Agreement to Sale-capital gain

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Ashwin (Querist)
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11 June 2008 Please throw some ligth on the provisions relating to Amount Received on Cancellation of Agreement to Sale.Assesse recevied some amount over and above the actual amount given to land owner at the time of making agreement to sale.The assessee gave some token amount, say rougly 10% of the agreement value at the time of agreement to land owner.The land owner is now selling the property to thrid party and that third party is making payment to the assesse for cancellation of his agreement to sale.whether it could be treated as sale/transfer of rights in immovable property as the asssesse acquired right to purchase the property be way of agreement to sale with the land owner. Possession was not taken.whether this can be considered as capital gains and consequemtly exemptions U/s 54 will be available? Please provide refference to some case laws also, if Availabe.

nilesh gupta

nilesh gupta (Expert)
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12 June 2008 capital gain must be arise from capital assets. and there must be transfer, in ur case possession was not taken by the asessee and also property is not registered in the name than in my opinion thereis no capital assets,

amount recd from third party is to be taxed under the head income from other source.

Ashwin

Ashwin (Querist)
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14 June 2008