Registration charges on property transfer deductible in capital gains computation where deed places burden on seller

Registration charges incurred by a seller on transfer of immovable property are allowable in computing capital gains where the sale deed expressly places the burden of such transfer-related expenses on the seller and the Revenue produces no contrary evidence. The registered deed identified the purchasers and supported the contractual allocation of expenses, and there was no independent verification to disprove the payment. On that basis, the outgoing was treated as genuine and connected with the transfer, so the disallowance was held unjustified and the deduction was allowed.

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Issues: Whether registration charges incurred by the seller on transfer of immovable property were allowable as a deduction while computing capital gains.

Analysis: The sale deed recorded an agreement that the seller would bear the purchase and registration expenses. The purchasers were identifiable from the registered deed, and the Revenue did not produce contrary evidence or independent verification to disprove the payment or the contractual allocation of such expenses. In the absence of a dispute on the remaining components of capital gains computation, the claimed registration charges were held to be a genuine outgoing incurred by the assessee in connection with the transfer.

Conclusion: The disallowance of registration charges was not justified and the deduction was allowed in favour of the assessee.

Final Conclusion: The appeal succeeded and the addition relating to registration charges was deleted, with the capital gains computation accepted on the assessee's claim for transfer-related expenses.

Ratio Decidendi: Where a transfer deed expressly places the burden of registration or incidental transfer expenses on the seller, and the Revenue fails to rebut the documentary evidence, such expenditure is allowable in computing capital gains.

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