Deduction U/s 54F Allowed – Deposit in CGAS Not Mandatory if Investment Made Within Extended Time

Zafar Iqbal Vs DCIT (ITAT Kolkata)

The ITAT Kolkata partly allowed the assessee’s appeal in a capital gains dispute arising from sale of land and claim of exemption u/s 54F. The AO and CIT(A) had denied exemption on the ground that unutilised capital gains were not deposited in the Capital Gain Account Scheme before the due date u/s 139(1) and also alleged ownership of more than one residential house. The Tribunal held that where the assessee had invested the capital gains in a new residential property within the extended time available u/s 139(4), exemption u/s 54F cannot be denied merely for non-deposit in CGAS, following decisions such as Ramchandra Rao and Venkata Dilip Kumar. It also accepted that the assessee owned only one residential property and directed the AO to allow deduction u/s 54F.

On other issues, expenses incurred for settlement of land disputes and eviction-related payments were restored to the AO for verification as potential cost of transfer/improvement, and addition relating to brought-forward deposits was also remanded for factual verification. Accordingly, the appeal was partly allowed for statistical purposes.

FULL TEXT OF THE ORDER OF ITAT KOLKATA

This appeal filed by the assessee is against the order of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. ‘CIT(A)’] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AY 2016-17 dated 14.05.2024.

2. The assessee is in appeal before the Tribunal raising the following grounds of appeal:

“1. For that on the facts and circumstances & legal position of the case, the order u/s 250 passed by the Ld. CIT(A) is against the principle of natural justice.

2. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) was not justified in denying the deduction u/s 54F of the Act on the ground that the appellant did not deposit the sale proceeds of his old property in Capital Gain Account Scheme before the due date prescribed u/s 139(1) of the Act, but had kept the same in his savings bank account and fixed deposits.

3. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) failed to appreciate the fact that the appellant was not aware about the Capital Gains Account Scheme 1988 and had kept the sale proceeds of his old property in his savings bank account and fixed deposits with an intention to purchase a new residential house property in order to claim deduction u/s 54F.

4. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) failed to appreciate the fact that the appellant had purchased a residential house property within two years from the date of transfer of his old landed property, and he was eligible to claim deduction u/s 54F of the Income Tax Act, 1961. The Ld. CIT (A) ought not to have denied the deduction u/s 54F of the Act on mere technicality for the sake of justice.

5. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) was not also justified in denying the deduction u/s 54F on wrong consideration of the fact and on the allegation that the appellant was already having two residential house properties on the date of sale of his old property, which was not correct.

6. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) failed to appreciate the fact that the expenses of Rs.55,71,982/-incurred by the appellant to settle the disputes in connection with his sold land with third parties before its sale for paving way for easy transfer of the same was an allowable deduction either as expenditure incurred in connection with the transfer or as cost of improvement. The Ld. CIT (A) was not justified in denying the deduction on the plea that the same was not within the scope of cost of improvement.

7. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) ought to have allowed the deduction as expenditure of Rs.55,71,982/- incurred by the appellant in connection with the transfer of his capital asset, if not as improvement cost of the capital asset, in view of CBDT circular No. 14(XL) 35 of 1955, dated 11.4.1955.

8. For that on the facts and circumstances & legal position of the case, the Ld. CIT (A) ought not to have confirmed the addition of Rs.99,10,000/-, being security deposit from tenant and advances against sale of lands, coming brought forward from earlier years in the hand of the appellant in current year.

9. That the appellant craves permission to add, amend, alter or vary all or any of the ground of appeal on or before the date of hearing of the appeal.”

2.1 The assessee has also raised an additional ground of appeal which is as under:

“For that on the facts and circumstances and legal position of the case, the Ld. Assessing Officer has erred in law and also on fact in not accepting the amount of Rs.98,00,000/-, paid to the tenants before the date of registration of the new property and before the date taking possession thereof as cost of acquisition incurred by the assessee in acquiring his new property, eligible for deduction u/s 54F of the Act. The Ld. CIT(A) ought not to have confirmed the said disallowance made by the Ld. AO in disposing the appeal of the assessee.”

3. Brief facts of the case are that the assessee is an individual and had filed his return of income for AY 2016-17 showing total income of ₹19,89,163/-. The case was selected for scrutiny under Computer Assisted Scrutiny Selection (in short ‘CASS’). Notices u/s 143(2) and 142(1) of the Act were issued. The Assessing Officer (hereinafter referred to as Ld. ‘AO’) noted that the assessee had sold his landed properties measuring 3.55 acres for ₹4,17,50,000/- on which Long Term Capital Gain of ₹3,06,35,864/- had accrued to him. The assessee had purchased a new house property for ₹3,13,62,500/- and had also claimed exemption u/s 54F of the Act for ₹2,30,13,588/-. The Ld. AO denied the exemption on the ground that the assessee did not keep the amount of Long Term Capital Gain in Capital Gain Account Scheme, 1988, before the date of filing of return u/s 139(1) of the Act. The Ld. AO was also of the view that the amount paid to the occupants of the new house property for vacating the same did not constitute the cost of acquisition and was not allowable u/s 54F of the Act, apart from the fact that the new house property purchased was in ruins and decaying conditions. The Ld. AO had also not allowed the amount paid to the persons who had filed suits against the assessee in respect of his sold land. The Ld. AO was of the view that the said payments did not constitute cost of improvement of the sold land and had also added back a sum of ₹1,10,10,000/- being security deposits received from tenants, advance received from the buyers of the other lands and fees payable to the lawyer. The Ld. AO assessed the total income of the assessee at ₹5,32,60,170/- u/s 143(3) of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who, vide order dated 14.05.2024 dismissed the appeal of the assessee.

4. Aggrieved with the order of the Ld. CIT(A), the assessee has filed the appeal before the Tribunal.

5. Rival contentions were heard and the submissions made have been examined.

6. Ground Nos. 1 and 9 are general in nature and do not require any separate adjudication.

6.1 Ground Nos. 2, 3 and 4 relate to the Ld. CIT (A) erring in denying the deduction u/s 54F of the Act on the ground that the assessee did not deposit the sale proceeds of his old property in Capital Gains Account Scheme, 1988 and had kept the sale proceeds of his old property in his savings bank account and fixed deposits with an intention to purchase a new residential house property in order to claim deduction u/s 54F of the Act.

