ITO, Bangalore V. Smt. Madhu SAnthakumar, Bangalore

ITA 512/BANG/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 60785 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 1 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 04-05-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A SUNDAR RAJAN
• Assessee Lawyers: BALARAM R RAO
• Keywords: Cost of acquisition; Corroborative evidences

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BANGALORE BANGALORE BANGALORE BENCH BENCH BENCH BENCH C CC C BEFORE BEFORE BEFORE BEFORE SHRI SHRI SHRI SHRI N. N. N. N. BARAT BARAT BARAT BARATH HH HVAJA SANKAR, VICE VAJA SANKAR, VICE VAJA SANKAR, VICE VAJA SANKAR, VICE- -- -PRESIDENT PRESIDENT PRESIDENT PRESIDENT A AA AND NDND ND SHRI SHRI SHRI SHRI N.V.VASUDEVAN N.V.VASUDEVAN N.V.VASUDEVAN N.V.VASUDEVAN, JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER , JUDICIAL MEMBER ITA NO.512/BANG/2011 (ASSESSMENT YEAR: 2008-09) INCOME-TAX OFFICER, INTERNATIONAL TAXATION, WARD 2(1), BANGALORE. APPELLANT VS. SMT. MADHU SANTHAKUMAR, NO.26/A, 2 ND FLOOR, MADHUVIN CHODAPPA LAYOUT, SHANTINAGAR, BANGALORE-560027. RESPONDENT PAN: BPFPS PAN: BPFPS PAN: BPFPS PAN: BPFPS 2407 L 2407 L 2407 L 2407 L APPELLANT BY: SHRI A.SUNDAR RAJAN, JCIT. RESPONDENT BY : SHRI BALARAM R RAO, ADVOCATE. DATE OF HEARING: 19-06-2012. DATE OF PRONOUNCEMENT: 29-06-2012. O R D E R O R D E R O R D E R O R D E R PER PER PER PER N. BARATHVAJA SANKAR, N. BARATHVAJA SANKAR, N. BARATHVAJA SANKAR, N. BARATHVAJA SANKAR, VP VPVP VP: :: : THIS IS AN APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2008-09 IN RESPECT OF SMT. MADHU SA NTHAKUMAR, BANGALORE, AGAINST THE APPELLATE ORDER DATED 15-2-2 011 OF THE CIT(A)-IV, BANGALORE. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A NON- RESIDENT INDIVIDUAL. SHE HAD SOLD A FLAT IN BANGALO RE FOR A CONSIDERATION OF `20 LAKHS AND AFTER DEDUCTING BROK ERAGE OF ITA NO.512/BANG/2011 PAGE 2 OF 7 `20,000/- HAD SHOWN NET SALE CONSIDERATION OF `19.8 0 LAKHS. AFTER DEDUCTING INDEXED COST OF ACQUISITION, REGISTRATION AND IMPROVEMENT AMOUNTING TO `19,91,784/- DECLARED NIL LONG TERM CAPITAL GAIN. HOWEVER, THE AO CONSIDERING THE COST OF ACQUISITION AT ONLY `3,06,410/- ALLOWED INDEXED COST AMOUNTING TO `3,77,700/- AND DETERMINED THE LONG TERM CAPITAL GAIN AT `16,02 ,300/-. AGAINST ADDITION OF LOWER COST OF ACQUISITION, NON- ALLOWANCE OF REGISTRATION EXPENSES AND COST OF IMPROVEMENT AND L ESSER INDEXED COST OF ACQUISITION, THE ASSESSEE WAS AGGRIEVED AND TOOK THE MATTER IN APPEAL BEFORE THE FIRST APPELLATE AUTHORI TY. 3. AFTER HEARING THE DETAILED SUBMISSIONS AND CONSI DERING THE FACTS AND MATERIALS ON RECORD, THE CIT(A) DIREC TED THE AO TO ADOPT LONG TERM CAPITAL AGAIN AT NIL. THUS, THE ASSESSEE SUCCEEDED BEFORE THE CIT(A). NOW, THE REVENUE IS A GGRIEVED AND IS ON APPEAL BEFORE US WITH THE FOLLOWING GROUNDS O F APPEAL: 1. THE LEARNED CIT ERRED IN DIRECTING THE AO TO RE PLACE THE COS T O F A CQUISITION ADOPTED IN THE ASSESSMENT ORDER BY THAT CLAIMED B Y THE ASSESSEE. HE ALSO E RRED IN D IRECTING THE AO TO ADOPT THE COST OF IMPROVEMENT AS CLAIMED BY THE ASS ESSEE. 2. TH E L E A RN ED C I T IS NOT JUSTIFIED IN LAW BY TAKING THE C OST OF ACQUISITION DECLARED BY THE ASS E SSEE ON THE BASIS OF FOLLOWING OP I NI O NS (A) FOR TH E PURP O SE OF R E GISTRATION , AS PER THE G U IDAN CE VALUE , THE VALUE WAS SHOWN AT RS . 3,06 , 410 / -IN THE REGISTERED SALE DEED . (B )THE SOCIETY ITSELF CONFIRMED IN ITS LETTER TO T HE FATHER OF THE ASSESSEE THAT IT HAS RECEIVED RS.7, 75,305 / - ITA NO.512/BANG/2011 PAGE 3 OF 7 (C) EVEN GOING BY COMMON SENSE IT IS CLEAR THAT NO FLAT IN THE LOCALITY COULD HAVE BEEN AVAILABLE AT THE CO ST ADOPTED B Y THE A.O. 3. THE LEARNED CIT IS TAILED TO APPRECIATE THE FACT THAT THE SOCIETY CONFIRMED THE RECEIPT OF RS . 7 , 75 , 305 / -FROM THE FATHER OF THE ASSESSEE AND NOT FROM THE ASSESSEE AND THE P AYMENT RECEIVED BY THE SOCIETY FROM THE ASSESSEE TOWARDS T HE FLAT WAS ONLY RS.3,06,410/- AS DECLARED IN REGISTERED SALE DEED. 4. THE SALE CONSI D ERATION SPECIFIED IN THE REGISTERED SALE DEED SHOULD BE ADOPTED AS THE PAYMENT FOR THE PURCHASE O F THE PROPE R L Y B Y THE BU Y ER . O N E CANNOT SAY THAT GOING BY COMMON SENSE THE PROPERTY COULD N O T HA V E BEEN ACQUIRED FOR THE CONSIDERATION MENTIONED IN REGISTERED DEED AND HENC E THE SALE CONSIDERATION SHOULD BE ADOPTED AT HIGHER VALU E. 5. THE LEARNED CIT(A) ERRED IN ALLOWING THE COST OF IMPROVEMENT CLAIMED BY ASSESSEE SINCE THE ASSESSEE HAS CLAIMED TO HAVE INCURRED TH E COST OF IMPROVEMENT DURING THE FY 2000-01 WHEREAS THE PROPERTY WAS ACQUIRED BY THE ASSESSEE AS PER THE REGISTER E D SA L E DEED DURING THE FY 2002- 03 6. AS FAR-AS THE ASSESSEE IS CONCERNED , COST OF IMPROVEMENT IS ONLY TO THE EXTENT OF WHAT SHE SPENT AS SHE CLAI MS. SO THERE IS NO QUESTION OF DETERMINING THE CAPITAL GAI NS ON ANY OTH E R TACT OTHER THAN THIS. 4. AT THE TIME OF HEARING, LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELIED ON THE GROUNDS OF AP PEAL RAISED BEFORE US AND REITERATED THE SAME AS HIS SUBMISSION S. PER CONTRA, LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDE R OF THE CIT(A) AND REITERATED THE CONTENTS OF SAME AS HIS SUBMISSI ONS. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND CONSIDERED T HE FACTS AND MATERIALS ON RECORD. THE CIT(A), AFTER CONSIDE RING THE SUBMISSIONS OF THE ASSESSEE AND GOING THROUGH THE A SSESSMENT RECORDS, RECORDED THE FOLLOWING EMERGING FACTS: ITA NO.512/BANG/2011 PAGE 4 OF 7 4. AFTER CONSIDERING THE ABOVE SUBMISSIONS OF THE APPELLANT AND AFTER GOING THROUGH THE ASSESSMENT RECO RDS THE FOLLOWING FACTS HAVE EMERGED: I) THE APPELLANTS FATHER MR.SHANTHA KUMAR WAS ALLOTTED A FLAT AT VIJAYA ENCLAVE MEASURING 1,007 SQ.FT. SUPER BUILT-UP AREA (769 SQ.FT. OF CARPET ARE A BY M/S.VIJAYA BANK EMPLOYEES HOUSING CO- OPERATIVE SOCIETY. II) MR.SHANTHA KUMARS DAUGHTER MRS.MADHU SHANTHA KUMAR WAS ALLOWED TO BUY THE FLAT AS PER THE BYE- LAWS OF M/S.VIJAYA BANK EMPLOYEES HOUSING CO- OPERATIVE SOCIETY. III) MRS.MADHU SHANTHA KUMAR HAD REIMBURSED THE PAYMENTS MADE BY HER FATHER AND FURTHER PAYMENT WAS MADE BY HER TO THE SOCIETY. IV) MR.SHANTHA KUMAR HAS CONFIRMED THE RECEIPT OF THE PAYMENT BY HIS DAUGHTER, THE APPELLANT. V) THE TOTAL PAYMENTS MADE TOWARDS THE CONSTRUCTIO N OF THE FLAT WAS AS UNDER: FINANCIAL YEAR AMOUNT 1996 - 97 4,83,890 1997 - 98 3,62,730 1999 - 2000 50,350 ------------- TOTAL 8,96,970 VI) SUBSEQUENTLY THE APPELLANT INVESTED `3,10,000 TOWARDS THE IMPROVEMENT OF THE FLAT IN FY 00-01. V II) ALSO A SUM OF `17,650 WAS SPENT ON REGISTRATION ON 3-7-2002 IMPROVEMENT IN FY 2002-03. VIII) THE PROPERTY WAS SOLD ON 16 - 1 - 2008 FOR `20 LAKHS IN FY 07-08. THE APPELLANT COMPUTED THE LTCG AS UNDER: SALE CONSIDERATION `20,00,000 LESS: BROKERAGE `20,000 -------------- NET CONSIDERATION `19,80,000 LESS: INDEXED COST OF ACQUISITION `15,49,313 INDEXED COST OF REGISTRATION ` 21,756 INDEXED COST OF ACQUISITION ` 4,20,714 --------------- TOTAL ` 19,91,784 ` 19,80,000 ITA NO.512/BANG/2011 PAGE 5 OF 7 RESTRICTED TO LTCG NIL NOTE: - TAKING INFLATION INDEX OF FY 07 - 08 OF 551, INDEXED COST OF ACQUISITION FOR INVESTMENT IN FY 96-97 OF `4,83,8 90/- WAS ARRIVED AT `8,74,175/-. [A] [A] [A] [A] - SIMILARLY TAKING INFLATION INDEX FOR 07 - 08 OF 551, INDEXED COST OF ACQUISITION FOR INVESTMENT OF `3,62,730/- IN FY 1997-98 WAS ARRIVED AT `6,03,819/- [B] [B] [B] [B] - TAKING INFLATION INDEX OF FY 07 - 08 OF 551, INDEXED COST OF ACQUISITION FOR INVESTMENT IN FY 98-99 OF `50,350 /- WAS ARRIVED AT `71,318/- [C] [C] [C] [C] - INDEXED COST OF IMPROVEMENT OF `3,10,000/ - MADE IN FY 00-01 WAS ARRIVED AT `4,20,714/- [D] [D] [D] [D] FINALLY ON REGISTRATION COST INCURRED OF `17,650/ - IN FY 02-03, THE INDEXED COST WAS TAKEN AT 21,756/- [E] [E] [E] [E] A+B+C+D+E = `19,91,784/ - AFTER CONSIDERING THE ABOVE EMERGING FACTS, THE CIT (A) GAVE DIRECTION TO THE AO TO TREAT LONG TERM CAPITAL GAIN S AS NIL. WHILE GIVING THE DIRECTION, HE HAS OBSERVED AS UNDER: 5. THE AO GOING BY THE REGISTERED SALE DEED EXECUTED O N 04.06.2002 BY THE VIJAYA BANK EMPLOYEES HOUSING CO- OPERATIVE SOCIETY IN FAVOUR OF THE ASSESSEE WHEREIN ONLY A SUM OF RS . 3,06 , 410/- WAS MENTIONED, HAS ALLOWED INDEXED COST ONLY TO THE EXTENT OF RS.3,77,700/- TO ARRIVE AT THE LTCG OF RS.16,02,300/-. FOR THE PURPOSES OF REGISTR ATION, AS PER THE GUIDANCE VALUE, THE GUIDANCE VALUE WAS S HOWN AT RS.3,06 , 410/-. HOWEVER, THE SOCIETY ITSELF IN A CONFIRMATION LETTER ISSUED TO MR . SHANTHA KUMAR ON 18.08.2008 HAS CERTIFIED THAT A SUM OF RS . 7,75,305/- WAS PAID DURING THE PERIOD FROM 30.04.1996 TO 01 . 06 . 2000 BY WAY OF INSTALLMENT. BESIDES THAT, FOR HAVING INVEST ED ON THE IMPROVEMENT A SUM OF RS.3,10,000/-, IN ADDITION TO APPELLANT'S OWN CERTIFICATION, THE ENGINEER CONTRAC TORS M/ S. RENUKA CONSTRUCTIONS HAVE GIVEN A CONFIRMATORY L ETTER ALONG WITH THEIR COPY OF THE RETURNS FOR THE RELEVA NT YEAR. ACCORDINGLY, IT IS A VERY CLEAR CASE WHERE THE INVE STMENT ITA NO.512/BANG/2011 PAGE 6 OF 7 ON THE FLAT IS MADE TO THE EXTENT OF RS.8,96,970/- BESIDES INVESTMENT MADE ON IMPROVEMENT TO THE EXTENT OF RS.3,10,000/ - REGISTRATION EXPENSES ARE ALSO EVIDENCED AS SEEN FROM THE COPY OF THE REGISTERED SALE DEED. EVE N GOING BY COMMON SENSE IT IS CLEAR THAT NO FLAT IN BTM LAY OUT IN 2002 WAS AVAILABLE AT THE RATE OF RS.300/- AS THE A O HAS ADOPTED THE COST OF RS.3,06 , 410 FOR A FLAT MEASURING 1007 SQ . FT. [CARPET AREA 769 SQ FT], ACCORDINGLY, AO IS DIRECTED TO ADOPT THE COST OF RS.8,96,970/ - TOWARDS CONSTRU CTION INCLUDING PROPORTIONATE SHARE OF THE LAND COST AND TO ADOPT RS.3,10,000 / - AS COST OF IMPROVEMENT AS IT IS EVI DENCED BY WRITTEN CONFIRMATION OF THE ENGINEERING CONTRACT OR AS ALSO SELF CERTIFICATION OF THE APPELLANT . APART FROM THAT, THE COST OF REGISTRATION EXPENSES OF RS.17,650/- CAN BE SEEN FROM THE SALE DEED DOCUMENT WHEREIN THE STAMP PAPER COST ITSELF IS RS.17,650/ - . IN ADDITION TO THAT THEY INCURRED A FURTHER SUM, OF RS.8,250/- TOWARDS REGISTRATION EXPENSES AS CAN BE SEEN FROM THE BACKSIDE OF THE F IRST PAGE OF THE SALE DEED WHICH WAS OMITTED TO BE CONSI DERED BY THE APPELLANT SINCE INDEXED COST WAS FAR EXCEEDING 19.80 LAKHS EVEN WITHOUT THIS SUM OF RS.8,250J-. AL L THE SUPPORTING EVIDENCES ARE IN THE FILE OF THE AO AS T HE AO HAD BROUGHT THEM ON RECORD BY ISSUING SUMMONS TO TH E CONCERNED PARTIES. IN VI E W OF THE SAME THE AO IS DIRECTED TO ADOPT THE COST OF ACQUISITION AT RS.8,96, 97 0J - , COST OF IMPROVEMENT AT RS.3,10,000J- AND REGISTRATION EXPEN SES AT RS.17,650-/-. ACCORDINGLY, INDEXED COST OF ACQUI SITION, IMPROVEMENT AND R EGISTRATION FAR EXCEEDS RS.19.80 LAKHS RESULTING IN TAXABLE LTCG AT NIL . AO IS DIRECTED TO ADOPT TAXABLE LTCG AT NIL . WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE CI T(A) FOR THE REASONS RECORDED THEREIN. HENCE, WE DISMISS THE GR OUNDS OF APPEAL OF THE REVENUE. 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH JUNE, 2012 . SD/- SD/- (N. (N. (N. (N.V. V.V. V.VASUDEVAN VASUDEVAN VASUDEVAN VASUDEVAN) )) ) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) (N.BARATHVAJA SANKAR) VICE VICE VICE VICE- -- -PRESIDENT PRESIDENT PRESIDENT PRESIDENT EKS ITA NO.512/BANG/2011 PAGE 7 OF 7 COPY TO : COPY TO : COPY TO : COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY ITAT, BANGALORE