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2023 (5) TMI 467 - AT - Income TaxLiability under the head short term/ long term capital gain - forfeiture of advanced amount against sale of property - Transfer of capital asset u/s 2(47) - joint owned property inherited - sale bargain was not concluded - HELD THAT:- Admittedly assessee jointly with her two sons inherited agricultural land from her husband after his death - also not in dispute that bargain was cancelled and cancellation of agreement to sale was specifically recorded on the back of the agreement to sale. These facts have not been controverted by the authorities below. AO made an addition being 1/10th share of advance amount in the hands of the assessee considering the same as sale consideration. The amount of advance was deposited in the joint bank account in the name of assessee, her son and widow wife of late. The amount as per submissions of the assessee and this quantum has not been disputed by the AO and the AO has also took note of said amount in first para of the assessment order. AO has grossly erred in taxing the advance amount under the head capital gain in peculiar circumstances when no transfer of any asset was made by the assessee and her co-owner - In the present case the assessee received advance amount on 06.09.2010 under agreement to sale, which was cancelled on 16.03.2011 and amount of advance was forfeited therefore, provision of section 51 of the Act are applicable and the amount proportionately forfeited by the assessee would be deducted from the cost of acquisition of the asset or fair market value as the case may be at the time of actual transfer of such asset in future. Decided in favour of assessee.
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