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TMI Blog2013 (4) TMI 829X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of A.Y. 2009-10 against the order of ld. CIT(A), Jodhpur, dated 26/02/2013. He has also applied for stay of the outstanding demand which was raised in this case regarding only one connected income. It was decided to hear both these maters jointly with the concurrence of the parties. 2. The assessee, as individual, filed his (Return of Income [ROI]) on 23/09/200, for A.Y. 2009-10, declaring total income of ₹ 5,14,081/-. Apart from agricultural income the assessee has also disclosed a minus long term capital gain (LTCG) Rs. 1,07,35,966/- which has been carried forward. Besides the assessee has also claimed a deduction of ₹ 92,12,470/- u/s 54 of the Act. In this appeal we are concerned only with the issue of computation of LTCG and related deduction claimed by the assessee. 3. The assessee sold a house situated at 377-A, Shastri Nagar, Jodhpur, for a total consideration of ₹ 4,01,00,000/- (Four Crores and one lakh only), against which he has claimed indexed cost of acquisition of Rs. being 3,74,21,477/- and ₹ 1,34,14,519/- and cost of improvement post acquisition by way of payment of hefty sum encumbered and later freed form for selling this house. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest so charged is bad in law and bad on facts. 7. We have heard rival submissions with regard to the grounds raised as above. The fate of the stay application is tagged with this main appeal, so there was no point in hearing, as such, on that. Ground No. (1) was not pressed by ld. AR Shri Amit Kothari, also written so in the small write-up produced for our perusal. Therefore, ground No. (1) is dismissed as no pressed. 8. The relevant facts apropos ground Nos. 2 and 3, have already been discussed. It was argued by ld. AR that computation of LTCG done by A.O. and approved by ld. CIT(A) is incorrect being against the facts and the law. He argued that reference u/s 55A to DVO for the determination of FMV of this property is not justified. He has relied on the FMV Determination by the Registered Value whose report was field before the authorities below and copy for which is enclosed in the paper book. The ld AR has clamoused that the burden cobbled with this property, may be after acquisition by way of pledging it with the Banker as guarantor would be considered as towards cost of acquisition because without getting it reimbursed the property could not be sold. 8. Per contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of May, 2008) and by taking FMV of the building consisting of basement, ground floor and first floor, has arrived at a depreciated cost of the Building as on 1.4.1981 of ₹ 20,04,207/-, which has also been accepted by the AO. Thus, the then cost of construction has been accepted, as given by the Registered Valuer at ₹ 34,63,809/-. From this figure only the Registered Valuer (RV) has arrived at the cost of ₹ 20,04,207/- as on 1.4.81 and this has been accepted since the building had been demolished by the purchaser by the time the DVO reached the spot. Thus, as per RV the cost of the land comes to ₹ 3,66,36,191/-, at the time of its sale. The registered valuer has adopted the decrease in land rate @7 % per annum per square foot and has arrived at its FMV as on 1.4.81 at ₹ 44,25,600/-. The area of the land being 9600 sq. ft (80 x 120 ). Thus, the total cost of the property in question comes to ₹ 64,30 lakhs. The argument of ld. AR that how the AO can accept one part of RV s report and ignore the other part seems to be not only logical but also justified. There cannot be two divergent views about the same report in respect of land and building. If ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ex , in relation to previous year, means such Index as the Central Government may, having regard to seventyfive per cent of average rise in the Consumer Price Index for urban non-manual employees for the immediately preceding previous year to such previous year, by notification in the official gazette, specify in this benefit . Likewise, para 35.6 of the Circular No. 636 dated 31.08.1992 reads as under:- 35.6. for the Financial year 1981-82, Cost Inflation Index is 100 and C.I.T. for each subsequent year would be determined in such a way that 75% of the rise in Consumer Price Index for urban non-manual employees would be reflected in the rise in C.I.J . The cost inflation index as on 1.4.1981 was 100 and the corresponding figure relating to A.Y. 2009-10 was 582 which induced 75% of the rise in consumer price index. Therefore if the cost inflation index, which gives a statutory formula for determining the fair market value for purposes of computation of capital gains, if applied backward, will result in maximum amount of capital gains liable to tax at 25% of the full scale consideration. In other words, one can calculate the taxable capital gains on the basis of above statu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asset released from the bank so that it could be sold, be deducted from the sale consideration, to compute the capital gain? Undoubtedly, this payment is inextricably linked with the transfer of the capital asset. Without making this payment assessee could not even transfer the rights in this property. The Madras High Court has said yes it can be allowed. Their Lord ships of Mumbai High Court while deciding the case of ITO Vs Smt. Lalitaben B. Kapadia reported in (2008) 3 DTR 28, have taken a similar view. Therefore, this amount can be allowed as deduction of expenses incurred in connection with the transfer after considering the factual matrix. The assessee has claimed this payment as a deduction against the sale consideration on the premise that this amount shall be treated as incurred towards cost of acquisition of this capital asset. In this connection reliance has been placed on the following decisions :- (i) CIT vs. K. Raja Gopala Rao 252 ITR 459. (ii) Sh. Karan Singh Choudhary vs DCIT Circle-3, Jodhpur 46 Taxworld 126. -a sum paid for the removal of encumbrance on the capital asset such amount will be allowed as deduction to the assessee. (iii) CIT vs. Shanku ..... X X X X Extracts X X X X X X X X Extracts X X X X
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