Mrs.Flora Martiz, Mangalore V. Income Tax Officer Ward-1(2), Mangalore

ITA 1179/BANG/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7736 (ITAT-BANGALORE)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 09-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: DR NAGENDRA REBELLY BENGALURU
• Assessee Lawyers: V SRINIVASAN
• Keywords: Reopening of assessment; Capital asset; Gift; Cost of acquisition; Fair market value; Reason to believe
• Section: 143(3); 147; 148; 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, JUDICIAL MEMBER ITA NO S . 1179 & 1180/BANG/2018 ASSESSMENT YEAR : 2009 - 10 MRS. FLORA MARTIZ PAN: ANAPM 0753F & MR. ROBERT MARTIZ PAN: ANAPM 0754C FLAT NO.1104, A BLOCK, MOURISHKA PALACE, KADRI KAMBLA, VYSYA RAO LANE, KADRI, MANGALURU 575 003. VS. THE INCOME TAX OFFICER, WARD 1(2), MANGALURU. APP ELLANT RESPONDENT APP ELLANT BY : SHRI V. SRINIVASAN, ADVOCATE RESPONDENT BY : DR. NAGENDRA REBELLY, ADDL.CIT(DR)(ITAT), BENGALURU. DATE OF HEARING : 30 .0 5 .2018 DATE OF PRONOUNCEMENT : 06.07.2018 O R D E R THESE APPEALS ARE BY THE TWO ASSESSEES AGAINST TWO ORDERS, BOTH DATED 17.01.2018 OF THE CIT(APPEALS)-10, BENGALURU, RELATING TO ASSESSMENT YEAR 2009-10. THE ISSUE THAT ARISES FOR CONSIDERATION IN BOTH THESE APPEALS ARE IDENTICAL AND ARISE OUT OF THE SA ME FACTS AND CIRCUMSTANCES. I DEEM IT CONVENIENT TO PASS A COM MON ORDER. 2. THE ASSESSEE IN ITA 1179/BANG/2018 IS THE WIFE OF ASSESSEE IN ITA NO.1180/BANG/2018. BOTH THE ASSESSEES ARE CO-OWNER S OF A PROPERTY ITA NOS.1179 & 1180/BANG/2018 PAGE 2 OF 10 MEASURING 0.22 ACRES TOGETHER WITH BUILDING MEASURI NG 2800 SQ.FT. IN GUYYA VILLAGE, SIDDAPUR, VIRAJPET TQ., KODAGU DIST. [HEREINAFTER REFERRED TO AS THE PROPERTY]. THE AFORESAID PROPERTY BELONGE D TO ONE SHRI JACOB, GRANDFATHER OF THE ASSESSEE IN ITA 1180/B/2018. BY A REGISTERED PARTITION DEED DATED 17.04.1999, THE ASSESSEE IN ITA NO.1180/ B/2018 WAS ALLOTTED THE PROPERTY AS HIS SHARE AS VACANT LAND. BY A REG ISTERED GIFT DEED DATED 07.06.1999, THE ASSESSEE IN ITA NO.1180/B/2018 GIFT ED 10 CENTS OUT OF 22 CENTS OF LAND TO THE ASSESSEE IN ITA NO.1179/B/2018 . SUBSEQUENTLY, CONSTRUCTIONS WERE PUT UP ON THE VACANT LAND AND TH E PROPERTY WAS SOLD BY BOTH THE ASSESSEES UNDER A REGISTERED SALE DEED DAT ED 03.04.2008 FOR A CONSIDERATION OF RS.32,50,000. THE ASSESSEES DID N OT FILE RETURN OF INCOME FOR AY 2009-10 DECLARING LONG TERM CAPITAL GAIN ON SALE OF THE PROPERTY. THE AO INITIATED PROCEEDINGS U/S. 147 OF THE INCOME -TAX ACT, 1961 [THE ACT] BY RECORDING THE FOLLOWING REASONS IN THE CAS E OF BOTH THE ASSESSEES:- 24/06/2014 DURING THE COURSE OF ASSESSMENT PROCEEDINGS FOR TH E AY 2010-11 IT IS VERIFIED FROM THE BANK PASS BOOK COPY PRODUCED BY THE ASSESSEE IN THE SB A/C NO.08422101015233 (JOINT ACCOUNT) OF CANARA BANK, THE ASSESSEE MADE CASH DEPOSIT OF RS.4 ,15,500 DURING THE YEAR 2008-09. THE ASSESSEE ALSO MADE CA SH DEPOSIT OF RS.15,47,406 IN THE SB ACCOUNT NO.27887 IN CORPORAT ION BANK (JOINT ACCOUNT). THE TOTAL CASH DEPOSIT IS RS.19,5 3,206/-. THE ASSESSEE HAS NOT BEEN OFFERED TO TAX. THE ASSESSEE S SHARE IS 50% IE RS.9,76,603/- OF BOTH BANKS. THE ASSESSEE HAS N OT FILED THE RETURN OF INCOME. BASED ON THE ABOVE EVIDENCES, I HAVE REASON TO BEL IEVE THAT THE INCOME HAS ESCAPED ASSESSMENT WITHIN THE M EANING OF SECTION 147 OF THE INCOME TAX ACT, 1961. 3. ACCORDINGLY, A NOTICE U/S. 148 OF THE INCOME-TAX ACT, 1961 [THE ACT] WAS ISSUED TO BOTH THE ASSESSEES ON 26.06.201 4. ITA NOS.1179 & 1180/BANG/2018 PAGE 3 OF 10 4. THE ASSESSEE IN ITA NO.1180/B/18 FILED A RETURN OF INCOME DECLARING INCOME FROM BROKERAGE & COMMISSION OF RS.90,000. T HE ASSESSEE IN ITA NO.1179/B/18 FILED A RETURN OF INCOME OF RS.60,000 FROM BROKERAGE & COMMISSION. BOTH THE ASSESSEES DID NOT DECLARE CAP ITAL GAIN ON SALE OF THE AFORESAID PROPERTY. IN THE COURSE OF ASSESSMENT PR OCEEDINGS, THE ASSESSEE FILED A COMPUTATION OF LONG TERM CAPITAL G AIN ON SALE OF PROPERTY AS FOLLOWS;- SALE CONSIDERATION 32,50,000 LESS: BROKERAGE 65,000 LESS: INDEXED COST OF LAND FMV AS ON 1981 22 CENTS ESTIMATED AT RS.1,10,000 X 582/100 6,40,200 LESS: COST OF CONSTRUCTION OF BUILDING 23,77,525X582/463 29,88,595 36,28,795 LONG TERM CAPITAL GAIN 4,43795 5. THE ISSUES WHICH AROSE FOR CONSIDERATION BEFORE THE AO ON THE BASIS OF COMPUTATION OF CAPITAL GAIN AS GIVEN ABOVE ARE : - (1) FAIR MARKET VALUE (FMV) OF THE LAND AS ON 01.04.1 981: IN THIS REGARD, IT IS NOT IN DISPUTE THAT THE ASSES SEE WAS ENTITLED TO OPT FOR ADOPTING COST OF ACQUISITION OF THE PROPERTY ADOPTING FMV OF THE PROPERTY AS ON 1.4.198 1 BECAUSE THE ASSESSEE BECAME OWNER OF THE PROPERTY B UT OTHER THAN BY ACTUAL ACQUISITION AND PRIOR TO 1.4.1 981 AS PER PROVISIONS OF SECTION 55(2)(B) R.W.S. 49(1)(III )(A) OF THE ACT. (2) COST OF CONSTRUCTION OF THE PROPERTY: AS WE HAVE ALREADY SEEN, THE LAND MEASURING 22 CENTS WAS SOLD ALONG WI TH BUILDING MEASURING 2800 SQ.FT. AND THEREFORE COST O F CONSTRUCTION OF THE BUILDING HAD TO BE ASCERTAINED. ITA NOS.1179 & 1180/BANG/2018 PAGE 4 OF 10 (3) EXPENDITURE INCURRED BY THE ASSESSEE IN CONNECTION WITH THE TRANSFER VIZ., BROKERAGE OF RS.65,000. 6. AS FAR AS FMV AS ON 1.4.81 IN RESPECT OF LAND ME ASURING 0.22 CENTS IS CONCERNED, THE AO ADOPTED THE COST OF ACQUISITIO N AT RS.10,000 PER ACRE. THE BASIS ADOPTED BY THE AO WAS A COPY OF GAZETTE N OTIFICATION OF 1999 WHEREIN THE FMV OF HOUSE SITE WITHIN 1 KM. WAS FIXE D AT 70,000 PER ACRE AND OUTSIDE 1 KM. WAS FIXED AT RS.18,000 PER ACRE. THE PROPERTY IN QUESTION WAS SOLD IN THE PREVIOUS YEAR RELEVANT TO AY 2009-10 AND THE AO ADOPTED THE VALUE AT RS.18,000 PER ACRE AS THE ASSE SSEES PROPERTY WAS OUTSIDE 1 KM. BY ADOPTING REVERSE INDEXATION, THE AO ARRIVED AT FMV AS ON 1.4.81 AT RS.10,000 PER ACRE. 7. AS FAR AS COST OF CONSTRUCTION IS CONCERNED, THE ASSESSEES CLAIMED THAT THE COST OF CONSTRUCTION INCURRED BY THE ASSES SEE AT RS.23,77,575. IN SUPPORT OF THE CLAIM FOR HAVING INCURRED THE AFORES AID EXPENSES, WHICH COMPRISED OF CIVIL CONSTRUCTION COST OF RS.19,02,10 4 AND ELECTRICAL WORKS AT RS.3,80,421 + REVENUE EXPENSES INCURRED DURING THE CONSTRUCTION OF RS.95,000. THE ASSESSEE CLAIMED THAT PERIOD OF CON STRUCTION WAS BETWEEN 05.10.01 TO NOV. 2003 AND APPLIED COST INFLATION IN DEX APPLICABLE FOR FY 2003-04 AND ARRIVED AT INDEXED COST OF CONSTRUCTION . IN SUPPORT OF INCURRING COST OF CIVIL CONSTRUCTION, ASSESSEE FILED COPY OF BILL STATEMENT FROM J.J. CONSTRUCTION, MYSORE. THE AO NOTICED THAT BILL WAS DATED 05.10.01. THE ASSESSEE HAD MADE PAYMENT OF RS.13,45,000 AND BALAN CE OF RS.5,55,000 WAS SHOWN AS PAYABLE. THE BILL STATEMENT REFERS TO 1 ST RUNNING BILL, 2ND RUNNING BILL, ETC. THE AO WAS OF THE VIEW THAT SIN CE THE CONSTRUCTION WAS COMPLETED ONLY IN NOV. 2003, THERE WAS NO POSSIBILI TY OF THE RUNNING BILLS BEING REFERRED TO IN THE BILL DATED 5.10.01. IN OT HER WORDS, THE AO WAS OF THE VIEW THAT RUNNING BILLS FOR EXPENSES TOWARDS CO NSTRUCTION TO BE INCURRED IN FUTURE CANNOT BE REFERRED TO IN THE BILL DATED 5 .10.01. THE BUILDING CONSTRUCTED BY THE ASSESSEE WAS NOT A RESIDENTIAL B UILDING. IN THESE ITA NOS.1179 & 1180/BANG/2018 PAGE 5 OF 10 CIRCUMSTANCES, THE AO DISBELIEVED THE BILL OF J.J. CONSTRUCTION, MYSORE FILED IN SUPPORT OF CLAIM OF THE ASSESSEE TOWARDS COST OF CONSTRUCTION. THE AO NOTICED THAT THE CONSTRUCTION COST IN THE YEAR 2003 WAS APPROX., RS.250 400 PER SQ.FT. ON THAT BASIS, THE AO ESTIMATED THE COST OF CONSTRUCTION AT RS.11,20,000 [ 2800 SQ.FT. X 400]. ON THAT BASIS T HE AO WORKED OUT THE INDEXED COST OF CONSTRUCTION. 8. AS FAR AS EXPENSES TOWARDS BROKERAGE IS CONCERNE D, ASSESSEE DID NOT FILE ANY EVIDENCE. IN THESE CIRCUMSTANCES, THE AO DID NOT ALLOW ANY DEDUCTION ON ACCOUNT OF EXPENSES INCURRED IN CONNEC TION WITH TRANSFER WHILE COMPUTING LONG TERM CAPITAL GAIN. THE AO ACCO RDINGLY COMPUTED LONG TERM CAPITAL GAIN AS FOLLOWS:- SALE CONSIDERATION 32,50,000 LESS: BROKERAGE NIL 32,50,000 LESS: INDEXED COST OF LAND 12,804 LESS: COST OF CONSTRUCTION OF BUILDING 23,77,525X582/463 14,07,862 14,20,666 LONG TERM CAPITAL GAIN 18,29,334 ASSESSEES SHARE THEREIN RS.9,14,667 9. ON APPEAL BY THE ASSESSEE, THE CIT(APPEALS) CONF IRMED THE ORDER OF AO. 10. AGGRIEVED BY THE ORDER OF CIT(APPEALS), THE ASS ESSEE HAS PREFERRED THE PRESENT APPEAL BEFORE THE TRIBUNAL. 11. THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PROCEEDINGS U/S. 147 OF THE ACT HAVE NOT BEEN VALIDLY INITIATED . IN THIS REGARD, THE LD. COUNSEL SUBMITTED THAT THE FACT THAT CASH DEPOSITS IN THE ASSESSEES BANK ACCOUNT DURING THE RELEVANT PREVIOUS YEAR AND THE F ACT THAT NO RETURN OF INCOME WAS FILED BY THE ASSESSEE FOR THE RELEVANT A SSESSMENT YEAR CANNOT BE THE BASIS FOR THE AO TO COME TO THE CONCLUSION T HAT THERE WAS AN ITA NOS.1179 & 1180/BANG/2018 PAGE 6 OF 10 ESCAPEMENT OF INCOME WHICH WAS CHARGEABLE TO TAX. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE FILED BEFORE US THE JUDGME NT OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF C.M. MAHADEVA V. CIT, ITA NO.1795/2009 DATED 24.08.2015 , WHEREIN THE HONBLE HIGH COURT HELD IN PARA 12 THAT SECTION 148 PROCEEDINGS CANNOT BE INIT IATED TO INVESTIGATE AND FIND OUT IF THERE WAS ANY LACUNA IN THE ACCOUNTS. PERMITTING THE AO TO DO SO WOULD BE PERMITTING THE AO TO MAKE FISHING AND ROVI NG ENQUIRIES. IN THAT CASE, THE REASONS FOR REOPENING WHICH ARE EXTRACTED IN PARA 9 OF THE AFORESAID JUDGMENT SHOWS THAT THE AO HAS SPECIFICAL LY MENTIONED ASSESSMENT IS BEING REOPENED FOR MAKING FURTHER INV ESTIGATION. THE LD. COUNSEL SUBMITTED THAT THE PRESENT PROCEEDINGS INIT IATED AGAINST THE ASSESSEE WAS NOTHING BUT A FISHING AND ROVING ENQUI RY. 12. I HAVE CONSIDERED HIS SUBMISSIONS AND AM OF THE VIEW THAT THE SAME IS WITHOUT ANY MERIT. AS RIGHTLY POINTED OUT BY TH E LD. DR BEFORE ME, THE ASSESSEE IN THIS CASE HAS NOT FILED A RETURN OF INC OME AT ALL FOR THE AY 2009-10. IN THE CASE DECIDED BY THE HONBLE KARNAT AKA HIGH COURT CITED SUPRA , THE ASSESSEE HAD FILED RETURN OF INCOME FOR THE R ELEVANT ASSESSMENT YEAR AND THE ASSESSMENT U/S. 143(3) OF THE ACT WAS ALREADY CONCLUDED. IT WAS IN THOSE CIRCUMSTANCES THAT THE COURT CAME TO T HE CONCLUSION THAT REOPENING OF ASSESSMENT WAS ONLY FOR THE PURPOSE OF MAKING FISHING AND ROVING ENQUIRY. 13. IN THE PRESENT CASE, I AM OF THE VIEW THAT IN T HE LIGHT OF THE FACT THAT ASSESSEE HAS NOT FILED ANY RETURN OF INCOME, THERE WAS EVERY REASON TO BELIEVE THAT THERE WAS ESCAPEMENT OF INCOME CHARGEA BLE TO TAX IN TERMS OF EXPLANATION 2(A) TO SECTION 147 OF THE ACT. IT IS NOT DISPUTED BEFORE ME THAT THE DEPOSITS IN THE BANK ACCOUNT REFERRED TO BY THE AO IN THE REASONS RECORDED WOULD BE ABOVE THE LIMIT OF INCOME WHICH I S NOT CHARGEABLE TO TAX. IN THESE CIRCUMSTANCES, I UPHOLD THE VALIDITY OF IN ITIATION OF PROCEEDINGS U/S. 148 OF THE ACT. ITA NOS.1179 & 1180/BANG/2018 PAGE 7 OF 10 14. THE NEXT ARGUMENT ADVANCED BY THE LD. COUNSEL F OR THE ASSESSEE WAS THAT THE PROPERTY IN QUESTION BELONGED NOT TO T HE ASSESSEE, BUT TO A FIRM OF PARTNERSHIP UNDER THE NAME & STYLE ANJU AR CADE. IN THIS REGARD, MY ATTENTION WAS DRAWN BY THE LD. COUNSEL FOR THE ASSE SSEE TO COPY OF PARTNERSHIP DEED DATED 28.03.2001 BETWEEN THE TWO A SSESSEES. UNDER CLAUSE 7 OF THE AFORESAID PARTNERSHIP DEED, THE TWO ASSESSEES BROUGHT IN THE PROPERTY AS THE PROPERTY OF THE FIRM. THE RELEV ANT CLAUSE IN THE PARTNERSHIP DEED READS AS FOLLOWS:- 7. THE FIRST AND SECOND PARTNERS HEREBY CONTRIBUTE NON AGRICULTURAL LAND BEARING SURVEY NO.104/3E MEASURIN G 22 CENTS SITUATED AT GUYYA VILLAGE, SIDDAPUR, VIRAJPET TALUK , KODAGU DISTRICT TOWARDS THEIR RESPECTIVE SHARE OF CAPITAL OF THE FIRM AND SAME SHALL BE THE ABSOLUTE PROPERTY OF THE FIRM. 15. THE FIRM HAD APPLIED FOR AND OBTAINED REGISTRAT ION FROM THE REGISTRAR OF FIRMS AND CERTIFICATE OF REGISTRATION OF THE FIR M DATED 9.4.01 IS ALSO FILED IN THE PAPERBOOK (PB). THE LD. COUNSEL ALSO BROUGHT T O MY NOTICE THAT THE FIRM WANTED TO BUILD UP A COMMERCIAL COMPLEX OVER THE LA ND AND HAD APPLIED FOR LOAN TO KARNATAKA STATE FINANCIAL CORPORATION (KSFC ) AND IN THIS REGARD, APPLIED FOR AN INCOME-TAX (IT) CLEARANCE CERTIFICAT E. COPY OF IT CLEARANCE CERTIFICATE DATED 25.6.2001 WAS ALSO FILED BEFORE M E. MY ATTENTION WAS ALSO DRAWN TO REPORT DATED 28.6.2001 OF VALUATION OF THE PROPERTY FOR THE PURPOSE OF AVAILING LOAN FROM KSFC WHEREIN THE PROPERTY WAS VALUED AT A SUM OF RS.18 LAKHS. MY ATTENTION WAS ALSO DRAWN TO THE FA CT THAT THE LOANS BORROWED FROM KSFC BECAME OVER-DUE AND ULTIMATELY T HE ASSESSEE HAD TO SELL THE PROPERTY MAINLY TO DISCHARGE THE LOAN AVAI LED FROM KSFC. POINTING OUT TO ALL THESE ABOVE FACTS, THE LD. COUNSEL FOR T HE ASSESSEE SUBMITTED THAT SINCE THE FIRM WAS THE OWNER OF THE PROPERTY, IT WA S ONLY APPROPRIATE THAT LONG TERM CAPITAL GAIN ON SALE OF PROPERTY SHOULD B E ASSESSED IN THE HANDS OF THE FIRM. ITA NOS.1179 & 1180/BANG/2018 PAGE 8 OF 10 16. ON THE ABOVE PLEA BEING TAKEN, THE CIT(APPEALS) HAS TAKEN A POSITION THAT NONE OF THE DOCUMENTS FILED BY THE AS SESSEE SUPPORT THE CLAIM OF ASSESSEE THAT PROPERTY BELONGED TO THE FIRM. HE HAS ALSO EXPRESSED THE OPINION THAT SINCE THE SALE DEED EXECUTED BY BOTH T HE ASSESSEES CLEARLY MENTION THAT THEY WERE THE CO-OWNERS OF THE PROPERT Y, THE CLAIM MADE BY THE ASSESSEE THAT THE LONG TERM CAPITAL GAIN CAN BE ASSESSED ONLY IN THE HANDS OF THE FIRM CANNOT BE ACCEPTED. 17. WE HAVE EXAMINED THE CLAIM OF ASSESSEE. WE ARE OF THE VIEW THAT THE SALE DEED UNDER WHICH THE PROPERTY WAS SOLD (CO PY OF WHICH IS PLACED AT PAGES 90 TO 100 OF THE ASSESSEES PB) CLEARLY SH OWS THAT BOTH THE ASSESSEES WERE OWNERS OF THE PROPERTY. THE ASSESSE ES HAVING SOLD THE PROPERTY AS BELONGING TO THEM AND HAVING RECEIVED T HE SALE CONSIDERATION ON THEIR OWN ACCOUNT CANNOT BE PERMITTED TO PLEAD T HAT THEY WERE NOT THE OWNERS OF THE PROPERTY. U/S. 45 OF THE ACT, LONG T ERM CAPITAL GAIN ARISING ON TRANSFER OF A CAPITAL ASSET IS LIABLE TO TAX IN THE HANDS OF THE TRANSFEROR. SINCE THE TRANSFERORS OF THE PROPERTY WERE ASSESSEE S, CAPITAL GAIN IS TO BE TAXED IN THEIR HANDS. IN THESE CIRCUMSTANCES, I AM OF THE VIEW THAT THE PLEA OF THE ASSESSEES THAT PROPERTY BELONGS TO THE FIRM CANNOT BE ACCEPTED IN THE INCOME-TAX PROCEEDINGS. 18. AS FAR AS DISPUTE WITH REGARD TO FMV AS ON 1.4. 1981 IS CONCERNED, I AM OF THE VIEW THAT THE CLAIM OF THE ASSESSEE THAT FMV OF THE LAND IS RS.1,10,000 IS NOT SUPPORTED BY ANY EVIDENCE; WHERE AS THE AO HAS BASED HIS CONCLUSION BASED ON A GAZETTE NOTIFICATION OF 1 999 GIVING THE VALUE OF THE PROPERTIES IN THE VICINITY OF THE AREA, WHERE T HE PROPERTY OF THE ASSESSEE IS SITUATED. I THEREFORE DO NOT FIND ANY MERIT IN THE SUBMISSIONS OF THE ASSESSEE ON THIS ISSUE. 