TaxTMI 
TaxTMI 
TaxTMI 
2016 (5) TMI 429
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....(3) of the Income Tax Act, 1961. 2. Rival contentions have been heard and record perused. Facts in brief are that the assessee was owner of the plot located at survey No. 895, Turner Road, Bandra, Mumbai (impugned property) which was converted from capital asset to stock in trade on 18-2-2006. The said property was sold during the year under consideration giving rise to capital gains as well business profits. The impugned property was originally owned by one Mr.Percy Maurice Pereira (here in after called vendor) and was in his possession and enjoyment. The assessee entered into an agreement for purchase of the impugned property with the vendor vide agreement dated 7-8-1973. As on the date of agreement the impugned property was subject matt....
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.... from the vendor in this regard, the assessee, i.e., the purchaser filed Suit no.889 of 1980 before the High court stating that there is a valid and subsisting agreement in respect of the impugned property in favour of the assessee and the vendor has no right, title or interest in the said property owing to the said agreement. The assessee also stated that at all material points of time prior to the filing of the suit and at the time of filing the suit the assessee was ready and willing to perform their part of the agreement for sale. In view of these facts, the assessee requested the court to declare that there is a valid agreement as above and to order and decree the vendor to specifically perform the agreement and to do all acts to conve....
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....res in addition to the amounts already paid to the vendor and the decree was to operate as conveyance of the property on payment of the said amount. Accordingly, the payments were made to the vendor and the conveyance deed was executed on 20-2-2006. In the above background the assessee converted the said impugned property into his stock in trade in February 2006 and sold the same in the following financial year relevant to the A.Y. under consideration. On completion of the sale, the assessee computed capital gains up to February 2006 and business profits for the period thereafter. The capital gains were offered to tax for the A.Y. under consideration following the provisions of Sec. 45(2) of the Act. In computing the capital gains, the asse....
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....agreement of sale is neither decisive nor conclusive as to the date of sale and the injunction order passed by the High court restraining the vendor from alienating the property is no evidence to establish the rights of the assessee in the impugned property. Further the A.O. also stated that the\fact of registering the sale agreement with the Sub Registrar is also not indicative of establishing the appellant's rights therein by observing that the title of the property is transferred on execution/performance of the contract and not by mere registration of sale deed. In essence, the A.O. held that the assessee owned the property only in F.Y. relevant to A.Y.2006-07 and therefore the asset was owned by him for a period of less than 36 mont....
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....f 1.4.1981 will not be allowed, but confirmed the addition of Rs. 54,00,000/-. We find that as per agreement of sale deed executed on 7.3.1973 which has been duly registered with the Sub-registrar of Assurance, Mumbai under S-2489/82 in the name of the assessee, the assessee has acquired right in the property from the date of agreement to sale dt. 7.3.1973. We also find that on 24.1.1983 assessee obtained an order and injunction against the vendor preventing the vendor from alienating, encumbering, transferring parting with the possession of the suit property. The order of the Hon'ble Court clearly evidences that the court accepted assessee's claim, right title and interest in the property conferred upon vide agreement dated 1973. 6. I....
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....ins. 8. With regard to declining assessee's claim of payment for removal of encumbrances amounting to Rs. 54 lakhs, we find that one Partner, Smt. Sushila Devi created problems for the on issue of property. Therefore, vide Deed of Retirement of Partnership dt. 21.12.2005, assessee resolved the problem by paying Rs. 54 lakhs in addition to her capital in the firm for the settlement of her claims in the capital as per clause no. 2 on page no. 3 of Deed of Retirement of Partnership dt. 21.12.2005, profits and assets of partnership firm which comprised the property at Bandra as only property. 9. As per Sec. 48 if the expenditure is incurred wholly and exclusively in connection with transfer of capital asset, in that situation expenditure is a....