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TMI Blog2023 (12) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... n 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2012-13. 2. As per the grounds of appeal, the assessee has challenged the disallowance of Rs. 2,12,29,422/-. 3. Briefly stated, the assessee-company is engaged in the business of real estate. The assessee filed return of income at Rs. 2,19,01,910/- for Assessment Year 2012-13 in question. The return was subjected to scrutiny assessment. In the return of income, the assessee-company inter alia declared capital gains of Rs. 2,19,01,906/- towards sale of land parcel. While computing the Long Term Capital Gain arising on sale of such land parcel admeasuring 284 Marle, the assessee also claimed deduction of Rs. 2,12,29,422/- (actual cost Rs. 1,92,28,177/- without indexation) being in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red towards removal of encumbrances amounting to Rs. 1,77,28,177/- and indexation thereon for the purposes of determination of tax liability towards capital gain. The assessee contends that; (i) the Assessing Officer disallowed the deduction claimed at Rs. 2,12,29,422/- being index cost of improvement incurred on account of removal of the encumbrances on the land parcel sold. (ii) The CIT(A) in the first appeal has mechanically accepted the action of the Assessing Officer and granted partial relief to the extent of Rs. 15 lakh admitted by the corresponding recipient encumbrances. (iii) The CIT(A) failed to take holistic view of the factual matrix and completely ignored the bank statement showing the withdrawals of cash by these partie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Assessment Year 2012-13 in question, the assessee sold certain portion of the land, i.e., 284 Marle out of the land area admeasuring 299 Marle for a total consideration of Rs. 6,21,25,000/-. While computing the LTCG arose on sale of such agricultural land admeasuring to 284 Marle, the assessee inter alia claimed deduction of pro rata cost incurred towards removal of encumbrances which worked out to Rs. 1,92,28,177/- indexed at Rs. 2,12,29,422/-. The Revenue Authorities have questioned the bona fides of the cost of removal of encumbrances in the absence of any direct evidence except for Rs. 15 lakh paid to one Shri Rajender Kumar. 7.2 On perusal of bank statement, it is noticed that between the period October 2010 to March 2011 certain w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of compensation. The legal remedy for removal of the encroachments, at times, is quite slow and it takes many years through such course. The land owners are thus compelled to pay compensation by force of circumstances to obtain clean possession for sale/use. One cannot put blinkers on such unstated but prevalent eco-system. Thus, where at least one party has accepted the factum of receipt of compensation and payments to other parties are also reflected in the bank statement of the assessee company to be the beneficiary of payments, the plea of the assessee requires a benign consideration. Coupled with this, we note that the payments have been made and accounted for in the Financial Year preceding to the Financial Year 2011-12 in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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