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2017 (8) TMI 403 - AT - Income TaxDisallowance of the cost of acquisition/cost of improvement - amount paid to the sister in law of the appellant as per the decree of the court - Held that:- When the assessee was to step into the shoes of her vendor, Ajit Vohra for all intents and purposes she could not have acquired a better title than Ajit Vohra had, the cost of acquisition of the property in question is required to be taken accordingly. So, merely deciding the issue on the basis of recital in the sale deed that property in question is free from all encumbrances, is incorrect interpretation of the legal proposition. In these circumstances, we are of the considered view that the Assessing Officer/Commissioner of Income-tax (Appeals) have erred on facts and in law disallowing the claim of the assessee that the amount of ₹ 1,20,00,000 belonged to the sister-in-law of the assessee, namely, Sheetal Girdhar for the purpose of computing the long-term capital gain. Identical issue has already been decided in the case titled as ITO v. Taj Services P. Ltd. [2011 (9) TMI 1140 - ITAT MUMBAI] wherein it was decided that "where compensation paid to a party for surrendering its pre- existing rights in property in question was inextricably connected with transfer of property as one of the conditions for sale of such property, such compensation was deductible from the sale consideration." - Decided in favour of assessee Exemption under section 54 - investment from the sale proceeds of the property - joint ownership - Held that:- From the amended provision of section 54 which came into effect from April 1, 2015 held roll over relief under section 54(1) is available if the investment is made in "one residential house" situated in India and earlier the expression used was "a residential house". The amended provisions contained under section 54(1) of the Act have been interpreted in favour of the assessee in the case of CIT v. Khoobchand M. Makhija [2013 (12) TMI 1525 - KARNATAKA HIGH COURT ], Thus we are of the considered view that the assessee is entitled for exemption under section 54(1) of the Act qua two residential houses i.e. built up plot No. 59, Block-A, Sector-52, Noida, jointly in the name of Smt. Rama Vohra, Sh. Ajit Vohra and Sh. Punit Vohra of ₹ 86,70,991 and Flat No. 407, Tower-2, Sector-9, Vaishali Extn., Ghaziabad of ₹ 52,87,200. So, grounds determined in favour of the assessee. Exemption qua vacant residential plot purchased for the purpose of constructing a residential house - disallowance made on the ground that the assessee has failed to produce any evidence of his intention to construct a house on a plot of land - Held that:- In the given circumstances, when it is not in dispute that the assessee has invested the capital gain in a residential plot purchased for the purpose of constructing of a residential house but has not constructed the residential house, the decision rendered by co-ordinate Bench in the case of Prasad Nimmagadda (2013 (5) TMI 74 - ITAT Hyderabad ) is applicable to the facts of this case. So, the Assessing Officer is directed to allow the exemption claimed by the assessee for the year under assessment and the Assessing Officer is further directed to verify whether the assessee has offered the capital gain for taxation at the end of the period of three years from the date of transfer of the original assets and in case the assessee's claim found to be incorrect then the Assessing Officer is to bring the capital gain to tax in the said years. - Decided in favour of assessee.
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