INDU BALA,DELHI V. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 60(1), NEW DELHI

ITA 3869/DEL/2023

AI Insights

The case revolves around the taxation of capital gains from the sale of a property in Kaushambi, Ghaziabad, which was originally owned by the late husband of the assessee, Ram Prakash Goel. The property was acquired by the Ghaziabad Development Authority (GDA) in 1984, and subsequent allotments and disputes led to a complex series of transactions involving multiple parties and financial settlements. The primary legal issues pertained to the classification of capital gains as short-term or long-term, the admissibility of certain costs as part of the acquisition and improvement of the property, and the eligibility for exemption under section 54EC of the Income-tax Act. The Tribunal's decision addressed these issues by clarifying the timeline of property acquisition and the nature of financial transactions involved.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 23607 (ITAT-DELHI)
• Duration Of Justice: 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2024
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 17-09-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 27-12-2023
• Other Referred Cases: CIT vs A Suresh Rao, Mrs. Madhu Kaul v. CIT & Anr., Vinod Kumar Jain v CIT & Ors., CIT v. Tata Services Limited, Principal CIT v. Vembu Vaidyanathan, Sri Mahendrasingh Ramsingh Jadav Vs. ITO, Kaushalya Devi Vs. CIT, Maradia Wire Rods Ltd. v. Income-tax Officer, Ward-4(4), Ahmedabad
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: OM PRAKASH
• Assessee Lawyers: NEERAJ JAIN
• Keywords: Capital asset; Opportunity of being heard; Sale consideration of property below Jantri Value; Cost of acquisition; Capital Gains
• Section: 50C; 54EC

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘C’: NEW DELHI BEFORE SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER and SHRI SUDHIR PAREEK, JUDICIAL MEMBER ITA No.3869/DEL/2023 (Assessment Year : 2016-17) Indu Bala, vs. ACIT, Circle 60 (1), 81C, Pocket C, New Delhi. Mayur Vihar Phase II, Delhi – 110 091. (PAN : BIHPB7871G) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Neeraj Jain, CA Shri P.K. Misra, CA REVENUE BY : Shri Om Prakash, Sr. DR Date of Hearing : 17.09.2024 Date of Order : 26.11.2024 O R D E R PER S.RIFAUR RAHMAN,AM: 1. This appeal is filed by the assessee against the order of ld. Commissioner of Income-tax (Appeals)/ National Faceless Appeal Centre (NFAC) (hereinafter referred to 'Ld. CIT (A)'] dated 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 2 ITA No.3869/DEL/2023 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.12,33,515.30 and freehold charge of Rs.2,46,703.06, totaling to Rs.1,17,31,468/36. The assessee had entered into an MOU on 08.04.2013 with M/s. Meenal Housing Pvt. Ltd. in respect of the plot no. HS1 in Kaushambi earmarked vide letter dated 17.01.2013 against a consideration of Rs. 14,76,76,450/- plus development expenses and other expenses. In pursuance of the understanding with the assessee being part of consideration towards the 3 ITA No.3869/DEL/2023 sale of the plot no. HS1 in Kaushambi to it, M/s. Meenal Housing Pvt. Ltd. had paid following amounts to the assessee or on her behalf :- Date Amount (Rs. ) Remarks 30.11.2012 1,00,00,000 Vide a P O No. 020973 drawn on PNB favouring assessee. 14.12.2012 1,00,00,000 Vide a Ch. No. 923601 drawn on Allahabad Bank favouring assessee. 30,00,000 Paid in cash to assessee 21.01.2013 1,17,32,000 Paid to GDA directly on behalf of assessee vide a PO No. 729032 drawn on PNB TOTAL 3,47,32,000 5. The total consideration settled between the assessee and M/s Meenal Housing Pvt. Ltd. was Rs. 14,76,76,450/- plus development expenses (Rs. 1,17,32,000) and other expenses. Against the said consideration the assessee had received Rs. 3,47,32,000 and the balance of Rs.13,64,08,450 was to have been received by the assessee on or before 15.07.2013 which was not received. The allotted plot SH-1 in Kaushambi was for a school whereas the assessee was to be allotted lands under residential scheme. After making efforts, the GDA agreed to earmark 3475 sq. mts. bearing no. GH-18B in Sector-3 of Vaishali residential scheme vide letter dated 17.06.2014 bearing no. 344/12/L.A.A./2012 in place of the plot at Kaushambi. Finally in pursuance of the allotment vide government order no. 809/9-A-3-2002/45 L.A./90 dated 15.03.2002 read with letter No. 174/12/L.A.A./2012 dated 17.01.2013, a sale deed was executed in favour of the assessee by GDA on 25.11.2014 after adjusting the following amounts towards its cost:- 4 ITA No.3869/DEL/2023 Compensation Rs. 20,83,903/- (As per sale deed not received and also not receivable) Development charges Rs.1,02,51,250/- Lease rent Rs. 12,33,515/- Freehold charge Rs. 2,46,703/- _____________ Total Rs.1,38,15,371/- =========== 6. Due to non-payment by M/s Meenal Housing Pvt. Ltd., the assessee pressed it for cancelation of the MOU for which M/s Meenal Housing Pvt. Ltd. was not forth coming, in the interregnum period due to the efforts made by the assessee she could manage to get the 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 5 ITA No.3869/DEL/2023 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. at a consideration of Rs.20,91,00,000. The copies of the MOU and the Cancellation Agreement alongwith the receipt issued by Meenal Housing Pvt. Ltd. were filed before the AO. 7. The assessee sold the residential Vacant Plot No.- GH-18B, situated at Sector-3, Residential Colony Vaishali, Ghaziabad, Teh. & Distt. Ghaziabad (UP) measuring 3475 Sq.Mt. for a consideration of Rs.20,91,00,000 on 20.10.2015. The deemed value of consideration under section 50C of the Income-tax Act, 1961 (for short ‘the Act’) was of Rs.26,29,88,000 which was considered as sale consideration in the return of income filed and assessee claimed Rs.6,59,10,388 as indexed cost of acquisition as per details below :- Date Purchase amount Indexed factor Indexed cost 30.03.1987 5,00,000 140 38,60,714 07.02.2013 1,17,32,000 852 1,48,85,319 20.10.2015 4,61,43,000 1081 4,61,43,000 25.11.2014 9,67,500 1024 10,21,355 Total 6,59,10,388 6 ITA No.3869/DEL/2023 8. The compensation amount for the acquisition of land in 1984 was finally determined at Rs.20,83,903/- as against Rs. 5,00,000/- considered as on 30.03.1987 in the chart above. 9. Further, the assessee claimed investment in REC bond as per provision of section 54EC to the tune of Rs.50,00,000/- and thereafter arrived at the net capital gain of Rs.19,05,77,612/- which she had shown in the ITR for the relevant AY 2016-17. 10. The AO completed the assessment under section 143 (3) of the Act by rejecting the claim of the assessee that the abovesaid property was long term capital asset and treated the same as short term capital gain by taking the date of acquisition of the property as 25.11.2014 based on the title of the plot in the name of the assessee bestowed by the deed of acquisition. Accordingly, he determined the short term capital gain as under :- Date of Sale 20.10.2015 Rs. Rs. Sale Consideration Received 20,91,00,000 Value for stamp purpose (50C) 26,29,88,000 Sale consideration for capital gain purpose 26,29,88,000 LESS : Cost of acquisition (25.11.2014) As discussed in para 5 above 1,47,93,403 Short Term Capital Gain 24,81,94,597 7 ITA No.3869/DEL/2023 11. AO rejected the whole claim of the assessee on long term capital gain and also rejected the cost of improvement as well as exemption claimed by the assessee under section 54EC of the Act of Rs.50,00,000/-. 12. Aggrieved with the above order, assessee preferred an appeal before the ld. CIT(A) and filed detailed submissions. After 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 Income Tax (Appeals), has erred in confirming the disallowance of Rs.4,61,43,000/- 8 ITA No.3869/DEL/2023 being amount paid to M/s. Meenal Housing Pvt. Ltd. towards cancellation agreement dated 20.10.2015 of MOU dated 08.04.2013 for purchase of land in question by M/s. Meenal Housing Pvt. Ltd by holding that the appellant has failed to establish that the said amount paid to M/s. Meenal Housing Pvt. Ltd had any connection with the transfer of said land from GDA to the appellant. 5. That the learned Commissioner of Income Tax (Appeals), has erred in upholding the decision of the assessing officer of not allowing the complete claim of cost of acquisition and improvement of Rs.5,93,42,500/- (before indexation) and not allowing indexation benefit on the same. 6. That the learned Commissioner of Income Tax (Appeals), has erred in relying on judgements which are not relevant to the facts of the case of the appellant. 7. That the learned Commissioner of Income Tax (Appeals), has erred in upholding the decision of the assessing officer of not allowing the claim of transfer charges amounting to Rs.15,00,000/-. 8. The above grounds of appeal are without prejudice to each other.” 14. At the time of hearing, ld. AR for the assessee has not pressed any jurisdictional issue raised in the above grounds of appeal. 15. On merits, ld. AR for the assessee brought to our notice findings of ld. CIT (A) which are given below :-  Letter dated 17.01.2013 was issued by GDA with regard to transfer of said land subject to payment of Rs. 1,17,31,468.36 towards development fee, lease rent and freehold charges. 9 ITA No.3869/DEL/2023  Letter dated 17.06.2014 was issued by GDA requesting for payment and stating that transfer will take place once the fee is cleared.  Complete right of the assessee existed only after execution of sale deed on 25.11.2024 and the title of the property is bestowed only on execution of sale deed.  Property sold before 36 months i.e., 20.10.2015  Thus the assessee is not eligible for claim of indexation and the sale shall be categorized under STCG.  Regarding claim of Rs. 5,00,000/- for purchase of land by assessee’s husband – No reply furnished to ld. AO & appellate proceedings.  Regarding compensation of Rs. 20,83,903/-, this amount was not in existence till 25.11.2014. As per the deed the same is adjusted in cost of the plot and cost is taken on 25.11.2014 and not 15.03.2002. No evidence filed to show that it is cost 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. 10 ITA No.3869/DEL/2023  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-tax Officer, Ward-4(4), Ahmedabad “Section 48, read with section 55, of the Income- tax Act, 1961 - Capital gains – Computation of - Assessment year 1999-2000 - Assessee was allotted two industrial plots by GIDC –During relevant assessment year, assessee sold those plots -Assessee's claim was that penalty paid to GIDC for non- use of industrial plots was to be deducted while computing capital gains on transfer of those plots - Revenue authorities rejected assessee's claim - Whether in view of fact that amount of penalty was paid only to protect title and possession of plots, it could not be held to be wholly and exclusively in connection with transfer of two industrial plots . Whether, further, payment of penalty by way of non-usage charges of industrial plots within stipulated time could not be held to be towards addition or alteration of capital asset viz. , land and, consequently and, thus, it did not fall within definition of cost of improvement in terms of provisions of section 55(1) (b) (2). Whether in view of 11 ITA No.3869/DEL/2023 aforesaid, assessee's claim was rightly rejected by authorities below.” 16. In response to the findings of ld. CIT (A), ld. AR submitted written submissions which are reproduced below :-  The right in the land in question was acquired by the assessee on 15.03.2002 vide a government order issued by Chief Secretary, Government of Uttar Pradesh of even date and thus it is wrong to considered the cost of acquisition as on 25.11.2014.  The compensation amount of Rs.20,83,903/- mentioned in the sale deed of 25.11.2014 was only a notional amount representing the cost as on 15.03.2002 to facilitate the sale document as the same was neither received nor receivable by the assessee under the government order dated 15.03.2002.  A reference to the sale deed executed by GDA dated 25.11.2014 clause 2 thereof would show that the compensation has neither been received by the assessee or her predecessor nor would they receive it. Thus the amount of compensation was only a notional figure to facilitate the sale deed of the property and this would be apparent from the fact that the registration officer has considered the consideration as Rs.1,17,32,000/- (which is in fact a cost of improvement) excluding the amount of compensation which was never received nor receivable. This is also evident from the government order dated 15.03.2002 wherein the right to receive the land in question came in existence. Thus in so far as the assessee is concerned the right 12 ITA No.3869/DEL/2023 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 on the assessee to pay the amount of Rs. 20,83,903/- and this fact is confirmed from letters dated 17.01.2013 and 17.06.2014 of GDA and also the stamp of the registering authority on the back of first page of stamp paper 13 ITA No.3869/DEL/2023 where the consideration is mentioned as Rs. 1,17,32,000/- which does not include the amount of Rs. 20,83,903/-.  The right in land having been acquired on 15.03.2002 at the notional value determined by GDA of Rs.20,83,903/- may at best be considered as the cost of acquisition as on 15.03.2002 and the indexed cost of the same of Rs. 52,88,026/- ( cost index adjustment 1081/426) may be taken for the purposes of computation of the capital gain. The assessee in the return has claimed the indexed cost of Rs. 38,60,714/-. The ld. AO has erred in considering the cost (compensation) as on 25.11.2014 of Rs. 20,83,903/- and without providing for indexation. Since the right of the assessee became absolute on 15.03.2002 due to a government order passed on that date, the indexed cost of acquisition of the land is Rs.52,88,026/-.  The amount of Rs.1,17,32,000/- paid on 07.02.2013 is the cost of improvement of such land and the indexed cost of the same is Rs. 1,48,85,319/- (cost index adjustment 1081/852).  Amount of Rs. 9,67,500/- has been paid as stamp duty and the indexed cost of the same is Rs. 10,21,355/- (cost index adjustment 1081/1024).  The assessee had entered into an MOU on 08.04.2013 with M/s. Meenal Housing Pvt. Ltd. in respect of the plot no. HS1 in Kaushambi earmarked vide letter dated 17.01.2013 against a consideration of Rs. 14,76,76,450/- plus development expenses and other expenses and the assessee had received Rs.3,47,32,000/- (including Rs. 1,17,32,000/-paid directly to GDA by M/s. Meenal Housing Pvt. Ltd. vide pay order no. 729032 dated 21.01.2013). The said MOU was cancelled vide 14 ITA No.3869/DEL/2023 an agreement dated 20.10.2015 wherein the net settlement money 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 the purposes of improvement in the right and title of the land in question which is allowable towards the cost of acquisition. The copies of the MOU and the Agreement alongwith the receipt issued by Meenal Housing Pvt. Ltd. were filed before the Ld. AO.  The MOU was cancelled on 20.10.2015 just before the execution of the sale deed to M/s Royce Developers P. Ltd.  The Hon’ble Delhi High Court in the 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 15 ITA No.3869/DEL/2023 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 and give up his right under the agreement to sell dated 10th April, 1989. 27. Aforesaid ratio and findings should not be interpreted to mean that wherever an assessee has paid an amount under an earlier agreement-to-sell in terms of the settlement or even a court decree, the said amount would be treated as expenditure wholly or exclusively in connection with the transfer, the subject matter of capital gains. The nature and character of the agreement, timing of the earlier agreement and payment claimed as expenditure and the date of transfer resulting in capital gains, are relevant aspects, which should be taken into consideration. For example, an agreement-to- sell rescinded or cancelled and payment made long before the date on which immovable property was transferred resulting in capital gains, may not be expenditure incurred wholly and exclusively in connection with such transfer. The words used in clause (i) do not permit and allow expenditure incurred wholly and exclusively on the immovable property as an expenditure to be deducted while computing capital gains. Link and connection with the transfer of a capital asset and the expenditure must be inextricable and should be established.” 16 ITA No.3869/DEL/2023  The facts of the said judgements quoted by the ld. CIT(A) are different from the case of the assessee. Both the cases are concerned with dues of the assessee i.e., estate duty paid n penalty for non-use of lands which do not affect the title of the assessee but in the present case the amount is paid to M/s. Meenal Housing Pvt. Ltd. on cancellation of MOU wherein the net settlement money of Rs.4,61,43,000/- was paid for improvement in the right and title of the land in question which is allowable towards the cost of acquisition.  The assessee had claimed transfer charges of Rs.15 lakhs incurred by her which have not been allowed by the ld. Assessing Officer on the ground that as per clause 9 & 10 of page 9 of the sale deed dated 20.10.2015 all the transfer expenses have been borne by the vendee. It is submitted that the claim of transfer charges represents other miscellaneous expenses incurred by the assessee which are not covered under clause 9 & 10 of the sale deed. 17. On the other hand, ld. DR for the Revenue relied on the findings of the lower authorities and submitted that as per the title deed granted by the Revenue Department, it is only carrying the message of title, it cannot 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. 17 ITA No.3869/DEL/2023 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 letter, late husband of the assessee entitled to the land admeasuring 3474.74 sq. mtrs. In Kaushambi which was acknowledged by GDA vide letter No.174/12/L.A.A./2012 dated 17.01.2013 against the payment of development fee of Rs.1,02,51,250/-, lease rent of Rs.12,33,515.30 and freehold charges of Rs.2,46,703.06 and the total comes to Rs.1,17,31,468.36. As per the record submitted before us, it shows that assessee is not in a position to make such payment, accordingly a MOU was entered by the assessee with Meenal Housing Pvt. Ltd. and a 18 ITA No.3869/DEL/2023 consideration was fixed of Rs.14,76,76,450/- plus development expenses and other expenses. Against the abovesaid MOU, Meenal Housing Pvt. Ltd. paid the above charges to GDA directly on behalf of the assessee and also paid to the assessee an amount of Rs.3,47,32,000/-. From the above facts on record, it is clear that assessee being the legal heir of late husband, Ram Prakash Goel 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. Therefore, in our considered view, assessee held the right on the land from the date of original purchase date of the property which was acquired by the GDA in the year 1984. Therefore, the property was transferred by the assessee for development 19 ITA No.3869/DEL/2023 to M/s. Royce Developers Pvt. Ltd. during the current assessment year. Therefore, we hold that the lands transferred by the assessee are a long term assets. 19. Coming to the issue of cost of acquisition and cost of improvement, as discussed in the above paragraphs, the assessee having the rightful right over the property and the assessee was able to get the earmarked 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 20 ITA No.3869/DEL/2023 of expenditure directly linked to the sale of the property. Accordingly, grounds raised by the assessee are allowed. 20. With regard to exemption claimed by the assessee u/s 54EC of the Act, since the issue under consideration is already addressed by ld. CIT (A) by remitting the issue back to the file of AO to verify the relevant bonds and allow the same after verification. Therefore, we do not see any reason to disturb the same. We direct AO accordingly. 21. Coming to the next ground of appeal on claim of expenditure on transfer charges amounting to Rs.15,00,000/-, the assessee has not filed any evidence before the AO and relied on Clauses 8, 9 and 10 of the Sale Deed. However, AO observed that the above stated clauses were borne by the vendee. Accordingly, he rejected the plea of the assessee. The same was sustained by ld. CIT (A). 22. At the time of hearing, ld. AR for the assessee has not made any fresh submission by bringing any material to substantiate its claim. Accordingly, ground no.7 raised by the assessee is dismissed. 23. In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open court on this 26th day of November, 2024. Sd/- sd/- (SUDHIR PAREEK) (S.RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26.11.2024 TS 21 ITA No.3869/DEL/2023 Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals). 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI "