Smt. Madhavaram Udayasree, Hyderabad V. ITO,Ward 11(3), Hyderabad

ITA 709/HYD/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2291 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-12-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Sale consideration of property below Jantri Value; Gift; Depreciation; Cost of acquisition; Fair market value; Valuation report
• Section: 50C; 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO. ASST. YEAR APPELLANT RESPONDENT 716/HYD/14 2009-10 INCOME TAX OFFICER, WARD-11(3) HYDERABAD SMT. MADHAVARAM UDAYASREE, HYDERABAD [PAN: AARPU6000B] 709/HYD/14 2009-10 SMT. MADHAVARAM UDAYASREE, HYDERABAD [PAN: AARPU6000B] INCOME TAX OFFICER, WARD-11(3) HYDERABAD FOR REVENUE : SMT. N. SWAPNA, DR FOR ASSESSEE : SHRI K.A. SAI PRASAD, AR DATE OF HEARING : 02-11-2017 DATE OF PRONOUNCEMENT : 20-12-2017 O R D E R PER B. RAMAKOTAIAH, A.M. : THESE TWO ARE CROSS-APPEALS BY REVENUE AND ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS)-VI, HYDERABAD, DATED 06-12-2013. THE ISSUE IN THESE APP EALS IS WITH REFERENCE TO COMPUTATION OF CAPITAL GAINS AND BOTH THE PA RTIES ARE AGGRIEVED ON THE ORDER OF CIT(A). 2. BRIEFLY STATED, ASSESSEE HEREIN SMT. MADHAVARAM UDAYASREE HAS ENTERED INTO AN AGREEMENT OF SALE CUM GPA FOR PROPERTY AT KUKATPALLY VIDE DOCUMENT DT. 18-07-2007 AND ANOTHER ITA NOS. 709 & 716/HYD/14 :- 2 - : DOCUMENT DT. 19-07-2007 WITH M/S. EMAMI NIRMAN PVT. LTD ., FOR A CONSIDERATION OF RS. 4,01,04,000/-. SUBSEQUENTLY B Y THE SALE DEED DT. 09-07-2009, THE SAID PROPERTIES WERE IN TURN S OLD BY M/S. EMAMI NIRMAN PVT. LTD., AS GPA HOLDER IN FAVAOUR OF M/S. EMAMI CONSTRUCTIONS PVT. LTD., FOR A CONSIDERATION OF RS. 5,16 ,04,000/-. ASSESSEE FILED RETURN OF INCOME IN THE IMPUGNED ASSES SMENT YEAR OFFERING LONG TERM CAPITAL GAIN ON SALE OF PROPERTY CONSISTING OF TWO PARTS, (I) 5-7-72/A (1035 SQ. YDS) AND (II) 5-7 -70/B (1193 SQ. YDS) AGGREGATING TO 2,228 SQ. YDS., IN SURVEY NO. 119 , SANGEET NAGAR, MUSAPET VILLAGE FALLING IN KUKATPALLY MUNICIPA LITY OF HYDERABAD. ASSESSEE, HOWEVER, HAS SHOWN AN AMOUNT OF RS. 4,01,04,000/- AS SALE CONSIDERATION ON WHICH CAPITAL GAIN WAS CALCULATED. AO WAS OF THE VIEW THAT THE DIFFERENCE OF RS . 1,15,00,000/- I.E., ULTIMATELY SOLD BY M/S. EMAMI NIR MAN PVT. LTD., SHOULD BE THE SALE CONSIDERATION IN THE HANDS OF ASSESSEE AND ACCORDINGLY, BROUGHT THE AMOUNT TO TAX. THIS IS NO T AN ADDITION U/S. 50C OF THE ACT BUT ADOPTION OF FAIR MARKET VALUE ON THE BASIS OF THE SALE DEED ENTERED ON 09-07-2009. T HE AO ALSO DISALLOWED THE EXEMPTIONS/EXPENDITURE CLAIMED BY ASSES SEE AMOUNTING TO RS. 50 LAKHS BEING PAYMENTS MADE FOR EVI CTING THE TENANTS AND RS. 20,05,000/- PAID AS COMMISSION TO AG ENTS AND CLAIM OF RS. 91,85,356/- TOWARDS INDEXED COST OF ACQU ISITION TO ARRIVE AT THE TAXABLE INCOME OF RS. 4,47,34,200/- AFTER ALLOWING THE EXPENSES OF RS. 4,50,300/- TOWARDS REGISTRATION CH ARGES AND DEDUCTION U/S. 54F TO THE EXTENT OF RS. 64,40,000/-. 