Dattatraya Lonkar, Pune V. Deputy Commissioner Income-tax,

ITA 1818/PUN/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7222 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 16-06-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 07-10-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P L KUREEL
• Assessee Lawyers: VIPIN GUJARATHI
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Business income; Fair market value
• Section: 50C; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E . . , , , ! ' BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO. 1818/PUN/2014 !# $ %$ / ASSESSMENT YEAR : 2010-2011 DATTATRAYA KERBA LONKAR, 20/2/1, KASHINATH PATIL NAGAR, DHANKAWADI, PUNE PIN-411043 PAN : AAGPL5233N ....... APPELLANT # / V/S. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2, PUNE. / RESPONDENT ASSESSEE BY : SHRI VIPIN GUJARATHI REVENUE BY : SHRI P.L KUREEL / DATE OF HEARING : 16.01.2017 / DATE OF PRONOUNCEMENT : 30.01.2017 &' / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, PUNE DATED 13.05. 2014 FOR THE ASSESSMENT YEAR 2010-2011. 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM THE RECOR D ARE: THE ASSESSEE IS ENGAGED IN THE BUSINESS OF REPAIRING AND MAINTAINING 2 ITA NO. 1818/PUN/2014 REFRIGERATORS, BOTTLE COOLERS, DEEP FREEZERS, AIR CONDITIONER ETC. THE ASSESSEE FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEA R UNDER APPEAL ON 30.03.2011 DECLARING TOTAL INCOME OF RS.71,48,520/ - INCLUDING INCOME FROM CAPITAL GAINS. THE CASE OF ASSESSEE WAS SELECTED FOR SCRUTINY UNDER CASS, ACCORDINGLY, FIRST NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED TO THE ASSESSEE ON 29.08.2011. DURING ASSESSMEN T PROCEEDING, THE ASSESSING OFFICER MADE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAINS ARISING FROM SALE OF LAND ON THE GROUND T HAT ASSESSEE HAS UNDERSTATED THE VALUE OF SALE CONSIDERATION WHILE COMPUTING LONG TERM CAPITAL GAIN AT THE TIME OF FILING RETURN OF INCOME. AGGRIEVED BY ASSESSMENT ORDER DATED 20.03.2013, THE AS SESSEE PREFERRED APPEAL BEFORE COMMISSIONER OF INCOME TAX (APPEALS ). THE COMMISSIONER OF INCOME TAX (APPEALS) PARTLY ACCEPTED THE APPEAL OF ASSESSEE AND ADOPTED SALE CONSIDERATION AS PER DVOS R EPORT AND REJECTED OTHER CONTENTIONS OF THE ASSESSEE. AGAINST THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS), THE ASSESSEE IS NOW IN SECOND APPEAL BEFORE THE TRIBUNAL. THE ASSESSEE HAS ASSAILED THE ORDER OF COMMISSIONER OF INCO ME TAX (APPEALS) BY RAISING FOLLOWING GROUNDS:- 1) THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN ADOPTING THE VALUE CERTIFIED BY DISTRICT VALUATION OFFICER-II, I.T DEPARTMENT, MUMBAI ( IN SHORT DVO) RS.3,14,86,000 /- AS FULL VALUE CONSIDERATION INSTEAD OF THE AGREEMENT VALUE RS.3,0 7,71,470/- WITHOUT APPRECIATING THE FACT THAT THERE WAS VERY M INOR DIFFERENCE BETWEEN THE VALUATION AS PER DVO AND THE AGREEMENT VALUE. THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) FAILE D TO APPRECIATE THAT VALUATION IS AN ESTIMATE AND THAT THE LEARNED A.O HAS NOT BROUGHT ON RECORD ANYTHING TO SUGGEST THAT THE APPELLANT HA S RECEIVED MORE 3 ITA NO. 1818/PUN/2014 THAN THE AGREEMENT VALUE OF RS.3,07,71,470/-. THE A PPELLANT HEREBY PRAYS THAT THE AGREEMENT VALUE MAY PLEASE BE CONSID ERED AS FULL VALUE CONSIDERATION. 2) THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE ADDITION OF RS. 23,00,000/- TO THE C ONSIDERATION OF THE PROPERTY UNDER CONSIDERATION MADE LEARNED ASSESSING OFFICER WITHOUT APPRECIATING THE FACTS THAT THE CONSIDERATION OF RS . 23,00,000/- WAS DIRECTLY PAID BY THE PURCHASER TO MR. MANSOOR AAGA & MRS. SHAGUFTA AAGA OUT OF THE TOTAL CONSIDERATION AS PER THE SALE DEED DATED 08.12.2009. THE HONORABLE COMMISSIONER OF INCOME TA X ( APPEALS) FAILED TO APPRECIATE THE FACT THAT APPELLANT WAS NE ITHER ENTITLE TO NOR HAS RECEIVED THE SAID CONSIDERATION AND HENCE IT IS NOT TAXABLE IN HIS HANDS. THE APPELLANT HEREBY PRAYS THAT THE SALE CON SIDERATION MAY PLEASE BE REDUCE BY RS. 23,00,000/-. 3) THE APPELLANT HEREBY RESERVES THE RIGHT TO ADD, AL TER, AMEND OR DELETE ANY GROUNDS OF APPEAL. 3. SHRI VIPIN GUJARATHI APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD INHERITED PROPERTY COM PRISING IN SURVEY NUMBER 11/9+14A/1B MEASURING 82R AT VILLAGE KOND HWA KHURAD FALLING IN THE MUNICIPAL LIMITS OF PUNE. DURING THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL, ASSESSEE SOLD THE PROPERTY/LAND SITUATED AT KONDHWA KHURD, PUNE FOR TOTA L CONSIDERATION OF RS.3,07,71,470/- AND DECLARED CAPITAL GAIN O F RS. 67,92,166/-.HOWEVER, IN THE RETURN OF INCOME, THE ASSESS EE HAD DECLARED GROSS SALE CONSIDERATION AS RS.2,32,71,470/-. FOR THE PURPOSE OF STAMP VALUATION, THE VALUE OF LAND SOLD BY THE A SSESSEE WAS DETERMINED AT RS.5,75,81,250/-. SINCE THE LAND IN QUESTIO N WAS UNDER LITIGATION AND WAS ENCROACHED FROM ALL SIDES, THE VALU E OF LAND DIMINISHED CONSIDERABLY. THE FATHER OF ASSESSEE DURING HIS LIFE TIME HAD ENTERED INTO MULTIPLE SALE AGREEMENTS IN RESPECT OF T HE SAID LAND. ONE RAMESH GOPAL YADAV ON THE BASIS OF FORGED POWER OF A TTORNEY, FRAUDULENTLY EXECUTED VARIOUS SALE DEEDS IN RESPECT OF T HE LAND IN QUESTION AND GOT THE NAMES OF PURCHASERS MUTATED IN TH E REVENUE 4 ITA NO. 1818/PUN/2014 RECORD. THERE WERE MULTIPLE LITIGATION WITH UNAUTHORIZED OCCU PANTS OF LAND. 3.1. THE LD. A.R SUBMITTED THAT DURING ASSESSMENT PRO CEEDINGS VALUATION OF PROPERTY WAS REFERRED TO DVO UNDER THE PRO VISION OF SECTION 50C. HOWEVER, TILL THE TIME OF PASSING OF ASSESSMENT ORDER ON 23.03.2013, THE REPORT OF DVO HAD NOT COME. THE ASSESSING OFFICER ADOPTED THE SALE CONSIDERATION AS PER STAMP DUTY VALUAT ION RATE I.E RS.5,75,81,250/-. THE ASSESSEE CARRIED THE MATTER IN APPEA L BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE DVO VIDE RE PORT DATED 23.12.2013 (PLACED