TaxTMI 
TaxTMI 
2023 (4) TMI 328
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..... 2. That the ld. CIT(A) erred in law in not appreciating the judgment of the Hon'ble Supreme Court rendered in the case of CIT vs. B.C.Srinivasa Shetty (128 ITR 294) in right perspective. 3. That the ld. CIT (A) erred on facts in not allowing the benefit of a sum of Rs. 70,00,000/- paid for acquiring title in the land sold resulting into charging of capital gains at very high figure. 4. The appellant craves leave to add, amend or alter any of the grounds of appeal before hearing." 2. The co-ordinate bench has disposed off this appeal vide order dated 30-01-2014 read with corrigendum dated 31-01-2014 where in the coordinate bench has decided the appeal of the assessee on ground no. 2. Thus, the other ground becomes academic therefore. On 24-11-2016 revenue filed a miscellaneous application (MA) in ITA no. 59/JP/2013 praying for recalling of the order contending that the Hon'ble Punjab & Haryana High Court has decided the issue while considering the judgement of the Hon'ble Supreme Court in the case of B. C. Srinivasa Setty. The co-ordinate bench vide order dated 29-06-2017 recalled the order dated 30-01-2014 to be decided on merits in the light of judg....
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.... Rs. 2,38,853/- 2. Expesnes on account of patta and registration charges paid to JDA Rs. 9,53,640/- Long term capital gain Rs. 65,75,438/- Deduction u/s 54 Investment in new asset Rs. 32,09,810/- (Purchase consideration & registry charges) Long term capital gain Rs. 33,65,628/- 4. Income from other sources as shown Rs. 73,906/- Gross total income Rs. 35,31,258/- Less: Deduction under chapter VIA Rs. 20,000/- Total income Rs. 35,11,258/- R/o Rs. 35,11,260/- 4. Being aggrieved, the assessee carried the matter in appeal before the ld CIT(A) challenging the computation of capital gain. The assessee did not find any favour, carried the matter before this tribunal and the same was in the earlier order decided on technical ground but based on the revenue's MA the same was recalled to be decided on merits of the case. 5. Before us the ld. AR of the assessee thus has supported his argument for ground no. 1 & 3 only and groun....
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.... 23/06/2008) Less : FMV as at 01/04/1981 @ Rs. 100/- per sq. sq. mtr 2,38,853 (40% of Rs. 1,02,600 i.e. Rs 41,040 ) (Indexed cost : 41,040 * 582/100) -------------- Taxable Capital Gains 36,07,507 Less : Deduction u/s 54 : Investment in House property : 38,29,810 Purchase consideration as per Registry 30,00,000 Add : Registry Charges 2,09,810 Add : Spent for construction work 6,20,000 ------------- It is pertinent to note that in the cost of acquisition the appellant had adopted only the cost of construction and not the purchase price/ market value of land. However later on the value was enhanced by the registering authority at Rs. 5,76,54,492 which was questioned by the buyer before the Hon`ble Revenue Board and finally the value was assessed at Rs. 1,94,19,827 and hence the ld. AO assessed the LTCG as under :- Sale Consideration of Residential House 77,67,931 (40% of 19419,827) Less : Transfer Expenses ....
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....e facts of the case are very clear to the extent of Sale Consideration as per section 50C i.e. Rs. 1,94,19,827 in which the share of the appellant is Rs. 77,67,931 (being 40%). As submitted above the father of the appellant had taken possession of the land without any title which land in fact pertained to M/s. Jai Mahal Hotels Pvt. Ltd. After sale of the property the said Taj Mahal Hotels Pvt. Ltd. filed a suit before the Hon`ble District and Session Court, Jaipur City on 09.02.2009 (APB 27- 47) wherein the appellant, his mother, his brother, the buyer, Mayor, Jaipur Nagar Nigam, Secretary JDA, Deputy Commissioner Zone 2 of JDA and the Registrar were made parties and allegations were made that the appellant with the collusion of JDA, JMC and Registering authorities obtained lease deed and executed a registered sale deed in favour of the buyer and following requests were made by above named Jai Mahal Hotels P Ltd in the suit :- 1. To declare the proceedings for transposing name of the appellant in house tax records by Jaipur Nagar Nigam as null and void (APB 33 - Para 14). 2. To declare the registered sale deed executed in favour of the buyer as null and void (APB ....
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....be considered as paid towards purchase of land only. Therefore the sale of the property by the appellant, his mother and his brother was sale of a land without any clear title which was bought by the buyer from M/s. Jai Mahal Hotels P Ltd. Therefore the same must be considered as part of cost incurred by the assessee, his mother and brother. This claim was raised before the ld. CIT (A) (Page 17-19 of the CIT (A) Order) who rejected the same by holding that the sellers had clear title in the land as JDA had granted lease deed to them and the sellers had clearly stated in the sale deed that they had clear title in the land and there is no encumbrance on the property being sold and also held that in absence of any clear finding given by the Hon`ble Court on the title of the land, claim of the appellant could not have been entertained. Hence she did not accept the contention of the appellant that said sum of Rs. 70,00,000 had been paid by the buyer to M/s. Jai Mahal Hotels P Ltd. for buying title. In this connection it is submitted that the ld. CIT (A) seems to had not gone through the contentions of the above named M/s. Jai Mahal Hotels P Ltd. raised in the suit filed for can....
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....Tax Act, 1961 for a sum of Rs. 4,11,790 by disbelieving on a payment of Rs. 6,20,000 made to the contractor for acquisition/ development of house property, on superfluous grounds. The appellant sold his residential land and building and claimed deduction u/s 54 by investing a sum of Rs. 38,29,810 in the new residential property (APB 11) (wrongly taken as Rs. 36,21,600 in the computation, Assessment Order and Appeal Order). This said sum of Rs. 38,29,810 comprised of Rs. 32,09,810 paid for purchase of ground floor and balance Rs. 6,20,000 paid to contractor for undertaking construction work on first floor. The appellant had executed an agreement with the contractor (APB 60-61) dated 03.06.2009 for doing this work and obtained receipt evidencing payment of Rs. 6,20,000 on various dates (APB 62) The AO disallowed the claim on the ground that his ward inspector reported that no person of the name Lalit (Contractor) was residing on the address mentioned in the Agreement and further the signatures of the contractor were different on Agreement and the receipt issued. Such view was upheld by the ld. CIT (A) also. Both of them also stated that the appellant also could not produce t....
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....Charges 2,09,810 Paid to Contractor 6,20,000 -------------- Taxable LTCG NIL Ground No. 2 : That the ld. CIT (A) erred in law in not appreciating the judgement of the Hon`ble Supreme Court rendered in the case of CIT v/s B.C. Srinivasa Shetty (128 ITR 294) in right perspective. Not prerssed Ground No. 4 : Residual Ground Not Pressed. Your honour is sincerely requested to consider the submissions favourably and allow the appeal." 6. As it is evident that the ld. AR of the assessee not pressed ground no. 2 & 4. Thus, the ground no. 1 & 3 both were related to the income offered under the head capital gain. The ld. AR for both these grounds in addition to the written argument submitted as above, further submitted that the father of the assessee in 1974-75 was in possession of the land without any title. Even though the father of the assessee or the assessee is not legal owner of the property assessee and his other legal heirs offered the capital gain which is not disputed by the revenue. 6.1 As regards the ground no. 1 the ld. AR of the assessee stated that the ....
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....atively, the ld. AR of the assessee submitted that as there was legal case against the assessee. With the help of the buyer, they have reached to a compromise agreement and has paid Rs. 70,00,000/-. The ld. AR of the assessee submitted that let the revenue enhance the actual sale consideration by that amount as the payment made to settle the dispute is supported by the evidence and the payment made to buy the peace in that litigation be considered as cost of improvement and said cost be considered as cost of title on the said disputed property and necessary deduction as cost of assets sold on which the capital gain charged is also required to be given. 7. The ld. DR is heard who has relied on the findings of the lower authorities and repeated the same. He has pressed that the payment of Rs. 70,00,000/- not made by the assessee and in that case how the claim of that payment be adjusted while working out the capital gain and for that matter he relied on the detailed finding of the ld. CIT(A) where in a detailed finding is given stating the reasons as to why the claim of the assessee cannot be considered while working out the capital gains. The relevant finding of the ld. CIT(A) on....
