TaxTMI 
TaxTMI 
2010 (5) TMI 69
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....ubstantially owned by the appellant, who was holding 97% shares therein and 3% share holding was with Reeta Wahi. 3. The appellant made gifts certain amounts from time to time totaling Rs.1,44,62,500/- to Reeta Wahi. These moneys received by Reeta Wahi in the form of gift from the appellant were utilized for repayment of loan to M/s. VIMAR. 4. On 11.06.2004, Reeta Wahi entered into collaboration agreement for development of the subject property and thereafter entered into another agreement to sell qua this property with M/s. Dear Farms (Pvt.) Ltd., which was the company of the builder who had entered into the collaboration agreement with Reeta Wahi. On entering into this agreement, dispute between the appellant and Reeta Wahi started and series of litigations ensued in the form of various suits. The appellant was in possession of the subject property. When he was asked to vacate the same, he alongwith his wife (since deceased) filed a suit bearing CS (OS) No.690 of 2009 on the Original Side of this Court praying for decree of declaration stating that the plaintiffs were the owners of the subject property. They also made a prayer for permanent injunction seeking to restrain Re....
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....d Sanjit Bakshi, the developer. It was agreed that out of a total consideration of Rs.15,76,05,316/- payable by the developer qua that property, Rs.4 Crores would be given to the appellant and remaining amount was to be paid to Reeta Wahi. Suit was decided by the Court in terms of the aforesaid settlement and other suits/appeals between the parties also stood settled. 8. Two aspects clearly emerge from the aforesaid factual matrix: a) This Court in its orders dated 01.05.2006 had accepted the plea of the appellant that he was the owner of the property, which was held and purchased in the name of Reeta Wahi, who was holding the same as fiduciary of the appellant. b) Settlement dated 25.11.2006 entered into between the parties, as per which the appellant was ultimately paid Rs.4 Crores qua this property, was accepted by this Court. 9. Receipt of this amount was treated as capital gain by the Assessing Officer (AO). The appellant resisted this move of the AO contending that he was not the owner of the property nor had any tenancy rights therein. He was only staying in the said property for the last more than 45 years and sum of Rs.4 crores was received by the appellant for....
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....spect of the property in question Total Sale consideration 15,76,05,316 Less: Indexed cost of acquisition 2,25,00,731 13,51,04,545 Income under the head Capital Gains from the property in question attributable to the assessee is worked out to follow: Sale consideration 4,00,00,000 Deduct proportionate cost of acquisition 57,10,623 Capital Gains 3,42,89,377" 11. Thus, the dispute is as to whether the appellant is to be allowed deduction on entire 2.25 Crores or he is entitled to only proportionate deduction. Even this question has been decided by the Tribunal against the appellant. Finding it to be a substantial question of law, the appeal was admitted qua this question of law, which reads as under: "(d) Whether on the facts and circumstance of the case and in law, the Tribunal committed a mistake in not giving the set off of the entire cost of acquisition (Index Cost of the acquisition of Rs.2.25 Crores) to the Appellant against the Receipt of Rs.4 Crores in respect of the property in question while computing the capital gain?" 12. The order of the AO reveals that after holding that the appellant was, in fact, the real owner of the prope....
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.... MODE OF COMPUTATION. The income chargeable under the head "Capital gains" shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely :- (i) Expenditure incurred wholly and exclusively in connection with such transfer; (ii) The cost of acquisition of the asset and the cost of any improvement thereto : Provided that in the case of an assessee, who is a non-resident, capital gains arising from the transfer of a capital asset being shares in, or debentures of, an Indian company shall be computed by converting the cost of acquisition, expenditure incurred wholly and exclusively in connection with such transfer and the full value of the consideration received or accruing as a result of the transfer of the capital asset into the same foreign currency as was initially utilised in the purchase of the shares or debentures, and the capital gains so computed in such foreign currency shall be reconverted into Indian currency, so however, that the aforesaid manner of computation of capital gains shall be applicable in respect of capital gains accruing or arising from e....