Shri Bhulabhai Lallubhai Tandel, Nani Daman V. The ACIT.,Vapi Circle, Vapi

ITA 1628/AHD/2011

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9694 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 23-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 14-06-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: MEHUL R SHAH
• Keywords: Capital asset; Cost of acquisition
• Section: 68

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI G.D. AGRAWAL, VICE-PRESIDENT AND SHRI RAJPAL YADAV, JUDICIAL MEMBER ./ ITA NO.1628/AHD/2011 / ASSESSMENT YEAR: 2006-2007 SHRI BHULABHAI LALLUBHAI TANDEL PROP: SAGAR PETROLEUM OPP: NEW POLICY COLONY, KUNTA ROAD NANI DAMAN PAN: AASPT 1712D VS ACIT, VAPI CIRCLE VAPI. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI MEHUL R. SHAH REVENUE BY : SMT.SONIA KUMAR, SR.DR / DATE OF HEARING : 24/06/2015 / DATE OF PRONOUNCEMENT: 17/07/2015 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF LEARNED CIT(A), VALSAD DATED 25.2.2011 PASSED FOR THE ASSTT .YEAR 2006-07. 2. IN THE FIRST GROUND OF APPEAL, THE ASSESSEE HAS PLEADED THAT THE LD.CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF DEVELOPMENT EXPENSES CLAIMED BY THE ASSESSEE, WHILE COMPUTING L ONG TERM CAPITAL GAIN FOR SALE OF LAND. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS RUNNING PROPRIETARY CONCERN IN THE NAME AND STYLE OF M/S.SAGAR PETROLEU M. HE HAS PUMPS AT DAMAN AS WELL AS UMBERGAON. HE HAS FILED HIS RE TURN OF INCOME ON 29.12.2006 DECLARING TOTAL INCOME AT RS.10,14,433/- . THE CASE OF THE ITA NO.2581/AHD/2011 2 ASSESSEE WAS SELECTED FOR SCRUTINY ASSESSMENT, AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSES SEE. 4. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAS SOLD LAND SITUATED AT DAMAN AT RS.14.0 0 LAKHS. WHILE COMPUTING THE LONG TERM CAPITAL GAIN, THE ASSESSEE HAS SHOWN COST OF ACQUISITION OF LAND AT RS.1,75,500/-. IT EMERGES F ROM THE RECORD THAT THE ASSESSEE HAS PURCHASED LAND IN THE YEAR 1985. THE TOTAL COST FOR PURCHASE OF THE LAND WAS SHOWN AT RS.10,246/-. THE ASSESSEE HAS CLAIMED EXPENDITURE OF RS.1,65,000/- TOWARDS DEVELO PMENT OF THE LAND. IN THIS WAY, HE HAS CLAIMED THE COST OF ACQUISITION AT RS.1,75,000/-. THE LEARNED AO HAS REJECTED THE CONTENTION OF THE A SSESSEE ON THE GROUND THAT THE ASSESSEE COULD NOT PRODUCE ANY EVID ENCE EXHIBITING THE FACT THAT HE HAS INCURRED RS.1,65,000/- FOR LEVELIN G THE LAND OR FOR ANY OTHER DEVELOPMENT. IN THIS WAY, THE CLAIM OF THE A SSESSEE HAVING INCURRED EXPENDITURE OF RS.1,65,000/- FOR DEVELOPME NT OF THE LAND, HAS BEEN REJECTED. 5. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV E, WE HAVE GONE THROUGH THE RECORD CAREFULLY. 7. SECTION 48 OF THE INCOME TAX ACT PROVIDES FOR MO DE OF COMPUTATION OF CAPITAL GAIN. THIS SECTION CONTEMPL ATES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET TH E FOLLOWING AMOUNTS, NAMELY, (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSI VELY IN CONNECTION WITH SUCH TRANSFER, (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. ITA NO.2581/AHD/2011 3 8. ACCORDING TO THE ASSESSEE HE HAS INCURRED A SUM OF RS.1,65,000/- FOR IMPROVEMENT OF THE LAND. NOW IN SUPPORT OF THE CLAIM, HE HAS FILED AN AFFIDAVIT OF SON OF HIS VENDOR. WE FIND THAT TH E PIECE OF LAND PURCHASED BY THE ASSESSEE WAS MEASURING 0.70 HECTAR E. IT WAS AN AGRICULTURAL LAND. THE ONLY CONTENTION OF THE ASSE SSEE WAS THAT HE HAS LEVELED THE LAND BY FILLING THE SAND. IT IS LITTLE IMPROVABLE THAT IN SUCH A SMALL PIECE OF LAND A SUM OF RS.1,65,000/- MIGHT HA VE BEEN INCURRED BY THE ASSESSEE. IT IS SUCH AN ISSUE FOR WHICH QUITE DIFFICULT TO BRING ANY DEMONSTRATIVE EVIDENCE AFTER SUCH A LONG PERIOD. T HEREFORE, IN OUR OPINION, IF WE ALLOW HIM SOME EXPENDITURE ON AN EST IMATE BASIS, THEN, ENDS OF JUSTICE WOULD MEET. IN OUR OPINION, THE AS SESSEE MIGHT NOT HAVE INCURRED MORE THAN RS.15,000/- ON THE IMPROVEM ENT OF THE LAND, BECAUSE THE COST OF ACQUISITION OTHERWISE IS RS.10, 246/-. HE HAS NOT RAISED ANY PERMANENT STRUCTURE. IF A LAND CAN BE P URCHASED FOR RS.10,246/-, THEN, AT THE MOST, FOR LEVELLING AND O THER THINGS, THE AMOUNT MORE THAN RS.15,000/- WOULD NOT HAVE BEEN IN CURRED. THEREFORE, WE ALLOW THIS GROUND PARTLY AND DIRECT T HE AO TO RE-COMPUTE THE LONG TERM CAPITAL GAIN BY TAKING COST OF IMPROV EMENT AT RS.15,000/- 9. IN THE NEXT GROUND OF APPEAL, THE GRIEVANCE OF T HE ASSESSEE IS THAT THE LEARNED CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS.4,50,000/- 10. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE AO THAT THE ASSESSEE HAD SHOWN UNSECURED LOAN OF RS.4,50,000/- FROM SHRI PARAS N. DESAI. SHRI DESAI IS AN EMPLOYEE OF THE ASSESSEE W HO WAS DRAWING A MONTHLY SALARY OF RS.5,000/-. THE BANK ACCOUNT WAS OPENED ON 18.6.2005 IN HIS NAME AND THREE CASH DEPOSITS WERE MADE. HE ISSUED A CHEQUE TO THE ASSESSEE FOR RS.4,50,000/-. ACCORDIN G TO THE AO, THE TRANSACTION IS NOT GENUINE. THE ASSESSEE HAS PAID THE MONEY TO HIS EMPLOYEE AND ISSUED THE CHEQUE IN FAVOUR OF THE ASS ESSEE. THE LEARNED ITA NO.2581/AHD/2011 4 AO HAS MADE ADDITION UNDER SECTION 68 OF THE ACT. THE APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 11. SECTION 68 OF THE INCOME TAX ACT, PROVIDES THAT WHERE ANY SUM IS FOUND CREDITED IN THE BOOKS OF AN ASSESSEE MAINTAIN ED FOR ANY PREVIOUS YEAR, THE ASSESSEE OFFERS NO EXPLANATION ABOUT THE NATURE AND SOURCE THEREOF OR THE EXPLANATION OFFERED BY HIM IS NOT, I N THE OPINION OF THE AO, SATISFACTORY, THE SUM SO CREDITED MAY BE CHARGE D TO THE INCOME TAX AS THE INCOME OF THE ASSESSEE OF THAT PREVIOUS YEAR . THERE IS NO DISPUTE THAT A SUM OF RS.4,50,000/- WAS FOUND TO BE CREDITED IN THE ACCOUNT OF THE ASSESSEE. THE EXPLANATION OF THE AS SESSEE IS THAT THIS AMOUNT HAS BEEN TAKEN AS A LOAN FROM MR. DESAI. HO WEVER, ON VERIFICATION OF THE DETAILS, IT WAS FOUND THAT MR.D ESAI WAS EMPLOYEE OF THE ASSESSEE DRAWING A MONTHLY SALARY OF RS.5,000/- . HE CANNOT HAVE A CREDIT BALANCE OF RS.4,50,000/-. HIS ACCOUNT WAS O PENED, THREE AMOUNTS WERE DEPOSITED IN THE BANK ACCOUNT, AND THE REAFTER HE ISSUED A CHEQUE. THUS, IT CANNOT BE CONSTRUED THAT IT WAS A GENUINE LOAN TAKEN FROM THE EMPLOYEE. THE LD.AO HAS RIGHTLY MAD E ADDITION, WHICH HAS RIGHTLY BEEN CONFIRMED BY THE CIT(A). WE FIND NO ERROR IN THE ORDER OF THE CIT(A) ON THIS ISSUE. ACCORDINGLY, TH IS GROUND OF THE APPEAL IS REJECTED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY THE 17 TH DAY OF JULY, 2015 AT AHMEDABAD. SD/- SD/- (G.D. AGRAWAL) VICE-PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 17/07/2015