Meera Varghese, CHENNAI V. ITO, CHENNAI

ITA 1209/CHNY/2015

• Counselvise Citation: 120921714 RSA 2015
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 11-09-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 20-05-2015
• Court: TRIBUNAL
• Department Lawyers: A B KOLI JCIT
• Keywords: Cost of acquisition

Judgement Text

, SMC , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, CHENNAI . , , BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO.1209/MDS./2015 ( / ASSESSMENT YEAR :2008-09) SMT.MEERA VARGHESE , NEW NO.6, RAJARAM MEHTA NAGAR, AMINJIKARAI, CHENNAI 600 029. VS. INCOME TAX OFFICER, BUSINESS RANGE-XII(4), CHENNAI 600 034. PAN AHPPM 0895 H ( /APPELLANT) ( !' / RESPONDENT ) # $ / APPELLANT BY : MR.PHILIP GEORGE,ADVOCATE !' # $ / RESPONDENT BY : MR.A.B.KOLI,JCIT, D.R % & # ' ( / DATE OF HEARING : 11 .09.2015 ) # ' ( /DATE OF PRONOUNCEMENT : 22.09.2015 / O R D E R PER A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I2, CHENNAI DA TED 26/02/2015 IN ITA NO. 42/CIT(A)-12/2013-14. 2 ITA NO.1209 /MDS/2015 2. THE ASSESSEE HAS RAISED SEVERAL GROUNDS IN HER APPEAL WITH RESPECT TO DISALLOWANCE OF EXPENDITURE WHILE COMPUT ING CAPITAL GAIN AND THEY ARE CONCISED HEREIN BELOW FOR ADJUDICATION :- 1. THE LD. CIT (A) HAD ERRED IN SUSTAINING THE ADD ITION MADE ON ACCOUNT OF DISALLOWANCE OF THE AUDIT FEE OF ` 10,000/-. 2. THE LD. CIT (A) HAD ERRED IN SUSTAINING THE ADD ITION MADE ON ACCOUNT OF DISALLOWANCE OF THE ADVOCATE FEE OF ` 10,000/-. 3. THE LD. CIT (A) HAD ERRED IN SUSTAINING THE ADD ITION ON ACCOUNT OF DISALLOWANCE OF PAYMENTS MADE TO THE CONTRACTOR MR. PRABHAKAR WITH RESPECT TO MAKING AND FIXING WARDROBES AMOUNTING T O ` 1,33,750/-. 4. THE LD. CIT (A) HAD ERRED IN SUSTAINING THE ADD ITION ON ACCOUNT OF DISALLOWANCE OF PAYMENTS MADE TO THE CONTRACTOR MR. KARUPPIAH WITH RESPECT TO MAKING KITCHEN UNIT AMOUNTING TO ` 94,377/-. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSES SEE IS AN INDIVIDUAL, ENGAGED IN BUSINESS, FILED HER RETURN O F INCOME ON 18.08.2008 ADMITTING INCOME AS ` 1,23,140/-. THE RETURN WAS TAKEN FOR SCRUTINY AND ASSESSMENT U/S.143(3) OF THE ACT WAS C OMPLETED ON 3 ITA NO.1209 /MDS/2015 23.12.2010 WHEREIN THE LD. ASSESSING OFFICER COMP UTED THE CAPITAL GAIN ARISING OUT OF THE SALE OF THE ASSESSEES FLAT IN CHITRA AVENUE AT ` 4,67,259/- AND LEVIED TAX ON THE SAME. 4.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, I T WAS OBSERVED BY THE LD. ASSESSING OFFICER THAT THE ASSESSEE HAD SOLD HER FLAT IN CHITRA AVENUE, CHOOLAIMEDU, CHENNAI FOR ` 35 LAKHS. IT WAS FURTHER OBSERVED THAT THE COST OF THE FLAT DURING THE PERIO D OF ACQUISITION VIZ., 2000-01 WORKED OUT AS UNDER:- 1. COST OF THE UNDIVIDED SHARE IN LAND ` 9,65,613/- 2. COST CONSTRUCTION AS PER THE BUILDER ` 13,25,000/- 3. COST INFLATION INDEX ` 8,18,076/- TOTAL ACQUISITION OF THE PROPERTY AFTER INDEXATION ` 31,08,689/- THE ASSESSEE HAD FURTHER CLAIMED THE FOLLOWING EXPE NDITURE WITH RESPECT TO THE COST OF THE ACQUISITION OF THE HOUSE DURING THE F.Y 2000-01. ( `) 1.AUDITOR CONSULTATION FEE 10,000 2.ADVOCATE CONSULTATION FEE 10,000 3.PAYMENT TO MR.PRABHAKAR TO MAKING WARDROBE 1,33,7 50 4.PAYMENT TO MR.KARUPPIAH MAKING KITCHEN UNIT 94, 377 4 ITA NO.1209 /MDS/2015 5.BROKERAGE CHARGES FOR SALE OF PROPERTY 70, 000 TOTAL ` 3,18,137 4.2 ON PERUSING THE ABOVE SAID EXPENDITURE THE LD. ASSESSING OFFICER WAS OF THE OPINION THAT SINCE THERE WERE NO PRIMARY BILL FOR PURCHASE OF WOOD AND PURCHASE OF MATERIALS FOR MAKI NG WARDROBES AND LABOUR BILLS, THE EXPENSES CLAIMED BY THE ASSES SEE IS EXCESSIVE WITH REGARD TO THE COST OF ACQUISITION OF THE PROPE RTY AND THEREFORE THE ENTIRE EXPENSE OF ` 1,33,750/- FOR MAKING WARDROBES AND ` 94,377/- PAID FOR MAKING KITCHEN UNIT TO MR.PRABHAKAR AND MR .KARUPPIAH RESPECTIVELY WAS DISALLOWED. FURTHER THE LD. ASSESS ING OFFICER OPINED THAT THE ONLY EXPENSES WHICH IS ALLOWABLE AGAINST T HE SALE OF THE PROPERTY, WAS BROKER COMMISSION OF ` 70,000/- AND DISALLOWED THE AUDITORS CONSULTATION FEE OF ` 10,000/- AND ADVOCATES CONSULTATION FEE OF ` 10,000/-. 4.3 ON APPEAL, THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER BECAUSE NO EVIDENCE WAS FURNISHED WITH RESPECT TO PAYMENT MADE TOWARDS AUDITOR FEE AND ADVOCATE FEE O F ` 10,000/- EACH, AND THE VOUCHERS FURNISHED WITH RESPECT TO RE NOVATION AND 5 ITA NO.1209 /MDS/2015 PURCHASE OF MATERIALS DID NOT APPEAR TO BELONG FOR THE YEAR 2001 I.E. THE YEAR IN WHICH THE ASSESSEE HAD CLAIMED THE EXPE NDITURE TO HAVE BEEN INCURRED. 5. BEFORE US, THE LD. A.R. ARGUED STATING THAT AL L THE AFORESAID EXPENDITURE WAS GENUINE AND REASONABLE AND THEREFOR E, THE SAME SHOULD BE ALLOWED TO BE TREATED AS COST OF ACQUISIT ION AND EXPENDITURE INCURRED ON SALE OF THE FLAT WHILE COMP UTING THE CAPITAL GAIN. THE LD. D.R ON THE OTHER HAND ARGUED IN SUPP ORT OF THE REVENUE. 7. WE HAVE HEARD BOTH THE PARTIES AND CAREFULLY P ERUSED THE MATERIALS AVAILABLE ON RECORD. CONSIDERING THE FACT S AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDER ED VIEW THAT FOR ANY SALE OR PURCHASE OF IMMOVABLE PROPERTY THE ASSE SSEE WILL INCUR REASONABLE EXPENDITURE TOWARDS ADVOCATE FEES AND AU DITOR FEES. IN THIS INSTANT CASE, THE ASSESSEE HAD PAID ` 10,000/- EACH TOWARDS THE SAME WHICH IS QUITE REASONABLE. THE LD. ASSESSING OFFICER HAD DISALLOWED THE EXPENDITURE BY STATING THAT THEY DO NOT COME WITHIN THE 6 ITA NO.1209 /MDS/2015 PURVIEW BUT HAS NOT COMMENTED ON THE GENUINENESS OF THE PAYMENT OR ABSENCE OF VOUCHERS. FURTHER, IT IS ALSO A GENE RAL PRACTICE THAT ANY PURCHASER OF A FLAT WILL HAVE TO INCUR EXPENDITURE IN REGARD TO FIXING OF WARDROBES AND KITCHENETTE ETC., BECAUSE MOSTLY THEY ARE NOT PROVIDED BY THE BUILDER OF THE FLAT. IN THE CASE OF THE ASS ESSEE, SHE HAS ONLY INCURRED TOTAL EXPENDITURE OF ` 2,28,127/- TOWARDS PURCHASE OF WARDROBE FOR ` 1,33,750 AND KITCHENETTE ` 94,377/-. THESE EXPENSES SEEM TO BE QUITE REASONABLE COMPARED TO THE SIZE OF THE FLAT. MOREOVER THE LD. ASSESSING OFFICER HAS NOT DISPUTED THAT THE PAYMENTS ARE NOT MADE TO THE CONTRACTOR MR.PRABHAKA R AND MR.KARUPPIAH, BUT ONLY WAS OF THE APPREHENSION THAT THE BILLS FOR PURCHASE OF WOODS AND OTHER MATERIALS WERE NOT PROD UCED BEFORE THE REVENUE. FURTHER THE LD. CIT (A) HAD CONFIRMED THE ORDER OF THE LD. ASSESSING OFFICER BECAUSE HE WAS NOT CONVINCED THAT THE BILLS WERE OF THE YEAR 2001 AND THE VOUCHERS FOR PAYMENT MADE TO AUDITOR AND ADVOCATE WERE NOT AVAILABLE. WE ARE NOT CONVINCED W ITH THESE FINDINGS OF THE REVENUE. CONSIDERING THE FACTS AND CIRCUMSTANCE OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE EX PENSES CLAIMED BY THE ASSESSEE ARE QUITE REASONABLE AND GENUINE. THER EFORE, WE 7 ITA NO.1209 /MDS/2015 HEREBY DIRECT THE LD. ASSESSING OFFICER TO ALLOW AL L THE ABOVE EXPENDITURES RAISED IN THE GROUNDS OF APPEAL BEFORE US WHILE COMPUTING THE CAPITAL GAIN OF THE ASSESSEE. 8. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON THE 22 ND SEPTEMBER, 2015 AT CHENNAI. SD/- ( . ) (A.MOHAN ALANKAMONY) ACCOUNTANT MEMBER K S SUNDARAM. * # !'+, -,' /COPY TO: 1. /APPELLANT 2. !' /RESPONDENT 3. % .' ( )/CIT(A) 4. % .' /CIT 5. ,/ 0 !'1 /DR 6. 0 2 3 & /GF