TaxTMI 
TaxTMI 
2022 (2) TMI 973
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....se and in law; 1. The Ld. Commissioner of Income Tax (Appeals) erred in conforming the actions of AO of not allowing Rs. 80,00,000/- claimed u/s. 48 of the Income Tax Act,1961 from the sale proceeds in calculation of Long term Capital Gains without appreciating the fact that that the amount was paid in compliance to the Consent Terms approved by the Bombay High Court. i)The expenditure in incurred wholly and exclusive in connection with the transfer of Long Term Capital Asset. ii) That the AO be directed to allow the expenditure incurred u/s. 48 of the Act. iii) Any other relief Your Honours may deem fit." 3. Briefly the facts are, the assessee is a resident individual. For the assessment year under di....
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....e submissions of the assessee. He observed, the consideration received by the assessee has already been mentioned in the deed of conveyance dated 18-12-2012 and there is no specific direction of the Court to pay further compensation to the buyer. Therefore, he disallowed the deduction claimed of Rs. 80 lakhs and computed long term capital gain accordingly. Though, the assessee contested the aforesaid disallowance before learned Commissioner (Appeals), however, the disallowance was sustained. 5. Reiterating the stand taken before the departmental authorities, learned counsel for the assessee submitted, after the assessee along with other coowners sold the property, another person disputed the sale by claiming ownership over the property. ....
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....tions of learned Commissioner (Appeals), he submitted, crucial agreements / documents were not filed before learned Commissioner (Appeals). 7. We have considered rival submissions in the light of the decisions relied upon and perused the materials on record. The factual matrix reveals that the subject property from which the assessee derived long term capital gain was acquired by his father in the year 1937. By way of a registered agreement executed on 27-02-1981, a portion of the property was sold to M/s Amar Builders and Developers. Subsequently, on 18-12-2012, through another registered deed of conveyance , a part of the property was sold to M/s Colo Colour Pvt Ltd for a consideration of Rs. 3,00,60,000/-. However, subsequent to such ....
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....ee's share in the property being to the extent of 20%, he contributed a sum of Rs. 80 lakhs. 9. Thus, it is a fact on record that as per the consent terms approved by the Hon'ble jurisdictional High Court, assessee paid a sum of Rs. 80 lakhs to the buyer M/s Colo Colour Pvt Ltd. Therefore, the payment made by the assessee is established on record and hence, cannot be disputed. In our view, learned Commissioner (Appeals) has completely misconceived the facts and made a fundamental error while observing that assessee's claim cannot be allowed in absence of complete terms and conditions of agreement date 18-11-2002 as mentioned in the consent terms approved by the High Court. Undisputedly, the consent terms along with Hon'ble High Court's o....
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....visions of s. 48 which read as under : "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) expenditure incurred wholly and exclusively in connection with such transfer, (ii) the cost of acquisition of the capital asset and the cost of any improvement thereto." The section broadly contemplates three amounts for the purpose of computing income chargeable under the head "Capital gains". The first is the full value of the consideration for which the capital asset has been transferred. The second is the expenditure incurred wh....
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....nly wider than the expression "for the transfer". Here again, we are of the view that any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by this clause. In other words, if, without removing any encumbrance including the encumbrance of the type involved in this case, sale or transfer could not be effected, the amount paid for removing that encumbrance will fall under cl. (i). Accordingly, we agree with the Tribunal that the sale consideration requires to be reduced by the amount of compensation. The first question is, therefore, answered in the "affirmative and in favour of the assessee.' 11. Thus, as per the ratio laid down in the aforesaid decision, any amount paid for removing ....