No Tax Treatment on Advance from Future Sale, Tax Treatment just on Actual Sale, Find complete information for Tax treatment of Advance Cash. In this post you can discover total details concerning No Tax Treatment on Advance from Future Sale with Case Law. you can also find case law description and decision by tribunal. Now you can scroll down below and examine more details concerning ” No Tax Treatment on Advance from Future Sale”
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No Tax Treatment on Advance from Future Sale
This is a case of the assessee which is participated in business and profession of the structure and constructions service, in which the advances for the building or business shops is normal and any person wishing to buy the structure needs to give the advance for the same.The above case was in Tribunal where it was decided that no money will be dealt with as earnings as versus advance and so no charge u/s 271( c) can be levied on the assessee. The quick of the case in discussed listed below.
The collaboration company which was under business of structure and building had actually remained in the search action u/s 132 of the income tax act. The Assessing officer was in the duty of evaluation procedures, throughout which he discovered that there were unaccounted, unrecorded and concealed money invoices of Rs. 25 Lakhs, which he asked to the assessee, in which reply to the same under notification u/s 153 A said that this were the advances for the stores which he was building and the work was not finished and the sale was not possible therefore the assessee treated as advances and not as earnings.
The Assessing officer ignored the reality and the declined the reply offered by assessee and treated it as an earnings in the year in which the advance were gotten and not when actual sale was done. And as assessee didn’t showed it as earnings, he had to re concile the very same and needed to pay tax for the exact same which would result in hold-up of the same. So penalty u/s 271( c) was also levied which the assesse didn’t accepted pay. He submitted appeal versus CIT( A).
Order of CIT( A):–LRB-
The CIT( A) held that the appeal of the assessee was appropriate and therefore charge must not be imposed. The advance from customers will accrue to the earnings of assessee only when such sale is done.
Reply by Department:–LRB-
The Department didn’t concurred to the plea of CIT and further appealed to Tribunal where he gave the reason that the cash receipts received by the assessee were not accounted in the books of account and the exact same was undisclosed. He likewise informed that when the advances are not accounted for in the books of account, it becomes the part of earnings of the assessee.
Reply by Assessee:–LRB-
The assessee responded that the notice was served by the department but it didn’t included any details for hidden and alleged income nor it included any particulars for malafide or wrong intent of the assessee. It was also stated that the basis for levying the penalty is the wrong objective of the assessee, which is not in the existing case
Choice by Tribunal:–LRB-
The Tribunal by hearing to the contentions of both assessee and department, it was decided that the contention of the assessee was proper and charging the advances as earnings was not right and therefore the appeal of department was rejected
The decision was dated 12 th June 2015 and result from there in.
A BIG CONCERN:-
NOW COMES THE BIG CONCERN THAT IF THE ADVANCE WERE GOTTEN AND MORE ON A FUTURE DATE IF THE SALE IS NOT DONE AND CANCELLED DUE TO ANY REASON THAN WHAT SHOULD BE THE TREATMENT OF ADVANCES??? NO RESPONSE HAS BEEN OFFERED THE SAME IN THE LAW.