Shruti Malpani, Hyderabad, Hyderabad V. ITO, Ward-6(2), Hyderabad, Hyderabad

ITA 847/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2538 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-10-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 15-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNA
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC - A BENCH : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT ITA.NO. 844/HYD/2017 ASSESSMENT YEAR 2006 - 2007 ASHISH KUMAR MALPANI, 8 - 2 - 608/35 & 36, ROAD NO.10, BANJARA HILLS, HYDERABAD. PAN: AEAPM 0872 L VS. ACIT, CIRCLE - 6(1), HYDEABAD. (APPELLANT) (RESPONDENT) ITA.NO.845/HYD/2017 ASSESSMENT YEAR 2006 - 2007 SWETA MALPANI, 8 - 2 - 608/35 & 36, ROAD NO.10, BANJARA HILLS, HYDERABAD. PAN: ALTPS 6771 Q VS. ITO, WARD - 6(2), HYDERABAD. (APPELLANT) (RESPONDENT) ITA.NO.846/HYD/2017 ASSESSMENT YEAR 2006 - 2007 MANISH KUMAR MALPANI, 8 - 2 - 608/35 & 36, ROAD NO.10, BANJARA HILLS, HYDERABAD. PAN: AEAPM 0869 H VS. ACIT, CIRCLE - 6(1), HYDEABAD. (APPELLANT) (RESPONDENT) ITA.NO.847/HYD/2017 ASSESSMENT YEAR 2006 - 2007 SMT. SHRUTI MALPANI, PLOT NO. 136A MLA COLONY, ROAD NO.12, BANJARA HILLS, HYDERABAD 500 034. PAN: AFKPM 5972 J VS. ITO, WARD - 6(2), HYDEABAD. (APPELLANT) (RESPONDENT) 2 ITA.NO.848/HYD/2017 ASSESSMENT YEAR 2006 - 2007 SMT. REKHA MALPANI, 8 - 2 - 608/35 & 36, ROAD NO.10, BANJARA HILLS, HYDERABAD. PAN: AKHPM 2556 N VS. ITO, WARD - 6(2), HYDERABAD. (APPELLANT) (RESPONDENT) FOR ASSESSEE S : SHRI K.C. DEVDAS FOR REVENUE : SMT. KOMALI KRISHNA, DR DATE OF HEARING : 06.10. 2017 DATE OF PRONOUNCEMENT : 06.10.2017 ORDER PER D. MANMOHAN, VP. THESE FIVE APPEALS ARE DIRECTED AGAINST COMMON ORDER PASSED BY LD. CIT(A) - 9, HYDERABAD AND THEY PERTAIN TO ASSESSMENT YEAR 2006 - 07. 2. AS COULD BE NOTICED FROM THE ASSESSMENT ORDER OF SHRI ASHISH KUMAR MALPANI, A PROPERTY WAS PURCHASED JOINTLY BY SIX PERSONS AND SOLD VIDE THREE SEPARATE DEEDS EACH. THE ASSESSEE AND THE OTHER FIVE PERSONS AGREED TO SHARE THE SALE PROCEEDS EQUALLY WHILE TOTAL EXPENSES WERE A PPORTIONED BY WAY OF ACTUAL SUMS SPENT BY EACH CO - OWNER. COST OF ACQUISITION ALONG WITH BROKERAGE WAS ALSO TAKEN INTO C ONSIDERATION. A.O. DOUBTED COST OF CONSTRUCTION CLAIMED , IN THE COMPUTATION OF CAPITAL GAINS , AND DISALLOWED A PORTION OF COST OF CONST RUCTION IN THE CASE OF EACH OF THE CO - OWNER . LD. CIT(A) HAVING AFFIRMED THE ACTION OF A.O., SECOND APPEAL WAS PREFERRED BEFORE THE TRIBUNAL. 3. IT IS NOT IN DISPUTE THAT THE FACTS AND CIRCUMSTANCES IN ALL THESE CASES ARE IDENTICAL. LD COUNSEL FOR THE ASSESSEE SUBMITTED THAT ONLY FIVE APPEALS ARE POSTED FOR HEARING TODAY (06.10.2017) WHEREAS IN THE CASE OF SIXTH CO - OWNER , CASE WAS ALREADY DISPOSED OF BY ITAT, B (SMC) BENCH VIDE ORDER DATED 3 1.03.2017 (ITA NO.1206/HYD/2016 IN THE CASE OF SHRI GIRISH KUMAR MALPANI ) WHEREIN, UNDER IDENTICAL CIRCUMSTANCES THE MATTER WAS SET ASIDE TO THE FILE OF A.O. WITH A DIRECTION TO THE 3 ASSESSEE TO FURNISH NECESSARY EVIDENCE BEFORE THE A.O. IT MAY BE USEFUL TO EXTRACT THE OPERATIVE PORTION OF THE AFORES AID JUDGMENT. 6. I HAVE CONSIDERED THE RIVAL ARGUMENTS AND THE DOCUMENTS PLACED ON RECORD. IT IS OBSERVED THAT TOTAL PROPERTY WAS PURCHASED BY WAY OF THREE SEPARATE PURCHASE BILLS AND THE SCHEDULES TO THE DEEDS MENTIONED THAT THERE WAS A BUILDING. FOR T HE SAKE OF RECORD THE SCHEDULE OF AGREEMENT DATED 06 - 12 - 2003 PLACED IN THE PAPER BOOK FROM PAGES 1989 - 1995 SHOWS THE PROPERTY OF PLOT ADMEASURING 600 SQ. YARDS (ALONG WITH PORTION OF OLD HOUSE ADMEASURING 1000 SQ. FEET) OUT OF 1828 SQ. YARDS EQUAL TO 1529 SQ. METERS BEARING PREMISES NO. 8 - 2 - 293/82/8/1323/A, ROAD NO. 67, JUBILEE HILLS LAYOUT. SIMILAR DESCRIPTION WAS MENTIONED IN THE OTHER TWO DOCUMENTS ALSO, WHICH INDICATE THAT OUT OF THE 1828 SQ. YARDS OF THE LAND, THERE WAS A PORTION OF OLD HOUSE ADMEAS URING 1000 SQ. FEET. IMMEDIATELY THEREAFTER THE ASSESSEES HAVE ENTERED A MEMORANDUM OF CONSTRUCTION AGREEMENT DATED 29 - 03 - 2005 FOR CONSTRUCTION THE RESIDENTIAL PROPERTY WITH SPECIFICATIONS OF COLUMNS, BEAMS ETC., AS STATED IN SECOND PAGE OF THE CONSTRUCTI ON AGREEMENT, FOR A CONSIDERATION OF RS. 45,00,000/ - . M/S MAHESHWARI MEGAVENTURES LTD., HAD SHOWN THIS RECEIPT OF RS. 45,00,000/ - WHICH WAS ACCEPTED BY THE A.O. IT WAS ALSO ON RECORD THAT THE SAID COMPANY HAS SPENT ONLY AN AMOUNT OF RS. 27,77,538/ - AND B ALANCE WAS OFFERED AS PROFIT. AS SEEN FROM THE NOTES ON ACCOUNTS ALSO, THE SAID COMPANY HAS TAKEN OVER AN ENTERTAINMENT CENTRE IN THE MONTH OF FEB 2006 AND A RESTAURANT WHICH WERE NOT CAPITALIZED. HOWEVER, A.O FINDS THAT THE BILLS PRODUCED PERTAIN TO ITE MS FOR HOTEL AND OTHER ITEMS WHICH ARE USED IN HOTEL / RESTAURANT, BUT NOT COST OF CONSTRUCTION ON THE PROJECT. SINCE, THIS FORUM IS NOT IN A POSITION TO EXAMINE WHETHER THE ASSESSEES CONTENTIONS ARE CORRECT OR NOT, I AM OF THE OPINION THAT THE CLAIM I S TO BE RE - EXAMINED . ASSESSEE IS DIRECTED TO PRODUCE THE NECESSARY DETAILS OF EXPENDITURE SPENT BY THE SAID COMPANY ON CONSTRUCTION AND ALSO HOW THE PAYMENTS ARE MADE, AS THE A.O IS DOUBTING THE PAYMENTS ALSO. A.O IS DIRECTED TO EXAMINE THE ISSUE AFRESH, IN THE LIGHT OF THE EVIDENCE THAT MAY BE PRODUCED AND ALLOW THE EXPENDITURE ACCORDINGLY, IF THE SAME IS SPENT ON THE BUILDING ON THE PROPERTY. PRIMA - FACIE ASSESSEES CONTENTIONS SEEMS TO BE VALID AS THE A.O HIMSELF HAS ALLOWED COST PERTAINING TO LICENSE FEES PAID TO MUNICIPALITY. IF LICENSE FEE WAS PAID, THERE MUST BE SOME LICENSE OBTAINED FOR THE CONSTRUCTION PROJECT. THESE REQUIRE A DETAILED VERIFICATION/ANALYSIS. THEREFORE, THE ORDER OF THE A.O AND CIT(A) TO THE EXTENT OF CLAIM OF COST OF IMPROVEMENT ON THIS RS. 45,00,000/ - STATED TO HAVE BEEN SPENT THROUGH M/S MAHESHWARI MEGA VENTURES LTD., IS RESTORED TO A.O FOR FRESH VERIFICATION AND PROPORTIONATE ALLOWANCE THEREON. ASSESSEE IS DIRECTED TO FURNISH THE NECESSARY EVIDENCE TO A.O, SO AS TO SUBSTANTIAT E THE CLAIM. WITH THESE OBSERVATIONS, THE ISSUE IS RESTORED TO THE FILE OF A.O FOR FRESH VERIFICATION, IF REQUIRED FROM THE BUYER ALSO. ACCORDINGLY, ASSESSEE GROUNDS ARE ALLOWED FOR STATISTICAL PURPOSES. 4. BOTH THE PARTIES ADMITTED THAT THE ISSUE IS IDENTICAL IN ALL THESE FIVE APPEALS ALSO AND SIMILAR VIEW MAY HAVE TO BE TAKEN. ACCORDINGLY, I DIRECT THE A.O. TO EXAMINE THE ISSUE AFRESH IN LINE WITH THE DIRECTION GIVEN IN THE CASE OF SHRI GIRISH KUMAR MALPANI (SUPRA). 5. IN THE RESULT, APPEALS FILED BY THE ASSESSEES ARE TREATED AS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED ACCORDINGLY IN THE OPEN COURT ON 06 TH OCTOBER, 2017 . S D / - (D. MANMOHAN) VICE PRESIDENT HYDERABAD, DATED: 06 TH OCTOBER, 2017 4 OKK, SR.PS COPY TO 1. B. NARSING RAO & CO, CHARTERED ACCOUNTANTS, PLOT NO.554, ROAD NO.92, JUBILEE HILLS, HYDERABAD - 96. 2. ACIT, CIRCLE - 6(1 ); ITO, WARD - 6(2), HYDERABAD. 3. CIT (A) - 9, HYDERABAD. 4. PR. CIT - 6, HYDERABAD. 5. D.R. ITAT A - SMC BENCH, HYDERABAD. 6. GUARD FILE