Anil Shivram Tungar, Nashik V. Income-tax Officer,

ITA 1618/PUN/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 1625 (ITAT-PUNE)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Salary income; Source of fund; Cost of acquisition

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 1 618 /PN/201 5 / ASSESSM ENT YEAR : 20 11 - 12 ANIL SHIVRAM TUNGAR, AT POST SHINDE, NASHIK PUNE ROAD, TAL. & DIST. NASHIK 422102 . / APPELLANT PAN: A CEPT0140L VS. THE INCOME TAX OFFICER, WARD 3 ( 2 ), NASHIK . / RESPONDENT / APPELLANT BY : NONE / APPELLANT BY : NONE / RESPONDENT BY : SHRI HITENDRA NINAWE / DATE OF HEARING : 30 . 0 6 .201 6 / DATE OF PRONOUNCEMENT: 30 . 0 6 .201 6 / ORDER PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE A SSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 01 . 1 0 .20 1 5 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 14 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . DESPITE SERVICE OF NOTICE, NONE APPEARED ON BEHALF OF THE ASSESSEE NOR ANY APPLICATION WAS MOVED FOR ADJOURNMENT AND BECAUSE OF SMALLNESS OF THE ITA NO. 1 618 /PN/20 1 5 ANIL S. TUNGAR 2 ISSUE, IT IS PROCEEDED TO DECIDE THE PRESENT APPEAL AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GRO UND OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LEARNED ASSESSING OFFICER HAS ERRED IN DISALLOWING ENTIRE DEVELOPMENT EXPENSES INCURRED BY ASSESSEE AND THEREBY NOT ALLOWING THE INDEXED COST OF RS.10,99,264/ - AND FURTHER LEARNED CIT(APPEALS) ERRED IN NOT ALLOWING THIS AMOUNT TO THE EXTENT CLAIMED IN THE RETURN. 4 . THE ISSUE RAISED IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE OF DEVELOPMENT EXPENSES OF PLOT OF LAND HAVING INDEXED COST OF RS.10,99,264/ - . 5. BRIEFLY, I N THE FACTS OF THE CASE, THE ASSESSEE HAD FURNISHED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 1,39,762/ - . THE ASSESSEE WAS AN INDIVIDUAL WORKING WITH NDCC BANK AT SHINDE BRANCH, NASHIK AND DERIVING INCOME FROM SALARY ONLY. THE ASSESSEE DURING THE YEA R UNDER CONSIDERATION HAD SOLD AGRICULTURAL LAND AT GAT NO.467/4 FOR RS.35 LAKHS. THE ASSESSEE CL AIMED THAT IT HAD INVESTED IN CONSTRUCTION OF HOUSE AT RS. 8,25,185/ - . FURTHER, IT ALSO CLAIMED THE EXPENSES ON ACCOUNT OF COMMISSION PAID ( HALF SHARE ) OF RS. 90,000/ - AND LITIGATION EXPENSES PAID ( HALF SHARE ) AT RS. 1,50,000/ - . THE NET SALE CONSIDERATION WAS THUS, WORKED OUT TO RS. 24,34,815/ - . THE ASSESSEE FURTHER CLAIMED THE INDEX ED COST OF ACQUISITION AT RS. 1,97,658/ - AND ALSO INDEXED COST OF LAND DEVELOPMEN T EXPENSES FOR ASSESSMENT YEARS 1999 - 2000 TO 2001 - 02 OF RS. 6,25,000/ - , INDEXED COST BEING RS. 10,99,264/ - . THE ONLY DISPUTE WHICH ARISES IN THE PRESENT APPEAL IS IN RESPECT OF SAID INDEXED COST OF LAND DEVELOPMENT EXPENSES OF RS. 10,99,264/ - . THE ASSESSING OFFICER WHILE PASSING THE ASSESSMENT ORDER AT PAGE 2 OF THE ASSESSMENT ORDER HAS MENTIONED THE BREAK - UP OF LAND DEVELOPMENT EXPENSES AT RS. 2,50,000/ - + RS.2,00,000/ - + RS. 17 , 5 0 ,000/ - . HOWEVER, AS POINTED OUT THAT THE INDEXED COST OF DEVELOPMENT EXPENSES WAS RS. 10,99,264/ - . HOWEVER, THE ASSESSING OFFICER ITA NO. 1 618 /PN/20 1 5 ANIL S. TUNGAR 3 UNDER PARAS 5 AND 6 UNDER SUB - CLAUSE (II) HAS MENTIONED THAT THE ASSESSEE HAD CLAIMED THE LAND DEVELOPMENT EXPENSES IN DIFFERENT YEARS I.E. IN FINANCIAL YEAR 1999 - 2000 AT RS.2,50,000/ - , IN FINANCIAL YEAR 2000 - 01 AT RS. 2,00,000/ - AND IN FINANCIAL YEAR 2001 - 02 AT RS. 1,75,000/ - RESPECTIVELY. THE ASSESSEE WAS ASKED TO PRODUCE VOUCHERS, DETAILS OF PAYMENTS TO THE CONTRACTORS, ETC. IN REPLY, THE ASSESSEE EXPLAINED THAT SINCE HE WAS SALARIED PERSON, HE HAD NOT MAINTAINED ANY BOOKS OF ACCOUNT, EXCEPT THAT HE GAVE THE NAME AND ADDRESS OF THE PERSON WHO HAS DONE THE WORK. IN THE ABSENCE OF ANY DOCUMENTARY EVIDENCE, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE AT RS. 10,99,264/ - AND RE - WORKED THE INCOM E FROM CAPITAL GAINS ON SALE OF AGRICULTURAL LAND IN THE HANDS OF ASSESSEE. 6. BEFORE THE CIT(A), THE ASSESSEE FILED COPY OF THE AGREEMENT WITH THE CONTRACTOR SHRI SHIVRAM PUNJAJI JAGTAP AND POINTED OUT THAT THE SAID COPY OF AGREEMENT WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT AGREEMENT WAS SUBMITTED DURING THE COURSE OF ASSESSMENT PROCEEDINGS, BUT THE SAME WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THE ASSESSEE CLAIMED THAT AS PER THE AGREEMENT OF SALE, ONE OF THE CONDITIONS OF SALE WAS THAT THE LAND SHOULD BE LEVELED WITH PROPER ROAD, GOVERNMENT MEASURE MENTS AND HENCE, THE LAND DEVELOPMENT EXPENSES WERE NECESSARY COST INCURRED BY THE ASSESSEE. FURTHER, THE SOURCE OF FUNDS FOR EXPENDITURE ON DEVELOPMENT WAS CLAIMED TO HAVE BEEN FILED BEFORE THE ASSESSING OFFICER. THE ASSESSEE STRESSED THAT IT HAD INCURR ED THE SAID EXPENSES. THE CIT(A) NOTED THE FACT THAT THE ASSESSEE WAS A SALARIED PERSON AND HAD NOT MAINTAINED BOOKS OF ACCOUNT. HOWEVER, ON PERUSAL OF AGREEMENT WITH SHRI JAGTAP FOR DEVELOPING THE LAND, HE OBSERVED THAT THE ASSESSEE ALONG WITH HIS BROTH ER HAD ENTERED INTO AN AGREEMENT ON 25.03.2000 FOR DEVELOPMENT OF LAND. HOWEVER, THE PAYMENT OF RS. 2,50,000/ - PERTAINS TO THE PERIOD BEFORE THE AGREEMENT ENTERED INTO FOR WHICH, NO EXPLANATION WAS FURNISHED BY THE ASSESSEE. FURTHER, IN THE ABSENCE ITA NO. 1 618 /PN/20 1 5 ANIL S. TUNGAR 4 OF ANY EVIDENCE AS TO THE PAYMENT TO SHRI JAGTAP IN THE LATER YEARS ALSO, THE SUBMISSIONS OF THE ASSESSEE THAT SHRI JAGTAP WAS A TAXPAYER, WAS NOT ACCEPTED AS EVIDENCE IN SUPPORT OF EXPENDITURE INCURRED. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW RS.1 L AKH TOWARDS COST OF IMPROVEMENT OF THE LAND AND MODIFY THE COMPUTATION OF LONG TERM CAPITAL GAINS ACCORDINGLY. 7. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 8. THE LIMITED ISSUE WHICH ARISES FOR ADJUDICATION IS WHETHER THE ASSESSEE IS ENTIT LED TO THE CLAIM OF LAND DEVELOPMENT EXPENSES AS COST OF IMPROVEMENT OF AGRICULTURAL LAND SOLD BY THE ASSESSEE. THE ASSESSEE CLAIMS THAT IT HAD ENTERED INTO AN AGREEMENT FOR THE DEVELOPMENT OF LAND WITH ONE SHRI JAGTAP, THE AGREEMENT IS DATED 25.03.2000 A ND THE ASSESSEE HAS CLAIMED TO HAVE MADE PAYMENT OF RS.2,50,000/ - IN FINANCIAL YEAR 1999 - 2000 , RS. 2,00,000/ - IN FINANCIAL YEAR 2000 - 01 AND RS. 1,75,000/ - IN FINANCIAL YEAR 2001 - 02, TOTALING YEAR 2000 - 01 AND RS. 1,75,000/ - IN FINANCIAL YEAR 2001 - 02, TOTALING RS.6,25,000/ - . THE ASSESSEE HAS FAILED TO APPEAR BEFORE THE TRIBUN AL AND FURNISH ANY EVIDENCE IN THIS REGARD. HOWEVER, BEFORE THE CIT(A), HE CLAIMED TO HAVE FURNISHED THE EVIDENCE TO PROVE THAT THE ASSESSEE HAD MADE THE AFORESAID PAYMENTS TO SHRI JAGTAP AND WHO IN TURN, WAS ASSESSED TO TAX. THE ACKNOWLEDGEMENTS AND COP Y OF RETURN OF INCOME OF SHRI JAGTAP FOR ASSESSMENT YEAR 2000 - 01 WERE FILED. IN THE TOTALITY OF THE ABOVE SAID FACTS AND CIRCUMSTANCES OF THE CASE, WHERE THE ASSESSEE WAS A SALARIED EMPLOYEE AND WAS NOT BOUND TO MAINTAIN ANY BOOKS OF ACCOUNT, THE EVIDENCE S FILED BY THE ASSESSEE HAVE TO BE TAKEN INTO ACCOUNT TO ADJUDICATE THE ISSUE RAISED. THE ONLY QUESTION WHICH ARISES IS THAT IN CASE THE ASSESSEE AND HIS BROTHER ENTERED INTO AN AGREEMENT ON 25.03.2000 FOR THE DEVELOPMENT OF LAND, HOW THE PAYMENTS MADE BY THE ASSESSEE IN ALL YEARS STANDS JUSTIFIED. THE FIRST FINANCIAL YEAR IS 1999 - 2000 AND THE AGREEMENT WAS MADE IN THE SAID FINANCIAL YEAR, ITA NO. 1 618 /PN/20 1 5 ANIL S. TUNGAR 5 CONSEQUENTLY, THERE IS NO MERIT IN THE OBSERVATIONS OF ASSESSING OFFICER AND CIT(A) IN THIS REGARD. THE ASSESSEE HAD FURNISHED THE EVIDENCES OF PAYMENT AND ALSO SOURCE OF PAYMENT, HENCE THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF THE ASSESSEE IN ENTIRETY I.E. THE ASSESSING OFFICER IS DIRECTED TO CONSIDER THE ISSUE OF COST OF IMPROVEMENT AND ALLOW THE DEDUCTI ON ON ACCOUNT OF THE SAME TO THE EXTENT OF RS.6,25,000/ - AND RE - COMPUTE THE INCOME FROM CAPITAL GAINS BY ALLOWING THE INDEX ED COST OF LAND DEVELOPMENT EXPENSES AT RS. 10,99,264/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 9 . IN THE R ESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 30 TH DAY OF JUNE , 201 6 . SD/ - SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 30 TH JUNE , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPO NDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE