Emd forfeited in failed auction under sarfaesi act 2002

Kishor Satpute (Querist) 26 April 2014 This query is : Resolved
The Earnest Money Deposit is forfeited as per the provisions of SARFAESI Act for failure to deposit balance of 25% amount of sale price by the Bank. My question is what to do with this forfeited amount?
1. Can this forfeited amount will be credited to Bank Profit and loss account?

or

2. Whether this forfeited amount will be credited to borrowers NPA loan account in respect of which the said failed auction property belonging to?

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K.K.Ganguly (Expert) 27 April 2014
1. No, it can noy be credited to the Borrower's NPA account since the said amount has not been paid by the Borrower,

2. I know one Branch Manager of a Bank has shown such forfieted amount as commission earned by his Branch.

Advocate. Arunagiri (Expert) 27 April 2014
This amount will go to the bank as misc income.

Rajendra K Goyal (Expert) 28 April 2014
It is Bank's Miscellaneous income.

Kishor Satpute (Querist) 29 April 2014
Thanks Sir

T. Kalaiselvan, Advocate (Expert) 30 April 2014
I too have the same opinion that it may be credited to the Bank Branch's miscellaneous income account, you may clarify from the senior officers at your higher office for confirmation.

Guest (Expert) 30 April 2014
Take it as sundries to book that finally in the other income head in the accounts of the bank.

M V Gupta (Expert) 01 May 2014
I agree with the experts that it will constitute Bank's Misc income or income from other sources. Will be taxable income of the Bank.

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