Shri Nandubhai Nathabhai Patel, Ahmedabad V. The Income tax Officer,Ward-11(2), Ahmedabad

ITA 2109/AHD/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 89451 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 24-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 26-08-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ROOP CHAND
• Keywords: Capital asset; Cost of acquisition; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH AHMEDABAD BEFORE S/SHRI G. D. AGRAWAL, V.P. AND RAJPAL YADAV , J.M. ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 SHRI NANDUBHAI NATHABHAI PATEL, 82-I, GAMBHA SHERI, NR. KRISHI BHAVAN, KOCHARAB, PALDI, AHMEDABAD. VS INCOME-TAX OFFICER, WARD-11(2), AHMEDABAD. (APPELLANT) (RESPONDENT) PA NO.AFXPP 6614 D APPELLANT BY MS. URVASHI SHODHAN, AR RESPONDENT BY SHRI ROOPCHAND, SR. DR DATE OF HEARING: 24/4/2015 DATE OF PRONOUNCEMENT: 15/5/2015 O R D E R PER SHRI RAJPAL YADAV, JUDICIAL MEMBER. THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF CIT(A) DATED 22 ND JUNE, 2011 PASSED FOR AY 2008-09. THE SOLITARY SUBSTANTIAL GROUND OF APPEAL RAISED BY THE ASSESSEE IS THAT LD. CIT(A) HAS ERRED IN CONFIRMING THE COMPUTATION OF SHORT-TE RM CAPITAL GAIN AT RS.25,65,800/- AS AGAINST RS. 2,88,415/- COMPUTED B Y THE ASSESSEE. ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INDIVIDUAL. HE HAS FILED HIS RETURN OF INCOME ON 26 TH MARCH, 2009 DECLARING TOTAL INCOME OF RS.50,970/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY AND NOTICE UNDER SECTION 143( 2) OF THE I.T. ACT, 1961 WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SC RUTINY OF THE ACCOUNTS IT REVEALED TO THE AO THAT ASSESSEE HAD SH OWN CAPITAL GAIN OF RS.2,88,415/-. IT EMERGES OUT FROM THE RECORD T HAT ASSESSEE HAD PURCHASED A PIECE OF AGRICULTURAL LAND BEARING SURV EY NO.334/1/2/1/2 IN REVENUE AREA THALTEJ, AHMEDABAD MEASURING 2675 S Q.MTRS. THIS PIECE OF LAND WAS PURCHASED ON 27 TH MARCH 2006 FOR A SUM OF RS.6,00,000/-. IT WAS SOLD ON 22 ND JANUARY, 2008 FOR A SUM OF RS.31,65,800/-. THE LAND SOLD BY THE ASSESSEE IS AN AGRICULTURAL LAND. THE ASSESSEE HAD COMPUTED SHORT-TERM CAPITAL GAIN O F RS.2,88,415/-. HE CLAIMED EXPENDITURE OF RS.28,77,315/-. THIS CLAI M WAS MADE ON ACCOUNT OF IMPROVEMENT MADE IN THE LAND. THE AO REJ ECTED THIS CLAIM ON THE GROUND THAT ASSESSEE FAILED TO SUBSTANTIATE THE ALLEGED EXPENDITURE INCURRED FOR IMPROVING THE LAND. 3. ON APPEAL THE LD. FIRST APPELLATE AUTHORITY HAS REAPPRECIATED THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONCURRED W ITH THE AO. THE ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 3 DISCUSSION MADE BY THE LD. CIT(A) IN PARAGRAPH 2.3 & 2.4 IS WORTH NOTING IN THIS REGARD. 