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2016 (7) TMI 1003 - AT - Income TaxComputation of long term capital gain on sale of inherited property - Held that:- Un-paid and outstanding liabilities such as outstanding municipal taxes , transfer, registration and mutation charges and costs with respect to the said property ‘Roshan Villa’ in favour of the assessee and co-owners , with which the property was saddled with on the date of sale on 16-01-2009, and which the buyer agreed to assume and discharge the same as his liabilities after acquisition of property ‘Roshan Villa’ needs to be added to the sale consideration value of ₹ 25,00,000/- to arrive at full value of consideration to determine long term capital gains arising from the sale of the property. We would like to give an example to explain the same say for example , one property is worth ₹ 100 lacs and there is a loan outstanding of ₹ 40 lacs against the said property. The buyer agrees to pay ₹ 60 lacs to the seller for acquiring the said property and agrees to discharge loan against the said property directly after acquisition . Then, the full value of the consideration of the property will be ₹ 100 lacs being ₹ 60 lacs paid by the buyer to the seller and ₹ 40 lacs will be added being loan outstanding against the said property which the buyer agreed to discharge directly to the lender and not ₹ 60 lacs which the buyer agrees to pay to the seller as sale consideration as ₹ 40 lacs is an additional burden with which property was saddled with at the time of sale which the buyer has agreed to discharge on behalf of the seller and is infact part and parcel of full value of consideration as contemplated u/s 48 of the Act. Addition as such and in the manner made by the AO cannot be sustained under law and matter needs to be restored to the file of the AO for computing full value of consideration in the manner as outlined by us and then granting relief on account of deductions of indexed cost of acquisition of land and building/structure which in the instant case is not disputed by the AO as per assessee’s valuer report and such other deductions/reliefs which the assessee is legally entitled to under the provisions of the Act on merits such as Section 54EC of the Act as claimed by the assessee , which shall be granted by the AO on merits after examination of the relevant claims/relief’s. Thus, we set aside the orders of the learned CIT(A) and restore the issue back to the file of the AO for de-novo determination of the issue on merits in the manner as outlined by us as above. Needless to say proper and adequate opportunity of being heard shall be provided to the assessee in accordance with principles of natural justice in accordance with law. The assessee shall be allowed to produce relevant evidences , material and explanation in support of his contentions in his defense which shall be admitted by the AO and adjudicated on merits. This disposes of all the grounds raised by the assessee on solitary issue of computation of long term capital gains on sale of inherited property ‘Roshan Villa’. - Decided in favour of assessee for statistical purposes.
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