The Jaipur Bench of Income Tax Appellate Tribunal (ITAT) has held that the amount paid for acquiring the title of the property under dispute would be treated as expenditure for transfer of property.
The assessee Lal Singh Naderia had no legal title on the property and sold the property at distress value and the same was at Rs. 1,20,00,000/- where the share of the assessee was 40%. The stamp duty authority in the first instance valued that property at Rs. 5,76,54,492/- and thereafter, the same was reduced to Rs. 1,94,19,827/- by an order dated 15-06- 2009.
As per provision of section 50C of the Income Tax Act 1961, while computing the amount of capital gain chargeable to tax the AO had applied the revised stamp assessed value as actual consideration received and value of consideration had been substituted from Rs. 1,20,00,000/- to Rs. 1,94,19,827/.
Mukesh Khandelwal appeared on behalf of the assessee submitted that if the amount was reconsideration based on the stamp valuation the relevant receipt of the disputed amount had fallen due and the same was required to considered as paid to settle the same property disputed and the deduction under section 48 was claimed by the assessee to the extent of his share @ 40%.
A. S. Nehra appeared on behalf of the revenue.
The Division Bench Of Sandeep Gosain, (Judicial Member) And Rathod Kamlesh Jayantbhai, (Accountant Member) following the decision that any amount, the payment of which was absolutely necessary to affect the transfer would be an expenditure covered under section 48(1)(i)[ Gopee Nath Paul & Sons Vs. DCIT 278 ITR 240(Cal)] held that ,
The payment of the said amount to settle the property dispute would be considered as the payment which was absolutely necessary to affect the transfer made by the assessee and would be considered as expenditure.
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