2.3 THE APPELLANT DURING THE COURSE OF APPELLATE PROCEEDINGS, HAD CLAIMED THE EXPENDITURE OF RS.1,05,000/- ON ACCOUNT OF STAMP DUTY OF RS.70,000/- AND ADVOCATE FEES RS.35,000/- AS PART OF COST OF LAND. HOWEVER, NO ANY EVIDENCE WAS PRODUCED AS TO FROM WH ERE THESE EXPENSES WERE INCURRED. THERE IS NO ANY BILL OR MON EY RECEIPT FOR THE PAYMENT OF ADVOCATE FEES. THEREFORE, THESE EXPENSES CANNOT BE ALLOWED AS PART OF THE COST OF LAND. THE APPELLANT HAD ALSO CLAIMED RS. 7,12,315/- AS EXPENSES INCURRED OUT OF HIS OWN ACCOUNT AND CLAIMED THE EXPENSES OF RS.7,50,000/- AND RS.7,10,0 00/- AS INCURRED RESPECTIVELY BY HIS TWO SONS SHRI NITIN PATEL AND S HRI HIMANSHU PATEL. THESE EXPENSES WERE STATED TO BE INCURRED TO WARDS DRAINAGE, BORE, MATIPURAN, FERTILIZERS AND SMALL UNIT OF DWEL LING UNIT. IT IS NOT ACCEPTABLE THAT ANY EXPENDITURE WAS INCURRED FOR AN Y DWELLING UNIT AS THERE IS NO REFERENCE OF SALE OF ANY DWELLING UNIT OR CONSTRUCTION OF SUCH DWELLING UNIT IN THE SALE DEED DATED 22.01.200 8. THE CLAIM OF SO CALLED EXPENSES INCURRED TOWARDS DRAINAGE, BORE, MA TIPURAN AND FERTILIZERS WERE NOT MADE BEFORE THE AO AND NO ANY BILLS OR VOUCHERS FOR THESE EXPENSES WERE EVER PRODUCED BEFORE THE AO OR DURING THE APPELLATE PROCEEDINGS. IT IS AN ENTIRELY NEW CLAIM TO REDUCE THE INCIDENCE OF TAX AND ARE NOT ALLOWABLE IN ABSENCE O F ANY SUPPORTING EVIDENCE. THE TOTAL CLAIM MADE DURING THE APPELLATE PROCEEDINGS IS FOR RS.22,77,315/- (RS.70,000/- STAMP DUTY + RS.35, 000/- ADVOCATE FEES + RS.7,12,315/- EXPENSES INCURRED OUT OF OWN A CCOUNT + RS.7,50,000/- EXPENSES INCURRED BY HIS SON NITIN PA TEL + RS.7,10,000/- EXPENSES INCURRED BY HIS SON HIMANSHU PATEL) WHEREAS IN THE CONCLUDING PARA, THE CLAIM WAS MADE FOR RS.28,77,315/-. I HAVE GONE THROUGH THE COPIES OF T HE BILLS AND VOUCHERS AND NOTICED THAT THE DETAILS ARE FOR THE E XPENDITURE OF RS.29,28,911/- OUT OF WHICH PAYMENTS FOR RS.28,48,8 15/- WERE STATED TO BE MADE. OUT OF THE TOTAL EXPENSES OF RS.29,28,9 11/- THE EXPENSES OF RS.6,00,000/- WERE FOR THE COST OF LAND AND THER E IS NO DISPUTE ABOUT IT, THE EXPENSES OF RS.70,000/- WERE STATED T O BE INCURRED ON STAMP DUTY (NO SOURCE OF INCURRING OF EXPENSES) RS. 35,000/- FOR ADVOCATE FEES (NO BILL OR MONEY RECEIPT OR NO SOURC E OF EXPENDITURE), ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 4 RS.1,55,750/- WERE STATED TO BE INCURRED FOR FERTIL IZER AND MATIPURAN AND CONSTRUCTION OF WALL AND GATE (NO BILLS OR VOUC HERS AND NO ANY DETAILS OF DATES OF EXPENDITURE AND SOURCE OF EXPEN DITURE). THE REST OF THE EXPENSES OF RS.20,68,161 (AS PER THE DETAILS OF 43 BILLS) ARE RELATING TO THE CONSTRUCTION RELATED MATERIAL AND T HE SAME CANNOT BE ALLOWED AS EXPENSES INCURRED FOR IMPROVEMENT OF THE LANDED PROPERTY. I HAVE TRIED TO EXAMINE THE BILLS AND VOU CHERS OF THESE EXPENSES FILED BEFORE THE ASSESSING OFFICER AND COP IES ALSO FILED BEFORE ME. IT WAS NOTICED THAT THE SAME WERE ONLY R ELATING TO CONSTRUCTION MATERIAL AND RELATED LABOUR. FROM THE COPIES OF 43 BILLS FILED. IT WAS NOTICED THAT THE EXPENSES ARE RELATIN G TO ELECTRIC WORK, WOODEN LABOUR, COLOUR WORK, POLISH WORK, FLOORING W ORK, STEEL BARS, ANGLES, WOOD, CERAMICS, GHANA TEAK, PIPES AND HANDW ARE AND SO ON. NOT A SINGLE BILL IS RELATING TO IMPROVEMENT OF THE LAND. THESE EXPENSES ARE MAINLY SEEN TO BE FOR THE FINISHING WO RK OF ANY BUILDING. FROM THE EXAMINATION OF THESE EXPENSES IT CAN BE IN FERRED THAT THE EXPENSES ON THE WHOLE BUILDING WERE NOT LESS THAN A CRORE OF RUPEES AND SUCH BUILDING WAS NOT FOUND CONSTRUCTED ON THE LAND SO SOLD. THESE EXPENSES MAY BE RELATING TO ANY OTHER BUILDIN G OF ASSESSEES SONS. THUS, THESE EXPENSES INCURRED ON CONSTRUCTION MATERIAL AND RELATED LABOUR CANNOT BE LINKED TO THE LAND SOLD AN D CANNOT BE ALLOWED AS IMPROVEMENT EXPENSES OF THE LAND. LIKEWI SE THE EXPENSES OF RS.70,000/- STATED TO BE INCURRED ON ST AMP DUTY (NO SOURCE OF INCURRING OF EXPENSES), RS.35,000/- FOR A DVOCATE FEES (NO BILL OR MONEY RECEIPT OR NO SOURCE OF EXPENDITURE) AND RS.1,55,750/- STATED TO BE INCURRED FOR FERTILIZER AND MATIPURAN AND CONSTRUCTION OF WALL AND GATE (NO BILLS OR VOUCHERS AND NO ANY DETA ILS OF DATES OF EXPENDITURE AND SOURCE OF EXPENDITURE) CANNOT BE AL LOWED FOR THE REASONS MENTIONED AGAINST THEM IN BRACKET. IT IS AL SO TO BE MENTIONED HERE THAT THE LAND WAS PURCHASED AND SOLD BY THE AP PELLANT. THE EXPENSES INCURRED BY HIS SONS ON THE CONSTRUCTION O F ANY DWELLING UNITS CANNOT BE ALLOWED TO THE APPELLANT IN THE NAM E OF IMPROVEMENT EXPENSES. 2.4 CONSIDERING THE ABOVE DISCUSSION, IT IS HELD TH AT THE ASSESSING OFFICER HAD CORRECTLY COMPUTED THE SHORT TERM CAPIT AL GAIN OF RS.25,65,800/- ON ACCOUNT OF SALE OF LAND BY THE AP PELLANT. THE COST OF THE LAND FOR RS.6,00,000/- ARE THE ONLY ALLOWABL E EXPENSES FOR THE DETAILED REASONS DISCUSSED IN PARA 2.2 AND PARA 2.3 ABOVE. THE ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 5 FINDING OF THE AO WITH REFERENCE TO COMPUTATION OF SHORT TERM CAPITAL GAIN OF RS.25,65,800/- IS HEREBY SUSTAINED AND THE ADDITION SO MADE TO THE TOTAL INCOME IS CONFIRMED. ALL THE GROUNDS O F APPEAL ARE DISMISSED. 4. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. SECTION 48 OF THE I. T. ACT, 1961 PROVIDES THE MODE OF COMPUTATION OF THE CAPITAL GAIN. THIS S ECTION CONTEMPLATES THAT THE INCOME CHARGEABLE UNDER THE H EAD CAPITAL GAIN, SHALL BE COMPUTED, BY DEDUCTING FROM THE FU LL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS - (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVEL Y IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. ACCORDING TO THE ASSESSEE THE EXPENDITURE INCURRED FOR