TMI Blog2016 (9) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the assessee are entitled for deduction of the amounts paid by them to their brothers for getting the premises vacated while computing the capital gains on sale of house-property. 3. Shri Nanubhai Keshavlal Chokshi, HUF has filed its return of income on 28.3.2009 declaring total income at ₹ 32,390/-. He has shown income from long term capital gain from sale of property and the income from other sources. The assessee has shown long term capital gain of sales proceeds of ₹ 2.07 crores from the sale of property. He has claimed deduction of ₹ 21.00 lakhs on the ground that this amount was paid to his brother, Shri Laxmanbhai K. Chokshi for vacating the house. Shri Lallubhai Keshavlal Chokshi, HUF has filed return of income on 28.3.2009 showing total income of ₹ 790/-. He has shown long term capital gain on sale proceeds of ₹ 1.71 crores and has claimed a deduction of ₹ 31.00 lakhs on account of payment to his younger brother, Shri Jagdishbhai K. Chokshi for vacating the house. The finding recorded by the AO in both the assessment orders is almost identical. Similarly, the ld.CIT(A) has passed almost verbatim orders. The ld.CIT(A) has noticed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Jagdishbhai K. Chokshi so that both of them should get equal amount of properties valuing ₹ 35,000/- each. That shows that the assessee has exclusive right over the property on which the assessee claims that his brother was occupying as tenant. 4. With the assistance of the ld.representatives, I have gone through the record carefully. There is not much dispute between the parties on the facts. The dispute is with regard to inference drawn from the evidence available on the record. Before embarking upon an inquiry on the nature of evidence produced by the assessees, and the reasons assigned by the AO for rejecting the explanation of the assessees, I would like to take note of section 48 of the Income Tax Act. This section contemplates mode of computation of capital gains. It provide that income chargeable under the head Capital Gains shall be computed by deducting from the full value of the consideration received or accruing, as a result of the transfer of the capital asset the following amounts, viz. (i) the expenditure incurred wholly and exclusively in connection with such transfer, and (ii) cost of acquisition of the asset and the cost of any improvement thereto, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. Similarly, I 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. 5. In the appeal of Shri Lallubhai Keshavlal Chokshi, HUF no other grounds were pressed by the ld.counsel for the assessee except charging of interest under section 234B which is consequential in nature. 6. In ITA No.86/Ahd/2012, the assessee has raised two more grounds of appeal. In this next ground of appeal, the assessee pleaded that the assessee had claimed additional expenditure for improvement of this property. This claim has been allowed to the assessee, but the ld.CIT(A) has allowed it at ₹ 2,88,370/-, whereas, the correct figure is of ₹ 6,75,000/-. 7. Brief facts of the case are 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re is believed, then, total value of the property will come at ₹ 18,91,50/-. In this way, the ld.CIT(A) has considered various aspects, but did not interfere in the working given by the ld.AO. 10. With the assistance of the ld.representatives, I have gone through the record carefully and perused the valuation report which is available at page no.66 of the paper book. The property in question is situated at F.P.No.80, T.P.S. No.20, 35/North Side, Sardar Patel Nagar Society, Ahmedabad. It comprised an area of 1821.00 sq.meters. There is a distribution deed dated 18.8.2006 between the assessee and Shri Ashokbhai Keshavdas Chowkshi. Thus, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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