ANITA SANTKUMAR VARMA, MUMBAI V. ASST CIT CIR 18(1), MUMBAI

ITA 3182/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3300 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-03-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 08-03-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M MURALI
• Assessee Lawyers: GOVIND JHAVERI
• Keywords: Capital asset; Additional evidence; Cost of acquisition
• Section: 143(3)

Judgement Text

ANITA SANTKUMAR VARMA ITA NO. 3182 /M U M /201 3 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI , , BEFORE SHRI RAJENDRA , ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA , JUDICIAL MEMB ER ITA NO. : 3182 /MUM/20 1 3 (ASSESSMENT YEAR: 200 8 - 0 9 ) ANITA SANTKUMAR VARMA , 14 MANAV MANDIR, ACHARYA P K ATRE MARG, WORLI HILL ROAD, WORLI, MUMBAI - 400 018 .: PAN: AA BPV 4439 K VS ASST CIT CIR 18(1), MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI GOVIND JHAVERI RESPONDENT BY : SHRI M MURALI /DATE OF HEARING : 0 8 - 0 3 - 201 6 / DATE OF PRONOUNCEMENT : 16 - 03 - 201 6 ORDER : . . : PER AMIT SHUKLA , JM : THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST IMPUGNED ORDER DATED 04.01.2013, PASSED BY LD. CIT(A) - 16 MUMBAI, FOR THE QUANTUM OF ASSESSMENT COMPLETED UNDER SECT ION 143(3) , FOR THE ASSESSMENT YEAR 2008 - 09 , ON THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE COMMISSIONER OF INCOME TAX (A) [CIT(A)] ERRED IN CONFIRMING THE AOS ORDER IN DISALLOWING AN AMOUNT OF RS.5,31,0 50/0 BEING THE COST OF IMPROVEMENT INCURRED BY THE APPELLANT IN COMPUTING SHORT TERM CAPITAL GAINS. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THE PROPERTY WAS PURCHASED AND SOLD ALONG WITH THE FURNITURE AND THE APPELLANT HAD INCURRED EXPENSES IN ONL Y REFURBISHING THE FURNITURE AND FIXTURE, WHICH IN TURN YIELDED A BETTER SALE VALUE OF THE CAPITAL ASSET IN THE INSTANT CASE. ANITA SANTKUMAR VARMA ITA NO. 3182 /M U M /201 3 2 2. THE FACTS IN BRIEF ARE THAT, THE ASSESSEE HAS SHOWN SHORT - TERM - CAPITAL - GAINS (STCG) ON SALE OF IMMOVABLE PROPERTY. IN THE COMP UTATION OF INCOME, THE ASSESSEE HAD SHOWN PURCHASE COST AT RS. 45 LAKHS FOR THE PROPERTY PURCHASED ON 20 TH OCTOBER, 2006 AND HAS SHOWN SALE CONSIDERATION OF RS.1,12,00,000/ - AS PER THE SALE AGREEMENT DATED 05.04.2007. WHILE ARRIVING AT STCG, THE ASSESSEE H AS REDUCED FROM THE SALE CONSIDERATION , A SUM OF RS.25,08,750/ - WHICH WAS TOWARDS FURNITURE AND FIXTURE S . IN RESPONSE TO THE SHOW CAUSE NOTICE, AS TO HOW THE COST OF DEVELOPMENT EXPENDITURE INCLUDES FURNITURE , T HE ASSESSEE SUBMITTED THE FOLLOWING BILLS OF MANSI ENTERPRISES , FOR INCURRING OF EXPENDITURES : - (I) BILL NO. 9 DATED 27/12/2006 FOR RS.9,94,500/ - (II) BILL NO. 27DATED 09/02/2007 FOR RS.9,99,000/ - (III) BILL NO.30 DATED 21.03/2007 FOR RS.5,15,250/ - RS.25,08,750/ - =========== 3. THE LD. AO NOTED THAT, OUT OF THE AFORESAID, FOLLOWING EXPENSES WERE FOUND TO BE INCUR RED FOR FURNITURE, WHICH CANNOT BE ALLOWED: - BILL SR. NO. DETAILS OF EXPENSES AMOUNT (RS.) 27/7 REMOVING EXISTING FURNITURE AS WARDROBE DINING TABLE, CHAIR, SOFA SET, CUPBOARD AND MAKING IN SIZE BY USING NEW MATERIALS, ALL NEW DECORATIVE FITTINGS, POLISHING ETC. 3,93,550/ - 30/4 PROVIDING & FIXING OLD AND NEW FURNITURE AS PORTION WITH SHUTTER WITH ALL FIXTURE 1,37,500/ - TOTAL 5,31,050/ - THUS, O UT OF THE TOTAL EXPENDITURE CLAIM ED F OR RS. 25,08,750/ - , THE AO DISALLOWED RS. 5,31,050/ - AND HELD THAT IT CANNOT BE TREATED AS COST OF IMPROVEMENT UNDER SECTION 48 . 4. THE LD. CIT(A) TOO AFTER DETAILED REASONING HAS CONFIRMED THE ACTION OF THE AO. ANITA SANTKUMAR VARMA ITA NO. 3182 /M U M /201 3 3 5. BE FORE US, THE LD. COUNSEL FOR THE ASSESSEE REFERRED TO THE AGREEMENT FOR SALE OF THE PROPERTY AND DREW OUR ATTENTION TO CLAUSE (O) OF THE AGREEMENT , WHEREBY THE ASSESSEE (VENDOR) HAD CARRIED OUT AND MODIFIED THE SAID OFFICE PREMISES BY INCURRING THE EXPENDI TURE OF RS. 25 LAKHS. FROM THIS CLAUSE, THE LD. COUNSEL POINTED OUT THAT, WITHOUT INCURRING SUCH EXPENDITURE , THE SALE WOULD NOT HAVE BEEN AFFECTED AT ALL, AS IT WAS ON UNDERSTANDING BETWEEN THE ASSESSEE AND THE PURCHASER . HE FURTHER SUBMITTED THAT, THE AS SESSEE HAS ALSO FILED A PETITION FOR ADMISSION OF ADDITIONAL EVIDENCES, WHICH CONTAINS COPY OF CONFIRMATION LETTER FROM , MAHAPALIKA KSHETRA MADHYAMIK SHIKSHAK SAHAKARI PATSANSTHA LIMITED , I.E. PURCHASER TO SHOW THAT THE SAID PREMISES WAS PURCHASED ON THE S TIPULATION OF THE CHANGES TO BE CARR IED OUT IN THE PREMISES AS PER THE TERMS OF NEGOTIATION . H E SUBMITTED THAT , ADDITIONAL EVIDENCE HAS A VITAL BEARING ON THE ISSUE INVOLVED. BESIDES THIS, AFFIDAVIT OF THE ASSESSEE HAS ALSO BEEN FILED. LD. D.R. ON THE OTHE R HAND RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 6. AFTER CONSIDERING THE CONTENTIONS RAISED BY BOTH THE PARTIES AND ON PERUSAL OF MATERIAL PLACED ON RECORD, WE FIND THAT THE SOLE DISPUTE IS WITH REGARD TO THE COST OF IMPROVEMENT FOR AN AMOUNT OF RS .5,51,050/ - WHICH HAS BEEN INCURRED TOWARDS ALTERNATION AND MODIFICATIO N O F LAY - OUT, FURNITURE AND DESIGN , AS PER THE REQUIREMENT OF THE PURCHASER . I T HAS BEEN CONTENDED TO BE A PRE - CONDITION OF THE PURCHASER FOR BUYING THE OFFICE PREMISES , WITHOUT WH ICH SALE WOULD NOT HAVE BEEN AFFECTED. EARLIER, THE ASSESSEE HAD FILED SUPPORTING BILLS BEFORE THE AO AS WELL AS THE CIT(A), HOWEVER, IN THE ADDITIONAL EVIDENCES FILED BEFORE US ALONG WITH THE PETITION, ASSESSEE HAS ENCLOSED CONFIRMATION LETTER FROM THE BU YER ALONG WITH THE AFFIDAVIT OF THE ASSESSEE WHICH, IN OUR OPINION HAS A VERY VITAL BEARING ON THE ISSUE INVOLVED. ACCORDINGLY, WE ADMIT THE ADDITIONAL EVIDENCES AND REMIT THE MATTER BACK TO THE FILE OF THE AO TO CONSIDER TH E ADDITIONAL EVIDENCE /S AND THEN DECIDE THE ISSUE ON THE BASIS OF THE MATERIAL RECORD AS WELL AS ADDITIONAL ANITA SANTKUMAR VARMA ITA NO. 3182 /M U M /201 3 4 EVIDENCES AND DECIDE THE ISSUE ACCORDINGLY . THUS, GROUND RAISED BY THE ASSESSEE ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 7. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS AL LOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH MARCH , 2016 . SD/ - SD/ - ( ) ( ) ( RAJE NDRA ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 16 TH MARCH , 2016 / COPY TO: - 1 ) / THE APPELLANT. 2 ) / THE RESPONDENT. 3) THE CIT (A) - 16 , MUMBAI . 4 ) THE COMMISSIONER OF INCOME TAX - 18 , MUMBAI . 5 ) , , / THE D.R. A BENCH, MUMBAI. 6 ) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS