SHRI DEV SUMAN SAINI, JAIPUR V. ASSISTANT COMMISSIONER OF INCOME TAX, JAIPUR

ITA 397/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 6309 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-07-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: POONAM RAI DCIT DR DHK
• Assessee Lawyers: B P MUNDRA
• Keywords: Question of law

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 397/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2013-14 SHRI DEV SUMAN SAINI A-69, MODEL TOWN, JAGAT PURA JAIPUR CUKE VS. THE ACIT CIRCLE - 6 JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AJXPS 1080 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI B.P. MUNDRA, CA JKTLO DH VKSJ LS@ REVENUE BY:SMT. POONAM RAI, DCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/06/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 02 /07/2018 VKNS'K@ ORDER PER BHAGCHAND, AM THE APPEAL FILED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 12-02-2018 FOR THE ASSESSME NT YEAR 2013-14 RAISING THEREIN FOLLOWING GROUNDS OF APPEAL. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE A DDITION OF RS. 5,00,000/- FOR PAYMENT TO VACANT OF UNAUTHORIZE D POSSESSION OUT OF CAPITAL GAIN. ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN NOT ALLOWING THE GROUND OF THE ASSESSEE THAT SELECTION OF THE CASE UNDER SCRUT INY THROUGH MANUAL IS BAD IN LAW AND FACTS. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF INTEREST EXPENSES OF RS. 8,02,854/- . 2.1 DURING THE COURSE OF HEARING THE LD.AR OF THE A SSESSEE HAS NOT PRESSED THE GROUND NO. 2. HENCE, THE SAME IS DISMIS SED BEING NOT PRESSED. 3.1 APROPOS GROUND NO. 1 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 2.4 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. AS NOTED BY THE AO, DURING THE YEAR UNDER CONSIDERATIO N, THE ASSESSEE ALONGWITH SHRI DILIP AGARWAL HAD SOLD A PL OT NO. 549, UDAY MARG, RAJA PARK, JAIPUR TO SURESH PUNJAB AND SHRI SUNDAR GANGA RAM PUNJABI FOR A CONSIDERATION O F RS. 1,00,00,000/-. HOWEVER, WHILE COMPUTING CAPITAL GAI NS THE ASSESSEE HAS DECLARED CONSIDERATION OF RS. 45,00,00 0/- ONLY FOR HIS 50% SHARE IN THE SAID PLOT INSTEAD OF RS. 5 0,00,000/- AS IT HAD BEEN SUBMITTED THAT THERE WAS ENCROACHMEN T ON THE SAID PLOT BY TWO PERSONS NAMELY BABULAL MEENA AND P HOOL CHAND JHA. IT HAD BEEN SUBMITTED THAT THE ASSESSEE SERVED THEM A LEGAL NOTICE THROUGH ADVOCATE AND MADE EFFOR TS TO EVACUATE THE PLOT THROUGH POLICE ALSO AND SINCE THE SE EFFORTS COULD NOT FETCH RESULT, THE ASSESSEE HAD TO MAKE AN AGREEMENT WITH THE ENCROACHERS TO THE EFFECT THAT AT THE TIME OF SALE OF PLOT, A SUM EQUAL TO 10% OF THE SALE CONSIDERATION