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TMI Blog2019 (6) TMI 1693X X X X Extracts X X X X X X X X Extracts X X X X ..... y any of the grounds stated hereinabove either before or at the time of hearing. The only issue raised by the assessee is that the Ld. CIT (A) erred in not granting the deduction amounting to Rs. 94,90,000/- paid towards cancellation of Banakhat against the income under the head capital gain. The facts of the case are that the assessee an Individual and generating his Income from Let-out of House Property, commission, Capital Gain on sale of land, Interest and Dividend Income. The AO during the assessment proceedings observed that the assessee in the year under consideration had transferred the land situated at Survey No. 917 of village mouje Sanathal dated 23-07-2012 for Rs. 6,48,30,800/-. The land was also held by the other four co-owners. As such, the assessee's share was only 23.50% in the said land, and accordingly, the consideration received by him was amounting to Rs. 1,52,35,238/- only. The assessee in his return of income on the sale of such land declared the Short Term Capital Gain (in short STCG) at Rs. 12,91,243/- after deducting the cost of acquisition amounting to Rs. 1,39,43,995/- against the sale consideration. On the question by the AO, the assessee submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12-13. (3) Ledger Account of Both the parties to whom I had paid the amount for cancellation of Banakhat which was reflected in books of account for the A.Y. 2013-14. (4) Copy of the bank Statement. (5) All the payment for cancellation of Banakhat deed for Both the parties amounting of Rs.94,40,184/- the said amount was paid by A/c Payee Cheque. (6) Copy of the balance sheet on banakhat deed was shown as an advance received against the agricultural land. The assessment proceeding for A.Y. 2012-13 was finalized u/s.143(3) read w.s. 147 dated 31.07.2015, the said facts was brought to your notice. (1) Ledger Acount of Agricultural Land from the books of Mavjibhai Savani & Dharmendra Savani duly signed by them. (Name, Address & PAN Number) along-with their ITR Filed and Computation of Income. (2) Ledger Account of Agricultural Land from the book sof Passawala Trading Co Pvt.Ltd. duly signed by the Director. (Name, Address & PAN Number) along-with their ITR Filed and computation of Income. Further the said party had furnished a Separate Letter Explaining the facts vide his letter dated 16.12.2015 by confirming all the facts." However, the AO from the submission made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss book. 2. Both the parties relied on the orders of the authorities below as favourable to them. Receiving the amount have shown the same in their income-tax returns and has also offered the said receipt as income. 3. Both the above parties have given confirmation of receipt of the amount stated in cancellation deed. 4. Disallowance in the hand of appellant and parallel taxation in the hands of recipient amount to double taxation on the same amount which is against the law. 5. In the case of one of the co-owner of the land sold the AO has allowed the claim of improvement cost against the sale consideration for computing capital gain. The differential treatment cannot be meted out to another co-owner while making the assessment of the same property or while valuing the same property. 6. By virtue of said two agreements right in person has been created in favour of both the above parties and said parties get right to get the property transferred in their name or sue for compensation for breach of contract by way of filing suit of specific performance." However, the Ld. CIT (A) during appellate proceedings referred the Banakhat made with Passwala share trading co. lt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dopted a colorable device to escape from the tax liability. The learned AR also submitted that the compensation paid by the assessee was accepted in the assessment framed under section 143(3) of the Act in the case of the co-owners of the property. 4. On the other hand, the Ld. DR submitted that the assessee has not brought any iota of evidence suggesting that there was some dispute between the assessee and the prospective buyers. Moreover, the assessee has entered into another agreement without cancelling the 1st agreement. The learned DR also claimed that the compensation paid by the assessee cannot be qualified as cost of improvement. Therefore the same is not eligible for deduction under the provisions of section 48 of the Act. The learned DR also submitted that the deduction of the compensation allowed in the case of co-owners does not mean that the same should be allowed in the case of the assessee. The learned DR vehemently supported the order of the authorities below. 5. We have heard the rival contentions and perused the materials available on records. From the preceding discussion, we note that the assessee along with other co-owners has purchased a piece of land amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat at the lower value and that too after incurring the huge cost as discussed above. At the time of hearing, the learned AR for the assessee has also not brought anything on record justifying with cogent reasons for entering into Banakhats and cancelling the same. We also note that the assessee has received advances alongwith other coowners against 1st and the 2nd Banakhat for Rs. 11,00,000/- and Rs. 5,40,255/- respectively but it has paid huge compensation amounting to Rs. 36,57,264.00 and Rs. 58,84,460.00 respectively, as discussed above. However, we find that the assessee has paid compensation to the following parties: 1. Mavjibhai Savani 2. Dharmendra Savani 3. Passawala Share Trading Co. Pvt Ltd. On perusal of the income tax return of the aforesaid parties, we note that all the parties have disclosed such compensation in their income tax return and have paid the due taxes on such compensation amount. This fact can be verified from the returns of income of the aforesaid parties which are placed on pages 11, 16, and 23 of the paper book. Accordingly, we hold that impugned transaction cannot be said to have made to avoid the tax liability. It is also important to note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount on which stamp duty was paid. The case of the assessee was that in the case of co-owner, reference was given to DVO under section 50C(2) who had determined fair market value of the property. The ld.counsel for the assessee contended that the assessee made a prayer before the ld.CIT(A) that the same value be adopted in the case of the assessee. We find force in this contention of the assessee, because section (2) of section 50C contemplates that in case assessee raises an objection of the value on which stamp duty was paid, then in order to find fair market value of the asset, reference would be made to the DVO , since in the case of co-owner such reference was made on the same piece of land. The same value ITA No.2444/Ahd/2016 determined by the AO in the case of coowner ought to be adopted in the case of the assessee. We allow the appeal of the assessee and remit the issue to the file of the AO with direction to the ld.AO to compute the capital gain assessable in the hands of the assessee on transfer of the above land by adopting full sale consideration equivalent to the amount determined by the DVO in the case of co-owner. With this direction, we allow this ground of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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