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.... the ld. CIT(A) for corrected claim of cost of acquisition/cost of improvement "7.3 I have carefully perused the order of the AO, the remand report and the submissions of the AR and do not concur with the submissions of the AR because first of all the submissions of the AR are not factually correct and contrary to the evidence filed by him. The AR of the appellant submitted that an out of Court Compromise Settlement between M/s Jai Mahal Hotels Pvt. Ltd. and M/s Sukh Shanti Estates Pvt. Ltd. was effected whereby the latter paid Rs. 70,00,000/- to the former which implied that the appellant was not having a title in the land. Thus the appellant had sold only the possession of the land as he did not have any title in this land. On perusal of the details on record it is seen that this argument is factually wrong because the appellant and his brother and mother had acquired the title of the land by way of lease deed as per the records of the JDA vide its order dated 28/06/2008. That is why they too were signatories of the Settlement -Document. On the face of it, the entire argument is absurd because first of all unauthorized possession of somebody else's property ....
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....f applicable legal position and decisions relied upon. The bench noted that as the appeal of the assessee was earlier decided on technical ground and based on the Miscellaneous application of the revenue the same was recalled to be decided on merits. On merits assessee has two grievance one is deduction of cost of improvement for a sum of Rs. 6,20,000 paid to contractor and benefit of improvement of cost of Rs. 70,00,000/- against the money paid to cure the defect in the tile and to settle the case filed in the civil courts. The bench noted that the property sold by the assessee is sold for which the father of the assessee is holding the possession since 1974-75 and the same is sold at a consideration 1,20,00,000/-. Subsequently, the valuation for stamp duty purpose first computed at Rs. 5,76,54,492/- and finally vide order dated 15- 06-2009 decided at Rs. 1,94,19,827/-. The revenue is replacing the stamp valuation against the actual consideration received by the assessee. As against this replacement assessee is asking for deduction of cost of improvement paid for a sum of Rs. 70,00,000/- to clear the defect in the title. As regards the disallowance of Rs. 6,20,000/- the only reaso....
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....A) were not verified by the ld. AO nor the finding is appearing in the order of the ld. CIT(A) that the ld. AO has commented on these documents. The assessee was not given an opportunity to refuted these allegations so made. Before us also except the findings of the ld. CIT(A) there is no comment on the documents and its veracity of these documents and merely based on surmised and conjecture the claim which is supported by documents and the source of the payment made is not disbelieved the claim of the assessee cannot be disbelieved on the reason that as on the date of inspector visit during the pendency of the assessment at the given address the person not found. The reasons canvassed cannot be a base to disbelieve the claim which is supported by the various evidence placed on record. In the light of these observations, we are of the view that the claim of the assessee for an amount of Rs. 6,20,000/- cannot be disbelieved and thus, we hold that the revenue has erred in not allowing the claim of the assessee and therefore, we direct the ld. AO to allow the claim of the assessee to the extent of the share of the assessee in this payment. In the light of these observations, we allow ....
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....and not the assessee. The assessee has no right to claim any escalation in his cost of acquisition consequent to this agreement." From the above it is clear that the ld. AO is not disputing the payment that the same is made by the buyer to settle the dispute and is related to same property. He has not disputed the settlement made by the parties in dispute and has also not disbelieve the proof of the payment made. The ld. CIT(A) in his order taken a view that the title of the property was not disputed based on the sales deed made by the assessee and his family, the ld. CIT(A) also taken a view that since there is inability of the seller of the property the same has been paid by the buyer and therefore, the benefit of the same cannot be given to the assessee and these dispute are subsequent to the sale and therefore it will not affect the computation of capital gain. Thus, based on these facts placed before us so far lower authority has not disputed that there was a settlement of dispute which was before the competent court and the dispute was related to this property where in the assessee was also one of the parties to the disputes. So, once the revenue is substituting the sale p....
