Sharad Ratanlal Bhandari, Nashik V. Assistant Commissioner of Income-tax,

ITA 464/PUN/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 0474 (ITAT-PUNE)
• Duration Of Justice: 7 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-11-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-08-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 17-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUMITRA BANERJI
• Keywords: Cost of acquisition

Judgement Text

- IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC , PUNE , BEFORE MS. SUSHMA CHOWLA, JM . / ITA NO. 464 /PN/201 6 / ASSESSM ENT YEAR : 20 11 - 12 SHRI SHARAD RATANLAL BHANDARI, FLAT NO.21, SANKET, SHARANPUR ROAD, NEW PANDIT COLONY, NASHIK 422002 . / APPELLANT PAN: A EJPB4484Q VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1, NASHIK . / RESPONDENT / APPELLANT BY : S MT. DEEPA KHARE / RESPONDENT BY : SMT. SUMITRA BANERJI / DATE OF HEARING : 0 5 . 1 0 .201 6 / DATE OF PRONOUNCEMENT: 11 . 1 1 .201 6 / ORDE R PER SUSHMA CHOWLA, J M : TH IS APPEAL FILED BY THE ASSESSEE IS AGAINST THE ORDER OF CIT (A) - 1 , NASHIK , DATED 0 1 . 12 .20 1 5 RELATING TO ASSESSMENT YEAR 20 11 - 12 AGAINST ORDER PASSED UNDER SECTION 1 4 3(3) OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - ITA NO. 464 /PN/20 1 6 SHRI SHARAD RATANLAL BHANDARI 2 1 . THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN DISALLOWING COST OF IMPROVEMENT OF RS. 6,22,105/ - OUT OF TOTAL COST OF IMPROVEMENT CLAIMED BY THE APPELLANT AT RS. 12,55,105/ - . 2. THE LEARNED CIT(A) E RRED IN LAW AND ON FACTS IN CONFIRMING DISALLOWANCE OF RS.6,22,105/ - WHEN HE ACCEPTED THE CLAIM TO BE GENUINE CLAIM AND THEREFORE THERE WAS NO REASON TO ALLOW THE COST AT AN ADHOC AMOUNT OF RS.6 LACS INSTEAD OF RS.12,55,105/ - . 3. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS AND DISALLOWED EXPENDITURE ON ADHOC BASIS. 3. THE ONLY ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE DISALLOWANCE MADE ON ACCOUNT OF COST OF IMPROVEMENT CLAIMED BY THE ASSESSEE. 4. BRIEFLY, IN THE FACTS OF THE CASE, THE ASSESSEE HAD FILED THE RETURN OF INCOME DECLARING TOTAL INCOME OF RS.20,07,280/ - . THE ASSESSEE HAD DECLARED INCOME FROM LONG TERM CAPITAL GAINS ON SALE OF TWO PROPERTIES. THE ASSESSEE HAD IN ADDITION TO COST OF ACQUISITION OF THE SAID PROPERTIES, CLAIMED DEDUCTIO N ON ACCOUNT OF IMPROVEMENT OF ASSETS AT RS.24,80,200/ - . THE ASSESSING OFFICER CALLED FOR THE DETAILS OF COST OF IMPROVEMENT. THE ASSESSEE PRODUCED PHOTOGRAPHS OF BHUMIPUJAN AT THE LAND BUT NO SUPPORTING DOCUMENTS WERE PRODUCED BY THE ASSESSEE. IN THE A BSENCE OF THE SAME, THE EXPENSES CLAIMED ON ACCOUNT OF COST OF IMPROVEMENT WERE HELD TO BE NON - GENUINE AND WERE DISALLOWED BY THE ASSESSING OFFICER AND THE INCOME FROM CAPITAL GAINS WERE RE - COMPUTED IN THE HANDS OF ASSESSEE BY MAKING AN ADDITION OF RS.12,5 5,104/ - I.E. EQUIVALENT TO ASSESSEES SHARE. 5. BEFORE THE CIT(A), THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS WHICH WERE REMANDED BACK TO THE ASSESSING OFFICER, WHO IN TURN, SUBMITTED REMAND REPORT. THE ASSESSEE FILED REJOINDER TO THE REMAND REPORT WHICH ARE INCORPORATED UNDER PARA 4.2 AT PAGES 3 TO 5 OF THE APPELLATE ORDER. THE CIT(A) DIRECTED THE ASSESSING OFFICER TO ALLOW THE COST OF ACQUISITION OF BOTH THE PLOTS ITA NO. 464 /PN/20 1 6 SHRI SHARAD RATANLAL BHANDARI 3 WHILE COMPUTING CAPITAL GAINS, WHICH IS NOT THE ISSUE BEFORE THE TRIBUNAL. IN RESPECT OF COST OF IMPROVEMENT, THE CIT(A) NOTED THAT THE EXPENDITURE PERTAINED TO THE YEAR 1995 - 96 WHICH WAS 20 YEARS OLD. THE CIT(A) AGREED WITH THE ASSESSEE THAT IT WAS DIFFICULT TO PRODUCE THE EVIDENCE WHICH WAS 20 YEARS OLD. THE ASSESSING OFFICER IN THE REMAN D PROCEEDINGS HAD MADE VERIFICATION ON TEST CHECK BASIS BY ISSUING SUMMONS TO SELLING PARTIES, WHO IN TURN, HAD CONFIRMED THE GENUINENESS OF BILLS RAISED. HOWEVER, SINCE THE BILLS WERE RAISED IN THE NAME OF SHRI R.M. BHANDARI, THE ASSESSING OFFICER IN THE REMAND PROCEEDINGS HELD THAT THE SAID EXPENDITURE WAS NOT TO BE ALLOWED IN THE HANDS OF ASSESSEE. THE CIT(A) HOWEVER, DISMISSED THE SAID PLEA OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO RESTRICT THE COST OF IMPROVEMENT FOR BOTH THE PROPERTIES T O RS.6 LAKHS AND RE - COMPUTE THE INCOME FROM CAPITAL GAINS. 6. THE ASSESSEE IS IN APPEAL AGAINST THE ORDER OF CIT(A). 7. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE DETAILS OF EXPENSES INCURRED BEING COST OF IMPROVEMENT WER E FILED BEFORE THE CIT(A), WHICH ARE PLACED AT PAGES 10 TO 11 OF THE PAPER BOOK ALONG WITH COPIES OF BILLS AND CASH VOUCHERS IN THIS REGARD. THE SAID EXPENSES WERE INCURRED IN 1995. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE COST OF IMPROVEMENT WAS PARTLY ACCEPTED, WHICH IS INCORRECT. 8. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE PLACED RELIANCE ON THE ORDER OF CIT(A). ITA NO. 464 /PN/20 1 6 SHRI SHARAD RATANLAL BHANDARI 4 9. ON PERUSAL OF RECORD AND AFTER HEARING BOTH THE LEARNED AUTHORIZED REPRESENTATIVES, THE LIMITED ISSUE WHICH ARISES FOR ADJUDICATION IS THE CLAIM OF ASSESSEE VIS - - VIS COST OF IMPROVEMENT OF TWO PLOTS WHICH WERE SOLD BY THE ASSESSEE. ADMITTEDLY, THE SAID PLOTS WERE PURCHASED ON 11.12.1992 AND THE COST OF ACQUISITION OF THE SAID PLOTS HAS BEE N ALLOWED IN THE HANDS OF ASSESSEE BY THE CIT(A). THE ASSESSEE FURTHER CLAIMED THAT THE COST OF IMPROVEMENT WAS INCURRED IN FINANCIAL YEAR 1995 - 96. THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE WAS TO THE EXTENT OF RS.24,80,200/ - , OUT OF WHICH THE ASSESS EE WAS ENTITLED TO 20% OF THE INDEXED COST I.E. RS.55,105/ - . BEFORE THE CIT(A), THE ASSESSEE FURNISHED BILLS TOTALING RS.23,13,873/ - , WHICH IN TURN, WERE VERIFIED BY THE ASSESSING OFFICER BY SUMMONING TWO OF THE SELLING PARTIES. THE ASSESSEE PLACED ON RE CORD THE BILLS WHICH WERE FILED BEFORE THE CIT(A), WHICH IN TURN, WERE VERIFIED BY THE ASSESSING OFFICER. THE CLAIM OF ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER SINCE THE BILLS WERE IN THE NAME OF SHRI R.M. BHANDARI. THE ASSESSEE EXPLAINED THAT HE W AS A JOINT OWNER OF THE SAID PROPERTY AND HAD ONLY 20% SHARE IN THE SAID PROPERTY AND SHRI RATANLAL BHANDARI WAS HIS FATHER WHO WAS LOOKING AFTER THE CONSTRUCTION ON THE SAID PROPERTY AND HE HAD MADE THE PURCHASE S ON BEHALF OF ALL THE JOINT OWNERS. THE CI T(A) ALLOWED THE CLAIM OF ASSESSEE TO THE EXTENT OF RS.6 LAKHS AND THE BALANCE COST OF IMPROVEMENT OF RS.6,22,105/ - WAS NOT ACCEPTED BY THE CIT(A), AGAINST WHICH THE ASSESSEE IS IN APPEAL. WHERE THE ASSESSEE HAD INCURRED THE COST OF IMPROVEMENT IN FINANCI AL YEAR 1995 - 96 TO THE EXTENT OF RS.24,80,200/ - AND THE ASSESSEE WAS ABLE TO FURNISH THE BILLS TOTALING RS.23,13,873/ - BEFORE THE CIT(A), THE INDEXED COST OF IMPROVEMENT WORKED OUT TO RS.62,75,524/ - , IN WHICH THE ASSESSEE CLAIMED 20% SHARE TO THE EXTENT OF RS.12,55,105/ - . THE ASSESSEE HAS TIME AND AGAIN STRESSED THAT THE COST OF IMPROVEMENT WAS INCURRED BY THE FATHER OF ALL JOINT OWNERS AND HENCE, THE BILLS WERE IN HIS NAME. THERE IS MERIT IN THE PLEA OF ITA NO. 464 /PN/20 1 6 SHRI SHARAD RATANLAL BHANDARI 5 ASSESSEE . W HERE THE ASSESSEE HAS BEEN ABLE TO PROD UCE MAJORITY OF THE BILLS TOTALING RS.23,13,873/ - AS AGAINST THE TOTAL CLAIM OF IMPROVEMENT AT RS.24,80,200/ - , THERE IS MERIT IN THE CLAIM OF ASSESSEE AND THE SAME MERITS TO BE ALLOWED IN ENTIRETY. THE CIT(A) HAD ALLOWED PART OF THE CLAIM AND HAS NOT GIVE N ANY BASIS FOR THE SAME. THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM IN FULL AND RE - COMPUTE THE INCOME FROM CAPITAL GAINS IN THE HANDS OF ASSESSEE BY TAKING COST OF IMPROVEMENT AT RS. 12,55,105/ - . THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE THUS, ALLOWED. 10 . IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THIS 11 TH DAY OF NOVEMBER , 201 6 . SD/ - SD/ - (SUSHMA CHOWLA) / JUDICIAL MEMBER / PUNE ; DATED : 11 TH NOVEMBER , 201 6 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESP ONDENT; 3. ( ) / THE CIT(A) - 1 , NASHIK ; 4. / THE PR. CIT - 1 , NASHIK ; 5. 6. , , , - / DR SMC , ITAT, PUNE; / GUARD FILE . / BY ORDER , // TRU E COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE