Whether Nazarana paid to State Govt would be cost of acquisition?

Late Shri Saifulla Abubakar Inamdar Legal Heir Vs ITO (ITAT Pune)

 Firstly, it is relevant to mention that the assessee did not take up the issue of Inami land before the AO. It was for the first time that the assessee raised this issue before the ld. CIT(A) contending that in the absence of any cost of acquisition incurred by his forefathers in obtaining the land in Inam, the machinery provisions for computing the capital gains failed. In support of the said contention, the assessee placed before the ld. CIT(A) some documents asserting Inam Patrak containing the entry of impugned land which was in torn condition and not legible. The ld. CIT(A) rejected the assessee’s contention on the ground that the same was not legible. The second view canvassed by the assessee that there was no cost of acquisition in view of such property being received as Inam, the ld. CIT(A) observed that payment of Nazarana to the Govt. of Maharashtra was a pre­condition to receive a marketable title and for transfer of such land, such payment of Nazarana would constitute the cost of acquisition. The ld. AR submitted that there was no such provision in the relevant Statute providing for payment of Nazarana as a pre­condition for receiving Inam property. A prayer was made that the ld. CIT(A) ought to have examined the assessee’s claim of Inami land by directing the enquiry to the concerned officials. Considering the entirety of the facts and circumstances of the instant case, I am of the considered opinion that it would be in the fitness of things, if the impugned orders are set aside and the matter is restored to the file of AO. I order accordingly and direct the AO to decide the issue afresh after conducting proper enquiries about the assessee’s claim of having received the land in question by his forefathers as Inam and further about the Nil cost of acquisition claim raised by the assessee. Needless to say, reasonable opportunity of hearing will be afforded to the assessee. 5. In the result, all the appeals are allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT PUNE

These three appeals by different but connected assessees arise out of separate orders passed by the ld. CIT(A) in November, 2016 in relation to the assessment year 2009-10. Since common issues are raised in these appeals, I am, therefore, proceeding to dispose them off by this consolidated order for the sake of convenience.

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