TaxTMI 
TaxTMI 
2023 (4) TMI 467
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....he department had filed SLP in that case which was dismissed without discussing the issue on merit as the tax effect involved in the said case was below Rs. 1 Crore. 2. Whether on the facts and circumstances of the case and in law, the LA CIT(A) has erred in allowing the following expenses incurred by the assessee on transfer of his 15% share in the property on the ground that the assessee had incurred these expenses wholly and exclusively for the transfer of his property whereas no documentary evidences has been provided by the assessee during the course of assessment proceedings i) Brokerage Rs 42,36,500/- (ii) Solicitor's fee Rs. 50,00,000/- (iii) Amounts paid to Occupier Rs. 10,00,000/- 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing payment of Rs 20 lakhs made to the tenant, Shri Stefano Funari, for early termination of Leave and Licence, even though the assessee failed to furnish the Leave and Licence agreement and also failed prove that the payment made to Mr. Funari was wholly and exclusively for the purpose of transfer of immovable property during the course of assessment....
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....d his Last Will and Testament dated 19th May, 1997 and Codicil dated 12th April, 1999 where under he bequeathed his 30% undivided right, title and interest in the said property to his wife, Mrs. Joan Fali Mehta absolutely. The said Will and Codicil were probated by the High Court at Bombay under T & I. J. Petition No.96 of 2007, as a consequence of which the said Mrs. Joan Fali Mehta became entitled to the said 30% undivided right, title and interest of the said Dr. Fali S. Mehta in the said property subject to the occupation of interest of the said Dr. Fali S. Mehta in the said property subject to the occupation of the tenants. 7. The said Mrs. Joan Fali Mehta died on 9th March, 2008 leaving behind her Last Will and Testament dated 31st August, 2007 where under she bequeathed her entire estate to her two sons, namely, Dr. Sorab (Sohrab) Fali Mehta and Dr. Rustom Fali Mehta. The Will of Mrs. Joan Fali Mehta contained a provision that the executor, namely, Mr. Cyrus Soli Nallaseth should sell the said 30% undivided right, title and interest in the said property and divide the sale proceeds equally between her two sons. 8. In compliance of the aforesaid direction in....
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....on in December 2015, while computing capital gain for A.Y.2016-17, because the property was transferred to him vide agreement dated 08/07/2002 for nil consideration? The assessee replied to the said query vide letter dated dated 25/06/2018 alongwith all supporting documents before the ld. AO. The ld. AO agreed with the assessee that the cost of acquisition should be the cost in the hands of the previous owner which in the case of the assessee is cost of acquisition in the hands of Mr. Kaikhoshru Byramji Mehta as on 01/04/1981 i.e. Rs.33,82,900/-.The ld.AO however, did not agree with the plea of the assessee that assessee is entitled for indexation benefit from 01/04/1981. The main plea of the ld. AO is that the mother of the assessee died on 09/03/2008 and therefore, the assessee became entitled to share in the property through the will of the mother and hence, the assessee can be allowed indexation only from F.Y.2007-08 and not from F.Y.1981-82. The ld. AO relied on the Circular No.636 issued by CBDT in this regard. The ld. CIT(A) however, agreed that the plea of the assessee by following the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Manjula J Shah r....
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....sked to furnish the justification for the aforesaid claim of expenses. The assessee vide letter dated 25/06/2018 submitted the receipts for brokerage, solicitor's fees, Chartered Accountant's fees, Architect's fees and receipts of the servants and occupier to whom the consideration was paid for vacating the premises. The ld. AO on verification of the same observed that assessee had paid brokerage of Rs.42,36,500/- to Mr. Hirji N Nagarwalla; amount paid to Mulla & Mulla Craigie Blunt and Caroe of Rs.50,00,000/- towards solicitor fees; Rs.1,00,000/- paid to Chartered Accountant S.S.Chokshi & Co. 4.2. The ld. AO observed that all the three parties were doing the same work for the assessee i.e. mainly arranging meeting with buyer and seller through Shri Markand Gandhi and negotiation of price. In addition to this, the Chartered Accountant was giving advice regarding tax deduction in respect of tax due to the assessee after the transfer of the property and Mulla & Mulla was attending some other work such as will and probate related work and leave and licence work, which are not exclusively incurred for the purpose of transfer of the property. Similarly, payments made to servants amou....
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....operty and accordingly, allowable as deduction. Aggrieved by these three reliefs granted by the ld. CIT(A), the Revenue is in appeal before us. 4.4. We find that the ld. AO had granted deduction of Rs.37,00,000/- on an adhoc basis @2% towards all expenses incurred on transfer. The dispute before us is only with regard to allowability of brokerage, solicitor fees and amount paid to tenant for vacating the premises. Hence, the deduction allowed by the ld. AO in the sum of Rs.37,00,000/- could be apportioned in the following manner:- A Total expenses allowed by the ld. AO 37,00,000 B Actual expenses incurred by the assessee on account of aforesaid three items (Rs.42,36,500 + Rs.50,00,000 + Rs.10,00,000) 1,02,36,500 C Actual expenses of brokerage 42,36,500 D Actual expenses of solicitor fee 50,00,000 E Amount paid to tenant for vacating premises 10,00,000 Amounts allowed by the ld. AO: On Account of Brokerage A /B x C 37,00,000 / 1,02,36,500 x 42,36,500 15,31,290 On Account of Solici....
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....ellers (c) Arranging peaceful vacation of the licensees occupying the apartments belonging to the sellers (d) Assisting with the removal of the occupant of the servant quarters staying in the premises. 4.5. The said confirmation also states that Mr. Hirji N Nagarwalla have attended over a dozen meetings on behalf of the sellers with the purchasers attorney Mr. Markand Gandhi and Mr. Hormaz Dyar Vakil (Attorney of the sellers) to fine tune the sale deed and other documents required to be executed by the sellers. In view of the above, we have no hesitation to hold that the brokerage amount of Rs.42,36,500/- paid by the assessee to Mr. Hiraj N Nagarwalla would be allowable in full as the deduction while computing capital gains of the assessee as against the sum of Rs.15,31,290/- allowed by the ld. AO towards brokerage on transfer of the subject mentioned property. 4.6. With regard to payment of Rs.50,00,000/- paid to M/s. Mulla and Mulla Craigie Blunt and Caroe, Advocates and Solicitors, the ld.AR stated that the same was paid to look after the legal aspects of the transaction of transfer of the subject mentioned property. In support of this argument, the ld. A....
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.... Mr. Markand Gandhi, Solicitor for Dr. Keiki Mehta on 26th June 2012 when Dr Keiki Mehta and his wife Mrs. Zenobia Mehta were also present alongwith Mr Cyrus (f) Drafting and finalizing the Leave and License Agreement between Mr. Sorab Fali Mehta and Dr Rustom Fali Mehta as Licensors and Mr. Richard Robert McConkey as Licensee in respect of the flat on the 2nd Floor and for that purpose attending on your brokers from time to time till finalization (g) Drafting and finalizing the Leave and License Agreement between Mr Sorab Fali Mehta and Dr. Rustom Fali Mehta as Licensors and Ms Anne Dubourg as Licensee in connection with the 3 floor premises at Sea Side and for that purpose attending on your brokers from time to time till finalization (h) Our Mr. H.SR. Vakil attending the office of Mr. Markand Gandhi on 15th November 2012 to further negotiate and discuss further with Dr. Keiki Mehta and reporting to you thereafter (i) Addressing a letter dated 29th November 2012 to M/s Markand Gandhi & Co. informing them that since we had not heard from them, it could now be reasonably presumed ....
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....n your behalf. (r) Perusing the files pertaining to the bills for the arrears of property taxes from 2010 to 2013 and advising you thereon. (s) Drafting the Deed of Transfer from Mr Cyrus S Nallaseth as executor to Mr Sorab Fali Mehta and Dr. Rustom Fali Mehta as beneficiaries. (t) Attending several meetings with Mr. Markand Gandhi of M/s Markand Gandhi & Co., Dr Keiki R Mehta, Mr Cyrus Nallaseth and Mr Hirji Nagarwalla and perusing and finalizing several drafts pertaining to the sale of your share and having the Public Notice, Release Deed, Power of Attorney and all other related documents for the transfer of your share (u) Attending on your behalf with Mr Hirji Nagarwalla, carrying on correspondence with your Licensee Mr. Stefano Funari and taking the necessary steps for terminating the Leave and License Agreement prematurely and taking possession and charge of the Third Floor premises on your behalf on 8th December 2015. (v) Attending to over 900 emails as well as telephone calls, conference calls on Sundays, holidays and outside office hours and atte....