TANVEER FATIMA AHMED ADAM, MUMBAI V. INCOME TAX OFFICER 20(3)-1, MUMBAI

ITA 3411/MUM/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 100858 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-08-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 05-08-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-05-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Unexplained expenditure
• Section: 69C

Judgement Text

, - IN THE INCOME TAX APPELLATE TRIBUNAL, SMC BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , ACCOUNTANT MEMBER ./ I.T.A. NO . 3 411 / MUM/20 1 4 ( / ASSESSMENT YEA R : 200 8 - 09 ) TANVEER F ATIMA AHMED ADAM, 505, MAGNUM TOWER, 2 ND CROSS LANE, ANDHERI (W), MUMBAI - 400053. / VS. INCOME TAX OFFICER, 20 (3)(1), MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : ADEPA9315G / APPELLANT S BY MS AAKRITI SETH / RSPONDENT BY SHRI K P R R MURTY / DATE OF HEARING : 5 . 8 . 201 5 / DATE OF PRONOUNCEMENT: 26 . 8. 201 5 / O R D E R P ER B ENCH : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER PASSED BY LD CIT(A) - 31, MUMBAI FOR ASSESSMENT YEAR 2008 - 09. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF LD CIT(A) RENDERED IN RESPECT OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE ON THE SALE OF RESIDENTIAL HOUSE. 2. I HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE PURCHASED A COMMERCIAL PREMISES ADMEASURING 385 SQ.FT. ON 7.4.2006 FOR A CONSIDERATION OF RS.23,03,925/ - (INCLUDING STAMP DUTY AND REGISTRATION CHARGES). THE SAI D PROPERTY WAS SOLD ON 26.9.2007 FOR A CONSIDERATION OF RS.30,10,000/ - . WHILE COMPUTING SHORT TERM CAPITAL GAIN, THE ASSESSEE ITA NO.3411/M/2014 2 ADOPTED THE COST OF PURCHASE AND COST OF IMPROVEMENT AT RS.26,33,410/ - . HOWEVER, SINCE THE ASSESSEE DID NOT FURNISH THE DETAILS OF COST OF IMPROVEMENT, THE AO ADOPTED THE COST OF PROPERTY AT RS.23,02,925/ - AND ACCORDINGLY COMPUTED SHORT TERM CAPITAL GAIN. 3. BEFORE LD CIT(A), THE ASSESSEE FURNISHED THE DETAILS OF COST OF IMPROVEMENT AS UNDER: - (A) BROKERAGE PAID TO ASHOK ESTAT E & INVESTMENT AT THE TIME OF SALES RS.60,200/ - (B) BROKERAGE PAID TO AYESHA ESTATE AGENCY AT THE TIME OF PURCHASE RS.43,450/ - (C) CIVIL WORKS CARRIED OUT BY SHRI A UPADHYAY, CIVIL CONTRACTOR - RS.2,57,000/ - . IT APPEARS THAT THE ASSESSEE HAS CLAIMED ANOTHER SUM OF RS.28,000/ - TOWARDS COST OF IMPROVEMENT BEFORE LD CIT(A). IT IS PERTINENT TO NOTE THAT THE AGGREGATE AMOUNT OF DETAILS OF COST OF IMPROVEMENT EXCEEDS THE ORIGINAL CLAIM. 4. HENCE THE LD CIT(A) CALLED FOR A REMAND REPORT FROM THE ASSES SING OFFICER. IN THE REMAND PROCEEDINGS, THE BROKERAGE PAID AT THE TIME OF PURCHASE AND SALES WERE CONFIRMED BY BOTH THE PARTIES. THE DOCUMENT FURNISHED BY THE ASSESSEE IN SUPPORT OF CIVIL WORKS WAS FOUND TO BE THE ESTIMATE GIVEN BY SHRI A UPADHYAY. THE ASSESSEE COULD NOT FURNISH ANY REPLY WITH REGARD TO THE CLAIM OF RS.28,000/ - RELATING TO COST OF IMPROVEMENT. THE AO ALSO EXPRESSED THE VIEW THAT THE ASSESSEE COULD NOT EXPLAIN THE SOURCES FOR MAKING BROKERAGE PAYMENTS. 