Dy. CIT, Circle-4, Pune V. Kamal Jestaram Kapadia, Pune

ITA 1144/PUN/2013

• Counselvise Citation: 114424514 RSA 2013
• Duration Of Justice: 2 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 24-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Gift; Cost of acquisition
• Section: 133(6); 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B , PUNE BEFORE M S SUSHMA CHOWLA , JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO. 1144 /PN/201 3 ITA NO. 1144 /PN/201 3 ASSESSMENT YEAR: 2007 - 08 THE DY. COMMISSIONER OF INCOME TAX, CIRCLE 4 , PUNE . APPELLA NT VS. KAMAL JESTARAM KAPADIA, 81A, PORWAL PLAZA, EAST STREET, GALLERIA, PUNE . . RESPONDENT PAN: A BKPK9411A PAN: A BKPK9411A A PPELLANT BY : SHRI B.C. MALAKAR RESPONDENT BY : S HRI NIKHIL PATHAK DATE OF HEARING : 2 8 - 0 5 - 201 5 DATE OF PRONOUNCEMENT : 29 - 0 5 - 201 5 ORDER PER SUSHMA CHOWLA, J M : THIS APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - I I, PUNE DATED 2 4 . 0 1 .201 3 RELATING TO ASSESSMENT YEAR 2007 - 08 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1 961 . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN ALLOWING THE DEDUCTION CLAIMED U/S.54 OF THE ACT ON EXPENDITURE FOR PURCHASE OF VARIOUS ITEMS OVER AND ABOVE THE INVESTMENT IN PUR CHASE OF RESIDENTIAL VARIOUS ITEMS OVER AND ABOVE THE INVESTMENT IN PUR CHASE OF RESIDENTIAL HOUSE FOR RS.1.10 CRORE. 2. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN INCLUDING THE COST OF PURCHASE OF HOUSEHOLD ELECTRICAL APPLIANCES, ELECTRONIC ITEMS, FURNITURE, INTERIOR DECORATION, FURNISHING ITEMS, LAVISH BATH RO OM FITTINGS ETC., AMOUNTING TO MORE THAN THE COST OF RESIDENTIAL HOUSE IN THE COST OF NEW ASSET PURCHASED, TO ALLOW DEDUCTION U/S.54 OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME - TAX(APPEALS) ERRED IN NOT APPRECIATING THAT INCLUSION OF THE COST OF SUC H ITEMS, AS REFERRED ABOVE IS NOT ENVISAGED FOR THE PURPOSE OF EXEMPTION U/S.54 OF THE LT. ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUND OF APPEAL. 3. THE ISSUE RAISED IN THE PRESENT APPEAL FILED BY THE REVENUE IS AGAINST THE ALLOW ANCE OF DEDUCTION CLAIMED UNDER SECTION 54 OF THE ACT ON EXPENDITURE FOR ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 2 PURCHASE OF VARIOUS ITEMS OVER AND ABOVE THE INVESTMENT IN PURCHASE OF RESIDENTIAL HOUSE. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE DURING THE YEAR 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE DURING THE YEAR UNDER CONSIDERATI ON HAD DECLARED INCOME FROM CAPITAL GAINS. THE ASSESSEE HAD SOLD A RESIDENTIAL PROPERTY, AGAINST WHICH IT HAD CLAIMED DEDUCTION UNDER SECTION 54 OF THE ACT AT RS. 2,89,50,350/ - . THE SAID DEDUCTION WAS ON ACCOUNT OF RE - INVESTMENT TOWARDS PURCHASE OF NEW RE SIDENTIAL PROPERTY ONE YEAR PRIOR TO THE DATE OF TRANSFER TO THE E XTENT OF RS.1.10 CRORES AND REST OF THE AMOUNT WAS SPENT TOWARDS RENOVATION WORK. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO TOWARDS RENOVATION WORK. THE ASSESSING OFFICER SHOW CAUSED THE ASSESSEE TO EXPLAIN AS TO WHY THE REMAINING AMOUNT OF RS.1,73,85,050/ - BE NOT DISALLOWED AND ADDED BACK TO THE INCOME FROM CAPITAL GAINS. IN REPLY, THE ASSESSEE POINTED OUT THAT IT HAD ACQUIRED THE BARE SHELL FROM THE BUILDER VIDE REGISTERED AGREEMENT DATED 13.07.2006 FOR SUM OF RS.1.10 CRORES. IT WAS FURTHER EXPLAINED BY THE ASSESSEE THAT ON ITS REQUEST, THE BUILDER HAD PROVIDED ONLY BARE SHELL AND THE INTERNAL CONSTRUCTION WAS COMPLETED BY THE ASSESSEE AS PER HIS DESIGN AND INTERNAL CONSTRUCTION WAS COMPLETED BY THE ASSESSEE AS PER HIS DESIGN AND DRAWINGS. THE AMOUNT WAS CLAIMED TO HAVE BEEN INCURRED ON CONSTRUCTION INCLUDING COST OF TILES, W ALLS , BATHROOMS, PAINT, ELECTRICAL W IRINGS AND INSTALLATION S, FIXING OF WINDOWS, DOORS AND FITTINGS REQUIRED IN THE HOUSE. FURTHER, PLEA OF THE ASSESSEE IN THIS REGARD WAS THAT THE SAID EXPENDITURE WAS INCURRED TO MAKE THE HOUSE HABITABLE. THE ASSESSING OFFICER WAS OF THE VIEW THAT UNDER THE PROVISIONS OF SECTION 54 OF THE ACT, DEDUCTION ONLY FOR THE COST OF PURCHASE OF RESIDENTIAL HOUSE WAS TO BE ALLOWED AND HAD IT BEEN THE INTENTION OF THE LEGISLATURE TO GRANT DEDUCTION ON THE COST OF RENOVATION, THE LA NGUAGE OF THE SAID SECTION WOULD HAVE BEEN DIFFERENT FROM THE ONE USED. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS THE ASSESSEES CASE WAS NOT THAT OF CONSTRUCTION OF A RESIDENTIAL HOUSE AND WHERE THE ASSESSEE HAD PURCHASED RESIDENTIAL HOUSE FROM A WE LL KNOWN BUILDER IN PUNE, THEN THE ISSUE WAS WHETHER THE DEDUCTION AVAILABLE FOR BOTH PURCHASE OF FLAT , AS WELL AS SUBSEQUENT RENOVATION COST , IS TO BE ALLOWED . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE PURCHASE WAS ONE TIME AFFAIR AND ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 3 DOES NOT BRING WITH IN ITS AMBIT ANY EXPENDITURE ON RENOVATION, ETC. CONSEQUENTLY, THE EXPENDITURE INCURRED BY THE ASSESSEE ON RENOVATION WAS HELD BY THE ASSESSING OFFICER NOT ALLOWABLE UNDER SECTION 54 OF THE ACT. 5. BEFORE THE CIT(A), THE ASSESSEE FURNISHED WRITTEN S UBMISSIONS VIS - - VIS ITS CLAIM OF DEDUCTION ON ACCOUNT OF COST OF IMPROVEMENTS UNDER SECTION 54 OF THE ACT. THE SAID WRITTEN SUBMISSIONS ARE REPRODUCED UNDER PARA 3.1 AT PAGES 2 TO 11 OF THE APPELLATE ORDER. THE CIT(A) REMANDED THE SAID SUBMISSIONS TO TH E ASSESSING OFFICER, WHO IN TURN FURNISHED THE REMAND REPORT DATED 28.09.2012, WHICH IS REPRODUCED UNDER PARAS 3.3 AT PAGES 12 TO 19 OF THE APPELLATE ORDER. IN WHICH IS REPRODUCED UNDER PARAS 3.3 AT PAGES 12 TO 19 OF THE APPELLATE ORDER. IN RESPONSE TO THE SAID REPORT, THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH ARE REPRODUCED UN DER PARA 3.4 AT PAGES 19 TO 26 OF THE APPELLATE ORDER. THE CIT(A) AFTER GOING THROUGH THE FACTUAL ASPECTS OF THE ISSUE OBSERVED THAT THERE WAS NO MERIT IN THE CONCLUSION DRAWN BY THE ASSESSING OFFICER THAT WHERE THE ASSESSEE HAD PAID THE PRICE , WHICH IS S AME AS PAID BY OTHER PURCHASERS, THEN THE PRESUMPTION IS THAT THE ASSESSEE HAD RECEIVED A COMPLETELY CONSTRUCTED FLAT, THE PRESUMPTION IS THAT THE ASSESSEE HAD RECEIVED A COMPLETELY CONSTRUCTED FLAT, AS IS RECEIVED BY OTHER PURCHASERS OF THE UNITS IN THE SAID BUILDING. THE CLAIM OF THE ASSESSEE VIS - - VIS THE SAID CONTENTION WAS THAT I T HAD ENTERED INTO AN AGREEMENT IN THE YEAR 2006 , WHEREAS THE PROJECT HAD STARTED IN THE YEAR 2004 AND NO ESCALATION PRICE WAS PAID BY THE ASSESSEE, SINCE IT HAD AGREED TO PURCHASE BARE SHELL OF THE FLAT WITHOUT ANY INTERIOR FITTINGS. THE CIT(A) NOTED THA T THE MATTER HAD BEEN REMANDED BACK TO THE ASSESSING OFFICER TO CARRY OUT NECESSARY ENQUIRIES AND VERIFICATION, WHICH THE ASSESSING OFFICER HAS FAILED TO CARRY OUT THE SAME AND THE PLEA OF THE ASSESSEE IN THIS REGARD WAS ACCEPTED. THE CIT(A) FURTHER NOTED THAT EVEN IN THE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH THE BUILDER, ON PAGE 5, IT WAS MENTIONED THAT THE PURCHASER EXPRESSED A DESIRE TO PURCHASE WITH REDUCED AMENITIES, A FLAT BEARING NO.1001, ON 10 TH FLOOR. MOREOVER, THE ENQUIRIES CARRIED OUT DUR ING THE REMAND PROCEEDINGS BY THE ASSESSING OFFICER HAD ALSO REVEALED THAT THE ASSESSEE HAD INCURRED EXPENDITURE ON THE FLAT SO AS TO MAKE IT HABITABLE . THE CIT(A) FURTHER NOTED THAT ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 4 THE VERIFICATION CARRIED OUT IN THE REMAND PROCEEDINGS CLEARLY INDICATED THAT THE ASSESSEE HAD ACTUALLY INCURRED THE EXPENSES AND AS SUCH, THE THEORY OF BARE SHELL PURCHASE OF THE PREMISES GETS ESTABLISHED. FURTHER, THE NATURE OF EXPENSES INCURRED BY THE ASSESSEE INDICATED THAT THE SAME HAD BEEN INCURRED ON PLASTERING, PLUMBI NG, PURCHASE OF TILES AND ELECTRICAL ITEMS, WINDOWS, FLOORING, ETC. WHICH CLEARLY SHOW THAT THE EXPENSES HAD BEEN INCURRED TOWARDS MAKING THE RESIDENTIAL FLAT HABITABLE. RELYING ON SERIES OF DECISIONS, THE CIT(A) HELD THAT THE COST INCURRED FOR CARRYING O UT CONSTRUCTION OF INTERNAL PART OF THE HOUSE IS TO BE INCLUDED IN THE COST OF THE ASSET FOR THE PURPOSE OF SECTION 54 OF THE ACT. ANOTHER ASPECT NOTED BY THE CIT(A) WAS THAT THE ASSESSING OFFICER IN THE RE MAND PROCEEDINGS NOTED CERTAIN AMOUNTS WERE EXPA N DED FOR THE RENOVATION AND BEAUTIFICATION WORK AND ALSO FOR PURCHASE OF ELECTRIC AL AND LUXURY GOODS SUCH AS AIR - CONDITIONERS, DVD PLAYER AND TELEVISION, MUSIC SYSTEM AND ALSO WATER PURIFIER, ETC. THE SAID EXPENDITURE TOTALING RS. 23,28,562/ - BASED ON THE E NQUIRIES CARRIED OUT BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, WHICH INCLUDED ITEMS LIKE AIR - CONDITIONERS, KITCHEN APPLIANCES, CURTAINS WERE HELD NOT ALLOWABLE AS COST OF THE ASSET. HOWEVER, THE REMAINING EXPENDITURE INCURRED BY THE ASSESSEE ON MAK I NG THE PREMISES HABITABLE WERE HELD TO BE PART OF THE COST OF THE HOUSE, WHICH COULD BE ALLOWED AS DEDUCTION UNDER SECTION 54 OF THE ACT. 6. THE REVENUE IS IN APPEAL AGAINST THE AFORESAID ORDER OF CIT(A). 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE FO R THE REVENUE POINTED OUT THAT AS AGAINST THE COST OF THE PROPERTY OF RS.1.10 CRORES, THE COST OF ADDITIONAL EXPENDITURE WAS TOTALING RS.1.73 CRORES, WHICH WAS MORE THAN THE COST OF THE PROPERTY ITSELF. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENT AL REPRESENTATIVE FOR THE REVENUE THAT WHERE THE ASSESSEE WAS PURCHASING A FLAT FROM AN ESTABLISHED DEVELOPER, WHERE SALE OF UNITS PERSE WERE MADE BY THE SAID DEVELOPER, THEN IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS PURCHASED THE FLAT DEVELOPER, THEN IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS PURCHASED THE FLAT WITH BARE WALLS ON LY. PLACING RELIANCE ON THE ORDER OF ASSESSING OFFICER, THE ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 5 LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT THERE WAS NO MERIT IN THE BENEFIT ALLOWED BY THE CIT(A). 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REPLY, DREW OUR 8. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN REPLY, DREW OUR ATTENTION TO THE AGREEMENT TO SELL PLACED AT PAGES 51 ONWARDS OF THE PAPER BOOK , WITH REFERENCE TO PAGE 72, WHEREIN IT WAS CATEGORICALLY AGREED UPON THAT THE BUILDER SHALL ONLY HANDOVER BARE SHELL OF THE FLAT TO THE ASSESSEE, WHO IN TURN, WAS RESP ONSIBLE FOR MAKING THE SAME HABITABLE . REFE R RING TO THE EXPLANATION FILED BEFORE THE CIT(A), THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE AFORESAID BUILDING HAD STARTED COMMENCEMENT OF ITS POINTED OUT THAT THE AFORESAID BUILDING HAD STARTED COMMENCEMENT OF ITS CONSTRUCTION IN THE YEAR 2004 . HOW EVER, THE ASSESSEE MADE THE SAID BOOKING WITH THE DEVELOPER IN THE YEAR 2006 WHEN ADMITTEDLY THE MARKET PRICE OF THE SAID FLAT HAD INCREA SED. HOWEVER, IN ORDER TO SAVE COST, THE ASSESSEE REQUESTED THE BUILDER TO PROVIDE THE SAID FLAT WITH BARE SHELL AND T HEREAFTER, COMPLETE THE BUILDINGS AS PER THE REQU ISITION OF THE ASSESSEE. IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT EVEN THE BUILDER HAS LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THAT EVEN THE BUILDER HAS CONFIRMED THE SAID STATUS VIDE ITS LETTER PLACED AT PAGE 108 OF PAPER BOOK. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD SOLD ITS RESIDENTIAL PROPERTY, AGAINST WHICH IT CLAIMS TO HAVE PURCHASED A FLAT FROM A B UILDER, ON WHICH IT HAD CARRIED OUT MAJOR WO RKS MAKING IT HABITABLE. THE ASSESSEE HAD CLAIMED THE DEDUCTION UNDER SECTION 54 OF THE ACT ON ACCOUNT OF COST OF THE SAID PROPERTY / FLAT AND ALSO COST OF THE IMPROVEMENTS CARRIED OUT IN THE SAID FLAT, FOR MAKING IT HABITABLE. THE ASSESSING OFFICER AND T HE CIT(A) HAD ALLOWED THE CLAIM OF DEDUCTION UNDER SECTION 54 OF THE ACT VIS - - VIS THE COST OF FLAT PAID BY THE ASSESSEE TO THE BUILDER I.E. RS.1.10 CRORES. THE ASSESSEE FURTHER CLAIMS TO HAVE INCURRED EXPENDITURE OF RS. 1.73 CRORES FOR MAKING THE SAID PRO PERTY HABITABLE. THE LIST OF EXPENDITURE IS PROVIDED AT PAGES 21 TO 23 OF THE PAPER BOOK TOTALING THE LIST OF EXPENDITURE IS PROVIDED AT PAGES 21 TO 23 OF THE PAPER BOOK TOTALING RS .1.73 CRORES. THE ISSUE ARISING BEFORE US IS IN RELATION