6.2 The Ld. CIT(A) considered the order of the Ld. AO, has reproduced the provisions of section 54F of the Act and held that in order to claim the deduction, the assessee must adhere to all the conditions as per provisions of the Act and since the assessee failed to satisfy the conditions enshrined in the Section 54F of the Act, hence, the Ld. AO correctly disallowed the deduction claimed by the assessee u/s 54F of the Act. The Ld. CIT(A) held that a plain reading of section 54F makes it clear that the sale consideration not utilised by the assessee for purchasing or construction of residential house property shall be deposited in the Capital Gain Accounts in accordance with the provisions of Capital Gain Accounts Scheme, 1988. Also the assessee shall not have more than one residential house other than the new residential house property in order to be eligible to claim deduction u/s 54F of the Act. Both these conditions were not fulfilled by the assessee. The assessee did not deny the fact that he was the owner of two residential house properties at Kanpur at the time of purchasing a new residential house property at Bareilly. Also, the assessee stated the reason of unawareness for failure to deposit the unutilised sale consideration in Capital Gain Accounts Scheme. The unawareness or lack of knowledge cannot be considered as reasons given to claim any deduction according to him, hence, in view of the facts discussed, the Ld. CIT(A) rejected the contention of the assessee and the addition made by the Ld. AO on account of disallowance of deduction claimed by the assessee u/s 54F of the Act was confirmed.

6.3 The assessee, regarding these grounds of appeal has submitted as under:

“The appellant had sold his old landed properties measuring 3.55 Acres in between June, 2015 and October, 2015 (para 7 of assessment order and page 13 of P/B) for a total sum of Rs.4,17,50,000/- and had purchased a new house property on 29.3.2017 for a total cost of Rs.3,13,62,500/- as per details furnished herein below. The assessee had offered a long term capital gains of Rs.76,22,276/- in his return of income instead of his actual liability of Rs.44,63,518/- only as per provisions of section 54F of the Income Tax Act, 1961 and had claimed before the Hon’ble CIT(A) in writing during the first appellate proceedings that his taxable capital gains was for Rs.44,63,518 only.

In Raghavan Nair vs. ACIT (2018) 402 ITR 400 (Ker HC), it has been held that if the capital gain has been wrongly offered in return, no tax should be levied as tax cannot be collected except by authority of law as per Article 265 of the Constitution of India.

And it has been held in the case of S. R. Kosthi vs. CIT (2005) 276 ITR 165 (Guj) that regardless of whether the revised return filed or not, once the assessee is in a position to show that the assessee has been over assessed, regardless of whether the over assessment is as a result of assesse’s mistake or otherwise, the CIT has the power to correct such an assessment.

Your Honors , the Ld. AO had not allowed any deduction u/s 54F of the Act on the ground that although the appellant had purchased a new house property on 29.4.2017, within the due date of filing of return u/s 139(4), but the appellant had failed to deposit his net sale proceeds in Capital Gains Account Scheme within the due date of furnishing of return u/s 139(1) of the Act, and also on the allegation that the appellant was already having two house properties at Kanpur on the date of transfer of his old assets as above.

The appellant had clarified at serial No. 4 (four) of his written submission dated 26.11.2028 before the Ld. AO that he was having only one house property in Kanpur. The copy of the electricity bill of that house property was furnished before the Ld. AO along with his reply (Page 235 of P/B).

But, the Ld. AO did not notice the reply of the appellant at serial No. 4 that he was having only one house property at Kanpur and not two separate house properties. There is no mention of such rebuttal made by the appellant in the assessment order of the Ld. A.O.

A copy of written submission of the appellant dated 26.11.2018 in response to show cause notice of the Ld. AO dated 22.11.2018 is enclosed herewith (page 232 to 236 of P/B).

Before the Ld. CIT(A), the appellant had submitted that the Ld. AO had wrongly observed that the appellant was having two separate house properties at Kanpur by misreading the balance-sheet of the appellant as at 31.3.2016. It was clearly appearing in the balance-sheet that the appellant had invested a sum of Rs.57,73,778/- in a house property at Kanpur in earlier year and there was a further investment of Rs.20,15,000/- during the current assessment year in the same house property, coming brought forward from last year. Copies of balance-sheets as at 31.3.2015 and 31.3.2016 were furnished, both before the Ld. AO and Ld. CIT(A).

(Copy of balance sheets as at 31.3.2015 may please be found at page 5 & 6 of P/B and balance sheet as at 31.3.2016 may please be found at page 3 & 4 of P/B).

The Ld. AO was also of the opinion that the appellant was not entitled for deduction u/s 54F of the Act as the appellant had purchased a building which was in ruins and in decaying condition (para 8 of assessment order and page 14 of P/B). But, to deny the deduction u/s 54F on this ground, the Ld. AO had not served any show-cause notice on the appellant.

The appellant, before the Ld. CIT(A), had submitted that in the case of M. Vijay Kumar vs. ITO (2009) 120 TTJ (Bang) 567 it was held that where the appellant has employed the LTCG in purchasing of a dilapidated house, relief u/s 54F cannot be denied.

The decision of Karnataka High Court in the case of CIT vs. Dr. R. Balagi (2014) 111 DTR (Kar) 288 was also brought to the notice of the Ld. CIT, in which case it has been observed – “Evidence on record showing that on the date there did exist a residential structure which the vendor was using as residence, exemption u/s 54F could not be denied on the ground that property was not suitable for residence of assessee.

It was submitted before the Ld. CIT(A) that the house property, purchased by the appellant, was occupied by tenants who had vacated the property only on the date of purchase of the same by the appellant.

Your Honors, in response to the Show-cause notice of the Ld. AO, dated 22.11.2018 (page 3 of assessment order and page 9 of P/B), the appellant had submitted in writing that he was in bona fide belief that he was required to keep the money in his bank account only. He had also submitted that all the payments for purchase of his new property had been made from his savings bank accounts and he requested the Ld. AO to allow the deduction u/s 54F (page 6 of assessment order, 2nd para, and page 12 of P/B).

