TaxTMI 
TaxTMI 
2020 (2) TMI 714
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....he Hon'ble Jurisdictional Court's order in this regard forms part of the sale agreement. 2. The learned CIT(A) erred on facts and in law in upholding disallowance selling expenses incurred in respect of sale of land amounting to Rs. 25,00,000/- paid to Mr. Bharat Chaudhari out of total expenses of Rs. 61,00,000/- without appreciating the facts and evidences submitted before the learned AO as well as the Ld. CIT(A) in this behalf. The Ld. CIT(A) contended that there is no evidence to establish the nexus between the amount paid and the capital gain whereas all the evidences are already on record. 3. Without prejudice to above, the cost of Rs. 61,00,000/- is not part of cost of acquisition but the selling cost to be reduced from the sales consideration. The learned AO as well as the CIT(A) failed to appreciate the said fact and also failed to rectify the mistake. 4. The appellant craves to add, alter, delete or substitute all or any of the above grounds of appeal." 2. The Ld. AR of the assessee submitted that the assessee is an individual and earned income from capital gain from sale of agricultural land situated at Gut No.74/19 at Nimgaon Korhale, Taluka-Rahata which was sol....
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....Kapadia Vs. CIT (1967) 63 ITR 651(SC) (b) CIT Vs. Daksha Ramanlal (1992) 197 ITR 123 ( Guj.) (c) R.M Arunachalam Vs. CIT, 227 ITR 222(SC) (d) CIT Vs. Manjula J. Shah 355 ITR 474 ( Bom) 3. Per contra, the Ld. DR has placed strong reliance on the orders of the Authorities below. 4. Feeing aggrieved by the order of the Ld. CIT(Appeals), the assessee filed appeal before us. We find that the Ld. CIT(Appeals) has upheld the order of the Assessing Officer by observing as under: "4.3.3 As regards payment of Rs. 36,00,000/- to Kisan Kharat, it has been argued that the said payment was made to avoid any legal dispute. It was argued that Kisan Kharat filed a civil suit against Aruna Jadhav (original land holder), Shri Ragunath Katore (son of the appellant), Shri Bharat Chaudhary, Shri Bhausahib Katore (husband of appellant) and the appellant herself on 08.10.2012. It was stated that due to civil suit, it became difficult for the appellant to proceed with the sale of the land. Therefore to avoid such litigation the appellant entered into a Kararnama dated 04.12.2012 by which Shri Kisan Kharat withdrew the suit after receiving the payment of Rs. 36,00,000/-. It appears that the en....
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....TO (154 ITR 148) has held that "colourable devices cannot be a part of tax planninq and it is wrong to encourage dubious methods to avoid payment of tax." (viii) Even if it is assumed that the payment was made to avoid litigation, then the claim is highly disproportionate and in fact even more than the sale consideration paid by the appellant on acquisition of the land. The cost of acquisition by the appellant is Rs. 50,00,000/- and the payments made to these two persons to avoid litigation is to the extent of Rs, 61,00,000/-. 4.3.5 In the light of the aforesaid discussion, it is held that the claim made towards cost of acquisition in the form of payment to Shri Kisan Kharat and Shri Bharat Chaudhary is nothing but a cooked up story to inflate the cost of acquisition so as to reduce the taxable amount of short term capital gain. In fact, the appellant has thoroughly failed to discharge his onus of proving that such payments were in the nature of expenditure which has been laid out or expended wholly and exclusively in connection with transfer/sale of the land. 4.3.6 Hon'ble Jurisdictional High Court in the case of CIT vs. Roshanbabu Mohammed Hussein Merchant (275 ITR 231)....
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....y the Assessing Officer. The order of the Assessing Officer is perfectly in order and the same is upheld. The ground is accordingly dismissed." 5. We have considered rival submissions of the parties and perused the material available on record. Before we deal with the issues raised by the assessee in the present appeal, we would like to record the dates and events which are relevant for adjudication of the present appeal. Dates Events 16-3-2009 Aruna G. Jadhav entered into an agreement for sale of the property with Bhausaheb R. Katore and Kisan S. Kharat for an amount of Rs. 11.00 lakhs 5-7-2010 Aruna G. Jadhav executed sale deed in favour of Bharat B. Choudhari and Raghunat Katore . 5-7-2010 Bharat Katore and Raghunat Katore executed irrevocable registered power of attorney in favour of Bhausaheb R. Katore 25-10-2010 An amount of Rs. 44,25,000/- was deposited with the Collector by Bharat Katore and Raghunat Katore. 14-12-2011 The Collector passed an order of N.A. (Non-agriculture). 30-7-2012 Raghunath B. Katore and Bharat B. Choudhari executed a registered sale deed in favour of Hirabai Katore w/o Bhausaheb R. Katore .(Appellant - assessee) 8-10-2012 A suit....
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.... hereunder the contents of the compromise which was filed in the paper book: "Compromise pursis from Plaintiff and Defendant No. 1 to 5 as follows: 1) That the plaintiff had brought this suit for specific performance from Agreement to sale dated 16-3-2009 asking for sale deed to be registered jointly in his favour; 2) As per pursis Para No.1 and various demand, prayers mentioned in the suit regarding agreement to sale dated 16-3-2009 plaintiff relinquish, release, withdraws all his prayers, demands and complaint mentioned in suit. 3) Plaintiff had released, withdraws all his grievance, complaint and prayer mentioned in the said suit. Plaintiff withdraws this suit and does not want to try it further. 4) As sec. 52 of transfer of property act was registered in sub-registrar office, Rahata according to the suit, the said notice shall be concluded/decided as per the compromise pursis. 5) That all the deeds and transactions between defendants are admitted to plaintiff and no complaint, grievances are remain, survives for plaintiff. Plaintiff withdraws all his complaints and prayers mentioned in the suit. Therefore, the said special civil suit shall be pronounced/decided acco....