TO THE ALLOWABILITY OF THE ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 6 SAID EXPENDITURE OF RS.1.73 CRORES AS COST OF THE NEW ASSET PURCHASED BY THE ASSESSEE, WHICH IN TURN, IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT. 10. ADMITTEDLY, THE POSITION IS THAT THE ASSESSEE HAD INCURRED THE SAID 10. ADMITTEDLY, THE POSITION IS THAT THE ASSESSEE HAD INCURRED THE SAID EXPENDITURE ON IMPROVING THE EXISTING FLAT AND MAKING IT MORE HABITABLE. THE FIRST ASPECT OF THE ISSUE TO BE DECIDED IN THE CASE OF THE ASSESSEE IS WHETHER SUCH EXPENDITURE CAN BE ALLOWED AS PART OF COST OF ACQUISITION OF NEW PROPERTY UNDER SECTION 54 OF THE ACT. THE CIT(A) IN THIS REGARD HAD PLACED RELIANCE ON SERIES OF DECISIONS, WHICH HAVE NOT BEEN CONTROVERTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. THE RELEVANT EXTRACT OF THE ORDER OF CIT(A) IN REPRESENTATIVE FOR THE REVENUE. THE RELEVANT EXTRACT OF THE ORDER OF CIT(A) IN THIS REGARD IS AS UNDER: - 4.4.1 THE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ASHOK SAYAL 78 D TR 162, WHEREIN THE ASSESSEE HAD CLAIMED EXEMPTION U/S 54 ON CONSTRUCTION OF NEW HOUSE. THE ASSESSEE HAD CONSTRUCTED ONE ROOM WITH BRICKS AND MUD WITH NO AMENITIES LIKE BOUNDRY WALL, KITCHEN, TOILET, ELECTRICITY, WATER AND SEWAGE CONDITIONS. THE HON'BLE HIGH COURT HELD THAT THE HOUSE CON STRUCTED BY THE ASSESSEE COULD NOT BE CONSIDERED AS A HABITABLE HOUSE AND THE EXEMPTION U/S 54 WAS NOT ALLOWABLE. THE HIGH COURT ALSO HELD THAT HOUSE MEANS A DWELLING PLACE OR BUILDING FOR HUMAN HABITATION AND A BUILDING TO BE HABITABLE BY HUMAN BEINGS SHO ULD ORDINARILY REQUIRE TO HAVE MINIMUM FACILITIES OF WASHROOM, KITCHEN, ELECTRICITY, SEWERAGE ETC. THUS IN THE PRESENT CASE ALSO THE APPELLANT HAD ALSO ELECTRICITY, SEWERAGE ETC. THUS IN THE PRESENT CASE ALSO THE APPELLANT HAD ALSO PURCHASED A BARE FLAT WHICH CANNOT BE CONSIDERED A HOUSE WHICH IS HABITABLE. THE APPELLANT HAS THUS INCU RRED CERTAIN EXPENDITURE ON MAKING THE HOUSE HABITABLE SO AS TO HAVE A FUNCTIONAL KITCHEN, BATHROOMS, ELECTRICITY, PLASTERING, PLUMBING AND SUCH RELATED WORKS . 4.4.2 THE MUMBAI ITAT IN THE CASE OF SALEEM FAZULBHOY \ IS DCIT (2 007) 106 ITD 167 (MUM) HELD T HAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION I N RESPECT OF THE BASIC COST OF THE PROPERTY AND THE EXPENDITURE INCURRED TO MAKE IT HABITABLE. THE BENCH HELD AS UNDER: 'EXPENDITURE INCURRED ON MAKING THE HOUSE HABITABLE SHOULD BE CONSIDERED AS INVESTMENT I N PURCHASE OF THE HOUSE SUBJECT TO THE CONDITION THAT PAYMENT WAS MADE DURING THE PERIOD SPECIFIED IN S. 54F. THERE IS DISTINCTION BETWEEN EXPENDITURE INCURRED ON MAKING THE HOUSE THERE IS DISTINCTION BETWEEN EXPENDITURE INCURRED ON MAKING THE HOUSE HABITABLE AND THE EXPENDITURE ON RENOVATION. ONE MAY VISUALIZE A SITUATION W HERE ASSESSEE MAY BUY A HABITABLE HOUSE BUT THE ASSESSEE MAY LIKE TO INCUR EXPENDITURE BY WAY OF RENOVATION TO MAKE IT MORE COMFORTABLE. HE MAY NOT BE HAPPY WITH THE QUALITY OF MATERIAL USED BY THE BUILDER AND, THEREFORE, HE MAY INCUR THE EXPENDITURE ON I MPROVEMENT OF THE HOUSE. SUCH EXPENDITURE CANNOT BE EQUATED WITH THE EXPENDITURE ON MAKING THE HOUSE HABITABLE. WHETHER THE HOUSE PURCHASED BY THE ASSESSEE WAS IN A HABITABLE CONDITION OR NOT WOULD DEPEND ON THE STATE OF CONDITION OF THE HOUSE AT THE TIME OF PURCHASE. HENCE, THIS ASPECT WOULD HAVE TO BE KEPT IN MIND WHILE ADJUDICATING SUCH ISSUE. IN THE PRESENT CASE, THE AO AS WELL AS THE CIT(A) HAD REJECTED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO EXPENDITURE COULD BE CONSIDERED FOR EXEMPTION UNDER S.54F WHICH WAS INCURRED AFTER THE DATE OF PURCHASE. THE AO HAD NO OCCASION TO EXAMINE THE STATE OF THE CONDITION OF THE THE AO HAD NO OCCASION TO EXAMINE THE STATE OF THE CONDITION OF THE HOUSE PURCHASED BY THE ASSESSEE. THOUGH THE LIST OF EXPENDITURE HAS BEEN PROVIDED BY THE ASSESSEE, YET IT IS TO BE EXAMINED WHETHER SU CH EXPENDITURE WAS INCURRED TO MAKE THE HOUSE HABITABLE OR JUST TO MAKE THE HOUSE MORE COMFORTABLE. THIS ASPECT OF THE M ATTER REQUIRES EXAMINATION BY THE AO. ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 7 4.4.3 IN THE CASE OF MRS. SONIA GULATI VS ITO 115 TAXMAN 232 (MUM ) (MAG) ON IDENTICAL FACT HELD AS UNDER: 'I HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS NOT IN DISPUTE THAT THE HOUSE IN QUESTION WAS PURCHASED BY THE ASSESSEE DURING THE ASSESSMENT YEAR UNDER CONSIDERATION THOUGH SHE HAD SOLD THE EARLIER SHARES IN ASSESSMENT YEAR 1992 - 93 AND CLAIMED DEDUCTION UNDER SECTION 54 - F OF THE ACT. SECTION 54 - F L AYS DOWN THAT THE ASSESSEE SHOULD PURCHASE THE HOUSE OUT OF THE CONSIDERATION RECEIVED FROM THE SALE OF THE ASSET WITHIN TWO YEARS FROM THE DATE O F SALE. IT IS ALSO NOT IN DISPUTE THAT THE PURCHASE FALLS WITHIN TWO YEARS FROM THE DATE OF SALE OF ASSET, V I Z . SHARES. THE ASSESSEE INVESTED THE CONSIDERATION ARISING OUT OF SHARES SOLD EARLIER IN THIS YEAR I.E. ASSESSMENT YEAR 1993 - 94 IN THE PURCHASE OF THE HOUSE IN QUESTION AS WELL AS INVESTED RS. 1,22,525/ - ON THE RENOVATION OF THE HOUSE TO MAKE IT HABITABLE IN THIS YEAR. THE AS S ESSEE HAS ALSO CLAIMED RS.5,000 / - BEING THE ARCHITECT FEES AS EXEMPT UNDER SECTION 54 - F OF THE ACT, AS IT WAS PART OF THE COST OF THE FLAT. NOW THE QUESTION ARISES WHETHER THE ASSESSEE IS ENTITLED TO, 54 - F DEDUCTION IF SHE SPENDS THE AMOUNT REALISED FROM THE SALE OF SUBSEQUENT SHARES ON THE SAME HOUSE FOR MAKING IT HABITABLE. THIS QUESTION AROSE BEFORE THE ORISSA HIGH COURT IN C. W .T. VS. K. B. PRADHAN (SUPRA) WHEREIN IT WAS HELD THAT IF THE INVESTMENT HAS BEEN MADE TO MAKE THE HOUSE HABITABLE IT CANNOT BE PRESUMED THAT THE HOUSE WAS IN A HABITABLE CONDITION ON THE DAY WHEN IT WAS - PURCHASED AND THE AMOUNT INVESTED SHOULD BE CONSIDE RED FOR THE PURCHASE OF A HOUSE OR CONSTRUCTION, THE CONCEPT OF HABITABILITY BEING INHERENT IN THE WORD 'HOUSE'. RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE ORI SSA HIGH CO URT IN THE DECISION CITED ABOVE, I AM OF THE OPINION THAT THE ASSESSEE IS ENTITLED TO GET EXEMPTION UNDER SECTION 54 - F FOR THE PURCHASE OF THE HOUSE AND ITS RENOVATION OUT OF THE CONSIDERATION RECEIVED ON THE SALE OF SHARES IN THE PREVIOUS YEAR AS WELL AS IN THE YEAR UNDER APPEAL. ACCORDINGLY, THE ORDER OR THE CIT (A) ON THIS ISSUE IS SET ASIDE AND THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE. 4.6.4 SIMILARLY ON IDENTICAL ISSUE IN THE CASE OF MRS.GULSHANBANOO R. MUKHI VS JCIT (2002) 83 ITD 649 (MUM) IT WAS HELD AS UNDER: ' C OMING TO THE MEANING OF S. 54(1)(I) VIS - E - VI S THE COST OF PURCHASE OF THE NEW ASSET, THE LEARNED COUNSEL CONTENDED THAT THE WORDS USED ARE 'COST OF NEW ASSET' IN CO NTRADI STINCTION TO PRICE OF NEW ASSET, THE LEGISLATURE HAS USED THE WORDS CONSCIOUSLY. THE FINDING OF THE CIT(A) IS TO THE EFFECT THAT ONCE THE PRICE OF RESIDENTIAL HOUSE IS PAID, THERE CANNOT BE FURTHER ADDITION TO THIS FIGURE WHICH IS NOT THE PLAIN MEANING OF THE WORDS 'COST OF NEW ASSET' WHICH WILL INCLUDE NOT ONLY THE PURCHASE PRICE, LEGAL EXPENSES IN THIS BEHALF, BUT ALSO THE NECESSARY EXPENDITURE CARRIED OUT TO MAKE IT A HABITABLE RESIDENTIAL HOUSE AND THEREFORE, THE WORD 'COST' IS USED. THE CIT(A) HAS WRONGLY INTERPRETED THE TIME FRAME. THE LEGISLATURE HAS GIVEN THE TIME FOR DIRECT EXPENDITURE UP TO THE DATE OF FILIN G OF THE RETURN AND BEYOND THAT TO INVEST THE CAPITAL. GAIN IN A BANK ACCOUNT UNDER THE CAPITAL GAIN DEPOSIT SCHEME. CONSEQUENTLY, THE WORD 'COST' BEING INCLUSIVE OF NECESSARY REPAIRS IS FURTHER STRENGTHENED BY THIS TIME FRAME PROVIDED BY THE LEGISLATURE T O THE ASSESSEE TO GO FOR A PROPER RESIDENTIAL HOUSE. CONSEQUENTLY, THE REPAIR SUBSEQUENTLY CARRIED OUT BY THE ASSESSEE TO MAKE THE HOUSE HABITABLE ARE WITHIN THE PURVIEW OF THE WORDS 'COST OF NEW ASSET' AND OUGHT TO BE ALLOWED WHILE WORKING OUT DEDUCTION/E XEMPTION UNDER S. 54(1). THE ACTION OF THE CIT(A) IN ENHANCING THE ASSESSMENT WAS ASSAILED. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, CONTENDED THAT THE EXPENDITURE IN QUESTION ARE IMPROVEMENT EXPENSES AND ARE INCURRED AFTER EFFECTING TH E PURCHASE. SEC. 54(1)(II) REFERS TO 'COST' ONLY WHICH IN COMMON PARLANCE MEANS PRICE OF THE HOUSE. WHEREVER THE LEGISLATURE HAVE INTENDED TO INCREASE THE AMBIT OF WORD 'COST', NECESSARY WORDS ARE USED AS RIGHTLY OBSERVED BY THE CIT(A) IN CONNECTION WITH S . ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 8 48(III) WITH REFERENCE TO COST AND IMPROVEMENT. IN THE EXISTING PROVISIONS, THERE CANNOT BE FURTHER ADDITION AFTER THE PURCHASE IS COMPLETED. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE WORDS USED ABOUT THE AMOU NT SPENT ON PURCHASE OF NEW ASSET ARE 'COST THERETO' AND NOT ''PRICE THERETO', THE COST INCLUDES ASSET ARE 'COST THERETO' AND NOT ''PRICE THERETO', THE COST INCLUDES PURCHASE AS WELL. CONSEQUENTLY, WE ARE OF THE VIEW THAT THE WORD USED SIGNIFIES THAT THE AMOUNT OF PURCHASE WILL INCLUDE OTHER NECESSARY EXPENDITURE IN THIS B EHALF TO MAKE A RESIDENTIAL HOUSE HABITABLE AND TAKEN TOGETHER WILL BE THE COST OF THE NEW ASSET. WE HAVE PERUSED THE ITEMS OF THE REPORT OF THE ARCHITECT. THE RESIDENTIAL HOUSE WAS IN A STATE OF GENERAL DISREPAIR AND WAS UNHABITABLE. CONSEQUENTLY, THE NEC ESSARY REPAIRS CARRIED OUT TO MAKE THE SAME HABITABLE WILL CONSTITUTE PART OF THE COST OF NEW HOUSE. WE HOLD THAT THE CIT(A) WAS NOT JUSTIFIED IN ENHANCING THE ASSESSMENT BY EXCLUDING THE AMOUNT OF RS. 14,94,359 WHILE WORKING OUT DEDUCTION UNDER S.54. THE E NHANCEMENT IS HEREBY DELETED. 4.7 THE ABOVE RATIO OF THE DECISIONS CLEARLY SHOW THAT THE COST INCURRED FOR CARRYING OUT THE CONSTRUCTION OF THE INTERNAL PART OF THE HOUSE OUGHT TO BE INCLUDED IN THE COST OF THE ASSET FOR THE PURPOSES OF SECTION 54 OF THE ACT. THE DEFINITION OF IN THE COST OF THE ASSET FOR THE PURPOSES OF SECTION 54 OF THE ACT. THE DEFINITION OF 'HOUSE' SHOWS THAT IT PREDOMINANTLY MEANS THE PLACE WHICH IS MEANT FOR AND IS CAPABLE FOR DWELLING. THUS, A HOUSE WHICH DOES NOT PERMIT OR IS NOT CAPABLE OF DWELLING FOR THE ASSESSEE CANNOT BE CALLED A 'HOUSE', IN OTHER WORDS, THE P ROPERTY WOULD ATTAIN THE CHARACTER OF THE HOUSE ONLY WHEN IT BECOMES HABITABLE AND IN THE CIRCUMSTANCES THE COST INCURRED WHICH GOES TO MAKE THE HOUSE HABITABLE FOR THE APPELLANT WOULD BE CONSIDERED AS COST OF THE HOUSE. THI S ASPECT OF THE MATTER ALSO COM ES OUT OF THE RATIO OF THE VARIOUS DECISIONS DISCUSSED ABOVE. THE ASSESSING OFFICER DURING THE ASSESSMENT PROCEEDINGS HAD DISALLOWED THE CLAIM OF THE EXPENDITURE SUBSTANTIALLY TO THE EXTENT OF RS. 1,73,85,050 / - . THOUGH THE APPELLANT HAS CLAIMED THE ENTIRE E XPENDITURE TO HAVE BEEN INCURRED FOR MAKING THE HOUSE HABITABLE AS THE SAME IS STATED TO HAVE BEEN INCURRED ON PURCHASE OF TI L ES, PLASTERING, WOODEN FLOORING, PLUMBING WORK, FIBER OPTIC LIGHTING CABLE, ETC. THE ASSESSING OFFICER, HOWEVER, IN TH E REMAND PRO CEEDINGS HAD CARRIED OUT THE ASSESSING OFFICER, HOWEVER, IN TH E REMAND PRO CEEDINGS HAD CARRIED OUT VERIFICATION OF THE EXPENDITURE C LAI M ED TO HAVE BEEN I NCURRED BY THE APPELLANT. THE A.O. NOTICED THAT THE APPELLANT HAD GOT CARRIED THE WORK IN THE PREMISES THROUGH VARIOUS AGENTS AND CONTRACTORS, HOWEVER, CERTAIN AMOUNTS WERE ALSO EXPENDED BY THE APPELLANT FOR THE RENOVATION AND BEAUTIFICATION WORK, WHICH LED TO ENH A NCIN G THE DECOR AND ALSO IN PURCHASE OF ELECTRONIC LUXURY GOODS SUCH AS AIR CONDITIONERS, DVD PLAYER, TELEVISION & MUSIC SYSTEM AND ALSO WATER PURIFIER ETC. THE EXPENDI TURE INCURRED BY THE APPELLANT ON THE AFORESA ID ITEMS ARE PURELY LUXURY GOODS AND BY ANY STRETCH OF IMAGINATION CANNOT BE CONSIDERED TO BE FOR MAKING THE HOUSE HABITABLE. THE TOTAL AMOUNT OF SUCH ITEMS HAS B EEN WORKED OUT AT RS.23,28,562/ - BASED ON THE ENQ UIRES CARRIED OUT BY THE ASSESSING OFFICER I N THE REMAND PROCEEDINGS. THE ITEMS INCLUDED IN THE AFORESAID EXPENDITURE INCLUDES A IR - CONDITIONE RS, KITCHEN APPLIANCES, CURTAINS AND BLINDS ETC. HOWEVER, THE REMAINING EXPENDITURE IS SEEN TO HAVE BEEN INCURRED BY THE APPELLANT ON THE REMAINING EXPENDITURE