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2022 (12) TMI 863 - AT - Income TaxLong term capital gain - allowable expenditure u/s. 48(i) for the purpose of computing the taxable component of long term capital gain - interest payment on security deposit towards clearance of encumbrance with Ramaniyam and payment of compensation to SAE & BJT for vacating the land and obtaining its peaceful possession for the purpose of completing the sale transaction - HELD THAT:- As conclusions flowing from the explanations and evidences furnished by the assessee in the present case are leading us to consider the doctrine of ‘preponderance of human probabilities’ and the ‘surrounding circumstances’ in respect of the claims made. Instead of adopting superficial approach, claim of the assessee is to be examined in the light of real life probabilities which have been so done by the ld. AO. In respect of impugned land on which computation of long term capital gain is the subject matter of this appeal, on one hand it has been said to be used under lease arrangement for the business operations of two concerns (SAE and BJT) wherein the co-owners including assessee have substantive holding/controlling interest and on the other hand the same land is said to be developed under a JDA with one party Ramanaiyam. The same land has been sold in the year under consideration giving rise to long term capital gains to the three co-owners who have attempted to minimize their taxability on the said gains by resorting to the two arrangements relating to the impugned land with SAE & BJT and Ramanaiyam, respectively. Claims by the assessee under the arrangements made tantamount to diversion of sale proceeds to which we do not ascribe our views favorably considering the facts and circumstances of the case as discussed above. Thus we set aside the order of ld. CIT(A) and uphold the disallowance made by the ld. AO in respect of claim of deduction made by the assessee towards payment of compensation to SAE and BJT and to Ramanaiyam towards interest for clearance of encumbrance.Appeal of the revenue is allowed.
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