The ACIT- 1(2), Bhopal V. Shri Prakash Bhojwani, Bhopal

ITA 332/IND/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 70069 (ITAT-INDORE)
• Duration Of Justice: 5 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 21-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: R N GUPTA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Wrong claim; Revised return
• Section: 143(3); 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL , INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, J.M. AND SHRI R.C.SHARM A, A.M. PAN NO. : ABVPB8825E I.T.A.NO. 332 /IND/201 3 A.Y. : 2009-10 ACIT, 1(2), BHOPAL VS. SHRI PRAKASH BHOJWANI, PROP.M/S. UNIQUE ASSOCIATES, BHOPAL. ASSESSEE RESPONDENT C.O.NO. 66/IND/2013 (ARISING OUT OF I.T.A.NO.332/IND/2013) A.Y. : 2009-10 SHRI PRAKASH BHOJWANI, PROP.M/S. UNIQUE ASSOCIATES, BHOPAL. VS. ACIT, 1(2), BHOPAL ASSESSEE RESPONDENT DEPAR TMENT BY : SHRI R.A.VERMA, SR. DR RESPONDENT BY : SHRI R. N. GUPTA, C. A. DATE OF HEARING : 23 . 10 .201 3 DATE OF PRONOUNCEMENT : 31 . 10 .201 3 SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 2 PAGE 2 OF 13 O R D E R PER R. C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE ORDER OF CIT( A) DATED 8 TH FEBRUARY, 2013, FOR THE ASSESSMENT YEAR 2009-10, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE INCOME-TAX ACT, 1961. 2. FOLLOWING GROUNDS HAVE BEEN TAKEN BY THE REVENUE :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE LD. CIT(A) HAS ERRED IN : 1. DIRECTING THE ASSESSING OFFICER TO ALLOW THE EXEMPTION OF RS. 11,29,925/- U/S 54F(1)(B) OF THE INCOME-TAX ACT, 1961. 2. DIRECTING THE ASSESSING OFFICER TO ALLOW SET OF F OF LOSS OF RS. 5,24,084/- AGAINST LONG TERM CAPITAL GAIN. 3. IN THE CROSS OBJECTION, THE ASSESSEE IS AGGRIEVED F OR NOT GIVING BENEFIT OF COST OF IMPROVEMENT OF RS. 5,02,8 08/-, WHILE COMPUTING CAPITAL GAINS. SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 3 PAGE 3 OF 13 4. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECORDS PERUSED. FACTS IN BRIEF ARE THAT THE ASSESSEE IS AN INDIVIDUAL AND PROPRIETOR OF M/S UNIQUE ASSOCIATES ENGAGED IN THE BUSINESS OF DERIVATIVE (FUTURE & OPTIONS) FROM BSE & NSE. THE RETURN OF INCOME WAS FILED ELECTRONICALLY ON 30 .09.2009 DECLARING INCOME OF RS. 4,72,144/-. DURING THE COUR SE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE HAD FILED REVI SED COMPUTATION OF TOTAL INCOME. IN THE SAID REVISED CO MPUTATION, THE ASSESSEE DISCLOSED INCOME AFTER CLAIMING EXEMPT ION U/S 54F FROM LONG TERM CAPITAL GAIN ON SALE OF LAND AT RS. 1,20,45,090/-. THE ASSESSEE, THEREFORE, AS PER THE REVISED COMPUTATION, COMPUTED TOTAL INCOME AT RS. 1,25,17,2 30/- .SUBSEQUENTLY, THE ASSESSMENT WAS COMPLETED U/S 143 (3) OF THE I.T.ACT 1961 ON 30.12.2011, DETERMINING THE TOT AL INCOME AT RS.L,40,97,190/-. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE A.O COMPUTED LONG TERM CAPITAL GAIN AT RS. L,36,25,043/ - AS AGAINST RS. 1,25,17,230/- COMPUTED BY THE ASSESSEE. THE TOTAL INCOME IN THIS YEAR, THEREFORE, WAS ASSESSED AT RS. SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 4 PAGE 4 OF 13 1,40,97,190/- (472144 + 13625043). THE HIGHER ASSES SMENT OF LONG TERM CAPITAL GAIN IS DUE TO THE REASONS (I) SA LE VALUE AS PER INSTRUMENT OF TRANSFER IS RS. 1,41,64,000/- BUT THE A.O. ADOPTED THE SALE CONSIDERATION AT RS. 1,41,73,000 U /S 50C (II) THE INDEXED COST OF IMPROVEMENT INCURRED BY ASSESSE E HAS NOT BEEN ALLOWED AND (III) THE EXEMPTION CLAIMED U/S 54 F HAS BEEN DENIED. 6. THE A.O. STATED IN HIS ORDER THAT AS PER THE AIR INFORMATION AVAILABLE ON RECORD, THE ASSESSEE HAS I MMOVABLE PROPERTY OF RS. L ,41,73,000/-; THAT IN THE RETURN OF INCOME FILED BY THE ASSESSEE U/S 139(1) OF THE I.T. ACT, 1 961 FOR A.Y. 2009-10 NO CAPITAL GAIN HAS BEEN SHOWN BY THE ASSES SEE; THAT THE ASSESSEE SHRI PRAKASH BHOJWANI APPEARED ON 15.1 2.2011 AND FILED REVISED COMPUTATION OF TOTAL INCOME OFFER ING LONG TERM CAPITAL GAIN FROM SALE OF IMMOVABLE PROPERTY F OR TAXATION; THAT THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN OF RS.1,20,45,090/-; THAT HE HAS SHOWN SALE: CONSIDERA TION AT RS.L,41,64,000/- WHEREAS THE MARKET VALUE OF THE LA ND UNDER CONSIDERATION WAS RS. L,41,73,000/- WHICH IS THE AC TUAL SALE SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 5 PAGE 5 OF 13 CONSIDERATION AS PER THE PROVISIONS OF SECTION 50C; THAT THE INDEXED COST FOR ACQUISITION WAS CLAIMED AT RS.9,88 ,984/- WHEREAS AS PER THE PURCHASE DEED FURNISHED BY THE A SSESSEE, THE INDEXED COST OF ACQUISITION COMES TO RS.5,47,95 7/-; THAT THE ASSESSEE HAS PURCHASED THE LAND UNDER CONSIDERA TION ON 25.03.2003 ADMEASURING 3.00 ACRES FOR RS.7,89,100/- ONLY; THAT THE ASSESSEE HAS MADE SALE OF ONLY 1.60 ACRES OUT OF THE SAID LAND; THAT THE PURCHASE COST OF THE LAND WHICH WAS SOLD BY THE ASSESSEE COMES TO RS.4,20,853/- ONLY, AND AF TER INDEXING IT BECOMES RS.5,47,957/-; THAT THE ASSESSE E HAS ALSO FURNISHED A COPY OF BILL OF RS.4,00,000/- DATED 28. 05.2003; THAT THE SAID BILL WAS PRIMA FACIE FOUND TO BE BOGU S, AS IT DID NOT BEAR ANY BILL NUMBER AND THE COMPLETE ADDRESS W AS ALSO NOT GIVEN ON IT; THAT THE ASSESSEE WAS ASKED TO FUR NISH COMPLETE ADDRESS AND PAN OF THE PERSON BUT THE ASSE SSEE HAS NOT JUSTIFIED THE SAME TILL DATE; THAT THE INCOME-T AX INSPECTOR ALSO VISITED THE PLACE AND SUBMITTED THAT NO SUCH P ARTY WAS FOUND AT THE SAID PLACE; THAT THEREFORE, THE LONG T ERM CAPITAL SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 6 PAGE 6 OF 13 GAIN WORKED OUT BY THE ASSESSEE IS INCORRECT; THAT THE CORRECT LONG TERM CAPITAL GAIN IS WORKED OUT AS UNDER:- TOTAL SALE CONSIDERATION U/S 50C OF THE LT. 1,41,73 ,000/- LESS: THE INDEX COST FOR PURCHASE (7,89,100 X 5,47, 957/- NET LONG TERM CAPITAL GAIN 1,36,25,043/- 7. BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLOWED ASSESSEES CLAIM OF EXEMPTION U/S 54F AFTER HAVING THE FOLLOWING OBSERVATIONS :- 12. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE. THE A.O. HAS DENIED THE EXEMPTION STATING THAT THE BILLS AND VOUCHERS IN RESPECT OF CONSTRUCTION ARE NOT FURNISHED. THE PERMISSION FOR THE CONSTRUCTION WAS GRANTED ON 3.5.2006 BY THE MUNICIPAL CORPORATION IS NOT ALLOWED. THE ASSESSEE CONTENDED IN HIS SUBMISSION THAT HE HAS SPENT. RS. 12,14,744/- ON THE COMPLETION OF RESIDENTIAL HOUSE DURING THE YEAR AND HE STARTED RESIDING THEREIN FROM JANUARY, 2009. THE M.P. ELECTRICITY BOARD ALSO CONVERTED THE TEMPORARY CONNECTION, WHICH IS GRANTED FOR SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 7 PAGE 7 OF 13 CONSTRUCTION PURPOSES, INTO A PERMANENT CONNECTION BECAUSE THE ASSESSEE COMPLETED THE HOUSE AND STARTED RESIDING. IN MY OPINION, CONSIDERING THE SUBMISSION OF THE ASSESSEE, THE A.O. IS NOT JUSTIFI ED IN DENYING THE EXEMPTION MERELY ON THE GROUND THAT THERE IS NO RENEWAL OF THE PERMISSION. I FIND THAT THE CONTENTION OF THE ASSESSEE OF INCURRING EXPENDITURE AT RS. 12,14,744/- DURING THE YEAR IN COMPLETING TH E CONSTRUCTION OF HOUSE HAS NOT BEEN DOUBTED BECAUSE THE COST OF CONSTRUCTION OF THE HOUSE HAS BEEN REFLECTED BY THE ASSESSEE IN HIS AUDITED BALANCE SHEET ON THE ASSTS SIDE UNDER THE HEAD LAND & BUILDING AND THE A.O. HAS ACCEPTED THE SAID BALANCE SHEET. I AM OF THE CONSIDERED OPINION THAT THE ASSESSEES CLAIM FOR EXEMPTION U/S 54F BY VIRTUE OF INVESTMENT IN HOUSE PROPERTY CANNOT BE SAID TO BE AN AFTERTHOUGHT AS THE ASSESSEE, AT THE FIRST INSTANCE, WAS OF THE BELIEF THAT NO TAXABLE CAPITAL GAIN AROSE ON TRANSFER OF AGRICULTURAL LAND , SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 8 PAGE 8 OF 13 THOUGH, FALLING IN MUNICIPAL AREA FURTHERMORE, THE AMOUNT OF EXEMPTION CLAIMED BY THE ASSESSEE IS ALSO NOT VERY MUCH SUBSTANTIAL KEEPING IN VIEW THE AMOUNT OF SALE PROCEEDS, THUS, THE APPREHENSION OF BOGUS CLAIM FOR EXEMPTION IS ALSO QUITE FAINT. THER E ARE ALSO NO FINDINGS THAT THE ASSESSEE DID NOT SATISFY THE CONDITIONS AS PRESCRIBED U/S 54F FOR CLAIMING EXEMPTION. THE EXEMPTION HAS BEEN DENIED BY THE A.O. ON ASSUMPTIONS AND PRESUMPTIONS AND, THEREFORE, THE DENIAL IS NOT JUSTIFIED. THEREFORE, THE A.O. IS DIRECTED TO ALLOW THE EXEMPTION AT RS. 11,29,925/- U/S 54F(1)(B) OF THE ACT. THUS, GROUND NO. 8 IS ALLOWED. 8. HOWEVER, THE LD. CIT(A) DID NOT ALLOW THE COST OF IMPROVEMENT WHILE COMPUTING CAPITAL GAINS AFTER HAV ING THE FOLLOWING OBSERVATIONS :- 8. I HAVE CAREFULLY GONE THROUGH THE ASSESSMENT ORDER AND SUBMISSIONS OF THE SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 9 PAGE 9 OF 13 ASSESSEE. I FIND THAT THE ASSESSEE HAD NOT RECORDED ANY EXPENDITURE ON COST OF IMPROVEMENT AS CLAIMED BY THE ASSESSEE AT RS. 4 LACS IN HIS BOOKS OF ACCOUNTS. THIS IS DUE TO THE REASON THAT THE ASSESSEE HAS SHOWN ADDITION TO CAPITAL ACCOUNT ON ACCOUNT OF CAPITAL GAIN FROM SALE OF LAND AT RS.1,37,34,661/- IN THE BALANCE SHEET. THE CALCULATION OF BOOK PROFIT FROM CAPITAL GAIN IS WORKED OUT AS UNDER: PARTICULARS AMOUNT SALES CONSIDERATION 141640 LESS: PROPORTIONATE COST OF 420853 (789100/3*1.60 ACRES) BOOK PROFIT 137431 BOOK PROFIT AS PER B/S 137346 DIFFERENCE 8486 THE ABOVE CALCULATION GOES TO SHOW THAT THE ASSESSEE HAD NOT DEBITED ANY COST OF IMPROVEMENT IN THE BOOKS OF ACCOUNTS. THE SO CALLED CONTRACTOR WAS ALSO NOT FOUND AT HIS ADDRESS INSTANCE. THE AFFIDAVIT SUBMITTED BY THE ASSESSEE IS MERELY A SEL F SERVING DOCUMENT. LOOKING TO THE FACTS AND SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 10 PAGE 10 OF 13 CIRCUMSTANCES OF THE CASE, THE DISALLOWANCE MADE BY THE A.O. IS SUSTAINED. HENCE, THE DISALLOWANCE IS CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 9. THE LD. CIT(A) ALLOWED THE ASSESSEES CLAIM SET-OFF OF LOSSES OF RS. 5,24,084/- WHILE COMPUTING TAXABLE LO NG TERM CAPITAL GAIN AFTER HAVING THE FOLLOWING OBSERVATION S :- 15. I HAVE CAREFULLY GONE THROUGH THE DETAILED SUBMISSION OF THE ASSESSEE EXPLAINING THEREIN THE FACTUAL AND LEGAL PROVISIONS. THE DECISIONS CITED H AVE ALSO BEEN SEEN. IN MY OPINION, THE SET OFF CLAIM IS A LEGAL AND A VALID CLAIM. IT IS SEEN THAT THE SHORT TERM CAPITAL LOSS ON SALE OF SHARES IS APPEARING IN THE BALANCE SHEET FURNISHED BEFORE THE A.O. THE ASSESSEE HAS ALSO FURNISHED THE DETAILS OF SHORT TE RM CAPITAL LOSS. THE ASSESSEE IS CERTAINLY ENTITLED TO HAVE SUCH LOSS SET OFF AGAINST THE INCOME FROM LONG TERM CAPITAL GAIN ON SALE OF LAND U/S 70. HENCE, THE A.O IS DIRECTED TO ALLOW SET OFF OF SAID LOSS OF RS. 5,24, 084/- WHILE COMPUTING TAXABLE LONG TERM CAPITAL GAIN. ACCORDINGLY, THIS GROUND OF APPEAL IS ALLOWED. SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 11 PAGE 11 OF 13 10. AGAINST THE ABOVE ORDER OF CIT(A), THE REVENUE IS I N APPEAL BEFORE US AND ASSESSEE HAS ALSO FILED CROSS OBJECTION AGAINST DENIAL OF COST OF IMPROVEMENT WHILE COMPUTI NG CAPITAL GAINS. 