IS SEEN TO HAVE BEEN INCURRED BY THE APPELLANT ON MAKING THE PREMISE HABITABLE SUCH AS ON INTERNAL BRICK WORK, PLASTERING, ELECTRICAL FITTINGS, FIBER OPTIC CABLES, FLOORING, PLUMBING, PAINTING ETC. THE NATURE OF THE SAID EXPENSES DO INDICATE THAT THE SAME WERE NECESSARY TO MAKE THE HOU SE HABITABLE AND COULD BE CONSIDERED AS PART OF THE COST OF THE HOUSE WHICH CAN BE CONSIDERED FOR ALLOWANCE AS A DEDUCTION U/S 54 OF THE I.T. ACT. 11. VARIOUS TRIBUNALS INCLUDING THE HONBLE PUNJAB & HARYANA HIGH COURT IN ASHOK SAYAL (SUPRA) HAD LAID DOW N THE PROPOSITION THAT THE EXPENDITURE INCURRED ON MAKING THE PROPERTY HABITABLE WAS PART OF THE COST OF HOUSE AND WAS ALLOWABLE AS DEDUCTION UNDER SECTION 54 OF THE ACT, WHILE COMPUTING INCOME FROM CAPITAL GAINS. ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 9 12. ANOTHER ASPECT OF THE ISSUE IS THE C LAIM OF THE ASSESSEE THAT IT HAD PURCHASED BARE SHELL OF THE SAID FLAT AND THE EXPENDITURE WAS WARRANTED TO MAKE THE HOUSE HABITABLE. THE PERUSAL OF THE AGREEMENT TO SELL WITH REFERENCE TO PAGE 5, WHEREIN IT IS MENTIONED THAT PURCHASER EXPRESSED A DESIRE TO PURCHASE WITH REDUCED AMENITIES OF FLAT BEARING NO.1001 ON 10 TH FLOOR , THE CASE OF THE ASSESSEE STANDS FURTHER ESTABLISHED. WHERE THE ASSESSEE HAD PURCHASED A BARE SHELL OF THE SAID FLAT, NECESSARY EXPENDITURE HAD TO BE INCURRED BY THE ASSESSEE IN OR DER TO MAKE THE SAID PREMISES HABITABLE. AS PER THE RULINGS OF THE TRIBUNAL AND HONBLE PUNJAB & HARYANA HIGH COURT (SUPRA), WHERE THE ASSESSEE HAS EXP A NDED THE SAID EXPENDITURE, THE SAME IS TO BE ADDED TO THE COST OF THE HOUSE, WHICH IN TURN IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT. 13. ANOTHER ASPECT RAISED BY THE ASSESSING OFFICER FOR DENYING THE BENEFIT TO THE ASSESSEE WAS THAT IT HAD PURCHASED THE SAID PROPERTY FROM THE BUILDER AT SAME RATE AS PURCHASED BY OTHER PURCHASERS OF OTHER FLA TS IN THE SAID BUILDING. THE PROJECT HAD COME UP FOR DEVELOPMENT IN THE YEAR 2004 AND THE CLAIM OF THE THE PROJECT HAD COME UP FOR DEVELOPMENT IN THE YEAR 2004 AND THE CLAIM OF THE ASSESSEE WAS THAT IT HAD ENTERED INTO AN AGREEMENT WITH THE SAID BUILDER IN THE YEAR 2006 WHEN THE MARKET VIS - - VIS THE RATES OF THE PROPERTY WERE ALREA DY HIGHER THAN IN THE YEAR 2004. HOWEVER, THE BUILDER SOLD THE SAID FLAT AT THE SAME RATE TO THE ASSESSEE IN THE YEAR 2006 AS WAS SOLD BY THE BUILDER IN THE YEAR 2004. HOWEVER, THE RIDER ON THE SAID SALE WAS THAT THE PROPERTY WOULD BE SOLD IN THE STATUS OF BARE SHELL AND THE INTERIORS WOULD BE COMPLETED BY THE ASSESSEE AT ITS OWN COST. IN VIEW THEREOF, WE FIND MERIT IN THE CLAIM OF THE ASSESSEE. 14. NOW, COMING TO THE NATURE OF EXPENDITURE INCURRED BY THE ASSESSEE TOTALING RS. 1.73 CRORES . D URING THE C OURSE OF APPELLATE PROCEEDINGS , THE ASSESSEE HAD MADE ELABORATE SUBMISSIONS VIS - - VIS THE SAID EXPENDITURE, WHICH IN TURN WERE FORWARDED TO THE ASSESSING OFFICER. THE CIT(A) VIDE ORDER PASSED UNDER SECTION 250(4) OF THE ACT DIRECTED THE ASSESSING OFFICER TO GO THROUGH THE UNDER SECTION 250(4) OF THE ACT DIRECTED THE ASSESSING OFFICER TO GO THROUGH THE ASSESSEES SUBMISSIONS ALONG WITH ITS ENCLOSURES AND MAKE NECESSARY ENQUIRIES IN THE MATTER, TO ASCERTAIN AS TO WHAT WAS ACTUALLY SOLD / PURCHASED AND SPENT ON ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 10 RENOVATION BY THE ASSESSEE AS WELL AS OTHER BUYERS. AFTER MAKING THE NECESSAR Y ENQUIRIES, THE ASSESSING OFFICER WAS DIRECTED TO SUBMIT THE REM AND REPORT. THE ASSESSING OFFICER IN THE REMAND REPORT DATED 28.09.2012 RECORDS THAT SUBSEQUENTLY, DETAILED ENQUIRIES WERE CONDUCTED, NOTICES UNDER SECTION 133(6) OF THE ACT WERE ISSUED TO T HE VARIOUS PERSONS FROM WHOM THE ASSESSEE HAD MADE PURCHASES AND THE NATURE OF WORK CARRIED OUT AT THE PREMISES OF THE ASSESSEE WAS REPORTED BY THE ASSESSING OFFICER, WHICH IS REPRODUCED AT PAGES 14 TO 17 OF THE APPELLATE ORDER. THE TABULATED DETAILS REFL ECT T HE ASSESSING OFFICER TO HAVE ISSUED THE NOTICES UNDER SECTION 133(6) OF THE ACT TO VARIOUS PERSONS AND AFTER NOTING THE NATURE OF BUSINESS OF THE SAID PERSONS , FURTHER ENQUIRIES WERE MADE FROM THE SAID PERSONS VIS - - VIS THE ADDRESS AT WHICH THE WORK W AS PERFORMED , INCLUDING THE AMOUNT AND MODE OF PAYMENT AND ALSO SIGNATURE OF THE PERSON RECEIVING THE CHALLAN. FURTHER, THE ASSESSING OFFICER ALSO REPORTED THE NATURE OF WORK CARRIED OUT AT THE PREMISES OF THE ASSESSEE. THOUGH THE REFERENCE IS BEING MADE TO THE SAID TABULATED DETAILS SUBMITTED BY THE ASSESSING OFFICER IN THE REMAND REPORT, WHICH ARE REPRODUCED IN THE APPELLATE ORDER, BUT THE SAME ARE NOT BEING REPRODUCED FOR THE SAKE OF BREVITY. THE ASSESSING OFFICER IN THE REMAND REPORT ADMITTED THE ASS ESSEE TO HAVE INCURRED HUGE EXPENDITURE FOR BEAUTIFICATION AND ENHANCING DCOR AND RENOVATION OF FLAT INCLUDING ESTABLISHMENT OF VARIOUS APPLIANCES, FURNITURE AT THE RESIDENCE OF THE ASSESSEE, WHICH IS AS UNDER: - THUS, IN A NUTSHELL, THE ABOVE MENTIONED CHART VERY CLEARLY DEPICTS THE ENORMOUS AMOUNTS EXPENDED BY SHRI KAMAL KAPADIA FOR RENOVATION WORK OF FLAT ENORMOUS AMOUNTS EXPENDED BY SHRI KAMAL KAPADIA FOR RENOVATION WORK OF FLAT AT S.NO.1001, GODS GIFT, OFF MANGALDAS ROAD, PUNE ROAD . THE ASSESSEE HAS INCURRED HUGE EXPENDITURE FOR BEAUTIFICATION AND ENHANCING DECOR AND RENOVAT ION OF THE FLAT EG . INSTALLATION OF TWO AIR - CONDITIONERS OF 1.5 CAPACITY AMOUNTING TO RS.24,500 / - EACH, ALTERNATION, RENOVATION, PLUMBING WORK WAS CARRIED OUT AMOUNTING TO RS.5,95,605/ - AT THE RESIDENCE OF SHRI KAMAL KAPADIA, MODULAR KITCHEN INSTALLED WOR TH RS.6,20,000/ - , PURCHASE OF REFRIGERATOR AMOUNTING TO RS.1,16,000/, DISHWASHER - RS.48,000/ - AND OVEN OF RS.50,000/ - , NEW FURNITURE SUPPLIED WORTH RS.1,68,000/ - AT THE RESIDENCE OF SHRI KAMAL KAPADIA, TWO SUPERIOR QUALITY BLINDS WERE SUPPLIED AT THE RES IDENCE OF SHRI KAMAL KAPADIA COSTING RS. 95,871/ - AND RS.19,790 EACH, 8 DAIKIN MAKE ACS WERE SUPPLIED AT THE RESIDENCE OF SHRI KAMAL KAPADIA, CORIAN SHEETS WERE SUPPLIED COSTING RS.82000/ - AT THE RESIDENCE OF SHRI KAMAL KAPADIA RESIDING AT 1001. GOD'S GIFT, OFF MANGALDAS ROAD, PUNE. THUS, IT IS TOTALLY CONTRADICTORY TO THE STATEMENT MADE BY SHRI KAMAL KAPADIA THAT, HE HAS PURCHASED A BARE SHELL AND CARRIED OUT INTERIOR WORK TO MAKE THE HOUSE HABITABLE. THE ABOVE CHART VERY CLEARLY DEPICTS THE VARIOUS AMO UNTS EXPENDED FOR RENOVATION OF THE HOUSE WHICH IS VERY CONTRADICTORY TO THE STATEMENTS MADE BY SHRI KAMAL KAPADIA. ITA NO . 1144 /PN/20 1 3 KAMAL J KAPADIA 11 THUS, THE AO WAS THOROUGHLY JUSTIFIED IN DISALLOWING THE CLAIM OF THE ASSESSEE U/S 54 OF THE INCOME TAX ACT, 1961. 15. IN THE TOTALITY OF THE ABOVE SAID EVIDENCES COLLECTED BY THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS, IT CANNOT BE DOUBTED THAT THE ASSESSEE HAD CARRIED OUT RENOVATION WORK AT ITS PREMISES TO MAKE THE SAID FLAT HABITABLE, WHICH ADMITTEDLY, IS TO BE ALLOWED AS PART OF TH E COST OF THE NEW ASSET PURCHASED BY THE ASSESSEE, WHILE COMPUTING INCOME FROM CAPITAL GAINS IN THE HANDS OF ASSESSEE. HOWEVER, THE ASSESSEE IS NOT ENTITLED TO THE EXPENDITURE INCURRED ON PURCHASE OF VARIOUS LUXURY GOODS TOTALING RS. 23,28,562/ - . IN THE T OTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) IN HOLDING THAT THE ASSESSEE IS ENTITLED TO THE CLAIM OF DEDUCTION TO THE EXTENT OF RS. 1,50,56,488/ - IN ADDITION TO THE DEDUCTION ALREADY ALLOWED AT RS.1.10 CR ORES, UNDER SECTION 54 OF THE ACT. UPHOLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE REVENUE. 1 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . 1 6 . IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED . ORDER P RONOUNCED ON THIS 29 TH DAY OF MAY , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 29 TH MAY , 2015 PUNE, DATED: 29 MAY , 2015 GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE DEPARTMENT; 2) THE ASSESSEE; 3) THE CIT(A) - I I, PUNE ; 4) THE CIT - II, PUNE ; 5) THE DR B BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// SENIOR PRIVATE SECRETARY I.T.A.T., PUNE