Mrs. Smiti Golyan, New Delhi V. ITO, New Delhi

ITA 556/DEL/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 5427 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 05-12-2013
• Assessment Year: 2009-2010
• Appeal Filed On: 30-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RENUKA JAIN GUPTA
• Assessee Lawyers: K R MANJANI
• Keywords: Capital asset; Gift; Opportunity of being heard; Cost of acquisition; Corroborative evidences; Assessment record
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH A NEW DELHI BEFORE SHRI R.P. TOLANI AND SHRI S.V. MRHROTRA ITA NO. 556/DEL/2013 ASSTT. YR: 2009-10 MRS. SMITI GOLYAN, VS. INCOME-TAX OFFICER, C/O NULON INDIA LTD., WARD 13(3), NEW DELHI. NULON HOUSE, ISHWAR NAGAR, MATHURA ROAD, NEW DELHI. PAN: AALPG 4650 K ( APPELLANT ) ( RESPONDENT ) APPELLANT BY : SHRI K.R. MANJANI ADV. RESPONDENT BY : SMT. RENUKA JAIN GUPTA SR. DR O R D E R PER R.P. TOLANI, J.M: : THIS IS ASSESSEES APPEAL AGAINST THE ORDER OF CI T(A)-XVI, NEW DELHI DATED 07-12-2012 RELATING TO A.Y. 2009-10. FO LLOWING GROUNDS ARE RAISED: 1. LEARNED A.O. AS WELL AS CIT(A) HAVE ERRED ON FA CTS AS WELL AS IN LAW IN NOT ALLOWING LITIGATION EXPENSES FOR 15 YEARS IN VARIOUS COURTS AS WELL AS ELECTRICITY CHARGES OF TE NANT WHICH WERE INCURRED TO IMPROVE THE VALUATION OF PROPERTY, ON WHICH ACCOUNT, THE APPELLANT HAS BEEN ABLE TO GET SALE PR ICE OF RS. 7.5 CRORES EVEN THOUGH THE PROPERTY WAS LET OUT FOR MEA GER AMOUNT OF RS. 1000/- P.M. 2. LEARNED A.O. AS WELL AS CIT(A) HAVE ERRED ON FAC TS AS WELL AS IN LAW IN MAKING THE ADDITION OF RS. 16 LAC S, RECEIVED FROM MASTER YASH GOLYAN IN WHOSE ACCOUNT FIRSTLY WI TH M/S VITIR CHATTELS PVT. LTD. AND THEN WITH M/S NULON IN DIA, THIS ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 2 AMOUNT WAS LYING FOR MANY YEARS SINCE 2003 AND WAS SIMPLY TRANSFERRED TO ACCOUNT OF APPELLANT, IN THIS YEAR. 2. APROPOS FIRST GROUND, THE FACTS, IN BRIEF ARE: T HE PROPERTY IN QUESTION I.E. HOUSE PROPERTY BEARING NO. 51A, NEW FRIENDS CO LONY, NEW DELHI ORIGINALLY BELONGED TO ONE SMT. BINA DEVI GOLYAN. S AME WAS ILLEGALLY SUBLET BY THE ORIGINAL TENANT M/S AMIN CHAND PYARELAL TO O NE SHRI ANIL GUPTA, WITHOUT THE PERMISSION OF SMT. BINA DEVI. FOR EVICT ION OF THIS ILLEGAL OCCUPANT, SMT. BINA DEVI INSTITUTED MANY LEGAL PRO CEEDINGS SINCE 1992 AND VIDE ORDER DATED 18-12-2006, HIGH COURT FINALLY PAS SED THE ORDER EVICTING MR. GUPTA AND THE POSSESSION WAS RESTORED TO SMT. B INA DEVI. THEREAFTER ON 24-04-2007 (A.Y. 2008-09) SHE GIFTED THE PROPERTY T O HER DAUGHTER IN LAW SMT. SHAKUNTLA AND GRAND DAUGHTER IN LAW SMT. SMITI GOLYAN I.E. ASSESSEE. BOTH OF THEM SOLD THIS PROPERTY DURING THE YEAR IN QUESTION FOR A SALE CONSIDERATION OF RS. 15 CRORES I.E. EACH GOT A SHAR E OF RS. 7.5 CRORES. THE ASSESSEE THEREAFTER FILED HER RETURN OF INCOME OFFE RING 7,50,00,000/- UNDER THE HEAD INCOME FROM CAPITAL GAINS. WHILE CALCULA TING THE LONG TERM CAPITAL GAINS THE ASSESSEE CLAIMED FOLLOWING EXPEND ITURE INCURRED BY SMT. BINA DEVI TO DEFEND THE ABOVE LEGAL PROCEEDINGS FOR RESTORATION OF POSSESSION, TOWARDS IMPROVEMENT/ COST OF THE PROPER TY: (I) COST OF ACQUISITION AFTER INDEXING : RS. 72, 85,828/- (II) LITIGATION EXPENSES AFTER INDEXING: RS. 2,16, 20,948/- (III) ELECTRICITY EXPENSE (UNPAID EXPENSES, PAID BY THE ASSESSEE): RS. 3,65,3 15/- 2.1. THE A.O., HOWEVER, OBSERVED THAT THESE LITIGA TION EXPENSES AND ELECTRICITY CHARGES NEITHER RELATED TO THE TRANSFER OF THE ASSET NOR THEY WERE SUPPORTED BY ANY EVIDENCE TO BE HELD AS ATTRIBUTABL E TO COST OF ACQUISITION. ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 3 THE A.O. EXCLUDED THESE AMOUNTS FROM THE COST OF AC QUISITION OF THE PROPERTY WHILE CALCULATING THE LONG TERM CAPITAL G AINS. 2.2. AGGRIEVED, THE ASSESSEE PREFERRED FIRST APPEAL BEFORE LD. CIT(A), WHERE EFFECTIVELY FOLLOWING SUBMISSIONS WERE MADE: 'IN ORDER TO IMPROVE MARKET VALUE, DRAWBACK, ENCUMB RANCES ON RIGHT AND TITLE OF HER PROPERTY NO.51-B, FRIENDS CO LONY WHICH WAS LET OUT TO A FIRM, M/S. AMIN CHAND PYARE LAL FO R PALTRY SUM OF RS.2,OOO/- P.M. WHICH WAS INCREASED TO RS.2,200/ - P.M. IN JULY 1992. YOUR HONOUR ARE AWARE THAT IN DELHI WHERE THE RENTS ARE BELOW RS.3500/- P.M., THESE ARE GOVERNED BY DEL HI RENT CONTROL ACT AND THE TENANT CANNOT BE EVICTED. HOWEV ER, IN THIS CASE, THE TENANT HAD SUB-LET THE PROPERTY TO SHRI A NIL KUMAR GUPTA WITHOUT THE CONSENT AND KNOWLEDGE OF THE LAND LORD. THE NATURE OF THE TENANT COULD BE GAUGED FROM THE FACT THAT THE LITIGATION DRAGGED ON FROM JUNE 1992 TO 18 TH DECEMBER 2006 AND THE MATTER HAS BEEN ROLLING AND ROAMING FROM AD DITIONAL RENT CONTROLLER TO HIGH COURT IN WHICH STAY PETITIO NS AND OBJECTIONS EVEN ABOUT THE OWNERSHIP OF THE LANDLORD S WERE RAISED. AFTER .FIGHTING THE CASE IN HON 'BLE DELHI HIGH COURT IN REGARD TO STAY AND MISCELLANEOUS APPLICATIONS FOR M ORE THAN THREE YEARS, THE MATTER CAME BACK TO ADDITIONAL REN T CONTROLLER WHERE THE PETITION FOR EVICTION WAS ORIGINALLY FILE D. THE MATTER WAS ULTIMATELY SETTLED IN HON'BLE HIGH COURT ON 18. 12.2006 WHEN SHRI ANI! GUPTA WAS ORDERED TO VACATE THE PREM ISES. EVEN THOUGH, THE HON 'BLE HIGH COURT HAD ALSO ORDERED TH AT THE TENANT WILL ALSO PAY ARREARS OF RENT, ELECTRICITY A ND WATER CHARGES BUT SHRI ANI! GUPTA DID NOT PAY IT AND THE LANDLORDS COULD ILL AFFORD FRESH LITIGATION FOR THIS ESPECIAL LY BECAUSE, THE SHRI ANI! GUPTA WAS NOT TENANT AND IT WAS VERY DIFF ICULT TO PROCEED AGAINST PARTNERS OF THE FIRM WHO ARE NOT EA SILY TRACEABLE. ON GETTING POSSESSION, IT WAS FOUND THAT RS.3,65,315/- WERE PAYABLE AND IF THIS WAS NOT PAID , ELECTRICITY FOR PROPERTY WOULD HAD BEEN DISCONNECTED, RESULTING IN GREAT DRAWBACK, ENCUMBRANCES, ON THE PROPERTY. THE LIST O F LITIGATION WHICH HAS OCCURRED ALONGWITH COPIES OF PETITION FOR EVICTION FILED IN 1992, ORDER DATED 31.8.1995 OF HON'BLE DELHI HIGH COURT ORDERS DATED 11.8.1999 OF SMT. ASHA MENON, ADDITIONAL ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 4 RENT CONTROLLER RUNNING INTO 32 PAGES, ORDERS DATED 13.4.2005 OF SHRI S.M CHOPRA, ADDITIONAL RENT CONTROLLER AND HON'BLE DELHI HIGH COURT ORDERS DATED18.12.2006 ARE ATTACHE D. FROM THIS, IT IS CLEAR THAT THE LITIGATION HAS DRAGGED F OR 15 YEARS AND IT TRAVELLED TWICE TO HON'BLE DELHI HIGH COURT. DUR ING THE ABOVE PERIOD, MANY OF THE LAWYERS AND SENIOR LAWYER S, MUNSHIS, CLERKS JUNIORS ETC. WERE ENGAGED TO FILE EVICTION' PETITIONS, APPEALS ETC. AND DEFEND VARIOUS PETITIONS FOR STAY, PETITIONS RAISING OBJECTIONS, COUNTERS, REJOINDERS, SUPPLEMEN TARY ETC. IN NUT SHELL, THE APPELLANT HAD SPENT ON:- 1. COURT FEE 2. COURT EXPENSES 3. TYPING & PHOTOSTAT 4. CERTIFIED COPIES OF ORDERS 5. POSTAGE, COURIER, MISCELLANEOUS EXPENSES 6. FEES OF ADVOCATES AND SENIOR ADVOCATES, JUNIORS, CL ERKS, MUNSHIS. 7. SALARY OF PERSON WHO WAS ENGAGED TO PURSUE THE LITI GATION. 8. CONVEYANCE, TRANSPORT AND 9. TELEPHONES ETC. 1N ABOVE MANNER, THE OWNER SPENT RS.2,16,20,948/- I N PERIOD OF 15 YEARS. SINCE THE APPELLANT IS HALF OWNER, HALF OF T HESE EXPENSES FOR EVICTION OF THE TENANT WERE REALLY TRE SS-PASSER. THESE EXPENSES ARE ALLOWABLE AS PER UNDER MENTIONED JUDGMENTS, BECAUSE IT IS ON ACCOUNT OF THIS THAT TH E APPELLANT HAS BEEN ABLE TO SELL HER HALF PORTION OF PROPERTY FOR RS. 7,50, 00, 000/- OTHERWISE NO PERSON WOULD HAD GIVEN MORE THAN RS.50 LACS FOR WHOLE OF THE PROPERTY BECAUSE IT WAS LET O UT AS STATED ABOVE ONLY FOR RS.2,200/- P.M. THE CAPITALIZED VALU E OF THE PROPERTY WOULD BE FAR LESS THAN RS.50 LACS FOR WHOL E PROPERTY I.E. RS.25 LACS FOR APPELLANT'S PORTION. I. 298 ITR 268 (KARN) MRS. JUNE PERRETT V. INCOME-TAX OFFICER 'CAPITAL GAINS-DEDUCTIONS-EXPENDITURE INCURRED WHOL LY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER-SALE OF PROPERTY RECEIVED UNDER WILL-EXPENDITURE INCURRED O N OBTAINING PROBATE, TRAVEL EXPENSES OF EXECUTORS AND EXPENDITURE ON EVICTING ILLEGAL TENANT-DEDUCTIBLE-I NCOME- TAX ACT, 1961, S. 48. ' ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 5 II. 241 CTR 364 (MAD.) V. LAKSHMI REDDY VS. INCOME TAX OFFICER 'CAPITAL GAINS-DEDUCTION UNDER S. 48-AM OUNT SPENT FOR RECTIFYING THE DEFECTS IN THE TITLE TO TH E PROPERTY AND REMOVING ENCUMBRANCE TO TRANSFER-IS EXPENDITURE INC URRED IN CONNECTION WITH THE TRANSFER FOR THE PURPOSE OF COM PUTATION OF CAPITAL GAINS AS PER S. 48. ' 2.3. LD. CIT(A) REJECTED THE CLAIM OF THE ASSESSEE, BY OBSERVING AS UNDER: 3.3.1 I HAVE CONSIDERED THE FINDINGS OF THE A.O. AS WELL AS ALL THE SUBMISSIONS OF THE AIR OF THE APPELLANT. DURING THE RELEVANT F.Y THE ASSESSEE HAS SOLD HOUSE PROPERTY FOR A CONS IDERATION OF RS.15 CRORES AS PER SALE DEED DATED 03/0712008 AND AS THE ASSESSEE WAS HAVING 50% SHARES IN THE PROPERTY, THE REFORE, SALE CONSIDERATION OF RS. 7,50,00,000/- WAS SHOWN UNDER THE HEAD INCOME FROM CAPITAL GAIN IN THE RETURN. THE COST OF ACQUISITION OF THE PROPERTY AFTER INDEXING WAS SHOWN AT RS. 72. 85 LAKHS. IN ADDITION, THE ASSESSEE HAS CLAIMED 50% OF EXPENSES CLAIMED TO HAVE BEEN INCURRED DURING THE YEAR 1992-93 TO 2007- 08 IN CONNECTION WITH TRANSFER OF CAPITAL ASSET U/S 48. T HE ASSESSEE HAS ALSO CLAIMED THE EXPENSES OF RS. 3,65,315/- ON ACCOUNT OF ELECTRICITY DUES PAID. THE A.O. DISALLOWED THE CLAIM OF THE ABOVE EXPENSES OF RS.L ,48,18,703/- U/S 48 ON THE G ROUND THAT EXPENSES OF RS. L,44,53,388/- ON ACCOUNT OF LEGAL CHARGES IS NEITHER RELATED TO TRANSFER OF THE ASSETS NOR SUPPO RTED BY ANY EVIDENCE AND THE ELECTRICITY CHARGES OF RS.3,65,315 /- ARE NOT RELATED TO TRANSFER OF ASSET. A.O. RECORDED THAT EVEN AFTER GIVING SUFFICIENT TIME, THE A/R FAILED TO FURNISH SUPPORTI NG EVIDENCES. THE A.O, HOWEVER, ACCEPTED THE COST OF ACQUISITION OF THE PROPERTY AFTER INDEXATION AT RS.72.85 LAKHS ON THE BASIS OF THE DEED OF PURCHASE OF THE PROPERTY PRODUCED BY THE A/ R. THE APPELLANT SUBMITTED THAT THE PROPERTY WAS PURCHASED BY BINA DEVI GOLYAN IN THE YEAR 1989-90 AND THE PROPERTY WA S UNDER OCCUPATION OF TENANT. AFTER EVICTION PETITIONS FILE D IN THE COURT AND FIGHTING THE CASE IN THE COURT FOR 15 YEARS THE POSSESSION OF THE PROPERTY WAS TAKEN FROM THE TENANT AND EXPENSES OF RS.2.16 CRORES AFTER INDEXATION WAS INCURRED BY BINA DEVI G OLYAN DURING THE YEAR 1992-93 TO 2007 -08 TO CONTEST THE CASE IN DIFFERENT COURTS. THE EXPENSES WERE IN THE NATURE O F COURT FEE, COURT EXPENSES, TYPING & PHOTOSTAT, CERTIFIED COPIES OF ORDERS, ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 6 POSTAGE, COURIER, MISCELLANEOUS EXPENSES, FEES OF A DVOCATES AND SENIOR ADVOCATES, JUNIORS, CLERKS, MUNSHIS, 'SALARY OF PERSON WHO WAS ENGAGED TO PURSUE THE LITIGATION, CONVEYANC E, TRANSPORT AND TELEPHONES ETC. THE PROPERTY WAS VACA TED BY THE TENANT ON THE BASIS OF ORDER OF HON 'BLE HIGH COURT DATED 18.12.2006 AND THE PROPERTY WAS GIFTED BY BINA DEVI GOLYAN TO HER DAUGHTER-IN-LAW SHAKUNTALA DEVI GOLYAN AND GRANDDAUGHTER-IN-LAW SMITI GOLYAN, THE APPELLANT, O N 24.04.2007 DURING THE A.Y. 2008-09. THE SUBMISSION OF THE APPELLANT IS THAT THE EXPENSES WERE INCURRED BY THE EARLIER OWNER DURING THE A.Y. 1993-94 TO A.Y. 2008-09 BEFOR E THE PROPERTY WAS TRANSFERRED TO THE APPELLANT. HOWEVER, THE APPELLANT HAS FAILED TO FURNISH ANY EVIDENCE IN SUP PORT OF THE ABOVE CLAIM OF EXPENSES OF RS. L.44 CRORES. NO YEAR WISE DETAILS OF EXPENSES PAID UNDER DIFFERENT HEADS SUCH AS, COU RT FEE, COURT EXPENSES, TYPING & PHOTOSTAT, CERTIFIED COPIES OF ORDERS, POSTAGE, COURIER, MISCELLANEOUS EXPENSES, FEES OF A DVOCATES AND SENIOR ADVOCATES, JUNIORS, CLERKS, MUNSHIS, SALARY OF PERSON WHO WAS ENGAGED TO PURSUE THE LITIGATION, CONVEYANCE, T RANSPORT AND TELEPHONES ETC. WERE FILED. NO DOCUMENTARY EVID ENCE IN SUPPORT OF THE ABOVE EXPENSES WERE FILED DESPITE SU FFICIENT OPPORTUNITIES WERE ALLOWED BY THE A.O. DURING THE C OURSE OF APPELLATE PROCEEDINGS ALSO ON 03.12.2012, THE A.R O F THE APPELLANT WAS REQUESTED TO FURNISH THE DETAILS OF T HE ABOVE EXPENSES ALONG WITH SUPPORTING EVIDENCES. THE A.R SUBMITTED THAT THE PARTICULARS ARE NOT AVAILABLE. IN THE ABSE NCE OF ANY DETAILS AND DOCUMENTARY EVIDENCES IN SUPPORT OF THE EXPENSES CLAIMED BY THE APPELLANT, THE GENUINENESS OF THE EX PENSES CLAIMED ARE NOT PROVED. THE APPELLANT HAS FAILED TO DISCHARGE THE ONUS CAST UPON HER, TO PROVE THAT EXPENDITURES CLAIMED ARE GENUINE. THEREFORE, THE EXPENSES ARE NOT ALLOWABLE TO THE APPELLANT AS INCURRED IN CONNECTION WITH TRANSFER O F CAPITAL ASSET U/S 48. IN THE CASE OF B.N. PINTO V. CIT [197 4] 96 ITR 306 (MYS) HON'BLE MYSORE HIGH COURT HAVE HELD THAT: 'IT WAS NOT CLAIMED THAT THERE WAS ANY EVIDENCE ON RECORD IN SUPPORT OF THE PLEA THAT CERTAIN AMOUNT REPRESENTED LAWYER'S FEES, ETC., APART FROM HER OWN ASSERTION TO THAT EFFECT. IN THE CIRCUMSTANCES REFE RRED TO BY THE ITO IN HIS ORDER, SUCH A PLEA COULD NOT BE ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 7 ACCEPTED. THE TRIBUNAL WAS, THEREFORE, CORRECT IN PROCEEDING ON THE BASIS THAT THERE WAS NO EVIDENCE IN SUPPORT OF THE ASSESSEE'S CONTENTION. THEREFORE, THE TRIBUNAL WAS JUSTIFIED IN NOT DEDUCT ING THE AMOUNT IN QUESTION WHILE COMPUTING THE CAPITAL GAINS. ' IN VIEW OF THE ABOVE, AS THE EXPENSES CLAIMED ARE N OT SUPPORTED BY ANY HEAD WISE, YEAR WISE DETAIL AND DOCUMENTARY EVIDENCE, THEREFORE, THE CLAIM OF THE APPELLANT IS NOT ALLOWA BLE MERELY ON THE BASIS OF HER OWN ASSERTION. THE APPELLANT HAS F AILED TO DISCHARGE THE ONUS CAST ON HER TO PROVE THAT THE EX PENSES CLAIMED ARE GENUINE. IN ORDER TO CLAIM THAT THE EXP ENDITURES ARE INCURRED IN CONNECTION WITH TRANSFER OF CAPITAL ASS ET, THE BURDEN OF PROVING THE NECESSARY FACTS IN THAT CONNECTION I S ON THE ASSESSEE. RELIANCE IS PLACED ON THE DECISIONS OF HO N'BLE SUPREME COURT IN THE CASE OF CIT VS. CALCUTTA AGENC Y LTD. (SC) 19 ITR 91 AND LAKSHIMARATAN COTTON MILLS CO. L TD. VS. CIT (SC) 73 ITR 634. IN VIEW OF THE ABOVE FACTUAL A ND LEGAL POSITION THE CLAIM OF EXPENSES OF RS.L ,44,53,388/- ARE NOT ALLOWABLE TO THE APPELLANT AS INCURRED IN CONNECTIO N WITH TRANSFER OF CAPITAL ASSET U/S 48.THE A.O. IS JUSTIF IED IN DISALLOWING THE EXPENSES CLAIMED. 3.3.2 REGARDING THE ELECTRICITY CHARGES OF RS. 3,65 ,315/- THE APPELLANT SUBMITTED THAT ON GETTING POSSESSION OF T HE PROPERTY IT WAS FOUND THE SAID AMOUNT WAS NOT PAID BY THE EARLI ER TENANT. THE CLAIM WAS MADE BECAUSE IT WAS PAID BY THE APPEL LANT AND IF NOT PAID, THE ELECTRICITY FACILITY WOULD BE DISCONN ECTED. FROM THE ABOVE SUBMISSION IT IS EVIDENT THAT THE SAID EX PENDITURE OF RS.3.65 LAKHS IS NO WHERE CONNECTED WITH THE TRANSF ER OF THE PROPERTY. THE SAID PAYMENT OF ELECTRICITY CHARGES I S IN THE NATURE OF GENERAL MAINTENANCE OF PROPERTY AND THERE FORE NOT DEDUCTIBLE WHILE COMPUTING CAPITAL GAIN. 3.3.3 IN THE CASE OF CIT VS. MITHLESH KUMARI (DEL) 92 ITR 9 IT HAS BEEN HELD BY HON'BLE DELHI HIGH COURT THAT GROU ND RENT PAID FOR TAKING THE PURCHASED PLOT IN POSSESSION IS IN THE NATURE OF EXPENDITURE ON MAINTAINING THE CAPITAL ASSET AND NOT FOR ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 8 ACQUISITION THEREOF. HENCE, NOT INCLUDIBLE IN COST OF ACQUISITION. SIMILARLY, IN THE CASE OF KIRAN BANSAL VS. ACIT (IT AT, DEL) 10 ITR (TRIB) 180 HON'BLE ITAT DELHI AND IN THE CASE O F S. SUDHA VS. ACIT (ITAT, CHENNAI) 10 ITR (TRIB) 206; 131 ITD 575 ITAT CHENNAI HAVE HELD THAT EXPENDITURES ON TILES L AYING, WHITE WASHING, ELECTRICAL RE-WIRING, WOOD WORK ETC. ARE O N GENERAL MAINTENANCE OF PROPERTY AND NOT FOR IMPROVEMENT OF PROPERTY. THEREFORE, NOT DEDUCTIBLE WHILE COMPUT ING CAPITAL GAINS. IN VIEW OF THE ABOVE FACTS AND DECISIONS, TH E SAID ELECTRICITY CHARGES PAID BEING IN THE NATURE OF GEN ERAL MAINTENANCE OF PROPERTY, IS NOT ALLOWABLE WHILE COM PUTING CAPITAL GAIN U/S 48. THE APPEAL FAILS IN THIS GROUN D. 2.4. APROPOS THE SECOND GROUND, A.O. FOUND THAT IN THE PERSONAL BALANCE SHEET OF THE ASSESSEE AN AMOUNT OF RS. 16 LACS WAS SHOWN AS UNSECURED LOAN RECEIVED FROM HER SON MASTER YASH GOLYAN. ASSESSEE WAS REQUIRED TO FILE CONFIRMATION AND COPY OF BANK A/C IN THIS BEHALF TO SUBSTANTIATE THE CASH CREDITS, WHICH ACCORDING TO A.O. WAS NOT FILED. IT WAS THUS HELD THAT ASSESSEE HAS FAILED TO PROVE THE IDENTITY, CREDITWORTHINESS AND CAPACITY OF MASTER YASH GOLYAN TO ADVANCE THIS AMOUNT AND ADDED AS UNE XPLAINED CASH CREDIT IN THE INCOME OF THE ASSESSEE U/S 68 OF THE ACT. 2.5. IN FIRST APPEAL, THE ASSESSEE FURNISHED EXPLAN ATION TO THE EFFECT THAT SINCE 2003, IN ITS ACCOUNT YASH GOLYAN OWNED AN AM OUNT OF RS. 16 LACS BALANCE WITH M/S VITIR CHATTELS PVT. LTD., WHICH IS ASSESSED TO INCOME TAX. THIS AMOUNT WAS FURTHER TRANSFERRED BY YASH GOLYAN TO ANOTHER COMPANY M/S NULON INDIA LTD. AS SHARE APPLICATION MONEY. SH ARES REMAINED TO BE ALLOTTED AND THE AMOUNT CONTINUED WITH NULON AS DEP OSIT, SUBSEQUENTLY THIS AMOUNT WAS GIFTED BY YASH GOLYAN TO HIS MOTHER I.E. THE ASSESSEE BY WAY OF ENTRIES I RESPECTIVE PERSONAL ACCOUNTS IN NULON LTD . IN SUPPORT THEREOF ASSESSEE SUBMITTED LEDGER ACCOUNT OF M/S VITIR CHA TTELS PVT. LTD. FOR THE IMPUGNED YEAR AND THE COPIES OF A/CS FROM NULON IND IA LTD. LD. CIT(A) ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 9 HOWEVER DID NOT ACCEPT THE ASSESSEES VERSION AND C ONFIRMED THE ADDITION BY FOLLOWING OBSERVATIONS: 4.3 .. THE SUBMISSION OF THE APPELLANT IS FO UND TO BE WITHOUT ANY MERIT BECAUSE NO SUCH EXPLANATION WAS F URNISHED BEFORE THE A.O. THE A.O. GAVE AMPLE OPPORTUNITY TO THE APPELLANT TO FILE THE PARTICULARS IN RESPECT OF ALL UNSECURED LOANS DURING THE ASSESSMENT PROCEEDINGS. THE APPELL ANT SUBMITTED THE PARTICULARS IN RESPECT OF ALL THE UNS ECURED LOANS EXCEPT THE UNSECURED LOANS RECEIVED FORM YASH GOLYA N. THE VERSION OF THE APPELLANT IN THE APPELLATE PROCEEDIN GS WAS NEVER SUBMITTED BEFORE THE A.O. FURTHER, NO CONFIRMATION AND COPY OF I.T. RETURN OF YASH GOLYAN [OR HIS NATURAL GUARDIAN, WHE N MINOR] SINCE A.Y. 2004-05 TO 2009-10 WAS FILED TO P ROVE THAT THE SAID SHARE APPLICATION MANY WAS ALREADY DISCLOS ED IN THE RETURN ALREADY FILED. FURTHER, NO LEDGER ACCOUNT OF NULON INDIA LTD. AND VITIR CHATTELS PVT. LTD. DULY SIGNED AND V ERIFIED BY AUTHORIZED PERSONNEL WAS FILED. NO AUDITED FINANCIA L STATEMENT AND COPY OF I.T. RETURN OF THESE COMPANIES WERE FIL ED FOR A.Y. 2004-05 TO A.Y. 2009-10 TO PROVE THE SHARE APPLICAT ION MONEY IN THE HAND OF YASH GOLYAN. NO REQUEST LETTER OF YA SH GOLYAN FOR TRANSFER OF SHARE APPLICATION MONEY FROM VITIR CHATTELS PVT. LTD. TO NULON INDIA LTD. IS FILED ALTHOUGH THE UNSI GNED LEDGER ACCOUNT SAYS IT HAS TRANSFERRED THE SHARE APPLICATI ON MONEY ON THE REQUEST OF YASH GOLYAN. FURTHER, NO REASON HAS BEEN ASCRIBED AS TO WHY THE APPLICATION MONEY IS LYING U NALLOTTED FOR SUCH A LONG PERIOD. IN VIEW OF THE ABOVE, THE ADDIT ION MADE BY THE A.O U/S 68 IS JUSTIFIED. THE APPEAL FAILS IN TH IS GROUND. 2.6. AGGRIEVED ON BOTH THE ISSUES ASSESSEE IS BEFOR E US. 3. LD. COUNSEL FOR THE ASSESSEE ADVERTING TO GROUND S CONTENDS THAT THE FACTS ABOUT ON GOING PROPERTY DISPUTE BETWEEN THE A SSESSEE, M/S AMIN CHAND PYARE LAL AND ANIL KUMAR GUPTA HAVE NOT BEEN DENIED BY ANY OF THE LOWER AUTHORITIES. THE ABOVE AMOUNTS HAVE BEEN EXCL UDED FROM COST OF ACQUISITION MAINLY BY OBSERVATIONS THAT NECESSARY E VIDENCE FOR INCURRING OF ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 10 EXPENDITURE WAS NOT PRODUCED BY THE ASSESSEE. SMT. BINA DEVI WAS A NON- RESIDENT AND THE PROPERTY DISPUTES I.E. RESTORATION OF POSSESSION AND CONNECTED LITIGATIONS WERE GOING ON IN DELHI. CHRON OLOGY OF THE LEGAL PROCEEDINGS STARTING FROM 6-11-1992 ONWARDS BEFORE RENT CONTROLLER, RENT CONTROL TRIBUNAL AND HONBLE DELHI HIGH COURT DISPU TE ARE PLACED ON THE RECORD. SMT. BINA DEVI BEING NOT PHYSICALLY PRESENT IN INDIA HAD TO CONTEST MULTIFARIOUS LITIGATION THROUGH LEGAL ATTORNEYS, SE NIOR ADVOCATES AND BATTERY OF OTHER LAWYERS. THE SPECTRUM OF LITIGATION SPEAKS VOLUMES ABOUT LEGAL EXPENSES IN A PLACE LIKE DELHI. THE EXPENDITURE I NCURRED IS ATTRIBUTABLE TO THE HEADS MENTIONED IN THE STATEMENT IN THIS BEHALF . THUS, THE TITLE OF THE ASSESSEE FOR PEACEFUL ENJOYMENT OF PROPERTY WAS EN DANGERED AND TO SAVE THE SAME IT WAS IMPERATIVE TO CONTEST THE MULTIFARI OUS PROCEEDINGS, THE EXPENSES ARE, THEREFORE, INCLUDABLE IN COST OF ACQU ISITION IN TERMS OF SEC. 68. FINALLY VIDE ORDER DATED 30-4-2007 THE HONBLE DELH I HIGH COURT DECIDED THE SUIT IN FAVOUR OF THE ASSESSEE AND DIRECTED AN IL GUPTA TO VACATE THE PREMISES WHICH WAS HANDED OVER TO ASSESSEE. 