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TMI Blog2017 (12) TMI 1259X X X X Extracts X X X X X X X X Extracts X X X X ..... 09 would be relevant claim in AY. 2009-10. Looking at any aspect, the claim of compensation to tenants is allowable expenditure u/s. 48(1). Therefore, reversing the findings of CIT(A), since the capital gains were taxed in the impugned assessment year, the claim is allowable in this assessment year. For the reasons stated above, assessee’s grounds are allowed. Coming to Revenue appeal, as seen from the facts of the case, assessee has not sold the property ultimately. GPA holder registered the document and difference in price was accounted by the company as ‘income’. On that reason, the order of CIT(A) cannot be faulted and there is no merit in Revenue’s contentions. Like-wise, the payments of commission to the parties is also established and nothing was brought on record to counter the findings of Ld.CIT(A) on the issue. Even with reference to indexed cost of acquisition, it is purely a matter of fact and Ld.CIT(A) has analysed in detail in para 8.4 and 8.5 of the order which was extracted above. The entire order was passed by CIT(A) after giving due opportunity to AO on all the issues and after obtaining a report through the Addl.CIT, Range-11, Hyderabad, being forwarded on 23- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ost of acquisition to arrive at the taxable income of ₹ 4,47,34,200/- after allowing the expenses of ₹ 4,50,300/- towards registration charges and deduction u/s. 54F to the extent of ₹ 64,40,000/-. 3. Assessee has raised various grounds before the Ld.CIT(A) and also furnished additional information which was sent to AO for verification. After receipt of the report of AO, Ld.CIT(A) considered the facts and gave relief of some items and confirmed other items. The issues considered by him are as under: Addition on account of disallowance of moneys paid to the confirming party ₹ 1,15,00,000/- : 3.1. It was explained by assessee that she has entered into an agreement of sale cum GPA with M/s. Emami Nirman Pvt. Ltd., for a consideration of ₹ 4,01,04,000/- and that was the amount which was received by her. The ultimate sale to M/s. Emami Constructions Pvt. Ltd., Musapet, was by the GPA holder and difference of consideration was received and accounted for by M/s. Emami Nirman Pvt. Ltd. After examining the facts and obtaining further reports from assessee, Ld.CIT(A) deleted the addition stating as under: 5.6 Perused the observations of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... survive. Accordingly, this ground of appeal is treated as allowed . 3.1.1. Revenue is aggrieved and raised the Ground No. 2(a) on this issue. Disallowance of payments to tenants : 3.2. Assessee has claimed expenses of ₹ 50 Lakhs being the payments made to tenants for their eviction in computing the capital gains. AO disallowed the amount stating that those parties to whom the amounts were paid were not available for verification. Assessee objected before the CIT(A) stating that the properties were received with tenants and were also sold along with tenants but the vacation of tenants took some time that is why there was a gap between the agreement of sale and ultimate sale deed, but in the meantime, assessee paid by way of cheques and some by way of cash to various tenants. Assessee also submitted evidence regarding existence of tenants on the property by way of photographs and relied on various case law that expenditure for vacating tenants is an allowable expenditure. Ld.CIT(A), however, rejected the same by stating as under: 6.5 Perused the observations of the assessing officer in assessment order and the remand report alongwith submissions of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in July, 2007, without any indication of disputes or demands from the tenants and there by the claim of expenses on that count in the subsequent period, amounts to an after thought as such the claim is not maintainable. Hence, the claim of expenses u/s. 48(i), is not available to assessee, on facts as such it is held reasonable to hold that the disallowance is justified. This ground of appeal is dismissed . 3.2.1. Assessee is aggrieved on the above decision of CIT(A). Disallowance of commission payments claimed at ₹ 20,05,000/: 3.3. While computing the taxable income of assessee, AO made disallowance of above amount claimed to have been paid as commission. AO disallowed the amount on the reason that summons issued to the recipient parties returned un-served. AO was of the view that the role of commission recipients and their services was not established as the recipients being none other than the representatives of the agreement holding companies and as such claim was rejected. 3.3.1. Before the Ld.CIT(A), assessee submitted confirmations with reference to payment of commission and also copies of their income tax returns which were referred to the AO for v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 91,85,357/-. AO disallowed the amount but allowed only an amount of ₹ 4,50,300/- being stamp duty paid. Assessee objected for such disallowance and submitted valuation report and working of indexed cost. It was submitted that total area was 14,000 Sq. Ft and portion of property was dismantled subsequently and after settling the matter with tenants, assessee sold 6,230 Sq. Ft., by way of agreement of sale deed and there is no disparity in information. After considering the remand report, Ld.CIT(A) allowed claim of assessee by stating as under: 8.4. Perused the observations of the assessing officer and the submissions of the appellant. As could be seen from the facts of the case, the property under reference was shown to have been acquired by Mr. N. Padma Rao, father of the appellant in the year 1978, on which constructions were shown to have been made and let out to tenants, from which income from property were derived. The property was gifted to the assessee vide gift deed dt. 10.04.2006, and 12.04.2006, by Mr. N. Padma Rao, and vide the agreements for sale dt. 18.07.2007 and 19.07.2007, the said property was agreed to be sold by the appellant to M/s. Emami Ni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessing officer, is not justified and the appellant is entitled to claim the indexed cost of acquisition based on valuation report which was not rejected by the assessing officer. However, there appears an arithmetical mistake in the valuation report, wherein the depreciation wrongly @25% on the RCC structured building was omitted to be deducted from the net value, resulting in arriving of value of property, wrongly at ₹ 14,02,500/- for the year 1978-79, which was rounded upto ₹ 14,00,000/-, based on which the indexed cost was worked out at ₹ 91,85,356/-. By deducting ₹ 1,80,000/-, the net value would be worked out to ₹ 12,22,500/-, and the indexed cost would be worked to ₹ 81,52,307/-, based on the rectified value of ₹ 12,20,000/- as pointed out by the assessing officer in the remand report. Accordingly the assessing officer may rework the indexed cost and compute the capital gains. The reworking will confirm the disallowance of additional claim of cost of acquisition to the extent of ₹ 10,33,049/-. To this extent this ground of appeal is treated as partly allowed . 3.4.1. Revenue is aggrieved on the above claim and raised Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. We have considered the rival contentions and perused the orders and Paper Book placed on record. As seen from the agreements of sale entered by assessee with M/s. Emami Nirman Pvt. Ltd., the transaction happened in July, 2007 by way of two separate agreements of sale cum GPA and the total consideration received on those agreements was the amount as received by assessee at ₹ 4,01,04,000/-. The terms also indicate that the tenants are existing and they are to be vacated. Assessee also furnished evidence that some sheds were available on the property doing business and she was also offering rental incomes earlier from them. Therefore, existence of tenants is not in dispute. Assessee has paid certain amounts by way of cheque and certain amounts withdrawals from bank, much before the assessment year, the facts of which was also confirmed during the course of survey in the statements. Therefore, payment to tenants cannot be doubted. To that extent, we are not in agreement with the order of Ld.CIT(A), wherein he did not allow the amount stating that the agreements were entered in 18-07-2007 and there was no basis for claiming the expenses as compensation paid to tenants in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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