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2016 (9) TMI 805 - AT - Income TaxEntitlement for deduction of the amounts paid by assessee to their brothers for getting the premises vacated while computing the capital gains on sale of house-property - Held that:- Keeping in mind social circumstances and the relationship of the brothers. What was their settlement while residing together? What was feeling of elder brother towards their younger brother, when they displaced them from a property where they were residing for last more than 24 years ? Had the controversy been appreciated in a mechanical manner, and if both the brothers, who were residing in the house refused to vacate the house, then, what would be the situation before these assessees. They have to file a suit for possession that might be decided against, and young brother ejected from the premises, but that would consume time in our judicial process of at least more than ten to fifteen years. The prospective buyers may not be available in such circumstances. Shri Laxmanbhai K. Chokshi as well as Shri Jagdishbhai K. Chokshi were candid in their statement that they were residing in these houses along with their brothers. Shri Laxmanbhai K. Chokshi, though had not been paying any rent, but he was paying electricity bills. I am of the view that the payments were made for improvement of title of the property and they are entitled to claim deduction of cost of payment. Therefore, allow solitary ground of appeal raised in the case of Shri Lallubhai Keshavlal Chokshi, HUF and direct the AO to grant him deduction of ₹ 31 lakhs for computing the long term capital gain. Similarly, allow ground nos.1 and 2 in the case of Shri Nanubhai Keshavlal Chokshi, HUF and direct the AO to allow deduction of ₹ 21 lakhs while computing the long term capital gain. Additional expenditure for improvement of property - Held that:- The assessee has purchased property at 11, Shaligram Bungalow-1, Thaltej, Ahmedabad for a sum of ₹ 46,25,000/-. He further incurred an expenditure of ₹ 6.75 lakhs, and accordingly claimed deduction under section 54 of the Income Tax Act. The ld.AO has disallowed the claim of the assessee with regard to the expenditure of ₹ 6.75 lakhs. A perusal of the paragraph 3.00 and 3.2 of the CIT(A)’s order, it would reveal that the ld.CIT(A) has allowed the claim but wrongly mentioned the amount of ₹ 2,88,370/-. To our mind, it is an apparent error committed at the end of the ld.CIT(A). Otherwise, in the assessment order as well as in all other details, the expenditure incurred by the assessee at ₹ 6.75 lakhs has been mentioned. Accordingly, allow this ground of appeal, and direct the AO to grant deduction of ₹ 6.75 lakhs from the sale proceedings while computing long term capital gain as cost of improvement. Indexed cost of acquisition - Action of the ld.AO for taking at ₹ 18,21,000/- as against the value of ₹ 19,79,160/- adopted by the assessee as on 1.4.1981 - Held that:- the assessee has an area of 910.50 sq.meters. The ld. Registered valuer has estimated the total value at ₹ 36.42 lakhs. It represents to the area of 1821.00 sq.meters. Similarly, there was a built-up area of 316.32 sq.meters. He applied the rate of 1000/- and valued at ₹ 3,16,320/-. The total value has been shown at ₹ 39,58,320/-. The assessee has half share and the value has been shown at ₹ 19,79,160/- . Against this valuation report, all other correspondences, i.e. confirmation etc. from valuer is totally irrelevant at the end of the AO, because the valuer was never cross-examined as to how he can change his report unilaterally. The ld.Revenue authority has made reference to all irrelevant details for scaling down the valuation of the property as on 1.4.1981. I direct the AO to take value of the property at ₹ 19,79,160/-, and thereafter, compute the long term capital gain in the hands of the assessee.
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