ITO, Wd.-11(3), Pune V. Smt. Seema H. Shirali, Pune

ITA 935/PUN/2011

• Counselvise Citation: [2015] 134 COUNSELVISE.COM (IT) 1161 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2015
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 04-07-2011
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Corroborative evidences; Revised return
• Section: 143(3); 54F; 148; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE , . . , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI R.K. PANDA, AM . / ITA NO S . 93 5 & 936 /PN/201 1 / ASSESSMENT YEAR S : 200 2 - 0 3 & 2003 - 04 THE INCOME T AX OFFICER , WARD 11(3), PUNE . . / APPELLANT VS. SMT. SEEMA H. SHIRALI, SOUMITRA PRABHAT ROAD, ERANDEWANA, PUNE 411 0 04 . / RESPONDENT PAN: A SIPS8950R / APPELLANT BY : SHRI RAJESH DAMOR / APPELLANT BY : SHRI RAJESH DAMOR / RESPOND ENT BY : SHRI NIKHIL PATHAK / DATE OF HEARING : 1 7 .0 6 .2015 / DATE OF PRONOUNCEMENT: 31 .0 8 .2015 / ORDER PER SUSHMA CHOWLA, J M : BOTH T HE APPEALS FILED BY THE REVENUE ARE AGAINST SEPARATE ORDER S OF CIT(A) - I, PUNE , DATED 29 .1 1 .201 0 RELATING TO ASSESSMENT YEAR S 2002 - 03 AND 20 0 3 - 0 4 PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE INCO ME TAX ACT, 1961. 2. BOTH T HE APPEALS RELATING TO THE SAME ASSESSEES ON SIMILAR ISSUES WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. HOWEVER, REFERENCE IS BEING MADE TO THE FACTS AND ISSUES IN ITA NO. 935 /PN/201 1 TO ADJUDICATE THE ISSUES. ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 2 3. THE REVENUE IN ITA NO. 935 /PN/201 1 HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) IS NOT JUSTIFIED IN ALLOWING THE COST OF IMPROVEMENT TO THE CAPI TAL ASSET DISREGARDING THE AO'S FINDING THAT THERE WAS NO CONCLUSIVE PROOF IN RESPECT OF EXPENDITURE CLAIMED. 2. THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT THE AMOUNT OF RS.33,00,000/ - PAID TO M/S RUPLEELA STEELS BY COURTS ORDER IN DARKHAST NO.41/2001 ON EXHIBIT 69 WAS TOWARDS REPAYMENT/SETTLEMENT OF LOAN TAKEN FROM THAT COMPANY IN THE PAST. THE CIT(A) ERRED IN LAW IN HOLDING THAT REPAYMENT OF THE LOAN AMOUNTED TO EXPENDITURE IN THE NATURE OF COST OF IMPROVEMENT OF THE CAPITAL ASSET. 3. THE ORDER OF THE LD. CIT(A) BE VACATED AND THAT OF THE AO BE RESTORED. 4. TH E APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER ANY OF THE ABOVE GROUNDS OF APPEAL. 4. BRIEFLY, IN THE FACTS OF THE PRESENT CASE, THE ASSESSEE WAS A NON - RESIDENT INDIAN AND WAS FILING THE RE TURN OF INCOME. THE ORIGINAL ASSESSMENT IN THE CASE WAS COMPLETED UNDER SECTION 143(3) OF THE ACT ON 20.03.2003, WHICH WAS SET - ASIDE BY THE CIT - I, PUNE VIDE ORDER DATED 24.03.2008 WITH DIRECTION TO RE - WORK ASIDE BY THE CIT - I, PUNE VIDE ORDER DATED 24.03.2008 WITH DIRECTION TO RE - WORK THE COST OF ACQUISITION OF PROPERTY TRANSFERRED D URING THE YEAR AND TO DETERMINE THE CAPITAL GAINS ACCORDINGLY. THE CIT ALSO DIRECTED THE ASSESSING OFFICER TO EXAMINE THE ALLOWABILITY OF EXPENSES CLAIMED AGAINST INCOME FROM CAPITAL GAINS, AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE. DURING T HE COURSE OF SET - ASIDE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO SUBSTANTIATE ITS CLAIM MADE AGAINST THE INCOME FROM CAPITAL GAINS WITH SUPPORTING EVIDENCE. IN REPLY, THE ASSESSEE FURNISHED THE COPIES OF FOLLOWING DOCUMENTS : - 1. LEASE OF 99 YEARS EXECUTED BY MR. AVINASH WARDEKAR IN FAVOUR OF MRS. SEEMA SHERALI. 2. LEASE DEED OF 999 YEARS EXECUTED BY WESTERN INDIA ERECTORS LTD. IN FAVOUR OF MR. AVINASH WARDEKAR. 3. SHREE MAHALAXMI ENTERPRISES : AGREEMENT FOR RS. 30,94,000/ - 4. V ALUATION REPORT RS.48,90,172.50/ - . AND CLAIMED FOLLOWING EXPENSES BEING COST OF IMPROVEMENT AS PER PARA 5 OF HIS LETTER WHICH IS AS UNDER: - 5. COST OF IMPROVEMENT: ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 3 A) AMOUNT PAID TO RUPLILA STEELS RS.33,00,000/ - (AS ATTACHED WITH OUR LETTER FOR A.Y. 2003 - 04) B) PASSING OF PLANS RS.1,32,450.58/ - (RS. 1379466 * 57195 SQFT. / 595683 SQFT) (* HER SHARE 57195 SQFT OUT OF TOTAL AREA OF 595683 SQFT) C) AB CONSTRUCTIONS RS.5,49,000/ - D) RAJ CONSTRUCTIONS RS.2,90,000/ - 5. THE ASSESSIN G OFFICER ON THE PERUSAL OF DETAILS FILED BY THE ASSESSEE OBSERVED THAT THE SAID EXPENSES WERE NOT INCURRED BY THE ASSESSEE. IT WAS ALSO NOTED BY THE ASSESSING OFFICER THAT SOME OF THE BILLS PARTICULARLY BY AB CONSTRUCTIONS WERE DRAWN IN THE NAME OF WARDE KAR DEVELOPERS PVT. LTD. A ND MANJU WARDEKAR AND SOMITRA WARDEKAR. WITH REGARD TO OTHER CLAIMS, THE ASSESSING OFFICER NOTED THAT FROM THE DETAILS, IT COULD NOT BE INFERRED WHETHER THE COST OF IMPROVEMENT WAS INCURRED BY THE ASSESSEE HERSELF OR ON HER BEHAL F BY SOMEBODY. THE ASSESSING OFFICER FURTHER OBSERVED THAT AS PER COURTS ORDER IN DARKHAST NO.41/2001 ON EXHIBIT NO.69 , THE ASSESSEE BEING JUDGMENT DEBTOR DARKHAST NO.41/2001 ON EXHIBIT NO.69 , THE ASSESSEE BEING JUDGMENT DEBTOR ADMITTED LIABILITY OF RUPLILA STEELS PVT. LTD. , AS PER HONBLE HIGH COURTS DECREE. HOWEVER, IT CO ULD NOT BE ESTABLISHED BEYOND DOUBT THAT THE AMOUNT WAS PAID BY THE ASSESSEE HERSELF. WITH REGARD TO THE COST OF ACQUISITION TO BE TAKEN AT RS.NIL, AS PER THE DIRECTIONS OF THE COMMISSIONER UNDER SECTION 263, THE ASSESSING OFFICER ADOPTED THE SAME AT RS.N IL AND EVEN THE COST OF IMPROVEMENT WAS ADOPTED AT RS.NIL AND THE SALE CONSIDERATION OF THE SAID PROPERTY WAS TAKEN AS INCOME OF THE ASSESSEE FOR THE INSTANT ASSESSMENT YEAR. 6. BEFORE THE CIT(A) THE CONTENTION OF THE ASSESSEE WAS THAT SHE HAD CHALLENGED THE ORDER OF COMMISSIONER UNDER SECTION 263 OF THE ACT IN DIRECTING THE ASSESSING OFFICER TO ADOPT COST OF