Shri Edmund H. Gonslaves, Pune V. Income-tax Officer,

CO 49/PUN/2013

• Counselvise Citation: [2016] 119 COUNSELVISE.COM (IT) 3300 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 7 month(s) 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 27-05-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 25-05-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 03-10-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SUNDHENDU DAS
• Keywords: Sale consideration of property below Jantri Value; Tax effect; Surrender of tenancy right
• Section: 50C

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE . . , ! , # $ BEFORE SHRI R.K. PANDA, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO.1141/PN/2012 #& & / ASSESSMENT YEAR : 2007-08 ITO, WARD - 2(2) , PUNE . / APPELLANT V/S SHRI EDMUND H. GONSLAVES, PLOT NO.79, ST. PARTRICKS TOWN SOCIETY, WANOWADI, PUNE 411013 PAN NO.AAXPG8481C . / RESPONDENT . / CO NO.49/PN/2013 (ARISING OUT OF ITA NO.1141/PN/2012) #& & / ASSESSMENT YEAR : 2007-08 SHRI EDMUND H. GONSLAVES, PLOT NO.79, ST. PARTRICKS TOWN SOCIETY, WANOWADI, PUNE 411013 PAN NO.AAXPG8481C CROSS OBJECTOR V/S ITO, WARD-2(2), PUNE APPELLANT IN THE APPEAL / ASSESSEE BY : SHRI KISHOR PHADKE / REVENUE BY : SHRI SUNDHENDU DAS / ORDER PER R.K.PANDA, AM : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE O RDER DATED 23-01-2012 OF THE CIT(A)-II, PUNE RELATING TO ASSE SSMENT YEAR 2007-08. THE ASSESSEE HAS FILED THE CROSS OBJECTION AGA INST THE APPEAL FILED BY THE REVENUE. / DATE OF HEARING :25.05.2016 / DATE OF PRONOUNCEMENT:27.05.2016 2 ITA NO.1141/PN/2012 & CO NO.49/PN/2013 (ITA NO.1141/PN/2012 (BY REVENUE) : 2. THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET FILED A CHART AND SUBMITTED THAT THE TAX EFFECT INVOLVED IN THE APPEAL FILED BY THE REVENUE IS BELOW RS. 10 LAKHS AND THEREFORE, THE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND HAS TO BE DISMISSED IN VIEW OF THE LATEST CBDT CIRCULAR NO.21/2015 DATED 10-12-2015. 3. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER H AND FAIRLY ADMITTED THAT THE TAX EFFECT INVOLVED IN THE GROUNDS RAISED BY THE REVENUE IS ADMITTEDLY BELOW RS.10 LAKHS. THEREFORE, TH E APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. 4. AFTER HEARING THE RIVAL CONTENTIONS MADE BY BOTH THE SIDES, WE FIND THE TAX EFFECT IN THE INSTANT APPEAL FILED BY THE REVEN UE IS ADMITTEDLY BELOW RS.10 LAKHS. THEREFORE, IN VIEW OF CIRCULAR NO.21/2015 DATED 10-12-2015 OF CBDT RAISING THE MONETAR Y LIMIT FOR FILING OF APPEALS BY THE DEPARTMENT BEFORE THE TRIBUNAL, WHICH ALSO APPLIES TO PENDING APPEALS FILED BY THE REVENUE, THE AP PEAL FILED BY THE REVENUE IS NOT MAINTAINABLE AND HAS TO BE DISM ISSED. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE REVENUE IS DISMISSED. CO NO.49/PN/2013 (BY ASSESSEE) : 5. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN TH E CO READS AS UNDER : 1. THE LD. TAXING AUTHORITIES BELOW HAS ERRED ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND ON QUESTIONS OF LAW IN NOT ALLOWING A DEDUCTION FOR RS.18,25,000/- IN THE COMPUTATION OF C APITAL GAINS BEING EXPENDITURE INVOLVED IN RELATION TO THE TRANSACTION OF CAPITAL GAINS WITHOUT APPRECIATING THE EVIDENCES ON RECORD AND SUBM ISSIONS MADE. 6. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND FILED THE RETURN OF INCOME ON 24-09-2007 DE CLARING 3 ITA NO.1141/PN/2012 & CO NO.49/PN/2013 TOTAL INCOME OF RS.1,21,933/-. IN THE RETURN OF INCOME, THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN ON ACCOUNT OF SALE OF INHERITED PROPERTY AT CHEMBUR, BOMBAY AND DECLARED NIL CA PITAL GAIN. THE AO APPLYING THE PROVISIONS OF SECTION 50C DETERMINED T HE VALUE OF THE SALE CONSIDERATION AT RS.1,32,34,500/- AND DETE RMINED 50% OF THE SAME AS BELONGING TO THE ASSESSEE AT RS.66,17 ,250/-. BEFORE THE AO THE ASSESSEE SUBMITTED THAT AN AMOUNT O F RS.18,25,000/- HAS BEEN INCURRED BY THE ASSESSEE AS WELL AS THE OTHER CO-OWNERS JOINTLY FOR WHICH AN AFFIDAVIT CUM DECLARA TION WAS FILED. IT WAS SUBMITTED THAT MOST OF THESE EXPENSES HAVE BEEN INCURRED FROM BANK ACCOUNT MAINTAINED WITH CENTRAL BANK AT CHEMBUR, BOMBAY. IT WAS SUBMITTED THAT WITHOUT INCURRING THESE EXPENSES THE DEVELOPMENT AGREEMENT COULD NOT HAVE BE EN MADE AND THEREFORE THESE EXPENSES ARE FULLY ALLOWABLE AS DEDUC TION FROM THE CAPITAL GAIN. IT APPEARS THAT THE AO HAS NOT CONSIDE RED THESE EXPENSES NOR GAVE ANY OPINION ON THIS ISSUE IN THE ASSE SSMENT ORDER. 7. BEFORE CIT(A) THE ASSESSEE TOOK AN ADDITIONAL GROUND O F APPEAL NO.3 IN WHICH THE CLAIM OF DEDUCTION FOR THE TOTAL E XPENSES INCURRED BY THE FAMILY OF 2 BROTHERS AND 3 SISTERS TO TH E TUNE OF RS.18,25,000/- WAS MADE. IT WAS SUBMITTED THAT THE ASSES SEE ALONG WITH OTHER CO-OWNERS HAS INCURRED THE FOLLOWING EXPENDITURE : LAWYERS FEES - RS.3,50,000 B-1 PROPERTY COLLECTOR, NOC - RS.1,50,000 MISC. EXPENSES - RS.50,000 CHARTERED ACCOUNTANT FEES - RS.25,000 FLAT NO.5 TENANT SETTLEMENT _ RS.12,50,000 -------------------- TOTAL - RS.18,25,000/- -------------------- 4 ITA NO.1141/PN/2012 & CO NO.49/PN/2013 8. IT WAS SUBMITTED THAT OUT OF THE ABOVE THE SHARE OF THE ASSESSEE BEING 30% COMES TO RS.5,90,429/-. SINCE THE AO HAS NOT CONSIDERED THIS ISSUE IN THE ASSESSMENT ORDER, IT WAS ARG UED THAT THE SAME SHOULD BE ALLOWED. 9. HOWEVER, THE CIT(A) WAS NOT SATISFIED WITH THE EXPLANAT ION GIVEN BY THE ASSESSEE AND REJECTED THE ABOVE CLAIM BY OBSERVING AS UNDER : 7.1 THE APPELLANT HAS, HOWEVER, SUBMITTED DURING TH E APPELLATE PROCEEDINGS THAT THE BROTHERS AND SISTERS HAD JOINTLY SPE NT VARIOUS EXPENSES FROM THE JOINT BANK ACCOUNT OF NOEL AND EDMU ND GONSALVES INTO WHICH THE AMOUNT OF RS.40 LACS WAS DEPOSITED AND T HE BALANCE AMOUNT DIVIDED AMONGST ALL OF THEM. APART FROM THE ABOVE, NO OTHER DETAIL OR EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE APPELLANT JUSTIFYING THE CLAIM OF EXPENSES OF RS.18.24 LACS CLAIME D ALSO INCLUDES PAYMENT OF RS.12.50 LACS TO A TENANT FOR VACATING THE PREMISES BUT NO EVIDENCE OF ANY DISPUTE ARISING BETWEEN THE APPELLANT AND THE FAMILY MEMBERS OR ANY DOCUMENT INDICATING SUCH PAYMENT HAS BE EN BROUGHT ON RECORD TO JUSTIFY THE SAID PAYMENT. IT IS PERTINEN T TO POINT OUT THAT THERE WERE OTHER TENANTS WHO WERE RESIDING IN THE OLD STRUCTURE. THE CLAIM IN RESPECT OF THE LAWYERS FEES AND CHARTERED ACC OUNTANT FEES IS ALSO INDEFINITE AND VAGUE AND IS NOT SPECIFIC THAT IT WAS IN CONNECTION WITH THE TRANSFER. THEREFORE, THE NATURE OF EXPENSES AS REPRESENTED BY THE APPELLANT WOULD NOT BRING THEM WITHIN THE AMBIT OF SEC.48(I) OF THE I.T. ACT, 1961, SO AS TO BE A PERMISSIBLE DEDUCTION. M OREOVER IN VIEW OF THE FACT THAT NO OTHER EVIDENCE APART FROM A BANK ST ATEMENT HAS BEEN FURNISHED WHICH COULD JUSTIFY THE CLAIMS MADE BY THE A PPELLANT. 