5. THE LD CIT(A) HELD THAT THE BROKERAGE OF RS.43,450/ - PAID AT THE TIME OF PURCHASE CANNOT BE CONSIDERED AS COST OF IMPROVEMENT AND HENCE DISALLOWED THE SAME. THE BROKERAGE OF RS.60,200/ - PAID AT THE TIME OF ITA NO.3411/M/2014 3 SALE WAS HELD TO BE ALLOWABLE BY THE LD CIT(A). BUT, SINCE THE ASSESSEE DID NOT EXPLAIN ABOUT THE SOURCES FOR PAYING SAID BROKERAGE, THE LD CIT(A) HELD THAT THE SAME IS ASSESSABLE U/S 69C OF THE ACT. WITH REGARD TO CIVIL WORKS, THE ASSESSEE LATER FURNISHED EVIDENCES TO THE TUNE OF RS.1,19,000/ - AND HENCE THE LD CIT(A) HELD THAT THE CLAIM OF CIVIL WORKS SHOULD BE RESTRICTED TO RS.1,19,000/ - . AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL. 6. THE FIRST ISSUE CONTESTED BY THE ASSESSEE RELATES TO THE ASSESSMENT OF BROKERAGE AMOUNT OF RS.60,200/ - AS UNEXPLAINED EXPENDITURE U/S 69C OF THE ACT. IT IS IN THE COMMON KNOWLEDGE OF EVERYONE THAT THE BROKERAGE IS GENERALLY PAID ON COMPLETION OF THE TRANSACTION. THE ABOVE SAID AMOUNT REPRESENTS THE BROKERAGE PAID ON SALE OF PROPERTY, MEANING THEREBY, THE ASSESSEE SHOULD HAVE PAID THE BROK ERAGE AMOUNT OUT OF SALE CONSIDERATION RECEIVED BY HER. HENCE, IN MY VIEW, THERE IS NO REASON TO SUSPECT ABOUT THE SOURCES FOR THE SAME. ACCORDINGLY, I SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE. 7. THE NEXT ISSUE RELATES TO THE BROKERAGE OF RS. 43,450/ - PAID AT THE TIME OF PURCHASE OF PROPERTY. THE GENUINENESS OF THE SAID PAYMENT HAS BEEN ACCEPTED BY BOTH THE TAX AUTHORITIES. THE LD CIT(A) REJECTED THE CLAIM BY OBSERVING THAT THE SAID BROKERAGE CANNOT FALL UNDER THE CATEGORY OF COST OF IMPROVE MENT. HOWEVER, THERE SHOULD NOT BE ANY DISPUTE THAT THE SAME FORMS PART OF COST OF PURCHASE. ACCORDINGLY, IN MY VIEW, THE BROKERAGE AMOUNT OF RS.43,450/ - SHOULD BE INCLUDED IN THE COST OF PURCHASE OF PROPERTY WHILE COMPUTING THE CAPITAL GAIN. ACCORDING LY, I MODIFY THE ORDER OF LD CIT(A) AND DIRECT THE ASSESSING OFFICER TO INCLUDE THE BROKERAGE AMOUNT OF RS.43,450/ - IN THE COST OF PURCHASE OF PROPERTY AND ACCORDINGLY COMPUTE THE CAPITAL GAIN. ITA NO.3411/M/2014 4 8. THE NEXT ISSUE RELATES TO THE RESTRICTING THE COST OF CIVIL WORKS TO RS.1,19,000/ - AS AGAINST THE CLAIM OF RS.2,57,000/ - . IT IS A FACT THAT THE ASSESSEE COULD PRODUCE THE SUPPORTING VOUCHERS ONLY TO THE EXTENT OF RS.1,19,000/ - . WITH REGARD TO THE REMAINING AMOUNT, IT IS CLAIMED THAT THE ASSESSEE DEVELOPED D ISPUTE WITH THE CONTRACTOR AND HENCE SHE HAS STOPPED THE PAYMENT. IT IS FURTHER SUBMITTED THAT THE ASSESSEE SHOULD BE PAYING MONEY TO THE CONTRACTOR UPON SETTLEMENT OF DISPUTE. HOWEVER, THE FACTS REMAIN THAT THE ASSESSEE COULD NOT SUBSTANTIATE HER SUBMIS SIONS. FURTHER, THE ASSESSEE DID NOT CLARIFY ABOUT THE PENDENCY OF THE DISPUTE AND THE POSSIBILITY OF RESOLUTION. IT IS SUBMITTED THAT THE CIVIL CONTRACTOR HAS CLOSED HIS BUSINESS AND HENCE IT IS POSSIBLE TO INFER THAT THE POSSIBILITY OF RESOLUTION OF D ISPUTE IS REMOTE. THE ASSESSEE ALSO DID NOT FURNISH THE DETAILS OF RENOVATION CARRIED OUT BY HIM, ON THE BASIS OF WHICH, THE CLAIM OF THE ASSESSEE COULD HAVE BEEN EXAMINED. HENCE, IN MY VIEW, THE ASSESSEE HAS FAILED TO PROVE THE CLAIM OF RENOVATION EXPEN SES BEYOND THE AMOUNT OF RS.1,19,000/ - . ACCORDINGLY, I AM OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN RESTRICTING THE CLAIM TO RS.1,19,000/ - . 9. THE GROUND NO.4 URGED BY THE ASSESSEE WAS NOT PRESSED BY LD A.R. ACCORDINGLY I DISMISS THE SAME AS N OT PRESSED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. PRONOUNCED ACCORDINGLY ON 26TH AUGUST 2 015. 26TH AUGUST, 2015 SD ( B.R. BASKARAN) ACCOUNTANT MEMBER MUMBAI: 26 TH AUG , 2015 . . . ./ SRL , SR. PS ITA NO.3411/M/2014 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI