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Facts
The assessee incurred registration charges of ₹5,47,250/- on the sale of immovable property and claimed it as an expense. The Assessing Officer (AO) doubted the genuineness of these charges, while the CIT(A) disallowed them. The assessee appealed to the tribunal.
Held
The tribunal held that the sale deed clearly indicated that the seller (assessee) agreed to bear the registration charges. The Bombay Stamp Act also supports this interpretation in the absence of a contrary agreement. The revenue did not provide any evidence to disprove this.
Key Issues
Whether registration charges incurred by the seller on the sale of immovable property are allowable as a deduction for computing capital gains.
Sections Cited
250 of the Income Tax Act, 1961, 143(3) of the Act, Bombay Stamp Act, section 30
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, NAGPUR “SMC” BENCH : NAGPUR
Before: DR. MANISH BORAD
This appeal at the instance of the assessee is directed against order of Ld. ADDL/JCIT (Appeals)-1, Chennai [“CIT(A)”], dated 25/08/2025 passed u/s. 250 of the Income Tax Act, 1961 (for short, 'the Act') which is arising out of assessment order dated 15.12.2016 passed u/s. 143(3) of the Act for the Assessment Year 2014-15 (A.Y.).
Registry has informed that there is a delay of 34 days in filing the instant appeal. Application for condonation of delay along with affidavit has been filed and placed on record. Ld.Departmental Representative (DR) opposed for condonation of delay. I have gone through the contents of the affidavit and 2 ITA.No.746/NAG/2025 (Ramesh Wasudeorao Nawsalkar) the reasons stated for delay and find that the same are reasonable cause and the assessee had bonafide reason giving rise to this delay and that the delay is not intentional and assessee has not gained from delaying the appeal. Therefore, adopting a justice oriented approach and also taking guidance from the judgments of Hon’ble Apex Court in the case of Collector, Land Acquisition, Anantnag & Anr. Vs. Mst. Katiji & Ors. [(1987) 2 SCC 107] and in the case of Inder Singh Vs. State of Madhya Pradesh judgment dated 21.03.2025 (2025 INSC 382), I hereby condone the delay of 34 days in filing of the instant appeal before this Tribunal and admit the appeal for adjudication.
The sole grievance of the assessee is against the disallowance of registration charges at ₹ 5,47,250/- incurred by the assessee on the sale of immovable property.
At the outset, learned counsel for the assessee submitted that assessee has sold an immovable property to six purchasers, the details of which are placed in paper book at page No.17. He also referred to the registered sale agreement and respective clause, as per which, the registration cost was to be borne by the seller and not by the purchasers and due to this reason, the registration charges incurred by the assessee at ₹ 5,47,250/- have been reimbursed to the purchasers in 3 ITA.No.746/NAG/2025 (Ramesh Wasudeorao Nawsalkar) cash and the same is therefore allowable in the computation of capital gain.
On the other hand, Ld. Departmental Representative (DR) submitted that the alleged sum has been paid in cash and there is no evidence demonstrating that such amount has been paid to the purchasers and also necessary details were not placed before the lower authorities.
I have heard rival contentions and perused the records placed before me. I observe that assessee is an individual and declared income of ₹ 15,81,960/- in the return of income for A.Y.2014-15 filed on 28.07.2014. During the year under consideration, assessee sold plots for a consideration of ₹1,30,44,126/- and apart from the other expenses towards cost of acquisition, the assessee also claimed brokerage expenses and registration charges. During the course of assessment proceedings carried out u/s. 143(3) of the Act after validly serving statutory notices, Ld.AO has only doubted the genuineness of registration charges at ₹ 5,47,250/- claimed by the assessee. There is no doubt for the remaining items of computing capital gain.
So far as registration charges are concerned, normally purchaser has to bear the registration charges, but in this case assessee has reimbursed the registration charges to the six buyers. Before me, learned counsel for the assessee has 4 ITA.No.746/NAG/2025 (Ramesh Wasudeorao Nawsalkar) referred to the extract section 30 of Bombay Stamp Act placed at page No. 91 of the paper book, which provides that “In the absence of an agreement to the contrary, the expense of providing the proper stamp shall be borne in the case of a certificate of sale by the purchaser of the property to which such certificate relates”. The above provision of Bombay Stamp Act provides that in absence of an agreement, registration charges are to be borne by the buyers, but in the instant case and on due perusal of the sale deed, (English translation has been placed in the paper book at page nos. 85-90) and specifically at page No. 90, it is agreed between the parties that the seller will bear the purchase expenses. This document itself indicates that it was agreed between the seller and the purchasers that the registration charges shall be borne by the seller. Further, the details of the purchasers are appearing in the registered sale deed and there is no evidence put-forth by the Revenue authorities by way of calling for any independent verification from the buyers/purchasers which can prove the contrary. I, therefore, considering the facts and circumstances, find that learned counsel for the assessee has successfully demonstrated all the details and documentary evidence that the registration expenses of ₹ 5,47,250/- were to be incurred by the assessee i.e. seller and, therefore, valid claim of deduction has been claimed against the sale consideration for computing the capital gain. Findings of the Ld.CIT(A) is 5 ITA.No.746/NAG/2025 (Ramesh Wasudeorao Nawsalkar) reversed and impugned disallowance of ₹ 5,47,250/- is deleted and grounds of appeal raised by the assessee are allowed.
In the result, appeal of the Assessee is allowed.