The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) allowed capital gain deduction for additional compensation of Rs. 25 lakhs paid to vendors for land acquisition costs, finding no grounds for doubt.
The assessee during the year under consideration had sold the subject mentioned lands for Rs. 16, 36,500/-. The sale consideration reported by the assessee was not doubted by the revenue. The regular cost of acquisition as reflected in the originally purchased deed together with miscellaneous expenses thereon is not doubted by the revenue. The only dispute is with regard to additional compensation paid in the sum of Rs. 25 lakhs for deduction of cost of acquisition is denied by the revenue.
Mr. R. S. Singhvi, representing the assessee observed that the assessment for AY 2008- 09 was completed under Section 143(3) of the Income Tax Act, 1961, wherein, this additional compensation of Rs. 25 lakhs paid was accepted to have been made from disclosed sources and no addition was made towards the same.
It is a fact on record that the assessee had brought this agricultural lands through its sister concern M/s. Vishnu Real Estate Pvt. Ltd who acted as agent. The development agreement of the assessee with the agent dated 28.01.2008 is enclosed in pages 24 to 30 of the Paper Book. It was not in dispute that a sum of Rs. 43,39,511/- is reflected in the balance sheet of M/s. Vishnu Real Estate Pvt. Ltd towards cost of acquisition.
The bench observed that the genuineness of the payment of additional compensation of Rs. 25 lakhs to the vendors had not been doubted by the revenue and the same is duly supported by the receipts given in stamp paper by vendors. These receipts are enclosed at pages 46 to 47 of the paper book. In the said receipts was also mentioned which the land that had been ultimately sold. The said receipts are issued by the very same vendors to whom the assessee had sold the lands
All these facts collectively proved that the sum of Rs. 25 lakhs paid as additional compensation by the assessee to the vendors would actually form part of the cost of acquisition of the lands and consequently eligible for deduction while computing capital gains.
The two member bench of the tribunal comprising Astha Chandra (Judicial member) and M. Balaganesh (Accountant member) directed the AO to grant deduction of Rs. 25 lakhs while computing capital gain on sale of lands. Accordingly, the ground raised by the assessee was allowed.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
