TMI Blog2017 (6) TMI 250X X X X Extracts X X X X X X X X Extracts X X X X ..... nsideration was declared by Mr. Karim in his return of income and sale consideration from Assignment right and declared as capital gains. The same was accepted by revenue. As far as revenue is concerned, the whole sale consideration was declared and charged for capital gains. There cannot be any revenue loss. Moreover, the same income cannot be charged to tax twice. Once the revenue accept the income offered by Mr. Karim as income under the head ‘income from capital gains’, the same has to be allowed as deduction in the hands of assessee. Accordingly, ground raised by the assessee is allowed. - ITA No. 998/Hyd/2012 - - - Dated:- 2-6-2017 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER, AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Assessee : Shri C.S. Subramanyam For The Revenue : Smt. U. Minichandran ORDER PER S. RIFAUR RAHMAN, A.M.: This is an appeal of the assessee directed against the order of the learned Commissioner of Income-tax(A) - IV, Hyderabad, dated 22-03-2012 for AY 2007-08. 2. On perusal of record, we find that there was a delay of 5 days in filing this appeal. In this connection, assessee filed a petition for condonation of the said del ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Alladin Investments and Properties as consenting party at the time of sale of the property. Copies of documents/reciepts were also submitted. A copy of the assignment deed dtd. 31/03/2003, executed between M/s Voltas Ltd. and M/s. Alladin Investments and Properties was also submitted along with the confirmation letter regarding ₹ 1,50,00,000/- towards assessee s share of cost. 3.2 The Assessing Officer noted that except for filing the above mentioned letter, assignment deed and confirmation letter, the assessee did not furnish any bank accounts so as to verify, the genuineness of payments claimed as made. Any cash flow statement or balance sheet was also not filed. On an examination of the assignment deed, however, he noted that there was no mention of the assessee's name or any reference to her therein. He observed that the assessee had not explained as to under what circumstances the amounts were paid to M/s. Alladin Investments and Properties. The confirmation from M/s. Alladin Investments and Properties only stated that they had received ₹ 1,50,00,000/- towards their share as confirming party, as they were instrumental in obtaining assignment deed for the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the title, such payments should be regarded as cost of acquisition u/s. 48. He averred that this is applicable for a property under sale which is ancestral in nature and devolved on the assessee upon inheritance. Reliance in this regard was placed on the decision in the case of V S M R Jagadish Chandra Vs. CIT (227 ITR 240) 5.1 The representative of the assessee submitted that the expenditure incurred for vacation of property and payment made to tenant is in the nature of payment only and exclusively in connection with the sale and therefore, deductible u/s 48(i). For this proposition he cited the decisions in the cases of CIT Vs. Shakuntla Rajeswar (160 ITR 840) (Del.) and Nawzar Chenoy Vs. CIT (234 ITR 98) (A.P). The representative contended that the case law relied upon by the Assessing Officer i.e. 159 ITR 797, is out of context in the facts of the present assessee, as the said case refer to compulsory acquisition of property by the Government and contemplated on the basis of one transfer alone by the assessee therein. 5.2. The representative of the assessee further contended that M/s Alladin Investments and Properties was the affirming party to both sale deeds and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fact that the sum of ₹ 1,50,00,000/- was assessed in the hands of Sri Karim Nawas Alladin also does not make the claim of the assessee a valid claim as the purpose and necessity of incurring such expenditure has not been established at any stage. Accordingly, it is held that the assessee is not liable to any deduction even on this account. Upholding the action of the Assessing Officer in disallowing the claim of deductions of' ₹ 79,36,350/- and ₹ 1,50,00,000/- in computing the Long Term capital gains, ground Nos. 2 and 4 are decided against the assessee. 7. As regards the application of provisions of section 50C of the Act, vide the questionnaire dtd. 8.11.2010, the assessee had been informed that she had admitted the value of consideration at ₹ 4 crores only in the return of income, whereas in view of the provisions of sec. 50C, the market value of the property i.e. ₹ 6,11,90,100/-, should have been adopted for computing the capital gains. In response to the said query, the assessee vide submissions dtd. 23.11.2010 submitted that the property at Sanathnagar was under long lease with M/s. Voltas Ltd. and when the same was reverted back to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 50C of the Act and the consequent adoption of the sale consideration at ₹ 6,11,90,1001/- was upheld. 10. Aggrieved by the order of the CIT(A), the assessee is in appeal before us raising the following grounds of appeal: 1 . The Commissioner ought to have allowed the expenditure incurred by the assessee for perfecting title and taking possession of the property as cost of acquisition. 2. The Commissioner ought to have allowed consideration paid to confirming party as part of cost of acquisition. 3. The Commissioner erred in applying section 5OC by adopting the market value as against the sale consideration received. 4. Any other ground at time of hearing. 10.1 The assessee filed a petition seeking admission of additional ground of appeal, which is as under: 1. The levy of capital gains in the hands of the assessee is not correct in law for the reason that the registered documents executed by the executants, which included the assessee, were not deeds of sale but only agreements of sale cum irrevocable General Power of Attorney and accordingly the said documents did not result in transfer of the immovable property which is the subject mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of immovable property mentioned therein, and the action of the Commissioner of Income Tax (Appeals) in upholding the action of the Assessing Officer are not in accordance with law. The assessee did not raise a ground of appeal on this count in the grounds of appeal filed before the Hon'ble Income Tax Appellate Tribunal for the reason that the assessee's tax advisor omitted to raise the appropriate ground due to inadvertence. The assessee submits that the additional ground of appeal now sought to be filed has a relevant bearing on the very chargeability of Capital Gain. 4. In the above circumstances, the assessee craves leave of the Hon'ble ITAT to file the aforementioned additional ground of appeal in appeal No.655/Hyd/2014 pending before the Hon'ble ITAT. The assessee submits that the additional ground of appeal may kindly be admitted and decided upon while adjudicating the assessee's appeal. 11. We admit the said additional ground of appeal as it is relevant on the chargeability of capital gain. 12. As regards ground No. 1 relating to denial of assessee s claim for allowance of expenditure incurred for perfecting title and taking possession ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mbrance over the said property by giving the same property on lease of 99 years to M/s. Voltas Limited. In order to get the lease hold rights released from M/s. Voltas Limited and obtain the possession of the property, the amount in question was paid by the assessee as compensation and the same was claimed as deduction being the cost of acquisition for the purpose of computing capital gain. The A.O. however disallowed the said deduction claimed by the assessee and the Ld. CIT(A) confirmed the said disallowance made by the A.O. by relying on the decision of Hon ble Bombay High Court in the case of CIT vs. R.M. Merchant Hussein and Fancy Corporation Limited (supra). 9. In support of assessee s claim on this issue, the Ld. Counsel for the assessee has relied on two decisions of the Hon ble Supreme Court in the case of VSMR Jagadishchandran (Decd) by L.Rs vs. CIT (supra) and R.M. Arunachalam vs. CIT (supra). In the case of VSMR Jagdishchandran (Decd) by L.Rs. vs. CIT (supra), it was held by the Hon ble Supreme Court that where mortgage was created by previous owner during his life time and the same was subsisting on the date of his death, the successor obtained only the mortgagor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claimed by the assessee under section 48 on account of payment made to M/s. Voltas Limited for release of lease hold rights created by her ancestors/predecessors. Ground No.1 of assessee s appeal is accordingly allowed. 14.1 As the issue raised before us is materially similar to the said case, respectfully following the decision of the coordinate bench on this issue, we allow the ground raised by the assessee. 15. As regards ground No. 2 relating to denial of assessee's claim for allowance of consideration of ₹ 1,50,00,000 paid to confirming party as cost of acquisition, the ld. AR submitted that the assessee paid a sum of ₹ 1,50,00,000/- to M/s. Alladin Investments Properties ( a concern belonging to Sri Karim Nawaz Alladin) who were instrumental in obtaining assignment deed for the said property from M/s.Voltas Ltd., This amount was paid by cheque No.425079 dated 05-032007. The recipient confirmed the receipt vide confirmation dated 11-11-2010 filed before the Assessing Officer (please see page 30 of the paper book). He submitted that the A.O denied the claim stating that the assessee did not produce his account and held that the payment was not proved ..... X X X X Extracts X X X X X X X X Extracts X X X X
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