In ITO vs. Smt. Aarti Kumaria, ITA No. 97/Lkw/2017, dated 14.3.2018, sale proceeds were kept in savings account and not deposited in Capital Gains Account due to ignorance. The assessee invested in new house property and claimed exemption u/s 54 – The AO had disallowed the claim, but the ld. CIT(A) had allowed the claim of the appellant against which the department filed appeal before ITAT – The Hon’ble ITAT allowed the claim of the appellant relying on the decision of Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh & Ors, (1979) 118 ITR 326 (SC).

The Hon’ble Supreme Court of India in its unique judgment in the case of Motilal Padampat Sugar Mills Co. vs. State of Uttar Pradesh & Ors., (1979) 118 ITR 326 (SC) had observed “it must be remembered that there is no presumption that every person knows the law. It is often said that everyone is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law”.

Honorable Sirs, before the Ld. CIT(A), it was submitted that the appellant had invested a total sum of Rs.3,13,62,500/- for purchasing a new house property on 29.4.2017, within the due date of filing of return u/s 139(4) of the Act and thus the appellant should be allowed for due relief and deduction u/s 54F of the Act.

Provisions of section 139(4) for Assessment year 2016 – 17 were as follows : -“Any person who has not furnished a return within the time allowed to him under sub-section (1), or within the time allowed under a notice issued under sub-section (1) of 142, may furnish the return for any previous year at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment, whichever is earlier”.

So, the due date of filing of return u/s 139(4) for assessment year 2016-17 was 31.3.2018 and the assessee had purchased his new house property on 29.4.2027, within the time allowed u/s 139(4) of the Act.

Provisions of section 54F(4) says that the amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official

Gazette, frame in this behalf and such return shall be accompanied by proof of such deposit

So, only section 139 has been mentioned in section 54F(4) and section 139 cannot be meant only section 139(1) but it means all sub-sections of section 139 of the Act.

Provisions of section 54F(4) and section 54(2) are in pari materia and the Hon’ble Guwhati High Court In CIT vs. Rajesh Kumar Jalan (2006) 286 ITR 274 (Gauhati), in which case it was the contention of the Revenue that since the assessee had not complied with the provisions of section 54(2) of the Act by not depositing the unappropriated amount of capital gain in the capital gain deposit scheme, 1988 within the stipulated time of furnishing the return u/s 139(1), so, the assessee was not entitled for any relief u/s 54 of the Act. In this case, the Hon’ble Guwahati High Court had held that from a plain reading of sub-section (2) of section 54, it is clear that only section 139 of the Act, 1961 has been mentioned in section 54(2) in the context that the unutilized portion of the capital gain on the sale of property should be deposited before the furnishing of return under section 139 of the Act. The High Court held that section 139 of the Income Tax Act, 1961, cannot be meant only section 139(1), but it means all sub-sections of section 139 of the Income Tax Act, 1961.

There was no necessity to comply with the conditions for availing of the benefit from tax of the capital gains, as laid down u/s 54(2) of the Act, i.e. to deposit the unpaid amount in a separate bank account under the capital gain account scheme as the assessee had already appropriated the entire capital gain for purchase of new asset within stipulated time u/s 139(4) of the Act.

The Hon’ble Guwahati High Court had further held that section 54 of the I.T. Act, 1961 is a beneficial provision for the assessee in the matter relating with the sale of long term capital assets, it appears, for the constitutional goal of providing residence to the citizen of India. It is fairly well settled that in construing a beneficial enactment, the view that advances the object of the beneficial enactment and serves its purpose must be preferred to the one which obstructs the objects and paralyses the purpose of the beneficial enactment. Decision of the Hon’ble Supreme Court of India in the case of Kunal Sing vs. Union of India (2003) 4SCC 524 applied.

The Apex Court in Kunal Singh vs. Union of India and Another, (2003) 4 SCC 524 has held – “In construing the provisions of beneficial statutes the view advancing the object of the Act and serving its object must be preferred to the one which obstructs the object and paralyses that purpose”

In CIT vs. Miss. Jagriti Agarwal (2011) 64 DTR (P & H) 333, it has been held that due date of furnishing the return of income as per section 139(1) of the Act is subject to the extended period as provided under sub-section (4) of section 139 of the Act.

The Hon’ble Punjab and Haryana High Court in this case has followed the decision of Karnataka High Court in the case of Fathima Bai vs. ITO (2009) 32 DTR 243 and the decision of Gauhati High Court in the case of CIT vs. Rajesh Kumar Jalan (2006) 286 ITR 274.

Same view has been expressed in the following cases also – CIT vs. Smt. Virenda P. Issac (2011) 64 DTR (Kar HC) 376 CIT vs. Jagtar Singh Chawla (2013) 87 DTR (P&H) 217

It has been held in Jagan Nath Singh Lodha vs. ITO, (2004) 85 TTJ (Jd) 173 {relying on the decisions of apex court in CIT vs. Gwalior Rayon Silk Manufacturing Co. Ltd (1992) 196 ITR 149 (SC) & Bajaj Tempo Ltd. vs. CIT (1992) 196 ITR 188 (SC)} that denial of relief for non purchasing of house before filing return u/s 139(1) and also for failure to deposit the amount in capital gains accounts was not justified as the intention of the assessee from the very beginning was to purchase residential house and the assessee has purchased house property within two years of sale of plot and thus the assessee was entitled to exemption u/s 54F.

The hon’ble Kolkata bench of ITAT in the case of Sunayna Devi vs. ITO, Siliguri, ITA No. 996/Kol/2013, dated 13.9.2017 (86 taxmann.com 7), wherein it was held that Karnataka High Court in the case of CIT vs. Ramchandra Rao (2015) 230 Taxman 334 // 56 taxmann.com 163 held that if the assessee invests the entire consideration in construction of a residential house within three years from the date of transfer he cannot be denied deduction u/s 54F of the Income Tax Act, 1961 on the ground that he did not deposit the said amount in capital gain account scheme before the due date prescribed u/s 139(1) of the Act.

In CIT vs. Ramchandra Rao, 56 taxman.com 163 (Karnataka HC), the assessee did not deposit the unutilized sale consideration in capital gain account scheme but, had invested the entire sale consideration in construction of a residential house within three years from the date of transfer. The question before the Hon’ble Karnataka High Court was that can the assessee be denied exemption u/s 54F of the Act as he did not deposit the said amount in capital gains account scheme before the due date prescribed u/s 139(1) of the Act?

