S.Krishnamoorthy, Salem V. JCIT, Salem

ITA 332/CHNY/2015

• Counselvise Citation: 33221714 RSA 2015
• Duration Of Justice: 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2009-2010
• Appeal Filed On: 09-02-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN
• Assessee Lawyers: T S LAKSHMIVENKATARAMAN

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI . . . , . !'# ! , % !& BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ ITA NO.332/MDS/2015 ( )( / ASSESSMENT YEAR : 2009-10 SH.S. KRISHNAMOORTHY, 86-A, TRICHY MAIN ROAD, SEELANAICKENPATTY, SALEM 636 201. PAN : AERPK 9570 Q V. THE JOINT COMMISSIONER OF INCOME TAX, RANGE III, SALEM. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SH.T.S. LAKSHMI VENKATARAMAN, CA -.+, / 0 / RESPONDENT BY : SH. N. MADHAVAN, JCIT 1 / 2% / DATE OF HEARING : 12.05.2015 3') / 2% / DATE OF PRONOUNCEMENT : 30.06.2015 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, DA TED 24.12.2014 AND PERTAINS TO ASSESSMENT YEAR 2009-10. THE ONLY ISSUE ARISES FOR CONSIDERATION IS WITH REGARD TO DI SALLOWANCE OF ` 15,00,000/- INCURRED BY THE ASSESSEE TOWARDS RENOVA TION EXPENSES. 2 I.T.A. NO.332/MDS/15 2. SHRI T.S. LAKSHMI VENKATARAMAN, THE LD. REPRESEN TATIVE FOR THE ASSESSEE, SUBMITTED THAT THE ASSESSEE CONSTRUCT ED A HOUSE AT SURVEY NOS.88/10B AND 88/11A2 AT SEELANAICKENPATTY VILLAGE, SALEM DISTRICT. THE LAND AND BUILDING TO THE EXTEN T OF 1020 SQ.METER WAS ACQUIRED BY THE GOVERNMENT FOR EXPANSION OF NAT IONAL HIGHWAY. A REVISED AWARD WAS PASSED AWARDING 10% O F THE MARKET VALUE OF THE PROPERTY AS ADDITIONAL COMPENSATION FO R THE PURPOSE OF DEMOLITION OF THE BUILDING. THE AWARD ALSO REFERS TO THE EXISTING BUILDING MAY NOT BE STRUCTURALLY STABLE AFTER DEMOL ITION OF THE PART OF THE BUILDING. THEREFORE, 10% ADDITIONAL COMPENSATI ON WAS AWARDED FOR THE PURPOSE OF DAMAGE DONE TO THE EXISTING BUIL DING. THE LD. REPRESENTATIVE FURTHER SUBMITTED THAT THE ASSESSEE HAS INCURRED A SUM OF ` 15,00,000/- ON REPAIRING OF THE REMAINING PORTION O F THE DEMOLISHED BUILDING. ACCORDING TO THE LD. REPRESEN TATIVE, THIS EXPENDITURE WAS INCURRED BECAUSE THE LAND AND BUILD ING WAS ACQUIRED BY THE GOVERNMENT. THEREFORE, ACCORDING T O THE LD. REPRESENTATIVE, THE EXPENDITURE HAS TO BE ALLOWED S INCE THE SAME WAS RELATED TO COMPULSORY ACQUISITION OF LAND BY TH E GOVERNMENT. 3. ON THE CONTRARY, SHRI N. MADHAVAN, THE LD. DEPAR TMENTAL REPRESENTATIVE, SUBMITTED THAT THE EXPENDITURE SAID TO BE INCURRED BY THE ASSESSEE WAS FOR THE PURPOSE OF RENOVATION O F THE PROPERTY/ 3 I.T.A. NO.332/MDS/15 BUILDING, WHICH WERE NOT ACQUIRED BY THE GOVERNMENT . HAVING GOT CONFIRMED THE WEAKNESS AND UNFIT OF OTHER PORTION O F THE BUILDING, THE GOVERNMENT HAS ALSO PAID ADDITIONAL COMPENSATIO N AT 10% TO THE EXTENT OF ` 9,65,370/-. SINCE THE EXPENDITURE SAID TO BE INCU RRED BY THE ASSESSEE WAS NOT IN CONNECTION WITH THE PORT ION WHICH WAS TAKEN OVER BY THE GOVERNMENT, BUT IT WAS INCURRED O N THE PORTION RETAINED BY THE ASSESSEE, IT CANNOT BE SAID THAT TH E EXPENDITURE INCURRED FOR THE PURPOSE OF TRANSFERRING THE PROPER TY. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. ADMITTEDL Y, A REVISED AWARD WAS PASSED BY THE COLLECTOR UNDER LAND ACQUIS ITION ACT AWARDING 10% ADDITIONAL COMPENSATION TO THE EXTENT OF ` 9,65,370/- AFTER TAKING INTO CONSIDERATION THE STRUCTURAL INST ABILITY OF THE REMAINING PART OF THE BUILDING AFTER THE ACQUISITIO N. THIS SUM OF ` 9.65,370/- IS NOT THE PRICE PAID BY THE GOVERNMENT FOR THE LAND AND BUILDING TAKEN OVER UNDER THE LAND ACQUISITION ACT. IN OTHER WORDS, THE ADDITIONAL COMPENSATION OF ` 9,65,370/- WAS PAID BY THE GOVERNMENT IN RESPECT OF THE DAMAGE CAUSED TO THE B UILDING RETAINED BY THE ASSESSEE. THEREFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE ADDITIONAL COMPENSATION AT 10% CANNOT BE TREATED AS PART OF THE CONSIDERATION/COMPENSATIO N AWARDED BY 4 I.T.A. NO.332/MDS/15 THE GOVERNMENT TOWARDS COST OF THE LAND. THIS AMOU NT OF ` 9.65,370/- IS ONLY MEANT FOR THE BUILDING RETAINED BY THE ASSESSEE AFTER ACQUISITION. THEREFORE, THIS AMOUNT OF ` 9,65,370/- HAS TO BE REDUCED FROM THE TOTAL COMPENSATION RECEIVED BY THE ASSESSEE FOR ACQUISITION OF THE LAND AND BUILDING. SIMILARLY, A SUM OF ` 4,17,426/- WAS AWARDED TOWARDS EXPENDITURE FOR DEMOLITION. TH IS IS ALSO NOT THE COST OF THE LAND AND BUILDING ACQUIRED BY THE G OVERNMENT. THEREFORE, THIS SUM IS ALSO TO BE REDUCED FROM THE COMPENSATION WHILE COMPUTING THE CAPITAL GAINS. 5. NOW COMING TO THE EXPENDITURE SAID TO BE INCURRE D BY THE ASSESSEE, ADMITTEDLY, THE ASSESSEE INCURRED THE EXP ENDITURE FOR THE PURPOSE OF RENOVATION OR MAKING GOOD OF THE REMAINI NG PART OF THE BUILDING RETAINED AFTER THE ACQUISITION. THEREFORE , THE EXPENDITURE OF ` 15,00,000/- INCURRED WAS NOT CONNECTED WITH LAND OR BUILDING TAKEN OVER BY THE GOVERNMENT. THEREFORE, THIS CANNOT BE TREATED AS EXPENDITURE INCURRED FOR TRANSFER OF THE LAND. THE REFORE, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE AMOU NT OF ` 15,00,000/- CANNOT BE ALLOWED. HOWEVER, AS ALREADY DISCUSSED, THE ASSESSING OFFICER IS DIRECTED TO REDUCE ` 9,65,370/- FROM THE COST OF LAND AND BUILDING TAKEN OVER BY THE GOVERNMENT A ND THEREAFTER WORK OUT THE CAPITAL GAIN ACCORDINGLY. 5 I.T.A. NO.332/MDS/15 6. WITH THE ABOVE OBSERVATION, THE APPEAL OF THE AS SESSEE IS DISMISSED. ORDER PRONOUNCED ON 30 TH JUNE, 2015 AT CHENNAI. SD/- SD/- (A. MOHAN ALANKAMONY) (N.R.S. GANESAN) (. !'# ! ) ( . . . ) % / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 5 /DATED, THE 30 TH JUNE, 2015. KRI. / -267 87)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 92 () /CIT(A), SALEM 4. 1 92 /CIT, SALEM 5. 7: -2 /DR 6. ( ; /GF.