SHRI ASHRAF KHARWA , NAGPUR V. THE ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-2, NAGPUR

ITA 73/NAG/2019

AI Insights

The case involves an appeal by Shri Ashraf Kharwa against the order of the CIT(A)-2, Nagpur, which was passed in the context of proceedings under section 143(3) of the Income Tax Act, 1961. The primary issues in the appeal were related to the disallowance of renovation expenses claimed by the assessee and the indexation of the cost of property acquired through a gift. The Tribunal heard arguments from both parties and reviewed the case file before making its decision.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 136795 (ITAT-NAGPUR)
• Duration Of Justice: 11 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-12-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: SMC
• Next Hearing Date: 31-10-2022
• Assessment Year: 2007-2008
• Appeal Filed On: 24-01-2022
• Other Referred Cases: Rohan Developers (P.) Ltd. vs. ITO [2022] 139 taxmann.com 32 (Bombay)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Gift
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL NAGPUR BENCH, NAGPUR – VIRTUAL COURT BEFORE SHRI S. S. GODARA, JUDICIAL MEMBER आयकर अपील सं. / ITA No.73/NAG/2019 िनधाᭅरण वषᭅ / Assessment Year: 2007-08 Shri Ashraf Kharwa, C/o. M/s. Loya Bagri & Co., Chartered Accountants, Gandhibag, Nagpur- 440002. PAN : ADCPA7765P Vs. ACIT, Circle-2, Nagpur. Appellant Respondent आदेश / ORDER PER S. S. GODARA, JM: This assessee’s appeal for assessment year 2007-08 arises against the CIT(A)-2, Nagpur’s order dated 18.01.2019 passed in case no. CIT(A)-2/474/2009-10, involving proceedings u/s 143(3) of the Income Tax Act, 1961; in short “the Act”. Heard both the parties. Case file perused. 2. The assessee raises the following substantive grounds in the instant appeal :- “(1) That the order of the Assistant Commissioner of Income Tax, Circle-2, Nagpur is bad in law and wrong on facts and the learned CIT(A) erred in partly confirming the same. (2) That the learned CIT(A) erred in law and on facts in sustaining the addition made by the Assessing Officer to the extent of Rs.50,000/- Assessee by : Shri Rajesh V. Loya Revenue by : Shri G. J. Ninawe Date of hearing : 01.11.2022 Date of pronouncement : 27.12.2022 ITA No.73/NAG/2019 2 by not taking into consideration, the expenditure incurred by the previous owners who have gifted the property to three persons. On the facts and circumstances of the case and in law the action of learned authorities is not justified. (3) That the learned CIT(A) erred in law and on facts in upholding the action of Assessing Officer in not properly considering that the property purchased by the previous owners was about 100 years old and required substantial renovation to make it habitable. On the facts and circumstances of the case and in law the action of learned authorities is not reasonable and unjustified. (4) That the learned CIT(A) erred in law and in facts in not directing the AO to accept the indexation claimed by the assessee on Renovation expenditure considering base year as 31 st March, 1992. On the facts and circumstances of the case, the action of the learned CIT(A) is unjustified. (5) That the learned CIT(A) erred in law and on facts in upholding the action of Assessing Officer is not allowing indexation of the cost of property involved from the date of purchase of the property by previous owners. On the facts and circumstances of the case and in law the action of the learned authorities is illegal and not justified. (6) That the learned CIT(A) erred in law and on facts in confirming the action of the AO of charging interest u/s 234A, 234B and 234C. On the facts and circumstances of the case and in law the action is unjustified.” 3. Learned counsel submits at the outset that the assessee’s grounds no.1 and 6 are general/consequential in nature. Rejected accordingly. 4. The assessee’s first and foremost raises the issue of cost of improvement in the alleged capital asset stated to the 100 years old. There is hardly any dispute that the assessee has claimed Rs.2,50,000/-; without any self-attested voucher even which stands accepted to the tune of Rs.1,00,000/- in the CIT(A)’s order. That being the case, I hardly find any reason to reverse the impugned remaining expenditure disallowance of Rs.1,50,000/- on account of ITA No.73/NAG/2019 3 total lack of evidence on assessee’s part. Rejected accordingly. These 2 nd and 3 rd grounds are declined. 5. The assessee’s fourth substantive ground seeks to claim renovation expenditure as having base year as on 31.03.1992. He has filed on record his co-owner’s assessment orders dated 30.11.2010 for A.Y. 2007-08 wherein the Assessing Officer had already accepted to claim in consequential computation. I therefore adopt consistency and accept the assessee’s instant second substantive grievance. Necessary computation shall follow as per law. 6. Lastly comes the assessee’s fifth substantive ground regarding indexation of acquisition as to be 01.04.1981 or from the actual date of having received gift of the capital assets which comes to be in the month of January, 1990. Learned departmental representative could hardly dispute that section 49(1)(ii) contains the specific provision regarding cost of such acquisition read with Explanation thereto that the same to be the cost of which any previous owner had acquired it for valuable consideration. Hon’ble Bombay high court’s landmark decision in Rohan Developers (P.) Ltd. vs. ITO [2022] 139 taxmann.com 32 (Bombay) also reiterates the very proposition. I therefore direct the learned Assessing Officer to compute the assessee’s long term capital gains in very terms. The assessee ITA No.73/NAG/2019 4 succeeds in his instant last substantive ground. Ordered accordingly. 7. This assessee’s appeal is partly allowed in above terms. Order pronounced on this 27 th day of December, 2022. Sd/- (S. S. GODARA) JUDICIAL MEMBER पुणे / Pune; ᳰदनांक / Dated : 27 th December, 2022. Sujeet आदेश कᳱ ᮧितिलिप अᮕेिषत / Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant. 2. ᮧ᭜यथᱮ / The Respondent. 3. The CIT(A)-2, Nagpur. 4. The Pr. CIT-2, Nagpur. 5. िवभागीय ᮧितिनिध, आयकर अपीलीय अिधकरण, नागपुर / DR, ITAT, Nagpur. 6. गाडᭅ फ़ाइल / Guard File. आदेशानुसार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपीलीय अिधकरण, पुणे / ITAT, Pune.