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2019 (12) TMI 576 - AT - Income TaxIncome of the assessee u/s 56(2)(vii) - difference between the amount paid to the land owners and the market price estimated by the Registration Department - whether the amount paid to the agreement holder for purchase of property has to be taken into consideration as cost of acquisition or not? - pre-existing right for purchase of the property by Durai and associates by virtue of agreement for sale executed with the land owners - HELD THAT:- The right to purchase the property can be specifically enforced through a court of law. Therefore, when there was pre-existing right to sell the property in favour of Durai and associates, the assessee cannot purchase the property unless the agreement to purchase the property in favour of Durai and associates is discharged. In other words, the agreement holder, namely, Durai and associates has to be paid for his pre-existing right to purchase the property. This Tribunal is of the considered opinion that the payment made to pre-existing agreement holder to purchase the property to the extent of ₹ 1,58,00,000/- has to be considered as cost of the property/ purchase price. If this amount of ₹ 1,58,00,000/- paid to the agreement holder, namely, Durai and associates was taken into consideration, admittedly, there was no benefit accrued to the assessee. In fact, the assessee has paid more than the market value fixed by the Registration Department. Therefore, there is no question of computing any income under Section 56(2)(vii). Tribunal is unable to uphold the orders of the lower authorities. Accordingly, orders of both the authorities below are set aside and the addition is deleted. - Decided in favour of assessee.
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