3.1. WHILE VACATING THE PROPERTY, THE SAID ANIL GUP TA WANTONLY DID NOT PAY THE OUTSTANDING ELECTRICITY CHARGES WHICH COULD HAV E LEAD TO DISCONNECTION AND SUBJECT TO THE CONDITIONS OF RECONNECTION ALONG WITH ENTIRE DUES AND RELEVANT PENALTIES, THUS INCURRING OF ELECTRICITY E XPENSES ALSO BECAME IMPERATIVE FOR PEACEFUL ENJOYMENT OF PROPERTY. THE ASSESSEE WAS THUS COMPELLED TO MAKE THE PAYMENT AS IN THE ABSENCE OF ELECTRICITY AND WATER CONNECTION, USE OF THE TITLE OF PEACEFUL ENJOYMENT WAS IMPAIRED. TO PERFECT THE TITLE AND USUFRUCT OF THE PROPERTY SMT. BEENA D EVI HAD TO PAY THE OUTSTANDING ELECTRICITY DUES IN THIS BEHALF. THIS I S TOWARDS THE IMPROVEMENT OF THE TITLE AND ELIGIBLE FOR INCLUSION IN COST OF ACQUISITION. BESIDES, ON 4-7- 2007 SMT. BINA DEVI FILED A CONTEMPT OF COURT PETIT ION AGAINST THE SAID ANIL ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 11 GUPTA FOR FAILING TO PAY THE OUTSTANDING DUES AS DI RECTED BY HONBLE DELHI HIGH COURT, THIS ALSO SHOWS THE GENUINENESS OF THE CLAIM. 3.2. AS PER PROVISIONS OF SEC. 48 OF THE I.T. ACT I N CASE OF ACQUISITION OF THE PROPERTY BY WAY OF GIFT OR INHERITANCE THE COST OF ACQUISITION OF THE PROPERTY WILL BE THE SAME AS IN THE HANDS OF THE OR IGINAL OWNER/ TRANSFEROR/DONOR. THE COST OF ACQUISITION INCLUDES THE COST OF IMPROVEMENT OF THE PROPERTY WHICH INCLUDES THE COST INCURRED ON DE FENDING OR IMPROVING THE TITLE. THUS IN THE HANDS OF SMT. BEENA DEVI THE COS T OF ACQUISITION WILL INCLUDE THE ORIGINAL COST AS WELL AS THE COST OF LI TIGATION AND PAYMENT OF OUTSTANDING ELECTRICITY DUES WHICH WERE NECESSARY F OR DEFENDING THE TITLE AND FOR ENJOYMENT OF PEACEFUL POSSESSION AND USUFRUCT O F THE PROPERTY. 3.3. THE LOWER AUTHORITIES HAVE NEITHER DOUBTED THE MULTIFARIOUS LITIGATION ENGAGED IN BY SMT. BINA DEVI AS ALSO THE OUTSTANDIN G ELECTRICITY DUES. BOTH THE DONEES I.E. SMT. SHAKUNTLA GOLYAN, MOTHER IN LA W OF THE ASSESSEE AND THE ASSESSEE CLAIMED 50% OF SUCH EXPENSES INCURRED TOW ARDS THE IMPROVEMENT OF PROPERTY WHICH IS DULY INCLUDED IN COST OF ACQUI SITION IN THE HANDS OF SMT. BEEN DEVI. THE ONLY REASON FOR DISALLOWING THE ABOV E AMOUNTS PROPOSED BY A.O. IS TO THE EFFECT THAT THE ASSESSEE FAILED TO ADDUCE EVIDENCE TOWARDS INCURRING THESE LEGAL EXPENSES. THE FACT OF THE MAT TER IS THAT THE LEGAL EXPENSES HAVE BEEN INCURRED NOT BY THE ASSESSEE BUT BY HER GRAND MOTHER IN LAW AS IT IS ONLY AFTER THE IMPROVEMENT AND CLEARAN CE OF TITLE, THE PROPERTY WAS GIFTED TO BOTH THE DONEES. THUS, THE EXPENDITUR E WAS INCURRED BY SMT. BINA DEVI AND THIS CLAIM HAS BEEN MADE BY THE ASSES SEE BASED ON HER INFORMATION. 3.4. APROPOS SECOND GROUND OF APPEAL, LD. COUNSEL C ONTENDS THAT THE CONFIRMATION FROM THE SAID M/S VITIR CHATTELS PVT. LTD. AND NULON INDIA LTD. WERE DULY FILED BEFORE THE CIT(A). THE ABOVE AMOUNT IS CONTINUING IN THEIR ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 12 BOOKS WAY BACK FROM THE YEAR 2003 IN THE NAME OF SH RI YASH GOLYAN. HE SUBSEQUENTLY BECAME MAJOR AND THE CONFIRMATION WAS ALSO FILED BY HIM IN THE CAPACITY OF MAJOR. THE ASSESSEE DISCHARGED HER PRIMARY ONUS BY EXPLAINING THAT THE AMOUNT IN QUESTION WAS OWNED BY SHRI YASH GOLYAN FROM 2003 AND THE AMOUNT HAS BEEN TRANSFERRED THROU GH INTERNAL BOOK TRANSFER IN THE ACCOUNT OF NULON INDIA LTD.. THESE CONCERNS ARE RELATED WITH THE ASSESSEE FAMILY. IT WILL BE TRAVESTY OF JUSTIC E TO ADD THE SAME AMOUNT IN THE HANDS OF MOTHER WHEN THE DEPARTMENT BY WAY OF A SSESSMENT IN THE CASE OF BOTH THE COMPANIES HAVE ACCEPTED THESE CREDITS A S BELONGING TO YASH GOLYAN. LD. CIT(A) HAS NOT GIVEN ANY COGENT REASON S TO DISCARD THIS EVIDENCE. ON ONE HAND AND AT THE SAME TIME RELIED O N THE SAME EVIDENCE AND POINTING OUT THAT NO REQUEST LETTER OF YASH GOLYAN OR TRANSFER OF SHARE APPLICATION MONEY FROM M/S VITIR CHATTELS PVT. LTD. AND NULON INDIA LTD. WAS FILED. THIS IMPLIES THAT LD. CIT(A) HAS ACCEPTE D THE FACT THAT THE AMOUNT CAME AS OPENING BALANCE OF YASH GOLYAN IN THE ACCOU NT OF M/S VITIR CHATTELS PVT. LTD. AND ITS TRANSFER TO NULON INDIA LTD. IS NOT ACCEPTED AS THE TRANSFER REQUEST LETTER WAS NOT FILED. IN RELATED C ONCERNS THE FUNDS ARE TRANSFERRED FROM ONE ENTITY TO ANOTHER ON ORAL INST RUCTION. BESIDES, WHEN THE CREDIT AND SHARE APPLICATION MONEY IS ACCEPTED IN N ULON INDIA, THERE IS NO JUSTIFICATION ON TECHNICAL OBJECTION. IT IS PLEADED THAT THE ASSESSEES ONUS FOR EXPLANATION OF CASH CREDIT IS PRIMARY IN NATURE, WH ICH STANDS DISCHARGED. THUS, LD. CIT(A) FAILED TO CONSIDER THE ISSUE PROPE RLY, THEREFORE, THE ADDITION SHOULD BE DELETED. 4. LD. DR SUPPORTED THE ORDER OF LOWER AUTHORITIES . 5. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE ENTIRE MATERIAL AVAILABLE ON RECORD. THOUGH DETAILED ARGUMENTS ARE MADE BY BOTH THE ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 13 PARTIES, WE HAVE MENTIONED THEM IN BRIEF, AS WE AR E INCLINED TO SET ASIDE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER FOR FO LLOWING REASONS. (I) NO CROSS VERIFICATION FROM THE RETURNS OR ACCOUNTS OF SMT. BEENA DEVI WHO WAS THE ORIGINAL OWNER OF THE PROPERTY HAV E BEEN CARRIED OUT TO VERIFY AS TO WHAT AMOUNT WAS SPENT FROM HER BOOKS, BANK OF ACCOUNT OR CASH IN HAND IN RESPECTIVE YEARS. THIS I S SO BECAUSE THE ASSESSEE IS CLAIMING 50% OF EXPENSES INCURRED BY SM T. BEENA DEVI IN DEFENDING AND IMPROVING HER TITLE OVER THE PROPE RTY. THIS BECOMES A CRUCIAL FACTOR FOR ASCERTAINMENT OF CLAIM OF THE ASSESSEE. (II) THERE IS NO INDICATION AS TO WHAT HAS BEEN DONE BY DEPARTMENT IN THE CASE OF SMT. SHAKUNTLA GOLYAN ON THESE ISSUES I .E. , THE ANOTHER CO-OWNER TO WHOM HALF OF THE PROPERTY WAS GIFTED BY SMT. BEENA DEVI ALONG WITH THE ASSESSEE. (III) APROPOS THE CASH CREDIT OF MASTER YASH GOLYAN, ON O NE HAND THE LD. CIT(A) FINDS FAULT WITH ASSESSEES EXPLANATION THAT THE DOCUMENTS WERE NOT FILED BEFORE ASSESSING OFFICER A ND AT THE SAME TIME HE HAS ADVERTED TO THE MERIT OF THE DOCUMENTS THAT IT AMOUNTS TO GIVING CONTRADICTORY FINDINGS. BESIDES, BOTH THE COMPANIES I.E. M/S VITIR CHATTELS PVT. LTD. AND NULON INDIA LTD. A RE CLAIMED TO BE REGULARLY ASSESSED AND FAMILY RELATED CONCERNS OF THE ASSESSEE. IF THE AMOUNT OF MR. YASH GOLYAN IS LYING IN ONE OF TH E FAMILY RELATED CONCERN I.E. VITIR CHATTELS PVT. LTD. AND T HEN TRANSFERRED TO ANOTHER CONCERN I.E. NULON INDIA LTD. AND BOTH OF T HEM ARE ASSESSED, IN THESE CIRCUMSTANCES THE ASSESSEES DIS CHARGE OF ONUS IS TO BE WEIGHED FROM THE ASSESSMENT RECORD OF THESE C ONCERNS. 5.1. IN OUR CONSIDERED VIEW, BOTH THE ISSUES HAVE N OT BEEN EXAMINED PROPERLY AND REQUIRE METHODICAL VERIFICATION OF FAC TS AND RECORD. THUS IT WILL ITA NO. 556/DEL/2013 MRS. SMITI GOLYAN VS. ITO 14 BE IN THE INTEREST OF JUSTICE TO SET ASIDE BOTH THE ISSUES BACK TO THE FILE OF ASSESSING OFFICER TO DECIDE THE SAME AFRESH IN ACCO RDANCE WITH LAW AFTER GIVING THE ASSESSEE AN OPPORTUNITY OF BEING HEARD, KEEPING OUR OBSERVATION IN MIND. 6. ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PUR POSES. ORDER PRONOUNCED IN OPEN COURT ON 21-2-2014. SD/- SD/- ( S.V. MEHROTRA ) ( R.P. TOLANI ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 21-02-2014. MP COPY TO : 1. ASSESSEE 2. AO 3. CIT 4. CIT(A) 5. DR