Ram purchased a house in Mumbai in March 2000 for Rs.3,50,000. In April,2011 he entered into an agreement to sell the property to Shyam for a consideration of Rs.19,75,000 and received earnest money of Rs.5,00,000. As per the terms of the agreement, the balance payment was to be made within 30 days of the agreement. If the intending purchaser does not make the payment within 30 days, the earnest money would be forfeited. As Shyam could not make the payment within the stipulated time the amount of Rs.5,00,000 was forfeited by Ram.
Which of the following statement is correct in respect of the above problem? [CII-12-13: 852,11-12: 785,10-11:711,84-85: 125]
A . Rs.500000 will be taxable as short term capital gain
B . Rs.500000 will be taxable as long term capital gain
C . Rs.150000 will be taxable under some other head other sources
D . Rs.150000 is not liable to tax
Answer: C