19. THE NEXT ISSUE IS WITH REGARD TO THE CLAIM FOR DEDUCTION ON ACCOUNT OF BROKERAGE. THERE IS NO EVIDENCE FILED BY THE AS SESSEE TO SUBSTANTIATE ITS ITA NOS.1179 & 1180/BANG/2018 PAGE 9 OF 10 CLAIM THAT IT PAID BROKERAGE AND THEREFORE THE CLAI M MADE BY THE ASSESSEES IS REJECTED. 20. THE NEXT ISSUE IS WITH REGARD TO COST OF CONSTR UCTION OF THE PROPERTY. IT IS SEEN FROM THE RECORD THAT ASSESSEE CLAIMS THA T THE PROPERTY WAS COMPLETED ONLY IN THE YEAR 2003. HOWEVER, FOR THE PURPOSE OF AVAILING LOAN FROM KSFC, THE ASSESSEE HAS GIVEN A VALUATION REPOR T, COPY OF WHICH IS PLACED AT PAGE 79 TO 82 OF THE ASSESSEES PB. THIS GIVES THE COST OF BUILDING AT RS.18 LAKHS. AS FAR AS ASSESSEES CLAI M THAT COST OF CONSTRUCTION WAS A SUM OF RS.23,77,575, THE SAME WA S SUPPORTED BY A BILL OF J.J. CONSTRUCTION, MYSORE AND THE RELIABILITY OF THE SAID BILL WAS RIGHTLY DOUBTED BY THE AO FOR THE REASONS GIVEN IN THE ORDE R OF ASSESSMENT. THE BILL WAS DATED 05.10.2001 AND THE BILL MAKES REFERE NCE TO RUNNING BILLS IN FUTURE WHICH COULD NOT BE INVESTED AT THE TIME OF M AKING THE BILL DATED 05.10.2001. THE ASSESSEE HAS NOT LET IN ANY EVIDEN CE TO REBUT THE CASE OF THE AO IN THIS REGARD. 21. THE AO HAS ADOPTED COST OF CONSTRUCTION OF THE BUILDING BY ESTIMATING THE SAME AT RS.11,20,000. THERE HAS BEE N NO BASIS FOR THIS ESTIMATION BY THE AO. IN THESE CIRCUMSTANCES, THE ONLY CREDIBLE EVIDENCE AVAILABLE IS THE EVIDENCE OF THE CHARTERED ENGINEER TOWARDS VALUE OF THE PROPERTY FOR THE PURPOSE OF AVAILING LOAN BY THE AS SESSEE FROM KSFC. THIS REPORT GIVES THE YEAR OF CONSTRUCTION AS 2000 TO 20 01 FEBRUARY, WHEREAS THE ASSESSEE CLAIMS THAT IT HAD CARRIED OUT CONSTRU CTION BETWEEN THE PERIOD 05.10.2001 AND NOV. 2003. THE ASSESSEE HAS HIMSELF CLAIMED INDEXATION ONLY FROM THE YEAR 2003 FOR THE PURPOSE OF COMPUTIN G LONG TERM CAPITAL GAIN. THIS HAS BEEN APPARENTLY DONE BASED ON THE B ILL OF J.J. CONSTRUCTION, MYSORE. I AM OF THE VIEW THAT IT WOULD BE JUST AND APPROPRIATE TO ADOPT THE COST OF CONSTRUCTION AS GIVEN IN THE REGISTERED ENG INEERS REPORT AT RS.18 LAKHS. SINCE THE ASSESSEE HAS CLAIMED INDEXATION B ENEFIT ONLY FROM 2003, ITA NOS.1179 & 1180/BANG/2018 PAGE 10 OF 10 THE SAME IS DIRECTED TO BE ALLOWED ONLY FROM 2003. THE AO IS ACCORDINGLY DIRECTED TO COMPUTE THE LONG TERM CAPITAL GAIN. 22. IN THE RESULT, THE APPEALS OF THE ASSESSEES ARE PARTLY ALLOWED. PRONOUNCED IN THE OPEN COURT ON THIS 6 TH DAY OF JULY, 2018. SD/- ( N.V. VASUDEVAN ) JUDICIAL MEMBER BANGALORE, DATED, THE 6 TH JULY, 2018. / D ESAI S MURTHY / COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE.