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TMI Blog2020 (12) TMI 602X X X X Extracts X X X X X X X X Extracts X X X X ..... was not justified in passing the rectification order u/s 154 r.w.s. 250(6) of the Income Tax Act, 1961 after making addition to the extent of Rs. 12,19,83,470/- merely based on change of opinion and reappraisal of facts already on record. (ii) That there is no case of any apparent mistake on record and provisions of Section 154 have been applied on illegal and arbitrary basis. (iii) That the issue of taxability of forfeiture amount being a subject matter of appeal before the Hon'ble ITAT, the rectification order passed by the CIT(A) is without valid jurisdiction and against the principles of doctrine of merger. (iv) That in any case, complete facts regarding forfeiture being already on record and duly discussed by the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where the act of forfeiture is being used as a device in view of similar forfeiture in respect of the same property in the past, the AO was justified in treating the amount forfeited as income of the assess u/s 56 of the Act. 1.b) Whether the Ld. CIT(A) has erred in relying upon the decision of the jurisdictional High Court in assessee's own case for A.Y. 2007-08, not appreciating the fact that the decision of Hon'ble High Court in the said Assessment Year proceeded on entirely different premises, namely i) that the AO had failed to comply with the direction given by the Addl. Commissioner of Income Tax u/s. 144A of the Act, which were binding on him. ii) that the plea of applicability of the provisions of section 56(2)(vi) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the forfeited amount and brought the amount of Rs. 12.50 crores to tax under the head "income from other sources". The AO has also observed that the assessee has received an amount of Rs. 18 crores during the Financial Year 2006-07 for the same property and has not paid any amount towards the tax for the forfeiture. 5. The ld. CIT (A) initially deleted the addition on the grounds that there is no provision to tax the amount forfeited in the Income Tax Act. The ld. CIT(A) held that the provisions of Section 51 and the provisions of Section 56(2)(ix) are not applicable to the facts of the assessee in the current year. The relevant portion of the ld. CIT(A) is as under: "6.7 Even though there may be merit in the observation of the AO th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 51 applicable w.e.f. 01.04.2015 as per which such forfeited advance is to be treated as income in terms of provisions of sec. 56(2)(ix). 6.10 It is further noticed that there is a dispute between buyers (appellant) and seller and matter is pending before judicial authorities as per sequence of events submitted in the written submission of the appellant. As per the relevant details, matter is still pending for final settlement. The Hon'ble Delhi High Court appointed sole arbitrator to adjudicate the disputes between the parties. Thus there is no material to hold that impugned transactions is non genuine and merely an attempt to avoid payment of tax. However, considering the various judicial orders passed in the appellant's own cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rfeiting it. He argued that on the earlier occasion, the assessee received Rs. 18 crores and subsequent he received Rs. 12.50 crores against the property of value of Rs. 30.16 lacs. Hence, the amount has been rightly held to be taxable by the ld. CIT(A). 9. Heard the arguments of both the parties and perused the material available on record. 10. We have gone through the provisions of the Act. The provisions of Section 51 are as under: "51. Where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in existence, any money or other money received in connection with negotiations of any capital asset and retained by the assessed shall be deducted from the cost for which the asset was acquired in computing the cost of acquisitions while determining the capital gains. 13. Thus, going through the provisions of Sections amended and pre-amended, we find that till the assessment year 2015- 16, the amount of forfeiture is not liable to be taxed but will go only in reducing the value of the asset while computing the taxability of the assessee under the head "capital gains". There is no taxability of the forfeited amount in the current year. The revenue may monitor or keep track of determination of capital gains as and when the asset is finally ..... X X X X Extracts X X X X X X X X Extracts X X X X
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