The Hon’ble Court has held that If the intention is not to retain cash but to invest in construction or any purchase of the property and if such investment is made within the period stipulated in section 54F(1), then section 54F(4) is not at all attracted and therefore the contention that the assessee has not deposited the amount in the Bank account as stipulated and therefore, he is not entitled to the benefit even though he has invested the money in construction is also not correct.

Venkata Dilip Kumar vs. CIT, 111 taxman.com 180 (Mad HC) {following the decision of CIT vs. Ramchandra Rao 56 taxman.com 163 (Karnataka HC).

“14. In my considered view, the contention of the Revenue to deny the benefit of deduction to the petitioneri’assessee cannot be justified for the following reasons: Section 54(2) cannot be read in isolation and on the other hand, application of Section 54(2) should take place only when the assessee failed to satisfy the requirement under Section 54(1). While the compliance of requirement under Section 54(1) is mandatory and if complied, has to be construed as substantial compliance to grant the benefit of deduction, the compliance of requirement under Section 54(2) could be treated only as directory in nature. If the assessee with the material details and particulars satisfies that the amount for which deduction is sought for under Section 54 is utilized either for purchasing or constructing the residential house in India within the time prescribed under Section 54(1), the deduction is bound to be granted without reference to Section 54(2), which would come into operation only in the event of failure on the part of the assessee to comply with the requirement under Section 54(1). Mere non compliance of a procedural requirement under Section 54(2) itself cannot stand in the way of the assessee in getting the benefit under Section 54, if he is, otherwise, in a position to satisfy that the mandatory requirement under Section 54(1) is fully complied with within the time limit prescribed therein.”

Considering the facts of the case of the appellant and the decisions of the Courts, capital gain of the appellant may please be restricted to Rs. 44,63,518i’- only by allowing deduction ui’s 54F of the Act for Rs. 3,13,62,500i’- for the sake of justice.”

6.4 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). There is merit in the argument of the assessee that there was no necessity to comply with the conditions for availing of the benefit from tax of the capital gains, as laid down u/s 54(2) of the Act, i.e. to deposit the unpaid amount in a separate bank account under the capital gain account scheme as the assessee had already appropriated the entire capital gain for purchase of new asset within stipulated time u/s 139(4) of the Act. The deposit was required to be made, if mandatory, before the due date for filing the return of income under sub-section (1) of section 139 in respect of the unutilised amount but the application of the capital gain could be made within the time provided under section 139, i.e. within the period provided for filing the return during the extended period or for filing a revised return u/s 139(4)/139(5) of the Act and as the assessee had acquired the property within the limitation date of filing of the revised return, the deduction under section 54F of the Act could not be denied. Hence, in view of the decision of Hon’ble Madras High Court in the case of Venkata Dilip Kumar (supra) and Ramchandra Rao (supra), the necessity to deposit the unutilised amount arose only if the assessee had not acquired the new property. Since the same was acquired before filing the return of income during the extended period of sub-sections (4) and (5) of section 139 of the Act, these grounds of appeal are allowed and the finding of the Ld. CIT(A) are reversed and the Ld. AO is directed to allow deduction u/s 54F of the Act to the assessee as per law. Hence, Ground Nos. 2, 3 and 4 are allowed and the findings of the Ld. CIT(A) are reversed and decided in favour of the assessee.

6.5 As regards Ground No. 5, the assessee submits that the residential house was being shown in the balance sheet of previous year and he was not having two residential properties, but only some addition was done to the existing property. The Ld. AO has not mentioned the details of the property and the contention of the assessee is verified from the details filed before us. This fact could not be rebutted by the Ld. DR. Hence, Ground No. 5 is also allowed and the Ld. AO is directed to grant the deduction under section 54F as per law as the conditions of section 54F were fulfilled. Hence, Ground No. 5 is also allowed.

Hence, Ground Nos. 2, 3, 4 and 5 of the appeal are allowed.

7. Ground Nos. 6 and 7 relate to the Ld. CIT(A) erring in not appreciating the fact that the expenses of ₹55,71,982/- incurred by the assessee to settle the disputes in connection with his sold land with third parties before its sale for paving way for easy transfer of the same was an allowable deduction either as expenditure incurred in connection with the transfer or as cost of improvement in view of the CBDT circular No.14(XL) 35 of 1955 dated 11.04.1955.

7.1 Regarding this issue, the Ld. CIT(A) has reproduced section 49 of the Act, considered the assessment order and dismissed this ground of appeal by holding as under:

“The cost of improvement always includes construction of asset other than the original asset and does not include the expenses incurred for settlement of legal disputes of the asset.

In view of the facts discussed above, the contention of the appellant is rejected and the addition made by the AO of Rs.55,71,982/- on account of disallowance of expenses incurred to settle the disputes of land sold is confirmed. Accordingly, Ground No. 4 is dismissed.”

7.2 The assessee in this regard has submitted as under:

“The appellant would like to explain the expenses of Rs.55,71,982/-incurred by him for improvement of title of his sold land before its sale, which can also be termed as expenditure incurred wholly and exclusively in connection with the transfer of his sold land as per Explanation to Sub­section (1) of section 54F. “Net consideration”, in relation to the transfer of a capital asset, as per the said Explanation to section 54F(1), means the full value of consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

One Panu Bewa was the original owner of lands. Panu Bewa was having only one daughter, Pohetiswari. Pohetiswari had got married with Premlal Paul and she gave birth of three sons, namely Bhimlal Paul, Dhumlal Paul and Dhanlal Paul.

Dhumlal Paul and Dhanlal Paul had sold their lands to one Sri Basanta Singha, S/o Dilip Kumar Singh and Sri Bhimlal Paul had sold his land to one Raimani Paul, who had subsequently sold the land to Sri Chunilal Singh alias Sri Chintu Singh and Sri Rabin Singh alias Sri Rinku Singh, both sons of Dilip Kumar Singh.

The appellant had purchased agricultural lands measuring 0.62 Acre from Basanta Kumar Singha vide registered deed of sale being No. 4184, dated 25.5.1990, recorded in Khatian No. 3/2 of Mouja – Baragharia, Siliguri (page 73 – 78 of P/B). The Plot numbers mentioned in the said deed were 406 (correct), 407 (correct), 410 (incorrect) and 408 (incorrect). The actual and correct plot numbers of the said purchased land were 401, 402, 403, 404, 405, 406 and 407.

