Mr. M.K. Chandrashekar (HUF), Bangalore V. ITO, Bangalore

ITA 358/BANG/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 5141 (ITAT-BANGALORE)
• Duration Of Justice: 4 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-07-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 08-06-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 10-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: H V GOWTHAMA
• Keywords: Capital Gains

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 358/BANG/2010 ASSESSMENT YEAR : 2006-07 SHRI M.K. CHANDRASHEKAR (HUF), #59, DEFENCY COLONY, 100 FT. ROAD, INDIRA NAGAR, BANGALORE. : APPELLANT VS. THE INCOME TAX OFFICER, WARD 7(1), BANGALORE. : RESPONDENT APPELLANT BY : SHRI H.V. GOWTHAMA, C.A. RESPONDENT BY : SMT. V.S. SREELEKHA, ADDL.CIT(DR) O R D E R PER A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT (A) III, BANGALORE, IN ITA NO: 75/W 7(1)/ CIT (A)-III/BNG/08-09 DATED: 16.12.2009 FOR THE ASSESSMENT YEAR 2006-07. 2. THE ASSESSEE HAS RAISED FOUR GRO UNDS. HOWEVER, ON A PERUSAL, THE CRUX OF THE GRIEVANCE OF THE ASSESSEE IS CONFINED TO THAT THE CIT (A) ERRED IN CONFIRMING THE ORDER OF THE AO IN RESTRICTING THE DEEMED COST OF INVESTMENT IN THE PR OPERTY AT RS.20.34 LAKHS AS AGAINST RS.36.72 LAKHS CLAIMED. ITA NO.358/BANG/10 PAGE 2 OF 8 3. THE HISTORY OF THE ISSUE, IN BRIEF, IS THAT THE ASSESSEE HUF - HAD CLAIMED IN ITS RETURN OF INCOME FOR THE AY UNDE R DISPUTE THAT IT HAD SOLD A FLAT AT BANJARA HILLS, HYDERABAD FOR RS.20 LAKHS. 3.1. HOWEVER, DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, ON A PERUSAL OF THE SALE AGREEMENT DATED 29.3.2005, IT WAS NOTICED BY THE AO THAT THE FLAT IN QUESTION WAS SOLD FOR RS.41 LAKHS AND THE SALE CONSIDERATION WAS RECEIVED ON 15.4.2005 THROUGH BANK CHANNEL. 3.2. THE ASSESSEE MADE A CLAIM FOR CREDIT OF RS.13 ,37.712/- BEING COST OF FURNITURE AND FIXTURES BUILT IN THE FLAT. IT WAS, FURTHER, CONTENDED BY THE ASSESSEE THAT RS.30 LAKHS HAS BEEN REFLECTED IN THE STATEMENT OF AFFAIRS AS AT 31.3.05 AND THAT THE ADDITIONAL COST CLAIMED TOWARDS FURNITURE BE ALLOWED AS BENEFIT ALONG WITH THE BENEFIT OF INDEXA TION. HOWEVER, THE AO WAS OF THE VIEW THAT THE AGREEMENT TO SELL AND ALS O THE PURCHASE DEED HAD ALSO THE SAME DESCRIPTION OF THE SCHEDULE OF THE PR OPERTY. ON EXAMINATION OF ORIGINAL COMPUTATION STATEMENT, THE AO NOTICED T HAT THE SALE CONSIDERATION WAS RS.20 LAKHS AGAINST WHICH THE COS T OF ACQUISITION WAS ADOPTED AT RS.16,20,000/- WHICH WAS FURTHER INDEXED . IT WAS REASONED BY THE AO THAT THERE WAS NO ANY EVIDENCE FOR THE ALLEG ED SALE OF FURNITURE OR THERE ANY SUCH CLAIM IN THE ORIGINAL CLAIM. NO EV IDENCE WAS BROUGHT ON RECORD TO SUGGEST THAT THE FURNITURE AND FITTINGS V ALUED AT RS.13,37,712/- WAS TRANSFERRED. THUS, BRUSHING ASIDE THE ASSESSEE S CLAIM AND IN THE ABSENCE OF ANY ADDITIONAL REFERENCE IN ANY OF THE D EEDS, THE CLAIM OF THE ITA NO.358/BANG/10 PAGE 3 OF 8 ASSESSEE WAS REJECTED AND, ACCORDINGLY, THE AO REWO RKED THE INDEXED COST AT RS.20,34,869/- AND DETERMINED THE TAXABLE LTCG A T RS.20,65,131/-. 4. AGGRIEVED, THE ASSESSEE TOOK UP THE ISSUE AMONG OTHERS WITH THE C IT(A) FOR REDRESSAL. AFTER DUE CONSIDERATIO N OF THE DETAILS FURNISHED BY THE ASSESSEE COUPLED WITH PHOTOSTAT COPIES OF DO CUMENTS RELATING TO THE FURNISHINGS AND FITTINGS ETC., THE LD. CIT (A) HAD OBSERVED THUS 5.0. I HAVE CAREFULLY CONSIDERED THE SUBMISSION MADE BY THE APPELLANT. THE FACT REMAINS THAT, IN THE RETURN OF INCOME SUBMITTED, THE APPELLANT HAS ADOPTED THE SALE CONSIDERATION AS ONL Y RS.20 LAKHS, ALTHOUGH THE APPELLANT HAD RECEIVED RS.41 LAKHS AS TOTAL CONSIDERATION. THE ASSESSING OFFICER HAS CONSIDERED THE INVESTMENT MADE INCLUDING THE STAMP VALUE FOR PURCHASE OF THE FLAT. THE APPELLAN T SUBMITTED THAT, AT THE TIME OF SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2005-06, THE TOTAL INVESTMENT IN THE FLAT AT HYDERABAD HAS BEEN DISCLO SED IN THE STATEMENT OF AFFAIRS SUBMITTED AT RS.30 LAKHS. COPY OF STATE MENT OF AFFAIRS HAS ALSO BEEN PRODUCED. HOWEVER, THE BREAK-UP OF RS.30 LAKHS WAS NOT AVAILABLE ON THE RECORD AND THE SAME SHOULD HAVE BE EN CONSIDERED EVEN WHEN THE RETURN OF INCOME WAS SUBMITTED BY THE APPELLANT. THEREFORE, I AM INCLINED TO ACCEPT THE VIEWS EXPRES SED BY THE ASSESSING OFFICER AND UPHOLD THE CALCULATION MADE BY THE ASSE SSING OFFICER HOLDING THE TAXABLE LONG TERM CAPITAL GAINS ARISING TO THE APPELLANT TO THE TUNE OF RS.20,65,131/-. 5. AGITATED, THE ASSESSEE HAS COME UP WITH THE PRE SENT APPEAL. THE SUBMISSION OF THE ASSESSEE DURING THE COURSE HE ARING WAS THAT (I) THE CIT(A) ERRED IN CONFIRMING THE ORDER OF THE AO IN RESTRICTING THE DEEMED COST OF INVESTMENT IN THE PROPERTY SOLD ONLY AT RS.20,34,869/- AS AGAINST RS.36,72,414/- CLAIMED BY THE ASSESSEE; & (II) HE OUGHT TO HAVE APPRECIATED THE FACT THAT THE TOTA L COST OF PROPERTY INCLUDING KITCHEN WORK, GARAGE, AIR CONDIT IONER ETC. WAS ADOPTED AT RS.30 LAKHS EVEN AS PER SCRUTINY ASSESSM ENT FOR THE IMMEDIATE PREVIOUS YEAR I.E., AY 2005-06 WHICH WAS ACCEPTED BY THE AO. ITA NO.358/BANG/10 PAGE 4 OF 8 5.1. TO DRIVE HOME ITS POINT, THE ASSESSEE HAD ALS O FURNISHED COPIES OF INVOICE FOR PURCHASE AND INSTALLATION OF SOLAR HEATING SYSTEM DT.21.4.2000, AIR CONDITIONER FROM VOLTAS, BILL FRO M A CIVIL CONTRACTOR, PURCHASE OF TWO GARAGES ETC., 5.2. ON THE OTHER HAND, THE LD. DR WAS OF THE FIRM VIEW THAT IN THE ABSENCE OF ANY CREDIBLE EVIDENCE TO SUBSTANTIATE TH E ASSESSEES CLAIM THAT THE FURNITURE AND FITTINGS WERE VALUED AT RS.13,37, 712/- WHICH WERE ALSO TRANSFERRED ALONG WITH THE FLAT ETC., THE AO HAD IN FACT CORRECTLY REWORKED OUT THE LTCG AT RS.20,65,131/- WHICH REQUIRES TO BE SUSTAINED. 6. WE HAVE DULY CONSIDERED THE RIVAL SUBMISSIONS, CAREFULLY PERUSED THE RELEVANT RECORDS AND ALSO THE DOCUMENTA RY EVIDENCES ADVANCED DURING THE COURSE OF HEARING BY THE LD. A. R. 6.1. ON A CLOSE PERUSAL OF THE DETAILS/EVIDENCES N OW FURNISHED BY THE ASSESSEE, WE FIND THAT THE ASSESSEE HAD PURCHAS ED THE FLAT AT BANJARA HILLS AS PER THE MOU ENTERED INTO ON 28.11.1999 WHE REAS THE INSTALLATION OF SOLAR WATER SYSTEM, PURCHASE AND INSTALLATION OF VO LTAS AIR CONDITIONER AND OTHER CARPENTRY, LAYING OF MARBLE FLOOR AND OTHER C IVIL WORKS WERE CARRIED OUT SUBSEQUENTLY. FURTHERMORE, THE PURCHASER OF THE FL AT FROM THE ASSESSEE HAD CONFIRMED IN HER CONFIRMATION LETTER DATED 16.1 .2009 TO THE EFFECT THAT THE PRICE PAID BY HER FOR THE FLAT WHICH INCLUDES T HE PAYMENT FOR THE FURNITURE AND FIXTURES IN THE APARTMENT. IT APPEARS TO US TH AT THESE EVIDENCES WERE NOT BEFORE THE AO WHO HAD CONCLUDED THE ASSESSMENT PROCEEDING FOR THE AY UNDER DISPUTE. ITA NO.358/BANG/10 PAGE 5 OF 8 6.2. DURING THE COURSE OF HEARING BEFORE THIS BENC H, IT WAS ASSERTED THAT THE TOTAL COST OF THE PROPERTY INCLUD ING KITCHEN WORK, GARAGES, AIR CONDITIONER ETC WAS ADOPTED AT RS.30 LAKHS AND THAT IN THE SCRUTINY ASSESSMENT FOR THE IMMEDIATELY PRECEDING ASSESSMENT YEAR; THE FACT WAS ACCEPTED BY THE AO ETC. HOWEVER, ON A GLIMPSE OF T HE ASSESSMENT ORDER FOR THE AY 2005-06, [SOURCE: PAGE 39 OF PB AR] WE F IND THAT THERE BEING NO REFERENCE OF ANY DISCUSSION OR ACCEPTANCE WITH REGA RD TO THE PROPERTY AT HYDERABAD BY THE AO AS CLAIMED BY THE ASSESSEE. 6.3. TURNING TO THE MAIN ISSUE, WE FIND THAT THE L D. CIT (A) HAD ACKNOWLEDGED IN HIS IMPUGNED ORDER THAT THE ASSESSE E HAD PRODUCED THE COPIES OF DOCUMENTS RELATING TO THE FURNITURE AND F ITTINGS ETC. HOWEVER, IN THE SUBSEQUENT PARAGRAPH, HIS OBSERVATION WAS THAT [AT THE COST OF REPETITION] 5.0. . THE APPELLANT SUBMITTED THAT, AT THE TIME OF SCRUTINY ASSESSMENT FOR ASSESSMENT YEAR 2005-06, TH E TOTAL INVESTMENT IN THE FLAT AT HYDERABAD HAS BEEN DISCLOSED IN THE STATEMENT OF AFFAIRS SUBMITTED AT RS.30 LAKHS. COPY OF STATEMENT OF AFF AIRS HAS ALSO BEEN PRODUCED. HOWEVER, THE BREAK-UP OF RS.30 LAKHS WAS NOT AVAILABLE ON THE RECORD AND THE SAME SHOULD HAVE BEEN CONSIDERED EVEN WHEN THE RETURN OF INCOME WAS SUBMITTED BY THE APPELLANT. T HEREFORE, I AM INCLINED TO ACCEPT THE VIEWS EXPRESSED BY THE ASSES SING OFFICER AND UPHOLD THE CALCULATION MADE BY THE ASSESSING OFFICE R HOLDING THE TAXABLE LONG TEM CAPITAL GAINS ARISING TO THE APPEL LANT TO THE TUNE OF RS.20,65,131/-. 6.4. ON A DILIGENT PERUSAL OF HIS OBSERVATION, WE FIND THAT HIS OBSERVATION WAS RATHER INTRIGUING TO THE EFFECT THA T ON THE ONE HAND HE HAD MENTIONED THAT THE TOTAL INVESTMENT IN THE FLAT AT HYDERABAD HAS BEEN DISCLOSED IN THE STATEMENT OF AFFAIRS SUBMITTED AT RS.30 LAKHS. COPY OF STATEMENT OF AFFAIRS HAS ALSO BEEN PRODUCED. HOWEV ER, THE BREAK-UP OF ITA NO.358/BANG/10 PAGE 6 OF 8 RS.30 LAKHS WAS NOT AVAILABLE ON THE RECORD AND THE SAME SHOULD HAVE BEEN CONSIDERED EVEN WHEN THE RETURN OF INCOME WAS SUBMI TTED BY THE APPELLANT WE HAVE FAILED TO GAUGE WHAT HE HAD REALLY MEANT? DOES HE MEAN THAT THESE ASPECTS SHOULD HAVE BEEN CONSIDERED BY THE AO WHO HAD CONCLUDED THE ASSESSMENT FOR THE AY 2005-06 OR THE AO WHOSE IMPUGNED ORDER [AY 2006-07] WHICH IS SUBJECT MATTER OF APPEAL BEFORE U S OR THE ASSESSEE ITSELF? ON THE FIRST PART HE HAD NARRATED THE SEQUENCE OF E VENTS, BUT, ABRUPTLY JUMPED INTO A CONCLUSION THAT THEREFORE, I AM INCLINED TO ACCEPT THE VIEWS EXPRESSED BY THE ASSESSING OFFICER AND UPHOLD THE C ALCULATION MADE BY THE ASSESSING OFFICER HOLDING THE TAXABLE LONG TEM CAPI TAL GAINS ARISING TO THE APPELLANT TO THE TUNE OF RS.20,65,131/-. 6.5. FROM THE ABOVE, ONE COULD SAFELY INFER THAT T HE LD. CIT(A) HAD, PERHAPS, MESSED UP THE ISSUE FROM WHICH HE COU LD NOT COME OUT WITH A PRECISE FINDING. 6.6. WE FIND THAT THOUGH THE CIT (A) HAD AGREED IN PRINCIPLE THAT THE ASSESSEE HAD PRODUCED DOCUMENTARY EVIDENCE BEFO RE HIM SUBSTANTIATING ITS CLAIM WHICH IN ALL FAIRNESS THE SAME SHOULD HAVE BEEN EITHER EXAMINED BY HIM OR HE SHOULD HAVE CALLED FOR COMMENTS FROM THE AO TO ARRIVE AT A DEFINITE CONCLUSION. IN STEAD, W ITHOUT RECORDING THE REASONS FOR HIS INCLINATION IN AN EXPLICIT MANNER, HE HAD ACCEPTED THE AOS VERSION WHICH, IN OUR CONSIDERED VIEW, IS LACKING C ONVICTION. 6.7. ON A CURSORY VERIFICATION OF BILLS, PURCHASE ORDERS, BILLS FOR THE EXPENSES INCURRED TOWARDS CARPENTRY, RE-FLOORING WI TH OF MARBLE STONES, ITA NO.358/BANG/10 PAGE 7 OF 8 KITCHEN PLATFORM REPLACED WITH POLISHED GRANITE ST ONE ETC. THE ASSESSEE COULD HAVE, IN FACT, INCURRED SUBSTANTIAL EXPENSES. THE ASSESSEE HAD ASSERTED THAT THE TOTAL COST OF THE PROPERTY INCLUD ING KITCHEN WORK, GARAGE, AIR CONDITIONER ETC WAS ADOPTED AT RS.30 LAKHS AND THE DETAILS OF THE SAME WERE FURNISHED DURING THE SCRUTINY ASSESSMENT PROCE EDINGS FOR THE ASSESSMENT YEAR 2005-06. THIS VERY FACT HAS NOT BE EN DISPUTED BY THE AO. 6.8. IN AN OVER ALL CONSIDERATION OF THE FACTS AND CIRCUMSTANCES OF THE ISSUE AS DELIBERATED UPON IN THE FORE-GOING PAR AGRAPHS, WE ARE OF THE CONSIDERED VIEW THAT THERE IS FORCE IN THE SUBMISSI ON OF THE ASSESSEE FOR HAVING INCURRED CONSIDERABLE EXPENSES FOR THE FLAT. FURTHER, THE PURCHASER OF THE FLAT IN HER LETTER DATED 16.1.2009 HAD CONFI RMED THE PRICE PAID BY HER FOR THE FLAT WHICH INCLUDES THE PAYMENT FOR THE FUR NITURE AND FIXTURES IN THE APARTMENT. IN VIEW OF THE ABOVE, WE ARE OF THE UNA NIMOUS VIEW THAT THE AO WAS NOT JUSTIFIED IN RESTRICTING THE DEEMED COST OF INVESTMENT IN THE SAID PROPERTY AT RS.20,34,869/- AS AGAINST RS.36,72,414/ - AS ADMITTED BY THE ASSESSEE. IT IS ORDERED ACCORDINGLY. 7. DURING THE COURSE OF HEARING, THIS BENCH CAM E TO KNOW THAT THE KARTHA OF HUF AIR COMMODORE M.K.CHANDRASHEKAR WAS A SE NIOR OFFICER OF OUR AIR FORCE AND WE DULY ACCLAIM AND ACKNOWLEDGE THE D EVOTED AND SELFLESS SERVICES RENDERED BY HIM TO OUR NATION. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ITA NO.358/BANG/10 PAGE 8 OF 8 PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF JULY, 2010. SD/- SD/- ( GEORGE GEORGE K. ) (A. MOHAN ALANKAMONY ) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 23 RD JULY, 2010. DS/- COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR ITAT, BANGALORE.