Sale consideration reduced on capital gains due to litigation

Facts :

Assessee sold shares of its subsidiary Shivalik Land Development to one Virasat Agro Foods for 10 Crores subject to the fact that Virasat acquired certain lands from another company Padmini Technologies. The value was fixed due to the planned land acquisition from Padmini Technologies. Subsequently it came to limelight that the said land was a litigious one and the deal was cancelled by Virasat suing Padmini with injunction and damages. In turn the assessee entered into a supplementary business transfer agreement with Virasat with consideration revised at 25 lakhs instead of 10 crores. AO disagreed with the 25 lakh consideration and held the capital gain sale consideration as 10 crores. On appeal CIT(A) reversed the order of the AO. Revenue went in appeal to ITAT.

Held against the revenue that the sale consideration was only Rs. 25 lakhs and not Rs. 10 crores due to the specific/litigation underlying of the transaction.

Case: Dy. CIT v. Indiabulls Real Estate Ltd. 2023 TaxPub(DT) 2278 (Mum-Trib)