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TMI Blog2024 (11) TMI 1305X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd. and a consideration was fixed who paid the above charges to GDA directly on behalf of the assessee and also paid to the assessee an amount. Thus it is clear that assessee being the legal heir of late husband was holding a lien on the land owned by late Ram Prakash Goel and only because of the lien held by the assessee through her late husband, the GDA has allotted the land admeasuring 3475sq.mts. on payment of development fees, lease rent and freehold charges. The above facts are demonstrated by the assessee by filing the relevant letters and communications with the GDA in the form of paper book. It is clear that the assessee has owned lands which were acquired by the GDA in the year 1984. The GDA has merely acknowledged and finally transferred the title of the property only on 25.04.2014 and handed over the property title to the assessee on 25.11.2014. It does not mean that assessee has acquired the property only on 25.11.2014. It clearly shows that the assessee held the right of lien on the lands not physically but originally claimed with the GDA. Assessee held the right on the land from the date of original purchase date of the property which was acquired by the GDA in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 06.12.2023 for AY 2016-17. 2. Brief facts of the case are, assessee is an individual who owned lands in Kaushambi area of Gkhaziabad. The abovesaid lands were originally owned by her late husband, Shri Ram Prakash Goel and the abovesaid lands were acquired by the Ghaziabad Development Authority (GDA) in the year 1984. In lieu of the land acquired by GDA, late Shri Ram Prakash Goel was to be granted equivalent piece of land in Kaushambi vide a government order no. 2793/9-A-3-96-45 L.A./90 dated 16.07.1996. 3. The 1996 order became a subject matter of dispute and finally on 15.03.2002 late Shri Ram Prakash Goel was allotted land at Kaushambi which was 56% equivalent of land acquired vide government order no. 809/9-A-3-2202-45 L.A./90 dated 15.03.2002 issued by Chief Secretary, Government of Uttar Pradesh. 4. The assessee s, late husband vide the said allotment letter became entitled to the land in question measuring 3474.74 sq. mts. in Kaushambi which was earmarked and sanctioned as plot no. SH-1 in Kaushambi residential scheme measuring 3475 sq. mts. by GDA vide letter No. 174/12/L.A.A./2012 dated 17.01.2013 against payment of development fee Rs. 1,02,51,250/-, lease rent of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plot of land eligible for residential use bearing no. GH-18B in Sector-3 of Vaishali. Since M/s Meenal Housing Pvt. Ltd. was not making the payment of the balance amount, the assessee negotiated with a new buyer M/s Royce Developers P. Ltd. for a sale consideration of Rs. 20,91,00,000 and before the sale could be completed the assessee in order to grant a clear title without any encumbrances was to obtain a discharge from M/s Meenal Housing P. Ltd. with whom it had an MOU for the sale against a consideration of Rs. Rs. 14,76,76,450/- plus development expenses (Rs.1,17,32,000) and other expenses. The assessee in order to make the property in question free from any existing or possible disputes negotiated with M/s Meenal Housing P. Ltd. for the cancellation of the MOU which was cancelled vide an agreement dated 20.10.2015 for a lump sum amount Rs. 8,08,75,000 including amount paid by them to the assessee directly or on her behalf totaling to Rs. 3,47,32,000/- and thus an amount of Rs. 4,61,43,000 (8,08,75,000 minus 3,47,32,000) was paid to M/s Meenal Housing P. Ltd. for improvement in the right and title of the land in question to facilitate the sale to M/s Royce Developers P. Ltd. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r considering the detailed submissions, ld. CIT(A) sustained the additions made by the AO in terms of capital gain, however granted relief to the assessee on exemption claimed by the assessee u/s 54EC of the Act with a direction to AO to verify the bonds and allow the claim of the assessee as per Rules. 13. Aggrieved assessee is in appeal before us raising following grounds of appeal :- 1. That the order of learned Commissioner of Income Tax (Appeals) is bad in law as well as on the facts and in the circumstances of the case. 2. That the learned Commissioner of Income Tax (Appeals), has erred in rejecting the Contention of the appellant that adequate opportunity of being heard was not provided by the ld. AO. 3. That the learned Commissioner of Income Tax (Appeals), has erred in upholding the decision of the assessing officer of treating the long term capital gain as short term capital gain by wrongly considering the year of acquisition as FY 2014-15 instead of 15.03.2002 i.e., the date confirming the order of allotment of the land in question vide order no. 2793/9- AA-3- 96/45 LA90 dated 16.07. 1996 against a compensation of Rs. 20,83,903/-. 4. That the learned Commissioner of Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 2002. Regarding Rs. 4,61,43,000/- paid to M/s. Meenal Housing Pvt. Ltd. (MHPL) MOU was entered into by the assessee with MHPL on 08.04.2013 and MHPL paid Rs. 3,47,32,000/- as advance which included Rs. 1,17,32,000/- directly paid to GDA. The MOU was cancelled at a settlement amount of Rs. 8,08,75,000/- and assessee paid Rs. 4,61,43,000/- to MHPL which it claimed as cost of improvement which is not acceptable as it is not related to acquisition or improvement of land. This payment has no connection / direct nexus with transfer of said land from GDA to assessee. The section 48(i) of the Income Tax Act clearly says that the expenditure incurred should be wholly and exclusively be in connection with such transfer. The reliance is placed on decision of the Hon ble Apex court while following its decision in the case of RM. Arunachalam (supra) held that where the mortgage is created by the assessee himself, then the expenditure incurred by the assessee to repay the mortgage debt cannot be held to be the cost of acquisition or cost of improvement allowable under section 48(ii) of the income-tax Act. And on the decision of the Hon ble ITAT Ahmedabad in Maradia Wire Rods Ltd. v. Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the land in question came in existence. Thus in so far as the assessee is concerned the right in land in question came into existence on 15.03.2002 and not on date of its registration on 25.11.2014. Reliance is placed on the following judgements : Hon'ble Karnataka High Court in the case of CIT vs A Suresh Rao 223 Taxmann 228(Kar) Hon'ble Punjab Haryana High Court in the case of Mrs.Madhu Kaul v. CIT Anr.[(2014) 363 ITR 54 (P H)] Hon'ble Punjab Haryana High Court in the case of Vinod Kumar Jain v CIT Ors. [(2012) 344 ITR 501 (P H)] Hon ble Bombay High Court in the case of CIT v. Tata Services Limited [(1980) 122 ITR 594 (Bom).] Hon ble Bombay High Court in the case of Principal CIT v. Vembu Vaidyanathan [(2019) 413 ITR 248 (Bom.)] Hon ble ITAT Bangalore, C Bench in the case of Sri Mahendrasingh Ramsingh Jadav Vs. ITO in ITA No. 32/Bang/2018 dated 16.03.2021 In the Above mentioned judgements it is held that assessee gets title of property on the basis of allotment letter and payment of instalment was only a follow up action and taking delivery of possession is only a formality. Hence the assessee had got the right in the property on 15.03.2002. There was no obligation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Kaushalya Devi Vs. CIT (2018) 92 Taxmann.com 335 (Delhi) in para 26 and 27 of the order has held that 26. Looking at the totality of the aforesaid circumstances and on the basis of findings recorded by the Tribunal, we would hold that there was a close nexus and connect between the payment of Rs. 25,00,000/- and the transfer of the property to the purchaser resulting in income by way of capital gains. There was proximate link and the expenditure incurred was in furtherance and to effectuate the transfer/sale of the property and was not remote and unconnected. Expenditure of Rs. 25,00,000/-, therefore, has to be treated as expense incurred wholly and exclusively in connection with the transfer of immovable property and, hence, allowable as a deduction under clause (i) of Section 48 of the Act. However, we would like to clarify that Rs. 7,50,000/-which was paid by Anil Kumar Sharma and subsequently refunded, cannot be allowed as a double deduction. In other words, refund of Rs. 7,50,000/-would mean that the earlier payment made by Anil Kumar Sharma was squared off. The assessee had in fact incurred expenditure of Rs. 25,00,000/-which was paid to Anil Kumar Sharma to forego an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be treated as the title of the assessee. It can be considered that title was granted only on 25.11.2014. Therefore, the title acquired by the assessee only from this date. Therefore, the determination of short term capital gains by the AO is proper. He relied on the findings of AO at page 2 of the assessment order. 18. Considered the rival submissions and material placed on record. We observed that the original lands were owned by late husband of the assessee, Ram Prakash Goel in Kaushambi area of Ghaziabad. It is a fact on record that abovesaid lands were acquired by Ghaziabad Development Authority in the year 1984. It is also fact on record that because of acquisition of abovesaid lands, GDA was to grant equivalent piece of land in Kaushambi vide Government Order No.2793/9-A-3-96-45 L.A./90 dated 16.07.1996. The abovesaid order of 1996 was a subject matter of dispute and finally on 15.03.2002, late husband of the assessee was allotted land at Kaushambi which was 56% equivalent of the total lands acquired by the GDA vide Government Order No.809/9-A-3-2202- 45 L.A./90 dated 15.03.2002 issued by the Chief Secretary, Government of Uttar Pradesh. As per the abovesaid allotment l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed amount of lands sanctioned in the name of the assessee only on payment of development fees, lease rent and freehold charges to GDA and since assessee was not in a position to make such payments, Meenal Housing Pvt. Ltd. came into the picture by signing a MOU with the assessee and it is also a fact on record that Meenal Housing Pvt. Ltd. paid the above fees to GDA directly. Therefore, the assessee is eligible to claim indexed cost on cost of purchase as on 30.03.1987 and the payment of development fees etc. to GDA on 07.02.2013. With regard to payment made to Meenal Housing Pvt. Ltd., the assessee has made to Rs. 4,61,43,000/- as compensation to clear the title from all encumbrances and the abovesaid payment of Rs. 4,61,43,000/- is nothing but a charge on the property as a lien. Therefore, the abovesaid payment has to be allowed as cost directly connected to the sale of the above land and stamp duty borne by the assessee of Rs. 9,67,5000/-. Therefore, we direct the AO to allow the claim of the assessee to the extent of above cost of improvement and cost of expenditure directly linked to the sale of the property. Accordingly, grounds raised by the assessee are allowed. 20. With re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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