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2023 (4) TMI 567 - AT - Income TaxTaxability of excess money received by the assessee over and above the cost of acquisition/WDV - Capital gain or Income from other sources - assessee submitted that it is well settled law that any amount received against the sale of capital asset is a capital in nature not a revenue receipt hence can be subjected to capital gain only and it cannot be taxed under the head income from other sources - HELD THAT - It is not in dispute that assessee had entered into agreement to sell of the property as buyer VA Realcon Pvt. Ltd on 07.12.2013 for a total sell consideration of Rs. 25 crores and an amount of Rs. 6 crores was received as advance/ part payment by way of 4 demand drafts issued by IDBI Bank. Since the buyer failed to pay the balance amount in complying with the conditions of the agreement an amount of Rs. 6 crores paid as advance sale consideration was forfeited by the assessee. Thus Amount of 6 crores received by the assessee will not fall within the ambit of section 56(2) Admittedly money has been received in pursuance to the agreement to sell which could not be materialized due to non performance of contract by the buyer. Therefore it cannot be said that the amount was received by the assessee without any consideration. Delhi High Court in the case of CIT vs Meera Goyal 2013 (2) TMI 74 - DELHI HIGH COURT have observed that earnest money of 18 Cr forfeited by the assessee as provided in the agreement to sell received from the purchaser Shinestar Buildcon Pvt. Ltd. who failed to pay the balance consideration by 30.03.2007 is a capital receipt not liable to tax. Provisions of section 51 would come into play in these circumstances as it specifically covers this type of transaction once the transaction had been held to be genuine there is no question of the transaction being without any consideration so as to invoke provisions of section 56(2)(vi) of the Act. The judgement of the Jurisdictional High Court is squarely applicable to the present case. Thus we do not find any error/ infirmity in the approach of the ld CIT(A) in deleting the addition made by the A.O. and we find no merit in the Ground No.1 of the Revenue. Accordingly ground No. 1 is dismissed. Assessee has not proved the genuineness and creditworthiness of the buyer - In the absence of any contrary evidence it cannot be said that the transaction i.e. agreement to sell entered into by the assessee and the buyer is not proved and the buyer is genuine. Therefore in our opinion the order of the ld CIT(A) in deleting the said addition requires no interference. Accordingly the Ground No. 2 of the Revenue is dismissed Depreciation at 10% on the value of building - Admittedly the agreement to sell was entered by the assessee with the buyer and even the advance of Rs. 6 crores was received and forfeited but ultimately the said amount of Rs. 6 crores has been forfeited due to failure on the part of the buyer. The premises was continued to be used by the assessee for its business purposes. Therefore in our opinion the depreciation is allowable to the assessee therefore we find no error in the order of the ld CIT(A) on the said issue. Accordingly we dismiss the Ground No.3.
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