ON RECORD AT PAGE NO. 69 TO 84 OF THE PAPER BOOK) DETERMINED THE FAIR MARKET VALUE OF PROPERTY AT RS.3,14,86,000/-.THE COMMISSIONER OF INCOME TAX (APPEALS) ADO PTED THE VALUATION OF PROPERTY AS DETERMINED BY THE DVO AND GRANTED PART RELIEF TO THE ASSESSEE. THE LD. A.R CONTENDED THAT THERE IS MARGINAL DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION AS PER SALE DE ED AND THE FAIR MARKET VALUE DETERMINED BY THE DVO. THE DIFFERENCE IS O NLY RS. 7,00,000/- WHICH IS APPROXIMATELY 2 PER CENT OF THE TOTAL VALUE OF THE LAND. VALUATION OF THE PROPERTY IS DONE ON THE BASIS OF EST IMATION. WHERE THE DIFFERENCE IN VALUE OF PROPERTY ADOPTED BY THE ASSESSE E AND AS DETERMINED BY THE DVO IS LESS THAN 10 PER CENT, THE VALUE DECLARED BY THE ASSESSEE SHOULD BE ACCEPTED. IN SUPPOR T OF HIS SUBMISSIONS THE LD. A.R PLACED RELIANCE ON THE DECISION OF P UNE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTIONS V/S. DCIT REPORTED AS 38 DTR 19. THE LD. A.R FURTHER SUBMITTED THA T THE HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SINGH V/S. CI T REPORTED AS 308 ITR 71 HAS HELD THAT NO ADDITION IS WAR RANTED IF THE 5 ITA NO. 1818/PUN/2014 DIFFERENCE IN VALUE ADOPTED BY THE ASSESSEE AND THE VALUA TION MADE BY THE DVO IS LESS THAN 15 PER CENT. THE LD. A.R PRAYED FOR ADOPTING THE VALUE OF PROPERTY AT RS.3,07,71,470/- I.E AS PER SALE DE ED FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAIN. 4. IN RESPECT OF GROUND NO.2, THE LD. A.R SUBMITTED THAT THE AUTHORITIES BELOW HAVE ERRED IN COMING TO THE CONCLUSION T HAT THE PART OF SALE CONSIDERATION AMOUNTING TO RS. 23 LACS WAS PAID BY THE PURCHASER OF LAND TO THE ASSESSEE. IN FACT, FROM THE TOT AL CONSIDERATION, PART OF CONSIDERATION I.E RS. 23 LACS WAS DIRE CTLY PAID BY PURCHASER TO MR. MANSOOR AAGA & MRS. SHAGUFTA AAGA . THEREFORE, NO CAPITAL GAIN HAS ARISEN TO ASSESSEE TO THE EXTENT OF SUM, DIRECTLY PAID TO THE AFORESAID TWO PERSONS. THE LD. A.R POINTED TH AT THE LAND WAS UNDER LITIGATION. MR. MANSOOR AAGA AND MRS. SHAGUFTA AA GA HAD ACQUIRED PART OF LAND BY WAY OF SALE AGREEMENT EXECUTED BY RAMESH GOPAL JADHAV ON THE BASIS OF FORGED POWER OF ATTORNEY. TH E ASSESSEE IN ORDER TO SETTLE THE PROTECTED LITIGATION COMPROMISED WIT H MR. MANSOOR AAGA & MRS. SHAGUFTA M. AAGA. THE LD. A.R PLACED ON RECORD A COPY OF COMPROMISE DECREE OF CIVIL COURT, PUNE DRAWN ON THE BASIS OF COMPROMISE BETWEEN THE AFORENAMED PARTIES. THE LD. A.R CONTENDED THAT SINCE RS. 23,00,000/- HAS NOT BEEN RECEIV ED BY THE ASSESSEE, THE ASSESSEE IS NOT LIABLE FOR TAX LIABILITY ON THE SAID AMOUNT. THE LIABILITY TO PAY TAX CANNOT BE FASTENED ON THE ASSESSEE MERELY ON THE GROUND OF DEEMED CAPITAL GAIN. THE LD. A.R S UBMITTED THAT EITHER, THE SAID AMOUNT SHOULD NOT BE INCLUDED IN PAR T OF SALE CONSIDERATION RECEIVED BY ASSESSEE OR IN ALTERNATIVE AFTE R INCLUDING THE SAID AMOUNT, THE SAME SHOULD BE ALLOWED AS DEDUCTION U/S 48 OF 6 ITA NO. 1818/PUN/2014 THE ACT. THE LD. A.R REFERRED TO SALE DEED DATED 08.12.2009 AT PAGE 26 TO 39 OF THE PAPER BOOK TO SHOW THAT RS. 8,00,000/- AND RS. 15,00,000/- ( TOTAL RS. 23,00,000/-) WERE DIRECTLY PAID BY T HE PURCHASER TO MANSOOR AAGA AND SHAGUFTA AAGA, RESPECT IVELY BY WAY OF CHEQUE. IN SUPPORT OF HIS CONTENTIONS THAT THE PAYME NT MADE TO UNAUTHORIZED OCCUPANTS OF LAND IS ALLOWABLE, THE LD. A.R PLACED RELIANCE ON THE FOLLOWING DECISIONS:- 1) CIT V/S. SHAKUNTALA KANTILAL 190 ITR 56 ( BOM.) 2) CIT V/S ABRAR ALBI 247 ITR 312 ( BOM.) 3) CIT V/S. RAMAN KUMAR SURI 255 CTR 257 ( BOM.) 5. PER CONTRA SHRI P.L KUREEL REPRESENTING THE DEPARTMEN T VEHEMENTLY DEFENDED THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS) IN CONFIRMING THE ADDITIONS. 6. WE HAVE HEARD THE SUBMISSIONS OF THE RIVAL REPRESENTA TIVES AND HAVE PERUSED THE ORDERS OF AUTHORITIES BELOW. WE HAVE ALS O CONSIDERED THE DECISIONS AND DOCUMENTS ON WHICH LD. A.R H AS PLACED RELIANCE. THE ASSESSEE IN APPEAL HAS IMPUGNED THE FINDINGS OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN ADOPTING THE VALUE OF PROPERTY AS DETERMINED BY THE DVO AND ADDITION OF RS. 2 3 LACS ON ACCOUNT OF PART CONSIDERATION PAID BY THE PURCHASER OF LAND DIRECTLY TO MR. MANSOOR ABDUL GANI AAGA AND SMT. SHAGUFTA M. AAGA. 7. IN RESPECT OF FIRST GROUND OF APPEAL RELATING TO VALUATIO N OF PROPERTY, IT IS AN ADMITTED FACT THAT AS PER SALE DEEDS, T HE TOTAL SALE CONSIDERATION IS RS. 3,07,71,470/-. THE ASSESSING OFFICER ADOP TED SALE VALUE OF PROPERTY FOR THE PURPOSE OF DETERMINING LONG TERM CAPITAL GAIN AS PER STAMP DUTY VALUATION I.E RS.5,75,81,250/-. THE 7 ITA NO. 1818/PUN/2014 REASON FOR WIDE VARIATION IN THE VALUATION OF PROPERTY FOR THE PURPOSE OF STAMP VALUATION AND THE ACTUAL SALE CONSIDERATION IS STA TED TO BE ON ACCOUNT OF ENCROACHMENT AND MULTIPLE LITIGATION QUA THE PROPERTY. THE MATTER WAS REFERRED TO DVO U/S 50C OF THE ACT. BY THE TIME, DV O FURNISHED HIS REPORT; THE ASSESSING OFFICER HAD PASSED THE ASSESSMENT ORDER. THE DVOS REPORT WAS PLACED BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS). THE DVO DETERMINED TH E VALUE OF PROPERTY AT RS.3,14,86,000/-. THE COMMISSIONER OF IN COME TAX (APPEALS) ADOPTED THE FAIR MARKET VALUE OF PROPERTY AS DETERMINED BY THE DVO. THE CONTENTION OF THE ASSESSEE IS THAT SIN CE THE DIFFERENCE BETWEEN ACTUAL SALE CONSIDERATION AND VALUE DETE RMINED BY THE DVO IS MARGINAL, ACTUAL VALUE OF SALE CONSIDERATION SHOULD BE ADOPTED FOR COMPUTING LONG TERM CAPITAL GAIN. 8. WE FIND MERIT IN THE SUBMISSION OF LD. A.R. THE DIFFERENCE BETWEEN THE FAIR MARKET VALUE DETERMINED BY THE DVO AND ACTUAL SA LE CONSIDERATION IS RS.7,14,530/-I.E SLIGHTLY MORE THAN 2 PER CE NT OF THE SALE CONSIDERATION. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF RAHUL CONSTRUCTION V/S. DCIT (SUPRA) HAS HELD THAT WH ERE DIFFERENCE BETWEEN THE SALE CONSIDERATION DECLARED BY THE ASSESSEE AND FAIR MARKET VALUE AS DETERMINED BY THE DVO U/S 50C IS LESS THAN 10 PERCENT, THE ASSESSING OFFICER WAS NOT JUSTIFIED IN SUBST ITUTING THE VALUE DETERMINED FOR SALE CONSIDERATION DISCLOSED BY THE AS SESSEE. THE CO-ORDINATE BENCH AFTER CONSIDERING THE PROVISIONS OF SECTION 50C OF THE ACT AND THE PROVISION OF SECTION 23A AND 24(5) OF THE WEALTH TAX ACT HELD AS UNDER :- 13. A COMBINED READING OF THE ABOVE PROVISIONS SHOW S THAT THE VALUATION ADOPTED BY THE DVO IS SUBJECT TO APPEAL A ND THE 8 ITA NO. 1818/PUN/2014 SAME IS NOT FINAL. IN THE INSTANT CASE WE FIND THAT AS AAGAINST THE VALUE OF RS. 28,73,000/- ADOPTED BY THE STAMP V ALUATION AUTHORITIES, THE DVO HAS DETERMINED THE FMV ON THE DATE OF TRANSFER AT RS. 20,55,000/- . THIS ITSELF SHOWS THA T THERE IS WIDE VARIATION BETWEEN THE TWO VALUES. FURTHER, THE VALU E ADOPTED BY THE DVO IS ALSO BASED ON SOME ESTIMATE. WE FIND THA T THE DIFFERENCE BETWEEN SALE CONSIDERATION SHOWN BY THE ASSESSEE AT RS.19,00,000/- AND THE FMV DETERMINED BY THE DVO AT RS. 20,55,000/- IS ONLY RS. 1,55,000 WHICH IS LESS THAN 10 PER CENT. THE COURTS AND TRIBUNALS ARE CONSISTENTLY TAKING A LIBERAL APPROACH IN FAVOUR OF THE ASSESSEE WHERE THE DIFFER ENCE BETWEEN THE VALUE ADOPTED BY THE ASSESSEE AND THE V ALUE ADOPTED BY THE DVO IS LESS THAN 10 PER CENT. 14. WE FIND THAT THE PUNE BENCH OF THE TRIBUNAL IN THE CASE OF ASSTT. CIT V/S. HARPREET HOTELS (P) LTD. VIDE ITA N OS. 1156- 1160/PN/2000 AND RELIED ON BY THE LEARNED COUNSEL F OR THE ASSESSEE HAD DISMISSED THE APPEAL FILED BY THE REVE NUE WHERE THE CIT(A) HAD DELETED THE UNEXPLAINED INVESTMENT I N HOUSE CONSTRUCTION ON THE GROUND THAT THE DIFFERENCE BETW EEN THE FIGURE SHOWN BY THE ASSESSEE AND THE FIGURE OF THE DVO IS HARDLY 10 PERCENT. 15. SIMILARLY, WE FIND THAT THE PUNE BENCH OF THE T RIBUNAL IN THE CASE OF ITO V/S. KAADDU JAYGHOSH APPASAHEB, VIDE IT A NO.441/PN/2004 FOR THE ASST. YR 1992-1993 AND RELIE D ON BY THE LEARNED COUNSEL FOR THE ASSESSEE FOLLOWING THE DECISION OF THE J&K HIGH COURT IN THE CASE OF HONEST GROUP OF H OTELS (P) LTD. V/S CIT (2002) 177 CTR (J&K) 232 HAD HELD THAT WHEN THE MARGIN BETWEEN THE VALUE AS GIVEN BY THE ASSESSEE A ND THE DEPARTMENTAL VALUER WAS LESS THAN 10 PER CENT , THE DIFFERENT IS LIABLE TO BE IGNORED AND THE ADDITION MADE BY THE A .O CANNOT BE SUSTAINED. 16. SINCE IN THE INSTANT CASE SUCH DIFFERENCE IS LE SS THAN 10 PER CENT AND CONSIDERING THE FACT THAT VALUATION IS ALW AYS A MATTER OF ESTIMATION WHERE SOME DEGREE OF DIFFERENCE BOUND TO OCCUR, WE ARE OF THE CONSIDERED OPINION THAT THE A.O. IN T HE INSTANT CASE IS NOT JUSTIFIED IN SUBSTITUTING THE SALE CONS IDERATION AT RS. 20,55,000 AS AAGAINST THE ACTUAL SALE CONSIDERATION OF RS. 19,00,000/- DISCLOSED BY THE ASSESSEE. WE, THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE A.O. TO TAKE RS.19,00,000/- ONLY AS THE SALE CONSIDERATION OF TH E PROPERTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 9. THE LD. A.R OF THE ASSESSEE HAS FURTHER PLACED RELIANCE ON THE DECISION OF HONBLE PATNA HIGH COURT IN THE CASE OF BIMLA SI NGH V/S. CIT (SUPRA) WHEREIN HONBLE HIGH COURT HAS HELD THAT DIFFE RENCE BETWEEN THE COST OF CONSTRUCTION SHOWN BY THE ASSESSE E AND AS DETERMINED BY THE ASSESSING OFFICER BEING LESS THAN 15 PER CENT, THE SAME IS TO BE IGNORED FOR THE PURPOSES OF ADDITION. THE HO NBLE DELHI 9 ITA NO. 1818/PUN/2014 HIGH COURT IN THE CASE OF CIT V/S. SADNA GUPTA 352 ITA 595 HELD THAT UNLESS AND UNTIL THERE WAS SOME OTHER EVIDENCE TO INDICATE THAT EXTRA CONSIDERATION HAD FLOWED IN TRANSACTION FOR PURCHAS E OF PROPERTY, REPORT OF DVO COULD NOT FORM BASIS OF ANY ADDITIO N ON PART OF REVENUE. IN ABSENCE OF ANY EVIDENCE NO RELIANCE COULD B E PLACED ON THE REPORT OF DVO FOR MAKING ADDITION. 10. THUS, IN VIEW OF THE FACT THAT THE DIFFERENCE BETWEEN SALE CONSIDERATION AND THE MARKET VALUE DETERMINED BY THE DV O IS NOT SUBSTANTIAL AND IS APPROXIMATELY LITTLE OVER 2 PER CENT OF THE ACTUAL SALE CONSIDERATION, WE FIND NO REASON FOR REJECTING ACTUAL SALE CONSIDERATION MENTIONED IN THE SALE DEED FOR DETERMINING LO NG TERM CAPITAL GAIN. ACCORDINGLY, THE GROUND NO.1 RAISED IN APPEAL BY THE ASSESSEE IS ALLOWED. THE ASSESSING OFFICER IS DIRECTED TO ADO PT ACTUAL SALE CONSIDERATION AS MENTIONED IN THE SALE DEED AS A FAIR MARKET VALUE FOR DETERMINING THE LONG TERM CAPITAL GAIN. 11. THE SECOND GROUND RAISED IN APPEAL IS WITH REGARD TO ADDITION OF RS. 23 LACS. PART OF SALE CONSIDERATION ALLEGED TO HAVE BEEN DIRECTLY PAID BY PURCHASER TO MR. MANSOOR ABDUL GANI AAGA AND SM T. SHAGUFTA M. AAGA. THE COMMISSIONER OF INCOME TAX (APPEALS) IN THE IMPUGNED ORDER HAS PLACED RELIANCE ON SOME OF COVENANTS OF THE SALE DEED DATED 08.12.2009 JOINTLY EXECUTED BY THE ASSESSEE, MR. MA NSOOR ABDUL GANI AAGA AND SMT. SHAGUFTA M. AAGA IN FAVOUR OF MR. DATTATRAYA SHANKARARRAO DHONE. AFTER REFERRING TO CLAUSE -7 AND 8 OF THE SALE DEED, THE COMMISSIONER OF INCOME TAX (APPEALS) REJECTED THE CONTENTION OF THE ASSESSEE AND DISALLOWED RS. 23 LACS DIRE CTLY PAID BY PURCHASER OF THE LAND TO MR. MANSOOR ABDUL GANI AAGA AND SMT. 10 ITA NO. 1818/PUN/2014 SHAGUFTA M. AAGA. THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN COMING TO THE CONCLUSION THAT WHILE DETERMINING SALE CONSIDERATION, DISCOUNT MUST HAVE BEEN MADE FOR LITIGATION Q UA PROPERTY. WE DO NOT AGREE WITH THE VIEW TAKEN BY THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APP EALS) CANNOT MAKE ADDITION BY DRAWING REFERENCES FROM SELECTIVE SECTIONS OF THE SALE DEED. THE CONTENT OF THE SALE DEED HAS TO BE R EAD IN WHOLE. A PERUSAL OF CLAUSE-9 OF THE SALE DEED SHOW THAT IT WAS M UTUALLY DECIDED BETWEEN THE ASSESSEE WHO IS SELLER NO.1 IN THE S ALE DEED, MANSOOR ABDUL GANI AAGA AND SMT. SHAGUFTA M. AAGA SELLER NO. 2 AND 3 RESPECTIVELY IN THE SALE DEED THAT MANSOOR