TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 645
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....inst Index Cost of Acquisition of Rs. 63,91,600/- (i.e. Rs. 11,60,000/- as on 1.4.1981). The aforesaid deduction in respect of Index Cost of Acquisition may please be granted. 3. The learned C.I.T.(A) has erred in denying the deduction of cost of improvement of Rs. 5,50,000/- (Index Cost of Acquisition of Rs. 10,78,470/-) from Long Term Capital Gain on Transfer of land to M/s Suvidha Developers. The aforesaid deduction may please be granted to the Appellant. 2. The first issue is in respect of the deduction of Rs. 16,00,000/- claimed by the assessee in computing the Long Term Capital Gain which was in respect of payment made by him to his sister for allegedly settling the dispute in the property/land. The facts which revealed from the records are as under. The assessee is an individual having income from capital gains on sale of land, interest and dividend. The assessee filed the return of income declaring total income of Rs. 82,05,590/- on 13-06- 2008, thereafter, the assessee revised the income to Rs. 1,07,09,630/- and filed the revised return on 17-07-2009 by withdrawing exemption claimed u/s. 54F. During the assessment proceedings, the Assessing Officer noticed that the asses....
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....isallowed the claim of Rs. 16,00,000/- made by the assessee as a cost of improvement. The assessee challenged the disallowance made by the Assessing Officer before the Ld. CIT(A) but without success. The Ld. CIT confirmed the order of the Assessing Officer on the issue of allowability of the deduction towards Rs. 16,00,000/- paid to Mrs. Aarti Sameer Nimgaonkar by giving the following reasons: "3.4 I have considered the facts brought on record by the Assessing Officer and also the submissions made by the appellant. Sec. 48 deals with the computation of capital gains and four items that are required to be considered in the computation of capital gains are: 1. Full value of consideration received or accruing as a result of transfer of capital asset. 2. Expenditure incurred wholly and exclusively in connection with transfer. 3. Cost of acquisition of the asset. 4. Cost of improvement of the asset. Thus the aggregate amounts representing in item 2,3,4 above are required to be deducted from item (a) in computing capital gains. Thus in the computation of capital gain, in order to qualify for deduction u/s 48 the expenditure should be 'wholly' in terms of quantum in connecti....
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....er of the asset. 3.7 In the case of B.N. Pinto Vs CIT (1974) 96 ITR 306 (Mysore) damages for wrongful detention of property was held to be not wholly and exclusively in connection with transfer of property and, therefore, not allowable u/s 48(i). In the present case, the appellant was the absolute owner of the property and the dispute to its ownership has never been challenged. The legal notice sent by the sister is by no means a legal suit filed in the court of law disputing the ownership or title of the property. No such suit disputing the title or the Will has been filed. The appellant has paid the sum of Rs. 16 lacs on account of possible likely events which never took place( The payment made to the sister in instalments has been made after the sale of property to M/s Suvidha Developers, therefore, the inference drawn by the Assessing Officer that the same is in nature of application of income is also not out of context. The facts brought on record clearly indicate that the payment to the sister was not absolutely necessary to effect the transfer, in other words, without removing encumbrance including the encumbrance of the type involved in this case, sale or transfer could no....
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....strar Haveli. As per the said partition deed dated 08-01-1932, the said property/land was given to the share of Mrs. Shantabai Shankarrao Phulmamdikar, who is the grandmother of the assessee. Late Shri Shankarrao Shriniwas Phulmamdikar had executed a WILL dated 22-03-1976 which was also registered on 09-07-1980 in which Late Shri Shankarrao Phulmamdikar confirmed the partition and also confirmed that the property of the assessee was of the exclusive ownership of his wife Mrs. Shantabai. Mrs. Shantabai had also executed her WILL dated 15-03-1976 which was registered on 15-07-1980. As per the WILL made by Late Mrs. Shantabai she bequeathed the said land absolutely to the son of her grandson Ram alias Vijay subject to right of Ram to take income there from during his lifetime. In the said WILL Late Smt. Shantabi made it clear that daughters of Ram (assessee's father) or any other person would not be having interest in the said land. It appears that the assessee's father also died subsequently. On the demise of Late Shri Shantabai the name of the assessee was entered into Revenue record. On the date of death of Smt. Shantabai as the assessee was minor the name of his father Ram alias V....
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....on by the Ld. AR. In the case of Miss Piroja C. Patel (supra) there were hutment dwellers on the property which claimed occupancy rights over the land and hence, the payment to the hutment dwellers was made and the same was allowed as cost of improvement. In the case of B.N. Pinto (supra) the issue is regarding the expenditure towards lawyer's fee, travelling expenses and damages for wrongful detention of property etc. In the said it was held that the damages for wrongful detention of property cannot be wholly and exclusively in connection with transfer of property. Therefore, was not allowable u/s. 48(i) of the Act. In the case of Mrs. June Perrett (supra) the payment was made to evict unauthorized occupant to the property and the said occupant was allowed as a deduction as a cost of improvement u/s. 48 of the Act. In the case of T Sreenivasa Rao (supra) again the payment was made to protected tenants. In our opinion in all the above case laws relied on by the Ld. AR there was encroachment on the property by way of possession or otherwise. In the present case Mrs. Aarti Sameer Nimgaonkar has no otherwise encroachment on the property nor any title or interest. 7.1 In the case of S....
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....ot allowed by the Assessing Officer. The assessee carried the issue before the Ld. CIT(A) and Ld. CIT(A) partly allowed the claim of the assesse. Before the Ld. CIT(A) in respect of claim of FMV as on 01-04-1981 with respect to the value of trees which was claimed to be Rs. 11,60,000/-, the assessee filed the approved valuer's report. The Assessing Officer rejected the claim of the assessee on the following reasons: i. No supporting evidence and no basis for arriving at the value of trees at Rs. 11,60,000/-. ii. The agricultural land was sold on as is where is basis. iii. No separate demarcation of sale proceeds in land value and trees value. iv. The ability of the valuer is beyond natural probability. v. No evidence that trees existed as on 01-04-1981. 9. The Ld. CIT(A) allowed the claim of the assessee at Rs. 4,11,980/- as against of Rs. 11,60,000/-. The reasons given by the Ld. CIT(A) are as under: 4.2 The appellant's submission has been considered and also the material on record. The existence of the mango trees on the agricultural land sold is supported by the Will and also the sale deed which has been entered into by the appellant with M/s Suvidha Properties and th....
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....ima facie appears on a higher side. 4.3 So far as the inference that sale of shade trees which after being cut are not capable of regeneration, would constitute capital receipts is established law even as decided in V. Venugopala Varma Rajah Vs CIT (1970) 76 ITR 460 (SC) and this was followed in state of Tamil Nadu Vs Smt. Soundara Rajan (2000) 241 ITR 428 (Mad). The Income Tax Appellate Tribunal in a number of cases upheld liability in such cases of sale of old trees as percentage of receipts were as a matter of estimate. The issue of sale of shade trees had come up in Emerald Valley Estates Ltd Vs CIT (1996) 222 ITR 799 (Kar) where it was held that the income from such sale of shade trees would be taxed as non-agricultural income. It had also observed that unlike goodwill it is not possible to say that no cost of acquisition can at all be conceived or envisaged in respect of a capital asset like shade trees purchased as a part and parcel of a yielding coffee estate. The removal of trees is a potential source for capital receipts for the estate owners and are, therefore, bound to constitute an important consideration while fixing the price of the estate as a whole. So also is the....
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....ies and perused the record. The assessee has filed the copy of the valuation report which is placed in the Compilation at Page Nos. 51 to 56. We find that as per the valuation report there were 169 mango trees and also other trees. The approved valuer is having the PHD in the Horticulture who has made the valuation of the trees as on 01-04-1981 at Rs. 11,60,000/-. It is also seen that the said property was given the name of "Ambarai". When the assessee has filed the valuation report from the Govt. approved agricultural valuer then the matter should have been referred to the Govt. Valuer for valuation if the valuation report was not accepted. Nothing has been discussed by the Assessing Officer as well as the Ld. CIT(A) why the valuation made by the approved valuer is not correct. We, therefore, allow the Ground No. 2 and direct the Assessing Officer to accept the valuation of the trees as made by the approved valuer as on 01-04-1981 and accordingly worked out the capital gain. Accordingly, Ground No. 2 is allowed. 11. So far as Ground No. 3 is concerned the Ld. Counsel submitted that as per the instruction of the assessee he is not pressing Ground No. 3. As Ground No. 3 is not pres....