Private limited company buying litigated property below circ

4WhatIsRight (Querist) 26 August 2021 This query is : Open
In 2012, a Private limted company bought a property for Rs.1000000 (ten lakh) and paid vide demand draft. Deed of conveyance was executed but couldn't be registered on that day. Seller returned the demand draft with a promise to get the deed registered and collect the demand draft at a later date. Thereafter seller refused to get the deed registered and handover physical possession of the property. Company approached court for specific performance of contract and got injunction on sale transfer of property by seller. Case is in trial stage. Now the seller has approached for compromise and offers to execute a fresh deed and handover possession for Rs.1500000 (fifteen lakh). market value for stamp duty is now (2021) Rs.2250000/-(twenty two lakh fifty thousand). What would be income tax implication for buyer company? How compromise process should be followed in this matter to avoid tax liability?

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A private limited company purchased a property in 2012 but the registration and possession were delayed due to the seller's refusal. After legal proceedings, the seller now proposes a compromise to execute a fresh deed and hand over possession for a higher price. The discussion focuses on the income tax implications for the buyer company and the correct process to follow for the compromise to avoid tax liabilities, recommending consultation with a tax practitioner or CA.

Dr J C Vashista (Expert) 27 August 2021
Consult a local prudent tax practitioner.

kavksatyanarayana (Expert) 27 August 2021
Yes. Consult a local CA or post this in CAclubindia.

4WhatIsRight (Querist) 28 August 2021
Vashishta sir & kavksatyanaryana sir
Greetings.

As advised I have already posted in CAclub, but only legal luminaries like your learned self can help me select the right process for compromise. How should buyer company proceed for compromise/consent decree or any order from court in this matter.

4WhatIsRight (Querist) 28 August 2021
Please advice as to what process to follow .

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