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TMI Blog2018 (10) TMI 1581X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ground No. 2. Hence, the same is dismissed being not pressed. 3.1 Apropos Ground No. 1 of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- ''2.4 I have perused the facts of the case, the assessment order and the submissions of the appellant. As noted by the AO, during the year under consideration, the assessee alongwith Shri Dilip Agarwal had sold a Plot No. 549, Uday Marg, Raja Park, Jaipur to Suresh Punjab and Shri Sundar Ganga Ram Punjabi for a consideration of Rs. 1,00,00,000/-. However, while computing capital gains the assessee has declared consideration of Rs. 45,00,000/- only for his 50% share in the said plot instead of Rs. 50,00,000/- as it had been submitted that there was encroachment on the said plot by two persons namely Babulal Meena and Phool Chand Jha. It had been submitted that the assessee served them a legal notice through Advocate and made efforts to evacuate the plot through Police also and since these efforts could not fetch result, the assessee had to make an agreement with the encroachers to the effect that at the time of sale of plot, a sum equal to 10% of the sale consideration shall be given to them for vacating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. In view of the discussion as above, the addition made by the AO is confirmed. The ground of appeal is dismissed. 3.2 During the course of hearing, the ld.AR of the assessee that the ld. CIT(A) has erred in confirming the addition of Rs. 5.00 lacs which was paid to vacant the unauthorized possession on plot. The amount is allowable prior to working out capital gain. He further pleaded that the assessee purchased the property in March 2002 and thereafter two persons namely Shri Babu Lal Meena and Shri Phool Chand Jha unauthorizedly constructed two small rooms. The assessee gave a legal notice to these persons on 1-11-2007. The assessee also tried to remove these unauthorized persons through Police. However, the unauthorized possession from these unauthorised occupants could not be removed. Thereafter in May 2008, assessee and the co-owner of the plot agreed with Shri Babu Lal Meena and Shri Phool Chand Jha that whenever the plot is sold, they will be paid 10% of the sale consideration towards vacating the unauthorized structure on plot. The assessee has submitted the copy of the legal notice issued to Shri Babu Lal Meena and Shri Phool Chand Jha. Copy of Ikrarnama entered into ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s noted that the AO has made the addition of Rs. 5.00 lacs by observing as under:- ''4.5 ..On perusal of the sale agreement dated 15-01- 2013 on page 10 of the sale deed, it is clearly mentioned that the plot was flat and vacant at the time of sale. Had there been any construction by the so called encroachers, the same must have found a mention in the sale agreement. The factual and legal position being so, the payment made to evacuate the illegal possessions can neither be allowed as a cost of improvement nor as an expenditure incurred in connection with sale transaction. This means an addition of Rs. 5,00,000/- to the income of assessee.'' In first appeal, the ld. CIT(A) has confirmed the addition made by the AO. From the available records, it is noted that there was a dispute and Shri Babu Lal Meena and Shri Phool Chand Jhan were having the illegal possessin on the premises of the assessee. It is further noted that the ld.AR of the assessee vide letter dated 17-03-2016 addressed to ACIT, Circle - 6,Jaipur had requested the AO to make enquiry if he has any doubt about the illegal possession of the premises by these two persons PBP 45). However, the AO had not given any adverse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the case of CIT vs Miss Pijoria C Patel [2002] 242 ITR 582 (Bom), the Hon'ble Bombay High Court held as under:- ''...The short point which arises for consideration in the present matter is whether compensation paid by the assessee and other co owners to the hutment dwellers for vacating the land was an allowable expenditure within the meaning of section 48 read with section 55 of the Income tax Act, 1961. The answer to this question will depend on whether the expen ses incurred by the assessee and other co owners constitute cost of improvement under section 48(ii). The said point is covered by the judg ment of the Division Bench of this court in the case of CIT v. Shakuntala Kantilal [1991] 190 ITR 56 and the judgment of the Division Bench of this court in the case of Hardiallia Chemicals Ltd. v. CIT [1996] 218 ITR 598. On eviction of the hutment dwellers from the land in question, the value of the land increases and, therefore, the expenditure incurred for having the land vacated would certainly amount to cost of improvement. Accordingly, the above question is answered in the affirmative, i.e., in favour of the assessee and against the Department. The reference accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12 and 26-07-2012 to 3 parties of an amount of Rs. 70,20,840/- were neither returned nor any interest received on the same and maximum amount of interest charges were attributable to these. As regards interest paid to private parties Raj Kumari Agarwal and Aparajita Saini, there is an opening balance and during the year interest has only been credited. Thus, it was concluded by the AO that interest bearing loans have not been utilized in giving advance on which interest has been earned and thus the claim of interest expenses against such interest income was rejected. In the present proceedings, A.R. reiterated the earlier submissions made before the AO. A perusal of the submissions and the ledger accounts, the A.R. has claimed to have paid Rs. 12 lakhs on 5-04-2012 and 7 lakhs on 06-08- 2012 to M/s. DND Build Homes Pvt. Ltd. A perusal of the account shows that on these dates funds were available with the assessee and there is no nexus for the loan funds from HDFC bank. As regards the amount of Rs. 25 lakhs on 07- 07-2012 to Shri Sunil Tiwari, the same is only for 3 days and returned on 10-07-2012. As regards loan to M/s. Feathertouch Polychm P. Ltd. M/s. Laxmi Builders & Developers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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