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.
Any amount, the payment of which is absolutely necessary to affect the transfer will be an expenditure covered under section 48(1)(i).
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal is filed by the assessee aggrieved from the order of the Commissioner of Income Tax (Appeal)-1, Jaipur [ here in after referred as Ld. CIT(A) ] for the assessment year 2009-10 dated 10.12.2012 which in turn arises from the order passed by the ITO, Ward-2(3), Jaipur passed under Section 143(3) of the Income tax Act, 1961 (in short ‘the Act’) dated 19.12.2011. In this appeal the assessee has taken the following grounds of appeal:
“1. That the ld. CIT(A) erred on facts in sustaining the disallowance of relief claimed by the appellant u/s 54 of the Income Tax Act. 1961 for a sum of Rs. 4,11,790 by disbelieving on a payment of Rs. 6,20,000/-made to the contractor for acquisition/development of house property, on superfluous grounds.
2. That the ld. CIT(A) erred in law in not appreciating the judgment of the Hon’ble Supreme Court rendered in the case of CIT vs. B.C.Srinivasa Shetty (128 ITR 294) in right perspective.
3. That the ld. CIT (A) erred on facts in not allowing the benefit of a sum of Rs. 70,00,000/- paid for acquiring title in the land sold resulting into charging of capital gains at very high figure.
4. The appellant craves leave to add, amend or alter any of the grounds of appeal before hearing.”
2. The co-ordinate bench has disposed off this appeal vide order dated 30-01-2014 read with corrigendum dated 31-01-2014 where in the coordinate bench has decided the appeal of the assessee on ground no. 2. Thus, the other ground becomes academic therefore. On 24-11-2016 revenue filed a miscellaneous application (MA) in ITA no. 59/JP/2013 praying for recalling of the order contending that the Hon’ble Punjab & Haryana High Court has decided the issue while considering the judgement of the Hon’ble Supreme Court in the case of B. C. Srinivasa Setty. The co-ordinate bench vide order dated 29-06-2017 recalled the order dated 30-01-2014 to be decided on merits in the light of judgment relied upon by the revenue.
3. The fact as culled out from the records is that the assessee filed the return of income for the assessment year 2009-10 on 04.08.2009 declaring total income of Rs. 1,45,630/-. The assessee has shown the Long Term Capital Gain on sale of residential property at Rs. 36,07,507/-. The assessee has shown the long term capital gain on sale of residential property at Rs. 36,07,507/- which has been computed as under:
“Land and Building at Ajmer Road, Jaipur on 08-07-2008
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