Kuldeep Singh, New Delhi V. ITO, New Delhi

ITA 56/DEL/2010

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 2715 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 15-07-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 06-01-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RENUYKA JAIN
• Assessee Lawyers: S S KALRA
• Section: 69C; 54F; 234B; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH D NEW DELHI) BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI T.S. KAPOOR, ACCOUNTANT MEMBER I.T.A. NO.56/DEL/2010 ASSESSMENT YEAR : 2006-07 SHRI KULDEEP SINGH, ITO, K-10, CONNAUGHT PLACE, WARD-5 (3), NEW DELHI. V. NEW DELHI. (APPELLANT) (RESPONDENT) PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO. PAN /GIR/NO.AANPS AANPS AANPS AANPS- -- -1391 1391 1391 1391- -- -R RR R APPELLANT BY : SHRI S.S. KALRA C.A. RESPONDENT BY : MS. RENUYKA JAIN, DR. ORDER PER TS KAPOOR, AM: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD CIT(A) DATED 30.10.2009. THE GROUNDS OF APPEALS TAKEN BY THE ASSESSEE ARE AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND UNDER THE PROVISIONS OF LAW THE CIT(A) HAS ERRED IN CONFIRMING/UPHOLDING INCOME UNDER THE HEAD CAPITAL GAINS AT ` .70,09,618/- AS AGAINST ` .16,84,580/- RETURNED BY THE ASSESSEE AS FOLLOWS:- A. A) BY DISALLOWING PAYMENT OF ` .5,00,000/- ON CANCELLATION OF EARLIER AGREEMENT ON SALE OF RESIDENTIAL PROPERTY. II) ` .2,50,000/- PAID TO SHRI RAJAT KAPOOR AS BROKERAGE ( BOTH ON 4.2.2005. ITA NO56/DEL/2010 2 B) BY DENYING THE CLAIM OF EXEMPTION U/S 54. B. I) BY TREATING LONG TERM CAPITAL GAINS OF ` .2,73,569/- AS SHORT TERM CAPITAL GAINS. II) ADDITION OF STT OF ` .41,177/- PAID ON VARIOUS TRANSACTIONS. C. III) BY DENYING EXEMPTION U/S 10(38) OF THE INCOME TAX ACT, 1961 ON LONG TERM CAPITAL GAINS OF ` .7,49,591/- (KOTAK CONTRA SCHEME). 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND UNDER THE PROVISIONS OF LAW, THE CIT(A) HAS ERRED IN U PHOLDING THE ADDITION OF ` .11,65,784/- U/S 69C OF THE INCOME TAX ACT, 1961 FOR LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES ESTIMAT ING THE MONTHLY EXPENDITURE OF ` .1,25,000/- ON SURMISES AND CONJECTURES. 3. THE ASSESSING OFFICER HAS ALSO ERRED IN CHARGING INTEREST U/S 234B OF THE INCOME TAX ACT, 1961 ` .4,22,015/-. 4. ANY OTHER GROUND THAT MAY BE TAKEN UP WITH THE PERM ISSION OF THE HON'BLE TRIBUNAL. 2. THE APPEAL OF THE ASSESSEE WAS EARLIER DISMISSED FOR NON PROSECUTION VIDE ORDER DATED 8.3.2010 WHICH WAS RECA LLED FOR HEARING ON MERITS VIDE ORDER OF THE TRIBUNAL DATED 2.3.2012. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FILE D RETURN OF INCOME DECLARING INCOME OF ` .47,88,579/- WHICH INCLUDED SHORT TERM CAPITAL GAINS OF ` .31,04,005/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY. DURING ASSESSMENT PROCEEDINGS, THE ASSESSING O FFICER OBSERVED THAT ASSESSEE HAD DECLARED INCOME FROM CAPITAL GAINS ON SALE OF HOUSE PROPERTY AT NEW FRIENDS COLONY, NEW DELHI AN D HAD CLAIMED AN AMOUNT OF ` .7.50 LAKHS AS BROKERAGE PAID ON THE ABOVE SALE. THE ASSESSEE WAS ASKED TO SUBMIT THE PROOF OF BROKERAGE AND IN RESPONSE ITA NO56/DEL/2010 3 THE ASSESSEE SUBMITTED PHOTO COPIES OF RECEIPT OF ` .15 LAKHS ISSUED BY ONE SHRI ASHOK K SINGHAL. THE RECEIPT FURTHER CONTAI NED PARTICULARS OF CHEQUES AMOUNTING TO ` .10 LAKLHS RECEIVED FROM THE ASSESSEE. IT WAS EXPLAINED BY THE LD AR THAT THE ASSESSEE HAD ENTERED IN TO AN AGREEMENT TO SELL THE HOUSE PROPERTY TO MR. ASHOK K SI NGHAL AND HAD RECEIVED ` .10 LAKHS AS ADVANCE MONEY. HOWEVER, SUBSEQUENTLY THE ASSESSEE BACKED OUT OF THE DEAL AND HAD TO PAY ` .15 LAKHS TO SHRI ASHOK K SINGHAL AS FULL AND FINAL SETTLEMENT COST INCL UDING REFUND OF ` .10 LAKHS. THUS, IT WAS CLAIMED THAT AN EXTRA AMOUNT OF ` .5 LAKHS HAD TO BE PAID WHICH BY MISTAKE WAS SHOWN AS BROKERAGE IN THE COMPUTATION OF CAPITAL GAIN. THE ASSESSEE SUBMITTED THAT THE DEED WAS CANCELLED BECAUSE THE ASSESSEE WAS GETTING BETTER PRICE F ROM ANOTHER PARTY AND THEREFORE HE HAD PAID ` .5 LAKHS FOR BETTER PRICE AND WITH REGARD TO ` .2.50 LAKHS TO SHRI RAJAT KAPOOR IT WAS SUBMITTED THAT THE AMOUNT WAS PAID TO BROKER ON 4.2.2005 AFTER FINALIZ ATION OF AGREEMENT OF SALE. FURTHER A PHOTO COPY OF RECEIPT DATED 4.2.2 005 FOR A SUM OF ` .2.50 LAKHS ISSUED BY SHRI RAJAT KAPOOR AS SERVICE CHARG ES TOWARDS SALE OF HOUSE NO.B-383, NEW FRIENDS COLONY, NEW DELHI WAS ALSO FILED. THE ASSESSING OFFICER POINTED OUT THAT THE RECEIPT WAS D ATED 4.2.2005 WHEREAS THE SALE DEED WAS REGISTERED ON 3.6.2005. THE A SSESSING OFFICER HELD THAT THE AMOUNT OF ` .7.50 LAKHS CLAIMED AS BROKERAGE ON SALE OF PROPERTY ACTUALLY REPRESENTED COST BORNE BY TH E ASSESSEE ON OLD DEAL WHICH NEVER MATERIALIZED AND WAS NOT EXPENSES IN CURRED FOR THE PRESENT DEAL, THEREFORE THE CLAIM OF EXPENSES AGAINST T HE CAPITAL GAINS WAS DENIED AND ADDITIONS OF ` .7.50 LAKHS WAS MADE. 4. THE ASSESSING OFFICER FURTHER OBSERVED THAT ASSESSEE HAD CLAIMED EXEMPTION FROM CAPITAL GAINS U/S 54 OF THE AC T TO THE TUNE OF ` .37,86,275/-. THE ASSESSEE WAS ASKED TO PRODUCE SUPPORTIN G EVIDENCE FOR CLAIMING THE SAID EXEMPTION. IN RESPONSE, THE ASSESSE E SUBMITTED THAT HE HAD INVESTED THE CAPITAL GAIN IN PURCHASE OF A NEW RESIDENTIAL ITA NO56/DEL/2010 4 HOUSE PROPERTY AT THE MAGNOLIAS DLF GOLFLINKS, DLF CI TY, GURGAON. IT WAS SUBMITTED THAT AS PER SCHEDULE OF PAYMENT, THE ASSESSE E HAD PAID ` .61,15,000/- UPTO 12.5.2006 AND IN SUPPORT THE ASSESSEE ALSO FILED A COPY OF BUYERS AGREEMENT DATED 9.2.2006. THE ASSESSING OFFICER AFTER GOING THROUGH THE SAID AGREEMENT OBSERVED THAT THE TO TAL SALE CONSIDERATION WAS ` .3,05,75000/- AND THE PAYMENTS WERE TO BE MADE AS PER ANNEXURE-3 ATTACHED WITH THE AGREEMENT AND TH ESE WERE LINKED TO THE STAGE OF CONSTRUCTION AND WERE SPREAD OVER A P ERIOD OF 36 MONTHS. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER CLAUSE 9.1 THE ISSUANCE OF OCCUPATION CERTIFICATE FOR THE BUILDI NG/COMPLEX WAS TO BE THE CONCLUSIVE EVIDENCE ABOUT BUILDING/COMPLEX OF HAVING BEEN FULLY COMPLETED IN ACCORDANCE WITH THE PLANS AND SPEC IFICATIONS. FROM THE INFERENCE OF THESE CLAUSES, THE ASSESSING OFFICER INF ERRED THAT THE OWNERSHIP OF APARTMENT WILL BE CONFERRED TO THE ASSESSEE ONLY ON THE DATE OF ISSUANCE OF OCCUPATION CERTIFICATE AND SINCE T HE DATE OF COMPLETION WAS 36 MONTHS AND THEREFORE THE ASSESSEE CANN OT BE SAID TO HAVE INVESTED IN THE HOUSE PROPERTY WITHIN THE STIP ULATED PERIOD AND THUS WAS NOT ENTITLED TO THE EXEMPTION OF CAPITAL GAI N U/S 54 OF THE ACT. 5. THE ASSESSING OFFICER FURTHER OBSERVED THAT THE ASSESSEE WAS LIVING IN A JOINT FAMILY AND ASSESSEE HAD WITHDRAWN ONL Y ` .1,22,612/- TOWARDS HOUSEHOLD EXPENSES. ON ENQUIRIES, THE ASSESSEE FURNI SHED THE DETAILS OF WITHDRAWALS MADE BY OTHER FAMILY MEMBERS LI VING ALONG WITH HIM AND SUBMITTED THAT IN ALL A SUM OF ` .3,34,216/- WAS WITHDRAWN FOR HOUSEHOLD EXPENSES. THE ASSESSING OFFICER, HOWEVER, FROM T HE PATTERN OF WITHDRAWALS MADE BY FAMILY MEMBERS OF ASSESSEE HELD TH AT THESE WERE SCATTERED AND LUMP SUM ONE TIME WITHDRAWALS AND CANNOT BE SAID TO HAVE BEEN INCURRED FOR HOUSEHOLD EXPENSES. MOREOVER HE HELD THAT ASSESSEE WAS LIVING IN A POSH BUNGLOW AT JOR BAGH AND THE WITHDRAWALS MADE BY THE ASSESSEE AND HIS FAMILY MEMBERS WERE INSUFFIC IENT AND THEREFORE HE ESTIMATED ANNUAL EXPENDITURE OF ` .15 LAKHS AGAINST WHICH ITA NO56/DEL/2010 5 WITHDRAWALS MADE BY THE ASSESSEE WAS ONLY ` .3,34,216/-. THEREFORE, HE MADE AN ADDITION OF ` .11.65,784/- AS UN-EXPLAINED EXPENDITURE U/S 69C OF THE ACT. 6. THE ASSESSING OFFICER ALSO NOTED THAT DURING THE YEAR THE ASSESSEE HAD DECLARED SHORT TERM CAPITAL GAIN OF ` .16,84,538/- AND LONG TERM CAPITAL GAIN OF ` .10,11,345/- FROM SALE OF MUTUAL FUNDS UNITS AND ASSESSEE HAD CLAIMED SHORT TERM CAPITAL GAIN TO BE T AXABLE AT 10% AND LONG TERM CAPITAL GAINS TO BE EXEMPT. IN ORDER T O EXAMINE THE ADMISSIBILITY OF THE CLAIM, THE ASSESSEE WAS ASKED TO FURNI SH TRANSACTION STATEMENT OF MUTUAL FUNDS SOLD DURING THE Y EAR AND IN RESPONSE THE ASSESSEE FURNISHED TRANSACTION STATEMENT OF SALE OF MUTUAL FUNDS EXCEPT A FEW STATEMENTS WHICH ARE DETAILE D AT PAGE 7 OF THE ASSESSMENT ORDER. THE TRANSACTIONS FOR WHICH STATEME NTS WERE NOT FURNISHED CONTAINED A CLAIM OF LONG TERM CAPITAL GAI N TO THE EXTENT OF ` .7,47,591/- AND IN THE ABSENCE OF THESE STATEMENTS, TH E ASSESSING OFFICER DISALLOWED THE CLAIM OF LONG TERM CAPITAL GA IN EARNED AS THE TRANSACTIONS WERE TREATED AS NON STT PAID. THE ASSESSING O FFICER ALSO DISALLOWED THE CLAIM OF ASSESSEE REGARDING SHORT TERM CAP ITAL GAINS AMOUNTING TO ` .5,22,260/- IN THE ABSENCE OF PROOF OF HAVING PAID S TT ON THEM AND ON THE BASIS THAT CERTAIN SCHEMES WERE NOT EQUITY ORIENTED. 7. DISSATISFIED WITH THE ORDER, THE ASSESSEE FILED APPEAL BEFORE LD CIT(A). THE LD CIT(A) AFTER GOING THROUGH THE SUBMISSI ONS OF ASSESSEE UPHELD THE ADDITIONS MADE BY THE ASSESSING OFFICER. 8. AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE US. 9. AT THE OUTSET THE LD AR EXPLAINED THE FACTS OF THE CASE REGARDING SALE OF HOUSE PROPERTY. IT WAS SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR SALE OF HOUSE WITH ONE MR. ASHOK K SINGHAL FROM WHOM HE HAD TAKEN AN ADVANCE OF ` .10 LAKHS. HOWEVER, BEFORE THE EXECUTION OF SALE DEED, THE ASSESSEE CANCELLED THE DEAL AND PAID A ITA NO56/DEL/2010 6 SUM OF ` .15 LAKHS AGAINST THE SAID ADVANCE OF ` .10 LAKHS. THEREFORE, ` .5 LAKHS WERE PAID AS CANCELLATION CHARGES AND THE PROPER TY WAS SOLD TO ANOTHER BUYER AT A HIGHER PRICE. THIS EXPENDITURE WA S NECESSARY AS OTHERWISE THE ASSESSEE WAS BOUND BY EARLIER AGREEMENT. TH EREFORE, IT WAS ARGUED THAT THE SAME REPRESENTED NECESSARY EXPENDITU RE WHICH WAS INCURRED FOR EFFECTING THE SALE OF SAID HOUSE PROPE RTY. IT WAS FURTHER CONTENDED THAT AMOUNT WAS PAID THROUGH ACCO UNT PAYEE CHEQUE. REGARDING BROKERAGE OF ` .2.50 LAKHS PAID TO SHRI RAJAT KAPOOR, THE LD AR ARGUED THAT AMOUNT WAS PAID BY CHEQUE AND EVEN IF THE AMOUNT WAS PAID FOR SETTLEMENT OF EARLIER AGREEMENT A S ALLEGED BY THE ASSESSING OFFICER EVEN THEN THE AMOUNT REPRESENTED NECESSA RY EXPENDITURE FOR EFFECTING THE PRESENT DEAL. THEREFOR E, IT WAS CLAIMED THAT EXPENDITURE WAS GENUINE AND AS PER LAW. OUR ATTE NTION WAS INVITED TO PAPER BOOK PAGES 22 TO 23 WHERE A COPY OF RECEIPT ISSUED BY SHRI ASHOK K. SINGHAL WAS PLACED. OUR ATTENTION WAS A LSO INVITED TO PAPER BOOK PAGE 27 WHERE A COPY OF AFFIDAVIT SIGNED AND FILED BY SHRI ASHOK K SINGHAL WAS PLACED WHEREIN HE HAS ACCEPTED THE FACT ABOUT CANCELLATION OF DEAL. THEREFORE, IN VIEW OF THE ABO VE DOCUMENTS, IT WAS ARGUED THAT THE EXPENDITURE WAS ACTUALLY PAID THROU GH CHEQUE AND REPRESENTED THE PENAL AMOUNT PAID FOR BACKING OUT OF EARLIER DEAL. AS REGARDS THE AMOUNT OF ` .2.50 LAKHS OUR ATTENTION WAS INVITED TO PAPER BOOK P[AGE 29-30 WHEREIN A COPY OF RECEIPT BY SHRI RAJAT KAPOOR INDICATING PAN NO. WAS ALSO PLACED. IN VIEW OF THE F ACTS THAT PAYMENT WAS MADE BY CHEQUE AND AGAINST DULY SIGNED RECEIPTS WHE REIN PAN NUMBER OF PAYEE WAS ALSO MENTIONED, IT WAS ARGUED THAT ASSESSING OFFICER WAS NOT JUSTIFIED IN MAKING THE DISALLOWANCE. 10. REGARDING THE DISALLOWANCE OF EXEMPTION U/S 54 OF THE ACT, THE LD AR ARGUED THAT ASSESSEE HAD ENTERED INTO A PURCHASE A GREEMENT FOR PURCHASE OF HOUSE AND HAD PAID ` .61,15,000/- UPTO 12.5.2006 AND AS PER AGREEMENT DATED 9.2.2006 THE COMPLETION WAS EX PECTED WITHIN ITA NO56/DEL/2010 7 36 MONTHS AND THE BALANCE PAYMENTS WERE LINKED WITH THE STAGE OF CONSTRUCTION. OUR ATTENTION WAS INVITED TO CIRCULAR N O. 471 DATED 15.10.1986 ISSUED BY THE CBDT CLARIFYING THEREIN THAT IN CASES OF ALLOTMENT OF FLATS UNDER SELF FINANCING SCHEME OF T HE DELHI DEVELOPMENT AUTHORITY THE ALLOTMENT IN ITSELF WAS SUFF ICIENT COMPLIANCE FOR GETTING BENEFIT U/S 54F OF THE ACT. IT WAS SUBMIT TED THAT CBDT ISSUED ANOTHER CIRCULAR NO.672 DATED 16,.12.1993 WHER EIN THE SAME BENEFIT FOR ACQUISITION OF FLAT UNDER SIMILAR SCHEME W AS EXTENDED TO SCHEMES NOTIFIED BY OTHER BUILDERS. OUR ATTENTION WAS A LSO INVITED TO THE DECISION OF HON'BLE TRIBUNAL IN THE CASE OF SATISH CHANDRA GUPTA V. ASSESSING OFFICER REPORTED IN (1995) 54 ITD 508 WHEREIN THE HON'BLE TRIBUNAL HELD THAT THE CLAIM CANNOT BE DENIED ON TH E GROUND THAT THE CONSTRUCTION STARTED BY THE ASSESSEE WAS NOT COMPLETED WIT HIN STIPULATED TIME PERIOD. CONTINUING HIS ARGUMENTS BY R EADING SECTION 54(1), THE LD AR ARGUED THAT SECTION REQUIRES THE ASSESSE E TO PURCHASE OR CONSTRUCT RESIDENTIAL PROPERTY WITHIN SPECIFIED PER IOD AND SECTION DOES NOT TALK ABOUT THE POSSESSION OF THE HOUSE. IT WAS AR GUED THAT ASSESSEE HAD PAID MORE THAN ` .36 LAKHS FOR THE PURCHASE AND CONSTRUCTION OF THE HOUSE PROPERTY AND THEREFORE, EXE MPTION CLAIMED BY THE ASSESSEE U/S 54 IS AS PER LAW. RELIANCE IN THIS RESP ECT WAS PLACED ON THE FOLLOWING CASE LAWS:- 1. I.T.A. NO.175 OF 2012 DATED 15.2.2012 IN SAMBANDAM UDAYKUMAR BY HON'BLE KARNATAKA HIGH COURT. 2. ACIT V. SUDHAKAR RAM 49 SOT 90 (MUM.) 3. CIT V. HILLA JB WADIA (1995) 216 ITR 376. (MUMBAI H IGH COURT) 11. IN VIEW OF THE ABOVE ARGUMENTS, THE LD AR SUBMITT ED THAT ASSESSEE NECESSARILY COMPLIED WITH THE CONDITIONS FOR EXEM PTION U/S 54F OF THE ACT. ITA NO56/DEL/2010 8 12. IN RESPECT OF ADDITION MADE U/S 69C OF THE ACT RE GARDING LOW WITHDRAWALS, THE LD AR ARGUED THAT ASSESSING OFFICER MAD E THE ADDITION ON THE BASIS OF SURMISES AND CONJECTURES ONLY. I T WAS SUBMITTED THAT ASSESSEE WAS LIVING IN HIS OWN HOUSE WITH HI S SON AND ON AN AVERAGE ` .27,500/- PER MONTH WERE WITHDRAWN WHICH WAS QUITE REASONABLE AND ASSESSING OFFICER HAD NOT GIVEN ANY JUSTI FICATION ON THE BASIS OF WHICH HE ARRIVED AT THE FIGURE OF ` .1,25,000/- PER MONTH. IT WAS FURTHER ARGUED THAT IN THE IMMEDIATELY PRECEDING YE AR, THE WITHDRAWALS WERE TO THE TUNE OF ` .3,62,868/- AND THE ASSESSMENT WAS COMPLETED U/S 143(3)OF THE ACT AND THERE WAS NO ADDITION ON THI S ACCOUNT. RELIANCE IN THIS RESPECT WAS PLACED ON THE FOLLOWING C ASE LAWS WITH THE PROPOSITION THAT NO ADDITION U/S 69C CAN BE DONE BY J UST ESTIMATION ON ACCOUNT OF NON WITHDRAWAL, 1. YADU HARI DALOMIA V. CIT 126 ITR 48. 2 S.K. GUPTA V. DCIT 62 TTJ 666 3 MP MALIWAL V. JCIT 10 SOT 319. 13. AS REGARDS ACTION OF ASSESSING OFFICER IN DENYING THE BENEFIT OF CAPITAL GAIN AND DENYING THE BENEFIT OF LOWER TAXAT ION ON SHORT TERM CAPITAL GAIN U/S 111A OF THE ACT, IT WAS ARGUED THAT ASSESSING OFFICER DENIED EXEMPTION WITHOUT VERIFYING THE CERTIFICATES SUBMITTED AT THE TIME OF HEARING. IT WAS ARGUED THAT AT THE TIME OF R EDEMPTION OF UNITS SECURITY TRANSACTION TAX WAS NOT CHARGED SEPARATELY AS I T WAS BORNE BY THE MANAGER OF SUCH FUNDS. 14. THE LD DR, ON THE OTHER HAND, ARGUED THAT CANCE LLATION EXPENSES OF EARLIER DEED CANNOT BE ALLOWED AS EXPENSES AGAINST T HE SALE CONSIDERATION AS THE SECTION REQUIRES THAT ONLY THOSE EX PENSES CAN BE REDUCED FROM SALE CONSIDERATION WHICH ARE WHOLLY AND EXCLUSIVELY INCURRED FOR THE TRANSFER OF SUCH ASSETS. THUS IT WAS ARG UED THAT EXPENSES OF ` .7.50 LAKHS CLAIMED BY THE ASSESSEE DO NOT RELATE TO TRANSFER OF THE TRANSACTION UNDER CONSIDERATION. AS REG ARDS ITA NO56/DEL/2010 9 DISALLOWANCE U/S 54, THE LD DR ARGUED THAT CONSTRUCTIO N WAS TO BE COMPLETED WITHIN 36 MONTHS AND THEREFORE THE ASSESSING O FFICER HAD RIGHTLY DENIED THE EXEMPTION AS THE ASSESSEE WAS NOT ABL E TO CONSTRUCT WITHIN THE STIPULATED PERIOD. RELIANCE WAS PLACED ON THE CASE LAW OF PRAFUL CHANDRA REPORTED IN 27 SOT 257. 15. AS REGARDS THE ADDITION MADE ON ACCOUNT OF LOW WI THDRAWAL THE LD DR HEAVILY RELIED ON THE FINDINGS OF ASSESSING OFFICE R AND LD CIT(A) AND SIMILAR RELIANCE WAS PLACED IN RESPECT OF DENIAL O F LONG TERM CAPITAL GAIN OF MUTUAL FUND AND TREATMENT OF CAPITAL GAIN B EING NON STT PAID. 16. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PA RTIES AND HAVE GONE THROUGH THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT GROUND NO.1 RELATES TO CAPITAL GAIN ON SALE OF HOUSE WHEREIN THE CLAIM OF THE ASSESSEE REGARDING EXEMPTION U/S 54 WAS DENIED AND FURTHER EXPENSES CLAIMED TO HAVE BEEN INCURRED WHOLLY AND EXC LUSIVELY FOR THE TRANSFER OF SAID PROPERTY WERE DENIED BY THE ASSESSING O FFICER. WE FIND THAT THE MAIN OBJECTION OF THE ASSESSING OFFICER IN DIS ALLOWING OF ` .5 LAKHS IS THAT IT REPRESENTED THE COST BORNE BY THE ASSESSEE ON ACCOUNT OF HIS FAILURE TO EXECUTE THE EARLIER DEAL AND IT HA D NOTHING TO DO WITH THE PRESENT SALE. SIMILARLY, THE OBJECTION OF THE ASSES SING OFFICER REGARDING BROKERAGE OF ` .2.50 LAKHS IS THAT IT RELATED TO EARLIER DEAL AND HAD NO CONNECTION WITH THE PRESENT DEAL FROM WHICH C APITAL GAIN WAS DECLARED. WE FIND THAT THE PAYMENTS WERE MADE BY CHE QUES TO THESE PERSONS AND WERE DULY ACKNOWLEDGED THROUGH RECEIPTS WH EREIN THE PAYEES HAS ADMITTED OF HAVING RECEIVED THESE PAYMENTS. THE ASSESSING OFFICER AND LD CIT(A) DID NOT AGREE WITH THE CONTENTIONS OF THE ASSESSEE BECAUSE OF NON PRODUCTION OF ORIGINAL AGREE MENTS, HOWEVER, THE FACT REMAINS THAT PAYMENTS WERE ACTUALLY MADE THROUGH CHEQUES AND WERE ACKNOWLEDGED BY PAYEES TO THE FACT T HAT THEY RECEIVED THE CHEQUES FOR SETTLEMENT AND SERVICE CHARGE S RESPECTIVELY FOR THE SAME PROPERTY. REGARDING ALLEGATION OF ASSESSING OFFICER THAT ITA NO56/DEL/2010 10 THE EXPENSES BELONGED TO EARLIER DEAL DOES NOT MATTER SO LONG THE EXPENSES WERE IN RESPECT OF SAME PROPERTY ON WHICH CAPI TAL GAIN WAS DECLARED. FURTHER LD CIT(A) HAD CERTAIN DOUBTS REGAR DING THE FACT THAT AN AMOUNT OF ` .3 LAKHS WAS PAID ON 8.1.2004 WHICH WAS BEFORE THE AGREEMENT DATE OF 7.6.2004. HOWEVER, AS THE EXPENDIT URE NECESSARILY REPRESENTED COST INCURRED BY THE ASSESSEE FOR EFFECTING THE SALE OF PROPERTY AS WITHOUT SETTLEMENT OF EARLIER DEAL, THE A SSESSEE WAS NOT IN A POSITION TO EXECUTE THE SALE DEED. WITHOUT TERMINAT ING THE AGREEMENT TO SELL WITH MR. ASHOK K SINGHAL, THE ASSESSEE COULD NOT HAVE SOLD THIS PROPERTY TO ANY OTHER PERSON. THEREFOR E, THE ASSESSEE HAS INCURRED THESE EXPENDITURE TO FINALIZE THE SALE TR ANSACTION, THEREFORE, EXPENSES INCURRED BY THE ASSESSEE IN CONNECTI ON WITH THE SAID PROPERTY FOR THE PURPOSE OF FINAL SALE IS TO BE TR EATED AS EXPENDITURE IN CONNECTION WITH SUCH TRANSFER. IT IS NO T THE CASE OF ASSESSING OFFICER THAT EXPENDITURE WAS NOT INCURRED AND RATHER HE DISALLOWED IT TREATING IT AS RELATING TO EARLIER DEAL . IN VIEW OF THE ABOVE CIRCUMSTANCES, WE HOLD THAT EXPENDITURE WAS NECESSARY AS IT RELATED TO HOUSE PROPERTY THE INCOME OF WHICH HAS BEEN DECLARED AS CAPITAL GAIN. 17. AS REGARDS THE CLAIM OF ASSESSEE REGARDING INVESTMENT IN HOUSE PROPERTY U/S 54, WE FIND THAT ASSESSEE HAD NECESSARILY CO MPLIED WITH THE CONDITIONS FOR ALLOWABILITY OF CLAIM AS ASSESSEE HAD ENTERED INTO AN AGREEMENT FOR PURCHASE OF HOUSE AND HAD INVESTED MORE THAN CAPITAL GAIN IN THE SAID HOUSE PROPERTY. THE CBDT CIRCULAR N O.672 DATED 16.12.1993 STATES AS UNDER WHICH WAS MORE THAN CAPITAL GAINS. THE BOARD HAS CONSIDERED THE MATTER AND HAS DECIDED T HAT IF THE TERMS OF THE SCHEME OF ALLOTMENT AND CONSTRUCTION OF FLAT/HOUSE BY THE COOPERATIVE SOCIETY OR OTHER INSTITU TIONS ARE SIMILAR TO THOSE MENTIONED IN PARA 2 OF BOARDS CIRCU LAR NO.471 DATED 15.12.1986 SUCH CASES MAY ALSO BE TREATED AS CASE S OF ITA NO56/DEL/2010 11 CONSTRUCTION FOR THE PURPOSE OF SECTION 54 & 54F OF IN COME TAX ACT, 1961. PARA 2 OF CIRCULAR NO.471 DATED 15.10.19 86 STATES AS UNDER:- ALLOTMENT OF THE FLAT UNDER THE SELF FINANCING SCH EME OF DDA AMOUNTS TO PURCHASE OR IS CONSTRUCTION BY THE DDA ON B EHALF OF THE ALLOTTEE, THE ALLOTMENT LETTER IS ISSUED ON PAYMEN T OF FIRST INSTALLMENT OF COST OF CONSTRUCTION. THE ALLOTMENT IS F INAL UNLESS IT IS CANCELLED OR THE ALLOTTEE WITHDRAWS FROM THE SCHEME UNDER EXCEPTIONAL CIRCUMSTANCES, THE ASSESSEE GETS TITLE TO THE PROPERTY ON THE ISSUANCE OF ALLOTMENT LETTER AND THE PAYMENT OF INSTALLMENT IS ONLY A FOLLOW UP ACTION AND TAKING THE DELIVERY OF POSSESSION. MOREOVER, AS HELD IN VARIOUS JUDICIAL PRONOUNCEMENTS, THE POSSESSION OF PROPERTY IS NOT NECESSARY WITHIN THE PRESCRIBED TIME , THE ONLY CONDITION IS THE INVESTMENT WHICH IN THE PRESENT CASE T HE ASSESSEE HAS MADE. UPTO 12.5.2006 THE ASSESSEE HAD PAID AN AMOUNT O F ` .61,15,000/-- WHICH WAS MORE THAN THE AMOUNT OF CAPI TAL GAIN EARNED BY THE ASSESSEE. THE CASE LAW RELIED UPON BY LD DR DOES N OT CONTAIN SIMILAR FACTS AND IS ON DIFFERENT FACTS ALTOGETHER. IN VIEW OF THE ABOVE, WE HOLD THAT THE ASSESSEE WAS ELIGIBLE FOR EXEMPTION U/ S 54 OF THE ACT. IN VIEW OF THE ABOVE FINDINGS GROUND NO.1(A) (I) & ( II) OF THE APPEAL ARE ALLOWED. 18. AS REGARDS GROUND NO.1(B) AND 1(C) WE FIND THAT A SSESSING OFFICER DISALLOWED THE CLAIM OF ASSESSEE REGARDING LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN DUE TO NON AVAILAB ILITY OF STATEMENTS/CERTIFICATES. BEFORE US THE ASSESSEE HAS FILED CO MPLETE DETAILS OF CAPITAL GAINS VIDE PAPER BOOK PAGES 31 TO 4 9 AND HAS ALSO FILED TRANSACTION STATEMENTS ISSUED BY DIFFERENT MUTUAL FUND AND THESE ITA NO56/DEL/2010 12 STATEMENTS WERE ALSO BEFORE THE ASSESSING OFFICER. THE LD AR HAS ARGUED THAT ASSESSING OFFICER DISALLOWED THE CLAIM OF ASSE SSEE WITHOUT PROPER VERIFICATION. THE LD CIT(A) ALSO DID NOT CON SIDER THE CLAIM OF ASSESSEE IN THE ABSENCE OF TRANSACTION STATEMENT OF KOTAK CONTRA FUND. THEREFORE, IN THE INTEREST OF JUSTICE WE DEEM I T NECESSARY THAT MATTER BE RE-ADJUDICATED BY THE ASSESSING OFFICER WHO O N THE BASIS OF EVIDENCE TO BE SUBMITTED BY ASSESSEE WILL ARRIVE AT THE TAXABILITY OF UNITS OF MUTUAL FUNDS. THEREFORE GROUND NO. 1(B) & 1 (C) ARE ALLOWED FOR STATISTICAL PURPOSES. 19. AS REGARDS GROUND NO.2 REGARDING ADDITION U/S 69C OF THE ACT, WE OBSERVE THAT ASSESSING OFFICER MADE DISALLOWANCE ON ACCO UNT OF LOW WITHDRAWALS FOR HOUSEHOLD EXPENSES. THE ADDITION MADE BY THE ASSESSING OFFICER IS BASED UPON ONLY ON SURMISES AND CONJECT URES AND IS NOT BASED UPON ON ANY FACTUAL FACTS. THE LD AR HAS R ELIED UPON A NUMBER OF CASE LAWS WHEREIN IT WAS HELD THAT ADDITIO N ON THE BASIS OF ESTIMATE WITHOUT BRINGING ANY OTHER FACT IS NOT LEGAL . MOREOVER, WE FIND FROM PAPER BOOK PAGE 62 THAT IN THE IMMEDIATELY PRE CEDING YEAR, THE ASSESSEE ALONG WITH HIS FAMILY MEMBERS HAD MADE TOTAL WIT HDRAWALS OF ` .3,62,868/- AND ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3), COPY OF WHICH IS PLACED AT PAGE 60 AND THERE WAS NO ADDITION MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LOW WITHDR AWALS. THOUGH PRINCIPLE OF RES JUDICATA DOES NOT APPLY TO INCOME TA X PROCEEDINGS AND EVERY YEAR IS CONSIDERED A SEPARATE YEAR YET ON THE BA SIS OF CONSISTENCY THE FACTS AND CIRCUMSTANCES OF THE PRESENT YE AR REMAINS SAME AS ASSESSING OFFICER DID NOT POINT OUT ANY SPECIFIC C IRCUMSTANCES BY WHICH HE ASSUMED THAT ASSESSEE HAD MADE LOW WITHDRAWAL S AS AGAINST THE ASSUMED EXPENSES OF ` .15 LAKHS P.A. HOWEVER, ON THE BASIS OF FINANCIAL POSITION OF THE ASSESSEE, WE FEEL THAT WITH DRAWALS MADE BY HIM DO NOT MATCH WITH HIS PROBABLE ACTUAL EXPENDITUR E. THE ADDITION MADE BY THE ASSESSING OFFICER BY ASSUMING AN ANNUAL EXPE NDITURE OF ITA NO56/DEL/2010 13 ` .15 LAKHS IS ALSO ON A HIGHER SIDE, THEREFORE, WE RESTRI CT THE ADDITION MADE ON THIS ACCOUNT TO ` .2,65,784/- ASSUMING AN ANNUAL EXPENDITURE OF ` .6 LAKHS AND DELETE THE ADDITION OF ` .9 LAKHS. 20. IN VIEW OF THE ABOVE, GROUND NO.2 OF APPEAL IS P ARTLY ALLOWED. 21. GROUND NO. 3 RELATES TO CHARGING OF INTEREST U/S 2 34B WHICH IS CONSEQUENTIAL AND DO NOT REQUIRE ANY ADJUDICATION. 22. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED AS DISCUSSED ABOVE. 22. ORDER PRONOUNCED IN THE OPEN COURT ON 31ST DAY O F JULY, 2013. SD/- SD/- (RAJPAL YADAV ) (T.S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DT.31.7.2013. HMS COPY FORWARDED TO:- 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT (A)-, NEW DELHI. 5. THE DR, ITAT, LOKNAYAK BHAWAN, KHAN MARKET, NEW DEL HI. TRUE COPY. (ITAT, NEW DELHI). DATE OF HEARING 15.7.2013 DATE OF DICTATION 25.7.2013 DATE OF TYPING 26.7.2013 DATE OF ORDER SIGNED BY 31.7.2013 BOTH THE MEMBERS & PRONOUNCEMENT. DATE OF ORDER UPLOADED ON NET & SENT TO THE BENCH CONCERNED.