Madhu Rakesh Mardia, Ahmedabad V. The Pr. CIT-5, Ahmedabad

ITA 1029/AHD/2017

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8405 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 2 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2012-2013
• Appeal Filed On: 28-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KHAN
• Assessee Lawyers: P D SHAH
• Keywords: Cost of acquisition; Set aside
• Section: 263

Judgement Text

- , - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI PRADIPKUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO.1029/AHD/2017 / ASSTT. YEAR: 2012-13 MADHU RAKESH MARDIA C/O. MEHTA LODHA & CO. CHARTERED ACCOUNTANTS 105, SAKAR-I, ASHRAM ROAD AHMEDABAD 380 009. PAN : ADKPM 6877 E VS. THE PR.CIT-5 AHMEDABAD. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI P.D. SHAH, AR REVENUE BY : SHRI M.S. KHAN, CIT-DR ! '#$ % &' / DATE OF HEARING : 12/07/2019 ()* % &' / DATE OF PRONOUNCEMENT: 17/07/2019 +, / O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST O RDER OF THE LD.PR.CIT-5 DATED 24.3.2017 PASSED UNDER SECTION 26 3 OF THE INCOME TAX ACT, 1961 IN THE ASSTT.YEAR 2012-13. 2. IT EMERGES OUT FROM THE RECORD THAT THE ASSESSEE HAS FILED HER RETURN OF INCOME ON 28.9.2012 DECLARING TOTAL I NCOME AT RD.33,41,521/-. THE CASE OF THE ASSESSEE WAS SELEC TED FOR SCRUTINY ASSESSMENT AND ASSESSMENT ORDER WAS PASSED ON 13.6.2014, AND THE AO DETERMINED TAXABLE INCOME BY ACCEPTING THE RETURNED INCOME. A PERUSAL OF THE RECORD WOULD SHOW THAT THE ITA NO.1029/AHD/2017 2 LD.COMMISSIONER HARBOURED A BELIEF THAT THE ASSESSE E HAS SOLD ONE PIECE OF LAND FOR A CONSIDERATION OF RS.1,01,85,700 /-. WHILE COMPUTING THE CAPITAL GAIN, SHE HAS SHOWN COST OF A CQUISITION AT RS.8,80,750/- INCLUDING THE COST OF MAINTENANCE DEP OSIT OF RS.1,23,750/-. ACCORDING TO THE LD.COMMISSIONER, T HIS RS.1,23,750/- OUGHT NOT TO BE TREATED AS A PART OF COST OF ACQUISITION AND SINCE THE AO FAILED TO CONDUCT ANY INQUIRY IN THIS ASPECT, HE TREATED THE ASSESSMENT IS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE. ACCORDINGLY, THE LD.COMMI SSIONER HAS SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO PASS A FRESH ASSESSMENT ORDER. 3. WHILE IMPUGNING THE ORDER OF THE LD.COMMISSIONER , THE LD.COUNSEL FOR THE ASSESSEE CONTENDED THAT A SUPPLE MENTARY AGREEMENT WAS EXECUTED BETWEEN M/S.LAKHENI BUILDERS, A PROPRIETORSHIP FIRM AND M/S.MAHAVIR ENTERPRISE, A P ROPRIETORSHIP CONCERN OF SMT.MADHUBEN RAKESHKUMAR ON 27.2.2004. IN THIS AGREEMENT IT WAS SETTLED THAT DEVELOPMENT CHARGES O F RS.3,46,500/- WAS TO BE PAID BY THE PROSPECTIVE BUY ER TO THE DEVELOPER WHICH INCLUDED DEPOSITS TOWARDS MAINTENAN CE FUND VIZ. GEB CHARGES ETC. ACCORDING TO THE ASSESSEE THIS COM PONENT OF RS.1,23,750/- WAS PART OF DEPOSIT GIVEN TO THE BUIL DER AS A MAINTENANCE FUND. IT IS PART AND PARTIAL OF COST O F ACQUISITION AND HAS RIGHTLY BEEN ACCEPTED BY THE AO WHILE COMPUTING THE CAPITAL GAIN. 4. ON THE OTHER HAND, THE LD.DR RELIED UPON THE ORD ER OF THE LD.COMMISSIONER AND CONTENDED THAT MAINTENANCE EXPE NSES ARE RECURRING EXPENSES, WHICH COULD NOT BE CONSIDERED A S A PART OF COST OF ACQUISITION OR IMPROVEMENT COST. ITA NO.1029/AHD/2017 3 5. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD. THE DISPUTE BEFORE US IS, WHETHER ONE TIME DEPOSIT TAKEN BY THE BUILDER AT THE TIME OF ACQUISITION TOW ARDS MAINTENANCE DEPOSITS IS TO BE CONSIDERED AS RECURRI NG EXPENDITURE REQUIRED TO BE EXCLUDED FROM THE COST OF ACQUISITIO N. THE LD.COMMISSIONER WHILE TREATING THE ASSESSMENT AS ER RONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE FAILED T O APPRECIATE THE VERY NATURE OF THE EXPENDITURE. IT WAS NOT ROUTINE EXPENDITURE DEBITED TOWARDS THE ELECTRICITY ETC. IT WAS ONE-TI ME AMOUNT TAKEN BY THE BUILDER WHICH WILL BE KEPT IN THE FUNDS OF T HE SOCIETY FOR TAKING CARE OF MAINTENANCE IN FUTURE. PART OF THE SAME IS RELATABLE TOWARDS DEPOSITS REQUIRED TO BE MADE FOR ELECTRICIT Y CONNECTION. HENCE, HE HAS ERRED IN APPRECIATING THIS FACT BEFOR E HOLDING THAT THIS AMOUNT IS NOT LIABLE TO INCLUDED IN THE COST O F ACQUISITION. IN OUR OPINION, IT WAS ONE-TIME DEPOSIT GIVEN BY THE A SSESSEE WHICH WERE NOT REFUNDABLE TO HER, AND IT BECAME PART OF A CQUISITION COST. THE LD.AO HAS RIGHTLY ALLOWED IT TO THE ASSESSEE WHILE DETERMINING THE CAPITAL GAIN ASSESSABLE IN HER HAND . THERE IS NO ERROR IN THE ORDER OF THE AO WHICH HAS CAUSED PREJU DICE TO THE REVENUE, AND THEREFORE, WE ALLOW THIS APPEAL AND QU ASH THE ORDER OF THE LD.COMMISSIONER PASSED UNDER SECTION 263 OF THE ACT. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 17 TH JULY, 2019. SD/- SD/- (PRADIPKUMAR KEDIA) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/07/2019