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2020 (4) TMI 296 - AT - Income TaxExemption u/s 54F - Nature of source of income / gain for investment - LTCG or not - Assessee given advance for purchase of land in the year 2005 and accordingly acquired right for specific performance of agreement of sale - acquiring of "capital asset” within the meaning of sec.2(14) - HELD THAT:- There is no dispute with regard to the fact that the assessee had entered into an “agreement of sale” for purchase of an agricultural land located in Venkatala Village, Yelahanka Hobli, Bengaluru North Tq. A perusal of the said agreement would show that as per clause 4.6 of the agreement, the vendor shall effect conversion of scheduled property from ‘agricultural” to “non-agricultural use”. As per clause-6, either of the party committing breach shall be liable to pay cost, expenses, damages, losses incurred by the aggrieved party. In the case of H Anil Kumar [2011 (1) TMI 1159 - KARNATAKA HIGH COURT] assessee entered into an agreement for purchase an immovable property and paid ₹ 1,00,000/-as advance. Subsequently the assessee filed a suit for specific performance of the agreement for sale. Thereafter, the assessee withdrew the suit for specific performance in lieu of payment of ₹ 7,50,000/-. The Hon'ble jurisdictional Karnataka High Court held that right of specific performance of the contract of sale constitutes Capital asset and compensation received for giving up the above said right constitutes capital gains. Facts of the present case are identical with the facts available in the case of H Anil Kumar (supra). The assessee herein has given advance for purchase of land in the year 2005 and accordingly acquired right for specific performance of agreement of sale. The said right constitutes “capital asset” within the meaning of sec.2(14) of the Act. Subsequently, the assessee has received money for giving up the said right. The same shall constitute capital gains in the hands of the assessee as per the decision rendered by the jurisdictional High Court in the case of H Anil Kumar (supra). In the instant case, it is not the case of assessing officer that the assessee did not get the “right of specific performance of agreement of sale” upon entering the sale agreement between the assessee and the seller. In the absence of such a legally valid finding, in our view, the revenue cannot place reliance on the decision rendered by Hon'ble Supreme Court in the case of Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] - Decided against revenue.
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