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TMI Blog2015 (6) TMI 844X X X X Extracts X X X X X X X X Extracts X X X X ..... land. This land, purchased by the assessee by means of six separate registered deeds in the years 1962/1963, was transferred during the previous year relevant to the assessment year under consideration to M/s Aarone Infrastructure Pvt. Ltd., New Delhi by means of a registered sale deed for a sale consideration of Rs. 27 crore. A sum of Rs. 9.06 crore was offered as long-term capital gain in the return of income. During the course of assessment proceedings, it was noticed by the AO that the assessee had claimed a deduction for a sum of Rs. 25 lac towards 'Cost of improvement'. In support of this claim, the assessee filed a copy of Court decree issued in a Compromise suit between the assessee and one Shri P.K. Dhingra. The assessee had entere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt paid by the assessee to Shri P.K. Dhingra, which would qualify for consideration and decision at our end. It is an admitted position that when on the earlier occasion this property became the subject matter of sale to Sh. Dhingra, the assessee received a sum of Rs. 12.50 lac in two instalments. It is further apparent that the assessee had to pay a sum of Rs. 25.00 lac to Sh. Dhingra pursuant to a Court decree. It is manifest from para 4 of the impugned order that the ld. CIT(A) has upheld the AO's finding on the assessee actually receiving a sum of Rs. 12.5 lac from Shri P.K. Dhingra on an earlier occasion and the resultant net payment standing only at Rs. 12.50 lac. There is no cross appeal from the side of the assessee assailing this f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctively transfer the property falls within its purview. Not only the expenses directly connected with or for the immediate purpose of the transfer of capital asset, but also all expenses which facilitate the transfer of the capital asset, fall within its scope. It would also include the expenses incurred to remove the impediments or encumbrances in the way of the instant transfer of capital asset. It implies that, any amount paid by the assessee for removing any encumbrance falls u/s 48(i) of the Act. 6. The Hon'ble Bombay High Court in CIT vs. Abrar Alvi (2001) 247 ITR 312 (Bom) has upheld the deduction of the amount paid to resolve the property dispute and remove the encumbrance thereupon u/s 48(i) of the Act. Similar view was earlier ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 12.50 lac, in our considered opinion, rightly deserves to be deducted u/s 48(i) as has been held by the ld. CIT(A). 9. If we strictly go by the provisions, then the sum of Rs. 12.50 lac received by the assessee earlier from Shri Dhingra is in the nature of advance money received. This amount is chargeable to tax in the year in question in terms of section 51, which provides that : 'Where any capital asset was on any previous occasion the subject of negotiations for its transfer, any advance or other money received and retained by the assessee in respect of such negotiations shall be deducted from the cost for which the asset was acquired or the written down value or the fair market value, as the case may be, in computing the cost of acqu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... computed capital gain by taking the indexed cost of acquisition at Rs. 10.00 crore for the lesser area. The ld. CIT(A) accepted the assessee's claim of higher area and ordered for the adoption of the indexed cost of acquisition at Rs. 10.39 crore. This resulted into deletion of addition to the tune of Rs. 38.76 lac, against which the Revenue has come up in appeal before us. 11. We have heard the rival submissions and perused the relevant material on record. There is no quarrel on the fact that the assessee's Registered valuer's report and the Court decree mention the lesser area. At this juncture, it is pertinent to note that the assessee was 1/5th owner of the total agricultural land admeasuring 223 Bighas and 16 Biswas. The claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transferred was not only the lesser area under his exclusive ownership, but also the common area on which he had joint ownership rights. Sale consideration amounting to Rs. 27 crore received by the assessee is in respect of higher area of 44 Bighas, 15 Biswas and 4 Biswans. It is not the case of the Revenue that the assessee transferred his entire 1/5th share in the agricultural land and received Rs. 27 crore in respect of lesser area and some other amount of consideration for the remaining area which was commonly used. When there is a sale of the assessee's 1/5th share in total land area covering both the exclusive ownership/possession as well as the joint ownership/possession, the cost should also be taken for the both, including that of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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