Skip to main content

Long Term Capital Gains - Disallowance of payment made to clear encroachers


Smt. Ujjawala Sitaram Baheti Versus Asstt. Commissioner of Income Tax, Circle – 1, Jalgaon and Vica-Versa

Computation of Long term capital gains (LTCG) - Disallowance of payment made to hutment dwellers for vacating the land - Held that:- These unauthorized occupants do not have permanent place of stay and they move from one place to another till the time they get place to settle down. Moreover, the dwellers were not personally known to the assessee. In such circumstances it is not prudent to expect from the assessee to produce the illegal occupants of land to whom payments were made. In so far as second objection is concerned the assessee has furnished a copy of title of civil suit filed in the Civil Court, Jalgaon. A perusal of same shows that the suit was filed against 19 defendants, if the assessee has included the name of some more persons in the list of unauthorized occupants to whom the payments have allegedly been made and the same are not verifiable, the Assessing Officer could have made reasonable disallowance rather than rejecting the claim of assessee in toto. The third objection is that there is no formal agreement with the slum dwellers. The Assessing Officer has observed that the receipts produced by the assessee are cyclostyled bearing only name and amount. We are of the considered view that when payments are made to encroachers/illegal occupants for vacating the land no formal agreement is required to be executed. The prime object of the owner of land is to seek the possession of land and ensure that land is free from encumbrances and encroachments. The assessee has produced receipts signed by some of the persons to whom payments have been made. The objection of the Department that receipts are on cyclostyled paper and lacks information is unwarranted. When the possession of land is retrieved from unauthorized occupants especially when they are hutment dwellers against some payment the details such as area occupied by each one of them is not relevant. Thus, the objections raised by the Department in disallowing the entire payment made to encroachers for vacating the land are not justified.

The assessee had jointly purchased the land with Shri Narayan S. Khadake, though the assessee had major share in the land. As per assessee own admission, the assessee has paid ₹ 7.80 lakhs out of ₹ 10.00 lakhs paid to encroachers. The remaining sum of ₹ 2.20 lakhs was contributed by Shri Narayan S. Khadake. Taking into consideration the entirety of facts we are of considered opinion that no disallowance on account of payment of compensation is called for. Accordingly, ground assessee is allowed.

Treating the profit from sale of land - Long Term Capital Gain or business income - Held that:- The documents on record show that the assessee has not indulged in sale-purchase of land/property. The assessee has purchased some properties over period of time starting from 1985 onwards. Except from the land in question the Revenue has not been able to show that the assessee has sold any other property or was dealing in land/property. The ld. DR has not been able to controvert the findings of the first appellate authority. In our opinion the findings of Commissioner of Income Tax (Appeals) are well reasoned and justified. We concur with the same. No other issue has been raised by the Department in appeal. Accordingly, the appeal of the Revenue is dismissed.

Article referred: Tax Management India.com

Comments

Most viewed this month

Partition proceedings are vitiated even if single co-sharer is not made party or is not served in accordance with law

Cause Title :  Bhagwant Singh vs  Financial Commissioner (Appeals) Punjab, Chandigarh,  CWP-2132-2018 (O&M), High Court Of Punjab & Haryana At Chandigarh Date of Judgment/Order : 31.08.2022 Corum : Hon’ble Mr. Justice Sudhir Mittal Background A large parcel of land was owned by the Nagar Panchayat. Thereafter, some of the co-sharers sold their shares to third parties including the petitioners herein. On 22.11.1995, respondents No.3 to 5 filed an application for partition of the land. The petitioners were not impleaded as parties.  On completion of proceedings, sanad was issued on 28.08.1996. Vide two separate sale deeds dated 28.05.2008 respondents No.3 and 5 sold some portion in favour of respondent No.6 and 7. These respondents sought implementation of the sanad resulting in issuance of warrants of possession dated 05.06.2008. Allegedly, it was then that the petitioners realized that joint land had been partitioned and that proceedings h...

Power of Attorney holder can also file cheque bounce cases: Supreme Court

The Supreme Court has held that a criminal complaint in a cheque bounce case can be filed and pursued by a person who holds a power of attorney (PoA) on behalf of the complainant. A three-judge bench headed by Chief Justice P Sathasivam gave the "authoritative" pronouncement on the issue, referred to it by a division bench in view of conflicting judgements of some high courts and the apex court. "We are of the view that the power of attorney holder may be allowed to file, appear and depose for the purpose of issue of process for the offence punishable under Section 138 of the Negotiable Instruments Act (which deals with cheque bounce cases)," the bench, also comprising justices Ranjana Prakash Desai and Ranjan Gogoi, said. The bench, in its judgement, said, "...we clarify the position and answer the questions in the following manner: "Filing of complaint petition under Section 138 of Negotiable Instruments Act through PoA holder is perfectly legal...

Christian who reconverts as Hindu SC will get quota benefits

Amid the controversy over “ghar wapsi”, the Supreme Court on Thursday ruled that a person who “reconverts” from Christianity to Hinduism shall be entitled to reservation benefits if his forefathers belonged to a Scheduled Caste and the community accepts him after “reconversion”. Citing articles by B R Ambedkar and James Massey, and reports by Mandal Commission and Chinappa Commission, the court said: “There has been detailed study to indicate the Scheduled Caste persons belonging to Hindu religion, who had embraced Christianity with some kind of hope or aspiration, have remained socially, educationally and economically backward.” The bench of Justices Dipak Misra and V Gopala Gowda held that a person shall not be deprived of reservation benefits if he decides to “reconvert” to Hinduism and adopts the caste that his forefathers originally belonged to just because he was born to Christian parents or has a Christian spouse. Expanding the scope of a previous Constitution benc...