TMI Blog2016 (4) TMI 1052X X X X Extracts X X X X X X X X Extracts X X X X ..... ale deed, which is also a “capital asset” within the meaning of section 2(14) of the Income Tax Act but not akin to land or building. Therefore, in this case, no addition can be made with the aid of section 50C in the hands of the assessee - Decided in favour of assessee - ITA.No.1601/Ahd/2012 - - - Dated:- 17-3-2016 - SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For The Assessee : Shri Mehul R. Shah For The Revenue : Shri V.K. Singh, Sr.DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER: The assessee is in appeal before us against the order of the ld.CIT(A)-II, Surat dated 26.6.2012 passed for the Asstt.Year 2008-09. 2. Solitary grievance of the assessee is that the ld.CIT(A) has erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 50C of the Income Tax contemplates that where the consideration received or accrued, as a result of transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted by the assessee by an authority of a state government for the purpose of payment of stamp duty, in respect of such transfer, the value so adopted or assessed, shall, for the purpose of section 48, to be deemed to the full value of considerations received or accruing as a result of such transfer. According to the assessee, the rights accrued to her, by virtue of purchase agreement, were capital in nature but not akin to a capital asset being land or building. She emphasized that though she has relinquished her rights in the nature of cap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 per sq.yard. The purchase was to be completed within six months from the date of the agreement and after expiration of the said period of six months by a 15 days notice to be given in writing. The time could be made the essence of the contract. The agreement was executed on July 31, 1961. It was the responsibility of vendor to obtain necessary permission from the municipal and other authorities, for the subdivision of the main plot, admeasuring 7,012. Ultimately he entered into an agreement to sell the property to M/s.Advani and Batra. The assessee threatened to file a suit for specific performance. A settlement was arrived vide which the vendor has returned ₹ 90,000/- paid by the assessee as advance and compensation of ₹ 5,0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be returned by M/s. Advani and Batra and an additional sum of ₹ 5,00,000 was also to be paid to the assessee by M/s. Advani and Batra was given effect to. Under this tripartite agreement, the assessee was to transfer and assign in favour of M/s. Advani and Batra the right, title and interest which the assessee had under the agreement entered into with Anandji Haridas. Once the parties had decided that the rights under the agreement of sale were to be assigned in favour of Messrs. Advani and Batra, if is difficult to see how the sum of ₹ 5,00,000 received by the assessee from M/s. Advani and Batra could be claimed to have been received by was of compensation or damages for breach of the agreement of sale. The position on Septembe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee has received a sum of ₹ 1,17,500/-. After deducting the cost of acquisition of the capital asset in the amount of ₹ 17,5000/- and expenses and legal charges in the sum of ₹ 17,904/-, the ITO found the capital gain to be ₹ 82,086/-. The Hon ble Bombay High Court upheld the conclusion of the AO and held that the assessee had acquired right of that capital asset nature, under the agreement for purchase of property. On extinguishment of such rights, gain arisen to the assessee is to be assessed as a capital gain. The Hon ble Court has upheld the conclusion of the AO that the assessee had earned capital gain of ₹ 82,086/-. 9. The next decision on this issue is of Hon ble Madhya Pradesh High Court in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th B for sale of a land for ₹ 100/-. A instead of executing sale deed in favour of B enters into a second agreement with C for ₹ 500/-. B files a suit for specific performance for enforcing the contract between him and A . Since, A was getting ₹ 500/- more on this sale transaction, he settles the dispute with B amicably and agrees to return his initial payment along with compensation of ₹ 100/-. Thus an amount of ₹ 100/- received by B would be in lieu of relinquishment of a capital asset, i.e. for foregoing his right of obtaining a sale deed with respect to that land. The capital gain on this ₹ 100/- would be assessable in the hands of B . A ultimately transfers the land to C and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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