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2015 (7) TMI 776 - AT - Income TaxAgreement to sell non materized - Advance received - litigation occurred due to non approval of map by the GDA and assessee has not returned back the amount - Held that:- Whatever amount has been received by the assessee as advance in aforementioned negotiations for sale and if those amounts are not returned back; the cost of property would stand reduced by such amount. In other words, when this sale does not materialize and the amount stands forfeited/not returned; and assessee makes another sale in future; then for purposes of computing the gain, cost of acquisition would be reduced by respective amount of advances received and not returned. As assessee is one of the legal owners of the impugned land for sale; so the entire theory of the AO (that the trust has been designed for tax evasion and assessee has earned income from other sources), crumbles down. Section 51 is found to be applicable in such cases; the assessee is asked to reduce the amount of advance if forfeited after arbitration, from cost of property while working out gain on any subsequent sale. The AO is also directed to take note of this, for future assessment purposes. We find Ld. CIT(A) has rightly held that for the-time being, there is no basis for any addition of,Rs.75,OO,OOO/- and accordingly he deleted the addition in dispute. - Decided against revenue.
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