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TMI Blog2020 (5) TMI 349X X X X Extracts X X X X X X X X Extracts X X X X ..... acts with regard to the ownership of ₹ 18,00,000/- paid to D.N. Chaudhary deceased. Notwithstanding the incompleteness of the transaction, the requirement for claim of deduction in the investment of capital gains, the assessee is entitled for deduction to that extent the contribution belongs to the assessee out of the said ₹ 18,00,000/-. The Assessing Officer is directed to examine the same and the claim of the assessee indicated above. Thus, this part of grounds is allowed for statistical purposes. Allowability of expenses out - HELD THAT:- There is no legal impediment in transferring the property by the appellant without concurrence of the sisters of his father. The payment, if made by the appellant therefore appears to be gratis, and is not related to the transfer of the land in Sept 2006 and therefore such expenditure is not wholly or exclusively related to the transfer of the capital asset and therefore not deductible u/s 48. Recipients of cash are not the owners of the property at the time of property transferred. The above payments made are not required to be incurred wholly and exclusively for the transfer of property by the assessee. Above finding of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has erred in understanding the proposition of the rights of the appellant s daughter his father s sisters has failed to agree that the same are inherent embedded as per Hindu Succession Act. 2.2. The learned CIT(A) has erred in understanding the factual matrix involved in such Joint families, irrespective of the rights being released by appellant s father s sisters there being no mention of their names in the Development Agreement, the father s sisters though had no legal rights but by sending the legal notice wanted to create litigation nuisance value were potential threat to the deal. 2.3. The learned CIT(A) has erred by overlooking the legal course available to the father s sisters who carried the intention of harassing the appellant by sending a legal notice has erred in being Judgmental in deciding the procedure of law which was not before him. 2.4. The learned CIT(A) has erred in appreciating the facts of payments made to daughters of the appellant who were legally entitled were part parcel of the agreements. 2.5. The learned CIT(A) has erred in understanding the provision of u/s 48(i) the concept of expenditure being incurred Wholly ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year through a Development Agreement dated 07.09.2006, which was subsequently registered as a sale deed on 21.04.2008. An examination of the development agreement registered on 07.09.2006 i.e. in present assessment year and the sale deed registered on 21.04.2008 i.e. A.Y. 2009-10, Assessing Officer found that the total consideration of ₹ 96,00,000/- was paid in instalments i.e. ₹ 48,00,000/- in F.Y. 2006-07, ₹ 5,00,000/- in F.Y. 2007-08 and the balance of ₹ 43,00,000/- in F.Y. 2008-09. In the return of income, assessee adjusted his share of consideration and reduced the sum of ₹ 11.50 lakhs out of ₹ 48 lakhs. This amount of ₹ 11.50 lakhs was paid to the daughters and sisters of the father of the assessee. Assessee claims that the said payments was needed to reduce the likely litigation from the said relatives. The Assessing Officer disallowed the same and adopted the net sale consideration at ₹ 48 lakhs instead of ₹ 36,50,000/- (₹ 48 lakhs ₹ 11.50 lakhs) claimed by the assessee. 5. Further, the assessee claimed a deduction u/s 54F of the Act. The Assessing Officer disallowed the claim u/s 54B of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hondve (₹ 6,90,000/-), ld. Counsel for the assessee relied on the Hon ble Bombay High Court s judgement in the case of CIT vs. Kamal Wahal, 351 ITR 4 and submitted that the reinvestment in the name of spouse is eligible for deduction u/s 54F of the Act and considered the purposive construction of the provisions. Further, ld. Counsel relied on the Hon ble Delhi High Court s judgement in the case of CIT vs. Ravinder Kumar Arora, 342 ITR 38 (Delhi-HC) in support of the case of the assessee. 9. On hearing both the sides on this issue of investment of capital gains in the assessee s wife, I find the judgement of the Hon ble Bombay High Court in the case of Kamal Wahal (supra) and the judgement of the Hon ble Delhi High Court in the case of Ravinder Kumar Arora (supra) helps the assessee. In these cases also, the reinvestment was made by the assessee in the residential house in the name of his wife. The purposive construction of the provisions preferred as against the literal construction of the same. For the sake of completeness, the relevant para 7 to 10 of the judgement of the Hon ble Bombay High Court in the case of Kamal Wahal (supra) are extracted hereunder :- 7. We h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut of the sale proceeds and that there was no constribution from the assessee's wife. 10. Having regard to the rule of purposive construction and the object which Section 54F seeks to achieve and respectfully agreeing with the judgment of this Court, we answer the substantial question of law framed by us in the affirmative, in favour of the assessee and against the revenue. B. Reinvestment in the names of sons 10. Regarding the investment in the hands of the sons, it is the submission of the ld. Counsel for the assessee that the said decision (supra) applies to the investment in the names of the sons also. 11. Per contra, the ld. DR for the Revenue submitted that the investment in the hands of the wife and daughters cannot be compared with that of the investment in the hands of the sons. In the present case, the assessee s investment made in the names of Shri Rahul Sakaram Bhondve (son), Shri Tarachand Sakaram Bhondve (son). The above cited decisions are relevant for the case of spouse only not to the son s cases. Considering the same, I am of the opinion that the discussion given by the CIT(A) and the Assessing Officer in their respective orders is fair and r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relatives still have some right in the said property though the property actually stands in the name of the assessee at the time of sale of the land. I find there is no dispute about an ancestral nature of the lands in question. The lands were partly owned by the assessee and his uncle 50% each. Father s sisters and daughters are not the owners of the property. There are details furnished by the assesse which are discussed in para 5 of the order of the CIT(A) as to the extent of amounts paid by the assessee to the father s sisters and father s daughters. The bonafide of the payments is not in dispute. The question is why the said payments are allowable as deduction in the computation of the capital gains. I find it is undisputed fact that the names of the father s sisters and father s daughters are not borne on the records of the revenue orders. The title of the property is not in dispute and the names of the assessee and his uncle appeared in 7/12 extracts. Therefore, whatever is paid by the assessee to his uncle is not as a matter of right but only aims at to keep him happy. Therefore, it is not the case that the title needs to be perfected before property is transferred. Howeve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d registered on 21/4/2008, the sellers are mentioned as Smt. Bhagubai B. Bhondve, her sons Vilas, Dyaneshwar, Popat Bhondve and her daughter Hirabai M. Garade along with the assessee Sakharam Bhondve. The confirming parties are 14 in number being other members of the extended Bhondve family, including the son Rahul and daughters Vidya and Varsha of the appellant. These persons are merely confirming parties and not sellers. d. The development agreement in Sept 2006, specifies that 50% of the payment is to be made to the assessee and 50% is to be made to the uncles of the assessee and their family. There is no direct payment made by the builder to either the sisters of the appellant s father or to his daughters. The consideration has been paid only to the appellant and his uncle. 5.3 From the above set of facts, it is evident that the sellers of the property an only the assessee and his uncles. The sisters of the appellant's father have released their rights in the ancestral property in 1997 itself and this entry being duly recorded in the mutation record on 9/2/1998 results in all the rights of the sisters of the appellant's father being extinguished in the year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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