10. AGGRIEVED WITH SUCH ORDER OF CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 11. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOT H THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND T HE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE FIND THE ASSESSEE BEFORE THE AO HAS REQUESTED TO CONSIDER THE EXPENSES INCURRE D BY THE 5 PERSONS TOTALING TO RS.18,25,000/-. HOWEVER, IT IS AN ADMITT ED FACT THAT THE AO HAS NOT DISCUSSED THE ALLOWABILITY OR OTHERWIS E OF THE ABOVE EXPENDITURE FROM THE TOTAL CONSIDERATION IN THE BOD Y OF THE ASSESSMENT ORDER. WHEN THE ASSESSEE TOOK UP THIS ISSU E BEFORE THE 5 ITA NO.1141/PN/2012 & CO NO.49/PN/2013 CIT(A) BY AN ADDITIONAL GROUND OF APPEAL NO.3, WE FIND THE CI T(A) REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT THERE WAS NO EVIDENCE OF ANY DISPUTE ARISING BETWEEN THE ASSESSEE AND HIS FAMILY MEMBERS WITH THE TENANT SO AS TO MAKE PAYMENT OF RS.12 .5 LAKHS FOR VACATING THE PREMISES. ALTHOUGH THERE WERE OTHER TEN ANTS WHO ARE RESIDING IN THE OLD STRUCTURE, THERE IS NO SUCH PAYME NT TO OTHER TENANTS. THE LD. CIT(A) FURTHER OBSERVED THAT EVEN THE PAYMENT OF FEES TO THE LAWYERS AND CHARTERED ACCOUNTANTS DO NOT INDICATE THAT THE SAID PAYMENTS WERE MADE IN CONNECTION WITH THE TRAN SFER OF THE PROPERTY. THE LD.CIT(A) ACCORDINGLY HELD THAT THESE EXPE NSES ARE NOT COMING WITHIN THE AMBIT OF SECTION 48(I) OF THE I.T. ACT S O AS TO BE A PERMISSIBLE DEDUCTION. 11.1 FROM THE COPY OF THE RECEIPT OBTAINED FROM SHRI MEE NAKSHI B. RAO DATED 29-05-2006 WE FIND THE SAME IS FOR A SUM OF R S.10 LAKHS BEING PART PAYMENT WHEREAS THE ASSESSEE HAS CLAIMED RS.12,50,000/- FOR EVICTING THE TENANT. THERE IS NO PROOF FOR THE BALANCE AMOUNT OF RS.2,50,000/-. ALTHOUGH THE RECEIPT SHOW S THE AMOUNT OF RS.10 LAKHS WAS RECEIVED TOWARDS PART PAYMENT AS PER SURRENDER DEED FOR SURRENDER OF TENANCY RIGHTS FROM MR S. DELPHINE BOOTHELLO, HOWEVER, NO SUCH COPY OF SURRENDER DEE D WAS FILED IN THE PAPER BOOK. WE FIND THE RECEIPT WAS ISSUED BY MEENAKSHI B. RAO ON 29-05-2006. THE ASSESSEE HAS ALSO NOT CONCLUSIVELY PROVED THAT THE SO CALLED FEES PAID TO THE L AWYERS AND CHARTERED ACCOUNTANTS RELATE TO THE FEES FOR TRANSFER O F THE ABOVE PROPERTY. SINCE THE ASSESSEE HAS NOT MADE OUT A CASE BY FILING NECESSARY DOCUMENTS, THE REQUEST OF THE LD. COUNSEL FOR THE ASSESSEE THAT THE MATTER MAY BE SET ASIDE TO THE FILE O F THE AO FOR FRESH ADJUDICATION DOES NOT HOLD GOOD. THE ASSESSEE COU LD NOT 6 ITA NO.1141/PN/2012 & CO NO.49/PN/2013 PRODUCE ALL THE DETAILS EITHER BEFORE THE LD.CIT(A) OR BEFOR E US TO SUBSTANTIATE THE ALLOWABILITY OF SUCH EXPENSES FROM THE CAP ITAL GAIN. UNDER THESE CIRCUMSTANCES AND IN ABSENCE OF ANY DOCUME NTARY EVIDENCE REGARDING THE ALLOWABILITY OF VARIOUS EXPENSES, WE D O NOT FIND ANY INFIRMITY IN THE ORDER OF THE CIT(A). WE ACCORDINGLY UPHOLD THE SAME AND THE GROUND RAISED BY THE ASSESSEE IN THE CO IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE AS WE LL AS THE CO FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 27-05-2016. SD/- SD/- ( VIKAS AWASTHY ) ( R.K. PANDA ) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE ; DATED : 27 TH MAY, 2016. ) *#,! -! / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. THE CIT(A ) - II , PUNE 4. 5. 6. THE CIT-II, PUNE $ ''(, (, / DR, ITAT, B PUNE; - / GUARD FILE. / BY ORDER , // TRUE COPY // // $ ' //TRUE /0 ' ( / SR. PRIVATE SECRETARY (, / ITAT, PUNE