Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (12) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (12) TMI 568 - AT - Income TaxComputation of capital gain - expenses claimed by the assessee for acquiring property and for sale of the property - Held that:- The assessee had declared the cost of acquisition of the property at ₹ 98,07,120/- in the case of 328 sq.yds and ₹ 87,12,470/- in the case of 369 sq.yds. Since the assessee had already declared the cost of acquisition in the assessment year 2007-08 and furnished the relevant balance sheet along with return of income, we do not see any reason to disturb the cost of acquisition declared by the assessee in the return of income. The fact that the cost of acquisition declared by the assessee was not disputed by the assessing officer. Having declared the cost of acquisition by the assessee in the year of acquisition and filed the relevant balance sheet it is not correct to revisit the issue again in the year under consideration. Therefore, we set aside the order of the Ld.CIT(A) and direct the assessing officer to allow the cost of acquisition of properties as declared in the balance sheets and the return of income relating to the year in which it was acquired. This ground of the appeal of the assessee is allowed. Payment of commission for sale of the property - Held that:- As observed by the CIT(A) that from the bank account of the assessee with the ING Vysya Bank account no.716010022199 shows that the assessee had received an amount of ₹ 5 lakhs from D. Srinivas on 8.1.2007, which indicates that impugned payment may not be towards commission. During the appeal hearing, the Ld. A.R. did not bring any evidence to show that the payment in fact was made for the commission. However the assessee has furnished the addresses and the AO should have verified the genuineness of payment of commission. When the addresses were given without making enquiries taking adverse view is unjustifiable. Therefore we are of the considered opinion that the issue should go back to the file of the assessing officer to make the necessary enquiries with regard to the payment of commission and decide the issue afresh on merits. Accordingly we set aside the orders of lower authorities and remit the, matter back to the file of the AO for fresh consideration. Expenditure incurred towards the stamp duty expenses - Held that:- Stamp duty and registration charges forms part of the cost of acquisition of the property, which is required to be borne by the buyer. As per the provisions of section 48 of the Act, the expenditure incurred wholly and exclusively in connection with the transfer of property is allowed as deduction. Since the stamp duty and registration cost is not considered as expenses in relation to transfer in the hands of the transferor, the same is not allowable. Further, as rightly observed by the Ld. CIT(A), the arrangement of incurring stamp duty and registration charges by the vendor effectively reduces the value of the consideration received by the vendor and also violates the mandate specified in the section 50C of the Act. In such case, while determining capital gains, the value as per the stamp valuation authorities has to be adopted for the purpose of computing the capital gains. Payment of interest - whether transaction was not a loan transaction ? - Held that:- the assessee has not taken any loan for acquiring the property and the compensation was not in the nature of interest. - From the agreement it is observed that there was no clause of payment of any compensation. However, the assessee stated that the he had to pay ₹ 6 lakhs as compensation because the sale transaction did not go through. When the assessee has received the entire amount what are the reasons for not concluding the sale transaction was not explained by the assessee. When there was no fault with the assessee in sale of the property, there is no valid reason and for payment of compensation. No agreement for cancellation was furnished by the assessee. In any case the compensation was not relatable to acquiring the property and it was with regard to the sale of agricultural land. The same cannot be linked with the sale of the impugned property. Further, the asset is capital asset and taxed under the head Capital Gains but not business income. Under the head Capital gains only direct expenses relatable to transfer of property are allowed as deduction. Therefore, the cancellation expenses should not be held to be incurred either for acquiring the property or for transfer of property and accordingly, we do not find any infirmity in the order of the Ld. CIT(A) and the same is upheld. This ground of appeal raised by the assessee is dismissed.
|