2019 (12) TMI 576

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..... sessee, submitted that the only issue arises for consideration is disallowance of Rs. 1,55,79,303/- paid to Shri Durai and others while computing capital gain. According to the Ld. representative, the assessee purchased a property from five owners of the land. The vendors / owners of the land have already entered into an agreement for sale. In order to clear the title, the assessee paid Rs. 1,58,00,000/- to the agreement holder Durai and associates. The balance amount was paid to the owners of the land. While computing the capital gain, the assessee claimed the amount paid to the agreement holder Durai and associates as cost of acquisition. However, according to the Ld. representative, the Assessing Officer found that the amount paid to Dur .....

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..... ng Officer treated the same as income of the assessee under Section 56(2)(vii) of the Act. The payment of Rs. 1,58,00,000/- said to be paid to Durai and associates, the agreement holder of the property, was not taken as sale consideration. According to the Ld. D.R., what was paid to the land owners can alone be considered as cost of the property and not the payment made to the agreement holder. On a query from the Bench, when the land owners entered into agreement for sale with third party, how the assessee being purchaser could purchase the property without making payment to the agreement holder who have pre-existing right to purchase the property? The Ld. D.R. submitted that he leaves the matter to the discretion of the Tribunal. 4. We .....

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..... urchase the property in favour of Durai and associates is discharged. In other words, the agreement holder, namely, Durai and associates has to be paid for his pre-existing right to purchase the property. Therefore, this Tribunal is of the considered opinion that the payment made to pre-existing agreement holder to purchase the property to the extent of Rs. 1,58,00,000/- has to be considered as cost of the property/ purchase price. If this amount of Rs. 1,58,00,000/- paid to the agreement holder, namely, Durai and associates was taken into consideration, admittedly, there was no benefit accrued to the assessee. In fact, the assessee has paid more than the market value fixed by the Registration Department. Therefore, there is no question of .....

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