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2014 (9) TMI 419 - AT - Income TaxIndexed cost of improvement disallowed – Computation of LTCG on sale of property – Held that:- In order to ascertain as to whether at the time of sale or transfer of the said property, any improvement to the property was in existence, when the property was purchased by the assessee on 25.11.1981 the property was agricultural land with no structure as admitted - according to the sale deed the property continued to be agricultural land, but however notably find no mention of any bungalow / building being or any details of improvements made thereto as claimed - this was made in regard to complaints and FIR’s lodged with the Police Department by the father of the assessee and the valuation is stated to have been made based on documents and information furnished to the valuers by the owner - assessee has not brought on record any evidence to establish that he had in fact incurred any expenditure on improvement as claimed - the question of allowing any deduction u/s 48(ii) of the Act for indexed cost of improvement as claimed by the assessee is not warranted – the order of the CIT(A) is upheld – Decided against assessee. Restriction of expenses on sale of property – Held that:- The assessee claimed to have incurred amounts aggregating to ₹ 40 lakhs in connection with the sale / transfer of the property - CIT(A) rightly disallowed the payment of ₹ 5 lakhs paid to Sri M.S. Narayan, only on the ground that there was no rationale in making the payment on 12.3.2008, almost six months after the sale of the asset - the 4 payments of ₹ 5 lakhs each made by the assessee to Sri M.S. Narayan, Advocate aggregating to ₹ 20 lakhs are incurred in connection with the sale / transfer of the property and are to be allowed as a deduction u/s 48 of the Act while computing the LTCG on sale of the property - these persons were neither a party to the civil suit nor were connected with the original owners of the land and that merely by making payments by cheque and producing receipts for the same are not sufficient to establish that these expenses were incurred wholly and exclusively for the purpose of transfer of the property - the assessee has failed to adduce any evidence to establish that payments to the 4 persons @ ₹ 5 lakhs each were incurred wholly and exclusively in connection with the transfer of the said property – the order of the CIT(A) is upheld – Decided against assessee. Professional charges paid to CA disallowed – Held that:- CIT(A) rightly was of the view that the expense on payments to chartered accountants is not allowable as a deduction u/s 48 of the Act while computing LTCG as it is clear that the expense is not incurred in connection with the cost of improvement or in connection with the transfer of the said property – Decided against assessee. Claim of exemption on investment made in NHAI Bonds u/s 54EC – Held that:- Following the decision in Aspi Ginwala Versus Assistant Commissioner of Income-tax, Circle-5, Baroda [2012 (4) TMI 195 - ITAT AHMEDABAD] - the assessee is entitled to total deduction u/s 54EC of the Act spread over a period of two financial years @ ₹ 50 lakhs each on investments made in specified instruments within a period of six months from the date of sale of the property. The assessee was unable to invest in Bonds within a period of six months as the issue was not open and did so the moment the same was made open to public and thus the allotment was made after the statutory period of six months – relying upon Ram Agarwal Vs. JCIT [2001 (9) TMI 233 - ITAT BOMBAY-G] - the assessee therein was prevented by sufficient cause from investing within the statutorily permitted period of six months and allowed the assessee exemption under section 54EC of the Act in respect of the said investment - the assessee has made payment for the investment in NHAI which was encashed on 9.6.2008 well within the statutorily permitted period of six months from the date of sale of the property - the date of payment is to be reckoned for calculating the six month period and since here the date of payment/encashment being well within the period of six months, the assessee is entitled to exemption u/s 54EC of the Act even on the second investment of ₹ 50 lakhs made in Bonds issued by NHAI – Decided in favour of assessee.
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