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2021 (7) TMI 274 - AT - Income TaxAddition u/s. 28(iv) - advance money against sale of property forfeited by the assessee - loan amount forfeited by the assessee represents income of the assessee and the same has not been declared in the return of income - HELD THAT:- In the present case amount represented advance money forfeited by the assessee and the same also represents cash received on forfeiture of advance money. In this view of the matter, the provisions of section 28(iv) of the Act is not applicable to the facts of the present case. In the present case, there is no dispute with regard to the fact that the assessee has received money from Naveen P. Patil initially in the financial year 2006-07. As per the recital in the Agreement for sale, the above said amount was given as investment in the projects taken up by the assessee - CIT(A) has given much importance to the recital so made in the Agreement for sale by observing that neither the assessee nor Naveen P Patil has given the details of project. In fact, the parties have only stated the purpose of given money by Shri Naveen P Patil to the assessee in FY 2006-07. The said facts are not relevant to the issue on hand. The issue on hand is related to the property transaction subsequently entered by the parties, i.e., subsequently, the above said loan amount was converted into advance money in the property transaction, whereby a property belonging to the assessee was agreed to be purchased by Shri Naveen P. Patil for a sum - Thus the issue is related to the property transaction and not the earlier loan transaction. Merely for the reason that the amount received as loan in an earlier year was converted into advance payment for purchase of property, there is no reason to disbelieve the property transaction as a colourable device. No material has been brought to substantiate the above said view of the tax authorities, meaning thereby, they have entertained this view only on surmises and conjectures. Since the amount forfeited by the assessee is on account of sale of property, we agree with the submissions of the assessee that the provisions of section 51 of the Act shall be applicable and the above said amount would go to reduce the cost of property. The impugned amount is not taxable in the hands of the assessee u/s. 28(iv) - Decided in favour of assessee.
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