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Commissioner of Income Tax, Ahmedabad-3 Versus Nischay Fab Pvt. Ltd.

2015 (4) TMI 10 - GUJARAT HIGH COURT

Computation of capital gain - Reduction of Cost of improvement - payment of compensation to tenant - AO treating the same as not an expense incurred in connection with the transfer of the capital asset in question but payments made with a motive to avoid taxes - Held that:- The provisions of sec.40A(2)(b) cannot be made applicable on a transaction claimed as deduction against capital gain.

Revenue did not produce any material to controvert the findings of fact recorded. Whether the tr .....

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nding of fact is perverse, as sought to be canvassed nor it can be said that any substantial question of law would arise, as sought to be canvassed on behalf of the Revenue. - Decided against revenue. - Tax Appeal No. 141 of 2015 - Dated:- 3-3-2015 - Jayant Patel And S. H. Vora,JJ. For the Appellant : Mr Nitin K Mehta, Adv. For the Respondent : None ORDER (Per : Honourable Mr. Justice Jayant Patel) 1. The Revenue has preferred the present appeal by raising the following question:- "Whether .....

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the transaction of improvement in the property by way of payment of compensation to the lessee was dubious and, therefore, he disallowed the amount of payment of compensation and made addition in the computation of tax to the extent of ₹ 57,20,000/-. In appeal, CIT(A) recorded the following findings of fact. The same at paragraph Nos.3.1.1 and 3.1.2 are as under:- "3.1.1. With regard to the payment of compensation to tenants, the facts that clearly emerge are (1) M/s.Gujarat Steels &a .....

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at the tenant had to bear inconvenience on account of shifting before the expiry of the lease period. (6) That the amount of compensation of ₹ 65,00,000/- has been paid by the appellant to the tenant on the basis of MOU between the appellant and the tenant. 3.1.2. The above amount cannot be said to be excessive in view of the fact that the tenant had to incur almost matching expenditure on construction, shifting and other incidentals. The provisions of sec.40A(2)(b) cannot be made applicab .....

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