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Nanubhai Keshavlal Chokshi HUF AND Lallubhai Keshavlal Chokshi, HUF Versus ITO, Ward-6 (2) , Ahmedabad.

2016 (9) TMI 805 - ITAT AHMEDABAD

Entitlement for deduction of the amounts paid by assessee to their brothers for getting the premises vacated while computing the capital gains on sale of house-property - Held that:- Keeping in mind social circumstances and the relationship of the brothers. What was their settlement while residing together? What was feeling of elder brother towards their younger brother, when they displaced them from a property where they were residing for last more than 24 years ? Had the controversy been appre .....

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dishbhai K. Chokshi were candid in their statement 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 .....

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5 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 would reveal that the ld.CIT(A) has allowed the claim but wrongly mentioned the amount of ₹ 2,88,370/-. To our mind, it is an apparent error committed at the end of the ld.CIT(A). Otherwise, in the assessment order as well as in all other d .....

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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 tot .....

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CIAL MEMBER For The Assessee : Shri Parimal Singh, Parmar-AR For The Revenue : Shri Jagdish, CIT-DR. ORDER Present two appeals are directed at the instance of the assessee against the orders of the ld.CIT(A) dated 22.11.2011 passed on their respective appeals in the Asstt.Year 2008-09. Since one of the issues is involved in both the appeals is common, therefore, I heard them together and deem it appropriate to dispose of them by this common order. 2. Solitary grounds of appeal taken in ITA No.87 .....

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operty 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 cro .....

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: In the case of Nanubhai K. Chokshi, HUF "(i) Municipal tax bills submitted by you shows that you were the sole occupant of the property on which he is claiming that it was also occupied by the tenant; (ii) In the valuation report of the property dated 22-06-2007 which were done before sale of the said property, also states that assesse was the sole occupant of the property. (Sr.No.24 (1) of the valuation report); (iii) Shri Laxmanbhai K.Chokshi has stated in his statement recorded u/s. 13 .....

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right over the property on which the assesses claims that his brother was occupying as tenant." In the case of Lallubhai K. Chokshi, HUF (1) Municipal Tax Bills submitted by you shows that you were the sole occupant of the property on which he is claiming that it was also occupied by the tenant; (2) In the valuation report of the property dated 22.06.2007 which were done before sale of the said property, also states that assessee was the sole occupant of the property. (Sr. No.24 (1) of the .....

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roperty in any capacity. (5) As per the will of father of the assessee dated 12,06.1957, the different properties were distributed between the assessee and Shri 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 careful .....

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pital 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, provided ………… The question before me is whether the payment made by both the assessees to their bothers is to be conside .....

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rothers have confirmed receipt of money. They also filed affidavit to this effect. Their statement has also been recorded. They were residing in the house, but not making payment of any rent. On an analysis of the record, I find that the ld.Revenue authorities approach to the controversy in strictly mechanical way. Whereas in the present appeals, situation was required to be appreciated, keeping in mind social circumstances and the relationship of the brothers. What was their settlement while re .....

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ut that would consume time in our judicial process of at least more than ten to fifteen years. The prospective buyers may not be available in such circumstances. Shri Laxmanbhai K. Chokshi as well as Shri Jagdishbhai K. Chokshi were candid in their statement 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 .....

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allubhai 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/-, wher .....

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er, it would reveal that the ld.CIT(A) has allowed the claim but wrongly mentioned the amount of ₹ 2,88,370/-. To my mind, it is an apparent error committed at the end of the ld.CIT(A). Otherwise, in the assessment order as well as in all other details, the expenditure incurred by the assessee at ₹ 6.75 lakhs has been mentioned. Accordingly, I allow this ground of appeal, and direct the AO to grant deduction of ₹ 6.75 lakhs from the sale proceedings while computing long term ca .....

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l dated 22.6.2007. According to the assessee, he has half-share in the property and other half was with Shri Ashokbhai Keshavdas Chowkshi. While considering the case of Shri Ashokbhai Keshavdas Chowkshi and Shri Lallubhai Keshavlal Chokshi, HUF, it was considered by the AO that value of the land will be taken at ₹ 2,000/- per square meter and built-up is to be valued at ₹ 1,000/- per sq.meter. In the case of assessee, valuation for land was made separately, and value for the construc .....

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be taken at ₹ 18.21 lakhs plus half share of the constructed area comes to ₹ 1,58,160/-. This aspect was not considered by the AO. When this aspect was brought to the notice of the ld.CIT(A), then, the ld.CIT(A) has observed that the value of the land was ₹ 15.81 lakhs and value of the building was ₹ 2,32,150/-. If working of this annexure is believed, then, total value of the property will come at ₹ 18,91,50/-. In this way, the ld.CIT(A) has considered various asp .....

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