3. ASSESSEE HAS RAISED VARIOUS GROUNDS BEFORE THE LD.CIT(A) AND ALSO FURNISHED ADDITIONAL INFORMATION W HICH WAS SENT TO AO FOR VERIFICATION. AFTER RECEIPT OF THE REPORT O F AO, ITA NOS. 709 & 716/HYD/14 :- 3 - : LD.CIT(A) CONSIDERED THE FACTS AND GAVE RELIEF OF SOM E ITEMS AND CONFIRMED OTHER ITEMS. THE ISSUES CONSIDERED BY HIM ARE AS UNDER: ADDITION ON ACCOUNT OF DISALLOWANCE OF MONEYS PAID TO THE CONFIRMING PARTY RS. 1,15,00,000/- : 3.1. IT WAS EXPLAINED BY ASSESSEE THAT SHE HAS ENTERE D INTO AN AGREEMENT OF SALE CUM GPA WITH M/S. EMAMI NIRMAN PVT. LTD., FOR A CONSIDERATION OF RS. 4,01,04,000/- AND THAT WAS THE AMOUNT WHICH WAS RECEIVED BY HER. THE ULTIMATE SALE TO M/S. EMAMI CONSTRUCTIONS PVT. LTD., MUSAPET, WAS BY THE GPA HOLDER A ND DIFFERENCE OF CONSIDERATION WAS RECEIVED AND ACCOUNTE D FOR BY M/S. EMAMI NIRMAN PVT. LTD. AFTER EXAMINING THE FACTS AND OB TAINING FURTHER REPORTS FROM ASSESSEE, LD.CIT(A) DELETED THE A DDITION STATING AS UNDER: 5.6 PERUSED THE OBSERVATIONS OF THE ASSESSING OFFI CER AND THE SUBMISSIONS OF THE APPELLANT. AS COULD BE SEEN FROM THE FACTS OF THE CASE THE APPELLANT VIDE THE AGREEMENTS FOR SALE DATED 18 .07.2007 AND 19.07.2007, FOR THE SALE OF TWO PROPERTIES LOCATED AT D.NO. 5-7-70/B (1193 SQ. YARDS) AND D.NO. 5-7-72/A (1035 SQ YARDS) LOCATED AT MOOSAPET, FOR AN AGGREGATE CONSIDERATION OF RS.4,01 ,04,000/- TO M/S. EMAMI CONSTRUCTIONS PVT. LTD. IT WAS SHOWN THAT APP ELLANT RECEIVED PART CONSIDERATION (RS.2,25,00,000) AND HANDED OVER THE POSSESSION TO THE AGREEMENT HOLDER. HOWEVER, THE TRANSACTION SHOWN TO HAVE BEEN NOT CARRIED FURTHER, AND INSTEAD, THE SAID PROPERTIES S HOWN TO HAVE SOLD TO M/S. EMAMI CONSTRUCTION PVT. LTD., A SISTER CONCERN OF THE AGREEMENT HOLDER, FOR A TOTAL CONSIDERATION OF RS.5,16,04,000 /- VIDE THE SALE DEED DATED 09.07.2009, WITH M/S. EMAMI NIRMAN PVT. LTD., ACTING AS CONSENTING PARTY, FOR WHICH THE BALANCE OF SALE CON SIDERATION OF RS. 1,15,00,000 (RS.5,16,04,000 - RS.4,01,04,000) SHOWN TO HAVE BEEN PASSED AS ON ORIGINAL AGREEMENT HOLDER. ON FURTHER EXAMINATION THE CONFIRMING PARTY HAS CONFIRMED THE RECEIPT OF PART CONSIDERATION OF RS. 1,15,00,000 AND SHOWN IN THEIR RETURN OF INCOME FOR THE RELEVANT YEAR. ADJUSTMENT OF SUCH RECEIPTS/GAINS AGAINST THE CARRI ED FORWARD LOSSES OF THE CONFIRMING PARTY DOES NOT ALTER THE QUANTUM OF SALE RECEIPTS IN THE HANDS OF APPELLANT, SINCE THE' NET SALE CONSIDERATI ON SHOWN AS RECEIPTS BY ITA NOS. 709 & 716/HYD/14 :- 4 - : THE ASSESSEE STAND QUANTIFIED AT RS.4,01,04,000/- A S THE SALE CONSIDERATION AGREED TO HAVE BEEN PAID BY THE AGREE MENT HOLDER. FURTHER, THE EXCHANGE OF THE AMOUNTS BETWEEN THE TWO SISTER CONCERNS, THROUGH BOOK ENTRIES OR TRANSFER OF THE AMOUNTS DOES NOT AL TER THE TRANSACTION, WHICH HAS BEEN ACCEPTED AS THE CONSIDERATION OF RS. 1,15,00,000/- RECEIVED BY THE CONSENTING PARTY. THERE IS NO EVIDE NCE BROUGHT ON RECORD, TO SHOW THAT THE AGREEMENT HOLDER, AS A CONFIRMING PARTY TO THE SALE DEED, DENIED TO HAVE RECEIVED THE AMOUNTS UNDER REF ERENCE AND AS SUCH AMOUNTS CANNOT BE TREATED AS THE SALE CONSIDERATION IN THE HANDS OF APPELLANT. THE AMOUNT WHICH WAS NOT RECEIVED BY THE ASSESSEE CANNOT BE CONSIDERED AS SALE CONSIDERATION HAVING PASSED IT O N TO THE CONSENTING PARTY, AND SUCH AMOUNTS ARE DEDUCTIBLE AGAINST THE GROSS SALE CONSIDERATION. HENCE, THE ADDITION OF RS. 1,15,00,0 00/-, BY VIRTUE OF DISALLOWANCE OF EXPENSES CLAIMED U/S. 48(I), DO NOT SURVIVE. ACCORDINGLY, THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 3.1.1. REVENUE IS AGGRIEVED AND RAISED THE GROUND NO . 