TMI Blog2018 (11) TMI 868X X X X Extracts X X X X X X X X Extracts X X X X ..... ivities only. But since the trust refused to accept any property other than in the fringe locality of Kolkata and due to heavy pressure applied by the said trust on the assessee to locate a property in Kolkata for pursuing its charitable objects, the assessee was forced to sell the flat at Gurgoan and utilize the proceeds thereon for purchasing a property at Rajarhat, Newtown in the name of the trust for a higher amount due to huge rise in real estate market and due to effluxion of time. But it cannot be brushed aside that the assessee was having the said flat at Gurgoan together with an attached encumbrance of amounts drawn by him from the said trust which had to be compensated in future either in cash or in kind for the benefit of the trust. Hence there was an attached encumbrance in the form of a contractual obligation to be fulfilled by the assessee to the trust. As decided in COMMISSIONER OF INCOME TAX, KOL-XI VERSUS SATYABRATA DEY [2014 (5) TMI 781 - CALCUTTA HIGH COURT] unless the assessee had settled the dispute, the sale transaction could not have materialised and the sale consideration had to be reduced by the amount of compensation paid – the expression used in secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hereby, using his influence, he committed them a constructed area of approximately 4000 sq.feet in and around Kolkata with an approximate value of ₹ 25,00,000/- which was at a highly discounted price. The agreement between the assessee and the said trust was entered on 11.9.2002 and subsequently an advance of ₹ 23,90,000/- was taken from the said trust by the assessee for purchase of 4000 sq.ft area to create a Musafirkhana to house the poor travellers. The The assessee showed several places in different areas in and around Kolkata to the trustees of the said trust but none of them were upto the expectations of the trust. The agreement entered into by the assessee with the said trust on 11.9.2002 clearly imposed a condition that in case if the assessee is not able to arrange the required property for the trust, the advance drawn by the assessee should have to be refunded to the trust together with cumulative interest of 2% per month. The said trust followed up with the assessee on various dates starting from 25.3.2003 onwards for recovery of the dues from the assessee. The assessee also wrote a letter dated 10.7.2004 to the said trust stating that since he had no projec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ized to buy a suitable property in the fringe locality of Kolkata to meet the requirements of the trust and sought for six months time to complete the entire process. The assessee finally sold his Gurgoan flat vide sale agreement dated 4.1.2007 to a third party having super area of 3540 sq.ft along with one car parking space for ₹ 2,33,64,000/-. The rights held by the assessee pursuant to agreement of sale entered on 15.9.2005 into with Green Max Estate Pvt Ltd got transferred to the new buyer of the flat pursuant to the new agreement of sale entered on 4.1.2007. As per the payment receipt issued by the assesee to Dr Rajendra Singh , the assessee had received the following payments on sale of property at Gurgoan :- 22.1.07 24,00,000 Chq No. 102353 drawn on Citibank 7.3.07 30,00,000 Chq No. 102364 drawn on Citibank 30.3.07 1,50,00,000 DD No. 413740 drawn on Citibank 16.4.07 23,89,000 Chq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 9,49,475/- due to erroneous consideration of figures in the computation of capital gains. Aggrieved, the assessee is in appeal before us. 5. We have heard the rival submissions and perused the materials available on record. The facts stated hereinabove remain undisputed and hence the same are not reiterated for the sake of brevity. It is not in dispute that the properties at Rajarhat, New Town were purchased from M/s Sunny Rock Estates and Developer P Ltd in the name of Al Habib Welfare Charitable Trust by the assessee using his own funds. This was done by him as compensation for using the funds of the trust for his personal purposes in the past. From the various correspondences exchanged between the assessee and the said trust as detailed supra, we find that the assessee at the first instance had purchased a flat at Gurgoan for the purpose of usage of the trust activities only. But since the trust refused to accept any property other than in the fringe locality of Kolkata and due to heavy pressure applied by the said trust on the assessee to locate a property in Kolkata for pursuing its charitable objects, the assessee was forced to sell the flat at Gurgoan and utiliz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the learned Tribunal. It is this order of learned Tribunal which is under challenge. Therefore, the question for consideration is whether the sum of ₹ 72 lakhs paid by the assessee pursuant to the award passed in favour of Onkar Management Private Limited can be treated as expenditure incurred with regard to the transfer under Section 48(i) of the Income Tax Act. Section 48in- so-far-as the same is relevant or material for our purpose, reads as follows: 48. The 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, namely:- ( i) expenditure incurred wholly and exclusively in connection with such transfer; ( ii) the cost of acquisition of the asset and the cost of any improvement thereto; Mr. Dubey, learned Advocate appearing for the Revenue, submitted that the sum of ₹ 72 lakhs could not be deducted from out of the capital gains made by the assessee nor the sum of ₹ 72 lakhs could be taken into account for the purpose of computation of the capital gains. He, in suppo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he meantime, the assessee entered into another agreement of sale in 1967 in respect of the same property with one C and C gave an assurance to R that on the completion of the sale, they would deduct a sum of ₹ 35,504/- from the total consideration and pay it to R. The assessee claimed that the sum of ₹ 35,504/- from the total consideration and pay it to R. The assessee claimed that thesum of ₹ 35,504/- should be allowed as deduction for the purpose of computing her income from capital gains. The Bombay High Court held that unless the assessee had settled the dispute with R, the sale transaction with C could not have materialised and the sale consideration had to be reduced by the amount of compensation paid to R. We are in agreement with the view expressed by the Bombay High Court that the expression used insection 48 of the Act, viz., 'expenditure incurred wholly and exclusively in connection with such transfer' has wider connotation than the expression, 'for the transfer'. We are of the view that but for the payment of ₹ 2 lakhs, the transfer would not have taken place and the payment has necessarily to be made for the transfer of the hotel ..... X X X X Extracts X X X X X X X X Extracts X X X X
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