2019 (8) TMI 183

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....e F.Y. 2009-2010 the assessee sold a house property (1/2 share) at 56 Golf Links, New Delhi for Rs. 21,75,00,000/- on 26.05.2009 which was purchased in F.Y. 1984-1985 of Rs. 27,25,000/-. Further there was some improvement cost of Rs. 4,90,640/- in F.Y. 1999-2000. Before this sale, the assessee was in negotiations with another party for its transfer and received Rs. 5 crore as earnest money, thereafter, Rs. 5 crore was received as part payment of negotiated amount as his share of 50% in this property. But this deal could not be materialized due to non-compliance of terms and conditions by the buyer. And the other party filed a suit in the Court of Law for recovery of money already paid by him. So, the matter of recovery of the amount receive....

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....Co. Ltd., vs. CIT [2000] 243 ITR 158 (SC) in which it was held that "where advance money forfeited is more than the cost of acquisition, in such a case, the excess of the advance money forfeited over the cost of acquisition of such asset shall be a capital receipt only". Accordingly the assessee in his computation of income has given effect of this money retained by him in the previous negotiation and accordingly reduced the indexed cost of acquisition and improvement by the amount retained by him of Rs. 4,62,50,000/-. So the indexed cost reduced to NIL and the excess amount beyond this of Rs. 3,16,75,268/- (Not 2,76,17,652/- as taken by the Assessing Officer) has been treated as a capital receipt not taxable in view Judgment of the Supreme....

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....Pashi after accepting the earnest money of Rs. 4,62,50,000/-, which was subsequently forfeited as the prospective buyer Sanjay Pashi has failed to perform his part of the contract. It is also not in dispute that the property in question was ultimately sold by assessee to M/s. HAP apparel pvt. Ltd. for Rs. 21.75 crore, (assessee's share 50%). It is also not in dispute that the assessee has already offered capital gain on the sale proceed of Rs. 21.75 crore. 11. However assessee has deducted Rs. 4,62,50,000/- the amount of sale proceeds forfeited from the cost of acquisition of the property in question u/s 51 of the Act and treated the excess of forfeited amount and cost of assets i.e. 2,76,17,652/- as capital receipts. ....