Stamp Duty, Registration Charges and Society Transfer Fees Incurred by Seller as Per Agreement Are Allowable | ITAT

Case Details: Kishore Bhagwandas Ramnani vs. Income Tax Officer - [2024] 161 taxmann.com 43 (Mumbai-Trib.)

Judiciary and Counsel Details

• Amit Shukla, Judicial Member & Amarjit Singh, Accountant Member
• Rahul Sarda for the Appellant.
• Anil Sant for the Respondent.

Facts of the Case

The assessee furnished its return of income by declaring long-term capital gains and income from other sources. During the year under consideration, the assessee shown long-term capital gain on the sale of immovable property and claimed deduction under section 54EC from such capital gains.

During the assessment proceedings, the Assessing Officer (AO) noticed that the assessee had claimed deduction of stamp duty, registration charges and society transfer fees out of the capital gain amount. Contending that the assessee failed to substantiate the expenses and failed to furnish any supporting document, the AO made additions to the assessee’s income.

On appeal, the Dispute Resolution Panel (DRP) dismissed the objection filed by the assessee.

Aggrieved by the order, the assessee filed an appeal before the Mumbai Tribunal.

ITAT Held

The Tribunal held that as per the terms and conditions of the sale agreement, the assessee was to bear the cost of stamp duty, registration charges and the society transfer fees. The assessee has, accordingly, paid stamp duty, registration charges, and society transfer fees. The assessee also referred to a copy of the sale agreement and a copy of the bank statement in support of his claim to make payment of aforesaid expenses.

It was found that the AO did not consider that the assessee incurred the expenses on stamp duty, registration charges and society transfer charges as per the terms and conditions of the agreement and evidence of payment as reflected in the copy of the bank statement.

Therefore, the AO was directed to allow the claim of the assessee after verification of the copy of the agreement and copy of bank statement filed by the assessee.