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The ACIT, Circle 5 (1) , Hyderabad Versus Mr. C. Narendranath

2014 (11) TMI 1161 - ITAT HYDERABAD

Disallowances in respect of capital gains - allowable expenditure u/s 48 - legal right in the compensation amount - Diversion By Overriding Title - Held that:- It is an obligation created as part of the agreement and there is no dispute that the amounts are collected from the buyers and paid to the developer. Since, these amounts are included in the sale consideration, assessee can certainly claim the amount in order to arrive at full value of consideration. Since, there is contractual obligatio .....

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5,000 per acre. Subsequent to that, the land was acquired by Government and only an amount of ₹ 2,20,220 was received by assessee. As assessee has entered into agreement, assessee paid an amount of ₹ 1,05,220 immediately on receipt of compensation to the agreement holder and offered the balance amount of ₹ 1,20,000 as capital gain. Considering the facts of the case and the fact that there is a legal right in the compensation amount, Hon’ble High Court held that this is a case o .....

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2. The issue contested by Revenue is about the deduction directed by Ld. CIT(A) of ₹ 31,32,000, out of full value of consideration. The Revenue has raised following two grounds. 2. The CIT(A) ought to have upheld the disallowances in respect of capital gains considering that the A.O. could not have been expected to allow deductors beyond the purview of sec.48 of the I.T. Act. 3. The CIT(A) failed to appreciate the legal constraints and thereby allowed the assessee s appeal on capital gains .....

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x. ₹ 5500 Rs.1,32,000 Assessing Officer was of the opinion that the above amounts are not allowable as an expenditure under section 48 of the Act and disallowed the same referring to the said section. 3. Before the Ld. CIT(A), assessee submitted that as per the agreement entered between the assessee-land owner and M/s. SMR Builders P. Ltd., assessee is required to pay corpus fund, infrastructure fund and difference on account of teak wood used in the flats falling to his share. The builder .....

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te from M/s. SMR Builders P. ltd., that the amounts were received by way of cheque. Considering the above, Ld. CIT(A) allowed assessee s contention by stating as under : 4.3. I have carefully considered the submissions of the appellant and the facts of the case. After verification of documents submitted by the appellant, it is clear that an obligation is created between the builder and the land owner i.e., the appellant to collect the charges from buyers and remit the same to the builder. In the .....

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ellip;……………………………. ………………………………….. Agreed cost of infrastructure per flat ₹ 1,00,000 Corpus fund per flat ₹ 25,000/- Extra cost for teak wood ₹ 6,000/- per flat 4.4. As per the obligation, the appellant had fulfilled the reimbursement of infrastructure of ₹ 24,00,000/-, corpus fund of ₹ 6,00,000/- and .....

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R Vinay City and the payment was also received by them through cheque no.327885 dated 06.04.2007. 4.5. In the light of the above evidences submitted by the appellant and also on the facts of the case, this addition of ₹ 31,32,000/- should not have been made by the Assessing Officer as the same were not actually received by the appellant. Hence, it cannot the income appellant. Accordingly, the Assessing Officer is directed to deduct the above amount from full value of consideration while ca .....

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