CHITRA VENKATARAMAN, J.

1. The following substantial questions of law are raised in the above Tax Case Appeal filed by the assessee for the assessment year 1988-89.

1. Whether on the facts and in the circumstances of the case, the ITAT had jurisdiction to decide on the quantum of cost of construction, especially when such a ground was not before the ITAT?

2. Whether on the facts and in the circumstances of the case, the ITAT was justified in adopting the rate of Rs.576/- sq.ft. estimated as consideration in Form 37-I filed before the Appropriate Authority as against the cost of construction of Rs.240/- per sq.ft. adopted in form No. 34A, Application for Certificate under Section 230A(1) of the Income Tax Act, 1961?

3. Whether on the facts and circumstances of the case, the ITAT was justified in not upholding the cost of construction of Rs.240/- per sq.ft. adopted by the Commissioner (Appeals) based on the information provided by the Assessing Officer?

4. Whether on the facts and in the circumstances of the case, the ITAT was justified in adopting Rs.576/- per sq.ft. by making reference to the Form 37-I filed before the Appropriate Authority as rate for arriving the cost of construction which was not the subject matter before the Appropriate Authority?

5. Whether on the facts and in the circumstances of the case, the ITAT was justified in adopting Rs.576/- per sq.ft. as cost of construction which is inconsistent with the evidence available and contrary to the facts on record?

6. Whether on the facts and in the circumstances of the case, the ITAT erred in holding that the amount payable to the sisters of the appellant as per the Will of the appellant's father is not deductible in computing the capital gains assessable to tax?

7. Whether on the facts and in the circumstances of the case, the ITAT is justified in holding that the obligation to make the payment to the sisters under the Will was a voluntary act of the appellant in the light of the agreement of Distribution of Assets of the Estate of the late Mr.J.D.Italia dated 18th July 1986?

2. The assessee herein was the owner of the immovable property situated at 90, Anna Salai, Madras, known as "Wellington Talkies", measuring about 20.419 grounds. The assessee, along with his father J.D.Italia, jointly owned the property, each having 50% share. J.D.Italia died on 20.9.1985. Under the Will executed by J.D.Italia dated 10.6.1985, the assessee was given 1/3rd share in the 50% share of J.D.Italia in the Wellington Talkies property. Apart from this, the assessee's sons were also given equal share as that of the assessee. Thus together with the share that the the assessee had originally, the total extent of share held by the assessee came to 67.68% share in the property and two sons held 16.16% each. As per the terms of the Will of the deceased J.D.Italia, the assessee's sisters and mother were given certain amount of cash. Apart from that the assessee's sisters were also given 10% share in the Wellington Talkies property or Rs.1,00,000/- each payable by the assessee. The Will stated that the choice as to whether the daughters were to be given 10% share in the Wellington property or to be given cash was, however, left to the assessee's choice and that the said decision shall not be questioned by the assessee's sisters and mother. Thus, in terms of the Will, the assessee, his mother and sisters entered into an agreement on 18.5.1986 as to the distribution of Assets in the Estate of the late Mr.J.D.Italia. Thus, apart from cash payment, instead of 10% share in the immovable property, the assessee paid a sum of Rs.6,00,000/- to each of his sisters. It is seen from the facts herein that along with his two sons, the assessee entered into a development agreement with M/s.Kalyani Constructions Private Limited (hereinafter referred to as construction company) on 27.9.1987, whereunder, the assessee and the construction company had two options viz., outright sale of the entire property