ACIT, Cir-9(1), Hyderabad V. Smt. K. Devaki Bai, Hyderabad

ITA 1203/HYD/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5591 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 7 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 20-06-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Source of fund

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1203/HYD/2011 ASSESSMENT YEAR 2007-08 THE ASST. CIT CIRCLE-9(1) HYDERABAD VS. SMT. K. DEVAKI BAI HYDERABAD PAN: AWCPK4844N [APPELLANT] [RESPONDENT] APPELLANT BY: SRI B. YADAGIRI RESPONDENT BY: SRI K.A. SAI PRASAD DATE OF HEARING: 19.02.2014 DATE OF PRONOUNCEMENT: 19.02.2014 ORDER PER CHANDRA POOJARI, AM: THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-VI, HYDERABAD DATED 29.3.2011 F OR ASSESSMENT YEAR 2007-08. 2. THE REVENUE RAISED THE FOLLOWING GROUNDS: (1) THE LEARNED CIT(A) ORDER IS ERRONEOUS BOTH IN LAW A ND ON FACTS. (2) THE LEARNED CIT(A) IS NOT JUSTIFIED IN STATING THAT THE EXPENDITURE HAS TO BE CONSIDERED FOR THE ENTIRE LAN D OWNED BY THE APPELLANT, IRRESPECTIVE OF THE FACT, THE SAM E WAS SOLD OR STILL CONTINUING WITH THE ASSESSEE AS THE EXPEND ITURE INCURRED BY THE ASSESSEE AS ON DATE OF THE SALE OF THE LAND IS ONLY ELIGIBLE FOR DEDUCTION TOWARDS DEVELOPMENT OF THE LAND OF 1133 SQ. YARDS. (3) THE LEARNED CIT(A) IS NOT JUSTIFIED IN STATING THAT THE PROPORTIONATE EXPENDITURE IN RESPECT OF LAND SOLD O F 8275 SQ. YARDS BY 31.3.2007 WORKED OUT RS. 48,90,714/- A S THE ITA NO. 1203/HYD/2011 SMT. K. DEVAKI BAI ==================== 2 TOTAL EXPENDITURE INCURRED BY THE ASSESSEE FOR THE DEVELOPMENT OF 19931 SQ. YARDS IS ONLY RS. 51,68,36 1/- BY 31.3.2007 AND THE PROPORTIONATE SHARE ON 8275 SQ. Y ARDS CAN NOT BE 48,90,714/-. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND DOES NOT HAVE ANY REGULAR SOURCES OF INCOME. FOR THE ASST. YEAR 2007-08 SHE FILED HER RETURN OF INCOME ON 30.11.2007 ADMITTING TOTAL INCOME OF RS. 19,37,240/ - UNDER THE HEAD LONG TERM CAPITAL GAINS. DURING THE ACCOUN TING YEAR RELEVANT FOR THE A.Y. 2007-08 THE ASSESSEE SOLD LAN D OF 8275 SQUARE YARDS (SQY) SITUATED AT KARMANGHAT, HYDERABA D OUT OF THE 19931 SQY SHE OWNS. THE ASSESSEE WORKED OUT THE LONG TERM CAPITAL GAIN ON SALE OF LAND OF 8275 SQY AT KA RMANGHAT, HYDERABAD AS UNDER: SALE CONSIDERATION RS. 68,70,900 LESS: INDEXED COST LAND FY 1981-82 8275/100*519 RS. 42947 IMPROVED COST FY: 2006-07 4890714/519*519 RS. 48,90 ,714 RS. 49,33,661 RS. 19,37,239 4. DURING THE COURSE OF SCRUTINY ASSESSMENT PROCEEDING S THE ASSESSEE FURNISHED DETAILS OF EXPENDITURE INCUR RED BY HER FOR THE DEVELOPMENTAL WORK UNDERTAKEN DURING THE FI NANCIAL YEARS 2005-06, 2006-07 AND 2007-08 AMOUNTING TO RS. 1,17,76,423/-. FURTHER, THE ASSESSEE SUBMITTED THAT THE PROPORTIONATE DEVELOPMENT EXPENDITURE INCURRED IN R ESPECT OF THE LAND SOLD WAS RS. 48,89,552/-. THE ASSESSEE FURNISHED ITA NO. 1203/HYD/2011 SMT. K. DEVAKI BAI ==================== 3 A DETAILED WORKING PERTAINING TO THE DEVELOPMENTAL EXPENDITURE INCURRED UP TO 31.03.2007 WHICH IS RS. 48,89,552/-. HOWEVER, THE AO WAS NOT CONVINCED WIT H THE CLAIM OF THE ASSESSEE WITH REGARD TO AN EXPENDITURE OF RS. 48,89,552/- AND PROCEEDED TO RE-WORKOUT THE SAME. I N THAT PROCESS THE AO OBSERVED THAT IN RESPECT OF 1133 SQ. YARDS SOLD TO M/S. SRI MAHAVEER BUILDERS ON 17.05.2006 THE RE WAS NO SCOPE / NECESSITY TO INCUR THE DEVELOPMENT EXPEND ITURE AS THE SAME WAS ALREADY TRANSFERRED TO THE TRANSFEREE. IN RESPECT OF THE REMAINING LAND THE AO RE-WORKED OUT THE CAPITAL GAIN OBSERVING THAT THE EXPENDITURE INCURRE D UP TO 31.03.2007 PERTAIN TO ENTIRE LAND OF 19930 SQY. TH US, THE AO RESTRICTED THE CLAIM OF THE EXPENDITURE AND RE-WORK ED OUT THE TAXABLE CAPITAL GAIN. 5. THE CIT(A) OBSERVED THAT THE ASSESSEE UNDERTOOK DEVELOPMENT OF 19931 SQY OF LAND AND INCURRED AN EXPENDITURE OF RS. 1,17,76,423 FOR DEVELOPMENT OF L AND DURING THE PERIOD ENDING 31.3.2008 AND THE ASSESSEE SOLD 8276 SQY DURING THE SAID ACCOUNTING PERIOD AND INCU RRED EXPENDITURE OF RS. 48,90,714 AS DEVELOPMENT EXPENDI TURE DURING THE YEAR. BEING SO, THE EXPENDITURE OF RS. 48,90,714 THE PROPORTIONATE COST OF IMPROVEMENT HAS TO BE ALL OWED U/S. ITA NO. 1203/HYD/2011 SMT. K. DEVAKI BAI ==================== 4 48(II) WHILE WORKING OUT THE CAPITAL GAIN. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AS RIGHTLY POINTED OUT BY THE LEARNED AR, THE EXPENDITURE IS NOT DOUBTED BY THE AO AND THE AS SESSEE CONSIDERED THE PROPORTIONATE COST OF DEVELOPMENT RE LATING TO 8275 SQY OF LAND WHICH WAS SOLD DURING THE YEAR AND THE SAME WAS CLAIMED AS COST OF IMPROVEMENT U/S. 48(II) OF THE ACT SO AS TO COMPUTE THE CAPITAL GAIN. IN THIS COM PUTATION, WE DO NOT FIND ANY INFIRMITY AND UPHOLD THE ORDER O F THE CIT(A). THE GROUNDS TAKEN BY THE REVENUE ARE DEVOI D OF MERIT, ACCORDINGLY DISMISSED. 7. IN THE RESULT, REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH FEBRUARY, 2014. SD/- (SAKTIJIT DEY) JUDICIAL MEMBER SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 19 TH FEBRUARY, 2014 TPRAO COPY FORWARDED TO: 1. THE ASST. CIT, CIRCLE-9(1), 1 ST FLOOR, B BLOCK, IT TOWERS, AC GUARDS, HYDERABAD. 2. SMT. K. DEVAKI BAI, 8-1-74, KARMANGHAT, HYDERABA D. 3. THE CIT(A)-VI, HYDERABAD. 4. THE CIT-VI, HYDERABAD 5. THE DR BENCH 'A', ITAT, HYDERABAD