2(A) ON THIS ISSUE. DISALLOWANCE OF PAYMENTS TO TENANTS : 3.2. ASSESSEE HAS CLAIMED EXPENSES OF RS. 50 LAKHS BEING THE PAYMENTS MADE TO TENANTS FOR THEIR EVICTION IN COMPU TING THE CAPITAL GAINS. AO DISALLOWED THE AMOUNT STATING THAT THOS E PARTIES TO WHOM THE AMOUNTS WERE PAID WERE NOT AVAILABLE FOR VE RIFICATION. ASSESSEE OBJECTED BEFORE THE CIT(A) STATING THAT THE PROP ERTIES WERE RECEIVED WITH TENANTS AND WERE ALSO SOLD ALONG W ITH TENANTS BUT THE VACATION OF TENANTS TOOK SOME TIME THAT IS WHY THER E WAS A GAP BETWEEN THE AGREEMENT OF SALE AND ULTIMATE SALE DE ED, BUT IN THE MEANTIME, ASSESSEE PAID BY WAY OF CHEQUES AND SOM E BY WAY OF CASH TO VARIOUS TENANTS. ASSESSEE ALSO SUBMITTED EVI DENCE REGARDING EXISTENCE OF TENANTS ON THE PROPERTY BY WAY OF PHOTOGRAPHS AND RELIED ON VARIOUS CASE LAW THAT EXPEND ITURE FOR VACATING TENANTS IS AN ALLOWABLE EXPENDITURE. LD.CIT(A) , HOWEVER, REJECTED THE SAME BY STATING AS UNDER: ITA NOS. 709 & 716/HYD/14 :- 5 - : 6.5 PERUSED THE OBSERVATIONS OF THE ASSESSING OFFICER IN ASSESSMENT ORDER AND THE REMAND REPORT ALONGWITH SU BMISSIONS OF THE APPELLANT. AS COULD BE SEEN FROM THE FACTS OF THE C ASE, THE APPELLANT ENTERED INTO TWO SETS OF AGREEMENTS FOR SALE OF THE PROPERTIES UNDER REFERENCE, VIDE AGREEMENTS DT. 18.07.2007 AND 19.07 .2007, SHOWN TO HAVE BEEN ENTERED WITH M/S. EMAMI NIRMAN PVT. LTD. FOR A TOTAL CONSIDERATION OF RS. 4,01,04,000/- AND POSSESSION W AS GIVEN. THE SUBSEQUENT AGREEMENT DEED WAS ENTERED ON 09.07.2009 , WITH M/S. EMAMI CONSTRUCTION PVT. LTD., FOR A CONSIDERATION O F RS. 5,16,04,000/-, WHEREIN THE ORIGINAL AGREEMENT HOLDER CONSENTED TO BE CONFIRMING PARTY, FOR WHICH RS. 1,15,00,000/-, BEING THE DIFFERENCE B ETWEEN CONSIDERATION AS PER THE ORIGINAL AGREEMENT (RS.4,01,04,000) AND THE SUBSEQUENT DEED (RS. 5,16,04,000), WAS RETAINED BY THE CONFIRMING P ARTY. WHEREAS, THE COMPENSATION OF RS. 50,00,000/- WAS SHOWN TO HAVE B EEN MADE TO 8 PARTIES THROUGH BEARER CHEQUES AND WERE SHOWN TO HA VE BEEN ENCASHED DURING FEBRUARY/MARCH, 2009, WITH SOME OF THE AMOUN TS OF ENCASHMENTS NOT MATCHING WITH THE AMOUNTS INDICATED AGAINST THE NAMES OF THE PARTIES. FURTHER, THE APPELLANT COULD NEITHER PRODU CE THE PARTIES NOR EXPLAIN THE PAYMENTS THROUGH PROPER EXPLANATION. MO RE SIGNIFICANT POINT THAT EMERGED IN THIS CASE WAS THAT VIDE THE AGREEME NTS DT. 18TH AND 19TH JULY, 2007, THE APPELLANT HAS RECEIVED THE MAJOR PA RT OF THE AGREED CONSIDERATION OF RS. 4,04,04,000 FROM M/S. EMAMI NI RMAN PVT. LTD. AND THE POSSESSION WAS SHOWN TO HAVE BEEN GIVEN IN JULY , 2007 ITSELF. THERE WAS NO INDICATION OF THE DISPUTE WITH THE TENANTS A S PER THE AGREEMENTS WITH M/S. EMAMI NIRMAN PVT. LTD AND THE BLAME FOR C ANCELLATION OF AGREEMENT WAS PUT ON THE AGREEMENT HOLDER WHO HAS B ECOME A CONFIRMING PARTY, LATER. WHERE THE AGREEMENTS WERE EXECUTED, POSSESSION WAS GIVEN VIDE THE AGREEMENTS DT. 18.07.2007 AND 19 .07.2007, THERE WAS NO BASIS FOR CLAIMING THE EXPENSES AS COMPENSAT ION PAID TO TENANTS IN THE YEAR 2009. EVEN, ON FURTHER FACTS, THE APPEL LANT FAILED TO PROVE THE GENUINENESS OF TRANSACTION BY FAILING TO PRODUCE TH E PARTIES AND EXPLAINING THE SAID TRANSACTIONS THROUGH VERIFIABLE INFORMATION. HENCE, ON FACTS, THERE WAS NO NEXUS OF THE EXPENSES TO THE TR ANSACTION UNDER REFERENCE AND AS SUCH THERE IS NO BASIS FOR THE CLA IM. THUS, THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT, DO NOT COME TO HER RESCUE. THUS, BASED ON THE FACTS, IT CLEARLY PROVES THAT THE PROP ERTY UNDER REFERENCE WAS HANDED OVER PHYSICALLY IN JULY, 2007, WITHOUT A NY INDICATION OF DISPUTES OR DEMANDS FROM THE TENANTS AND THERE BY T HE CLAIM OF EXPENSES ON THAT COUNT IN THE SUBSEQUENT PERIOD, AMOUNTS TO AN AFTER THOUGHT AS SUCH THE CLAIM IS NOT MAINTAINABLE. HENCE, THE CLAI M OF EXPENSES U/S. 48(I), IS NOT AVAILABLE TO ASSESSEE, ON FACTS AS SU CH IT IS HELD REASONABLE TO HOLD THAT THE DISALLOWANCE IS JUSTIFIED. THIS GR OUND OF APPEAL IS DISMISSED. 3.2.1. ASSESSEE IS AGGRIEVED ON THE ABOVE DECISION O F CIT(A). ITA NOS. 709 & 716/HYD/14 :- 6 - : DISALLOWANCE OF COMMISSION PAYMENTS CLAIMED AT RS.20 ,05,000/: 3.3. WHILE COMPUTING THE TAXABLE INCOME OF ASSESSEE , AO MADE DISALLOWANCE OF ABOVE AMOUNT CLAIMED TO HAVE BEE N PAID AS COMMISSION. AO DISALLOWED THE AMOUNT ON THE REASON THA T SUMMONS ISSUED TO THE RECIPIENT PARTIES RETURNED UN-SER VED. AO WAS OF THE VIEW THAT THE ROLE OF COMMISSION RECIPIENTS A ND THEIR SERVICES WAS NOT ESTABLISHED AS THE RECIPIENTS BEING NO NE OTHER THAN THE REPRESENTATIVES OF THE AGREEMENT HOLDING COMPA NIES AND AS SUCH CLAIM WAS REJECTED. 3.3.1. BEFORE THE LD.CIT(A), ASSESSEE SUBMITTED CONFIR MATIONS WITH REFERENCE TO PAYMENT OF COMMISSION AND ALSO COPI ES OF THEIR INCOME TAX RETURNS WHICH WERE REFERRED TO THE AO FOR V ERIFICATION. LD.CIT(A) AFTER CONSIDERING THE OBSERVATIONS OF AO AND SUBMISSIONS OF ASSESSEE, ALLOWED THE AMOUNT BY STATING AS UNDER: 7.3 PERUSED THE OBSERVATIONS OF THE ASSESSING OFFI CER AND THE SUBMISSIONS OF THE APPELLANT BOTH AT THE STAGE OF A SSESSMENT AS WELL AS REMAND PROCEEDINGS. AS COULD BE SEEN FROM THE FACTS OF THE CASE, THE APPELLANT CLAIMED THE EXPENSES AS COMMISSION PAID F OR THE SALE OF PROPERTY AND SUCH AMOUNTS WERE SHOWN AT RS. 20,05,0 00/-, APPARENTLY ON THE SALE CONSIDERATION OF RS. 4,01,04,000/- AND THE PAYMENTS WORKED OUT TO 5% ON THE TOTAL CONSIDERATION WITH 1% OF COM MISSION SHOWN TO HAVE BEEN PAID TO EACH OF THE FIVE PERSONS, SHOWN TO HAV E INVOLVED IN THE TRANSACTION. THE AMOUNTS WERE SHOWN TO HAVE BEEN PA ID THROUGH BANKING CHANNELS, FOR WHICH CONFIRMATIONS SHOWN TO HAVE BEE N FURNISHED AND THE SAID AMOUNTS WERE SHOWN TO HAVE BEEN OFFERED FOR TA X, IN THE INDIVIDUAL HANDS OF THE RECIPIENTS. THE ASSESSING OFFICER COUL D NOT BELIEVE THE PAYMENTS HOLDING THAT NO FULL INFORMATION WAS FURNI SHED. HOWEVER, IT IS A FACT THAT VERIFICATION OF SUCH PAYMENTS THROUGH THE BANK ACCOUNT OF THE APPELLANT REVEAL THE DEBIT OF RS. 4,01,000/- TO EAC H OF FIVE RECIPIENTS, ON 30.03.2009 IN THE BANK ACCOUNT OF THE APPELLANT AT DHANALAXMI BANK, AND THE SAME EXPLAIN THE PAYMENT OF COMMISSION, THO UGH THE DETAILS OF ASSESSMENT OF RECIPIENTS NOT AVAILABLE, WITH THE DE TAILS OF PAN OF RECIPIENTS STATED TO HAVE BEEN FURNISHED BEFORE THE ASSESSING OFFICER. THE COMMISSION WAS CHARGED ON THE SALE CONSIDERATION OF RS. 4,04,04,000/- ITA NOS. 709 & 716/HYD/14 :- 7 - : ON WHICH THE NET CAPITAL GAINS WERE CHARGED AND APP ARENTLY THERE IS NO WRONG IN SUCH BASIS. UNDER THE CIRCUMSTANCES, I AM OF THE OPINION THAT HAVING PAID COMMISSION THROUGH THE BANK ACCOUNT, AN D RELATABLE TO TRANSACTION UNDER REFERENCE INDICATE THAT THE APPEL LANT HAS DISCHARGED ONUS TO INDICATE THAT EXPENSES ARE RELATED TO SUCH SALE RECEIPTS AND AS SUCH ALLOWABLE EXPENSE IN ABSENCE OF ANY CONTRARY I NFORMATION AVAILABLE TO THE ASSESSING OFFICER. HENCE, IT IS REASONABLE T O HOLD THAT THE PAYMENT OF THE COMMISSION OF RS. 20,05,000/- IS ALLOWABLE. THIS GROUND OF APPEAL IS TREATED AS ALLOWED. 3.3.2. REVENUE IS AGGRIEVED WITH THIS AND RAISED GROU ND NO. 2(B) ON THIS ISSUE. DISALLOWANCE OF INDEXED COST OF ACQUISITION : 3.4. WHILE COMPUTING THE TAXABLE CAPITAL GAINS, ASSESS EE CLAIMED COST OF ACQUISITION OF PROPERTY AT RS. 91,85 ,357/-. AO DISALLOWED THE AMOUNT BUT ALLOWED ONLY AN AMOUNT OF RS. 4,50,300/- BEING STAMP DUTY PAID. ASSESSEE OBJECTED FOR SUCH DISALLOWANCE AND SUBMITTED VALUATION REPORT AND WORKING OF INDEXED COST. IT WAS SUBMITTED THAT TOTAL AREA WAS 14,000 SQ. FT AND PORTION OF PROPERTY WAS DISMANTLED SUBSEQUENTLY AN D AFTER SETTLING THE MATTER WITH TENANTS, ASSESSEE SOLD 6,230 SQ. FT., BY WAY OF AGREEMENT OF SALE DEED AND THERE IS NO DISPAR ITY IN INFORMATION. AFTER CONSIDERING THE REMAND REPORT, LD.CI T(A) ALLOWED CLAIM OF ASSESSEE BY STATING AS UNDER: 8.4. PERUSED THE OBSERVATIONS OF THE ASSESSING OFF ICER AND THE SUBMISSIONS OF THE APPELLANT. AS COULD BE SEEN FROM THE FACTS OF THE CASE, THE PROPERTY UNDER REFERENCE WAS SHOWN TO HAVE BEEN ACQUIRED BY MR. N. PADMA RAO, FATHER OF THE APPELLANT IN THE YEAR 1978 , ON WHICH CONSTRUCTIONS WERE SHOWN TO HAVE BEEN MADE AND LET OUT TO TENANTS, FROM WHICH INCOME FROM PROPERTY WERE DERIVED. THE PROPER TY WAS GIFTED TO THE ASSESSEE VIDE GIFT DEED DT. 10.04.2006, AND 12.04.2 006, BY MR. N. PADMA RAO, AND VIDE THE AGREEMENTS FOR SALE DT. 18. 07.2007 AND 19.07.2007, THE SAID PROPERTY WAS AGREED TO BE SOLD BY THE APPELLANT TO ITA NOS. 709 & 716/HYD/14 :- 8 - : M/S. EMAMI NIRMAN PVT. LTD. FOR A CONSIDERATION OF RS, 4,01,04,000/-, AND AS THE SAID AGREEMENT WAS NOT HONOURED, SUBSEQU ENTLY, THE PROPERTY WAS SHOWN TO HAVE BEEN SOLD TO M/S. EMAMI CONSTRUCT IONS PVT. LTD FOR A CONSIDERATION OF RS. 5,16,00,000/- WITH M/S. EMAMI NIRMAN PVT. LTD. ACTING AS CONSENTING PARTY, FOR WHICH THE AMOUNT OF RS. 1,15,00,000/- WAS RETAINED BY CONSENTING PARTY WHILE COMPUTING CA PITAL GAINS ON RS. 4,01,04,000/-, THE APPELLANT CLAIMED INDEXED COST O F ACQUISITION AT RS. 91,85,356/-, BASED ON THE VALUATION REPORT OF REGIS TERED VALUER, WHO PUT THE VALUE OF THE PROPERTY AT RS. 14,00,000/- FOR TH E YEAR 1978-79, FOR THE PURPOSE OF VALUATION AS ON 01.04.1981. THE ASSESSIN G OFFICER REJECTED THE CLAIM ON THE BASIS OF INCONSISTENT INFORMATION RELA TED TO THE AREA UNDER CONSTRUCTION, AS PER WHOM, THE GIFT DEEDS DT. 10.04 .2006 AND 12.04.2006, WAS MENTIONING THE TOTAL CONSTRUCTED AR EA ONLY AT 400 SFT AS AGAINST 13600 SFT WORKED OUT IN VALUATION REPORT. T HE ASSESSING OFFICER ALSO POINTED OUT THAT THE AREA AS PER THE SALE DEED DT. 09.07.2009 IS INDICATED AT 6230 SFT. THUS, THE ENTIRE CLAIM OF IN DEXED COST OF ACQUISITION WAS REJECTED AND SUBSTITUTED WITH THE STAMP DUTY PA ID (RS. 4,50,300) FOR EXECUTION OF THE GIFT DEED. 8.5 BASED ON THE FACTS OF THE CASE, IT REVEALS THAT THERE ARE INCONSISTENCIES IN CLAIMS OF ASSESSEE. BUT, THAT DO ES NOT ALONE DISENTITLE THE ASSESSEE IN HIS CLAIM. THE APPELLANT AND HER DO NOR WERE DERIVING RENTAL INCOME FROM THE PROPERTIES UNDER REFERENCE A ND THE PHOTOGRAPHS FILED IN THIS REGARD INDICATES THE EXISTENCE OF REA SONABLE BIG STRUCTURES AND BUILDINGS, WHICH APPEAR PARTLY DEMOLISHED BETWE EN THE DATE OF AGREEMENTS AND SALE DEED. IT IS ALSO A FACT THAT T HE ASSESSING OFFICER HAS GONE BY THE DOCUMENTS ALONE AND COULD HAVE VERIFIED THE EXISTENCE OF SUCH STRUCTURES, THROUGH THE CONCERNED AUTHORITIES SUCH AS MUNICIPAL CORPORATION ETC. IN FACT, THE NOTICE ISSUED BY THE GHMC DT. 01.10.2007 INDICATE THE AREA UNDER PROPERTY ASSESSMENT IS 7334 SFT, LOCATED IN PROPERTY BEARING D.NO. 5-7-70/6 (1193 SQ.YARDS ) AN D WITHOUT INCLUDING THE STRUCTURE ON PROPERTY BEARING D.NO.5-772/A (103 5 SQ.YARDS). THE COST OF ACQUISITION, THUS WAS QUESTIONED AND REJECTED ME RELY BASED ON THE RELEVANT DOCUMENTS WITHOUT FURTHER VERIFYING' THE F ACTS, WHICH INDICATE OTHERWISE. THUS, BASED ON THE FACTS, REJECTION OF V ALUE BASED ON VALUATION REPORT, BY THE ASSESSING OFFICER, IS NOT JUSTIFIED AND THE APPELLANT IS ENTITLED TO CLAIM THE INDEXED COST OF ACQUISITION B ASED ON VALUATION REPORT WHICH WAS NOT REJECTED BY THE ASSESSING OFFICER. HO WEVER, THERE APPEARS AN ARITHMETICAL MISTAKE IN THE VALUATION REPORT, WH EREIN THE DEPRECIATION WRONGLY @25% ON THE RCC STRUCTURED BUILDING WAS OMI TTED TO BE DEDUCTED FROM THE NET VALUE, RESULTING IN ARRIVING OF VALUE OF PROPERTY, WRONGLY AT RS. 14,02,500/- FOR THE YEAR 1978-79, WH ICH WAS ROUNDED UPTO RS. 14,00,000/-, BASED ON WHICH THE INDEXED CO ST WAS WORKED OUT AT RS. 91,85,356/-. BY DEDUCTING RS. 1,80,000/-, TH E NET VALUE WOULD BE WORKED OUT TO RS. 12,22,500/-, AND THE INDEXED COST WOULD BE WORKED TO RS.81,52,307/-, BASED ON THE RECTIFIED VALUE OF RS. 12,20,000/- AS POINTED OUT BY THE ASSESSING OFFICER IN THE REMAND REPORT. ACCORDINGLY THE ITA NOS. 709 & 716/HYD/14 :- 9 - : ASSESSING OFFICER MAY REWORK THE INDEXED COST AND C OMPUTE THE CAPITAL GAINS. THE REWORKING WILL CONFIRM THE DISALLOWANCE OF ADDITIONAL CLAIM OF COST OF ACQUISITION TO THE EXTENT OF RS. 10,33,049/ -. TO THIS EXTENT THIS GROUND OF APPEAL IS TREATED AS PARTLY ALLOWED. 3.4.1. REVENUE IS AGGRIEVED ON THE ABOVE CLAIM AND R AISED GROUND NO. 2(C) ON THE ISSUE, INCLUDING THE CONTENTION THAT OPPORTUNITY TO AO WAS NOT GIVEN AS PER RULE 46A OF IT RULES. 4. THUS, REVENUE IS AGGRIEVED ON THREE ITEMS AND ASSESSEE IS AGGRIEVED ON ONE ITEM AND RAISED GROUND S ACCORDINGLY. 5. LD.DR, REFERRING TO THE ORDERS OF THE AO AND CIT (A) RELIED ON THE FACTS AS STATED BY AO TO SUBMIT THAT THE ORDE R OF CIT(A) IS NOT CORRECT. THEREFORE, REVENUE IS AGGRIEV ED. 6. LD. COUNSEL IN REPLY, HOWEVER, SUBMITTED THAT ASS ESSEE HAD ENTERED INTO AGREEMENT OF SALE WAY BACK IN JULY, 2007 (AY 2008-09) AND THE ULTIMATE SALE WAS IN JULY, 2009 (AY 2010-11) AND IN THESE TWO YEARS, ASSESSEE WAS TRYING TO GET THE TENANTS VACATED AND OBTAIN NECESSARY PERMISSIONS. HE ALSO FU RTHER BROUGHT TO THE NOTICE THAT THE SALE DEED WAS DT. 09-07-200 9 WHICH PERTAINS TO AY. 2010-11 AND NOT FOR IMPUGNED ASSESSMEN T YEAR AND FURTHER, THE REGISTRATION WAS DONE BY M/S. EMAMI N IRMAN PVT. LTD., AS GPA HOLDER AND NOT BY ASSESSEE AS SUCH. ASSESSEE OFFERED THE CAPITAL GAIN IN THE IMPUGNED YEAR AS SHE HAS RECEIVED HER PART OF CONSIDERATION FULLY AND POSSESSION WAS DE EMED TO HAVE BEEN HANDED-OVER AFTER PAYING TO THE TENANTS. THEREF ORE, SINCE THE PAYMENTS TO THE TENANTS WERE SUPPORTED BY PAYMENTS THROUG H CHEQUES AS WELL AS WITHDRAWAL FROM BANK ACCOUNT, THE S AME SHOULD HAVE BEEN ALLOWED BY CIT(A). IT WAS FURTHER S UBMITTED THAT ITA NOS. 709 & 716/HYD/14 :- 10 -: THE DISCREPANCY IN AMOUNT REFERRED BY AO AGAINST INDI VIDUAL PERSONS DOES NOT DISPROVE THE FACT THAT THE AMOUNTS HAVE BEEN PAID TO TENANTS FOR EVICTION AND TOTAL OF RS. 50 LAKHS HAVE BEEN PAID. ON A QUERY, WHETHER THE PROVISIONS OF SECTION 5 0C ARE ATTRACTED TO THE CAPITAL GAINS, IT WAS SUBMITTED THAT THE STAMP DUTY VALUE WAS MUCH LESS THAN WHAT ASSESSEE HAS ENTERE D INTO AGREEMENT IN JULY, 2007 AND EVEN AT THE TIME OF REGISTR ATION ALSO THE VALUE AS PER REGISTRATION AUTHORITIES WAS MUCH LESS SO THE PROVISIONS OF SECTION 50C ARE NOT ATTRACTED. 6.1. WITH REFERENCE TO REVENUE APPEAL, LD. COUNSEL SUBMITTED THAT ALL THE FACTS HAVE BEEN APPROPRIATELY CONSI DERED BY THE LD.CIT(A) AFTER GIVING DUE OPPORTUNITY TO AO IN TH E REMAND REPORT AND SO THE GROUND ON RULE 46A VIOLATION DOES N OT SURVIVE. WHILE SUPPORTING THE ORDER OF CIT(A) ON ISSUES WHIC H HE HAS GIVEN RELIEF TO ASSESSEE; IT WAS PRAYER OF THE LD. COUNSEL TH AT THE AMOUNT OF RS. 50 LAKHS PAID TO TENANTS SHOULD BE ALLOW ED ON THE BASIS OF EVIDENCE FURNISHED BEFORE THE AUTHORITIES. 7. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE ORDERS AND PAPER BOOK PLACED ON RECORD. AS SEEN FROM THE AGREEMENTS OF SALE ENTERED BY ASSESSEE WITH M/S. EMAM I NIRMAN PVT. LTD., THE TRANSACTION HAPPENED IN JULY, 2007 BY WAY OF TWO SEPARATE AGREEMENTS OF SALE CUM GPA AND THE TOTAL CONS IDERATION RECEIVED ON THOSE AGREEMENTS WAS THE AMOUNT AS RECEIVED BY ASSESSEE AT RS. 4,01,04,000/-. THE TERMS ALSO INDICA TE THAT THE TENANTS ARE EXISTING AND THEY ARE TO BE VACATED. ASSE SSEE ALSO FURNISHED EVIDENCE THAT SOME SHEDS WERE AVAILABLE ON THE PROPERTY DOING BUSINESS AND SHE WAS ALSO OFFERING RENTAL INCO MES EARLIER ITA NOS. 709 & 716/HYD/14 :- 11 -: FROM THEM. THEREFORE, EXISTENCE OF TENANTS IS NOT IN D ISPUTE. ASSESSEE HAS PAID CERTAIN AMOUNTS BY WAY OF CHEQUE AN D CERTAIN AMOUNTS WITHDRAWALS FROM BANK, MUCH BEFORE THE ASSESSM ENT YEAR, THE FACTS OF WHICH WAS ALSO CONFIRMED DURING TH E COURSE OF SURVEY IN THE STATEMENTS. THEREFORE, PAYMENT TO TENANTS C ANNOT BE DOUBTED. TO THAT EXTENT, WE ARE NOT IN AGREEMENT WITH THE ORDER OF LD.CIT(A), WHEREIN HE DID NOT ALLOW THE AMOUNT STATING TH AT THE AGREEMENTS WERE ENTERED IN 18-07-2007 AND THERE WAS NO BASIS FOR CLAIMING THE EXPENSES AS COMPENSATION PAID TO TENA NTS IN THE YEAR 2009. IF CAPITAL GAINS ARE TO BE TAXED IN THE AY. 2008-09 ON THE BASIS OF THE SALE AGREEMENT, THE COMPENSATION COULD NOT HAVE BEEN PAID, BUT ASSESSEE WOULD BE WITHIN HER RIGHTS TO CLAIM THAT AS A DEDUCTION FROM THE SALE VALUE. SINCE ASSESSEE OF FERED CAPITAL GAINS IN THE IMPUGNED ASSESSMENT YEAR [THE ACTUAL SALE IS IN THE NEXT ASSESSMENT YEAR AND AGREEMENT OF SALE IN PREVIOUS ASSESSMENT YEAR] THEN, THE COMPENSATION PAID TO TENANTS IN THE YEAR 2009 WOULD BE RELEVANT CLAIM IN AY. 2009-10. L OOKING AT ANY ASPECT, THE CLAIM OF COMPENSATION TO TENANTS IS ALLOWABL E EXPENDITURE U/S. 48(1). THEREFORE, REVERSING THE FIN DINGS OF CIT(A), SINCE THE CAPITAL GAINS WERE TAXED IN THE IMPUGNED ASSE SSMENT YEAR, THE CLAIM IS ALLOWABLE IN THIS ASSESSMENT YEAR. FOR THE REASONS STATED ABOVE, ASSESSEES GROUNDS ARE ALLOWED. 8. COMING TO REVENUE APPEAL, AS SEEN FROM THE FACTS OF THE CASE, ASSESSEE HAS NOT SOLD THE PROPERTY ULTIMATEL Y. GPA HOLDER REGISTERED THE DOCUMENT AND DIFFERENCE IN PRIC E WAS ACCOUNTED BY THE COMPANY AS INCOME. ON THAT REASON, THE ORDER OF CIT(A) CANNOT BE FAULTED AND THERE IS NO MERIT IN RE VENUES CONTENTIONS. LIKE-WISE, THE PAYMENTS OF COMMISSION TO THE PARTIES ITA NOS. 709 & 716/HYD/14 :- 12 -: IS ALSO ESTABLISHED AND NOTHING WAS BROUGHT ON RECOR D TO COUNTER THE FINDINGS OF LD.CIT(A) ON THE ISSUE. EVEN WITH REF ERENCE TO INDEXED COST OF ACQUISITION, IT IS PURELY A MATTER OF FACT AND LD.CIT(A) HAS ANALYSED IN DETAIL IN PARA 8.4 AND 8.5 OF THE ORDER WHICH WAS EXTRACTED ABOVE. THE ENTIRE ORDER WAS PASSE D BY CIT(A) AFTER GIVING DUE OPPORTUNITY TO AO ON ALL THE ISSUES AND AFTER OBTAINING A REPORT THROUGH THE ADDL.CIT, RANGE-11, HYDERABAD, BEING FORWARDED ON 23-07-2013. WHEN DUE OPPORTUNITY WAS GIVEN TO AO, IT IS NOT UNDERSTANDABLE HOW REVENUE COULD CONTEN D THAT CIT(A) HAS NOT GIVEN OPPORTUNITY UNDER RULE 46A. WE DO NOT FIND ANY MERIT IN ANY OF THE GROUNDS RAISED BY REVENUE, AC CORDINGLY ALL THE GROUNDS OF REVENUE ARE REJECTED. 9. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED AND APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH DECEMBER, 2017 SD/- SD/- (P. MADHAVI DEVI) (B. RAMAKOTAIAH) JUDICIAL MEMBER ACCOUNTANT MEM BER HYDERABAD, DATED 20 TH DECEMBER, 2017 TNMM ITA NOS. 709 & 716/HYD/14 :- 13 -: COPY TO : 1. THE INCOME TAX OFFICER, WARD-11(3), HYDERABAD. 2. SMT. MADHAVARAM UDAYASREE, C/O. CH. PARTHASARATH Y & CO., 1-1-298/2/B/3, 1 ST FLOOR, SOWBHAGYA AVENUE, ST.NO.1, ASHOKNAGAR, HYDERABAD. 3. CIT (APPEALS)-VI, HYDERABAD. 4. CIT-V, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.