11. RIVAL CONTENTIONS HAVE BEEN CONSIDERED AND RECORDS PERUSED. DURING THE YEAR, THE ASSESSEE HAS EARNED C APITAL GAIN OF RS. 1,20,45,090/-, HOWEVER, IN THE ORIGINAL RETU RN THE ASSESSEE HAS NOT DISCLOSED THIS CAPITAL GAIN. THERE AFTER, THE ASSESSEE FILED A REVISED RETURN WHEREIN THIS CAPITA L GAIN WAS SHOWN AND EXEMPTION U/S 54F WAS CLAIMED ALONGWITH DEDUCTION ON ACCOUNT OF INDEXED COST OF IMPROVEMENT DONE. THE ASSESSING OFFICER HAS ALLOWED PROPORTIONATE COS T OF LAND, IN SO FAR AS ENTIRE AGRICULTURE LAND MEASURING 3 AC RES WERE NOT SOLD BUT ONLY 1.6 ACRES WERE SOLD. BY TAKING THE CO ST OF ENTIRE LAND, WHICH WAS RS. 7.89 LAKHS, THE PROPORTIONATE C OST OF LAND SOLD WORKS OUT TO BE RS. 4.20 LAKHS. AFTER GIVING B ENEFIT OF INDEXATION, THE ASSESSING OFFICER ALLOWED COST OF R S. 5.47 LAKHS. WE FOUND THAT IT WAS AN AGRICULTURAL LAND. T HE ASSESSEE HAD ALSO CLAIMED COST OF IMPROVEMENT INCURRED ON BO REWELL, SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 12 PAGE 12 OF 13 LEVELING OF LAND AND FENCING BY CEMENT POLE FROM CO NTRACTOR, MANOJ SHARMA. THE ASSESSING OFFICER MADE INQUIRY AN D FOUND THAT BILL OF MANOJ SHARMA SO FILED BY THE ASSESSEE WAS BOGUS AS IT DID NOT BEAR ANY BILL NUMBER AND COMPLETE ADD RESS. BY THE IMPUGNED ORDER, THE LD. CIT(A) ALLOWED ASSESSEE S CLAIM OF EXEMPTION U/S 54-F ON THE PLEA THAT ASSESSEE HAS SP ENT RS. 12,14,744/- ON COMPLETION OF RESIDENTIAL HOUSE DURI NG THE YEAR AND ALSO STARTED RESIDING THEREIN FROM JANUARY , 2009. HOWEVER, THERE IS NO MATERIAL ON RECORD TO SUPPORT THIS OBSERVATION OF CIT(A). HOWEVER, HE HAS DECLINED ASS ESSEES CLAIM OF IMPROVEMENT BY SPENDING RS. 4 LAKHS. THE L D. CIT(A) HAS ALSO ALLOWED ASSESSEES CLAIM OF SET OFF OF LOS S OF RS. 5,24,084/- U/S 70. THE LD. CIT(A)S CONCLUSION TO A LLOW SET-OFF OF LOSS OF RS. 5,24,084/- IS NOT SUPPORTED BY ANY M ATERIAL ON RECORD. WE FOUND THAT LAND SO SOLD WAS BASICALLY AG RICULTURAL LAND AND EVEN ASSESSEE HAS CLAIMED COST OF IMPROVEM ENT ON THE PLEA OF EXPENDITURE HAVING BEEN INCURRED ON BOR E WELL, LEVELING OF LAND AND FENCING BY CEMENT POLES. THUS, THE CONCLUSION OF CIT(A) THAT IT WAS A SALE OF RESIDENT IAL HOUSE SO SHRI PRAKASH BHOJWANI, BHOPAL I.T.A.NO. 332/IND/2013 AND C.O.NO.66/IND/2013 13 PAGE 13 OF 13 AS TO MAKE THE ASSESSEE ELIGIBLE FOR CLAIM OF DEDUC TION U/S 54F IS NOT BORNE OUT OF RECORD AND EVEN CONTRARY TO THE FACTS DISCUSSED BY THE ASSESSING OFFICER IN HIS ORDER. IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE SET-ASIDE THE ENTIRE I SSUE TO THE FILE OF ASSESSING OFFICER FOR DECIDING AFRESH. EVEN THE GROUND TAKEN BY THE ASSESSEE WITH REGARD TO COST OF IMPROVEMENT HAVING BEEN INCURRED IS ALSO RESTORED BACK FOR DECIDING AF RESH AFTER GIVING DUE OPPORTUNITY TO THE ASSESSEE. 12. IN THE RESULT, THE APPEAL OF THE REVENUE AND CROSS OBJECTION FILED BY THE ASSESSEE ARE ALLOWED FOR STA TISTICAL PURPOSES. THIS ORDER HAS BEEN PRONOUNCED IN THE OPEN COURT ON 31 ST OCTOBER, 2013. SD/- SD/- (JOGINDER SINGH) (R. C. SHARMA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31 ST OCTOBER, 2013. CPU* 24253110