M/s. Sundaram Theatre, Madurai V. ACIT, Madurai

ITA 2156/CHNY/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96502 (ITAT-CHENNAI)
• Duration Of Justice: 3 year(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2015
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 23-11-2015
• Assessment Year: 2003-2004
• Appeal Filed On: 27-11-2012
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: T VASUDEVAN
• Keywords: Capital asset; Cost of acquisition
• Section: 131

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D' BENCH : CHENNAI , . ! ' , # '$ % [ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER ] ./ I.T.A.NO.2156/MDS/2012 / ASSESSMENT YEAR : 2003-04 M/S SUNDARAM THEATRE 141 KK NAGAR MADURAI 625 020 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE II, MADURAI [PAN AAAAS 9394 J ] ( &' / APPELLANT) ( ()&' /RESPONDENT) ./ I.T.A.NO.2187/MDS/2012 / ASSESSMENT YEAR : 2003-04 THE ASSTT. COMMISSIONER OF INCOME-TAX CIRCLE II, MADURAI VS. M/S S UNDARAM THEATRE 141 KK NAGAR MADURAI 625 020 ( &' / APPELLANT) ( ()&' /RESPONDENT) ASSESSEE BY : SHRI T. VASUDEVAN, ADVOCATE DEPARTMENT BY : SHRI A.V. SREEKANTH, JCIT / DATE OF HEARING : 23 - 1 1 - 2015 / DATE OF PRONOUNCEMENT : 11 - 12 - 2015 * / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE CROSS APPEALS BY THE ASSESSEE AND THE REV ENUE ARE DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, MADURAI, DATED 7.9.2012 FOR ASSESSMENT YEAR 2003-04. ITA NO.2156 &2187/12 :- 2 -: 2. FIRST WE TAKE UP ASSESSEES APPEAL. THE FIRST GRO UND IS WITH REGARD TO DISALLOWANCE OF COMMISSION PAYMENT OF ` 2,32,000/- OUT OF ` 3,12,000/- ON SALE OF PROPERTY. 3. THE ASSESSEE SOLD A PROPERTY FOR A CONSIDERATION O F ` 1.56 CRORES AND SAID TO BE PAID BROKERAGE OF ` 3,12,000/-. THE ASSESSEE HAS NOT PRODUCED ANY DETAILS REGARDING THE NAME AND ADDRESS OF THE PERSON TO WHOM THE BROKERAGE HAS BEEN PAID. IN THE ABSENCE OF PROOF OF PAYMENT, THE ASSESSING OFFICER DISALLOWED THE EN TIRE BROKERAGE F ` 3,12,000/-. ON APPEAL BEFORE THE CIT(A), THE ASSE SSEE STATED THAT THE BROKERAGE WAS PAID TO FOUR PERSONS VIZ. (I)R. M UTHU KAMATCHI, (II)K. GANESAN, (III)K MUTHIAH AND (IV) M. SELVAM. AS PER THE RECEIPTS, THEY ADMITTED TO HAVE RECEIVED A SUM OF ` 80,000/- EACH AS BROKERAGE IN SUNDARAM THEATRE SALE TRANSACTION. THE CIT(A) F ORWARDED THIS INFORMATION TO THE ASSESSING OFFICER AND CALLED FOR REMAND REPORT. THE ASSESSING OFFICER VIDE HIS REMAND REPORT DATED 11.1.2012 SUBMITTED THAT HE HAS ISSUED SUMMONS U/S 131 TO AL L THE FOUR PERSONS IN THEIR GIVEN ADDRESSES AND THE SAME WERE RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH THE ENDORSEMENT NO SUCH AD DRESS. THEREAFTER, AN INSPECTOR OF THE DEPARTMENT WAS DEPUTED TO VERI FY WHETHER THE PERSONS CONCERNED RESIDE IN THE GIVEN ADDRESS. IT WAS REVEALED THAT NO SUCH PERSONS OR ADDRESS WERE EXISTED. IN VIEW O F THE ABOVE, THE ITA NO.2156 &2187/12 :- 3 -: EXISTENCE OF THE PERSONS AND CLAIM OF THE EXPENSES WERE FOUND TO BE NON-GENUINE BY THE ASSESSING OFFICER. LATER, A COP Y OF THE REMAND REPORT WAS FORWARDED TO THE ASSESSEE BY THE CIT(A) VIDE LETTER DATED 23.1.2012. ONCE AGAIN, THE ASSESSEE VIDE LETTER DATED NIL SUBMITTED ON 22.2.2012 REITERATED THE CONTENTIONS THAT BROKER AGE WAS ACTUALLY PAID AND DUE TO LAPSE OF TIME AND CHANGE OF ADDRESS OF SUCH BROKERS POSTAL AUTHORITIES/IT AUTHORITIES COULD NOT REACH S UCH PERSONS. HE ENCLOSED LETTER ACKNOWLEDGING RECEIPT OF ` 80,000/- SAID TO HAVE BEEN RECEIVED FROM SHRI K. GANESAN, ONE OF THE ALLEGED B ROKERS. THE CIT(A) ONCE AGAIN CALLED FOR THE REMAND REPORT FROM THE AS SESSING OFFICER. THE ASSESSING OFFICER VIDE HIS LETTER DATED 22.6.20 12 SUBMITTED THAT IN ORDER TO VERIFY THE ABOVE CLAIM, SUMMON U/S 131 WA S ISSUED TO THE WITNESS AND STATEMENT U/S 131(1)(B) WAS RECORDED F ROM SHRI K. GANESAN. INITIALLY HE WAS QUESTIONED ABOUT THE NON -AVAILABILITY AT DOOR NO.10, KUMARAN STREET, SADHASIVAM NAGAR, MADUR AI, DURING THE ENQUIRY MADE ON 29.5.2011, SHRI GANESAN REPLIED THA T DURING THE YEAR 2002-03, HE RESIDED IN NO.10, KUMARAN STREET, SADAS IVAM NAGAR, MADURAI. LATER ON, HE SHIFTED HIS RESIDENCE TO 5/4 47 KUMARAN STREET, SADASIVA NAGAR MADURAI AND THEN SHIFTED TO 5/1/779, MARAIMALAI ADIGALAR THERU, SADASIVA NAGAR, MADURAI. HE ADMITT ED THAT DURING THE YEAR 2002-03 HE WAS AN AGENT WITH A FILM DISTRIBUTO R, MADURAI FOR WHICH HE WAS DRAWING A MEAGER MONTHLY SALARY. IN A DDITION TO THAT, ITA NO.2156 &2187/12 :- 4 -: HE WAS ALSO WORKING AS A BROKER FOR THE REAL ESTATE IN THE LOCAL AREA. HE HAS RECEIVED A SUM OF ` 80,000/- AS HIS SHARE OF BROKERAGE IN DIFFERENT INSTALLMENTS OVER A PERIOD OF THREE YEARS IN RESPECT OF SALE OF M/S SUNDARAM THEATRE. SHRI GANESAN WAS ALSO QUESTI ONED WHETHER HE WAS ASSESSED TO TAX. HE REPLIED THAT HE WAS NOT AS SESSED TO TAX AS HIS INCOME WAS BELOW TAXABLE LIMIT. ON THE BASIS OF TH E ABOVE, THE CIT(A) ALLOWED THE CLAIM OF ` 80,000/- TOWARDS BROKERAGE PAYMENT AND DISALLOWED THE BALANCE AMOUNT OF `2,32,000/-. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE SUBMITTED THAT TH E INITIAL BURDEN CAST UPON THE ASSESSEE WAS DISCHARGED BY T HE ASSESSEE AND THE ENQUIRY WAS MADE AFTER A LONG TIME SUBSEQUENT T O THE PAYMENT OF BROKERAGE AND BEING SO, IT WAS UNABLE TO DELIVER TH E NOTICE ISSUED BY THE DEPARTMENT BY THE POSTAL AUTHORITIES. NON-AVAI LABILITY OF THE RECIPIENTS CANNOT BE A REASON TO DISALLOW THE CLAIM OF BROKERAGE. ACCORDING TO HIM, ON SALE CONSIDERATION OF REVENUE ` 1.56 CRORES, PAYMENT OF BROKERAGE @ 2% IS VERY REASONABLE AND IT CANNOT BE DISALLOWED. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTA TIVE SUBMITTED THAT THERE IS NO EVIDENCE TO SHOW THAT TH ERE WAS PAYMENT OF ANY COMMISSION TO PARTIES OTHER THAN SHRI GANESAN W HO HAS CONFIRMED ITA NO.2156 &2187/12 :- 5 -: THE RECEIPT OF ` 80,000/- AS BROKERAGE. CONSIDERING THE FACTUAL POSITION, THE CIT(A) IS JUSTIFIED IN ALLOWING THE PAYMENT OF ` 80,000/- AS BROKERAGE AND DISALLOWING THE BALANCE PAYMENT. HE SUBMITTED THAT NO INTERFERENCE IN THE ORDER OF THE CIT(A) IS CALLED FOR. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL AVAILABLE ON RECORD. IN THIS CASE, THE CL AIM OF THE ASSESSEE IS THAT PAYMENT OF ` 3,12,000/- TOWARDS BROKERAGE ON SALE OF M/S SUNDARAM THEATRE. THE SAID PAYMENT HAS BEEN MADE TO FOUR PERSONS VIZ. (I)R. MUTHU KAMATCHI, (II)K. GANESAN, (III)K M UTHIAH AND (IV) M. SELVAM. THE DEPARTMENT SUMMONED THEM BY ISSUING NO TICE U/S 131 OF THE ACT. HOWEVER, ALL THE LETTERS ISSUED TO THE ABOVE PERSONS RETURNED UNSERVED BY THE POSTAL AUTHORITIES WITH AN ENDORSEMENT NO SUCH ADDRESS. LATER ON, THE ASSESSING OFFICER WAS ABLE TO TRACE ONLY ONE SHRI K. GANESAN WHO HAS GIVEN RECEIPT FOR ` 80,000/- AND THE SAME WAS ALLOWED BY THE DEPARTMENT. THE OTHER THRE E PERSONS CANNOT BE TRACED AND THERE IS NO IOTA OF EVIDENCE TO SHOW THAT PAYMENTS TOWARDS BROKERAGE WERE MADE TO THEM. THE ASSESSEE IS NOT ABLE TO PLACE ANY MATERIAL TO SHOW THAT THE OTH ER THREE PERSONS ACTUALLY RENDERED SERVICE TO THE ASSESSEE IN THE S ALE OF SUNDARAM THEATRE. BEING SO, IN OUR OPINION, THE ASSESSEE H AS NOT DISCHARGED THE INITIAL BURDEN CAST UPON IT FIRST TO PROVE THE GENUINENESS OF PAYMENT. THEREFORE, THE CIT(A) IS JUSTIFIED IN DIS ALLOWING THE PAYMENT ITA NO.2156 &2187/12 :- 6 -: OF BROKERAGE TO THREE PERSONS. ACCORDINGLY, WE HAV E NO HESITATION TO CONFIRM THE ORDER OF THE CIT(A) ON THIS ISSUE. 7. THE SECOND GROUND IS WITH REGARD TO DISALLOWANCE OF PAYMENT OF ` 10 LAKHS BEING THE AMOUNT PAID FOR ENABLING THE LE SSEE, SHRI RAJAN TO VACATE THE PREMISES AND HANDOVER VACA NT POSSESSION TO THE BUYER OF THE PROPERTY. 8. FACTS OF THE ISSUE ARE THAT THE ASSESSEE HAS DEDUC TED A SUM OF ` 10 LAKHS TOWARDS COMPENSATION TO BE PAID TO THE LE SSEE FOR VACATING THE PROPERTY. BEFORE THE ASSESSING OFFICE R, THE ASSESSEE FILED A COPY OF AFFIDAVIT FILED BEFORE THE COURT SAYING T HAT THE AMOUNT OF ` 10 LAKHS IS TO BE PAID TO THE LESSEE FOR HANDING OVER POSSESSION OF THE PROPERTY AND IT HAS CLAIMED AS COST OF TRANSFER U/ S 48 OF THE ACT. THE ASSESSING OFFICER DISALLOWED THE SAME. ON APPEAL, THE CIT(A) OBSERVED THAT THERE WAS NO CLAUSE IN THE SALE DEED TO THE EFFECT THAT A SUM OF ` 10 LAKHS WAS TO BE PAID BY THE BUYER TO THE LESSEE SHRI RAJAN ON BEHALF OF THE SELLER SO AS TO REDUCE THE SALE C ONSIDERATION BY THE EXTENT OF ` 10 LAKHS. ACCORDING TO THE CIT(A), THE ASSESSEE S CLAIM IS NOT SUPPORTED BY ANY MATERIAL EVIDENCE FOR CLAIM OF ` 10 LAKHS AS DEDUCTION FROM THE TOTAL SALE CONSIDERATION OF ` 1.56 CRORES. ACCORDINGLY, HE REJECTED THE CLAIM OF THE ASSESSEE . AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO.2156 &2187/12 :- 7 -: 9. THE MAIN PLEA OF THE LD. REPRESENTATIVE IS THAT THE PREMISES WAS EARLIER OCCUPIED BY ONE LESSEE, SHRI R AJAN AND FOR PEACEFUL HANDING OVER THE POSSESSION OF THE PROPERT Y THE ASSESSEE WAS FORCED TO PAY ` 10 LAKHS TO SHRI RAJAN AND IT SHOULD BE CONSIDERED AS A COST OF TRANSFER TO BE ALLOWED AS DEDUCTION WH ILE COMPUTING THE CAPITAL GAINS. 10. ON THE OTHER HAND, THE LD. DR SUBMITTED THAT THERE IS NO EVIDENCE OF PAYMENT OF ` 10 LAKHS TO THE LESSEE, SHRI RAJAN. FURTHER THERE IS ALSO NO CLAUSE IN THE SALE DEED FOR PAYMEN T OF ` 10 LAKHS FOR THE PURPOSE OF VACATING THE PREMISES. BEING SO, IT CANNOT BE CONSIDERED AS ALLOWABLE EXPENDITURE WHILE COMPUTING THE CAPITAL GAINS ARISING OUT OF THE SALE TRANSACTION. 11. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. UNDER SEC. 48 OF THE INCOME-TAX ACT, INCOM E CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY D EDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS , NAMELY (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER (II) THE COST OF ACQUISITION OF THE ASSET AND THE COST O F ANY IMPROVEMENT THERETO. THE CONTENTION OF THE ASSESSEES REPRESENTATIVE IS THAT THE PAYMENT TO SHRI RAJAN IS AN EXPENDITURE INCURRED WHOLLY AND EX CLUSIVELY IN ITA NO.2156 &2187/12 :- 8 -: CONNECTION WITH THE TRANSFER OF CAPITAL ASSET. HOW EVER, AS RIGHTLY POINTED OUT BY THE LD. DR, THE ASSESSEE IS NOT ABL E TO POINT OUT ANY SPECIFIC CONDITION IN THE SALE DEED OF THE PROPERTY TO SUGGEST THE PAYMENT OF ` 10 LAKHS TO SHRI RAJAN FOR VACATING AND HANDING OV ER THE PEACEFUL POSSESSION OF THE PROPERTY. BEING SO, IN THE ABSENCE OF ANY SUCH CLAUSE IN THE SALE DEED WARRANTING PAYMENT OF ` 10 LAKHS TO SHRI RAJAN, WE ARE NOT IN A POSITION TO APPRECIATE THE ARGUMENT OF THE LD. REPRESENTATIVE. ACCORDINGLY, THIS GROUND IS RE JECTED. 12. THE NEXT GROUND IS WITH REGARD TO DISALLOWANCE OF C LAIM OF THE ASSESSEE IN RESPECT OF PAYMENT OF ELECTRICITY DUES TO THE ELECTRICITY BOARD. 13. FACTS OF THIS ISSUE ARE THAT THE ASSESSEE CLAIMED PAYMENT OF ` 12.50 LAKHS TOWARDS ELECTRICITY CHARGES TO THE ELE CTRICITY BOARD OUT OF THE SALE CONSIDERATION RECEIVED ON SALE OF PROPERTY , SUNDARAM THEATRE. THE SAME WAS DISALLOWED BY THE LOWER AUTHORITIES. BEFORE THE CIT(A), THE ASSESSEE STATED THAT A SUM OF ` 24 LAKHS WAS WITHHELD BY THE BUYER TOWARDS PROBABLE DUES. THE ASSESSEE FILED A COPY OF THE COURT ORDER. AS PER THE COURT ORDER, SHRI SHEIK DAWOOD H AS PAID ` 10 LAKHS AND FOR THE BALANCE AMOUNT OF ` 8,60,000/- THE COURT HAS DIRECTED HIM TO FURNISH BANK GUARANTEE. SHRI SHEIK DAWOOD DURIN G THE FIRST APPELLATE PROCEEDINGS BEFORE THE CIT(A) STATED THAT HE DID NOT ITA NO.2156 &2187/12 :- 9 -: WITHHELD ` 24 LAKHS FROM THE FULL CONSIDERATION OF ` 1.56 CRORES. HE PROMISED TO PRODUCE THE DETAILS BEFORE THE CIT(A). ACCORDINGLY, TWO SUMMONS WERE ISSUED ON 30.9.2011 AND 2.12.2011 TO E NFORCE HIS ATTENDANCE BEFORE THE CIT(A). SHRI SHEIK DAWOOD TH OUGH RECEIVED THE NOTICE ON BOTH THE OCCASIONS, FAILED TO APPEAR BEFO RE THE CIT(A). DESPITE THE REMINDER GIVEN BY THE DEPARTMENT, HE DI D NOT APPEAR. BASED ON THE MATERIAL EVIDENCE ON THE FILE, THE CIT (A) CAME TO THE CONCLUSION THAT THERE WAS NO EVIDENCE TO SUGGEST TH AT ` 24 LAKHS WAS WITHHELD BY SHRI SHEIK DAWOOD. LATER, HE CALLED FO R THE REMAND REPORT FROM THE ASSESSING OFFICER. THE ASSESSING OFFICER SUBMITTED HIS REPORT TO THE CIT(A) VIDE HIS LETTER DATED 22.6.2012 AS UN DER: PAYMENT OF ELECTRICITY DUES: TO VERIFY THE ABOVE CLAIM LETTER DATED 2.4.2002 WAS ADDRESSED TO THE BANK MANAGER, DEPUTI NG THE INSPECTOR TO COLLECT DETAILS U/S 133(6). THE BANK ACUTHORITY HAS FILED A REPLY DATED 16.4.2012 STATING THA T THERE IS A DEPOSIT OF 12 LAKHS IN THE JOINT NAMES OF MR KA NDASAMY & MR SHIEK DAWOOD OPENED ON 12.8.2002. THE DEPOSIT IS STIL L LYING WITH THE BANK SINCE NEITHER THE DEPOSITOR WIT HDRAW THE AMOUNT NOR WAS THIS PAID TO ANY OTHER PARTY AS THER E IS A SUIT PENDING IN ADDITIONAL DISTRICT COURT, MADURAI. THE COMMISSIONER OF INCOME-TAX (APPEALS) DIRECTED TH E UNDERSIGNED THROUGH LETTER DATED 7.4.2011 TO VERIFY THE CLAIM OF ASSESSEES REPRESENTATIVE THAT ` 24,00,000/- WAS WITHHELD FROM THE FULL SALE CONSIDERATION OF ` 1,56,00,000/- TOWARDS PROBABLE DUES LIKE EB PAYMENT. SINCE FULL SALE VALU E HAS BEEN CONSIDERED FOR CAPITAL GAIN WORKING PURPOSE, ASSES SEE CLAIMED THAT ITS LIABILITIES TOWARDS PAYMENT OF EB DUES AS P ER COURT ORDER SHOULD ALSO BE CONSIDERED FOR ARRIVING AT COR RECT TAXABLE INCOME. THE BUYER OF THE PROPERTY MR SHIEK DAWOOD WAS SUMMONED ON 16.8.2011 THROUGH THE NOTICE DATED 4.8.2011. MR ITA NO.2156 &2187/12 :- 10 -: SHEIK DAWOOD DURING HIS APPEARANCE BEFORE THE UNDER SIGNED ON 23.8.2011 ORALLY MENTIONED THAT HE DID NOT WITHHOLD ` 24,00,000/- FROM FULL SALE CONSIDERATION OF ` 1,56,00,000/-. HE PROMISED TO PRODUCE THE DETAILS IN HIS NEXT APPEA RANCE ON 5.9.2011 AND BE AVAILABLE TO MAKE STATEMENT U/S 131. MR. SHEIKH DAWOOD DID NOT APPEAR ON 5.9.2011. TWO SUMMONS WERE ISSUED ON 30.09.2011 AND 21.12.2011 TO ENFORCE ATTENDANCE. BUT MR SHEIKH DAWOOD, THOUGH RECEIVE DTHE NOTICES ON BOTH THE OCCASIONS, FAILED TO APPEAR. DESPITE THE TELEP HONIC REMINDERS GIVEN BY THE INSPECTOR, HE DID NOT APPEAR . BASED ON THE MATERIAL AVAILABLE IN THE FILE, THERE IS NO EVI DENCE TO SUGGEST THAT ` 24,00,000/- WAS WITHHELD BY MR. SHEIK DAWOOD. THE COMMISSIONER OF INCOME TAX (APPEALS) AGAIN DIREC TED THE ASSESSING OFFICER THROUGH LETTER DATED 22.2.2012 TO PERSONALLY EXAMINE MR. SHEIKH DAWOOD ON THE ISSUES STATUS OF DEPOSIT WITH CENTRAL BANK OF INDIA. SUMMONS U/S 131 DATED 21.3.2011 WAS SERVED ON MR. SHEIKH DAWOOD. STILL , MR. SHEIKH DAWOOD DID NOT COMPLY WITH THE ORDER OF SUMM ONS. HOWEVER, IT IS CLEAR FROM THE LETTER GIVEN BY SENIO R MANAGER, CENTRAL BANK OF INDIA, TALLAKULAM BRANCH, MADURAI THA T THE DEPOSIT IS STILL IN THE BANK IN THE JOINT NAMES OF MR. KANDASAMY AND MR. SHEIKH DAWOOD. 14. SINCE THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE T HAT IT HAD RECEIVED ONLY ` 1.32 CRORES FROM SHRI SHEIK DAWOOD AND HE HAS ADMITTED THAT ENTIRE SALE CONSIDERATION WAS PAID TO THE ASSESSEE, THE ENTIRE SALE CONSIDERATION HAS TO BE CONSIDERED FOR COMPUTATION OF CAPITAL GAINS. IT WAS STATED THAT THE PAYMENT OF ` 12.50 LAKHS WAS PAID TO SHRI SHEIK DAWOOD TOWARDS ELECTRICITY CHARG ES. HOWEVER, THERE WAS NO EVIDENCE THAT THE ASSESSEE HAS NOT RECEIVED THE FULL CONSIDERATION OF ` 1.56 CRORES. THEREFORE, THE CIT(A) DISALLOWED TH E ITA NO.2156 &2187/12 :- 11 -: CLAIM OF THE ASSESSEE. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 15. THE LD. A.R REITERATED THAT THE AMOUNT OF ` 24 LAKHS WAS WITHHELD BY SHRI SHEIK DAWOOD AND IT RECEIVED ONLY THE BALANCE SALE CONSIDERATION AND THEREFORE, THE BALANCE SALE CONSI DERATION HAS TO BE CONSIDERED FOR COMPUTATION OF CAPITAL GAINS. 16. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, A SU M OF ` 12.50 LAKHS WAS PAID BY SHRI SHEIK DAWOOD TO ELECTRICITY BOAR D. THE ASSESSEE WAS NOT ABLE TO PINPOINT THE CLAUSE IN THE SALE DEE D WHICH AUTHORIZES SHRI SHEIK DAWOOD TO WITHHELD AN AMOUNT OF ` 12.50 ALKHS TOWARDS PAYMENT OF ELECTRICITY CHARGES TO THE ELECTRICITY B OARD. THERE MAY BE OUTSTANDING AMOUNT TOWARDS ELECTRICITY CHARGES ON T HE SAID PROPERTY BUT THERE IS NO CLAUSE SPECIFYING THAT THE ASSESSE E HAS TO PAY THAT DUES. IN SUCH CIRCUMSTANCES, IT IS NOT POSSIBLE TO HOLD THAT THE ASSESSEE HAS NOT RECEIVED FULL VALUE OF SALE CONSID ERATION FROM THE PURCHASER. BEING SO, WE ARE NOT IN A POSITION TO U PHOLD THE ARGUMENT OF THE LD. REPRESENTATIVE. ITA NO.2156 &2187/12 :- 12 -: 18. BEFORE US, THE LD. REPRESENTATIVE RELIED ON THE JUD GMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS BRADFORD TRADING CO. P. LTD. 261 ITR 222, WHEREIN IT WAS HELD THAT THE A MOUNT PAID BY THE ASSESSEE TO A THIRD PARTY TO SETTLE THE PREEXISTING CLAIMS AGAINST TRANSFER OF THE ASSET HAS ALSO LITIGATION EXPENSES CONSTITUTED EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY FOR TRA NSFER OF THE CAPITAL ASSET AND WAS DEDUCTIBLE IN COMPUTATION OF CAPITAL GAIN, THE AMOUNT REIMBURSED BY PURCHASER TO ASSESSEE TOWARDS SUCH C LAIM CONSTITUTED PART OF SALE CONSIDERATION BUT DEDUCTIBLE WHILE COM PUTING CAPITAL GAINS. WE ARE FULLY IN AGREEMENT WITH THE ABOVE DECISION O F THE JURISDICTIONAL HIGH COURT. IF A PRECONDITION IS IN THE SALE DEED TO BEAR ANY EXPENDITURE RELATING TO THE TRANSFER OR ANY OUTSTAN DING AMOUNT WHICH WAS ANNEXED TO THE PROPERTY THEN PAYMENT OF THAT AM OUNT HAS TO BE CONSIDERED AS COST INCURRED IN RELATION TO TRANSFER OF THE SAID PROPERTY. IN THE PRESENT CASE, IN RESPECT OF GIVING REPEATED OPPORTUNITY TO THE ASSESSEE BY THE LOWER AUTHORITIES TO PLACE NECESSAR Y EVIDENCE FOR BEARING THAT EXPENDITURE BY THE ASSESSEE ITSELF, T HE ASSESSEE FAILED AND AT ALL TIMES GIVEN A VERY EVASIVE REPLY. IN SU CH CIRCUMSTANCES, WE ARE NOT IN A POSITION TO ALLOW THE CLAIM OF THE AS SESSEE BY FOLLOWING THE ABOVE JUDGMENT. THIS GROUND OF THE ASSESSEE IS ALSO REJECTED. 19. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ITA NO.2156 &2187/12 :- 13 -: 20. NOW COMING TO THE REVENUES APPEAL I.T.A.NO. 2187/ MDS/2012, THE REVENUE RAISED A GROUND THAT THE CIT( A) ERRED IN GRANTING INDEXATION CLAIMED BY THE ASSESSEE ON THE GOODWILL WHILE DETERMINING THE CAPITAL GAINS. 21. FACTS OF THIS ISSUE ARE THAT THE ASSESSEE STATED T HAT GOODWILL HAS BEEN ACQUIRED DURING THE YEAR 1985-86 FOR ` 9 LAKHS AND COST OF INDEXATION WAS WORKED OUT AT ` 30,18,045/-. THE ASSESSING OFFICER WAS OF THE OPINION THAT GOODWILL BEING SELF-GENERAT ED ASSET, THERE CANNOT BE ANY INDEXATION OF COST AND THE COST OF AC QUISITION HAS TO BE CONSIDERED U/S 55(2)(A)(II) OF THE ACT. AGAINST T HIS, THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A) AND CONTESTED THAT UPTO 31.3.1985, THE OLD PARTNERS RAN THE BUSINESS ON THEIR OWN. ON 1.4.1985, THE NEW TWO PARTNERS MRS AR MUTHUNAYAKAM W/O AR ARIYAMUTHU AND MR AR SARAVANAN, S/O AR ARIYAMUTHU JOINED AS PARTNERS FOR 50% SHARES I.E 25% EACH. FOR THIS PURPOSE, GOODWILL OF THE PROPE RTY WAS VALUED FOR ` 18 LAKHS. SO IN ORDER TO JOIN AS PARTNERS WITH TH E OLD PARTNERS, IT WAS NECESSARY AND COMPULSORY TO PAY FOR GOODWILL BY THE NEW PARTNERS. THEREFORE, MRS AR MUTHUNAYAKAM AND SHRI AR SARAVANA N PAID ` 9 LAKHS FOR 50% SHARE. THIS PURCHASE PRICE OF GOODWI LL WAS CLAIMED AS DEDUCTION U/S 55(2) OF THE ACT. SUNDARAM THEATRE WAS SOLD ON 5.8.2002 AND THE GOODWILL EXISTED IN THE YEAR 1985 ITSELF, THEREFORE, ITA NO.2156 &2187/12 :- 14 -: THE FIRM HAD PAID GOODWILL VALUED AT ` 9 LAKHS. ACCORDINGLY, THE COST OF INDEXATION WAS DONE. THE CIT(A), CONSIDERING THE S ALE DEED DATED 5.8.2002 REGISTERED WITH SRO, MADURAI, OBSERVED THA T THERE WAS COST OF ACQUISITION TO GOODWILL AND ACCORDING TO HIM, CO ST OF INDEXATION TO HAS BE DONE. WHILE DOING SO, HE HAS GONE THROUGH T HE TRIAL BALANCE OF THE RELEVANT PERIOD OF M/S SUNDARAM THEATRE AND ALS O PARTNERSHIP DEED DATED 1.4.1985 AND ALLOWED THE CLAIM OF THE A SSESSEE. AGAINST THIS, THE REVENUE IS IN APPEAL BEFORE US. 22. WE HAVE HEARD BOTH PARTIES AND PERUSED THE MATERIAL ON RECORD. ADMITTEDLY, WHILE ADJUDICATING THE ISSUE, THE CIT(A) HAS CONSIDERED THE TRIAL BALANCE AND THE PARTNERSHIP DE ED CITED (SUPRA). IN OUR OPINION, THESE ARE FRESH DOCUMENTS AND THE ASSE SSING OFFICER HAS TO EXAMINE THE DOCUMENTS REGARDING THE PAYMENT OF G OODWILL AND IF THERE IS ACTUAL PAYMENT OF GOODWILL THEN THERE IS A COST TO GOODWILL AND THE CLAIM OF THE ASSESSEE HAS TO BE CONSIDERED ON EXAMINATION OF RECORDS RELATING TO THE PAYMENT OF GOODWILL. ACCOR DINGLY, THIS GROUND IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFIC ER FOR RECONSIDERATION OF THE ISSUE OF PAYMENT TOWARDS GOODWILL AND DECIDE IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE. ITA NO.2156 &2187/12 :- 15 -: 23. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 24. TO SUMMARIZE THE RESULT, THE APPEAL OF THE ASSESSE E IS DISMISSED AND THAT OF THE REVENUE IS ALLOWED FOR ST ATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 11 TH DECEMBER, 2015, AT CHENNAI. SD/- SD/- ( . ! ' ) (G. PAVAN KUMAR) # / JUDICIAL MEMBER ( ) (CHANDRA POOJARI) / ACCOUNTANT MEMBER / CHENNAI / DATED: 11 TH DECEMBER, 2015 RD ' #$ %$ / COPY TO: 1 . &' / APPELLANT 4. ( / CIT 2. ')&' / RESPONDENT 5. $*+ ' , / DR 3. ( () / CIT(A) 6. +/ 0 / GF