SHALL BE GIVEN TO THEM FOR VACATING THE POSSESSIONS. ACCORDI NGLY, AFTER SALE OF THE SAID PLOT, A SUM EQUAL TO 10% OF THE SALE ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 3 CONSIDERATION OF RS. 1,00,00,000/-I.E. RS. 10 LAKH WAS PAID TO BOTH OF THEM AND THUS NET SALE CONSIDERATION ARR IVED AT RS. 90 LAKHS ONLY OF WHICH THE 50% SHARE I.E. RS. 45 LA KHS HAS BEEN CORRECTLY SHOWN BY THE ASSESSEE TO COMPUTE THE CAPITAL GAINS. RELIANCE WAS PLACED BY THE A.R. ON CASE OF CIT VS MISS PIROJA C PATEL (2000) 242 ITR 582 (BOM.) AND M RS. JUNE PERRETT VS ITO (2008) 298 ITR 268 (KAR.) AND N AOZAR CHENOY VS CIT (1998) 234 ITR 95 (AP). THE AO DISCUSSED AND DISTINGUISHED ALL THE THREE CA SES IN THE CASE OF MISS. PIROJA C PATEL, THE ASSESSEE H AD SOLD LAND TO THE BMC WHICH WAS HAVING HUTMENTS OVER THERE. IN THAT CASE GIVING VACANT POSSESSION OF THE LAND TO BMC WA S A CONDITION PRECEDENT UNDER THE TERMS OF THE NEGOTIAT ION-CUM- ACQUISITION AGREEMENT. HENCE, THE COMPENSATION PAID TO THE HUTMENT DWELLERS WERE ALLOWED AS COST OF IMPROVEMEN T BY THE HON'BLE HIGH COURT. HOWEVER, IN THE CASE OF THE RE IS NO MATERIAL TO SUGGEST THAT THE PROSPECTIVE BUYER HAD INSISTED ON HANDING OVER THE VACANT POSSESSION OF PLOT. IN THE CASE OF MRS. JUNE PERRETT, ONLY THE LEGAL EXPENSES, COURT FEE ETC. FOR OBTAINING THE LETTER O F ADMINISTRATION AND PROBATE INCURRED BY THE EXECUTOR S TO SECURE AN ORDER OF EVICTION AGAIN UNAUTHORIZED OCCU PANT WAS HELD TO BE ALLOWED AS EXPENDITURE IN COST OF IMPROV EMENT. IN THE PRESENT CASE NO SUCH EXPENSES ARE INVOLVED. THE CASE OF NAOZAR CHENOYS VS CIT ALSO DOES NOT HELP THE ASSESSEE. IN THAT CASE, THE HON'BLE HIGH C OURT ALLOWED THE EXPENDITURE INCURRED BY THE ASSESSEE TO WARDS PAYMENT MADE TO THE TENANTS FOR VACATING THE PREMIS ES WHICH IS THE SUBJECT MATTER OF THE SALE TRANSACTION. IT W AS HELD THAT SUCH PAYMENT HAS NEXUS WITH THE TRANSACTION AS WITH OUT THE TENANTS VACATING THE PREMISES, THE BUILDING CANNOT BE SOLD. HERE IN THE PRESENT CASE, THE PAYEE ARE NOT THE TEN ANTS BUT ILLEGAL/UNAUTHORIZED OCCUPANTS OF THE LAND. THE AO THUS ADDED THIS AMOUNT OF RS. 5,00,000/-. ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 4 IN THE PRESENT PROCEEDINGS, SUBMISSIONS AS MADE IN THE ASSESSMENT PROCEEDING WERE REITERATED. HOWEVER, SIN CE THE APPELLANT COULD NOT DEMONSTRATE THAT THE LAND WAS A CTUALLY OCCUPIED BY THE 2 PARTIES TO WHOM THE AMOUNTS WERE CLAIMED TO HAVE BEEN PAID. FURTHER AS POINTED OUT BY THE AO EVEN IN THE SALE DEED THE PLOT WAS MENTIONED AS VACANT AND HENCE THIS DOES NOT SUPPORT THE APPELLANT CONTENTION. IN VIEW OF THE DISCUSSION AS ABOVE, THE ADDITION MADE BY THE AO IS CONFIRMED. THE GROUND OF APPEAL IS DISMISSED. 3.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ADDITION OF RS. 5.00 LACS WHICH WAS PAID TO VACANT THE UNAUTHORIZED POSSESSION ON PLOT . THE AMOUNT IS ALLOWABLE PRIOR TO WORKING OUT CAPITAL GAIN. HE FUR THER PLEADED THAT THE ASSESSEE PURCHASED THE PROPERTY IN MARCH 2002 AND T HEREAFTER TWO PERSONS NAMELY SHRI BABU LAL MEENA AND SHRI PHOOL C HAND JHA UNAUTHORIZEDLY CONSTRUCTED TWO SMALL ROOMS. THE AS SESSEE GAVE A LEGAL NOTICE TO THESE PERSONS ON 1-11-2007. THE ASSESSEE ALSO TRIED TO REMOVE THESE UNAUTHORIZED PERSONS THROUGH POLICE. HOWEVER, THE UNAUTHORIZED POSSESSION FROM THESE UNAUTHORISED OCCUPANTS COULD NOT BE REMOVED. THEREAFTER IN MAY 2008, ASSESSEE AND THE CO-OWNER O F THE PLOT AGREED WITH SHRI BABU LAL MEENA AND SHRI PHOOL CHAND JHA T HAT WHENEVER THE PLOT IS SOLD, THEY WILL BE PAID 10% OF THE SALE CON SIDERATION TOWARDS VACATING THE UNAUTHORIZED STRUCTURE ON PLOT. THE A SSESSEE HAS SUBMITTED THE COPY OF THE LEGAL NOTICE ISSUED TO SHRI BABU LA L MEENA AND SHRI PHOOL ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 5 CHAND JHA. COPY OF IKRARNAMA ENTERED INTO WITH SHRI BABU LAL MEENA AND SHRI PHOOL CHAND JHA WAS ALSO FILED. THE ASSESS EE ALSO SUBMITTED THE ID PROOF OF THESE PERSONS IN SUPPORT OF HIS CONTENT IONS. 3.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE OR DER OF THE LOWER AUTHORITIES. 3.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE ALONG WITH SH RI DILIP AGARWAL HAD SOLD A PLOT NO. 549, UDAY MARG, RAJA PARK, JAIPUR T O SHRI SURESH PUNJABI AND SUNDER GANGA RAM PUNJABI FOR A CONSIDERATION OF RS. 1.00 CRORE. WHILE COMPUTING THE CAPITAL GAIN THE ASSESSEE HAD D ECLARED CONSIDERATION OF RS. 45.00 LACS ONLY FOR HIS 50% SHARE IN THE SAI D PLOT INSTEAD OF RS. 50.00 LACS. WHEN ASKED FOR SHOWING THE LESS CONSIDE RATION, IT HAS BEEN SUBMITTED THAT THERE WAS ENCROACHMENT ON THE SAID P LOT BY TWO PERSONS NAMELY SHRI BABU LAL AND SHRI PHOOL CHAND. THE ASSE SSEE SERVED THEM A LEGAL NOTICE THROUGH ADVOCATE AND MADE EFFORTS TO E VACUATE THE PLOT THROUGH POLICE ALSO (PBP-16). SINCE THESE EFFORTS C OULD NOT FETCH RESULT, THE ASSESSEE HAD TO MAKE AN AGREEMENT WITH THE ENCR OACHER TO THE EFFECT THAT AT THE TIME OF SALE OF SAID PLOT A SUM EQUAL T O 10% OF THE SALE CONSIDERATION SHALL BE GIVEN TO THEM FOR VACATING T HE POSSESSION (PBP 17- ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 6 18). ACCORDINGLY, AFTER SALE OF THE SAID PLOT A SUM EQUAL TO 10% OF THE SALE CONSIDERATION OF RS. 1.00 CRORE I.E. RS. 10.00 LACS WAS PAID TO BOTH OF THEM FOR WHICH THE ASSESSEE HAS FILED THE RECEIPT O F CASH AMOUNT OF RS. 10.00 LACS TAKEN BY THEM (SHRI BABU LAL MEENA AND S HRI PHOOL CHAND JHA) (PBP 20). THE ASSESSEE HAS FILED THE ID PROOF OF BOTH THE PERSONS I.E. DRIVING LICENS. IT IS NOTED THAT THE ASSESSEE HAD S HOWN ITS SHARE OF RS. 45.00 LACS I.E. 50% OF NET CONSIDERATION OF RS. 90. 00 LACS TO COMPUTE THE CAPITAL GAIN. IT IS ALSO NOTED THAT LD.AR OF THE AS SESSEE VIDE ITS LETTER DATED 14-12-2015 ADDRESSED TO DCIT,CIRCLE 6, JAIPUR (PB P 43-44) JUSTIFIED THE PAYMENT MADE TO UNAUTHORIZED OCCUPANTS, THE REL EVANT SUBMISSION IS AS UNDER:- REASON OF THE 10% AGREED WAS THAT SHRI BABU LAL MEENA AND SHRI PHOOL CHAND JHAN MADE CONSTRUCTI ON ON THE PROPERTY AND THEY CLAIMED TO MAKE EXPENSES OF R S. 5,00,000/- TO SAVE THE TITLE, THE ASSESSEE WAS HAVI NG NO ALTERNATIVE BUT TO AGREE TO GIVE 10% SHARE, THE COP Y OF THE AGREEMENT IS ENCLOSED HEREWITH AT PAGE NO. 21-26. HOWEVER, IT IS NOTED THAT THE AO HAS MADE THE ADDIT ION OF RS. 5.00 LACS BY OBSERVING AS UNDER:- 4.5 ..ON PERUSAL OF THE SALE AGREEMENT DATED 15-0 1- 2013 ON PAGE 10 OF THE SALE DEED, IT IS CLEARLY MEN TIONED THAT THE PLOT WAS FLAT AND VACANT AT THE TIME OF SALE. H AD THERE BEEN ANY CONSTRUCTION BY THE SO CALLED ENCROACHERS, THE SAME MUST HAVE FOUND A MENTION IN THE SALE AGREEMENT. TH E ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 7 FACTUAL AND LEGAL POSITION BEING SO, THE PAYMENT MA DE TO EVACUATE THE ILLEGAL POSSESSIONS CAN NEITHER BE ALL OWED AS A COST OF IMPROVEMENT NOR AS AN EXPENDITURE INCURRED IN CONNECTION WITH SALE TRANSACTION. THIS MEANS AN ADD ITION OF RS. 5,00,000/- TO THE INCOME OF ASSESSEE. IN FIRST APPEAL, THE LD. CIT(A) HAS CONFIRMED THE A DDITION MADE BY THE AO. FROM THE AVAILABLE RECORDS, IT IS NOTED THAT TH ERE WAS A DISPUTE AND SHRI BABU LAL MEENA AND SHRI PHOOL CHAND JHAN WERE HAVING THE ILLEGAL POSSESSIN ON THE PREMISES OF THE ASSESSEE. IT IS FU RTHER NOTED THAT THE LD.AR OF THE ASSESSEE VIDE LETTER DATED 17-03-2016 ADDRESSED TO ACIT, CIRCLE 6,JAIPUR HAD REQUESTED THE AO TO MAKE ENQ UIRY IF HE HAS ANY DOUBT ABOUT THE ILLEGAL POSSESSION OF THE PREMISES BY THESE TWO PERSONS PBP 45). HOWEVER, THE AO HAD NOT GIVEN ANY ADVERSE FINDINGS THEREON. IT IS NOTED FROM THE SALE AGREEMENT MADE BETWEEN THE A SSESSEE WHEREIN THE ASSESSEE HAD RECEIVED THE AMOUNT OF RS. 45.00 LACS THROUGH CHEQUE, THE DETAILS OF WHICH ARE AVAILABLE AT PBP 36 OF SALE AG REEMENT. THE ASSESSEE HAD TAKEN ONLY RS. 45.00 LACS THROUGH BANKING CHANN EL AND RS. 10.00 LACS WAS RECEIVED BY CASH WHICH WAS DUE TO THE REASON TH AT THESE ILLEGAL POSSESSION HOLDER WANTED THE AMOUNT IN CASH. TO THI S EFFECT, THE ASSESSEE HAS RELIED ON THE DECISIONS OF VARIOUS HON'BLE HIGH COURTS. HON'BLE