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TMI Blog2023 (5) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The Ld. CIT(A) and Ld. A.O. has both grossly erred in law and on facts in calculating LTCG on advance money received without any transfer of any capital asset." 3. The ld counsel for the assessee submitted a written submission/ short synopsis which reads as under:- "The appellant is basically an agriculturist- having agricultural land in village Kailash District Karnal Haryana joint with sons, inherited by husband Mohar Singh who deed some time ago. The Assessee Vidya Devi along with his son Raj Kumar & widow Manju of son Vijay Kumar and Seven other farmers of the village "Kailash" having joint land all persons agreed to sell 107 k 4 m to M/S J.D universal Realtors and developers pvt ltd against consideration of Rupees Ninety-Eight ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... joint name of the Raj Kumar, Vidya (assessee) and M anju w/o Vijay Kumar The A.O attributed the money deposited in the hands of Assessee Vidya Devi and assessed to Tax under the head capital gain, whereas the money deposited was to be divided between the abovementioned 3 persons including the Assessee There the A.O has grossly erred in the taxing under the head of capital gain as there is no transfer of any asset and it cannot be taxed under the head of capital gains in absence of "transfer" which is essential for invoking the provisions of Section 45 of the Act. As argued, there was no transfer so no tax liability. Secondly entire three persons advance money attributed to the Assessee. The consequent liability of advance money will aris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces. Effectively, therefore the said amendments seek to prepone the taxability of the advance money forfeited to the year of receipt of the money as against the previous (Applicable to the present situation) provision where the same is taxed in an indirect manner in the year of transfer of the capital asset. Reliance Placed on : * Commissioner of Income-tax v. Reliance International Corporation (P.) Ltd. [1994] 73 TAXMAN 679 (DELHI) * Futura Polyster Ltd. v. Income Tax Officer [2020] 118 taxmann.com 243 (Mumbai - Trib.) Therefore, Assessment made is wrong & illegal and the LD CIT(A) also erred in conferring the same." 4. The ld counsel submitted that as per judgment of the Hon'ble jurisdictional High Court in the case of CIT Vs. Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sum of Rs. 1,10,00,000/- through cheque to be divided as per respective shares as mentioned in the agreement to sell vide dated 06.09.2010. It is also not in dispute that subsequently on 16.03.2011 bargain was cancelled and cancellation of agreement to sale was specifically recorded on the back of the agreement to sale dated 06.09.2010. These facts have not been controverted by the authorities below. However, the AO made an addition of Rs. 11 lakh being 1/10th share of advance amount in the hands of the assessee considering the same as sale consideration. The amount of advance was deposited in the joint bank account in the name of assessee, her son Raj Kumar and widow Smt. Manju wife of late Vijay Kumar in Axis Bank account No. XXXXX6777. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO in a case where such property is transferred in future point of time. But the amount of advance received and forfeited by the assessee before 31.03.2014 cannot be taxed in the hands of the assessee under the head capital gain. 8. In the present case the assessee received advance amount on 06.09.2010 under agreement to sale, which was cancelled on 16.03.2011 and amount of advance was forfeited therefore, provision of section 51 of the Act are applicable and the amount proportionately forfeited by the assessee would be deducted from the cost of acquisition of the asset or fair market value as the case may be at the time of actual transfer of such asset in future. My conclusion also gets support from the judgment of the Hon'ble Jurisdi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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