M/S.HOLTEX ENGINEERING COMPANY PRIVATE LIMITED (NOW MERGED WITH A.T.E. PRIVATE LTD), MUMBAI V. DCIT CIRCLE- 2(1)(2), MUMBAI

ITA 2201/MUM/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5363 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2013-2014
• Appeal Filed On: 09-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE HONBLE JUSTICE(R) SHRI P.P.BHATT, PRESIDENT AND G.S. PANNU, VICE PRESIDENT ITA NO.2201/MUM/2018 M/S. HOLTEX ENGG. COMPANY PVT LTD., (NOW MERGED WITH A.T.E PVT LTD) 43, DR. V.B. GANDHI MARG, FORT, MUMBAI. : (A.Y : 2013-2014) DCIT -2(1)(2), MUMBAI PAN NO.AABCH 0699 C (APPELLANT) VS . (RESPONDENT) APPELLANT BY : SHRI HITESH JAIN, AR RESPONDENT BY : SHRI SAURABH KUMAR RAI, DR DATE OF HEARING : 15/04/2019 DATE OF PRONOUNCEMENT : 31/05/2019 O R D E R PER G.S. PANNU, VP : THE CAPTIONED APPEAL FILED BY THE ASSESSEE PERTAIN ING TO ASSESSMENT YEAR 2013-14 IS DIRECTED AGAINST AN ORDE R PASSED BY CIT(A)-4, MUMBAI DATED 5.1.2018, WHICH IN TURN ARIS ES OUT OF AN ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 25.2.2016. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUND OF APPEAL: THE CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF TH E AO IN DISALLOWING INDEXED COST OF IMPROVEMENT OF RS.23,13 ,329/- WHILE COMPUTING LONG TERM CAPITAL GAIN. ON THE FAC TS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE DISAL LOWANCE OF 2 2201/MUM /2018 A.Y. 2013-14 INDEXED COST OF IMPROVEMENT OF RS.23,13,329/- OUGHT TO BE DELETED. 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUFACTURING, ASSEMBLIN G, SELLING, ERECTING, SERVING AND OTHERWISE DEAL IN METALLIC CA RD CLOSING FOR ALL COUNTS OF FIBRES FOR THE PROCESSING OF COTTON, WOOL AND COMPLETE RANGE OF SYNTHETIC AND MAN-MADE FIBRES AND OTHER TEXTILE BRIEFS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER NOTICED THAT THE ASSESSEE HAS SHOWN CAPITAL ON SALE OF LAND AND CLAIMED EXPENDITURE UNDER THE HEAD TRANSFER COST, INDEXED COT OF ACQUI SITION AND INDEXED COST OF IMPROVEMENT. THE ASSESSING OFFICER REQUIR ED THE ASSESSEE TO FURNISH DOCUMENTARY PROOF IN SUPPORT OF THE CLAIM. THE ASSESSEE FURNISHED THE COST OF IMPROVEMENT BEFORE THE ASSESS ING OFFICER AND ALSO SUBMITTED THAT EXPENDITURE WAS INCURRED PRIOR TO FI NANCIAL YEAR 1996-97 I.E. 20 YEARS AGO AND, THEREFORE, IT WAS DIFFICULT TO GATHER THE SAME. AFTER PERUSING THE SAME, THE ASSESSING OFFICER OBSE RVED THAT SOME OF THE EXPENDITURE ARE NOT SUPPORTED WITH DOCUMENTARY EVIDENCE AND IN SOME CASES, THEY COULD NOT BE CATEGORISED AS COST O F IMPROVEMENT. THE ASSESSING OFFICER ACCEPTED THE ACCEPTED THE COS T OF ACQUISITION, BUT HOWEVER, THE ASSESSING OFFICER ALSO OBSERVED THAT O UT OF TOTAL COST OF IMPROVEMENT (WITHOUT INDEXATION), THE ASSESSEE HAS CLAIMED RS.3,15,423/- IN A.Y. 2012-13 AND RS.11,52,599/- IN A.Y. 2013-14 ON PRORATE BASIS AND, THEREFORE, APPLYING THE SAME RAT IO, THE ASSESSING OFFICER DISALLOWED RS.23,13,329/- OF INDEXED COST O F ACQUISITION AND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 4. BEING AGGRIEVED BY THE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CI T(A). 5. BEFORE THE CIT(A), THE ASSESSEE REITERATED THE S UBMISSIONS MADE BEFORE THE ASSESSING OFFICER BUT COULD NOT FURNISH THE SUPPORTING 3 2201/MUM /2018 A.Y. 2013-14 BILLS/VOUCHERS IN RELATION TO THE CLAIM OF COST OF IMPROVEMENT. HENCE, THE CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OF FICER. 6. BEFORE US, LD A.R. SUBMITTED THAT DURING THE F.Y . 1982-83, THE ASSESSEE HAD PURCHASED LAND MEASURING 1,37,594 SQ. MTRS SITUATED AT CHANDRAPURA, TALUKA HALOL, DIST: PANCHAMAHAL FOR A TOTAL CONSIDERATION OF RS.9,40,297/-. FOR IMPROVEMENT OF THE SAID LAND , THE ASSESSEE HAD INCURRED RS.14,68,066/- FROM F.Y. 1982-83 TO 1996-9 7 AND CAPITALISED THE SAME TO FIXED ASSETS. IT WAS SUBMITTED THAT SI NCE THE EXPENSES INCURRED WAS PRIOR TO 20 YEARS, IT IS DIFFICULT TO COLLATE THE BILLS AND VOUCHERS. IT WAS SUBMITTED THAT TO SUBSTANTIATE TH E CLAIM THAT THESE EXPENSES WERE INCURRED, THE ASSESSEE FURNISHED THE AUDITED BALANCE SHEET FOR F.Y. 1982-83 TO 2012-13, WHEREIN, THE EXP ENSES INCURRED ON IMPROVEMENT TO LAND WERE DULY CAPITALISED WITH COST OF LAND AND DULY AUDITED BY THE AUDITOR AND THE SAME ALSO WAS NOT DI SPUTED BY THE INCOME TAX DEPARTMENT IN ANY OF THE FINANCIAL YEAR. HENCE, HE REQUESTED TO ALLOW THE INDEXED COST OF IMPROVEMENT OF RS.23,13,329/-. 7. ON THE OTHER HAND, LD D.R. SUPPORTED THE ORDERS OF LOWER AUTHORITIES AND FURTHER SUBMITTED THAT THE ASSESSEE HAS NOT BEEN ABLE TO FURNISH THE BILLS AND VOUCHERS IN SUPPORT OF THE COST OF IMPROVEMENT OF THE LAND. THEREFORE, HE URGED TO DISMISS THE AP PEAL OF THE ASSESSEE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORD OF THE CASE. WE FIND THAT THE ASSESSEE HAS INCURRED T HE AMOUNT TOWARDS COST OF IMPROVEMENT OF THE LAND FROM THE FINANCIAL YEAR 1982-83 TO 1996-97 AND THE ASSESSMENT YEAR INVOLVED IN THE YEA R UNDER CONSIDERATION IS 2013-14. THE EXPENDITURE WAS BOOK ED IN ASSESSEES BOOKS OF ACCOUNT, WHICH WAS AUDITED BY THE AUDITORS AND NO DISCREPANCIES WERE POINTED OUT. THE CONTENTION OF T HE ASSESSEE IS THAT THE EXPENDITURE WAS INCURRED MORE THAN 20 YEARS AGO AND IT IS DIFFICULT TO COLLATE THE SAME NOW. WE ALSO FIND THAT THE EXI STING PROVISIONS OF 4 2201/MUM /2018 A.Y. 2013-14 SECTION 55 PROVIDE THAT FOR COMPUTATION OF CAPITAL GAINS, AN ASSESSEE SHALL BE ALLOWED DEDUCTION FOR COST OF ACQUISITION OF THE ASSET AND ALSO COST OF IMPROVEMENT, IF ANY. IN THIS CASE, THE ASS ESSING OFFICER DID NOT ALLOW THE CLAIM ON THE GROUND THAT THE ASSESSEE HAS CLAIMED RS.3,15,423/- IN A.Y. 2012-13 AND RS.11,52,599/- IN A.Y. 2013-14 ON PRORATE BASIS. HOWEVER, NO WHERE, THE REVENUE AUTH ORITIES HAVE NOT CONTROVERTED THE EXPENDITURE INCURRED FOR THE IMPR OVEMENT OF LAND AND DOUBTED THE AUDIT REPORT FURNISHED BY THE ASSESSEE DURING THE PAST YEARS. SINCE THE MATTER RELATES TO MORE THAN 20 YE ARS AGO, AT THE MOMENT, IT IS NOT POSSIBLE ON THE PART OF THE ASSES SEE TO COLLECT THE BILLS AND VOUCHERS PERTAINING TO THE EXPENDITURE INCURRED FOR IMPROVEMENT OF LAND FROM F.Y. 1981-82 TO 1996-97. WE ALSO FIND TH AT THE ASSESSEE HAS PRODUCED BEFORE US THE SERIES OF ORDERS OF THIS TRI BUNAL, WHEREIN, ON SIMILAR FACTS, THE TRIBUNAL HAS ALLOWED THE COST OF EXPENDITURE INCURRED FOR IMPROVEMENT OF LAND WHICH WERE MORE THAN 20 YEA RS AGO. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES OF THE CASE, WE INCLINE TO ALLOW THE GROUND OF THE ASSESSEE AND DIR ECT THE ASSESSING OFFICER TO DELETE THE ADDITION OF RS.23,13,329/- TO WARDS COST OF IMPROVEMENT OF LAND. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . PRONOUNCED ON 31/05/2019 SD/- SD/- (JUSTICE P.P. BHATT) PRESIDENT (G.S. PANNU) VICE PRESIDENT MUMBAI, DATE : 31/05/2019 B.K.PARIDA, SR.PS 5 2201/MUM /2018 A.Y. 2013-14 COPY TO : 1) THE APPELLANT: M/S. HOLTEX ENGG. COMPANY PVT LTD ., (NOW MERGED WITH A.T.E PVT LTD) 43, DR. V.B. GANDHI MARG, FORT, MUMBAI 2) THE RESPONDENT: DCIT -2(1)(2), MUMBAI 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, F BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI