ACIT, Jaipur V. SHRI KALYAN BUILDMART PVT. LTD., Jaipur

ITA 518/JPR/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2048 (ITAT-JAIPUR)
• Duration Of Justice: 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-06-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-06-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: NEENA JEPH DHK
• Keywords: Cost of acquisition

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 518/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2007-08 SH. NAWAL KISHORE AGARWAL 4-C-7, TALWANDI, KOTA- 342005 CUKE VS. ITO WARD-06 (2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO.: ABSPAOO32B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL JKTLO DH VKSJ LS@ REVENUE BY : SMT. NEENA JEPH LQUOKBZ DH RKJH[K@ DATE OF HEARING : 22/06/2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 23/06/2017. VKNS'K@ ORDER PER:SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)- 02, JAIPUR DATED 24.02.2016 WHEREIN THE ASSESSEE HA S TAKEN FOLLOWING GROUNDS OF APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE LD. ITO WARD 6(2), JAIPUR ERRED IN DISALLOWING AND SIMULTANEOUSLY LD. CIT(A) ERRED IN SUSTAINING THE DISALLOWANCE OF CLAIM OF RS. 3499260 .00 FOR COST OF IMPROVEMENT AND RENOVATION OUT OF SALE CONSIDERATIO N IN CALCULATING LONG TERM CAPITAL GAIN IN SPITE OF EVIDENCES OF HOU SE LOAN DISBURSEMENT, WHICH WERE ON RECORD. IGNORING THE VI TAL EVIDENCE OF INCURRING RENOVATION AND IMPROVEMENT EXPENSES THE D ISALLOWANCE OF CLAIM IS GROSSLY UNJUSTIFIED, WITHOUT JURISDICTION AND LIABLE TO BE QUASHED. ITA NO. 518/JP/2016 SH. NAWAL KISHORE AGARWAL, KOTA VS ITO WARD 6(2), JAIPUR 2 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE ASSES SEE HAS SOLD A RESIDENTIAL PLOT AT 1-D, BOHRA JI KA BAG, TONK PHATAK, JAIPUR F OR CONSIDERATION OF RS. 1,00,00,000/- ON 28.07.2006 TO SH. PRANAV JAIN THRO UGH REGISTERED DEED, WHICH WAS VALUED AT SAME COST BY THE STAMP VALUATIO N AUTHORITY FOR THE PURPOSE OF CHARGING STAMP DUTY. THE ASSESSEE HAS CO MPUTED LONG TERM CAPITAL GAIN ON THE ABOVE SALE OF IMMOVABLE PROPERT Y AS UNDER: SALE CONSIDERATION RS. 1,00,00,000/- LESS: INDEXED COST OF ACQUISITION RS. 16,59,19 7/- (8,28,000 X 519/259) INDEXED COST OF IMPROVEMENT RS. 46,17,438/- (COST OF CONSTRUCTION 25,00,000 X 519/281) INDEXED COST OF IMPROVEMENT RS. 39,22,497/- (COST OF RENOVATION34,99,260 X 519/463) RS. 1,01,99,132/- LONG TERM CAPITAL LOSS RS. 1,99,132/- 2.1 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, TH E ASSESSEE WAS ASKED TO FURNISH EVIDENCES REGARDING COST OF CONSTRUCTION & COST OF IMPROVEMENT CLAIMED BY HIM. HE WAS ALSO ASKED TO EXPLAIN SOURCE OF INVESTMENT/EXPENSES INCURRED IN CONSTRUCTION AND IMPROVEMENT. IN RESPO NSE, THE ASSESSEE SUBMITTED THAT CONSTRUCTION OF HOUSE WAS COMPLETED IN FY 1995-96. EVIDENCES OF EXPENDITURES INCURRED ON CONSTRUCTION TO THE EXT ENT OF RS. 15.75 LACS HAD ALREADY BEEN SUBMITTED. SINCE, THE DOCUMENTS REQUIR ED ARE ALMOST 20 YEARS OLD NOW AND IT IS NOT POSSIBLE TO TRACE SUCH OLD DO CUMENTS FOR ASSESSEE. BESIDES, COST OF CONSTRUCTION HAS BEEN TAKEN AS RS. 500/- PER SQ. FEET ON CONSERVATIVE SIDE. IT WAS FURTHER SUBMITTED BY THE ASSESSEE THAT HE HAS BORROWED LOAN FOR MAJOR RENOVATION ON THE PROPERTY AND REPAID TOTAL RS. 35,39,935/-. DOCUMENTS EVIDENCING PAYMENT OF SAID S UM HAD ALREADY BEEN FURNISHED. SUCN LOAN WAS GRANTED BY BANK AS HOME LO AN EXCLUSIVELY FOR CARRYING OUT RENOVATION OF THE PROPERTY. ALL EVIDEN CES OF EXPENDITURE ON RENOVATION WERE SUBMITTED TO THE BANK ON THE BASIS OF WHICH BANK HAD DISBURSED THE LOAN FROM TIME TO TIME. ASSESSEE COUL D NOT TRACE THE ACTUAL ITA NO. 518/JP/2016 SH. NAWAL KISHORE AGARWAL, KOTA VS ITO WARD 6(2), JAIPUR 3 PROOF OF EXPENSES INCURRED ON SUCH RENOVATION AS TH E SAME ARE ALREADY 8-10 YEARS OLD. 2.2 THE AO DIDNT FIND THE SUBMISSION OF THE ASSESS EE THAT THE HOME LOAN WAS DISBURSED ON THE BASIS OF THE EVIDENCES OF EXPE NDITURE ON RENOVATION WERE SUBMITTED TO THE BANK AS ACCEPTABLE AS THE HOM E LOAN WAS DISBURSED TO THE ASSESSEE WITHIN A SHORT PERIOD OF LESS THAN A M ONTH, WHICH ARE DETAILED IN THE ASSESSMENT ORDER. THE ASSESSEE HAS NEITHER FUR NISHED EVIDENCE IN RESPECT OF NATURE OF RENOVATION WORK CARRIED OUT NO R ANY EVIDENCE IN RESPECT OF EXPENSES INCURRED THEREON. THE ACTUAL UTILIZATIO N OF HOME LOAN IS NOT VERIFIABLE IN ABSENCE OF ANY EVIDENCE IN THIS RESPE CT. THE HOME LOAN REPAYMENT CANNOT BE ACCEPTED AS EVIDENCE FOR COST O F RENOVATION. IN VIEW OF THE ABOVE FACTS & CIRCUMSTANCES OF THE CASE, THE CO ST OF RENOVATION CLAIMED BY THE ASSESSEE WAS DISALLOWED. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO CONFIRMED THE FINDINGS OF THE AO AND HEL D AS UNDER: AS REGARD COST OF IMPROVEMENT/RENOVATION, THE ONLY DETAIL FURNISHED IS DISBURSEMENT OF HOME LOANS. THE APPELLANT CLAIMED T HAT THE LOAN AMOUNT IS RELEASED DEPENDING ON CONSTRUCTION COMPLETED AND HE NCE SHOULD BE ACCEPTED AS EVIDENCE OF RENOVATION UNDERTAKEN. IT IS SEEN TH AT THE ENTIRE AMOUNT OF LOAN HAS BEEN RELEASED IN THREE DAYS IN A PERIOD OF ONE MONTH AND HENCE DOES NOT LEND CREDIBILITY TO THE ASSESSEES SUBMISS ION. FURTHER, NO EVIDENCE WHATSOEVER IN THE FORM OF CORRESPONDENCE WITH BANK EVIDENCING CONSTRUCTION COULD BE PRODUCED BY THE ASSESSEE. DISBURSEMENT OF LOAN ALONE CANNOT EVIDENCE COST OF RENOVATION. 4. DURING THE COURSE OF HEARING, THE LD AR SUBMITTED T HAT THE ASSESSEE CARRIED OUT RENOVATIONS OF HIS PROPERTY FOR RS. 34, 99,260/- DURING THE AY 2004-05. FOR THIS PURPOSE HE TOOK THE HOME LOAN FRO M STANDARD CHARTERED BANK. THE FACTUM OF LOAN TAKEN IS NOT IN DISPUTE. T HE ONLY DISPUTE IS WHETHER THE LOAN AMOUNT IS UTILIZED IN RENOVATION OR NOT. I N COURSE OF ASSESSMENT ITA NO. 518/JP/2016 SH. NAWAL KISHORE AGARWAL, KOTA VS ITO WARD 6(2), JAIPUR 4 PROCEEDINGS, ASSESSEE HAS SPECIFICALLY POINTED OUT THAT HOME LOAN WAS DISBURSED ON THE BASIS OF EVIDENCE OF EXPENSE ON RE NOVATION SUBMITTED TO THE BANK AND AS THE MATTER IS ALREADY 8-10 YEARS OLD, H E COULD NOT TRACE THE EVIDENCE OF EXPENDITURE ON RENOVATION. INSPITE OF T HIS, THE AO HAS NOT MADE ANY INQUIRY FROM THE STANDARD CHARTERED BANK TO VER IFY THE FACT OF SANCTION OF LOAN FOR RENOVATION. NO MATERIAL IS BROUGHT ON RECO RD THAT THE LOAN OBTAINED FROM THE BANK HAS BEEN UTILIZED FOR ANY OTHER PURPO SE. THEREFORE, THE ASSESSEE SHOULD BE ALLOWED THE BENEFIT OF INDEXED C OST OF RENOVATION FOR WORKING OUT THE CAPITAL GAIN. EVEN THE LOAN IS REPA ID AFTER SALE OF PROPERTY. 4.1 THE LD AR FURTHER SUBMITTED THAT IT IS SETTLED LAW THAT STRICT RULE OF EVIDENCE DOES NOT APPLY TO THE INCOME TAX PROCEEDIN GS. THE CIRCUMSTANTIAL EVIDENCES ARE REQUIRED TO BE CONSIDERED. THE SUPREM E COURT IN CASE OF SUMATI DAYAL VS. CIT (1995) 214 ITR 0801 HAS HELD T HAT SURROUNDING CIRCUMSTANCES AND THE TEST OF HUMAN PROBABILITY SHO ULD BE CONSIDERED/APPLIED IN ASSESSING THE INCOME. THIS PRINCIPAL IS AGAIN AP PROVED BY THE SUPREME COURT IN CASE OF CIT VS. SMT. P.K. NOORJAHAN (1997) 237 ITR 0570. THEREFORE, CONSIDERING THE OVERALL FACTS AND CIRCUMSTANCES OF THE CASE, IT CANNOT BE PRESUMED THAT THE RENOVATION WORK WAS NOT CARRIED O UT BY THE ASSESSEE FROM THE HOME LOAN TAKEN FROM CHARTERED BANK. 5. ON THE CONTRARY, THE LD. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT IN ABSENCE OF NECESS ARY EVIDENCE IN PLACE, THE AO WAS RIGHT IN DISALLOWING THE CLAIM OF THE ASSESS EE TOWARDS THE RENOVATION EXPENSES. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IT IS THE CONTENTION OF THE LD AR THAT THE HOME LOAN WAS DISBURSED BY THE STANDARD CHARTERED BANK ON THE BASIS OF EVID ENCE OF EXPENSE ON RENOVATION SUBMITTED TO THE BANK AND AS THE MATTER IS ALREADY 8-10 YEARS OLD, ITA NO. 518/JP/2016 SH. NAWAL KISHORE AGARWAL, KOTA VS ITO WARD 6(2), JAIPUR 5 HE COULD NOT TRACE THE EVIDENCE OF EXPENDITURE ON R ENOVATION. AS PER THE LD CIT(A), THE DISBURSEMENT OF LOAN ALONE CANNOT BE TA KEN AS SUFFICIENT EVIDENCE IN SUPPORT OF COST OF RENOVATION AND THE FACT THAT ENTIRE LOAN WAS DISBURSED IN THREE DAYS IN A PERIOD OF ONE MONTH DOESNT LEND CR EDIBILITY TO THE ASSESSEES CASE. THE LD AR HAS FURTHER SUBMITTED THAT THE AO COULD HAVE MADE INQUIRY FROM THE STANDARD CHARTERED BANK AND IN ABSENCE OF THE SAME, THE ASSESSEE SHOULDNT BE PENALISED WHEN THE FACTUM OF HOME LOAN FOR RENOVATION IS NOT IN DISPUTE AND MERELY FOR WANT OF EVIDENCE TOWARDS REN OVATION EXPENSES. IN OUR VIEW, THOUGH THE MATTER IS OLD ENOUGH, HOWEVER, IN THE INTEREST OF JUST AND FAIR PLAY, LET THE ASSESSEE REACH OUT TO ITS BANKER AND THE AO CAN ALSO INDEPENDENTLY SEEK THE NECESSARY INFORMATION FROM T HE BANK REGARDING THE HOME LOAN DISBURSEMENT AND RELATED EXPENSE AND SUPP ORTING DOCUMENTATION SUBMITTED BY THE ASSESSEE WITH THE BANK TO SEEK THE DISBURSEMENT OF THE HOME LOAN. THE GROUND OF THE ASSESSEE IS THUS ALLOW ED FOR STATISTICAL PURPOSES. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 23/06/2017. SD/- SD/- DQY HKKJR FOE FLAG ;KNO (KUL BHARAT) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 23/06/2017 *GANESH VKNS'K DH IZFRFYFI VXZSF'KR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT - SH. NAWAL AGARWAL 2. IZR;FKHZ@ THE RESPONDENT - ITO, WARD 6(2), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDRVIHY@ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR ITA NO. 518/JP/2016 SH. NAWAL KISHORE AGARWAL, KOTA VS ITO WARD 6(2), JAIPUR 6 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 518/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.