ITO, New Delhi V. Sh. Parveen Adlakha, New Delhi

ITA 3759/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52663 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 1 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Next Hearing Date: 17-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 05-08-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRATIMA KAUSHIK
• Assessee Lawyers: NARENDER CHHILLAR
• Keywords: Cost of acquisition
• Section: 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH `F: NEW DELHI BEFORE SHRI C.L.SETHI, JUDICIAL MEMBER AND SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER I.T. A. NO.3759/DEL/2010 ASSESSMENT YEAR : 2006-07 INCOME-TAX OFFICER, SHRI PRAVEEN ADLAKHA, WARD-33(4), NEW DELHI. VS. 34-B/1, NEW RAJINDER NAGAR, NEW DELHI. PAN: AAEPA9295R (APPELLANT) (RESPONDENT) APPELLANT BY: SMT. PRATIMA KAUSHIK, SR. DR. RESPONDENT BY: SHRI NARENDER CHHILLAR, ADVOCATE. O R D E R PER C.L. SETHI, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL AGAINST THE ORDER DATED 17 -5-2010 PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) FO R THE ASSESSMENT YEAR 2006-07. 2. THE ONLY GROUND RAISED BY THE REVENUE IS AS UNDE R:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT (A) HAS ERRED IN DELETING THE ADDITION OF RS.22,19,941/- MA DE BY THE A.O. IN THE ABSENCE OF ORIGINAL DOCUMENT WHICH WERE NEITHER PRODUCED BEFORE THE A.O. NOR BEFORE THE CIT(A) BY T HE ASSESSEE IN SUPPORT OF THE IMPROVEMENT EXPENSES CLAIMED IN T HE COMPUTATION OF LONG TERM CAPITAL GAIN. 2 3. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.10 .2006 DECLARING TOTAL INCOME AT RS.1,82,210/-. THE ASSESSEE IS A PARTNER IN A FIRM NAMELY, TEXTILE HOUSE AND HAD SHOWN INCOME FROM REMUNERATION AND IN TEREST RECEIVED FROM THE FIRM. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAD SOLD A PROPERTY BEARING NO.10, SUKHDEV VIHAR, NEW DELHI, F OR RS.2 CRORE ON 22.3.06. THE ASSESSEE, BEING A CO-OWNER, HAD HALF SHARE IN THE SAID PROPERTY. THE SAID PROPERTY WAS PURCHASED FOR RS.9,60,000/- O N 16.12.1988. THE ASSESSEE CLAIMED BEFORE THE AO THAT THE SAID PROPER TY WAS IMPROVED AFTER THE SAME WAS PURCHASED. THE ASSESSEE HAD CLAIMED H ALF SHARE IN IMPROVEMENT COST INCURRED IN THE FINANCIAL YEARS AS UNDER:- (I) FINANCIAL YEAR 1989-90 RS.3,99,282/- (II) FINANCIAL YEAR 1994-95 RS.3,56,271/- (III) FINANCIAL YEAR 1999-2000 RS.2,99,419/- 4. THE ASSESSEE WORKED OUT THE LONG TERM CAPITAL GA IN AT RS.62,98,318/- AFTER APPLYING INDEX COST OF ACQUISITION AND INDEX COST OF IMPROVEMENT. THE ASSESSEE DEPOSITED AN AMOUNT OF RS.63,00,000/- IN T HE SPECIFIED SCHEME AND CLAIMED DEDUCTION U/S 54 OF THE ACT. 5. IN SUPPORT OF IMPROVEMENT MADE IN THE PROPERTY I N DIFFERENT YEARS, THE ASSESSEE PRODUCED COPIES OF THE FOLLOWING BILLS BEF ORE THE A.O.:- (I) BILL OF M/S. SATYAVIR RANA & CO. DATED 22.12.1989 O F RS.7,98,564/-, THE ASSESSEES HALF SHARE BEING RS.3 ,99,282/-. 3 (II) BILL OF RAM SINGH (CONTRACTOR) DATED 17-01-1995 AMO UNTING TO RAS. 7,12,542/-, THE ASSESSEES SHARE BEING RS.3,56 ,271/-. (III) BILL OF RRK CONSTRUCTIONS PVT. LTD. DATED 11.8.1999 OF RS.5,98,840/-, THE ASSESSEES SHARE BEING RS.2,99,4 19/-. 6. THE INDEXED COST OF IMPROVEMENT WAS DETERMINED A T RS.22,19,941/- WITH REFERENCE TO THE ACTUAL COST OF RS.3,99,282/- INCURRED IN THE FINANCIAL YEAR 1989-90, RS.3,56,271/- INCURRED IN THE FINANCI AL YEAR 1994-95 AND RS.2,99,419/- INCURRED IN THE FINANCIAL YEAR 1999-2 000. THE INDEXED COST WAS DETERMINED AT RS.11,53,734/- FOR F.Y. 1989-90, RS.6,83,656/- FOR F.Y. 1994-95 AND RS.3,82,547/- FOR F.Y.1999-2000, AGGREG ATING TO INDEXED COST OF IMPROVEMENT AT RS.22,19,941/-. 7. WHILE MAKING THE ASSESSMENT, THE AO DISALLOWED T HE INDEXED COST OF IMPROVEMENT OF RS.22,19,941/- BY OBSERVING THAT THE ASSESSEE FAILED TO PRODUCE THE ORIGINAL BILLS OF THE EXPENSES ALLEGEDL Y INCURRED BY THE ASSESSEE IN THE FINANCIAL YEARS 1989-90, 1994-95 AND 1999-20 00. 8. BEING AGGRIEVED, THE ASSESSEE PREFERRED AN APPEA L BEFORE THE LEARNED CIT(A). 9. AFTER CONSIDERING THE ASSESSEES EXPLANATION AND VARIOUS EVIDENCES PRODUCED BY THE ASSESSEE BEFORE THE AO AND THE AOS ORDER, THE LEARNED CIT(A) ALLOWED THE ASSESSEES CLAIM WITH REGARD TO THE IMPROVEMENT MADE 4 TO THE PROPERTY DURING THE FINANCIAL YEAS 1989-90, 1994-95 AND 1999-2000 BY OBSERVING AND HOLDING AS UNDER:- 5. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE CA SE. SO FAR AS THE FIRST GROUND OF DISALLOWANCE IS CONCERNED, I FIND THAT THE APPELLANT HAD PURCHASED A HOUSE AND HENCE, IT WAS N OT UN- REASONABLE TO CARRY OUT REPAIRS TO MAKE IT LIVABLE. THE APPELLANT HAD GIVEN SPECIFIC DETAILS OF THE REPAIR WORK AND HAD ALSO FURNISHED A COPY OF THE RELEVANT DETAILS FROM THE THREE CONTRACTORS IN RESPECT OF REPAIRS WHICH TOOK PLACED IN 1990-91, 1994-95 AND 1999-2000. THE LD. AO HAS, ON THE OTHE R HAND NOT POINTED OUT ANY DEFECT OR DEFICIENCY IN THE BIL LS AND HAS NOT MADE ANY USE OF THIS INFORMATION FOR MAKING ANY FUR THER ENQUIRIES, THOUGH HE WAS NOT SATISFIED WITH THE SAM E. HE DID NOT GIVE ANY SPECIFIC AND COGENT GROUND TO REJECT T HE CLAIM OF THE APPELLANT IN RESPECT OF THE COST OF IMPROVEMENT , WHICH WAS DONE ONLY ON THE BASIS OF ABSENCE OF THE ORIGINAL B ILL. THE LD. AO OUGHT TO HAVE ACKNOWLEDGED THAT ASSESSEE HAD SUB MITTED COPIES OF BILLS WHICH WERE AS OLD AS 15 YEARS, WHIL E THE PHOTOCOPIES OF THE SAME WERE DULY FURNISHED BEFORE HIM. IN VIEW OF THIS, THE ADDITION MADE BY THE APPELLANT IN RESPECT OF THE REPAIR WORK, IS BEING DELETED, BEING ARBITRARY AND BASELESS. 10. HENCE, THE DEPARTMENT IS IN APPEAL BEFORE US. 11. THE LEARNED DR HAS RELIED UPON THE AOS ORDER A ND SUBMITTED THAT THE AO WAS JUSTIFIED IN REJECTING THE ASSESSEES CLAIM OF IMPROVEMENT ALLEGEDLY MADE TO PROPERTY IN F.Y. 1989-90, 1994-95 AND 1999- 2000 INASMUCH AS THE ASSESSEE FAILED TO PRODUCE ORIGINAL BILLS FROM THE CONCERNED CONTRACTOR OR THE PERSON CONCERNED, WHO CLAIMED TO HAVE CARRIED OUT T HE IMPROVEMENT WORK TO THE PROPERTY. 5 12. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND, SUBMITTED THAT THE PAPERS RELATING TO IMPROVEMENT WORK DONE TO THE PROPERTY PURCHASED IN 1988, ARE VERY OLD AND ORIGINALS THEREOF WERE NOT T RACEABLE, HOWEVER, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE PHOTO COPIES OF ALL THE BILLS WERE DULY SUBMITTED BEFORE THE AO AS WELL AS BEFORE THE LEARNED CIT(A) AND NO DEFECT OR DISCREPANCY WAS FOUND THERE IN. HE FURTHER SUBMITTED THAT THE DETAILS OF THE MATERIALS USED AN D THE NATURE OF WORKS DONE WERE ALSO MENTIONED IN THE BILLS SUBMITTED BY THE C ONTRACTORS AND THEREFORE, THERE WAS NO REASON TO DISBELIEVE THE ASSESSEES CL AIM. 13. WE HAVE HEARD BOTH THE PARTIES AND HAVE GONE TH ROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ASSESSEE HAS ALSO PRODU CED BEFORE US, COPIES OF THE BILLS ISSUED BY M/S. SATYAVIR RANA & CO., SHRI RAM SINGH & M/S. RRK CONSTRUCTIONS PVT. LTD., WHICH ARE PLACED AT PAGES 1 TO 20 OF THE PAPER BOOK DATED 7.10.2010 FILED BEFORE US. M/S. SATYAVIR RAN A & CO. VIDE BILLS DATED 22.12.1989 HAS GIVEN THE DETAILS OF TOTAL EXPENDITU RE OF RS.7,98,564/- INCURRED FOR DISMANTLING OF FLOOR IN THE GROUND FLO OR, DISMANTLING OF MARBLE FLOORING, EXCAVATION OF LAWN AND THEN DOING THE MAR BLE WORK AND GRANITE WORK IN THE BUILDING. THE ITEM-WISE DETAILS REGARD ING PAYMENT TO VARIOUS WORKERS HAVE ALSO BEEN GIVEN. THE ITEM-WISE DETAIL S OF ITEMS OR GOODS USED FOR RECONSTRUCTION WORK HAVE ALSO BEEN FURNISHED. SIMILARLY, RAM SINGH 6 CONTRACTOR VIDE BILL DATED 17.01.1995 HAS GIVEN THE DETAILS OF VARIOUS WORKS EXECUTED BY HIM. M/S. RRK CONSTRUCTIONS PVT. LTD. HAS ALSO GIVEN DETAILS OF VARIOUS RENOVATION WORKS CARRIED OUT IN RESPECT OF THE PROPERTY SITUATED AT 10, SUKHDEV VIHAR, NEW DELHI. THE AO DID NOT MAKE ANY ENQUIRY FROM THE RESPECTIVE PERSONS CONCERNED OR MADE PHYSICAL VERIF ICATION OF THE PROPERTY. THE AO HAS REJECTED THE CLAIM OF THE ASSESSEE MEREL Y FOR THE REASON THAT ORIGINAL BILLS WERE NOT PRODUCED. THE ASSESSEE HAS EXPLAINED BEFORE THE LEARNED CIT(A) THAT THE WORK OF IMPROVEMENT WAS CAR RIED OUT IN F.Y. 1989- 90, 1994-95 AND 1999-2000 AND SINCE THE MATTER IS A VERY OLD ONE, IT WAS NOT FEASIBLE ON THE PART OF THE ASSESSEE TO LOCATE THE ORIGINAL BILLS. WE, FURTHER FIND THAT THE ASSESSEE HAS GIVEN SPECIFIC DETAILS O F THE VARIOUS WORKS UNDERTAKEN IN THE FINANCIAL YEARS 1989-90, 1994-95 AND 1999-2000. WE, FURTHER FIND THAT IDENTICAL CLAIM WAS ALSO MADE BY CO-OWNER SHRI ASHOK ADLAKHA, (PAN AAEPA 9294Q ITO, WARD 22(2), NEW DELHI) AND IT WAS STATED BY THE LEARNED COUNSEL FOR THE ASSESSEE AT THE BAR THAT IDENTICAL CLAIM HAS BEEN ACCEPTED BY THE DEPARTMENT IN THE CA SE OF SHRI ASHOK ADLAKHA WITHOUT SELECTING THE SAID CASE FOR SCRUTIN Y. A COPY OF ACKNOWLEDGEMENT OF RETURN FILED BY SHRI ASHOK ADLAK HA FOR A.Y. 2006-07 WHERE THE CAPITAL GAIN HAS BEEN SHOWN AT `NIL, HAS BEEN FILED BEFORE US. 7 14. IN THE LIGHT OF THE DISCUSSIONS MADE ABOVE, WE, THEREFORE, UPHOLD THE ORDER OF THE LEARNED CIT(A) IN DELETING THE ADDITIO N MADE BY THE AO WITH REGARD TO THE ASSESSEES CLAIM FOR IMPROVEMENT IN T HE PROPERTY MADE IN THE F.Y.1989-90, 1994-95 AND 1999-2000. 15. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 16. THIS DECISION IS PRONOUNCED IN THE OPEN COURT O N 9 TH SEPTEMBER, 2011. SD/- SD/- (SHAMIM YAHYA) (C.L. SETHI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 9 TH SEPTEMBER, 2011. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.