Case Law Details
Lal Singh Naderia Vs ITO (ITAT Jaipur)
ITAT Jaipur held that amount paid towards settling the property dispute is absolutely necessary to affect the transfer and accordingly the same is allowed as expenditure covered by provision of section 48 of the Income Tax Act.
Facts- In spite of having no legal title on the property, the assessee had sold the property at distress value and the same was at Rs. 1,20,00,000/- where the share of the assessee was 40%. The stamp duty authority in the first instance valued that property at Rs. 5,76,54,492/- and thereafter, the same was reduced to Rs. 1,94,19,827/- by an order dated 15-06-2009. As per provision of section 50C of the Income Tax Act 1961, while computing the amount of capital gain chargeable to tax the AO had applied the revised stamp assessed value as actual consideration received and value of consideration had been substituted from Rs. 1,20,00,000/- to Rs. 1,94,19,827/.
Assessee contended before CIT(A) that expenditure in curing the title of the property be allowed.
Conclusion- Considering the wider scope of section 48 while computing the capital gain the payment made in relation the property if at the first instance be considered as additional consideration and at the same the payment of the said amount to settle the property dispute be considered as the payment which is absolutely necessary to affect the transfer made by the assessee and shall be considered as expenditure to which is covered by the provision of section 48.
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So what is the taxability of Rs 70,00,000 in hands of Jai mahal Palace. Please guide