One Sri Animesh Mukherjee had purchased 0.66 Acre of agricultural land from Basanta Kumar Singha vide registered deed No.4181, dated 25.5.1990, recorded in Khatian No. 16 of Mouja – Baragharia, Siliguri (page 79 – 84 of P/B). The plot numbers mentioned in the said deed were 274 (correct), 272 (incorrect), 270 (incorrect) and 269 (correct). The actual and correct plot numbers of the said purchased land of Sri Animesh Mukherjee were 269, 273 and 274. Sri Animesh Mukherjee had sold 0.33 Acres of agricultural land, out of his aforesaid purchased land of 0.66 Acres, to the brother of the appellant Md. Sarif, vide registered deed of sale being No.6300, dated 14.9.1990, recorded in Khatian No. 16 of Mouja – Baragharia, Siliguri, with the same incorrect Plot numbers (page 85 – 92 of P/B).

The brother of the appellant, Md. Sarif had gifted his aforesaid agricultural land measuring 0.33 Acre to the appellant vide a registered deed of gift being No. 3322 dated 25.6.2008 with the same incorrect Plot numbers {page 93 – 101 of P/B).

The other (brother) of the appellant, Md. Nadim had purchased a plot of agricultural land measuring 2.81 Acre from Basanta Kumar Singha vide registered deed of sale being No.4185, dated 25.5.1990 in Khatian No. 3/2 of Mouja – Baragharia, Siliguri as well as in Khatian No. 16 of Mouja – Baragharia, Siliguri (page 102 – 109 of P/B).

The said brother of the appellant, Md. Nadim had gifted his aforesaid agricultural land measuring 2.81 Acre to the appellant vide registered deed of gift dated 31.1.2006, registered on 25.6.2008 vide No.3321 at the office of the A.D.S.R. Siliguri – II at Bagdogra (page 110 -121 of P/B).

In the aforesaid manner, the appellant became the owner of 3.76 Acre of lands (0.62 plus 0.33 plus 2.81), but he was in actual possession of 3.75 Acres of agricultural land.

Plot numbers of entire lands measuring 3.75 Acres were wrong, right from its sell by the two brothers Sri Dhumlal Paul and Sri Dhanlal Paul to Sri Basanta Singha, from whom the appellant, his brothers and the aforesaid Sri Animesh Mukherjee had purchased the lands as per details as above.

The incorrect plot numbers of lands in the sale deeds were required to be corrected by all the three original owners Sri Dhumlal Paul, Sri Dhanlal Paul and Sri Bhimlal Paul, who had already sold their lands to Sri Basanta Kumar Singha, Sri Chunilal Singh, alias Sri Chintu Singh and Sri Rabin Singh, alias Sri Rinku Singh, all sons of Dilip Kumar Singh.

Sri Basanta Kumar Singha had purchased 2/3rd shares of lands from Sri Dhumlal Paul and Sri Dhanlal Paul and Sri Chunilal Singh, alias Sri Chintu Singh and Sri Rabin Singh, alias Sri Rinku Singh had purchased l/3rd share of original lands from Sri Bhimlal Paul. Taking the advantage of wrong mentioning of plot numbers in the sale deeds, sold by their brother Basanta Kumar Singha to the appellant, his brothers and Animesh Mukherjee (from whom the brother of the appellant Md. Sarif had purchased the land), had applied for mutation in respect of the lands of the appellant in their names at the office of the Block and Land Reforms Officer, Matigara, Government of West Bengal. Notice u/s 57 of W.B.L.R. Act, 1955, dated 13.1.2015 and 3.2.2015 were served on the appellant and on other purchasers (page 122 -124 of P/B).

Realizing the mistakes and defects in the purchase deeds and the subsequent gift deeds executed by the brothers of the appellant in his favour, The appellant was compelled to settle the matter with the said Sri Chunilal Singh, alias Sri Chintu Singh and Sri Rabin Singh, alias Sri Rinku Singh and had got reregistered l/3rd share of land measuring 1.25, which was already in his possession for Rs.28,00,000/- vide registered deed of sale being No.1344, dated 14.1.2015, registered in the office of the A.D.S.R. Siliguri – II at Bagdogra (page 132 – 148 of P/B). The stamp duty value of the land was for Rs.1,59,20,250/- and the appellant had to pay stamp duty of Rs.11,30,334/- and registration charge for Rs.1,41,648/- for Re-registration of the lands vide aforesaid Deed No. 1-344. Total expenses incurred was for Rs.40,71,982/- to get the title corrected and to settle the dispute, in absence of which the purchaser was not ready to purchase the land of the appellant, sold during the year. A joint petition by both the parties, dated 16.4.2015 was submitted before the Block and Land Reforms Officer, Matigara, Government of West Bengal, in reply to notice u/s 57 of W.B.L.R. Act, 1955 and the Mutation Case NO.178/IX/13-14 and Mutation Case No.4415/IX/BLRO/MTG/13 were dropped (page 125 – 128 of P/B). The said Chuni Lal Singh and Rabin Singh had also filed a separate petition to BLRO, Matigara Block at Shivmndir inforing the said office that they had transferred 1.25 Acre, being their 1/3rd share to the appellant by virtue of deed of sale being No. 00344 for the year 2015, dated 14.1.2015 and for that reason they did not want to proceed against the appellant and prayed the BLRO office to drop the proceedings (page 129 – 131 of P/B).

EXPLANTION REGARDING IMPROVEMENT COST OF RS.15,00,000/- PAID TO ONE ANANDA PAUL alias ANDHARU PAUL.