KARNATAKA HIGH COURT IN THE CASE OF MRS.JUNE PERRET T VS ITO (2008), 298 ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 8 ITR 268 HELD THAT PAYMENT TO EXECUTE AN ORDER OF E VICTION AND TO EVICT AN UNAUTHORIZED OCCUPANT CAN BE TREATED AS COST OF IMP ROVEMENT. THE RELEVANT OBSERVATION OF THE COURT IS AS UNDER:- THEN THE LAST QUESTION TO BE CONSIDERED BY US IS, WHETHER THE AMOUNT SPENT BY THE EXECUTORS TO SECURE AN ORDER OF EVICTION TO EVICT UNAUTHORISED OCCUPANT HA S TO BE TREATED AS EXPENDITURE IN CONNECTION WITH THE TRANS FER OF PROPERTY ? THE EXECUTORS COULD HAVE SOLD THE PROPERTY EVEN WIT HOUT EVICTING THE UNAUTHORISED OCCUPANT. IF SUCH AN ATTE MPT WERE TO BE MADE BY THE EXECUTORS, NO MAN OF PRUDENCE WOULD HAV E COME TO BUY THE PROPERTY, SINCE THE UNAUTHORISED OCCUPANT W ERE CLAIMING ADVERSE POSSESSION OF THE PROPERTY. IN ORDER TO CLE AR THE CLOUD CAST ON THE PROPERTY, THE EXECUTORS WERE REQUIRED TO FIL E A CIVIL SUIT. ANY EXPENSES INCURRED IN CONNECTION WITH SUCH SUIT HAS TO BE TREATED AS EXPENDITURE IN ORDER TO TRANSFER THE PROPERTY. OUR VIEW IS SUPPORTED BY THE JUDGMENT OF THE BOMBAY HIGH COURT IN THE CAS E OF CIT V. MISS PIROJA C. PATEL REPORTED IN [2000] 242 ITR 582 . IN THE AFORE- SAID CASE, CERTAIN EVICTION PROCEEDINGS WERE INITIA TED TO EVICT THE UNAUTHORISED OCCUPANT FROM THE LAND. DUE TO EVICTIO N OF THE UNAUTHORISED OCCUPANT FROM THE HOUSE, THE VALUE OF THE PROPERTY WAS INCREASED AND THE EXPENDITURE INCURRED FOR VACA TING THE LAND HAS BEEN TREATED AS COST OF IMPROVEMENT. SIMILARLY, IN THIS CASE ALSO, IF THE UNAUTHORISED OCCUPANT HAD NOT BEEN EVI CTED, THE VALUE OF THE PROPERTY WOULD HAVE BEEN DECREASED INSTEAD O F INCREASING. THEREFORE, WE HAVE TO TREAT THE EXPENDITURE INCURRE D BY THE EXECUTORS TO EVICT THE UNAUTHORISED OCCUPANT AS AN AMOUNT SPENT TOWARDS COST OF IMPROVEMENT OF THE PROPERTY. IN THE CIRCUMSTANCES, WE HAVE TO ANSWER THE QUESTION OF LAW FRAMED IN FAV OUR OF THE ASSESSEE. IN THE CASE OF CIT VS MISS PIJORIA C PATEL [2002] 242 ITR 582 (BOM), THE HON'BLE BOMBAY HIGH COURT HELD AS UNDER:- THE SHORT POINT WHICH ARISES FOR CONSIDERATION IN T HE PRESENT MATTER IS WHETHER COMPENSATION PAID BY THE ASSESSE E AND OTHER CO OWNERS TO THE HUTMENT DWELLERS FOR VACATING THE LAND WAS AN ALLOWABLE EXPENDITURE WITHIN THE MEANING OF SECTION 48 READ WITH SECTION 55 OF THE INCOME TAX ACT, 1961. THE ANSWER TO THIS QUESTION WILL DEPEND ON WH ETHER THE EXPEN SES INCURRED BY THE ASSESSEE AND OTHER CO OWNERS CONSTI TUTE COST OF IMPROVEMENT UNDER SECTION 48(II). THE SAID POINT IS COVERED BY THE JUDG MENT OF THE DIVISION BENCH OF THIS COURT IN THE CASE OF CIT V. SHAKUNTALA KANTILAL [1991] 190 ITR 56 AND THE JUDGMENT OF THE DIVISION BENCH OF THIS COURT IN THE ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 9 CASE OF HARDIALLIA CHEMICALS LTD. V. CIT [1996] 218 ITR 598. ON EVICTION OF THE HUTMENT DWELLERS FROM THE LAND IN QUESTION, THE VALUE OF THE LAND INCREASES AND, THEREFORE, THE EXPENDITURE INCURRED FOR HAVING THE LAND VACATED WOULD CERTAINLY AMOUNT TO COST OF IMPROVEME NT. ACCORDINGLY, THE ABOVE QUESTION IS ANSWERED IN THE AFFIRMATIVE, I.E. , IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. THE REFERENCE ACCORDING LY STANDS DISPOSED OF WITH NO ORDER AS TO COSTS. ISSUANCE OF CERTIFIED CO PY EXPEDITED. IN THE CASE OF NAOZAR CHENOY VS CIT (1998), 234 IT R 95, THE HON'BLE ANDHRA PRADESH HIGH COURT HELD AS UNDER:- ..AS REGARDS THE EXPENDITURE INCURRED BY THE ASSE SSEE TOWARDS PAYMENT OF THE AMOUNT TO THE TENANTS FOR VACATING THE PREMISES , WHICH IS THE SUBJECT MATTER OF THE SALE TRANSACTION, WE ARE OF THE VIEW THAT IT HAS NE XUS WITH THE TRANSACTION AS WITHOUT THE TENANTS VACATING THE PREMISES, THE BUILDING CAN NOT BE SOLD. THEREFORE WE ARE OF THE VIEW THAT THE SAID EXPENDITURE WAS INCURRED FOR EFFECTING THE TRANSACTION AND THEREFORE HE IS ENTITLED FOR DEDUCTION OF THE AMOUN TS INCURRED TOWARDS VACATION OF THE TENANTS, IN COMPUTING THE CAPITAL GAIN OF THE BUILD ING SOLD. IT FOLLOWS FROM THE ABOVE THAT THE ASSESSEE IS ENTITLED TO THE DEDUCTION OF R S. 43,107, RS. 34,200, RS. 60,000 AND RS. 3,800 BECAUSE THESE AMOUNTS RELATE TO THE E XPENDITURE INCURRED FOR THE PURPOSE OF GETTING THE TENANTS TO VACATE THE BUILDI NG. ACCORDINGLY, WE ALLOW THE SAME. TAKING INTO CONSIDERATION ALL THE RELEVANT FACTS, C IRCUMSTANCES OF THE CASE, EVIDENCES AND VARIOUS CASE LAWS RELIED ON BY THE ASSESSEE, WE HOLD THAT THE LD. CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE A DDITION OF RS. 5.00 LACS WHICH WE DIRECT TO DELETE. THUS GROUND NO. 1 OF TH E ASSESSEE IS ALLOWED. 4.1 APROPOS GROUND NO. 3 OF THE ASSESSEE, THE FACTS AS EMERGES FROM THE ORDER OF THE LD. CIT(A) ARE AS UNDER:- 3.3 I HAVE PERUSED THE FACTS OF THE CASE, THE ASSESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLA NT. THE AO NOTED THAT INTEREST PAYMENTS OF RS. 8,02,585/- W ERE CLAIMED UNDER SECTION 57 AS REPRODUCED IN THE ASSES SMENT ORDER AT PARA 3 ON PAGE 2. HE FURTHER FOUND THT OUT OF THE TOTAL CLAIM OF INTEREST A SUM OF AGGREGATING TO RS. 2,47,170/- ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 10 RELATES TO HDFC BANK OD ACCOUNT AND AS PER THIS, TH E OPENING BALANCE AS ON 01-04-2012 WAS RS. 9238/- AND CLOSING BALANCE AS ON 31-03-2013 WAS RS. 12,681/- A ND THUS CONCLUDED THAT BANK CHARGES IN THIS ACCOUNT WERE IN RESPECT OF LOAN UTILIZED AND REPAID DURING THE YEAR. FURTHE R THE ADVANCE TO M/S. FEATHERTOUCH POLYCHEM P. LTD. M/S. LAXMI BUILDERS & DEVELOPERS AND M/S. SWADESHI DEVELOPERS WERE GIVEN IN EARLIER YEARS AND HENCE INTEREST PAID TO H DFC BANK COULD NOT HAVE ANY NEXUS WITH THE SAME. IT WAS FURT HER NOTED THAT RS. 11 LAKH WITHDRAWN ON 20-04-2012 AND SUBSEQ UENT LOAN ON18-07-2012, 21-07-2012 AND 26-07-2012 TO 3 P ARTIES OF AN AMOUNT OF RS. 70,20,840/- WERE NEITHER RETURN ED NOR ANY INTEREST RECEIVED ON THE SAME AND MAXIMUM AMOUN T OF INTEREST CHARGES WERE ATTRIBUTABLE TO THESE. AS REG ARDS INTEREST PAID TO PRIVATE PARTIES RAJ KUMARI AGARWAL AND APARAJITA SAINI, THERE IS AN OPENING BALANCE AND DU RING THE YEAR INTEREST HAS ONLY BEEN CREDITED. THUS, IT WAS CONCLUDED BY THE AO THAT INTEREST BEARING LOANS HAVE NOT BEEN UTILIZED IN GIVING ADVANCE ON WHICH INTEREST HAS BEEN EARNED AND THUS THE CLAIM OF INTEREST EXPENSES AGAINST SUCH INTERES T INCOME WAS REJECTED. IN THE PRESENT PROCEEDINGS, A.R. REIT ERATED THE EARLIER SUBMISSIONS MADE BEFORE THE AO. A PERUSAL O F THE SUBMISSIONS AND THE LEDGER ACCOUNTS, THE A.R. HAS C LAIMED TO HAVE PAID RS. 12 LAKHS ON 5-04-2012 AND 7 LAKHS ON 06-08- 2012 TO M/S. DND BUILD HOMES PVT. LTD. A PERUSAL OF THE ACCOUNT SHOWS THAT ON THESE DATES FUNDS WERE AVAILA BLE WITH THE ASSESSEE AND THERE IS NO NEXUS FOR THE LOAN FUN DS FROM HDFC BANK. AS REGARDS THE AMOUNT OF RS. 25 LAKHS ON 07- 07-2012 TO SHRI SUNIL TIWARI, THE SAME IS ONLY FOR 3 DAYS AND RETURNED ON 10-07-2012. AS REGARDS LOAN TO M/S. FEATHERTOUCH POLYCHM P. LTD. M/S. LAXMI BUILDERS & DEVELOPERS AND M/S. SWADESHI DEVELOPERSSSSS, ALL AR E OPENING BALANCES AND NO AMOUNTS ARE EXTENDED DURING THE YEAR. FURTHER THE HDFC BANK ACCOUNT, THE OPENING BA LANCE IS ONLY RS. 9000/- APPROXIMATELY, THUS NO LOANS ARE RE FLECTED THEREIN. SIMILARLY ONLY INTEREST IS BEING CREDITED TO THE ACCOUNTS OF APARAJIT SEN AND RAJ KUMARI AGARWAL THE SAME ARE OPENING BALANCES AND INTEREST IS CREDITED. FURT HER THE MAIN ISSUE IS THAT THE A.R. HIMSELF IS AGREEING THA T ALMOST ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 11 RS. 80 LAKHS HAVE BEEN USED FOR PURPOSE OF AGRICULT URAL LAND AND MAJOR PART OF INTEREST AMOUNT IS USED FOR THESE . THUS THE INTEREST BEARING LOANS HAVE BEEN UTILIZED FOR A PER SONAL ASSET. THE CONTENTION OF THE ASSESSEE THAT SINCE CAPITAL G AIN IS OFFERED ON THE LAND IN THE SUBSEQUENT YEAR ALSO CAN NOT BE ACCEPTED AS THE CLAIM OF THE INTEREST HAS BEEN MADE UNDER SECTION 57 WHEREIN IT HAS TO RELATE TO THE LOANS GI VEN AND THE INTERST EARNED THEREON. IN VIEW OF THE DISCUSSION A S ABOVE, THE DISALLOWANCE MADE BY THE AO IS SUSTAINED. THE G ROUND OF APPEAL IS DISMISSED. 4.2 DURING THE COURSE OF HEARING, THE LD.AR OF THE ASSESSEE PRAYED THAT THE LD. CIT(A) HAS ERRED IN CONFIRMING THE DISALLOW ANCE OF INTEREST OF RS. 8,02,854/- WHICH SHOULD BE ALLOWED. 4.3 ON THE OTHER HAND, THE LD. DR SUPPORTED THE OF THE LOWER AUTHORITIES. 4.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. BRIEF FACTS OF THE CASE ARE TH AT THE ASSESSEE IN THE COMPUTATION OF INCOME HAD CLAIMED EXPENSES OF RS. 8 ,02,854/- AGAINST THE INTEREST INCOME SHOWN UNDER THE HEAD INCOME F ROM OTHER SOURCES. DURING ASSESSMENT PROCEEDING THE ASSESSEE WAS ASKED TO PROVE THAT THE INTEREST BEARING LOANS TAKEN BY THE ASSESSEE HAVE B EEN UTILIZED IN GIVING THE LOANS ON WHICH INTEREST INCOME HAS BEEN EARNED. THE DETAILS OF INTEREST EXPENSES CLAIMED BY THE ASSESSEE ARE AS U NDER:- ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 12 BANK CHARGES (HDFC BANK) RS. 104215.60 BANK INTEREST ON OD A/C HDFC BANK RS. 142954.86 INTEREST PAID TO PRIVATE PARTIES: APARAJITA SAINI RS. 205725/- SHRIKANT OIL RS. 300000/- RAJKUMAR AGARWAL RS. 49959/- TOTAL RS. 555654.00 RS. 802854.00 THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEE DING SUBMITTED ALL THESE DETAILS FILED BEFORE THE AO WHO HAS MADE THE ADDITION OF RS. 8,02,854/-. THE LD. CIT(A) HAS CONFIRMED THE AC TION OF THE AO. FROM THE AVAILABLE RECORDS BEFORE US, IT IS NOTED THAT T HE ASSESSEE HAS UTILIZED THE BORROWED FUNDS TO PURCHASE THE AGRICULTURAL LAN D. AS REGARDS INTEREST PAYMENT TO RAJ KUMARI AGARWAL AND APARJITA SAINI, I T IS NOTED THAT THERE WERE OPENING BALANCES OF THE AMOUNTS IN THEIR ACCOU NTS. FURTHER THE ASSESSEE HAS EARNED INTEREST ON THE ADVANCES MADE T O M/S. FEATHERTOUCH POLYCHEM (P) LTD. OF RS. 6,17,757/-. IT IS IMPORTAN T TO NOTE THAT DURING THE YEAR THE ASSESSEE HAS EARNED INTEREST INCOME OF RS. 13,95,012/- AND PAID THE INTEREST OF RS. 8,02,854/-. IN VIEW OF THESE FA CTS AND CIRCUMSTANCES OF THE CASE, WE FIND NO MERIT IN THE ORDER OF THE LD. CIT(A) IN SUSTAINING THE DISALLOWANCE OF INTEREST OF RS. 8,02,854/-. THUS GR OUND NO. 3 OF THE ASSESSEE IS ALLOWED. ITA NO.397/JP/2018 SHRI DEV SUMAN SAINI VS ACIT, CIRCLE 6, JAIPUR 13 5.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS P ARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02-07-2018 . SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 02/07/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI DEV SUMAN SAINI, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ACIT, CIRCLE 6, JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.397 /JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR