SAMPAT DEVI SUTALIYA, Hyderabad V. INCOME TAX OFFICER, WARD - 4(5), Hyderabad.

ITA 660/Hyd/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6011 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-07-2024
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: DB-A
• Next Hearing Date: 04-06-2024
• Assessment Year: 2016-2017
• Appeal Filed On: 27-12-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 147

Judgement Text

आयकर अपीलीय अिधकरण, हैदराबाद पीठ मŐ IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI MANJUNATHA G., ACCOUNTANT MEMBER & SHRI K.NARASIMHA CHARY, JUDICIAL MEMBER आ.अपी.सं / ITA No. 660/Hyd/2023 (िनधाŊरण वषŊ / Assessment Year: 2016-17) Smt.Sampat Devi Sutaliya Hyderabad [PAN : AFVPS5182D] Vs. Income Tax Officer Ward 4(5) Hyderabad अपीलाथŎ / Appellant Ů̝ यथŎ / Respondent िनधाŊįरती Ȫारा/Assessee by: Shri K.A. Sai Prasad, CA राज̾ व Ȫारा/Revenue by: Shri Shakeer Ahamed, DR सुनवाई की तारीख/Date of hearing: 05/06/2024 घोषणा की तारीख/Pronouncement on: 05/07/2024 आदेश / ORDER PER K. NARASIMHA CHARY, J.M: Aggrieved by the order dated 30/10/2023 passed by the learned Commissioner of Income Tax (Appeals)-NaƟonal Faceless Appeal Centre (NFAC), Delhi (“Ld. CIT(A)”), in the case of Sampat Devi Sutaliya (“the assessee”) for the assessment year 2016-17, the assessee preferred this appeal. 2. Only quesƟon involved in this appeal is relaƟng to the cost of construcƟon in the year 1986-87 for computaƟon of capital gains. Brief ITA No. 488/Hyd/2023 Page 2 of 4Page 2 of 4 facts relaƟng to this issue are that the assessee purchased an open plot admeasuring 504 sq. yards on 4/2/1986 and having obtained permission on 8/10/1986 she got the old structure demolished and constructed a three-storey the building. She sold half a share in it for a sale consideraƟon of Rs. 1,51 18,000/-. Since the assessee did not file any return of income for that year, case was reopened under secƟon 147 of the Income Tax Act, 1961 (for short “the Act”). Assessee claimed cost of construcƟon at Rs. 337.22/- per sq. Ō, while compuƟng the capital gains, but could not furnish any evidence to establish the same staƟng that since the transacƟon took place about 30 years back, no documentary evidence like bills and vouchers are not available. Claiming that the assessee did not furnish any evidence to prove the cost of construcƟon in the year 1986-87, learned Assessing Officer disallowed the total claim for the indexed cost of improvement at Rs. 74, 79, 748/-. 3. Aggrieved assessee preferred appeal before the Ld. CIT(A) and pleaded that in the year 1986-87 she incurred an expenditure of Rs. 19,37,400/- for construcƟon of the total plinth area of 5744 square feet, and the cost of construcƟon aƩributable to the 50% share out of this, 5744 square feet comes to Rs. 9,68,700/- and the indexed cost thereof comes to Rs. 74,79,748/-. Learned AR submiƩed that when there is evidence sufficient to conclude that by demolishing the old structure, the assessee constructed a new building, denying the cost of construcƟon in total is untenable and illogical. He further submiƩed that as rightly observed by the Ld. CIT(A) the business enƟƟes are supposed to keep the accounts of documents up to the period of 6 years, and therefore, to expect an individual to preserve the bills and vouchers for a period of more than 30 years will cause a lot of hardship. He, therefore, prayed that in the absence of any proof being produced by the assessee, it is always open for the authoriƟes to take resorted to some esƟmate having regard to the cost of construcƟon at any point of Ɵme in proximity to the period of construcƟon. He produced a copy of the order dated 29/12/2006 passed in ITA No. 465 ITA No. 488/Hyd/2023 Page 3 of 4Page 3 of 4 /Hyd/ 2003 in the case of ACIT vs. K Pratap Reddy for the assessment year 1997-98 where the Tribunal approved the cost of construcƟon at Rs. 150/- per square feet and basing on that he submits that a reasonable esƟmate at Rs. 322/- could be made in this case because the construcƟon in this case is about 5 years later. 4. Per contra, Ld. DR relied upon the orders of the authoriƟes and submiƩed that since there is no evidence whatsoever that is produced by the assessee, it is not possible to allow the indexed cost of construcƟon and, therefore, the authoriƟes rightly disallowed the cost of construcƟon. 5. We have gone through the record in the light of the submissions made on either side. Sale deed dated 13/2/1986 clearly show that the house was exisƟng in the property purchased by the assessee and the assessee constructed a new building by obtaining permission from the municipal CorporaƟon of Hyderabad wide permit No. 143/10, file No. 689/6/3/86, dated 8/10/1986. It is too much to expect that the assessee constructs a three-storey building of a plinth area of 5744 square feet without incurring any expenditure. Denial of the total cost of construcƟon are indexed cost of construcƟon amounts the same. We are unable to accept the same. In all fairness, the authoriƟes should have esƟmated the cost of construcƟon by taking clue from the cost of construcƟon prevailing in that year or in some other year in proximity of such period. We therefore, deem it just and proper to esƟmate the cost of construcƟon and allow it to the assessee. 6. A perusal of the order in the case of K Pratap Reddy (supra)clearly shows that for the construcƟon in the year 1981, Ld. CIT(A) adopted the cost of construcƟon at Rs. 150/- per square feet and it was approved by the Coordinate Bench of this Tribunal. By taking such esƟmate into consideraƟon, we can reasonably reach the figure of Rs. 300/-per square feet for the year 1986-87. We adopt of the same. We accordingly direct the learned Assessing Officer to take the cost of construcƟon at Rs. 300 per ITA No. 488/Hyd/2023 Page 4 of 4Page 4 of 4 square feet and allow the indexed cost of construcƟon accordingly. Grounds are answered accordingly. 7. In the result, appeal of the assessee is allowed in part. Order pronounced in the open court on this the 5 th July, 2024. Sd/- Sd/- (MANJUNATHA G.) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated:05/07/2024 Pvv/SPS Copy forwarded to: 1. Sampat Devi Sutaliya C/o KatrapaƟ & Associates, 1-1-298/2/B/3 Sowbhagya Avenue Apts, 1st Floor, Ashoknagar, Street No.1 Secunderabad 500020 2. Income Tax Officer Ward 4(5) IT Towers, AC Guards, Masab Tank, Hyderabad 500004. 3. Pr.CIT Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE