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TMI Blog2018 (11) TMI 199X X X X Extracts X X X X X X X X Extracts X X X X ..... to as 'FVC') of the entire property under section 50C of the Income tax Act, 1961(herein after referred to as 'Act') in proportion to actual sale price received by the assessee (50:241) as the deemed FVC in respect of share of property sold while computing the long term capital gains for the relevant year. 1(b) That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO without appreciating the fact that the amount of INR 58,97,247/- being the proportionate deemed FVC under section 50C of the Act of actual consideration amounting to INR 41,00,000/- paid by the buyer of the property directly to the confirming parties would be assessed in their individual assessments and hence the same needs to be excluded in computing the deemed FVC in respect of the share of property sold. 1(c). That on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the AO without appreciating the fact that the confirming parties were the deemed owner of the property sold under section 27(iiib) read with section 269UA(f) of the Act as they were in possession of property un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed above was done by neither the assessee nor his ancestors. So, the assessee's claim of value of building as cost of acquisition in computation of long Term Capital Gains cannot be admitted. 5. The ld AO noted that the purchaser, M/s Penion Developers (P) Ltd, paid directly to confirming parties (Successors of the leaseholder Khirode Prasanna Tarafder since deceased ), Shri Biplab Tarafder & others Rs. 41,00,000/- separately for 'forever discharge and acquit and surrender their lease hold right'. It is to be noted that the leaseholders were occupying the property unauthorizedly and suit number 487/1981 was filed against them before the Learned 1st Civil Judge at Sealdah, which was not decided. But the assessee while computing the Long Term Capital Gains deducted Rs. 41,00,000/- from the Stamp Duty Valuation of Rs. 3,46,64,309/-. 6. During the assessment proceedings, the assessee was asked to state under which provision of the Income Tax Act, l96l, the payment of Rs. 41,00,000/- had been deducted from the total sales consideration receipt. In reply, the assessee submitted a letter on 14.03.2013, but ld AO noted that assessee could not through any light regarding his c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be applied to the value of consideration received by him. The same principle is applicable to the sum of Rs. 41 lacs received by the unauthorized occupants in the instant case. The amount had been paid to them only to obtain vacant possession of the property and was not relatable to any share in the asset transferred in the form of land and/or buildings. Therefore, the ld. CT(A) rejected the assessee's prayer for reducing the proportionate amount of Rs. 58,92,933/- from the total deemed value of consideration. For the same reasons, the additional grounds seeking directions for computation of capital gain in the hands of the assessee by taking only the proportionate deemed value of consideration in his hands, the applicable fraction being 50/241 in view of his share of Rs. 50,00,000/- out of total consideration of Rs. 2.41 crores inclusive of the amount of Rs. 41 lacs paid to the unauthorized occupants was also rejected by the ld. CIT(A). 9. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before us. 10. The ld. Counsel for the assessee submitted before us that the sale deed was entered into between three parties. The first party being the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the assessee had not incurred the expenditure for payment to unauthorized occupant on the incorrect notion that the assessee had claimed the payment made to unauthorized occupant as deduction under section 48(1) of the Act. Before the Ld CIT(A), the assessee, while computing the deemed value of sale consideration for the purpose of calculating the capital gains arising from the sale of the property claimed, the proportionate stamp duty value of the consideration received by the unauthorized occupants to be deducted from the total stamp duty value of the property and thus requested the Ld. CIT(A) to compute capital gains tax on the proportionate share of the capital gains based on proportionate stamp duty value for each of the co-owners. The Ld CIT(A) rejected the said contention of the assessee, on the alleged ground that since the provisions of section 50C of the Act is not applicable to the unauthorized occupants, the aforesaid deduction of the proportionate share of the stamp duty value of the unauthorized occupants cannot be taken into consideration. Further, the Ld CIT(A) also confirmed the action of the AO in not giving the deduction of Rs. 41 Lac in arriving at the deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupants' being in proportion to the consideration received by them (i.e total deemed value of consideration x 41/241) and as such the same should be deducted from the total deemed value of consideration in order to compute the LTCG in the hands of the assessee. 14. On the other hand, the ld. DR for the Revenue has primarily reiterated the stand taken by the Assessing Officer which we have already noted in our earlier para and is not being repeated for the sake of brevity. 15. We have given a careful consideration to the rival submissions and perused the materials available on record, we note that assessee had sold his ancestral property which was jointly owned by the assessee and other family members. The said property was sold by virtue of a tripartite agreement entered into by the assessee, three co-owners of the property and the persons who had pre-occupied the property, known as, 'unauthorised occupants' illegally with the developer. We note that the unauthorized occupants were occupying the property by virtue of a lease deed entered into by their predecessor with the ancestors of the assessee on 27.08.1960 for a period of 20 years. However, the said parties continued to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cond allegation of the AO is that the vendor has no role in determining the quantum of payment to the unauthorized occupants (confirming parties).We note that since it was a tripartite agreement entered into among the assessee, purchaser and the unauthorized occupants(confirming parties), the quantum of the compensation was agreed upon jointly. The compensation was agreed upon by the parties and the same was directly paid by the purchaser to the unauthorized occupants (confirming parties). The assessing officer has failed to bring any cogent evidence on record to show that amount of Rs. 41,00,000/- has not been paid by purchaser to these unauthorized occupants. We do not find any force in the stand taken by the assessing officer as well as ld CIT(A), therefore, we delete the addition made by the assessing officer to the tune of Rs. 21,35,057/-. We do not find any infirmity in the computation of long term capital gain made by the assessee which is noted by us in para No.15 of this order ( as above), hence we accept the long term capital gain computed by the assessee to the tune of Rs. 1,82,577/-, and we direct the assessing officer to consider Rs. 1,82,577/- as long term capital ga ..... X X X X Extracts X X X X X X X X Extracts X X X X
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