Deen Dayal Rathi, JODHPUR V. ITO, JODHPUR

ITA 108/JODH/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3057 (ITAT-JODHPUR)
• Duration Of Justice: 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 04-03-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR DEEPAK SEHGAL
• Keywords: Capital asset; Recovery proceedings; Application of stay; Cost of acquisition; Fair market value
• Section: 143(3); 234B; 54

Judgement Text

1 IN THE INCOME TAX APPELALTE TRIBUNAL : JODHPUR BENC H : JODHPUR BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER AND SHRI N.K. SAINI, ACCOUNTANT MEMBER. SA NO. 25JODH/2013 (ARISING OUT OF ITA NO. 108/JODH/2013) (ASSESSMENT YEAR 2009-10) ITA NO. 108/JODH/2013 (ASSESSMENT YEAR 2009-10) DEEN DAYAL RATHI VS ITO, WARD-3(4), G-70, SHASTRI NAGAR, JODHPUR. JODHPUR. PAN NO. ADRPR1623E (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI AMIT KOTHARI. DEPARTMENT BY : DR. DEEPAK SEHGAL, CIT-DR DATE OF HEARING : 20/03/2013. DATE OF PRONOUNCEMENT : 04/04/2013. PER HARI OM MARATHA:- THE ASSESSEE HAS FILED APPEAL IN RESPECT OF A.Y. 2 009-10 AGAINST THE ORDER OF LD. CIT(A), JODHPUR, DATED 26/02/2013. HE HAS ALSO APPLIED FOR STAY OF THE OUTSTANDING DEMAND WHICH WA S RAISED IN THIS CASE REGARDING ONLY ONE CONNECTED INCOME. IT WAS DE CIDED TO HEAR BOTH THESE MATERS JOINTLY WITH THE CONCURRENCE OF THE PA RTIES. 2 2. THE ASSESSEE, AS INDIVIDUAL, FILED HIS (RETURN O F INCOME [ROI]) ON 23/09/200, FOR A.Y. 2009-10, DECLARING TOTAL INCOME OF RS. 5,14,081/-. APART FROM AGRICULTURAL INCOME THE ASSESSEE HAS ALS O DISCLOSED A MINUS LONG TERM CAPITAL GAIN (LTCG) RS. 1,07,35,966/- W HICH HAS BEEN CARRIED FORWARD. BESIDES THE ASSESSEE HAS ALSO CLAI MED A DEDUCTION OF RS. 92,12,470/- U/S 54 OF THE ACT. IN THIS APPEAL W E ARE CONCERNED ONLY WITH THE ISSUE OF COMPUTATION OF LTCG AND RELATED D EDUCTION CLAIMED BY THE ASSESSEE. 3. THE ASSESSEE SOLD A HOUSE SITUATED AT 377-A, SHA STRI NAGAR, JODHPUR, FOR A TOTAL CONSIDERATION OF RS. 4,01,00,0 00/- (FOUR CRORES AND ONE LAKH ONLY), AGAINST WHICH HE HAS CLAIMED IN DEXED COST OF ACQUISITION OF RS. BEING 3,74,21,477/- AND RS. 1,34 ,14,519/- AND COST OF IMPROVEMENT POST ACQUISITION BY WAY OF PAYMENT O F HEFTY SUM ENCUMBERED AND LATER FREED FORM FOR SELLING THIS HO USE. THE ASSESSEE HAS INVESTED A SUM OF RS. 92,12,470/- IN A NEW HOUS E, OUT OF THE TOTAL SALE CONSIDERATION. 4. THE A.O. HAS DETERMINED THE FAIR MARKET VALUE (F MV) OF THIS HOUSE AS ON 01/04/1981, AT RS. 21,24,207/- (RS. 20, 04,207/- TAKEN A FMV OF THE LAND) AS AGAINST RS. 64,29,807/- (COST O F ACQUISITION BOTH FOR 3 BUILDING AND LAND) TAKEN BY THE ASSESSEE. THE A.O. HAS REFUSED TO CONSIDER THE SUM OF RS. 1,34,14,519/- TOWARDS COST OF THE ASSET AS CLAIMED BY THE ASSESSEE. 5. THE LD. CIT(A) HAS FOLLOWED A SUIT AND HAS AGREE D DITTO WITH A.O. 6. THE ASSESSEE IS AGGRIEVED AND HAS IN HIS SECOND APPEAL, RAISED THE FOLLOWING GROUNDS :- 1. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE ORDER PASSED U/S 143(3) BY THE LD. AO, WHICH IS BAD IN LAW AND BAD ON FACTS . 2. A. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE CO MPUTATION OF LONG TERM CAPITAL GAINS AT R. 1,84,24,645/- AS AGA INST LOSS OF RS. 1,07,35,966/- DECLARED BY THE APPELLANT. THE ADDIT ION SO MADE IN THE COMPUTATION OF LONG TERM CAPITAL GAINS IS BAD IN LAW AND BAD ON FACTS. B. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE FAIR MARKET VALUE OF THE PROPERTY AS ON 1.4.1981 AT RS. 21,24,207/- AS AGAINST CLAIMED BY THE APPELLANT AT RS. 64,29,807/-. THE R EDUCTION IN FAIR MARKET VALUE SO SUSTAINED IS BAD IN LAW AND BAD ON FACTS. C. THE LD. CIT(A) HAS ERRED IN SUSTAINING THE REFE RENCE TO VALUATION OFFICER FOR DETERMINING FAIR MARKET VALU E AS ON 1.4.1981 U/S 55A OF THE I.T. ACT WHICH WAS BAD IN LAW, BAD ON FACTS AND CONTRARY TO THE PROVISIONS OF LAW. D. THE LD. CIT(A) HAD ERRED IS NOT ACCEPTING THE F AIR MARKET VALUE AS DECLARED BY THE APPELLANT WHICH WAS BASED ON THE VALUATION MADE BY THE REGISTERED VALUER. 4 E. THE VALUATION OFFICER HAD ERRED IN ADOPTING THE VALUE OF LAND AS ON 1.4.1981 AT RS. 1,20,000/- AS AGAINST VALUATION MADE BY THE REGISTERED VALUER AT RS. 44.25 LAKHS. 3. THE LD. CIT(A) HAS ERRED IN NOT ALLOWING DEDUCTI ON OF RS. 1,27,00,000/- CLAIMED TO BE SET OFF AGAINST CAPITAL GAINS AS CHARGES REQUIRED TO BE PAID TO UNION BANK OF INDIA, ASSET R ECOVERY BRANCH, MUMBAI TO DISCHARGE THE SECURITY FROM THE SAID BAN K AND RELEASED THE ASSET CHARGED WITH THE SAID BANK. THE SAID AMOUNT WAS ALLOWABLE AS A REDUCTION FROM THE SAID CONSIDERATION/COST OF PROTE CTING RIGHT IN THE ASSET. 4. THE LD. CIT(A) HAS ERRED IN SUSTAINING CHARGING OF INTEREST U/S 234A, 234B AND 234C. THE INTEREST SO CHARGED IS BAD IN LAW AND BAD ON FACTS. 7. WE HAVE HEARD RIVAL SUBMISSIONS WITH REGARD TO T HE GROUNDS RAISED AS ABOVE. THE FATE OF THE STAY APPLICATION I S TAGGED WITH THIS MAIN APPEAL, SO THERE WAS NO POINT IN HEARING, AS S UCH, ON THAT. GROUND NO. (1) WAS NOT PRESSED BY LD. AR SHRI AMIT KOTHARI, ALSO WRITTEN SO IN THE SMALL WRITE-UP PRODUCED FOR OUR P ERUSAL. THEREFORE, GROUND NO. (1) IS DISMISSED AS NO PRESSED. 8. THE RELEVANT FACTS APROPOS GROUND NOS. 2 AND 3, HAVE ALREADY BEEN DISCUSSED. IT WAS ARGUED BY LD. AR THAT COMPUT ATION OF LTCG DONE BY A.O. AND APPROVED BY LD. CIT(A) IS INCORRECT BEI NG AGAINST THE FACTS AND THE LAW. HE ARGUED THAT REFERENCE U/S 55A TO DV O FOR THE DETERMINATION OF FMV OF THIS PROPERTY IS NOT JUSTIF IED. HE HAS RELIED ON THE FMV DETERMINATION BY THE REGISTERED VALUE WHOSE REPORT WAS FIELD 5 BEFORE THE AUTHORITIES BELOW AND COPY FOR WHICH IS ENCLOSED IN THE PAPER BOOK. THE LD AR HAS CLAMOUSED THAT THE BURDEN COBBLED WITH THIS PROPERTY, MAY BE AFTER ACQUISITION BY WAY OF PLEDGI NG IT WITH THE BANKER AS GUARANTOR WOULD BE CONSIDERED AS TOWARDS COST OF ACQUISITION BECAUSE WITHOUT GETTING IT REIMBURSED THE PROPERTY COULD NOT BE SOLD. 8. PER CONTRA, LD. CIT-DR DR. SEHGAL, HAS VEHEMENTL Y REFUTED THE ABOVE ASSERTIONS MADE BY LD. AR SHRI KOTHARI. HE HA S HEAVILY RELIED ON AND HAS SUPPORTED THE REASONS GIVEN BY LD. CIT(A) I N ARRIVING AT HIS CONCLUSION AGAINST THE ASSESSEE. HE HAS REITERATED THEM IN TOTO. HE HAS REJECTED THE CONTENTION THAT NO SUCH REFERENCE COUL D BE JUSTIFIED TO DVO IN THE GIVEN CIRCUMSTANCES. HE HAS JUSTIFIED TH E COMPUTATION OF COST AND LTCG BY THE AO. HOWEVER, HE HAS NOT DISPUT ED THE SALE CONSIDERATION SHOWN BY THE ASSESSEE. 9. WE HAVE GIVEN OUR THOUGHTFUL CONSIDERATION TO TH E FACTS, THE CIRCUMSTANCES, THE RELEVANT RECORDS THE LEGAL POSIT IONS AND THE PRECEDENTS RELIED ON BY THE PARTIES. WE HAVE EXAMIN ED THE ORDERS OF THE AUTHORITIES AND THE FOLLOWINGS SCENARIO WOULD E MERGE THEREFROM REGARDING THE COMPUTATION OF LTCG BY THE ASSESSEE A ND BY THE AO :- 6 PARTICULAR AS SHOWN BY ASSESSEE AS COMPUTED BY AO SALE CONSIDERATION IN RELATION TO SALE OF RESIDENTIAL HOUSE ON 16.05.2008 40100000 40100000 INDEXED COST C LAIMED BY THE ASSESSEE ON THE BASIS OF REPORT OF REGISTERED VALUER AS ON 01.04.1981 AT RS. 64,29,807/- AO TOOK THE VALUE AS ON 1.4.1981 ON THE BASIS OF REPORT OF VO AT RS. 21,24,207/- 37421477 1,23,62,885 DEDUCTION FOR PAYMENT MADE TOWARDS BANK GUARANTEE FOR GETTING FREE TITLE OF THE PROPERTY DURING FY 2007-08 AT RS. 1,27,00,000/- INDEXED VALUE CLAIMED AS DEDUCTION. 1,34,14,519 NIL NET CAPITAL GAINS ( - ) 1,07,35,996 2,77,37,115 DEDUCTION FOR INVESTMENT IN NEW RESIDENTIAL HOUSE. 92,12,470 92,12,470 NET TAXABLE LONG TERM CAPITAL GAIN NIL 1,85,24,645 10. REGARDING VALUATION OF FMV AS ON 1.4.81 WE HAVE FOUND THAT THE ASSESSEE HAS DECLARED IT ON THE BASIS OF THE REPORT OF THE REGISTERED VALUER WHO HAS DETERMINED THE VALUE OF THE BUILDING AT RS. 20,04,207/- AND THAT OF THE LAND AT RS. 44,25,600/- TOTALING TO RS. 64,29,807/-. THERE IS NO DISPUTE REGARDING THIS FACT. THE REGIST ERED VALUER HAS FOCUSED HIS REPORT ON THE UNDISPUTED SALE PRICE OF RS. 4,01,00,000/- (IN THE MONTH OF MAY, 2008) AND BY TAKING FMV OF THE BU ILDING CONSISTING OF BASEMENT, GROUND FLOOR AND FIRST FLOOR, HAS ARRI VED AT A DEPRECIATED COST OF THE BUILDING AS ON 1.4.1981 OF RS. 20,04,20 7/-, WHICH HAS ALSO 7 BEEN ACCEPTED BY THE AO. THUS, THE THEN COST OF CON STRUCTION HAS BEEN ACCEPTED, AS GIVEN BY THE REGISTERED VALUER AT RS. 34,63,809/-. FROM THIS FIGURE ONLY THE REGISTERED VALUER (RV) HAS ARR IVED AT THE COST OF RS. 20,04,207/- AS ON 1.4.81 AND THIS HAS BEEN ACCE PTED SINCE THE BUILDING HAD BEEN DEMOLISHED BY THE PURCHASER BY TH E TIME THE DVO REACHED THE SPOT. THUS, AS PER RV THE COST OF THE L AND COMES TO RS. 3,66,36,191/-, AT THE TIME OF ITS SALE. THE REGISTE RED VALUER HAS ADOPTED THE DECREASE IN LAND RATE @7 % PER ANNUM P ER SQUARE FOOT AND HAS ARRIVED AT ITS FMV AS ON 1.4.81 AT RS. 44,2 5,600/-. THE AREA OF THE LAND BEING 9600 SQ. FT (80 X 120). THUS, THE TOTAL COST OF THE PROPERTY IN QUESTION COMES TO RS. 64,30 LAKHS. THE ARGUMENT OF LD. AR THAT HOW THE AO CAN ACCEPT ONE PART OF RVS REPORT AND IGNORE THE OTHER PART SEEMS TO BE NOT ONLY LOGICAL BUT ALSO JU STIFIED. THERE CANNOT BE TWO DIVERGENT VIEWS ABOUT THE SAME REPORT IN RES PECT OF LAND AND BUILDING. IF REPORT REGARDING ONE IS ACCEPTED, THE OTHER SHALL HAVE TO BE ACCEPTED UNLESS THERE ARE DERIVING REASONS. IN THE GIVEN CASE, THE DEMOLITION OF THE BUILDING CANNOT BE SUCH A FACTOR, WHICH CAN JUSTIFY ONE CONCLUSION. ON THAT BASIS, THE REPORT CANNOT BE ACCEPTED IN PART, AND REJECTED IN PART. IN OUR CONSIDERED OPINION, TH IS ACTION OF THE AO IS NOT LEGALLY JUSTIFIED. EVEN AS PER THE BACKWARD IND EXATION BY TAKING ADVANTAGE OF CBDT CIRCULAR NO. 636 DATED 31.07.1992 THE VALUE OF THE 8 LAND AS ON 1.4.1981 WOULD BE AROUND THE SAME AS DET ERMINED BY THE REGISTERED VALUER. THE RVS REPORT IS ANNEXED AT AS SESSEES PAPER BOOK 26 TO 32. HE HAS ADOPTED THE LAND RATES AT RS. 10/- PER SQ. FT. AND HAS FURTHER INCREASED THE VALUE BY 15% FOR LOCATION WIS E ADVANTAGE AND BY 10% ON ACCOUNT OF IT BEING SITUATED ON THE 200 FEET WIDE ROAD. THUS, HE HAS TAKEN LAND VALUE AT RS. 12.5 PER SQ. FT. THE SALE RATE IS RS. 4000/- PER SQ. FT. THE VALUE OF THE BUILDING GIVEN BY THE REGISTERED VALUER AND ACCEPTED BY THE AO COMES TO RS. 34,63,80 9/-. THIS AMOUNT IS OUT OF TOTAL SALE CONSIDERATION OF RS. 4,01,00,0 00/- AND GIVES 8.64% OF THE TOTAL VALUE. THE VALUE OF LAND AS ON 1.4.198 1 HAS BEEN CLAIMED BY THE ASSESSEE AT RS. 20,04,207/- BUT THE VALUE OF THE LAND HAS BEEN TAKEN AT RS. 1,20,000/- AS AGAINST CLAIMED AT RS. 4 4,25,600/- BY THE ASSESSEE. ADMITTEDLY, AS PER THE DVOS REPORT NO D LC RATE WAS AVAILABLE AS ON 1.4.1981. THE REPORT OF THE RV IS S UPPORTED BY THE BACKWARD INDEXATION COMPUTED ON THE BASIS OF COST I NFLATION INDEX. THIS METHOD OF COST-INFLATION INDEX WAS INTRODUCE D FOR THE COMPUTATION OF THE CAPITAL GAINS LIABLE TO TAX. FOR THIS PURPOSE REFERENCE CAN BE MADE TO CBDTS CIRCULAR NO. 636 DA TED 31.08.1992. AS A MEASURE TO OFFSET THE EFFECT OF INFLATION, ALL APPRECIATION IN VALUE OF CAPITAL ASSETS BEFORE 1.4.1974 WERE EXCLUDED FRO M TAX. THE CUT-OFF DATE WAS TAKEN AS 1.4.1981. THUS, THE APPRECIATION IN FAIR MARKET 9 VALUE OF CAPITAL ASSET UPTO 1.4.1981 WAS TAKEN AS A SUBSTITUTE FOR ACTUAL COST OF ACQUISITION TO OFFSET THE IMPACT OF INFLATION UPTO THAT DATE AND THIS HAS TO BE INCREASED BY APPLYING COST INFLATION INDEX AS MAY BE NOTIFIED IN THE OFFICIAL GAZETTE FROM TIME T O TIME. THIS IS A FURTHER WAY TO SQUARE-UP THE IMPACT OF INFLATION FO R THE PERIOD POST 1.4.1981. EXPLANATION (V) OF SECTION 48 DEFINES CO ST INFLATION INDEX AS UNDER :- COST INFLATION INDEX, IN RELATION TO PREVIOUS YEA R, MEANS SUCH INDEX AS THE CENTRAL GOVERNMENT MAY, HAVING REGARD TO SEVENTY- FIVE PER CENT OF AVERAGE RISE IN THE CONSUMER PRICE INDEX FOR URBAN NON-MANUAL EMPLOYEES FOR THE IMMEDIATELY PREC EDING PREVIOUS YEAR TO SUCH PREVIOUS YEAR, BY NOTIFICATIO N IN THE OFFICIAL GAZETTE, SPECIFY IN THIS BENEFIT. LIKEWIS E, PARA 35.6 OF THE CIRCULAR NO. 636 DATED 31.08.1992 READS AS UNDE R:- 35.6. FOR THE FINANCIAL YEAR 1981-82, COST INFLATI ON INDEX IS 100 AND C.I.T. FOR EACH SUBSEQUENT YEAR WOULD BE DETERM INED IN SUCH A WAY THAT 75% OF THE RISE IN CONSUMER PRICE INDEX FOR URBAN NON-MANUAL EMPLOYEES WOULD BE REFLECTED IN THE RISE IN C.I.J. THE COST INFLATION INDEX AS ON 1.4.1981 WAS 100 AND THE CORRESPONDING FIGURE RELATING TO A.Y. 2009-10 WAS 5 82 WHICH INDUCED 75% OF THE RISE IN CONSUMER PRICE INDEX. TH EREFORE IF THE COST INFLATION INDEX, WHICH GIVES A STATUTORY FORMU LA FOR DETERMINING THE FAIR MARKET VALUE FOR PURPOSES OF C OMPUTATION 10 OF CAPITAL GAINS, IF APPLIED BACKWARD, WILL RESULT IN MAXIMUM AMOUNT OF CAPITAL GAINS LIABLE TO TAX AT 25% OF THE FULL SCALE CONSIDERATION. IN OTHER WORDS, ONE CAN CALCULATE TH E TAXABLE CAPITAL GAINS ON THE BASIS OF ABOVE STATUTORY FORMU LA AS UNDER :- SALE CONSIDERATION RS. 4,01,00,000/- LESS: 25% WHICH IS DEDUCTED WHILE PREPARING NOTIFIED COST INFLATION INDEX RS. 1,00,2 5,000/- AMOUNT EQUIVALENT TO 582 OF COST INDEX RS. 3,00,75 ,000/- IF 582 OF CII IS = RS. 3,00,75,000/- THEN FOR 100 IT WILL BE RS. 3,00,75,000 X 100 = 51,67,525/- 582 THIS FIGURE IS EQUIVALENT TO COST INDEX FIGURE OF 100 AS ON 1.4.1981. THE FAIR MARKET VALUE AS ON 1.4.1981 WILL HAVE TO BE FURTHER INCREASED BY 25% AS BELOW: 51,67,525 X 125 = 64,59,407/- 100 THUS, RS. 64,59,407/- IS THE AMOUNT OF FMV AS ON 1. 4.1981 COMPUTED AS PER THE NOTIFIED COST INFLATION INDEX, WHICH IS MANDATORY AND BINDING FOR COMPUTATION OF CAPITAL GAINS. 10. THE LEGAL ANGLE FROM WHICH REFERENCE BY AO U/S 55 A TO DVO HAS BEEN ASSAILED IN AS MUCH AS THAT BEFORE SUCH REFERE NCE THE AO HAS NOT OPINED THAT THE VALUE SO CLAIMED BY THE ASSESSEE IS LESS THAN THE FMV OF THE CAPITAL ASSET, IS ALSO FOUND TO HOLD MERIT W HICH IS ALSO SUPPORTED 11 BY VARIOUS JUDICIAL PRONOUNCEMENTS. FOLLOWING DECIS IONS WILL SUPPORT OUR ABOVE CONCLUSION: (I) HIBABEN JAYANTILAL SHAH VS ITO (2008) 6 DTR 20 3 (GUJ) (II) ITO VS. SMT. LALITABAN B. KAPADIA (2008) 3 DT R 28 (MUM). (III) MS. RUBAB M. KAZERANI VS. JCIT (2005) 97 TTJ 698 (TM) (MUM) (IV) CIT VS. ARIHANT BUILDERS (2008) 6 DTR 185 (RA J.). HENCE, WE ALLOW THIS ISSUE IN FAVOUR OF THE ASSESSE E. 11. GROUND NO. 3 RELATES TO DEDUCTION ON ACCOUNT OF COST ADDITION BY WAY OF PAYMENT MADE TO BANK FOR PROTECTING RIGHT IN THE PROPERTY. THE FACTS APROPOS THIS GROUND ARE THAT THE ASSESSEE HAD PAID A SUM OF RS. 1,27,00,000/- TO THE UNION BANK OF INDIA (THE BANK) TO DISCHARGE HIS LIABILITY AS A GUARANTOR. TO SECURE THE TITLE DEED WHICH WAS MORTGAGED AND LYING WITH THE BANK, AS ONE TIME SETTLEMENT WAS MADE. THE ASSESSEE STOOD GUARANTOR AGAINST A LOAN TAKEN BY M/ S. MELTECH IMPEX PRIVATE LTD, MUMBAI. RECOVERY PROCEEDINGS HAD START ED AND, THEREFORE, ONE TIME SETTLEMENT HAD TO BE MADE WITH THE BANK IN ORDER TO PROTECT INTEREST IN THIS CAPITAL ASSET. CAN THIS AMOUNT BE ALLOWED AS DEDUCTION FOR COMPUTING CAPITAL GAINS. CAN THIS A MOUNT WHICH WAS 12 PAID TO GET THE TITLE DEED OF THIS CAPITAL ASSET RE LEASED FROM THE BANK SO THAT IT COULD BE SOLD, BE DEDUCTED FROM THE SALE CONSIDERATION, TO COMPUTE THE CAPITAL GAIN? UNDOUBTEDLY, THIS PAYMENT IS INEXTRICABLY LINKED WITH THE TRANSFER OF THE CAPITAL ASSET. WITH OUT MAKING THIS PAYMENT ASSESSEE COULD NOT EVEN TRANSFER THE RIGH TS IN THIS PROPERTY. THE MADRAS HIGH COURT HAS SAID YES IT CAN BE ALLO WED. THEIR LORD SHIPS OF MUMBAI HIGH COURT WHILE DECIDING THE CASE OF ITO VS SMT. LALITABEN B. KAPADIA REPORTED IN (2008) 3 DTR 28, H AVE TAKEN A SIMILAR VIEW. THEREFORE, THIS AMOUNT CAN BE ALLOWED AS DED UCTION OF EXPENSES INCURRED IN CONNECTION WITH THE TRANSFER AFTER CONS IDERING THE FACTUAL MATRIX. THE ASSESSEE HAS CLAIMED THIS PAYMENT AS A DEDUCTION AGAINST THE SALE CONSIDERATION ON THE PREMISE THAT THIS AMO UNT SHALL BE TREATED AS INCURRED TOWARDS COST OF ACQUISITION OF THIS CAP ITAL ASSET. IN THIS CONNECTION RELIANCE HAS BEEN PLACED ON THE FOLLOWIN G DECISIONS :- (I) CIT VS. K. RAJA GOPALA RAO 252 ITR 459. (II) SH. KARAN SINGH CHOUDHARY VS DCIT CIRCLE-3, JODHPUR 46 TAXWORLD 126. -A SUM PAID FOR THE REMOVAL OF ENCUMBRANCE ON THE C APITAL ASSET SUCH AMOUNT WILL BE ALLOWED AS DEDUCTION TO T HE ASSESSEE. (III) CIT VS. SHANKUNTALA KANTILAL 190 ITR 56 (MUM ). (IV) CIT VS. ABRARA LTD. 247 ITR 312 (MUM) 13 12. PER CONTRA, LD. CIT-DR HAS RELIED ON ALL THE DE CISIONS ON WHICH AO HAS RELIED AND HAS MAINLY RELIED ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF MR. JAGDISH CHANDRAN VS. CIT 227 IT R 240 (SC). 13. AFTER CONSIDERING RIVAL STANDS WE CAN STATE IT WITH CERTITUDE THAT THIS AMOUNT OF RS. 1,27,00,000/- CANNOT BE SAID, BY ANY STRETCH OF IMAGINATION, TO BE A PART OF COST OF ACQUISITION AS THE ASSESSEE HAD ALREADY ACQUIRED THIS PROPERTY FREE FROM ANY SORT O F ENCUMBRANCES. THIS CANNOT ALSO BE TREATED AS COST OF IMPROVEMENT AS IT WAS NOT INCURRED TOWARDS IMPROVEMENT. THUS, THE DECISION OF HONBLE APEX COURT (SUPRA) WILL NOT APPLY TO THE FACT OF THIS CA SE. 14. LASTLY, THE BENEFIT OF SECTION 54 IS ALSO AVAIL ABLE TO THE ASSESSEE. 15. CHARGING OF INTEREST U/S 234B IS MANDATORY BUT IT ADMITS CONSEQUENTIAL RELIEF. 16. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. IN VIEW OF DISPOSAL OF APPEAL, THE S.A. BECOMES INFRUCTUOUS . 14 17. AS A RESULT, THE APPEAL OF THE ASSESSEE IS PART LY ALLOWED AND THE STAY APPLICATION IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH APRIL, 2013. SD/- SD/- [N.K. SAINI] [HARI OM MARATHA] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 4 TH APRIL, 2013. VL COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSISTANT REGISTRAR