Premlal Paul, the father of Sri Bhimlal Paul, Sri Dhumlal Paul and Sri Dhanlal Paul had remarried with one Bhudeshwari and the said Bhudeshwari gave birth of one son, namely Sri Ananda Paul alias Andharu Paul as per chart of previous ownership at page 72 of P/B. The said Andharu Paul, S/o Premlal Paul, taking the advantage of wrong mentioning of plot numbers in the purchase deeds, had also applied for mutation in respect of the lands of the appellant in the office of the Block Land & Land Reform Officer, Matigara and a notice dated 20.4.2012 was served by the said office on the appellant and others vide Memo No. 167/16(18)/BLRO-Mtg (page 170 -174 of P/B). The said Andharu Paul had claimed that the lands of the appellant as per plot No.601 had not been sold by him or by the other co-sharers. The appellant was compelled to settle the matter with him by paying a sum of Rs.15,00,000/- to him, otherwise the purchaser of the land of the appellant was not ready to buy his land. The appellant had paid the said sum of Rs.15,00,000/- vide written agreement dated 30.7.2015, duly authenticated by the Notary Public (page 175 – 184 of P/B). The said Andharu Paul had also executed a deed of declaration dated 31.7.2015, registered in the office of the Additional District Sub Registrar (A.D.S.R.), Siliguri – II at Bagdogra, being document No. IV-040300919/2015, dated 31.7.2015, declaring that the ownership of the appellant in respect of 4.23 Acres of land was absolute and exclusive and the appellant was having transferable and saleable right over his said land. The land of the appellant was free from any litigations, encumbrances and charges whatsoever and the claim of said Andharu Paul over the land of the appellant was not valid (page 185 – 199 of P/B).

So, in total, the appellant had incurred a total expense of Rs.55,71,982/-(Rs.40,71,982/- plus Rs.15,00,000/-) towards the cost for improvements or cost for transfer of his sold land, unless of which the appellant could not sold his land for total sum of Rs. 4,17,00,000/-, the cost of which was only for Rs.3,52,000/-.

The expenses of Rs.55,71,982/- so incurred by the appellant can also be termed as “cost of transfer”, allowable as per Explanation to section 54F(1) which says that “net consideration”, in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer.

In CIT vs. Miss Piroja C. Patel (2000) 242 ITR 582 (Bom), compensation paid for eviction of hutment dwellers from land which was sold and it had been held by the High Court that the said expenditure was allowable as cost of improvement. The Hon’ble Court reasoned that the compensation was paid to remove an obstacle to the sale of the land, and hence it was an expenditure incurred for the purpose of improving the title of the land, which increased the value of the land. The Hon’ble High Court had allowed the assessee to deduct the compensation paid while calculating capital gains tax on sale of land (page 86 -87 of W/S). Decision of CIT vs. Shakuntala Kantilal (1991) 190 ITR 56 (Bom) relied upon (page 52 – 55 of W/S).

CIT vs. Abrar Alvi (2001) 247 ITR 312 (Bom HC) – (Page 56 – 57 of W/S) – Payment had been made to son to resolve property dispute is deductible expenses while computing capital gains. The High Court observed that the assessee had paid an amount of Rs.8 Lakhs to his son for settlement of a suit instituted by him in respect of the property. The Tribunal held that there was an acrimonious dispute between the father and the son and the amount was paid to remove the encumbrance and to effect the transfer. Hence, the Tribunal held that the payment was deductible. Confirmed by the High Court. Decision of CIT vs. Shakuntala Kantilal (1991) 190 ITR 56 (Bom) followed. (In this case amount was paid for removing encumbrance to effect transfer of a capital asset and it was held that it was a deductible expense. The assessee agreed to sell a plot of land to a company. A dispute arose between them, as consequence of which the assessee agreed to pay certain amount as compensation to the company. The assessee then sold the same plot to another person and claimed that the amount paid to the company was liable to be deducted while computing gain on such sale. The Hon’ble Bombay High Court ruled in favour of the assessee, holding that the amount paid as compensation to the company was liable to be deducted while computing capital gain arising on such sale, (page 52 – 55 of W/S).”

7.3 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). The assessee had received land measuring 2.81 acre as gift from his brother on 30.01.2006. His brother had purchased the property on 25.05.1990 for ₹12,000/- and stamps for ₹1,200/- and registration fee and other expenses of ₹1,800/- were incurred making the cost of the property to the previous owner i.e. his brother at ₹15,000/-. The assessee contends that a sum of ₹6,85,000/- was incurred during the period 25.05.1990 to 31.01.2006 which was claimed as cost of improvement but for which no documentary evidence was available. As per the written submission filed before us it was stated that a sum of ₹40,71,982/- was incurred to get the title corrected and to settle the dispute, in the absence of which the purchaser was not ready to purchase the land of the assessee sold during the year. Another sum of ₹15 Lakh was paid to one Ananda Paul alias Andharu Paul and the details of previous ownership are mentioned at page 72 of the paper book filed before us. The said Andharu Paul had also applied for mutation and the dispute was settled by paying a sum of ₹15 Lakh to him. The expenses of ₹55,71,982/- are claimed to be incurred as cost of transfer for correction of the plot numbers and settlement of the dispute. This being so, the assessee can be said to be the owner of the plots from the date of correction of the land record. Since the Ld. CIT(A) has merely stated that the cost of improvement always includes construction of asset other than original asset and does not include the expenses incurred for settlement of legal dispute of the asset, however, in view of the decision in the case of Abrar Alvi (supra) and also the decision of Hon’ble Madras High Court in the case of CIT vs. Venkatraman [1982] 10 Taxman 298 (Mad.) wherein it has been held that Where a landlord entered into agreement for sale with third parties in respect of lands owned by him which were in possession of tenants, and the vendees insisted on getting vacant possession, amounts paid by the landlord to the tenants for getting the land vacated are deductible in the computation of capitals gains, the finding of the Ld. CIT(A) are reversed and this issue is remanded to the Ld. AO to examine the facts of the case and decide accordingly. The assessee shall furnish evidence for the fact that the amounts were paid to the litigants by furnishing the required evidence and also for expenses incurred for getting the numbers of the plots corrected in the land records. Hence, Ground Nos. 6 and 7 of the appeal are allowed for statistical purposes.

8 Ground No. 8 relates to the Ld. CIT(A) erring in confirming the addition of ₹99,10,000/- being security deposit from tenant and advances against sale of lands, coming brought forward from earlier years in the hand of the assessee in current year.

8.1 The Ld. CIT(A) regarding this issue has held as under:

“The assessee in his return of income had shown unsecured loan of Rs.1,00,10,000/- and sundry creditors of Rs. 10,00,000/-. The AO asked the assessee to prove the genuineness of transaction, identity & creditworthiness of the creditors. However the assessee submitted that he did not have any unsecured loan. The unsecured loan shown by the assessee is directly related to the source of investment shown by the assessee in his balance sheet. The assessee had shown total assets of Rs.5,32,11,703/- whereas he had shown capital of Rs.4,22,01,703/- only. Thus the appellant had tried to explain the investment made by showing unsecured loan & sundry creditors for which he had no evidence. Therefore the AO treated the unsecured loan of Rs.1,00,10,000/- & sundry creditors of Rs. 10,00,000/- as bogus and added it to the total income of the assessee as unexplained investments.

During the appellate proceedings, the appellant claimed that during the year under consideration, he received unsecured loan of Rs.1,00,000/- only and remaining amount was brought forward liability of earlier years. During the assessment proceedings, the appellant claimed to not have any unsecured loan and now he is claiming to have liability of the earlier financial years thereby giving statement contradictory to each other. This time also, the appellant could not substantiate the unsecured loans by proving the genuineness of transaction, identity & creditworthiness of the creditors.

Therefore it is held that the AO correctly made addition of Rs. 1,10,10,000/-as unexplained investments.

In view of the facts discussed above, the contention of the appellant is rejected and the addition made by the AO of Rs.1,10,10,000/- as unexplained investments is confirmed. Accordingly, Ground No. 5 is dismissed.”

8.2 The assessee regarding this issue has submitted as under:

“GROUND NO. 8 – B/f credits from last year for Rs.99,10,000/- had been added back u/s 68 –

The assessee had received deposits of Rs.2,25,000/- from his tenants and the same was deuly reflected in the balance-sheet of the assessee as at 31.3.2015, (page 6 of Paper Book). The return of the assessee for Assessment year 2015-16 was scrutinized u/s 143(3) and no addition had been made. The said amount of Rs.2,25,000/- had been brought forward to the balance-sheet as at 31.3.2016, (page 3 of Paper Book) and the Ld. AO had added back the said amount of Rs.2,25,000/- in current assessment year 2016-17.

Similarly, there was an advance amount of Rs.83,85,000/-, received by the appellant against sale of his lands in his balance-sheet as at 31.3.2015 and also a sum of Rs.60,00,000/- and 13,00,000/- being advance against sale of land were showing received by the appellant in his balance-sheet as at 31.3.2015, (page 6 of Paper Book). The return of the assessee for assessment year 2014-15 and 2015-16 were scrutinized by the Ld. AO u/s 143(3), (page 45 and page 39 of Paper Book) and no addition had been made on being found the said advances genuine.

Out of the aforesaid advances, Rs.2,25,000/- being advance from tenant, Rs.83,85,000/- being advance against sale of land and Rs.13,00,000/-being advance against sale of land (Total Rs.99,10,000/-) was carried forwarded to the balance-sheet of the assessee as at 31.3.2016. Despite of furnishing of all details, the Ld. AO had added back a sum of Rs.1,00,10,000/-, including Rs.99,10,000/- B/F from last year, as undisclosed cash credits. Only a sum of Rs.1,00,000/- had been received from Advocate Joyjit Chowdhury during the year, who had paid advance of Rs.13,00,000/- in earlier year for purchase of land from the assessee. The addition of Rs.99,10,000/- being B/F figure from last year, in the current assessment year was bad in law as the same was not the credit of current assessment year in view of the following decisions of Courts.

CIT vs. Prameshwar Bohra (2007) 208 CTR (Raj.) 218

CIT vs. Usha Stud Agricultural Farms Ltd. (2008) 5 DTR (Del) 335 (page 67 of W/S)

CIT vs. Bhaichand Gandhi (1983) 141 ITR 67 (Bom)

Ivan Singh vs. ACIT (Bom HC) dated 14.2.2020 (page 70 of W/S)

DCIT vs. Global Mercantiles (P) Ltd. ITA NO. 1669/Kol/2009, dated 13.01.2016, (2016) 157 ITD 924 (Kolkata- Trib) (Copy enclosed)

CIT vs. Jagat Kumar Satishbhai Patel (2014) 225 taxman 190 (Gujrat High Court)

CIT vs. Raghuraji Agro Industries (P) Ltd. (2012) 349 ITR 260 (All HC) Shreedev Enterprise 193 DTR 165 (Kar HC)

Giridharilal Mohanlal Patel vs. ITO, ITA No. 677/Ahd/2011, dated 16.10.2015

D.K. Enterprise vs. ACIT, ITA No. 6086/Mumbai/2010, dated 06.05.2016.”

8.3 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Since the assessee claims that only a sum of ₹1 Lakh was received and the rest of the amount were brought forward from the last year, this issue is also remanded to the Ld. AO for verification. The assessee shall furnish evidence for the fact that these amounts had not been received during the period relevant for the impugned assessment year and therefore, were not liable to be added to the total income of the assessee for A.Y. 2016-17 and on being satisfied with the evidence to be filed, the Ld. AO is directed to delete the addition as prima facie the contention of the assessee appears to be correct.

9. The additional ground of appeal raised by the assessee relates to the Ld. AO erring in not accepting the amount of ₹98,00,000/-paid to the tenants before the date of registration of the new property and before the date taking possession thereof as cost of acquisition incurred by the assessee in acquiring his new property, eligible for deduction u/s 54F of the Act and the Ld. CIT(A) has confirmed the said disallowance made by the Ld. AO.

9.1 The assessee regarding this issue has submitted as under:

“The new house property purchased by the assessee was occupied by four tenants. The assessee had purchase the said property including the tenants. The assessee had paid a total sum of Rs.98,00,000/- to those four tenants to vacate the newly purchased house property at Bareilly under written and notarized agreements, in which the vendor Sri Kaushal Kumar Maheshwari was also a party. The payment of Rs.98,00,000/- was made before the date of registration of the new property to ensure that the absolute ownership right can be passed on the buyer assessee. Unless the four tenants were evicted, the newly purchased house property could not have been used by the assessee as his residence as there was no rooms except those were occupied by the tenants.

Sincel, the payment was made before the date of registration, assessee had considered the said payment as cost of acquisition of his new property and claimed deduction u/s 54F of the Act in computing his capital gain liability on sale of his old properties. Due explanation, reason and purpose of the said payment of Rs.98,00,000/- was furnished before the Ld. AO together with copies of agreements in response to the show cause notice issued by the Ld. AO as per his assessment order at page 6 (six), first paragraph. The assessee had also furnished the copies of cheques and drafts paid to the tenant occupants before the Ld. AO. But, the Ld. AO without making any comment on the explanation furnished by the assessee, had not allowed the said claim of Rs.98,00,000/- as cost of acquisition of the new property for the purpose of deduction u/s 54F of the Act.

Before the Ld. CIT(A), the assessee had contended that he had paid the said sum of Rs.98,00,000/- to the tenants / occupants before the date of registration of his new property and before taking the possession of the said property, and as such it was the cost of acquisition of his new property. Section 54F exempts cost of new asset and not just purchase consideration. Any payment made before the date of registration of the new property for making the property useful, convenient and habitable should be considered as cost of acquisition of new property and not the cost of improvement as the payment was made before the date of registration, when the assessee did not become the owner of the new property.

But, the Ld. CIT(A) has not accepted the said contention of the assessee. In fact, the Ld. CIT(A) has not accepted the total claim of the assessee for Rs.3,13,62,500/- u/s 54F as per computation of total income furnished before him, including the payment of Rs.98,00,000/- paid to the tenants. In computation of total income, the assessee had claimed for deduction u/s 54F of the Act as follows –

Cost of acquisition includes the cost incurred in acquiring the asset, which includes purchase price as well as expenses incurred in connection with the acquisition of the asset. The cost of acquisition of asset must be understood in the common sense that is, it must represent the expenditure incurred in acquiring the asset. The dictionary meaning of the word “cost” is “what is laid out or suffered to obtain anything – [adopted in Habib Hussein vs. CIT (1963) 48 ITR 859 (Bom)] (Page 117 to 127 of W/S). It is reasonable to include in the actual cost of a capital asset all expenses which were incurred by the assessee in acquiring it as distinct from the items of expenditure which were incurred by him for retaining or maintaining the capital asset [CIT vs. Fort Gloster Industries Ltd. (1971) 79 ITR 48 (Cal)] (Page 90 to 92 of W/S). In this case, the Hon’ble Calcutta High Court has held that the expenses of Rs.36,000/- which the assessee had incurred for payment of commission to the bank on bank guarantee which essential for acquisition of the machinery by the assessee should be treated as part of assessee’s “actual cost”.

The Hon’ble Supreme Court of India in the case of Challapalli Sugars Ltd. vs. CIT (1975) 98 ITR 167 (SC) (Page 102 to 116 of W/s) has held that the accepted accountancy rule for determining cost of fixed assets is to include all expenditures necessary to bring such asset into existence and to put them in working condition. The interest incurred before the commencement of production on borrowed money can be capitalized and added to the cost of the fixed assets. [Followed in CIT vs. K. Raja Gopal Rao (2001) 252 ITR 459 (Mad)].

In CIT vs. Mithilesh Kumari (1973) 92 ITR 9 (Del HC) (Page 93 to 98 of W/S), the assessee had purchased land by borrowing a sum of Rs.95,000/- from her mother in law. Rs.95,000/- had been paid to the vendor and Rs.16,878/- being interest on loan had been paid to the mother-in-law of the assessee. It has been held that both amount of Rs.95,000/- and Rs.16,878/- constitutes the actual cost of land to the assessee. The fact that the amount of Rs.95,000/- paid to the vendor and the amount of interest paid to a different person does not make difference.

In Gulshanbanoo R. Mukhi v. JCIT 83 ITD 649 (ITAT- Mum) (2002), it was the question that whether the expenditure to make a residential house habitable will be included in the cost of new asset? The words used about the amount spent on purchase of new asset are ‘cost thereto’ and not ‘price thereto’. The cost includes purchase as well. Consequently, the words used signify that the amount of purchase will include other necessary expenditure in this behalf to make a residential house habitable and taken together that will be the cost of the new asset.

In Hiren Himmatsingh Rathod vs. ITO, ITA No.261/Ahd/2019, dated 20.4.2022, (Page 99 to 101 of W/S,. it has been held that the cost for making the property habitable before taking over possession of the same is eligible for relief u/s 54 of the Act. (Decision of ITAT, Ahmadabad in the case of Shrinivas R. Desai vs. ACIT (2013) 145 ITD 12 followed).”

9.2 We have considered the submissions made, gone through the facts of the case and perused the record and the order of the Ld. CIT(A). Our attention was also drawn to the various agreements filed in the paper book for payment of demand draft of ₹56 Lakh, ₹33 Lakh, ₹4 Lakh and ₹5 Lakh making the total sum of ₹98 Lakh. However, it is not mentioned in the agreements filed as to who had paid this amount i.e. the vendor Kishor Kumar Maheswari or the assessee Zafar Iqbal as the agreements mentioned that both of them had jointly paid the amount. However, in the case of CIT vs. R. Ranga Setty [1985] 22 Taxman 252 (Kar.) it has been held that In a compulsory acquisition case, any payment made by the landlord to the tenant in regard to surrender of tenancy right cannot be considered as an expenditure incurred in connection with compulsory acquisition and in the case of L.M. Patel & B.M. Patel (HUF) vs. CIT [2012] 27 taxmann.com 234/211 Taxman 252 (Guj.) it has been held that Payment for relinquishment of tenancy right held not deductible since it was made only for reducing its tax liability and not for the purpose of executing the transaction of sale. Since the assessee claims that the money was paid for getting the encroachers to evict the property illegally occupied by them except for the notarised agreements, no other evidence viz. police complaints etc. for getting the premises evicted from the unauthorised occupants have been filed and only the details of demand drafts are mentioned, this issue is also remanded to the Ld. AO to examine the claim of the assessee, verify the evidence for the payment made as well as the source of payment and to ascertain from the vendor as well as to who had incurred this expenditure and thereby decide the issue in accordance with the judicial pronouncements mentioned, the facts of the case of the assessee, the evidences to be filed and thereafter, consider the claim of the assessee as per law. For statistical purposes, this additional ground of appeal is allowed for quantification of the deduction claimed u/s 54F of the Act.

10. In the result, the appeal filed by the assessee is partly allowed for statistical purposes.

Order pronounced in the open Court on 5th February, 2026.