STAMP DUTY, ADVOCATES FEES, FALLS WITHIN SUB-CLAUSE (1) OF SEC TION 48 I.E. IT IS CONNECTED WITH TRANSFER OF THE CAPITAL ASSETS. SHE CONTENDED THAT A SUM OF RS.70,000/- WAS INCURRED TOWARDS STAMP DUTY AND RS.35,000/- WAS PAID TOWARDS ADVOCATES FEES. THE OTHER SUMS HA VE BEEN INCURRED FOR IMPROVEMENT OF THE ASSET. THE LD. COUN SEL FOR THE ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 6 ASSESSEE HAS REITERATED THE STAND OF THE ASSESSEE C ANVASSED BEFORE THE LD. FIRST APPELLATE AUTHORITY. SHE TOOK US TO P ARAGRAPH 2.1 OF CIT(A) S ORDER WHERE SUBMISSIONS OF THE ASSESSEE HAVE BEE N REPRODUCED. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DER OF CIT(A). 6. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES WE ARE OF THE VIEW THAT LD. FIRST APPELLATE AUTHORITY HAS MAD E A DETAILED ANALYSIS OF EACH ITEM OF EXPENDITURE CLAIMED BY THE ASSESSEE TOWARDS THE IMPROVEMENT OF THE ASSET AS WELL AS INCURRED IN CON NECTION WITH THE TRANSFER. IT IS TO BE APPRECIATED THAT ASSESSEE HAS CLAIMED EXPENSES OF RS.1,55,750/- INCURRED TOWARDS FERTILIZER AND MA TIPURAN. THE TOTAL LAND IS MEASURING 2675 SQ.MTRS. WHICH IS JUST EQUIV ALENT TO HALF ACRE OF LAND. EVEN SOMEBODY WANTS TO PUT WARMI-POST OR C OWDUNG AS FERTILIZER IT CANNOT COST RS.1,55,750/-. THE LAND H AS BEEN SOLD AS AN AGRICULTURAL PURPOSE. THIS IS HIGHLY EXAGGERATED AM OUNT WHICH HAS BEEN CLAIMED BY THE ASSESSEE WITHOUT SUBMITTING ANY EVIDENCE. SIMILARLY THE ASSESSEE HAS CLAIMED THAT HE MUST HAV E FILLED THE LAND WITH SAND FOR LEVELING PURPOSES THOUGH NO DIRECT EV IDENCE HAS BEEN PLACED ON RECORD. THE ASSESSEE COULD ONLY PRODUCED HIS ACCOUNT AS WELL AS ACCOUNT OF HIS SONS WHEREIN THEIR BOOKS, TH EY HAVE CLAIMED ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 7 INCURRED EXPENDITURE BUT THE ASSESSEE COULD NOT BRI NG ANY DEMONSTRATIVE EVIDENCE EXHIBITING THAT SOME PHYSICA L CHANGES WERE BROUGHT IN THE ASSET. CONSIDERING THE WELL REASONED FINDING OF THE CIT(A) VIS--VIS THE CLAIM MADE BY THE ASSESSEE, WE ARE OF THE VIEW THAT ENDS OF JUSTICE WOULD MEET IF A SUM OF RS.1,50 ,000/- IS ALLOWED TO THE ASSESSEE ON AN ESTIMATE BASIS FOR LEVELING AND PUTTING SOME FERTILIZER ETC. TOWARDS IMPROVEMENT OF THE ASSET. T HE LD. AO SHALL RECOMPUTED THE CAPITAL GAIN AFTER ALLOWING THE IMPR OVEMENT COST OF RS.1,50,000/- TO THE ASSESSEE. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PAR TLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/5/2015 SD/- SD/- (G. D. AGRAWAL) VICE PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE ITA NO.2109/AHD/2011 ASST. YEAR 2008-09 8 BY ORDER DY. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 12/5/2011 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER:13/5/2011 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: