M/s. Amarnath Agarwal HUF, Saharanpur V. ITO, Saharanpur

ITA 299/DEL/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 3803 (ITAT-DELHI)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 25-05-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 20-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: J P CHANDRAKAR
• Assessee Lawyers: VIRYANT SINGH
• Keywords: Sale consideration of property below Jantri Value
• Section: 50C; 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A: NEW DELHI BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER ITA NO. 299/DEL/2010 ASSESSMENT YEAR: 2006-07 AMARNATH AGARWAL HUF, NARAYANPURI, COURT ROAD, SAHARANPUR. AAAHA9756K VS. ITO, WARD 2, SAHARANPUR. (APPELLANT) (RESPONDENT) APPELLANT BY : VIRYANT SINGH, CA RESPONDENT BY: J.P. CHANDRAKAR, SR. DR O R D E R PER I.P. BANSAL, J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 3.11.09 (WRONGLY WRITTEN AS 3.11.20 00) FOR A.Y. 2006-07. GROUNDS OF APPEAL READ AS UNDER: - 1. THE ORDER OF THE LD. CIT(A) IS BAD IN LAW. 2. THE LD. CIT(A) ERRED IN NOT ADMITTING THE CLAIM OF THE APPELLANT THAT SEC. 50C WAS NOT APPLICABLE. 3. THE LD. CIT(A) ERRED IN NOT ALLOWING THE DEDUCTI ON OF RS. 1,10,800/- IN RESPECT OF COURT CASES DURING THE SEVERAL YEARS AFT ER INDEXATION WHICH CAME TO RS. 4,08,139/- AND RS. 30,000/- TOWARDS TRA VELING. 4. THE LD. CIT(A) ERRED IN NOT ALLOWING THE CLAIM U /S 54F. 5. THE INTEREST CHARGED BY THE AO U/S 234A AND 234B IS BAD IN LAW. 2 ITA NO. 299/DEL/2010 6. THE APPELLANT CRAVES FOR LEAVE TO ADD, AMEND OR DELETE GROUNDS OF APPEAL. 2. AT THE TIME OF HEARING LD. AR DID NOT PRESS GROU ND NO. 2, 4 & 5. IN RESPECT OF GROUND NO. 1 AND 6 IT WAS SUBMITTED THAT THEY ARE GENERAL IN NATURE NEED NOT TO BE SEPARATELY ADJUDICATED. LD. AR PRES SED ONLY GROUND NO. 3. 3. THE ASSESSEE SOLD TWO SHOPS BEARING MUNICIPALITY NO. 2/2366/3 & 2/2366/4 WHICH WAS EARLIER OCCUPIED AS TENANT BY SH RI UMESH CHAND GANDHI S/O SHRI HANS RAJ GANDHI. THE ASSESSEE COULD GOT T HEM VACATED AFTER A LONG LITIGATION STARTED IN F.Y. 1977-78. IT IS THE CASE OF ASSESSEE THAT IN THE SAID LITIGATION PROCESS ASSESSEE HAD TO INCUR HUGE LEGAL EXPENSES AS WELL AS TRAVELING EXPENSES TO GET THE PROPERTY VACATED. RE FERENCE HAS BEEN MADE TO VARIOUS ORDERS OF THE COURTS WHICH ARE ALSO FILED I N THE PAPER BOOK. ON THE BASIS OF THOSE ORDERS IT IS THE CASE OF THE ASSESSE E THAT HE HAS TO INCUR HUGE EXPENDITURE ON LITIGATION AND TRAVELING WHICH SHOUL D BE CONSIDERED TO BE COST INCURRED BY THE ASSESSEE WITH INDEXATION BENEFIT FO R COMPUTATION OF CAPITAL GAIN. HOWEVER, ASSESSEE DOES NOT HAVE ANY EVIDENCE TO SHO W THAT ACTUALLY WHAT AMOUNT WAS PAID OR INCURRED ON SUCH LITIGATION EXPE NSES AND TRAVELING. WITH THE HELP OF CIRCUMSTANTIAL EVIDENCE WHICH IS IN THE SHAPE OF VARIOUS ORDERS OF JUDICIAL COURTS, IT IS BEING CLAIMED THAT THE EXPEN SES TO THE TUNE OF RS. 1,10,800/- WERE INCURRED TOWARDS COURT CASES AND TR AVELING EXPENSES WHICH IF THE BENEFIT OF INDEXATION IS GIVEN THE SAME WILL BE COSTING RS. 4,08,139/- AND RS. 30,000/- RESPECTIVELY. THE AO HAS DENIED SUCH CLAIM OF THE ASSESSEE ON THE GROUND THAT THE LITIGATION ENTERED INTO BY THE ASSESSEE WERE NOT INCURRED 3 ITA NO. 299/DEL/2010 WITH REFERENCE TO THE PROPERTY AS WHAT WAS SOLD BY THE ASSESSEE WAS VACANT SHOPS. LD. CIT(A) ALSO HAS REJECTED THE CLAIM OF T HE ASSESSEE ON SUCH GROUND. 4. AFTER NARRATING THE FACTS IT WAS SUBMITTED BEFOR E US THAT ACCORDING TO THE DECISION OF HONBLE KARNATAKA HIGH COURT THAT IN TH E CASE OF MRS. JUNE PERRET VS. ITO 298 ITR 268 THE EXPENSES INCURRED TOWARDS L ITIGATION AND TRAVELING EXPENSES WERE HELD TO BE CONSIDERED AS PART OF THE COST. IT IS THE CONTENTION OF THE ASSESSEE THAT IT HAD TO INCUR EXPENDITURE ON LI TIGATION FOR EVICTION OF THE OCCUPANT AND WITHOUT EVICTING THE OCCUPANT ASSESSEE COULD NOT GET THE HIGHER SALE PRICE AND AFTER CONSIDERING THE FACTS IT WAS H ELD THAT IN ABSENCE OF ANY DOUBT TO THE GENUINENESS OF THE CLAIM THE AMOUNT IN CURRED BY THE ASSESSEE TOWARDS LEGAL AND PROFESSIONAL TAX, EXECUTORS EXPEN SES IN ENGLAND AND INDIA AND THE COURT FEE EXPENSES WERE ALLOWABLE. 5. ON THE OTHER HAND, IT WAS SUBMITTED BY LD. DR TH AT THOSE EXPENDITURES COULD NOT BE ALLOWED AS THERE IS NO PROVISION IN TH E INCOME TAX FOR ALLOWANCE FOR SUCH EXPENDITURE. IT WAS FURTHER SUBMITTED THAT IN ANY CASE NO INDEXATION BENEFIT CAN BE GIVEN AS ASSESSEE IS NOT ABLE TO SUB MIT ANY EVIDENCE OF INCURRING SUCH EXPENDITURE. THUS, IT WAS PLEADED T HAT THE CLAIM OF THE ASSESSEE SHOULD NOT BE ADMITTED. 6. IN REPLY, IT WAS SUBMITTED BY LD. AR THAT YEAR W ISE EXPENDITURES HAVE BEEN INCURRED BY THE ASSESSEE AND THESE EXPENSES CA N BE CORRELATED WITH THE JUDICIAL ORDERS WHICH WERE PASSED DURING THOSE YEAR S. IT WAS SUBMITTED THAT THOUGH ASSESSEE DOES NOT HAVE THE DOCUMENTARY EVIDE NCE REGARDING INCURRING 4 ITA NO. 299/DEL/2010 OF SUCH EXPENDITURE BUT A COMPLETE LIST HAS BEEN MA DE OUT WITH THE HELP OF JUDICIAL ORDERS TO SHOW THAT THE SAID EXPENDITURES WERE INCURRED. IT WAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE REGARDING EXPENSES INCURRED ON LITIGATION AND TRAVELING SHOULD BE ALLOWED AND IT W AS CONCEDED BY HIM THAT ASSESSEE MAY NOT BE GIVEN INDEXATION BENEFIT. 7. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS IN THE LIGHT OF MATERIAL PLACED BEFORE US. SO AS IT RELATES TO NON -PRESSING OF OTHER GROUNDS LD. AR HAS SUBMITTED A LETTER BEFORE US IN WHICH IT HAS BEEN STATED THAT GROUND NO. 2, 4 ARE NOT PRESSED AND OTHER GROUNDS ARE NOT CONT ESTED EXCEPT GROUND RELATING TO ALLOWABILITY OF TRAVELING AND LITIGATIO N EXPENSES WITHOUT INDEXATION BENEFIT. SO THE LIMITED ISSUE REMAINS IN THE PRESE NT APPEAL IS REGARDING ALLOWABILITY OR OTHERWISE OF THESE EXPENDITURES WIT HOUT INDEXATION BENEFIT. THOUGH THE ASSESSEE DOES NOT HAVE THE EVIDENCE REGA RDING ACTUALLY INCURRING OF THESE EXPENDITURES BUT WITH THE HELP OF JUDICIAL ORDERS, THE ASSESSEE HAS PREPARED A LIST ACCORDING TO WHICH IT HAS BEEN MENT IONED THAT ON WHAT DATES THE JUDICIAL ORDERS WERE PASSED AND THE DATES OF OTHER EVENTS RELATING TO LITIGATION FOR EVICTION OF THE TENANT ALONG WITH SUPPORTING OR DERS HAVE BEEN FILED. SIMILARLY AT PAGE 82 THE ASSESSEE HAS SUBMITTED THE INCURRING OF THESE EXPENDITURES YEAR WISE WHICH ARE VARYING BETWEEN 500 TO 7000. THE TO TAL OF THESE EXPENDITURES ARE 1,10,800/-. THE LIST PERTAINS TO ONLY EXPENSES INCURRED ON COURT CASES FROM 1969 TO 2005 IN MISCELLANEOUS COURTS AND DEPARTMENT S. KEEPING IN VIEW THE VARIOUS JUDICIAL ORDERS AND PROCEEDINGS UNDERTAKEN BY THE ASSESSEE IN THIS REGARD, WE ARE OF THE OPINION THAT ASSESSEE HAS BEE N ABLE TO SHOW THAT HE HAS TO INCUR EXPENDITURE ON LITIGATION WHICH WAS CARRIE D ON FOR A LONG PERIOD. 5 ITA NO. 299/DEL/2010 THEREFORE, THE CLAIM OF THE ASSESSEE IN ITS ENTIRET Y COULD NOT BE REJECTED. THE ASSESSEE DOES NOT HAVE THE EVIDENCE TO INCUR SUCH E XPENDITURE, THEREFORE, SOME ESTIMATION HAS TO BE MADE. WE ESTIMATE A SUM OF RS. 90,000/- FOR INCURRING OF SUCH EXPENDITURE WHICH CAN BE CONSIDER ED TO BE THE LITIGATION EXPENSES INCURRED BY THE ASSESSEE THE BENEFIT OF WH ICH SHOULD BE GIVEN AS COST WITHOUT THE BENEFIT OF INDEXATION. SO FAR AS IT RELATES TO TRAVELING EXPENSES THERE BEING NO EVIDENCE RELATING THERETO, THEREFORE , SUCH CLAIM OF THE ASSESSEE CANNOT BE ALLOWED. THEREFORE, GROUND NO. 3 RAISED BY THE ASSESSEE IS PARTLY ALLOWED. AS MENTIONED EARLIER OTHER GROUNDS WERE N OT PRESSED, THEY ARE DISMISSED. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 11.06.201 0 (SHAMIM YAHYA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 11.06.10 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR