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TMI Blog2023 (4) TMI 467X X X X Extracts X X X X X X X X Extracts X X X X ..... dismissed without discussing the issue on merit as the tax effect involved in the said case was below Rs. 1 Crore. 2. Whether on the facts and circumstances of the case and in law, the LA CIT(A) has erred in allowing the following expenses incurred by the assessee on transfer of his 15% share in the property on the ground that the assessee had incurred these expenses wholly and exclusively for the transfer of his property whereas no documentary evidences has been provided by the assessee during the course of assessment proceedings i) Brokerage Rs 42,36,500/- (ii) Solicitor's fee Rs. 50,00,000/- (iii) Amounts paid to Occupier Rs. 10,00,000/- 3 Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in allowing payment of Rs 20 lakhs made to the tenant, Shri Stefano Funari, for early termination of Leave and Licence, even though the assessee failed to furnish the Leave and Licence agreement and also failed prove that the payment made to Mr. Funari was wholly and exclusively for the purpose of transfer of immovable property during the course of assessment proceedings." 3. We have heard rival submissions and perused the materials available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... right, title and interest in the said property to his wife, Mrs. Joan Fali Mehta absolutely. The said Will and Codicil were probated by the High Court at Bombay under T & I. J. Petition No.96 of 2007, as a consequence of which the said Mrs. Joan Fali Mehta became entitled to the said 30% undivided right, title and interest of the said Dr. Fali S. Mehta in the said property subject to the occupation of interest of the said Dr. Fali S. Mehta in the said property subject to the occupation of the tenants. 7. The said Mrs. Joan Fali Mehta died on 9th March, 2008 leaving behind her Last Will and Testament dated 31st August, 2007 where under she bequeathed her entire estate to her two sons, namely, Dr. Sorab (Sohrab) Fali Mehta and Dr. Rustom Fali Mehta. The Will of Mrs. Joan Fali Mehta contained a provision that the executor, namely, Mr. Cyrus Soli Nallaseth should sell the said 30% undivided right, title and interest in the said property and divide the sale proceeds equally between her two sons. 8. In compliance of the aforesaid direction in the Will of Mrs. Joan Fali Mehta, Mr. Cyrus Soli Nallaseth executed the Deed of Release dated 30th December, 2015 wherein Mr. Cyrus Soli Nallas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngwith all supporting documents before the ld. AO. The ld. AO agreed with the assessee that the cost of acquisition should be the cost in the hands of the previous owner which in the case of the assessee is cost of acquisition in the hands of Mr. Kaikhoshru Byramji Mehta as on 01/04/1981 i.e. Rs.33,82,900/-.The ld.AO however, did not agree with the plea of the assessee that assessee is entitled for indexation benefit from 01/04/1981. The main plea of the ld. AO is that the mother of the assessee died on 09/03/2008 and therefore, the assessee became entitled to share in the property through the will of the mother and hence, the assessee can be allowed indexation only from F.Y.2007-08 and not from F.Y.1981-82. The ld. AO relied on the Circular No.636 issued by CBDT in this regard. The ld. CIT(A) however, agreed that the plea of the assessee by following the decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Manjula J Shah reported in 355 ITR 474. 3.4. We find that the issue in dispute is squarely covered by the decision of the Hon'ble Jurisdictional High Court referred to supra wherein the Hon'ble Jurisdictional High Court after due consideration of CBDT Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ating the premises. The ld. AO on verification of the same observed that assessee had paid brokerage of Rs.42,36,500/- to Mr. Hirji N Nagarwalla; amount paid to Mulla & Mulla Craigie Blunt and Caroe of Rs.50,00,000/- towards solicitor fees; Rs.1,00,000/- paid to Chartered Accountant S.S.Chokshi & Co. 4.2. The ld. AO observed that all the three parties were doing the same work for the assessee i.e. mainly arranging meeting with buyer and seller through Shri Markand Gandhi and negotiation of price. In addition to this, the Chartered Accountant was giving advice regarding tax deduction in respect of tax due to the assessee after the transfer of the property and Mulla & Mulla was attending some other work such as will and probate related work and leave and licence work, which are not exclusively incurred for the purpose of transfer of the property. Similarly, payments made to servants amounting to Rs.7,15,000/- was only for the arrears of salary payable to the said servant of the assessee which is not connected to with the transfer of the property and there was a tenant occupying the said property and that the tenant was merely compensated for vacating the premises and assessee's shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only with regard to allowability of brokerage, solicitor fees and amount paid to tenant for vacating the premises. Hence, the deduction allowed by the ld. AO in the sum of Rs.37,00,000/- could be apportioned in the following manner:- A Total expenses allowed by the ld. AO 37,00,000 B Actual expenses incurred by the assessee on account of aforesaid three items (Rs.42,36,500 + Rs.50,00,000 + Rs.10,00,000) 1,02,36,500 C Actual expenses of brokerage 42,36,500 D Actual expenses of solicitor fee 50,00,000 E Amount paid to tenant for vacating premises 10,00,000 Amounts allowed by the ld. AO: On Account of Brokerage A /B x C 37,00,000 / 1,02,36,500 x 42,36,500 15,31,290 On Account of Solicitor Fees A /B x D 37,00,000 / 1,02,36,500 x 50,00,000 18,07,258 On Account of amount paid to tenant for vacating premises A /B x E 37,00,000 / 1,02,36,500 x 10,00,000 3,61,452 Total 37,00,000 4.4. With regard to claim of deduction on account of brokerage expenses of Rs.42,36,500/- we find that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the sellers) to fine tune the sale deed and other documents required to be executed by the sellers. In view of the above, we have no hesitation to hold that the brokerage amount of Rs.42,36,500/- paid by the assessee to Mr. Hiraj N Nagarwalla would be allowable in full as the deduction while computing capital gains of the assessee as against the sum of Rs.15,31,290/- allowed by the ld. AO towards brokerage on transfer of the subject mentioned property. 4.6. With regard to payment of Rs.50,00,000/- paid to M/s. Mulla and Mulla Craigie Blunt and Caroe, Advocates and Solicitors, the ld.AR stated that the same was paid to look after the legal aspects of the transaction of transfer of the subject mentioned property. In support of this argument, the ld. AR placed reliance on the invoice raised by the said solicitor firm dated 31/12/2015 which are enclosed in pages 10-17 of the paper book filed before us. For the sake of convenience, the entire bill raised by the said solicitor firm is reproduced below:- Particulars Rs. Rs. (a) To our professional charges. Perusing the copy of the Probate dated 7th October 2008 of the last Will and Testament of late Mrs. Joan Mehta and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; (g) Drafting and finalizing the Leave and License Agreement between Mr Sorab Fali Mehta and Dr. Rustom Fali Mehta as Licensors and Ms Anne Dubourg as Licensee in connection with the 3 floor premises at Sea Side and for that purpose attending on your brokers from time to time till finalization (h) Our Mr. H.SR. Vakil attending the office of Mr. Markand Gandhi on 15th November 2012 to further negotiate and discuss further with Dr. Keiki Mehta and reporting to you thereafter (i) Addressing a letter dated 29th November 2012 to M/s Markand Gandhi & Co. informing them that since we had not heard from them, it could now be reasonably presumed that his client was not interested in going ahead and that you would be free to deal with the premises and your share in the market. (j) Perusing the letter dated 30th November 2012 from Mr. Markand Gandhi in reply thereto and reporting to you. (k) Perusing two notices both dated 5th June 2013 from the District Collector of Mumbai wherein it was inter alia stated that the Lease dated 22nd July 1940 had expired on 21 July 2006 and as per the Government's recent Policy date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice, Release Deed, Power of Attorney and all other related documents for the transfer of your share (u) Attending on your behalf with Mr Hirji Nagarwalla, carrying on correspondence with your Licensee Mr. Stefano Funari and taking the necessary steps for terminating the Leave and License Agreement prematurely and taking possession and charge of the Third Floor premises on your behalf on 8th December 2015. (v) Attending to over 900 emails as well as telephone calls, conference calls on Sundays, holidays and outside office hours and attending on you and conferring with you from time to time. (w) And generally advising you in the matter from time to time to bring the matter to a successful close on 30th December 2015. 1,00,00,000 4.7. From the perusal of the bill given by the Solicitor as reproduced supra, we find that items mentioned in (d), (e), (h), (i) ,(j), (p), (q), (t), (u) & (w) alone could be construed as expenses incurred in relation to the transfer of the subject mentioned property. Hence, the payment of Rs.50 lakhs paid by the assessee to the said solicitor is to be bifurcated towards items allowable in res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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