TMI Blog1980 (7) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... n 25th March, 1975. So the ITO asked the assessee to state why the market rate prevailing on or about 25th March, 1975 should not be taken for determining the value of the sale consideration, under s. 52(2) of the IT Act, 1961 (hereinafter referred to as the Act). The assessee offered his explanation, stating therein that the property in question was sold to Chander Punjabi in terms of agreement of sale dt. 21st April, 1964; that the agreement of sale dt. 21st April, 1964 was between A.B. Devare and Shri Chander Punjabi along with Shri P.T. Dasaje; that the Solicitors of Shri P.T. Dasaje, M/s Khona and Suryakant had, by their letter dt. 20th Feb., 1974, informed Shri N.D. Gujral, Advocate for Dr. A.B. Devare, stating that Shri P.T. Dasaje had given up his right under the said contract in favour of Shri Chander Punjabi who would execute the conveyance deed; that the conveyance deed of the property executed on 25th April, 1975 was actually done as per agreement dt. 21st April, 1964; that the price viz., Rs. 50 per sq. yd. mentioned in the said agreement dt. 21st April, 1964 was the market price prevailing in that area; that the time lag of nearly ten years between the agreement of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies as mentioned in the agreement dt. 21st April, 1964 was Rs. 50 per sq. yd. whereas in the conveyance dt. 25th March, 1975 the rate of sale per sq. yd. works out to Rs. 66. If the agreement dt. 21st April, 1964 was binding on the vendor and the purchaser would not have agreed to the deviation from the agreed price of Rs. 50 per sq. yds. This fact clearly proves that the vendor has rescinded the agreement. (v) As per s. 52(2), it is the fair market value of the capital asset on the date of the transfer to be taken as the full value of consideration for such capital asset for the purposes of capital gain. So, he referred the matter to the Asstt. Valuation Officer, Unit VIII, under s. 58(2) of the Act, for determination of the market value of the property in dispute, as on 31st March, 1975, as he was of the view that the fair market value of the said property sold by the assessee on 25th March, 1975, exceeded the value of the sale price shown by the assessee, by more than 15 per cent. The aforesaid Valuation Officer, in his valuation report, estimated the fair market value of the property at Rs. 2,74,200. So the ITO asked the assessee to show cause that why the fair market val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or the purpose of calculating capital gains, at Rs. 1,95,000 in place of Rs. 2,74,200. 5. Shri S.N. Inamdar, ld. counsel for the assessee contends, that the CIT(A) is not justified in withdrawing the deductions allowed by the ITO, referred to above. He relied upon the order of the ITO, and the paper book containing 4 pages. 6. On other hand, Shri Makhija, ld. Deptl. Rep. contends that the withdrawal of the aforesaid deductions by the CIT(A) is justified, while the CIT(A) was not justified in taking the sale price of the property, for the purposes of calculating capital gains, at Rs. 1,95,000 in place of Rs. 2,74,200. 7. We have heard the rival contentions, and gone through the record before us. The first issue, for our determination, is that what should be the sale-price of the property, for the purposes of capital gains. The ITO applied the provisions of s. 52(2) of the Act, on the reasons stated above. In appeal, the CIT(A) has concluded that the ITO was not correct in adopting the value of the property, as on 25th March, 1975, for the purposes of working out the capital gains; as the property was sold, vide agreement dt. 21st April, 1964; though the land was finally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation towards payment of fees to the solicitors. The amount of payment of fees, referred to above, is not in dispute, but the contention of the Deptl. Rep. is that the aforesaid expenditure was not wholly and exclusively incurred in connection with the transfer. We do not see any force in the contention of the Deptl. Rep., because, according to the agreement, the assessee had to transfer the property in dispute to the vendee Shri Chander Punjabi, free from all encumbrances, and to meet it, the assessee had to face litigation, as stated above, and, as such, had to pay fees to the solicitor, named N.D. Gujral, for defending the suit filed by Suraj Prasad Mishra and Thakurcharan Bacha Upadhya for clearing title deeds of property. Therefore, we hold that the payment of fees of Rs. 17,000 to Shri N.D. Gujral is an allowable deduction as the same had been incurred by the assessee for the transfer of good title to the vendor. Hence, we allow it, holding therein that the ITO was justified in his action, while the CIT(A) was unjustified in undoing it. Hence, we set aside the order of the CIT(A) on the issue, while we confirm the order of the ITO. Similarly, we hold that the assessee is e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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