Prabha Electronics Pvt. Ltd., Chandigarh V. ACIT, Chandigarh

ITA 540/CHANDI/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 9167 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 11 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-03-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 25-03-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 27-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition

Judgement Text

, , ' IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B, CHANDIGARH . . , , BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRI SANJ AY GARG, JUDICIAL MEMBER ./ ITA NO. 540/CHD/2017 ! / ASSESSMENT YEAR : 2012-13 PRABHA ELECTRONICS PRIVATE LIMITED, PLOT NO.209, INDUSTRIAL AREAS, PHASE 1, CHANDIGARH VS. '# THE ACIT, CIRCLE 2(1), CHANDIGARH $ % ./ PAN NO: AADCP2295E $&/ APPELLANT ()$& / RESPONDENT *+ , - / ASSESSEE BY : SH. TEJ MOHAN SINGH, ADVOCATE , - / REVENUE BY : SH. MANJIT SINGH, CIT DR . / , +0% / DATE OF HEARING : 25.03.2019 12! , +0% / DATE OF PRONOUNCEMENT : 25.03.2019 / ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER DATED 20.01.2017 OF THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. 2. THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL:- 1. THAT THE ORDER PASSED BY THE LD. CIT(A)-1 CHANDIGARH HAS ERRED ON LAW AND ON THE FACTS OF THE CASE AND IS NOT JUSTIFIED IN UPHOLDING THE ADDITION OF 38,09,824/- ARISING UNDER THE HEAD CAPITAL GAINS ON ACCOUNT OF DIFFERENCE IN SELLING PRICE OF OFFICE SPACE 809A ITT, NEHRU PLACE, NEW DELHI AS TAKEN BY THE APPELLANT COMPANY AT 12,00,000/- AND THE ITA NO.540-C-17- PRABHA ELECTRONICS PVT LTD., CHANDIGARH 2 SELLING PRICE AS ASSUMED BY THE LD. ASSESSING OFFIC ER AT 42,00,000/-. 2. THAT THE APPELLANT CRAVES LEAVE TO ADD, DELETE OR A MEND ANY OF THE GROUNDS OF THE APPEAL ON OR BEFORE THE DISPOSAL OF THE SAME. 3. TO PROVIDE ANY OTHER EVIDENCE WHICH MAY NOT HAVE BE EN PROVIDED AT THE TIME OF ASSESSMENT WITH THE PERMISS ION OF HON'BLE BENCH. 3. THE BRIEF FACTS RELATING TO THE ISSUE ARE THAT T HE ASSESSEE FILED ITS RETURN OF INCOME DECLARING AN INCOME OF 91,86,500/-. THE RETURN WAS SELECTED FOR SCRUTINY ASSESSMENT. DURING THE ASSESS MENT PROCEEDINGS, THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS SOL D OFFICE SPACE AT 809A ITT, NEHRU PLACE, NEW DELHI MEASURING 150 SQ. FT. D URING THE YEAR. THE ASSESSEE WAS ASKED TO FURNISH THE DETAILS OF THE SA ME. THE ASSESSEE FURNISHED THE UNREGISTERED SALE AGREEMENT, HOWEVER, IT DID NOT PRODUCED THE PURCHASE DEED. FROM THE SALE AGREEMENT, THE ASSESSI NG OFFICER OBSERVED THAT THE CONSIDERATION FOR THE PROPERTY INCLUDED SA LE PRICE OF 12,00,000/- AND DUES OF APPROX. 30,00,000/- AS ARREARS OF PROPE RTY TAXES, PAYMENT TO BUILDERS ETC. AS PER THE AGREEMENT THE PURCHASER WO ULD PAY ALL THE DUES PENDING AGAINST THE SAID PROPERTY. THEREFORE, THE T OTAL SALE CONSIDERATION WAS 42,00,000/-. THE CIRCLE RATE OF THE PROPERTY DURIN G THE PERIOD WAS AROUND 35,00,000/- AS NOTICED BY THE ASSESSING OFFI CER FROM THE WEBSITE OF DELHI GOVERNMENT. AS PER SECTION 50C, THE ASSESSING OFFICER TOOK THE HIGHER OF THE TWO AS THE SALE CONSIDERATION. 4. AGGRIEVED BY THE ABOVE ORDER OF THE ASSESSING OF FICER, THE ASSESSEE PREFERRED APPEAL BEFORE THE LD. CIT(A). BEFORE THE LD. CIT(A), THE ITA NO.540-C-17- PRABHA ELECTRONICS PVT LTD., CHANDIGARH 3 ASSESSEE PLEADED THAT IF THE SALE CONSIDERATION WA S TO BE TAKEN AT 42 LACS, THEN THE PURCHASE COST OF THE PROPERTY WOULD ALSO B E INCREASED BY THE AMOUNT OF DUES I.E. 30 LACS AND IN THAT EVENT IT WOULD NOT AFFECT THE CAPITAL GAINS FROM THE PROPERTY. HOWEVER, THE LD. CIT(A) OBSERVED THAT THE LIABILITY / EXPENDITURE OF 30 LACS CLAIMED BY THE ASSESSEE WAS NOT PART OF THE COST OF ACQUISITION AS THE NATURE OF EX PENDITURE WAS NOT LINKED TO THE ACQUISITION OR IMPROVEMENT OF THE PROPERTY. HE, THEREFORE, DISMISSED THE APPEAL OF THE ASSESSEE. 5. BEING AGGRIEVED BY THE ABOVE ORDER OF THE CIT(A) , THE ASSESSEE HAS COME IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. IT IS A CASE WHERE T HE PURCHASER HAS PAID A PRICE OF 12 LACS TO THE ASSESSEE BESIDES OWNERSHIP / PAYING ANOTHER LIABILITY OF 30 LACS OF THE ASSESSEE TO THE THIRD PARTIES. THE DETAIL OF THE LIABILITY OWNED UP / PAID OF THE ASSESSEE BY THE PU RCHASER TOWARDS SALE CONSIDERATION OF THE PLOT IN QUESTION IS AS FOLLOWS :- AMOUNT (IN ) MAINTENANCE CHARGES 3,38,034.20 GROUND RENT 98,097.60 SINKING FUND 1,01,180.40 BUILDING INSURANCE 6,288.00 ENERGY CHARGES 225.00 WATER CHARGES 3,812.00 5,92,637.20 ITA NO.540-C-17- PRABHA ELECTRONICS PVT LTD., CHANDIGARH 4 INTEREST (10.6.2005) 18,53,031.00 (24% QRTLY. COMPOUNDED) 24,45,668.20 7. A PERUSAL OF THE ABOVE DETAIL SHOWS THAT THE EXP ENDITURE EXCEPT INTEREST I.E. THE AMOUNT OF LIABILITY TOWARDS THE M AINTENANCE CHARGES, GROUND RENT, SINKING FUND, BUILDING INSURANCE, ENER GY CHARGES, WATER CHARGES WAS NEITHER ON ACCOUNT OF ACQUISITION OF PR OPERTY NOR WAS INCURRED FOR IMPROVEMENT OF THE PROPERTY. THE AMOUNT INCURRE D FOR THE AFORESAID CHARGES WAS IN FACT FOR USAGE OF THE PROPERTY AND A MENITIES THEREOF AND, THUS, CANNOT BE INCLUDED AS COST OF ACQUISITION OR COST OF IMPROVEMENT. THE CLAIM OF THE ASSESSEE TOWARDS THESE CHARGES HAS , THEREFORE, RIGHTLY BEEN REJECTED BY THE LOWER AUTHORITIES. HOWEVER, SO FAR AS THE INTEREST CHARGES OF 18.53 ARE CONCERNED, IT HAS BEEN SUBMITTED THAT INTEREST PAYMENT WAS MADE T O THE BUILDER FOR LATE PAYMENT. HOWEVER, NO DOCUMENTARY EVIDENCE IN THIS R ESPECT HAS BEEN FURNISHED BEFORE US. IN OUR VIEW, THE COST OF THE ASSET ALSO INCLUDES THE INTEREST CHARGES ETC. PAID BY THE ASSESSEE TO THE B UILDER FOR THE ACQUISITION OF THE ASSETS IN QUESTION AND, THUS, ARE TO BE COUN TED TOWARDS THE COST OF ASSET. WE, THEREFORE, RESTORE THIS LIMITED ISSUE TO THE FILE OF THE ASSESSING OFFICER TO EXAMINE THE DETAIL OF EXPENDITURE CLAIME D TOWARDS INTEREST EXPENDITURE OF 18.53 LACS AND IF THE SAME HAS BEEN PAID TO THE BU ILDER FOR ACQUIRING ASSET IN QUESTION, THOUGH AS INTEREST CHA RGES, ON THE COST PRICE, THE SAME WILL BE TAKEN AS PART OF THE COST OF ACQUI SITION. HOWEVER, IF IT IS FOUND THAT THE ASSESSEE HAS ALREADY CLAIMED THE DED UCTION OF THE AFORESAID INTEREST CLAIMED, AFORESAID INTEREST EXPENDITURE UN DER ANY OTHER PROVISION ITA NO.540-C-17- PRABHA ELECTRONICS PVT LTD., CHANDIGARH 5 OF THE ACT, INCLUDING UNDER THE PROVISIONS OF SECTI ON 24 OF THE ACT, THEN THE ASSESSEE WILL NOT BE ENTITLED TO INCLUDE THE AMOUNT ALREADY SO DEDUCTED AS COST OF ACQUISITION AS THE SAME MAY AMOUNT TO DOUBL E BENEFIT / DEDUCTION. THE ASSESSING OFFICER WILL ACCORDINGLY DECIDE THIS LIMITED ISSUE AS PER LAW. WITH THE ABOVE OBSERVATIONS, THE APPEAL OF THE ASSE SSEE IS TREATED AS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.03.2019 SD/- SD/- ( . . / N.K. SAINI) ( ! ' / SANJAY GARG) #$% / VICE PRESIDENT & ' / JUDICIAL MEMBER DATED : 25. 3.2019 .. 3 , (+45 65!+ / COPY OF THE ORDER FORWARDED TO : 1. $& / THE APPELLANT 2. ()$& / THE RESPONDENT 3. . 7+ / CIT 4. . 7+ ( )/ THE CIT(A) 5. 58 (+9 , 0 9 , :;<= / DR, ITAT, CHANDIGARH 6. < >/ / GUARD FILE 3 . / BY ORDER, ? / ASSISTANT REGISTRAR