Case Law Details
Sujit Majumdar Vs ITO (ITAT Allahabad)
The issue before us is within narrow compass and concerns itself with the allowability of deduction u/s 48 towards cost of improvement with respect to amount paid by the assessee towards his share towards conversion of aforesaid property from leasehold to freehold.
We have also carefully gone through the Freehold deed dated 13.03.2012, which is placed in paper book, wherein freehold rights with respect to this property granted by State of U.P. The entire description of the property and leaseholder / inheritor, from the date of grant of lease rights of the NazuJ land in 1935 till the date of execution of freehold deed are found mentioned in the deed. Thus, the freehold conversion of the property was done by State of U.P. in favour of the existing leaseholders and not in favour of the buyers. This also strengthen the view that sale consideration included freehold conversion charges, stamp duty etc. and as agreed upon the funding was done by sellers but the payments were made out of the sale consideration found mentioned in the agreement to sell. Thus, the assessee has rightly claimed the deduction onaccount of his share of freehold conversion charges, stamp duty etc. for converting the said property into freehold, being improvement in the property or otherwise as paid for removing impediment in the transfer/sale of the property. Thus, provisions of Section 48 of the 1961 Act were rightly applied with by the assessee, while computing income from long term capital gains chargeable to tax.
We allow the appeal of the assessee to that extent by holding that the assessee will be allowed as cost of improvement of the amount paid towards his share for conversion of aforesaid leasehold land to freehold, by following our own order dated 28th January, 2021 in the case of the brother of the assessee namely Mr. Sanjay Majumdar, in ITA No. 68/Alld/2018 for ay: 2012-13. Thus, we allow ground of appeal no. 1 and 2 raised by assessee in memo of appeal filed with tribunal. We order accordingly.
FULL TEXT OF THE ORDER OF ITAT ALLAHABAD
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