Ipsita Malik, New Delhi V. ACIT, New Delhi

ITA 1863/DEL/2012

• Counselvise Citation: 186320114 RSA 2012
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 30-09-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 23-04-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SATPAL SINGH
• Assessee Lawyers: R S AHUJA
• Keywords: Capital asset; Source of fund; Cost of acquisition; Valuation report

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH C NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.1863/DEL/2012 ASSESSMENT YEAR : 2008-09 IPSITA MALIK, ACIT. C/O R.S. AHUJA & CO., CIRCLE-24 (1), C-353, DEFENCE COLONY, NEW DELHI. NEW DELHI. V. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.ABBPM ABBPM ABBPM ABBPM- -- -4831=H 4831=H 4831=H 4831=H APPELLANT BY : SHRI R.S. AHUJA, C.A. RESPONDENT BY : SHRI SATPAL SINGH, SR. DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 25.1.2012. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE AS UNDER:- 1. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD ITO & CIT(A) ERRED IN:- A) DISALLOWING THE COST OF CONSTRUCTION OF ` .2,16,00,000/- AND INDEXATION THEREON. B) DISALLOWING THE COST OF IMPROVEMENT PAID TO EXCALIBUR INDIA P. LTD. ` .70,00,000/- AND TEXCON INDIA PVT. LTD. ` .40,00,000/- RESPECTIVELY. ITA NO1863/DEL/2012 2 C) DISALLOWING THE DEDUCTION OF PAYMENT OF ` .1,94,80,000/- SPENT BY THE ASSESSEE TO CLEAR THE DUES OF THE CONCEPTS INDIA PVT. LTD. 2. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER OR AMEND THE GROUNDS OF APPEAL AT OR BEFORE THE HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT RETURN DECLAR ING INCOME AT ` .2,64,13,668/- WAS FILED ON 31.7.2008. THE CASE OF T HE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT ASSESSEE HAD DECLARED CAPITAL GAIN S ON SALE OF PROPERTY MEASURING 8954 SQ. YDS. LOCATED AT 422-B, UD YOG VIHAR, GURGAON. THE ASSESSING OFFICER FURTHER OBSERVED THAT FRO M THE SALE CONSIDERATION THE ASSESSEE HAD REDUCED AN AMOUNT OF ` .2,16,00,000/- ALLEGED TO HAVE BEEN SPENT ON CONSTRUCTION OF FACTORY ON THE SAID LAND. HE FURTHER OBSERVED THAT ASSESSEE HAD INDEXED SUCH COST OF CONSTRUCTION FROM FINANCIAL YEAR 1994-95. IN THIS REG ARD HE OBSERVED THAT THE ASSESSEE WAS ISSUED PERMISSION FOR CHANGE OF LAND USE ON 30.9.1994 AND IT WAS IMPOSSIBLE TO CONSTRUCT A FACTORY MEASURING 48000 SQ. FT. IN A PERIOD OF 7-8 MONTHS. THE ASSESSING OF FICER ALSO NOTED THAT THE SALE DEED EXECUTED BY THE ASSESSEE DID NO T MENTION ABOUT THE FACT OF ANY BUILDING CONSTRUCTED THEREON A ND RATHER THE SALE DEED CLEARLY STATED THAT COVERED AREA WAS NIL. THEREF ORE, HE HELD THAT THE CAPITAL ASSET WHICH WAS SUBJECT TO CAPITAL GAIN WA S ONLY PLOT OF LAND AND THEREFORE THE ASSESSEE WAS SHOW CAUSED AS TO WHY COST OF CONSTRUCTION OF FACTORY WAS INCLUDED IN COST OF ACQUISI TION TO WHICH THE ASSESSEE DID NOT REPLY. IN VIEW OF THE ABOVE THE COST O F CONSTRUCTION CLAIMED BY THE ASSESSEE ALONG WITH ITS INDEXATION WAS DISA LLOWED. 3. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HAD REDUCED AN AMOUNT OF ` .1,70,00,00/- FROM THE SALE CONSIDERATION AS BEING AMOUNTS PAID TO M/S EXCALIBUR INDIA P. LTD. AND M/S TEXCON INDIA P. LTD. IN LIEU OF THE CONSTRUCTION BY ABOVE TWO PAR TIES ON THE LAND ITA NO1863/DEL/2012 3 BELONGING TO THE ASSESSEE. THE ASSESSING OFFICER POINTED O UT TO THE ASSESSEE THAT COMPENSATION GIVEN TO M/S EXCALIBUR INDIA P . LTD. AND M/S TEXCON INDIA P. LTD. WHO WERE OCCUPYING A PORTIO N OF ASSESSEES LAND CANNOT BE SAID TO BE IN THE NATURE OF IMPROVEME NT AND AT BEST CAN BE CONSIDERED AS COST OF TRANSFER AND BEING IN THE NAT URE OF COST OF TRANSFER NO INDEXING WAS ALLOWABLE. THE ASSESSING OFFICER FURTHER OBSERVED THAT OUT OF ` .1.3 CRORES, ` .70 LAKHS PAID TO M/S EXCALIBUR INDIA P. LTD. WAS NOT PAID FROM THE BANK ACCOUNT OF THE ASSE SSEE RATHER IT WAS FROM THE BANK ACCOUNT OF SHRI NARINDER MALIK, HU SBAND OF ASSESSEE AND HE WAS A SEPARATE ENTITY. SIMILARLY, HE OBSERVED T HAT ` .40 LAKHS PAID TO M/S TEXCON INDIA P. LTD. WAS ALSO PAID BY SHR I NARINDER MALIK. THEREFORE, THE ASSESSING OFFICER ONLY ALLOWED ` .60 LAKHS AS COST OF TRANSFER AND DISALLOWED THE REMAINING AMOUNT OF ` .1.10 CRORES. 4. THE ASSESSING OFFICER ALSO OBSERVED THAT IN THE COMPUT ATION OF CAPITAL GAINS THE ASSESSEE HAS DECLARED SALE CONSIDERATION AT ` .8.75 CRORES WHICH WAS ARRIVED AT AFTER REDUCING ` .1.75 CRORES FROM ` .10.50 CRORES AND EXPLANATION GIVEN BY THE ASSESSEE WAS THAT DUE TO OUTSTANDING LIABILITIES OF THE COMPANY M/S CONCEPT CRE ATIONS, THE PURCHASER HAD DEDUCTED THE SAID AMOUNT FROM THE SALE CONSIDERATION. HOWEVER, NO EVIDENCE WAS SUBMITTED. THEREFORE, THE ASSE SSEE WAS AGAIN SHOW CAUSED AS TO WHY ` .1.75 CRORES WAS REDUCED FROM THE SALE CONSIDERATION. THE ASSESSEE FURNISHED THE REPLY AS UNDER:- AGAINST SALE OF LAND SHE RECEIVED ` .8,55,20,000/- AGAINST THE RECEIVABLE AMOUNT OF ` .10.50 CRORES AND THE BALANCE OF `.1,94,80,000/- CONSTITUTED DEDUCTIBLE AMOUNT BECAUSE IT WAS USED TO CLEAR THE DEBT FROM M/S CONCEPT INTERNATIONA L INDIA PVT. LTD. FOR ANY REASON, IT IS HELD THAT THE AMOUNT IS NOT DEDUCTIBLE AGAINST LAND SALE THEN THE AMOUNT SPENT TO MAKE COMP ANY DEBT FREE WILL CONSTITUTE A DEDUCTIBLE EXPENSES IN THE SALE OF SHARE IN CASE OF DEBT/LIABILITY WRITTEN OF PRIVATE LIMITED CO MPANY. ITA NO1863/DEL/2012 4 5. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLA NATION AS IN HIS OPINION NO EVIDENCE OR SUPPORTING DOCUMENTS IN RESP ECT OF SUCH CLAIMED PAYMENT FOR ATTACHED LIABILITY WAS FURNISHED. THEREFORE, HE DISALLOWED THE AMOUNT OF ` .1.75 CRORES AND RECOMPUTED THE CAPITAL GAIN AFTER DISALLOWING THE ABOVE SAID DEDUCTIONS. 6. AGGRIEVED THE ASSESSEE FILED APPEAL BEFORE LD CIT(A ) AND REITERATED HER SUBMISSIONS BEFORE ASSESSING OFFICER. THE L D CIT(A) AFTER GOING THROUGH THE SUBMISSIONS OF ASSESSING OFFICER DID NOT ALLOW ANY RELIEF TO THE ASSESSEE AND DECIDED THE MATTER AGAINST TH E ASSESSEE BY HOLDING AS UNDER:- 8. A CAREFUL PERUSAL OF THE VARIOUS DOCUMENTS INDICAT ES THAT THE APPELLANT LEASED OUT BUILT UP AREA TO THE VARIOUS TEN ANTS FROM ABOUT SEPTEMBER, 1997 ONWARDS. HOWEVER, EACH OF THE TENANTS HAS ALSO CARRIED OUT CONSIDERABLE CIVIL CONSTRUCTION OF A PERMANENT NATURE. THE APPELLANT WAS REQUIRED TO STAT E WHETHER THE FIXED ASSETS COMPRISING CIVIL CONSTRUCTION APPEARED EITHER IN HER BALANCE SHEET OR IN THE BALANCE SHEETS OF THE SAI D TENANTS. THE APPELLANT HAS PRODUCED COPIES OF THE RETURNS FILED BY HER FROM THE ASSESSMENT YEAR 1998-99 ONWARDS, FROM WHICH IT APPEARS THAT SHE HAS NEVER FILED A BALANCE SHEET WIT H THE RETURN OF INCOME AND INCOME HAS BEEN DISCLOSED ONLY UNDER THE HEAD INCOME FROM HOUSE PROPERTY. THE ONLY BALANCE SHEET OF M/S. TEXCON INDIA PVT. LTD. PRODUCED, FOR THE YEAR ENDIN G 31.03.2004, DOES NOT SHOW ANY BUILDING UNDER THE CHART OF FIXED A SSETS. THE BALANCE SHEET OF M/S. CONCEPT INTERNATIONAL INDIA PV T. LTD. AS ON 31.03.2005 SHOWS A WDV OF BUILDING' `.63,43,785/-.THE BALANCE SHEET OF M/S. EXCALIBUR INDIA PVT. LTD. SHOWS THE WDV OF BUILDING AS ON 31.03.2005 OF `.71,67324/-. THE INEVITABLE CON CLUSION IS THAT THE APPELLANT HAS NO EVIDENCE REGARDING CONSTRUC TION OF THE FACTORY BUILDING OF 48000 SQ. FEET, APART FROM THE L EASE DEEDS, ITA NO1863/DEL/2012 5 AND THE NOMINAL RENTAL INCOME DISCLOSED. MOREOVER, TH E APPELLANT CLAIMS TO HAVE A LIABILITY AMOUNTING TO `. 1,70,00,000/- PAYABLE TO M/S. EXCALIBUR INDIA PVT. LTD. AND M/S. TE XCON INDIA PVT. LTD. PERTAINING TO THE CONSTRUCTION CARRIED OUT BY THEM. IF THE APPELLANT'S CONTENTION IS ACCEPTED, IT WOULD AMOUNT T O ALLOWING COST OF CONSTRUCTION OF A TOTAL AMOUNT OF `.3,86,00,0 00/-, I.E. THE SUM OF `. 2,16,00,000/- INCURRED BY THE APPELLANT IN FINANCIAL YEAR 1994-95, AND `. 1,70,00,000/- INCURRED BY THE TENANTS IN FINANCIAL YEAR 2006-07. CONSIDERING THAT THE APPELLA NT HAS BEEN UNABLE TO PRODUCE ANY EVIDENCE REGARDING HER SOURCES OF INCOME IN THE ASSESSMENT YEAR 1994-95 ONWARDS, UP TO THE ASSESSMENT YEAR 1998-99, IN WHICH INCOME OF ONLY `.86,400/- WA S DISCLOSED, IT IS INCONCEIVABLE HOW THE APPELLANT RAISED THE SUM O F `.2,16,00,000/- IN THE ASSESSMENT YEAR 199495, WITHOUT EVEN A RUPEE OF BANK LOAN. WHILE THE APPELLANT MAY HAVE LE ASED OUT THE LAND, IT APPEARS THAT THE ACTUAL CONSTRUCTION OF FACT ORY HAS BEEN CARRIED OUT BY THE COMPANIES M/S. CONCEPT INTERNATION AL INDIA PVT. LTD., M/S. EXCALIBUR INDIA PVT. LTD. AND M/S TEX CON INDIA PVT. LTD. AFTER CAREFUL CONSIDERATION, IT IS HELD THAT TH E APPELLANT CANNOT CLAIM DEDUCTION UNDER SECTION 48 OF THE INCOM E TAX ACT, 1961 WITHOUT PROVING THAT COST OF ACQUISITION/IMPROVE MENT WAS EVER INCURRED. THE ACTION OF THE ASSESSING OFFICER IN DISALLOWING THE CLAIM OF COST OF CONSTRUCTION OF FACTORY BUILDIN G OF `.2,16,00,000/- IS ACCORDINGLY UPHELD. 9. THE NEXT GRIEVANCE OF THE APPELLANT RELATES TO TH E DISALLOWANCE OF LIABILITY PAYABLE TO M/S. EXCALIBUR INDIA PVT. LT D. AND M/S. TEXCON INDIA PVT. LTD. OF `.70,00,000/- AND `.40,00 ,000/- RESPECTIVELY. IT IS THE APPELLANT'S CONTENTION THAT LI ABILITY OF `. 1,70,00,000/- WAS TO BE PAID TO THE TWO ABOVE MENTIO NED TENANTS AS COMPENSATION FOR THE COST OF CONSTRUCTION IN CURRED BY ITA NO1863/DEL/2012 6 THEM ON THE SAID LAND. THE ASSESSING OFFICER FOUND THAT THE PAYMENT AMOUNTING TO `.1,30,00,000/- HAD BEEN MADE NOT BY THE APPELLANT, BUT BY HER HUSBAND SHRI NARENDER MALI K. THE APPELLANT SUBMITS THAT OUT OF THE TOTAL SALE RECEIPTS OF `.10,55,22,000/-, THE AMOUNT OF `.2,00,00,000/- WAS PAID TO SHRI NARENDER MALIK FROM WHICH THE PAYMENTS WERE MADE ON BEHALF OF THE APPELLANT. IT IS ALSO SUBMITTED THAT PAYMENTS WERE MADE OUT OF JOINT ACCOUNTS, IN WHICH THE ACCOUNT HOLDERS ARE B OTH THE APPELLANT AND HER HUSBAND. 10. I HAVE CAREFULLY PERUSED THE EXTRACTS OF BANK STAT EMENTS SUBMITTED BY THE APPELLANT WITH THE WRITTEN SUBMISSIONS. ACCOUNT NUMBER 17101507200 WITH ICICI BANK, SAKET BRANCH, I S JOINTLY HELD BY THE APPELLANT WITH HER HUSBAND, IN WHICH 'SHE IS THE FIRST ACCOUNT HOLDER. OUT OF `.1,70,00,000/-, THE PAYMENT S MADE TO M/S. EXCALIBUR INDIA PVT. LTD. FROM THIS ACCOUNT ARE AS UNDER:- DATE CHEQUE NO. AMOUNT 06.11.2006 816209 15,00,000/- 23.11.2006 816219 20,00,000/- 10.01.2007 820368 25,00,000/- TOTAL 60,00,000/- ACCOUNT NUMBER 17101078177 WITH ICICI BANK, SAKET B RANCH, IS IN THE NAME OF SHRI NARENDER KUMAR MALIK, AND THE APPELLAN T'S NAME DOES NOT APPEAR ON THE BANK STATEMENT. THE PAYMENTS MADE A RE AS UNDER:- DATE CHEQUE NO. AMOUNT PAID TO 31.08.2006 810642 40,00,000/- TEXCON 06.10.2006 816209 10,00,000/- EXCALIBUR 06.10.2006 814081 10,00,000/- EXCALIBUR TOTAL 60,00,000/- ITA NO1863/DEL/2012 7 ACCOUNT NO. 17101507273 WITH ICICI BANK, SAKET, BRA NCH, IS ALSO IN THE SOLE NAME OF SHRI NARENDER R'1ALIK, FROM WHIC H THE FOLLOWING PAYMENTS HAVE BEEN MADE TO M/S. M/S. EXCALI BUR INDIA PVT. LTD.:- DATE CHEQUE NO. AMOUNT 27.04.2006 836839 20,00,000/- 15.06.2006 808404 10,00,000/- 05.07.2006 808405 10,00,000/- 07.07.2006 808406 10,00,000/- TOTAL 50,00,000/- EXAMINATION OF THE BANK ACCOUNT NUMBERS 17101078177 AND 17101507273 IN THE NAME OF SHRI NARENDER MALIK DO N OT SHOW THE CREDIT OF SALE CONSIDERATION OF RS. 2,00,00,000/- , AS CLAIMED BY THE APPELLANT. IN FACT, BANK ACCOUNT NUMBER 1710 1078177 HAS DEPOSITS ALMOST ENTIRELY IN US DOLLARS. THERE IS, THE REFORE, NO REASON TO PRESUME THAT PAYMENTS MADE TO M/S. TEXCON IND IA PVT. LTD. AND M/S. EXCALIBUR INDIA PVT. LTD. BY SHRI NARE NDER MALIK HAVE EMANATED FROM THE SALE CONSIDERATION TAXABLE IN THE HANDS OF THE APPELLANT. THE APPELLANT WAS ALLOWED A NUMBE R OF OPPORTUNITIES TO EXPLAIN THE TREATMENT FOR TAX PURPO SES OF THE COMPENSATION RECEIVED BY M/S. TEXCON INDIA PVT. LTD. AND M/S. EXCALIBUR INDIA PVT. LTD. IN THEIR RETURNS OF INCOME . THE APPELLANT HAS STATED THAT THE COMPENSATION RECEIVED HAS BEEN REDU CED FROM THE VALUE OF ASSETS DURING THE FINANCIAL YEAR 200 7-08. THE COPY OF BALANCE SHEET AS ON 31.03.2007 HAS BEEN FILED IN THE CASE OF M/S. EXCALIBUR INDIA PVT. LTD. WHICH SHOWS WDV OF BUILDING AS ON 31.03.2007 AS `.58,90,553/-, AND BUIL DING UNDER CONSTRUCTION AT `. 1,39,69,237/-. THE BALANCE SHEET AS ON 31.03.2008 SHOWS OPENING WDV OF `.2,57,66,000/-, AND ITA NO1863/DEL/2012 8 DEDUCTION DURING THE YEAR OF `. 1,17,77,207/-. THE COUNSEL FOR THE APPELLANT COULD NOT EXPLAIN HOW THESE FIGURES COULD B E RECONCILED WITH THE COMPENSATION OF `. 1,30,00,000/- RECEIVED BY M/S. EXCALIBUR INDIA PVT. LTD. IN THE FINANCIAL YEAR 200 6-07. MOREOVER, IT APPEARS THAT THE COMPANY HAS SHOWN CONSTRUCTION OF T HE BUILDING IN THE VERY SAME YEAR AS IT HAS RECEIVED THE COMPENSATION FOR THE DEMOLITION/RELINQUISHMENT THERE OF. THE BALANCE SHEET OF M/S. TEXCON INDIA PVT. LTD. AS ON 31 .03.2007 AND AS ON 31.03.2008 WAS NOT PRODUCED AT ALL. THERE C AN BE NO DOUBT, THEREFORE, THAT THE CLAIM OF COMPENSATION PAY ABLE TO M/S. TEXCON INDIA PVT. LTD. AND M/S. EXCALIBUR INDIA PVT. LTD. BY SHRI NARENDER MALIK ON BEHALF OF THE APPELLANT IS NOT PRO VEN BY THE RECORD. THE PAYMENTS MADE BY SHRI NARENDER MALIK TO M/S. TEXCON INDIA PVT. LTD. AND M/S. EXCALIBUR INDIA PVT. LTD. ARE NOT PROVEN TO HAVE ANY CONNECTION WITH THE SALE TRANSACTI ON OF LAND. AS PAYMENT OF ONLY `.60,00,000/- HAS BEEN MADE FROM T HE BANK ACCOUNT OF THE APPELLANT, AS ALREADY ALLOWED BY THE ASSESSING OFFICER, THE APPELLANT IS NOT ENTITLED TO ANY FURTHE R RELIEF. THE DISALLOWANCE OF `.1,30,00,000/- IS ACCORDINGLY UPHELD . 11. THE FINAL ISSUE FOR ADJUDICATION IS THE DISALLOWANC E OF CLAIM OF DEDUCTION OF `.1,94,80,000/- FOR PAYMENT OF LIABILI TY ALLEGEDLY BELONGING TO M/S. CONCEPT INTERNATIONAL INDIA PVT. L TD. IN THE COMPUTATION OF INCOME FILED WITH THE RETURN OF INCO ME, THE APPELLANT HAD DEDUCTED THE AMOUNT OF `.1,75,00,000/ - FROM THE SALE CONSIDERATION OF `.10,50,00,000/- ON ACCOUNT OF 'PAYMENT OF LIABILITY ATTACHED TO PROPERTY DIRECTLY FROM CONCEP T. DURING THE ASSESSMENT PROCEEDINGS, WHEN REQUIRED TO EXPLAIN THE NAT URE OF THIS LIABILITY/ DEDUCTION, THE APPELLANT CLAIMED THA T AS AGAINST THE SALE CONSIDERATION OF `. 10,50,00,000/-, AN AMOUNT OF `. 8,55,20,000/- WAS ACTUALLY RECEIVED AND THE BALANCE AMOUNT OF `. ITA NO1863/DEL/2012 9 1,94,80,000/- WAS DEDUCTED TO CLEAR THE DEBTS OF M/S. CONCEPT INTERNATIONAL INDIA PVT. LTD. HOWEVER, THE APPELLAN T COULD NOT PRODUCE EVIDENCE OF THE SO CALLED PAYMENT OF LIABILI TY. DURING THE APPELLATE PROCEEDINGS, THE APPELLANT HAS ARGUED THAT THE LAND WAS TRANSFERRED TO ONE SHRI RAVINDRA B. LAD BOTH BY WAY OF SALE OF THE LAND, AND BY TRANSFER OF THE SHARES OF THE COM PANY M/S. CONCEPT INTERNATIONAL INDIA PVT. LTD. IT WAS ARGUED THAT THE SHAREHOLDING COULD BE TRANSFERRED ONLY AFTER THE COMP ANY'S LIABILITIES WERE PAID OFF. RELIANCE IS PLACED ON AN A GREEMENT DATED 03.07.2006 BETWEEN THE APPELLANT AND SHRI R. B. LAD, WHICH I HAVE CAREFULLY PERUSED. THE EXTRACT FROM THE SAID AGREEMENT IS REPRODUCED BELOW:- XXXXXXXX XXXXXXXX XXXXXXXX THE SAID AGREEMENT IS RECORDED ON PLAIN PAPER AND IS N EITHER REGISTERED NOR WITNESSED. WHILE THE AGREEMENT REFERS TO CLEARING OF THE LIABILITIES ATTACHED TO THE LAND, A COMPLETE READING WOULD SHOW THAT THE LIABILITIES ARE THOSE PERTAINING TO M/S. TEXCON INDIA PVT. LTD. AND M/S. EXCALIBUR INDIA PVT. LTD. IF THER E WERE SPECIFIC LIABILITIES OR DEBTS TO BE CLEARED BEFORE TRANSFER OF THE OWNERSHIP OF THE COMPANY AND THE LAND, THE DETAILS AND AMOUNTS THEREOF WOULD HAVE BEEN ENUMERATED IN THE AGREEMENT. NO SUCH DETAILS ARE FOUND THEREIN. EVEN AT THIS STAGE, THE APPELLANT HAS NOT FURNISHED ANY DETAILS OF PAYMENTS SUBSEQUENTLY MADE OF `.1,94,80,000/-, OR EVEN OF `.1,75,00,000/-. THE AP PELLANT'S CLAIM THAT SHE HAS RECEIVED ONLY `.8,55,20,000/- AS AGAINST T HE RECEIVABLE AMOUNT OF `.10,50,00,000/- IS ALSO PATENTL Y UNTRUE AS THE REGISTERED SALE DEED DATED 12.04.2007 SHOWS COMPLET E DETAILS OF PAYMENT AMOUNTING TO `.10,50,00,000/- BY BANK DRAFT/ ITA NO1863/DEL/2012 10 CHEQUE BETWEEN 15.05.2006 AND 12.07.2006. I FIND NO REASON, THEREFORE, TO INTERFERE WITH THE ACTION OF THE ASSESSIN G OFFICER IN DISALLOWING THE CLAIM OF LIABILITY OF `.1,75,00,000/ - AS PER THE RETURN OF INCOME AND OF `.1,94,80,000/- AS PER SUBSEQU ENT CLAIM. THIS GROUND OF APPEAL IS THEREFORE DISMISSED. 7. AGGRIEVED THE ASSESSEE IS IN APPEAL BEFORE US. 8. AT THE OUTSET, THE LD AR SUBMITTED THAT PROOF OF I NVESTMENT IN THE CONSTRUCTION OF BUILDING COULD NOT BE FILED BEFO RE ASSESSING OFFICER AND BEFORE LD CIT(A) AS CONSIDERABLE PERIOD HAD PASSED AND ASSESSING OFFICER DISALLOWED THE COST OF CONSTRUCTION ON THE BASI S THAT SALE DEED DID NOT CONTAIN ANY MENTION ABOUT THE EXISTENCE OF T HE BUILDING. IN THIS RESPECT OUR ATTENTION WAS INVITED TO PAPER BOOK PAGES 178 TO 183 WHERE A COPY OF VALUATION REPORT OBTAINED BY THE ASSE SSEE WAS PLACED AND IT WAS ARGUED THAT SINCE ASSESSEE HAD NO EVIDENCE OF AMOUNTS SPENT ON CONSTRUCTION OF BUILDING, THEREFORE, THE RE PORT FROM THE REGISTERED VALUER WAS OBTAINED AND WAS FILED WITH THE ASSESSING OFFICER AND THE ASSESSING OFFICER DID NOT CONSIDER THE SAME. OUR ATTENTION WAS ALSO INVITED TO PAPER BOOK PAGES 1 TO 37 WHERE COPIES OF RETURNS ALONG WITH FORM NO.16A ISSUED IN FAVOUR OF ASSESSEE BY VARIOUS T ENANTS COMPANIES WAS PLACED. ON THE STRENGTH OF THESE DOCUMEN TS IT WAS SUBMITTED THAT ASSESSEE HAD BEEN DECLARING THE AMOUNT O F RENT RECEIVED FROM THE THREE COMPANIES I.E. M/S CONCEPT IN TERNATIONAL INDIA P. LTD., EXCALIBUR INDIA P. LTD AND M/S TEXCON INDIA P. LTD. UNDER THE HEAD INCOME FROM HOUSE PROPERTY. PARTICULAR RELIANCE WAS PLACED ON FORM NO.16A ISSUED BY THE ABOVE SAID COMPANIES IN SUPPOR T OF THE CLAIM THAT ASSESSEE WAS RECEIVING RENT OF BUILDING AND T HEREFORE EXISTENCE OF BUILDING CANNOT BE DOUBTED. OUR ATTENTI ON WAS ALSO INVITED TO PAPER BOOK PAGES 156 TO 161 WHERE COPIES OF LEASE A GREEMENTS ENTERED INTO BY THE ASSESSEE WITH THREE COMPANIES WERE P LACED. ON THE STRENGTH OF THESE LEASE AGREEMENTS, IT WAS ARGUED TH AT LEASE ITA NO1863/DEL/2012 11 AGREEMENT RELATED TO YEAR 1997 ONWARDS AND IT WAS SPE CIFICALLY WRITTEN IN THE LEASE DEED THAT CONSTRUCTED AREA WAS BEING LEASE D OUT. THEREFORE, FROM THIS ANGLE ALSO, THE LD AR ARGUED THA T EXISTENCE OF BUILDING WAS THERE. HE FURTHER TOOK US TO PAPER BOOK PAGE 177 WHERE A COPY OF OCCUPATION CERTIFICATE ISSUED BY SR. TOWN PLA NNER WAS PLACED. ON THE STRENGTH OF THIS OCCUPATION CERTIFICATE IT WAS ARGUED THAT THE OCCUPATION CERTIFICATE MENTIONS THE COVERED AREA OF THE BUILDING WHICH INCLUDED BASEMENT, GROUND FLOOR AND FIRST FLOOR AND T HIS OCCUPATION CERTIFICATE WAS ISSUED ON 28.5.1997 WHICH PROVES THAT B UILDING WAS THERE BEFORE 28.5.1997 AND THAT IS WHY THE OCCUPATIO N CERTIFICATE CERTIFYING THE BUILT UP AREA WAS ISSUED. OUR ATTENTIO N WAS ALSO INVITED TO PAPER BOOK PAGE 185 & 186 WHERE A COPY OF MAP IN THE FORM OF BONDED WAREHOUSE ALONG WITH A LETTER OF ASSISTANT COMMI SSIONER, CENTRAL EXCISE WAS PLACED. IN VIEW OF THE ABOVE FACTU AL POSITION, IT WAS ARGUED THAT ASSESSING OFFICER DID NOT CONSIDER ALL THESE EVIDENCES AND MOREOVER THE LD CIT(A) ALSO DID NOT CONSIDER THESE EVI DENCES AND RATHER MADE A NEW CASE BY RELYING UPON THE BALANCE SH EET OF M/S CONCEPT INTERNATIONAL FOR THE YEAR 2004-05. OUR ATT ENTION WAS ALSO INVITED TO PAPER BOOK PAGES 93 TO 97 WHERE COPIES OF ELECTRICITY BILLS WERE PLACED AND IT WAS ARGUED THAT WITHOUT EXISTENCE OF BUILDING ELECTRIC CONNECTION CAN NEVER BE GIVEN. 9. REGARDING ALLEGATION OF ASSESSING OFFICER THAT THE B UILDING WAS NOT MENTIONED IN THE SALE DEED IT WAS ARGUED THAT SALE DEED CANNOT BE CONSIDERED AS CONCLUSIVE EVIDENCE IF OTHER EVIDENCE P ROVE THE CONTRARY. RELIANCE IN THIS RESPECT WAS PLACED ON THE F OLLOWING JUDGMENTS:- 1. HIRA LAL RAM DAYAL V., CIT 122 ITR 461 (P&H). 2. CIT V. INTZAR ALI IN I.T.A. NO. 162/2013 DECIDED BY HON'BLE ALLAHABAD HIGH COURT. 38 TAXMAN.COM. 1 03 3. SMT. SARAFA BIBI MOHD., IBRAHIM V. CIT 204 ITR 631 (SC). ITA NO1863/DEL/2012 12 4. WTO V. OFFICER IN CHARGE (COURT OF WARDS) 105 ITR 13 3. 5. NAMITA SARKAR V. CIT (2005) 275 ITR 590 (CAL.). 10. IN VIEW OF THESE JUDGMENTS IT WAS ARGUED THAT NON MENTIONING OF BUILDING IN THE SALE DEED CANNOT BE REASON TO DISALLOW THE EXPENDITURE INCURRED BY ASSESSEE ON CONSTRUCTION OF BUILDING IF OTH ER EVIDENCES PROVED THAT BUILDING WAS THEREON ON THE SAID LAND. 11. ARGUING ON SECOND GROUND OF APPEAL, THE LD AR SUB MITTED THAT ASSESSING OFFICER DISALLOWED THE CLAIM OF ASSESSEE SIMPLY ON THE BASIS THAT PAYMENTS WERE NOT MADE FROM THE BANK ACCOUNT OF THE ASSESSEE. IN THIS RESPECT IT WAS ARGUED THAT SINCE THE ASSESSEE HAD T O MAKE PAYMENTS TO THESE COMPANIES FOR MAKING THE PROPER TITL E OF PROPERTY AVAILABLE TO BUYER AND SHE WAS NOT HAVING SUFFICIENT FUNDS, THEREFORE, MONEY WAS PAID FROM THE BANK ACCOUNT OF HER HUSBAND. HE FURTHER ARGUED THAT THE FACT OF HAVING MADE PAYMENT FROM TH E BANK ACCOUNT OF HER HUSBAND IS NOT DISPUTED. THEREFORE, HE ARGUED THAT THE PAYMENTS WERE NECESSARILY MADE TO MAKE PROPERTY FIT FOR SALE. 12. REGARDING THIRD GROUND OF APPEAL, THE LD AR SUB MITTED THAT THE PAYMENTS WERE MADE FOR OUTSTANDING LIABILITIES OF M/S CONCEPT INDIA P. LTD. AS NOBODY WILL BUY A COMPANY WHICH IS LOADED WIT H OUTSTANDING LIABILITIES. THEREFORE, THE EXPENDITURE WAS A NECESSAR Y EXPENDITURE IN CONNECTION WITH TRANSFER OF PROPERTY. 13. THE LD DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER AND LD CIT(A) AND ARGUED THAT ASSESSING OFFICER AFTER GOING THROUGH ALL THE FACTS OF THE CASE HAD RIGHTLY M ADE THE ADDITIONS AND LD CIT(A) HAD VERY ELABORATELY DEALT WITH THE A RGUMENTS OF THE ASSESSEE AND HAD RIGHTLY UPHELD THE DISALLOWANCES. 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. REGARDING FIRST GROUND OF APPEAL, WE FIND THAT SECTION 48 OF THE INC OME TAX ACT, 1961 PROVIDES THE MODE OF COMPUTATION OF CAPITAL GAIN. AC CORDING TO THIS ITA NO1863/DEL/2012 13 SECTION THE INCOME CHARGEABLE UNDER THE HEAD CAPITA L GAIN SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CO NSIDERATION RECEIVED OR ACCRUING AS A RESULT TO THE TRANSFER OF CA PITAL ASSET FOLLOWING AMOUNTS NAMELY:- A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNE CTION WITH SUCH TRANSFER. B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. 15. THE ASSESSEE WHILE COMPUTING THE CAPITAL GAIN ON SA LE OF 8954 SQ. YDS. OF LAND HAS DEDUCTED THE COST OF CONSTRUCTION OF THE BUILDING. THE LD ASSESSING OFFICER DENIED THE ASSESSEE THE CLAIM OF S UCH COST OF CONSTRUCTION. ON AN ANALYSIS OF THE EVIDENCE, WE FIND THAT CASE OF THE ASSESSING OFFICER IS BASED MAINLY ON TWO FACTS- A) THAT THE ASSESSEE FAILED TO PRODUCE DETAILS OF EXPENDITU RE INCLUDING BANK ACCOUNTS, EXHIBITING THE INCURRENCE O F EXPENSES ON CONSTRUCTION. B) IN THE SALE DEED NOWHERE BUILDING HAS BEEN MENTIONED AS SOLD. 16. ON THE STRENGTH OF THESE TWO FACTS HE HARBORED THE BELIEF THAT ASSESSEE HAS NOT SOLD ANY BUILDING AND THEREFORE ANY COST OF CONSTRUCTION ALLEGED BY THE ASSESSEE IS NOT TO BE ALLOWED AS DEDUCTION WHILE COMPUTING THE CAPITAL GAINS. 17. ON THE OTHER HAND, THE CASE OF THE ASSESSEE IS THAT BUILDING WAS CONSTRUCTED IN THE YEAR 1994-95. HER INABILITY TO PR ODUCE DETAILS OF EXPENDITURE CANNOT AUTHORIZE THE ASSESSING OFFICER TO D ENY THE EXPENDITURE IN THE YEAR WHEN ASSESSEE HAS SOLD THE BUIL DING. ACCORDING TO THE ASSESSEE THE FACTUM OF EXISTENCE OF BU ILDING IS NOT IN DISPUTE. FOR BUTTERING HER CONTENTION THE ASSESSEE HAS PO INTED OUT THAT SHE HAS LET OUT THE BUILDING CONSTRUCTED ON THE PLOT O F LAND. SHE HAD OFFERED RENTAL INCOME FOR ASSESSMENT RIGHT FROM ASSESSMENT YEAR 1998-99 UPTO THE DATE OF SALE. THE TENANTS HAVE BEEN MANUFACTURING ITA NO1863/DEL/2012 14 THE GOODS WHICH WERE SUBJECT TO EXCISE CLEARANCE., THE OCCUPANCY CERTIFICATE ISSUED BY THE DEPARTMENT OF TOWN & PLANNI NG IS PLACED ON THE RECORD AND HE FURTHER DREW OUR ATTENTION TOWARD S THE LEASE AGREEMENT BETWEEN HER AND THE TENANTS. ON THE STRENGT H OF THESE DOCUMENTS HE POINTED OUT THAT BUILDING WAS IN EXISTENC E. HER INABILITY TO QUANTIFY THE COST OF CONSTRUCTION SHOULD NOT BE CON SIDERED AS A SOLE CRITERIA TO EXCLUDE THAT COST OF CONSTRUCTION WHILE C OMPUTING THE CAPITAL GAIN. THE ALTERNATIVE OF IT IS THAT COST OF CONSTRUCTI ON CAN BE ASCERTAINED WITH THE HELP OF EXPERT I.E. THE VALUATI ON OFFICER. NO DOUBT, IT WOULD BE AN ESTIMATED FIGURE BUT AFTER APPLYING T HE RELEVANT FACTORS, A CORRECT FIGURE CAN BE ACHIEVED. THE ASSESSEE HAS ALREA DY TAKEN A REPORT FROM THE REGISTERED VALUER AND CALCULATED THE COST OF CONSTRUCTION ON THAT BASIS. AS FAR AS THE OBJECTION OF T HE ASSESSING OFFICER IS CONCERNED THAT BUILDING HAS NOT BEEN MENTI ONED IN THE SALE DEED, ACCORDING TO THE ASSESSEE THE TERMS AND CONDITIONS MENTIONED IN THE SALE DEED ARE NEGOTIATED TERMS AND CONDITIONS BETW EEN THE VENDOR AND VENDEE AND DOES NOT CARRY THE VALUE EQUIVALENT T O ANY STATUTE. THERE MAY BE A DIFFERENT OBJECT OF THE VENDEE FOR N OT MENTIONING THE BUILDING AND ONE OF THE RELEVANT FACTORS CAN BE A LO WER PAYMENT OF STAMP DUTIES. THUS NON MENTION OF BUILDING IN THE SALE DEED WOULD NOT AUTHORIZE THE ASSESSING OFFICER TO DENY THE CLAIM OF ASSE SSEE. DURING THE COURSE OF HEARING WE HAD CONFRONTED TO THE LD CO UNSEL FOR THE ASSESSEE THAT THE ALLEGED RENTAL INCOME CAN BE AN INCOM E FROM THE LAND ONLY. THE LD COUNSEL HAD SUBMITTED THAT IF IT W AS AN INCOME SIMPLY FROM LEASING OUT OF THE LAND THEN IT WOULD HAV E BEEN ASSESSED AS INCOME FROM OTHER SOURCES AND NOT INCOME FROM HOUSE PROPERTY. IN THIS CONNECTION HE DREW OUR ATTENTION TOWARDS SECTION 24 OF THE INCOME TAX ACT, 1961. 18. WE FURTHER FIND THAT THE OCCUPANCY CERTIFICATE ISSUED BY TOWN PLANNER PLACED AT PAPER BOOK PAGE 177 CLEARLY MENTI ONS THE EXISTENCE ITA NO1863/DEL/2012 15 OF BUILDING AND THE AREA MENTIONED IN THE OCCUPANCY CERTIFICATE MATCHES WITH THE AREA MENTIONED BY THE REGISTERED VAL UER. THE DATE OF ISSUE OF OCCUPANCY CERTIFICATE IS 28.5.1997 WHICH C LEARLY ESTABLISHES THAT BUILDING MUST HAVE BEEN COMPLETED BEFORE 28.5. 1997. THE LD CIT(A) HAS UPHELD THE DISALLOWANCE HOLDING THAT THE B ALANCE SHEET OF M/S CONCEPT INTERNATIONAL INDIA P. LTD. AND THAT OF M/S EXCALIBUR INDIA P. LTD. CONTAINED THE VALUE OF BUILDING, THEREFORE THE BUILDING MUST HAVE BEEN CONSTRUCTED BY THESE COMPANIES AND NOT BY T HE ASSESSEE. IN THIS RESPECT WE ARE OF THE VIEW THAT LD CIT(A) SHOU LD HAVE REFERRED TO THE BALANCE SHEETS FOR THE PERIOD 31.3.1997 TO ARR IVE AT THE CONCLUSION AS TO WHETHER THERE WAS BUILDING APPEARING IN THE BALANCE SHEETS OF THESE COMPANIES OR NOT. THE LD CIT(A)S ACTION OF UPHOLDING OF DISALLOWANCE RELYING UPON THE BALANCE SHEET OF YEA R 2004-05 IS NOT CORRECT IN VIEW OF THE FACT THAT VALUE OF BUILDINGS APPEARING IN THE BALANCE SHEETS AS ON 31.3.2005 MAY BE OTHER BUILDINGS O WNED AND CONSTRUCTED BY THE RESPECTIVE COMPANIES AFTER TAKING O VER ON LEASE FROM THE ASSESSEE. THE LD CIT(A) HIMSELF OBSERVES THAT PAR T OF BUILDINGS WAS CONSTRUCTED BY THESE COMPANIES. FROM THE DOCUMENT SUCH AS OCCUPANCY CERTIFICATE ISSUED BY THE TOWN PLANNE R ONE THING BECOMES APPARENT AND THAT IS THAT BUILDING WAS THERE O N THE SAID LAND. THIS FACT IS FURTHER STRENGTHENED BY THE REPORT OF REG ISTERED VALUER WHO HAD PREPARED THE VALUATION REPORT AFTER PHYSICALLY V ERIFYING THE BUILDING. MOREOVER THE AREA OF CONSTRUCTION AS CONTAI NED IN OCCUPANCY CERTIFICATE AND VALUATION REPORT MATCHES. THE EVIDEN CE OF ELECTRIC CONNECTION FURTHER FORTIFIES THE EXISTENCE OF BUILDIN GS. THE CERTIFIED BONDED WAREHOUSE WHICH WAS BEING USED BY TEXCON INDIA P. LTD. PLACED AT PAPER BOOK PAGES 184 TO 186 ALSO PROVES THE EXISTENCE OF BUILDING. THERE IS NO VALUE OF BUILDING APPEARING IN THE BALANCE SHEET OF TEXCON FURTHER STRENGTHENS THE FACT THAT BUILDING WAS NOT CONSTRUCTED BY TEXCON. FURTHER THE LEASE DEEDS ENTERED INTO BY ITA NO1863/DEL/2012 16 ASSESSEE ALSO ESTABLISHES THE FACT THAT ASSESSEE HAD PARTLY BUI LT THE BUILDINGS AS SHE WAS GETTING RENT AND WAS DECLARING INCO ME UNDER THE HEAD INCOME FROM HOUSE PROPERTY. KEEPING IN VIEW ALL THESE FACTS, IT CAN BE CONCLUDED THAT BUILDING WAS PHYSICALLY THERE O N THE LAND AND THAT TOO ITS CONSTRUCTION WAS COMPLETED BEFORE 28.5.19 97 AS OCCUPATION CERTIFICATE IS DATED 28.5.1997. THEREFORE EVEN IF SALE DEED DID NOT MENTION ABOUT THE EXISTENCE OF BUILDING, THE FACT REMAINS THAT THERE WAS BUILDING ON THE ABOVE LAND. NOW THE QUESTIO N ARISES AS TO WHO HAD CONSTRUCTED THE BUILDING. THE ASSESSEE HAD NO PR OOF OF FUNDS TO ESTABLISH THAT BUILDING WAS CONSTRUCTED BY HER. THE LD CIT(A) HAS RELIED UPON THE BALANCE SHEETS OF M/S CONCEPT INDIA & M/S EXCALIBUR INDIA TO PROVE THAT SINCE VALUE OF BUILDING WAS APPE ARING IN THE BALANCE SHEET AS ON 31.3.2005, THEREFORE, BUILDINGS WERE CONSTR UCTED BY THESE COMPANIES. HOWEVER, HE HAD NOT CONSIDERED THE FACT TH AT PART OF BUILDING WAS CONSTRUCTED BY THESE COMPANIES ALSO WHICH M AY BE AFTER THE BUILDING WAS LEASED OUT. THE LD CIT(A) HIMSELF HAD HELD IN HIS OPENING FINDINGS AS UNDER:- A CAREFUL PERUSAL OF THE VARIOUS DOCUMENTS INDICATES THAT THE APPELLANT LEASED OUT THE BUILT UP AREA TO VARIOUS TEN ANTS FROM SEPTEMBER, 1997 