TaxTMI 
TaxTMI 
2018 (11) TMI 868
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....30.10.2009 declaring total income of Rs. 34,08,690/-. In the first round of assessment proceedings, a sum of Rs. 78,60,000/- was added back disallowing the said loss which was set off against capital gain of Rs. 94,48,000/- received on sale of property at Gurgaon. The ld CITA passed an exparte order for non-appearance on behalf of the assessee. The assessee pleaded that the notices were sent by the ld CITA's office to the wrong address. This tribunal in first round of proceedings remitted the issue to the file of the ld AO for fresh consideration. 3.1. The assessee is having regular income from property dealing business , rent and other sources. He is also associated with many philanthropic activities. The assessee is a settler of a trust named as 'Al-Habib-Welfare & Charitable Trust' as per the Deed of Trust executed on 29.2.2000. He entered into a contract with the said trust whereby, using his influence, he committed them a constructed area of approximately 4000 sq.feet in and around Kolkata with an approximate value of Rs. 25,00,000/- which was at a highly discounted price. The agreement between the assessee and the said trust was entered on 11.9.2002 and subsequently an adv....
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.... along with the flat. The aforesaid trust vide its letter dated 14.11.2005 to the assessee indicated that the cost of the flat at Gurgoan would be beyond its comprehension and expressed its inability to take over the said flat for its charitable purposes. In the said letter dated 14.11.2005, the trust also accused the assessee for having bought a flat in his name using the monies belonging to the charitable trust. It was also strongly indicated by the trust to the assessee in the very same letter that the assessee should sell the flat at Gurgoan and buy some property at Kolkata in the name of the trust and final time of one year to complete the said deal was allowed to the assessee by the trust. The assessee wrote a letter dated 12.12.2006 to the said trust stating that he had made arrangement to sell his flat at Gurgoan and proceeds of the same would be utilized to buy a suitable property in the fringe locality of Kolkata to meet the requirements of the trust and sought for six months time to complete the entire process. The assessee finally sold his Gurgoan flat vide sale agreement dated 4.1.2007 to a third party having super area of 3540 sq.ft along with one car parking space fo....
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.... the liability incurred by the assessee by paying extra compensation to the trust amounting to Rs. 78,60,000/- is only his personal liability. It was further held that the assessee was not having any capital asset in respect of properties purchased at Rajarhat , Newtown, Kolkata as admittedly the said properties were purchased only in the name of the trust using the funds of the assessee. These findings were upheld by the ld CITA after giving partial relief to the tune of Rs. 9,49,475/- due to erroneous consideration of figures in the computation of capital gains. Aggrieved, the assessee is in appeal before us. 5. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. It is not in dispute that the properties at Rajarhat, New Town were purchased from M/s Sunny Rock Estates and Developer P Ltd in the name of Al Habib Welfare & Charitable Trust by the assessee using his own funds. This was done by him as compensation for using the funds of the trust for his personal purposes in the past. From the various correspondences exchanged between the asse....
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....the assessee for recovery of damages. An award was passed on 30th September, 2007 directing the assessee to pay a sum of Rs. 72 lakhs. The assessee filed his return for the assessment year 2007-08 on 29th March, 2008 claiming deduction of the said sum of Rs. 72 lakhs under Section 48(i) as expenditure incurred in connection with the transfer. The assessing officer and the CIT(A) both held against the aforesaid claim of the assessee which was ultimately allowed by the learned Tribunal. It is this order of learned Tribunal which is under challenge. Therefore, the question for consideration is whether the sum of Rs. 72 lakhs paid by the assessee pursuant to the award passed in favour of Onkar Management Private Limited can be treated as expenditure incurred with regard to the transfer under Section 48(i) of the Income Tax Act. Section 48in- so-far-as the same is relevant or material for our purpose, reads as follows: "48. 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) expendit....
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....nt of the Bombay High Court, held as follows: "The Bombay High Court in CIT v. Shakuntala Kantilal [1991] 190 ITR 56 (58 Taxman 106), has dealt with a case where the assessee owned a piece of land and she entered into an agreement of sale of the said property with one R and a dispute subsequently arose and R filed a suit for specific performance and there was a settlement whereby the assessee agreed to pay certain sum of money to R and in the meantime, the assessee entered into another agreement of sale in 1967 in respect of the same property with one C and C gave an assurance to R that on the completion of the sale, they would deduct a sum of Rs. 35,504/- from the total consideration and pay it to R. The assessee claimed that the sum of Rs. 35,504/- from the total consideration and pay it to R. The assessee claimed that thesum of Rs. 35,504/- should be allowed as deduction for the purpose of computing her income from capital gains. The Bombay High Court held that unless the assessee had settled the dispute with R, the sale transaction with C could not have materialised and the sale consideration had to be reduced by the amount of compensation paid to R. We are in agreemen....