Private limited company buying litigated property below circle rate

This query is : Resolved

lalit (Querist)
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26 August 2021 In 2012 company made payment of full consideration amount of rupees ten lakh and got a deed of conveyance executed for a property. Deed couldn't be registered on that day and physical possession was not handed over. Seller returned the demand draft of rupees ten lakh to the company with a promise to collect payment on next day of registration and handover of physical possession. Thereafter the seller refused to get the deed registered and handover physical possession. Company approached court for specific performance of contract (registration of deed & handover of physical possession) and got injunction on sale or transfer of property by the seller. Case is in trial stage. Now in 2021 the seller has approached for compromise at a price of rupees fifteen lakhs, which is lower by almost 40% than the current circle rate/market value of rupees twenty two lakh fifty thousand as prices have increased in last 10 years. Company wants to compromise and settle the issue. What could be income tax implications in this matter ? Section 56(2) & 50C?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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22 September 2021 As it is fresh transaction now, both the sections would be triggered. You can get valuation certificate from a registered valuer to justify your stand in appeal.