ONWARDS. HOWEVER, EACH OF THE TENANT S HAS ALSO CARRIED OUT CONSIDERABLE CIVIL CONSTRUCTION OF A PERMANENT NATURE. THEREFORE, IT IS POSSIBLE THAT BUILDINGS AS APPEARING A S ON 31.3.2005 IN THE BALANCE SHEETS OF THESE COMPANIES REPRESENTED THE BU ILDING CONSTRUCTED BY THESE COMPANIES AFTER TAKING OVER OF B UILDING ON LEASE FROM ASSESSEE. THEREFORE, WE ARE OF THE CONSIDERED OPINI ON THAT RELEVANT BALANCE SHEET FOR ARRIVING AT THE CONCLUSIO N THAT THESE COMPANIES CONSTRUCTED THE BUILDINGS CAN ONLY BE EXAMIN ED FROM THE BALANCE SHEET OF 31.3.1997. IF THE EXAMINATION OF TH ESE BALANCE SHEETS AS OF THIS YEAR REVEALS THAT THERE WAS NO BUILDING APP EARING IN THE ITA NO1863/DEL/2012 17 FIXED ASSETS, THEN THE OBVIOUS CONCLUSION IS THAT INITIA LLY BUILDING WAS CONSTRUCTED BY ASSESSEE AND FURTHER THESE TENANT COMPANI ES HAD MADE FURTHER ADDITIONS, THE VALUE OF WHICH IS REPRESEN TED IN THE BALANCE SHEETS OF THESE COMPANIES AS ON 31.3.2005. THERE FORE, FOR THIS VERIFICATION WE SET ASIDE THE ISSUE TO THE OFFICE OF ASSE SSING OFFICER WITH A DIRECTION TO VERIFY THE BALANCE SHEETS OF THESE COMPANIES FOR THE YEARS 31.3.1997 AND IF THERE IS NO AMOUNT APPEARING WITH RESPECT TO BUILDINGS, THEN HE SHOULD ALLOW THE BENEFIT TO THE ASSE SSEE AS ALL OTHER EVIDENCES ARE IN FAVOUR OF ASSESSEE. REGARDING COST INCU RRED, THE ASSESSING OFFICER CAN GET VERIFIED THE VALUATION REPORT FOR THE PURPOSE OF RATES TAKEN BY VALUER AS THE CONSTRUCTED AREA MATC HES WITH THE OCCUPANCY CERTIFICATE. REGARDING INDEXATION, THE SAM E CAN BE GIVEN FROM FINANCIAL YEAR 1996-97 AS THE OCCUPANCY CERTIFI CATE DATED 28.5.1997 ESTABLISHES THE COMPLETION OF BUILDING BEFOR E 28.5.1997. IN VIEW OF THE ABOVE, THE GROUND NO.1 IS ALLOWED FOR STA TISTICAL PURPOSES. 19. REGARDING SECOND ISSUE WE FIND THAT THE ASSESSING OFFI CER DISALLOWED THE PAYMENTS ONLY ON THE BASIS THAT PAYMENTS WERE NOT MADE BY THE ASSESSEE AND THESE WERE MADE BY THE HUSBAND OF THE ASSESSEE. WE FIND THAT DISALLOWANCE ONLY ON THIS ACCOUNT IS NOT A VALID DISALLOWANCE AS THE ASSESSING OFFICER HAS NOT OTHERWISE DOU BTED THE PAYMENTS. WE FURTHER FIND THAT LD CIT(A) HIMSELF HAD HELD THAT A CONSIDERABLE PORTION IN THE NATURE OF PERMANENT STRUC TURE WAS ALSO CONSTRUCTED BY TENANTS. THE LD CIT(A) ALSO MAKES A FIND ING THAT IN THE CASE OF M/S EXCALIBUR IN THE BALANCE SHEET AS ON 31.3.2 008, A DEDUCTION OF AN AMOUNT OF ` .1,77,77,207/- WAS MADE FROM THE VALUE OF BUILDING. THE LD CIT(A) INFERRED IT TO BE AGAINST TH E ASSESSEE AS ASSESSEE WAS NOT ABLE TO RECONCILE THE FIGURE OF ` .1,17,77,207/- WITH THE AMOUNT OF COMPENSATION OF ` .1,30,00,000/- RECEIVED BY EXCALIBUR. HOWEVER, WE FIND THAT COST OF BUILDING AS APPEARING A S ON 1.4.2006 AS PER PAPER BOOK PAGE 140 IS ` .1,17,77,207/- AND ON RECEIPT OF ITA NO1863/DEL/2012 18 COMPENSATION OF ` .1,30,00,000/- THE ASSESSEE REDUCED THE TOTAL AMOUNT FROM BUILDING ACCOUNT IN SUBSEQUENT YEAR AS I S APPARENT FROM PAPER BOOK PAGE 139. THEREFORE, THERE IS NOTHING WRO NG IN IT AS WHEN AN ASSET IS SOLD FOR AN AMOUNT WHICH EXCEEDS THE COST PRI CE, THE ONLY AMOUNT WHICH CAN BE REDUCED FROM THE COST PRICE IS MA XIMUM UP TO COST PRICE APPEARING IN THE BALANCE SHEET. THEREFORE, UPHOLDING OF DISALLOWANCE RELYING UPON THESE FINDINGS IS NOT CORREC T. 20. IN VIEW OF THESE FACTS AND CIRCUMSTANCES WE ALLOW G ROUND NO.2. 21. REGARDING THIRD GROUND OF APPEAL WE FIND THAT N O FORCEFUL ARGUMENTS WERE ADVANCED BY THE LD AR AND LD CIT(A) H AS VERY ELABORATELY DEALT WITH THE ISSUE AND HAD RIGHTLY UPHE LD THE DISALLOWANCE AND WE DO NOT FIND ANY INFIRMITY IN THE SAME. THEREFORE, THIS GROUND OF APPEAL IS DISMISSED. 22. IN VIEW OF THE ABOVE, THE APPEAL FILED BY THE A SSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. 23. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F JANUARY, 2014. SD/- SD/- (RAJPAL YADAV) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.31.1.2014. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). ITA NO1863/DEL/2012 19 DATE OF HEARING 30.12.2013 DATE OF DICTATION 28.1.2014 DATE OF TYPING 29.1.2014 DATE OF ORDER SIGNED BY 31.1.2014 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.