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....ider than the expression "for transfer". Any amount, the payment of which is absolutely necessary to affect the transfer will be an expenditure covered under section 48(1)(i)[ Gopee Nath Paul & Sons Vs. DCIT 278 ITR 240(Cal)] the finding of the high court in this regard is reiterated here in below; 4. It appears from the materials on record that there was a suit between the Allahabad Bank and Gobindo Sheet Metal. In the said suit the Allahabad Bank claimed certain amount to the extent of Rs. 25,00,000 appx. on account of Gobindo Sheet Metal's liability towards the loan obtained from the Allahabad Bank which was sought to be recovered together with a declaration of hypothecation of certain movable goods including stock-in-trade. At the same time, there was another suit in which an arbitration agreement was sought to be filed on account of dispute including the dispute involved in respect of the dissolution of the two firms, Gopee Nath Paul & Sons and Gobindo Sheet Metal Works & Foundry between the partners of the respective two firms i.e.: the parties who were common. In the latter suit, there was a compromise in which both the firms stood dissolved from the date agreed in ....
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.... 5. Section 48(1), as it stood in 1992-93, while providing for computation of capital gains permitted in clause (i) deduction of the "expenditure incurred wholly and exclusively in connection with such transfer". The expression 'in connection with such transfer' is wider than the expression 'for the transfer'. Any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by clause (i) of section 48(1). In other words, if without removing any encumbrance, sale or transfer could not be effected, the amount paid for removing that encumbrance will fall under clause (i). 5.1 From the facts as disclosed above, it appears that the amount was received out of the sale of assets of both the firms under orders of this Court subject to meeting of the liability of the Allahabad Bank since confirmed only upon prior payment. Inasmuch as, unless this liability was met, the transferee could not derive any title. In other words, the sale consideration receivable by the assessee was less the liability of the Allahabad Bank. Thus, meeting this liability of one of the firms, when the entire assets were being sold, was an absolute necessity to ....
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....deductible in computation of capital gains. However, the discharge of mortgage created by the assessee after he acquired the property would not be deductible. 6.1 On the other hand, the decision cited by Mr. Som in D.D. Chittaranjan v. CIT [1992] 193 ITR 2383 (Mad.) is distinguishable on facts, inasmuch as in this case, the amount of the sale proceeds was paid to a third party with whom there was certain dispute between that third party and the wife of the assessee in respect of a different property of which the wife was the absolute owner and as such the amount paid to meet the liability of the wife in respect of another property could not be held to be an expenditure incurred for the purpose of transfer of the assessee's own property different from the property of his wife. On fact, it was found that there was no connection of this expenditure with the transfer. 6.2 The decision in S.R.V. Press & Publication (P.) Ltd.'s case (supra) cited by Mr. Som is also distinguishable and would have no manner of application in the present case in view of the fact that the amount was spent in that case after the receipt of the consideration by the liquidator to discharge the....
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....ment made in relation the property if at the first instance be considered as additional consideration and at the same the payment of the said amount to settle the property dispute be considered as the payment which is absolutely necessary to affect the transfer made by the assessee and shall be considered as expenditure to which is covered by the provision of section 48 and the judicial decision as cited above. In terms of these observations the ground no. 3 raised by the assessee is allowed. In the result, appeal of the assessee is partly allowed. Order pronounced in the open Court on 08/02/2023. ============= Document 1 A) "यह à¤à¥€ तय पाया गया था कि उकà¥à¤¤ à¤à¥‚खणà¥à¤¡ का जयपà¥à¤° विकास पà¥à¤°à¤¾à¤§à¤¿à¤•à¤°à¤£ दà¥à¤µà¤¾à¤°à¤¾ पटà¥à¤Ÿà¤¾ जारी होने के बाद विकà¥à¤°à¤¯ पतà¥à¤° निषà¥....
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