Chandrashekar Naganagouda Patil

[2020] 117 taxmann.com 520 (Bangalore – Trib.)

In above case , it is held thay Income from relinquishing rights under an agreement should be assessed under the head income from capital gains

– Section 45, read with sections 2(14), 2(47) and 56, of the Income-tax Act, 1961

 – Capital gain

– Chargeable in Assessment year 2012-13

 – Issue – Whether income from relinquishing rights under an agreement should be assessed under the head income from capital gains

– Held, yes

 – On 09-02-2005, assessee entered into an agreement to purchase a vacant site for Rs.27.60 lakh

 – Assessee paid an advance of Rs.2.75 lakh and agreed to pay the remaining sum at the time of registration of sale deed

 – Under said agreement, vendor was required to make out a marketable title to the property and assessee had a right to enforce terms of agreement by way of specific performance

 – On 08-12-2011, vendor and assessee as confirming party sold said property to a third party

 – As per sale deed Rs.44.50 lakh was paid to vendor while Rs.48.30 lakh was paid to assessee as instructed by vendor towards full and final satisfaction of the entire sale consideration amount

– In CIT v. H Anil Kumar (2011) 242 CTR 537 (Kar), High Court has held that giving up of a right to claim specific performance by conveyance in respect to an immovable property amounts to relinquishment of the capital asset and there would be a transfer of capital asset within meaning of Act

 – Whether amount receivedin lieu of giving up rightto claim specific performance would constitute capital gain and it would exigible to tax accordingly

 – Held, yes