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2023 (6) TMI 113 - AT - Income TaxLong-term capital gains - receipts by the assessee as per the consent decree passed by the Hon”ble Bombay High Court in the suit for specific performance of the Agreement to Sell filed by the assessee transfer of any right, title, or interest in the property - main allegation of the Revenue that the amount paid to the assessee is not in lieu of “right to sue”, rather the same was paid to the assessee since it transferred/sold its rights/interest in the property, i.e. Villa Nirmala to R A Realty and therefore, capital gain arose to the assessee HELD THAT:- As decided in Sterling Construction & Investments [2015 (4) TMI 838 - BOMBAY HIGH COURT] once the suit for specific performance has been refused then the receipt of monetary sum cannot be taxed as claimed by the Revenue as the same is in the nature of compensation in money for breach of the contract. Since in the present case also, pursuant to the consent decree in a suit for specific performance amount was paid, therefore, the said amount cannot be said to be liable to capital gains tax. As regards the reliance placed on Clause No.10 of the consent decree, we are of the considered view that the said clause is merely an arrangement amongst the parties, whereby the payment will be directly made to the partners as set out in the consent terms instead of the assessee and thus, cannot be said to be a relinquishment of any right in favour of the partners giving rise to any capital gains in the hands of the assessee. Thus the amount received by the assessee pursuant to the consent decrees dated 20/01/2011 and 15/07/2015 passed by the Hon”ble Bombay High Court is not in respect of the transfer of any right, title, or interest in the property i.e. Villa Nirmala, and therefore, cannot be taxed under the head “capital gains” in the hands of the assessee. Decided in favour of assessee.
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