ABDU L GANI AAGA AND SMT. SHAGUFTA M. AAGA WOULD RECEIVE RS. 8 LACS AND R S. 15 LACS RESPECTIVELY FROM THE PURCHASER. THERE IS REFERENCE OF CO MPROMISE PURSHIS IN CIVIL SUIT NO. 1741 OF 2015 BETWEEN THE ASSESS EE AND VARIOUS OTHER PERSONS INCLUDING MR. MANSOOR ABDUL GANI AAG A AND SMT. SHAGUFTA M. AAGA. THE CLAUSE -9 OF SALE DEED READS AS UNDER: - 9. WITHOUT ACCEPTING OR AGREEING ANY OWNERSHIP, RIG HT, POSSESSION ON THE SAID PROPERTY OR ANY PART THEREOF ON BASIS OF ANY D OCUMENT, THE SELLER NO. 1 AND THE SELLER NO.2 AND 3 HAVE ARRIVED AT A COMPROM ISE ON THE PROLONGED LITIGATION AND ACCORDINGLY ON ACCOUNT OF INVESTMENT IN THE ILLEGAL TRANSACTION, COURT CASE EXPENSES AND COMPENSATION, THE SELLER NO .1 HAD AND HAS AGREED TO PAY AN AMOUNT OF RS.8,00,000/-( RUPEES EIGHT LAK HS ONLY) AND RS. 15,00,000/- ( RUPEES FIFTEEN LACS ONLY) TO THE SELL ER NO. 2 AND 3 RESPECTIVELY AND ACCORDINGLY IN THE SAME CIVIL SUIT THE SELLERS HEREIN HAVE FILED A COMPROMISE PURSHIS ON RECEIPT OF THE TOTAL AMOUNT A S STATED IN SCHEDULE OF PAYMENT. ACCORDINGLY THE SELLER NO. 2 AND 3 ARE SIG NING THE PRESENT SALE DEED ALONG WITH THE SELLER NO. 1 IN FAVOUR OF THE PURCHA SER. 12. A FURTHER PERUSAL OF CLAUSE-12 OF THE SALE DEED WHICH GIVES THE DETAILS OF THE SALE CONSIDERATION AND THE MANNER OF P AYMENT OF CONSIDERATION REVEAL THAT RS. 8 LACS HAS BEEN PAID TO S ELLER NO.2 I.E 11 ITA NO. 1818/PUN/2014 MR. MANSOOR ABDUL GANI AAGA VIDE PAY ORDER NO. 016361 DA TED 03.12.2009 DRAWN ON VISHWESHWAR SAHAKARI BANK LTD, BRANC H PUNE AND RS. 15 LACS HAVE BEEN PAID TO SELLER NO. 3, SMT. SHA GUFTA M. AAGA VIDE PAY ORDER NO. 016359 DATED 03.12.2009 DRAWN O N VISHWESHWAR SAHAKARI BANK LTD, BRANCH PUNE ON THE INSTR UCTION OF ASSESSEE. THE ASSESSEE HAS ALSO PLACED ON RECORD A COP Y OF THE COMPROMISE DRAWN BEFORE THE CIVIL JUDGE, SENIOR DIVISION, PUN E IN CIVIL SUIT NO. 1741/2015 IN SUIT TITLED SHRI DATTATRAYA KERAB A LONKAR V/S. SHRI RAMESH GOPALRAO JADHAV AND OTHERS. A PERUSAL O F THE SAID COMPROMISE DEED SHOWS THAT MR. MANSOOR ABDUL GANI AAGA AND SMT. SHAGUFTA M. AAGA ARE DEFENDANT NO. 30 AND 31 IN THE SAID SUIT. 13. A PART OF SALE CONSIDERATION AMOUNTING TO RS. 23 LACS WAS PAID ON DIRECTION OF THE ASSESSEE TO MR. MANSOOR ABDUL GANI AA GA AND SMT. SHAGUFTA M. AAGA IN A COMPROMISE AND TO PUT AN END TO LITIGATION AND TO REMOVE ALL ENCUMBRANCES FROM THE LAND. TH IS FACT IS FURTHER EVIDENT FROM PERUSAL OF CLAUSE-15 OF THE SALE DEED WHERE IT HAS BEEN CATEGORICALLY STATED THAT APART FROM SPECIAL SU IT NO. 1741/95, THE ENTIRE PROPERTY IN QUESTION IS NOT SUBJECT MATTER OF ANY OTHER LEGAL MATTER. 14. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V/ S. SHAKUNTALA KANTILAL (SUPRA) HAS HELD THAT WHERE THE EXPEN DITURE HAS BEEN INCURRED TO REMOVE ENCUMBRANCES FOR TRANSFERRING LA ND, THE SAME IS DEDUCTABLE. THE RELEVANT EXTRACT OF THE JUDGMEN T IS REPRODUCED HEREIN BELOW: THE LEGISLATURE, WHILE USING THE EXPRESSION FULL V ALUE OF CONSIDERATION; IN OUR VIEW, HAS CONTEMPLATED BOTH ADDITIONS TO AS WELL AS WELL AS DEDUCTIONS FROM THE APPARENT VAL UE. WHAT IT 12 ITA NO. 1818/PUN/2014 MEANS IS THE REAL AND EFFECTIVE CONSIDERATION. THAT APART, SO FAR AS CL.(I) OF S. 48 IS CONCERNED, WE FIND THAT THE EXPRESSION USED BY THE LEGISLATURE IN ITS WISDOM IS WIDER THAN THE EXPRESSION FOR THE TRANSFER. THE EXPRESSION USED IS THE EXPE NDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER. THE EXPRESSION IN CONNECTION WITH SUCH TRANSFER IS, IN OUR VIEW, CERTAINLY WIDER THAN THE EXPRESSION F OR THE TRANSFER. HERE AAGAIN, WE ARE OF THE VIEW THAT ANY AMOUNT OF THE PAYMENT OF WHICH IS ABSOLUTELY NECESSARY TO EFF ECT THE TRANSFER WILL BE AN EXPENDITURE COVERED BY THIS CLA USE. IN OTHER WORDS, IF, WITHOUT REMOVING ANY ENCUMBRANCES INCLUD ING THE ENCUMBRANCE OF THE TYPE INVOLVED IN THIS CASE, SALE OR TRANSFER COULD NOT BE AFFECTED, THE AMOUNT PAID FOR REMOVING THAT ENCUMBRANCE WILL FALL UNDER CL. (I). ACCORDINGLY, W E AGREE WITH THE TRIBUNAL THAT THE SALE CONSIDERATION REQUIRES T O BE REDUCED BY THE AMOUNT OF COMPENSATION. THE FIRST QUESTION, IS , THEREFORE, ANSWERED IN THE AFFIRMATIVE AND IN FAVOU R OF THE ASSESSEE. SIMILAR VIEW HAS BEEN TAKEN BY THE HONBLE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT V/S. MISS PIROJA C. PATEL REPORTED AS 2 42 ITR 582 AND IN THE CASE OF CIT V/S. ABRAR ALVI (SUPRA). 15. A PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW REVEA L THAT THE AUTHORITIES BELOW WITHOUT VERIFYING THE FACT WHETHER THE A MOUNT OF RS. 23 LACS HAVE ACTUALLY BEEN PAID BY THE PURCHASER T O THE MR. MANSOOR ABDUL GANI AAGA AND SMT. SHAGUFTA M. AAGA, HAS OUT RIGHTLY REJECTED THE CONTENTIONS OF ASSESSEE. WE DEEM IT APPROPRIATE TO REMIT THE ISSUE BACK TO THE FILE OF ASSESSING OFFICER FOR T HE LIMITED PURPOSE TO ASCERTAIN WHETHER THE AMOUNT OF RS. 8 LACS AND RS. 15 LACS HAVE BEEN ACTUALLY RECEIVED BY MR. MANSOOR ABDUL G ANI AAGA AND SMT. SHAGUFTA M. AAGA, AS HAS BEEN MENTIONED IN THE S ALE DEED. IF THE SAID AMOUNT HAS BEEN RECEIVED BY THE AFORESAID PE RSONS, THE SAME IS TO BE ALLOWED AS EXPENDITURE U/S 48 OF THE ACT IN THE HANDS OF ASSESSEE FROM TOTAL SALES CONSIDERATION. ACCORDINGLY, GRO UND NO. 2 RAISED IN THE APPEAL BY THE ASSESSEE IS ALLOWED FOR STATIST ICAL PURPOSES. 13 ITA NO. 1818/PUN/2014 16. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED IN THE AFORESAID TERMS. ' ORDER PRONOUNCED ON MONDAY, THE 30 TH DAY OF JANUARY, 2017. SD/- SD/- ( / R.K. PANDA) ( ! ' / VIKAS AWASTHY) #' ACCOUNTANT MEMBER $ % #' JUDICIAL MEMBER / PUNE; &# / DATED : 30 TH JANUARY, 2017. SB &'(')!*+',%* / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(A)-II, PUNE. 4. THE CIT-II, PUNE. 5. !'( %%)* , )* , + +,- , / DR, ITAT, B BENCH, PUNE. 6. ( ./0 / GUARD FILE. // TRUE COPY // #1 / BY ORDER, /ASSISTANT REGISTRAR )* , / ITAT, PUNE