Belinda Prabagar, Hyderabad, Hyderabad V. ITO, Ward-1(2), Hyderabad, Hyderabad

ITA 1696/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2206 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 16-12-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: MD AFZAL
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1696/HYD/2016 ASSESSMENT YEAR: 2009-10 BELINDA PRABAGAR, SECUNDERABAD [PAN: AFHPP4327D] VS THE INCOME TAX OFFICER, WARD-1(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI MD. AFZAL, AR FOR REVENUE : SHRI A.G.V. PRASAD, DR DATE OF HEARING : 27-12-2017 DATE OF PRONOUNCEMENT : 29-12-2017 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF TH E COMMISSIONER OF INCOME TAX (APPEALS)-1, HYDERABAD, DATED 19-08-2016. THE ISSUE IN THIS APPEAL IS WITH REFERE NCE TO WORKING OF CAPITAL GAINS. 2. BRIEFLY STATED, ASSESSEE HAS INHERITED A PROPERTY ALONG WITH HER BROTHERS AND SISTERS AND FATHER FROM HER MOTHER. T HE PROPERTY WAS DISPOSED-OFF BY ALL THE PARTIES, BUT IT WAS THE CONTE NTION OF ASSESSEE THAT THIS PROPERTYS SALE PROCEEDS RECEIVED B Y HER FATHER, HAS OFFERED CAPITAL GAIN IN HIS HANDS I.E., SHRI B.J . DHANRAJ. AT THE TIME OF ASSESSMENT, ASSESSEE COULD NOT FURNISH ANY EV IDENCE THAT THE INCOME WAS OFFERED IN THE HANDS OF SHRI B.J. DHAN RAJ. THEREFORE, BASED ON THE SALE DEED, AO HAS BROUGHT 1/5 TH OF SHARE OF CAPITAL GAINS IN ASSESSEES HANDS. ASSESSEE CLAIMED THE COST OF LAND AND ALSO COST OF CONSTRUCTION OF BUILDING IN THE COMPUTATION BEFORE THE ASSESSING OFFICER (AO). IN THE ABSENCE O F ANY EVIDENCE OF COST OF BUILDING, THE AO HAS ALLOWED ONLY COST OF ACQU ISITION OF THE I.T.A. NO. 1696/HYD/2016 :- 2 - : LAND AND COMPUTED THE CAPITAL GAINS. LD.CIT(A) CONFI RMED THE ACTION OF AO ON BOTH THE ISSUES I.E., TAXING 1/5 TH SHARE OF CAPITAL GAINS IN ASSESSEES HANDS AND REJECTION OF COST OF IM PROVEMENT CLAIMED. HENCE, THE PRESENT APPEAL. 2.1. ASSESSEE HAS RAISED AS MANY AS SIX GROUNDS ON THESE TWO ISSUES AND ASSESSEE ALSO FILED COPY OF THE RETURN FIL ED BY HER FATHER ADOPTING THE ENTIRE CAPITAL GAINS IN HIS HANDS. EVEN THOUGH THE DR WAS INSTRUCTED TO VERIFY THE STATUS OF THAT RETURN, WE WERE INFORMED THAT THE RETURN WAS ACCEPTED UNDER THE PROVISION S OF SECTION 143(1) OF THE ACT BY THE LD. COUNSEL AND NO N OTICES WERE ISSUED TO THE OTHER CO-SHARERS. HOWEVER, ASSESSEE DID NOT PRESS FOR THE ISSUE OF TAXING 1/5 TH SHARE IN ASSESSEES HANDS. THEREFORE, THE ONLY ISSUE LEFT FOR CONSIDERATION IS THE COST OF IMPROV EMENT AS CLAIMED. 3. IT WAS SUBMITTED BY LD. COUNSEL THAT ASSESSEES MOTHER HAS PURCHASED A PROPERTY AND INVESTED MONEYS IN A SCHOO L PREMISES AS SHE WAS OPERATING A SCHOOL IN THE NAME OF NIRMAL HIG H SCHOOL UNDER AN EDUCATIONAL SOCIETY CALLED NIRMAL EDUCATI ONAL TRUST CONSTITUTED AND REGISTERED UNDER THE DOCUMENT NO. 634/ 88 IN CHENNAI. SMT. NIRMALA DEVI, MOTHER OF ASSESSEE WAS THE SECRETARY OF THE SOCIETY TILL HER DEMISE. THEN THE MANAGEMENT WA S PASSED ON TO SHRI B.J. DHANRAJ. ON ACCOUNT OF ILL-HEALTH AND OLD AGE, THE SCHOOL WAS HANDED OVER TO OTHERS ALONG WITH ITS ASSETS AND LIABILITIES. SINCE THE PREMISES DOES NOT BELONG TO SCH OOL, THE TRUSTEES OF INSTITUTE HAVE DECIDED TO PAY A REASONABLE COMPENSATION AND ACQUIRE THE PROPERTY AS WELL. SINCE THE PROPERTY DEVOLVED ON ALL THE PERSONS, ALL THE MEMBERS HAVE S IGNED BUT I.T.A. NO. 1696/HYD/2016 :- 3 - : CAPITAL GAINS WAS IN FACT ADMITTED BY SHRI B.J. DHANRAJ . LD. COUNSEL REFERRED TO THE RETURN OF INCOME FILED BY SHR I B.J. DHANRAJ AND SUBMITTED THAT THERE WAS COST OF IMPROVEMENT BEING IND EXED WHICH COMES TO 81,57,978/- AND IF THIS IS ALLOWED, THE RE WOULD BE NO CAPITAL GAIN FOR THE IMPUGNED ASSESSMENT YEAR. IT WA S SUBMITTED THAT AT PRESENT, ASSESSEE DOES NOT HAVE ANY EVID ENCE BUT AS SEEN FROM THE SALE DEED, BUILDING WAS ALSO SOLD. WHILE ADMITTING THAT THE VALUE AS SHOWN IN THE ANNEXURE TO THE DEED INDI CATES THE MARKET VALUE OF BUILDING AT RS. 20,82,000/- [LAND VAL UE BEING RS. 62,18,000/-], IT WAS SUBMITTED THAT THE VALUE WAS TAKEN A T DEPRECIATED VALUE OF OLD BUILDING AND NOT THE ACTUAL COST, WHICH IS TO BE INDEXED. IT WAS SUBMITTED THAT COST OF IMPROVEMENT O F THE BUILDING SHOULD BE ALLOWED. 4. LD.DR, HOWEVER, SUBMITTED THAT ASSESSEE HAS NOT FURN ISHED ANY EVIDENCE, THEREFORE, AO HAS RESTRICTED THE COST OF ACQUISITION TO THE LAND ALONE. 5. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE DOCUMENTS PLACED ON RECORD. AS SEEN FROM THE SALE D EED, ASSESSEE NOT ONLY SOLD THE LAND BUT ALSO EXISTING BUILDING, FOR TOTAL VALUE OF WHICH WAS RS. 83 LAKHS ON WHICH THERE IS NO DISPUTE. THEREFORE, IT IS NOT APPROPRIATE ON THE PART OF AO TO ALLOW ONLY THE C OST OF ACQUISITION OF LAND ALONE, IGNORING THE COST OF ACQU ISITION/ IMPROVEMENT OF THE BUILDING. AS SEEN FROM THE RETURNS FILED BY SHRI B.J. DHANRAJ, THERE ARE CERTAIN DETAILS OF COST OF INVESTMENT WITHOUT ANY EVIDENCE. IT WAS SUBMITTED BY LD.DR THAT SH RI B.J. DHANRAJ HAS NOT ADMITTED THE CAPITAL GAINS ORIGINALLY, BUT SUBMITTED THAT THE DETAILS SUBSEQUENTLY WHICH SHOULD NOT B E THE I.T.A. NO. 1696/HYD/2016 :- 4 - : BASIS FOR CONSIDERING THE CLAIM. ON CONSIDERING THE SALE DEED AND THE RETURN OF SHRI B.J. DHANRAJ, I AM OF THE OPINION T HAT THE COST OF THE BUILDING WHICH WAS ALSO SOLD ALONG WITH LAND, SHO ULD HAVE BEEN ALLOWED TO ASSESSEE WHILE COMPUTING THE CAPITAL GAINS. HOWEVER, THE VALUE OF BUILDING IS NOT ASCERTAINABLE ON THE BASIS OF THE DOCUMENTS PLACED ON RECORD. IT IS FOR THE ASSESSEE TO SUBMIT THAT THE NECESSARY DETAILS OF THE CONSTRUCTION OF THE BUILDI NG AND THEREAFTER, CLAIM THE INDEXATION ON THE COST OF BUILDING WHICH SEEMS TO HAVE BEEN CONSTRUCTED OVER A PERIOD OF THIRTY YEARS. ASSESSEE CAN OBTAIN NECESSARY DETAILS EITHER FROM HE R MOTHERS PAST RECORD OR FROM THE RECORD OF THE SOCIETY. IN THE ABSENCE OF SUCH EVIDENCE, THE OTHER OPTION IS TO ADOPT THE VALUE OF THE BUILDING AS MENTIONED IN THE SALE DEED AND WORK OUT THE COST AND INDEXATION ON THAT BASIS. THE OPTION IS GIVEN TO ASSESSE E TO FURNISH NECESSARY DETAILS TO THE AO, WHO IS DIRECTED TO EXAMI NE AND ALLOW THE COST OF THE BUILDING ON THE BASIS OF THE FACTS AND LA W. FOR THIS PURPOSE, THE COMPUTATION OF CAPITAL GAINS IS RESTORED TO THE FILE OF AO, TO ALLOW THE COST OF IMPROVEMENT WITH DUE INDEXATIO N AS REQUIRED UNDER LAW. ASSESSEE SHOULD BE GIVEN DUE O PPORTUNITY BEFORE FINALYSING THE ORDER. GROUNDS ARE ACCORDING LY PARTLY ALLOWED FOR STATISTICAL PURPOSES. 6. IN THE RESULT, APPEAL OF ASSESSEE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH DECEMBER, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 29 TH DECEMBER, 2017 TNMM I.T.A. NO. 1696/HYD/2016 :- 5 - : COPY TO : 1. BELINDA PRABAGAR, C/O. MOHD. AFZAL, ADVOCATE, 11 -5- 465, SHERSONS RESIDENCY, FLAT NO. 402, CRIMINAL CO URT ROAD, RED HILLS, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-1(2), HYDERABAD. 3. CIT (APPEALS)-1, HYDERABAD. 4. PR.CIT-1, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.