TaxTMI 
TaxTMI 
TaxTMI 
2014 (7) TMI 367
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.... of Rs. 8,81,866/- as computed by AO as against loss of Rs. 95,163/- computed by the appellant." 3. The brief facts as noted by the AO in para-4 of the assessment order are that the assessee has disclosed capital gain on sale of land. He further noted that the assessee has included Banakhat cancellation charges of Rs. 6,77,029/- and Rs. 3,00,000/- on account of payment made to land owners, to the cost of transfer of the land. The AO asked the assessee to furnish reasons as to why these two additions should be allowed in the cost of transfer of lands. In reply, it was submitted by the assessee before the AO that the assessee has entered into an agreement to sell this land and for this purpose a banakhat was executed on 25-9-1996 and advance of Rs. 25,00,000/- was taken by the assessee. The AO further noted that on going through the agreement, it was seen that the onus was on the purchaser to pay any amount required for obtaining approval from the competent authority with respect to transfer of this land in the name of the prospective purchaser. He also noted that it was also mentioned in the banakhat agreement that in any case, if the approval was not obtained, then the prospective....
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....owards the payment of compensation and actual payment is not denied. There is no relationship between the assessee and person to whom the banakhat cancellation charges were paid. He also submitted that as per sections 73 and 74 of the Indian Contract Act, 1872, compensation is payable for the loss or damage for breach of contract. He placed reliance on two judgments of the Hon'ble Bombay High Court in the case of CIT Vs. Shakuntala Kantilal, 190 ITR 56 and CIT Vs. Abrar Alvi, 247 ITR 312. The Ld. DR submitted that there was no obligation on the part of the assessee to pay compensation as per the banakhat agreement. He supported the orders of the authorities below. 5. We have considered rival submissions and perused the material on record and gone through the orders of the authorities below and also the judgments cited by the learned AR of the assessee. We find that as per clause-5 of the banakhat agreement, copy of which is available at page no.52 of the paper book, the title clearance certificate and also the land possess marketable way will be obtained by the party of the second part i.e. buyer and not the assessee. As per clause-6 of the agreement, in case of non-execution of s....
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....mpensation was allowed to be deducted from the capital gain when the land was actually sold thereafter. In the present case, we find that there is no obligation on the part of the assessee to pay any compensation as per the banakhat agreement, and it is not the assessee who has opted out from the banakhat agreement and it is the buyer on whose behest the banakhat cancellation agreement was executed and because of this difference in fact, this judgment is not applicable to the present case. The second judgment cited by the learned AR of the assessee is the judgment of the Hon'ble Bombay High Court rendered in the case of Abrar Alvi (supra). We find that this judgment is also not applicable to the present case, because the facts are different. In that case there was acrimonious dispute between the assessee and his son, who had filed a suit to restrain the transfer. The assessee paid Rs. 8 lakhs to his son to effect the transfer. In these facts, it was held that the Tribunal rightly allowed the expenditure incurred by the assessee to remove the encumbrance to the transfer. In the present case, nothing is brought to show that there was any encumbrance on the transfer, which was remove....
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....at there is amendment in section 48 and section 55 w.e.f. 1-4-1988 which had brought out the conceptual change in computing capital gain. He observed that the decisions cited by the learned AR were given before the concept of "Indexed Cost" was brought into the statute. Therefore, these decisions are distinguishable. He rejected the claim of the assessee on this count. Being aggrieved, the assessee carried the matter before the learned CIT(A), but without success and now the assessee is in further appeal before us. 11. It is submitted by the learned AR of the assessee that the interest on capital was paid to the partners as per partnership deed and profit & loss account. He also submitted that there is no dispute regarding the payment of interest to the partners, therefore, the same should be allowed, and added to the cost of acquisition of the land in question. As against this, the learned DR of the Revenue supported the orders of the authorities below. 12. We have considered rival submissions and gone through the orders of the authorities below and also perused the material on record and various judgments cited by the learned AR of the assessee before the authorities below. Cop....