ACQUISITION OF THE PROPERTY AT RS.NIL. DURING THE COURSE OF HEARING OF THE APPEAL, THE ASSESSEE INFORMED THE CIT(A) THAT THE TRIBUNAL IN ITA NO. 606, 607 & 625/PN/2008 RELATING TO ASSESSMENT YEARS 2002 - 03 TO 2004 - 05 , VIDE COMMON ORDER DATED 11.06.2010, HAS DECIDED THE ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 4 ISSUE AGAINST THE ASSESSEE AND IN FAVOUR OF THE REVENUE. IN VIEW THEREOF, THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE W ERE DISMISSED A ND THE COST OF ACQUISITION OF THE LAND WAS TAKEN AT RS.NIL. 7. THE SECOND ISSUE BEFORE THE CIT(A) WAS THE COST OF IMPROVEMENT AND OTHER EXPENSES, IN SUPPORT OF WHICH THE ASSESSEE FURNISHED WRITTEN SUBMISSIONS, WHICH ARE INCORPORATED UNDER PARA 4.2 AT PAGE S 4 AND 5 OF THE APPELLATE ORDER. THE EXPLANATION OF THE ASSESSEE WAS THAT SHE WAS A NON - RESIDENT INDIAN STAYING ABROAD AND ALL HER FINANCIAL AND PROPERTY AFFAIRS WERE LOOKED AFTER BY HER MOTHER MRS. MANJU WARDEKAR , TO WHOM SHE HAD GIVEN POWER OF ATTORNEY . IT WAS ALSO EXPLAINED BY HER THAT THE ENTIRE SALE CONSIDERATION HAD BEEN RECEIVED ON HER BEHALF BY HER MOTHER AND THE EXPENDITURE WAS ALSO INCURRED BY HER MOTHER ON HER BEHALF. IN THESE CIRCUMSTANCES, ALL THE BILLS FOR EXPENDITURE WERE IN THE NAME OF H ER MOTHER OR FAMILY MEMBERS CONCER NS OF HER PARENTS AND AMOUNTS WERE DIRECTLY PAID BY HER MOTHER. SINCE THE ASSESSEE HAD FURNISHED THE NECESSARY DIRECTLY PAID BY HER MOTHER. SINCE THE ASSESSEE HAD FURNISHED THE NECESSARY INFORMATION, A REQUEST WAS MADE FOR ALLOWING THE COST OF IMPROVEMENT OF THE PROPERTY. THE CIT(A) VIDE PARA 4. 3 NOTED THAT THE ASSESSEE HAD ORIGINALLY FILED THE RETURN OF INCOME SHOWING CAPITAL GAINS OF RS. 17,92,188/ - ON SALE OF LAND SITUATED AT BIBWEWADI, PUNE, AGAINST WHICH DEDUCTION UNDER SECTION 54F OF THE ACT WAS CLAIMED TO SHOW THE CAPITAL GAINS AT RS.NIL. THEREAFTER, THE ASSESSEE FURNISHED RETURN OF INCOME ON 09.08.2004 DECLARING TOTAL INCOME OF RS. 1,03,47,973/ - , WHEREIN THE ASSESSEE HAD TAKEN THE COST OF ACQUISITION AT RS.NIL. T HIS RETURN WAS REGULARIZED BY THE ASSESSING OFFICER UNDER SECTION 148 OF THE A CT. DURING PENDENCY OF RE - ASSESSMENT PROCEEDINGS, THE ASSESSEE FURTHER REVISED RETURN OF INCOME ON 31.03.2005 , WHEREIN INCOME DECLARED IN THE ORIGINAL RETURN OF INCOME WAS AGAIN DECLARED I.E. AT RS. 73,970/ - . AS PER THIS RETURN OF INCOME, THE ASSESSEE HAD SHOWN CAPITAL LOSS OF RS. 18,13,158/ - BY DECLARING THE COST OF ACQUISITION AT MARKET VALUE TO THE PREVIOUS OWNER. ALL THESE FACTS ARE MENTIONED IN THE ASSESSMENT ORDER ORIGINALLY PASSED UNDER SECTION 143(3) R.W.S. ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 5 148 OF THE ACT . THE ASSESSING OFFICER AL LOWED THE COST OF ACQUISITION AT RS.1,21,11,706/ - AND THE COST OF IMPROVEMENT AT RS. 45,71,451/ - VIDE ORDER UNDER SECTION 143(3) R.W.S. 148 OF THE ACT. THE COMMISSIONER , PUNE, HOWEVER, INITIATED PROCEEDINGS UNDER SECTION 263 OF THE ACT WITH REGARD TO THE A BOVE TWO ISSUES AND IN RESPECT OF THE FIRST ISSUE, THE COST OF ACQUISITION WAS DIRECTED TO BE TAKEN AT RS.NIL AND FURTHER, THE ASSESSING OFFICER WAS DIRECTED TO VERIFY THE COST OF IMPROVEMENT IN THE HANDS OF THE ASSESSEE. THE ASSESSING OFFICER HOWEVER, AD OPTED BOTH THE FIGURES AT RS.NIL. THE CIT(A) NOTED THAT THE COST OF IMPROVEMENT CONSISTING OF PAYMENTS MADE TO RUPLILA STEELS , PMC, ARCHITECTS FEES, AB CONSTRUCTIONS AND RAJ CONSTRUCTIONS. AS FAR AS PAYMENT OF RUPLILA STEELS OF RS.33 LAKHS WAS SHOWN TO BE RELATING TO AN INJUNCTION ORDER PASSED BY THE HONBLE BOMBAY HIGH COURT ON A COMPLAINT FILED BY M/S. CREDENTIAL FINANCE LTD. AS PER THE SAID ORDER, THE PLAINTIFFS HAD FILED A SUIT SEEKING MONEY DECREE FOR SUM OF RS. 7.62 CRORES WITH INTEREST AND INJUNCT ION WAS SOUGHT FROM THE COURT FOR RESTRAINING MR. AVINASH S. WARDEKAR AND HIS FAMILY MEMBE RS FROM ALIENATING THE LAND AT BIBWEWADI, PUNE. THE HONBLE BOMBAY HIGH COURT IN THE FACTS AND CIRCUMSTANCES OF THE CASE OBSERVED THAT MR.AVINASH S. WARDEKAR HAS LEA SED OUT PORTION OF THE LAND IN FAVOUR OF FAMILY MEMBERS AND HAD ALSO ENTERED INTO TRANSACTIONS WITH THREE PARTIES, WITH AN INTENTION TO DEFEAT THE EXECUTION OF DECREE, THAT MAY BE PASSED AGAINST HIM. THE ASSESSEE BEING THE DAUGHTER OF MR. AVINASH S. WARDE KAR, WHO IN TURN HAD RECEIVED PORTION OF LAND ON LEASE FROM HER FATHER, CLAIMED TO HAVE MADE THE SETTLEMENT ALONG WITH OTHER FAMILY MEMBERS AND THE COST OF SHARE OF PAYMENTS WAS CLAIMED AS COST OF IMPROVEMENT . IN VIEW OF THE SAID SETTLEMENT AND RELEASE OF THE PORTION OF LAND FROM DECREE BY PAYING SUM OF RS.33 LAKHS, THE CIT(A) WAS OF THE VIEW THAT THE EXPENDITURE WAS ALLOWABLE IN PRINCIPLE. HOWEVER, THE EXACT QUANTIFICATION WAS DIRECTED TO BE VERIFIED BY THE ASSESSING OFFICER WHILE GIVING APPEAL EFFECT AN D IN TURN, ALLOWING THE SAME. ALL OTHER EXPENSES WERE ALSO DIRECTED TO BE EXEMPTED AT THE TIME OF ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 6 GRANTING RELIEF I.E. CLAIM IN RESPECT OF RS. 1,32,450/ - FOR PAYMENT TO PMC FOR GETTING THE LAND CONVERTED FROM AGRICULTURAL TO NON - AGRICULTURAL, PAYMENT OF RS . 3 LAKHS TO ARCHITECT, PAYMENT OF RS. 8,39,000/ - TO AB CONSTRUCTION AND RAJ CONSTRUCTION, PURSUANT TO THE DEVELOPMENT AGREEMENT ENTERED INTO. AS PER THE CIT(A) , THE SAID EXPENSES WERE RELATING TO THE SALE MADE AND WERE ALLOWABLE. HOWEVER, THE ASSESSING OF FICER WAS DIRECTED TO VERIFY THE ACTUAL PAYMENT AND ITS INCIDENCE TO THE ASSESSEE BEFORE ALLOWING IT, WHILE GIVING THE APPEAL EFFECT. 8. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN ALLOWING THE COST OF IMPROVEMENT OF THE CAPITAL ASSET AND ALSO IN ALLOWING THE CLAIM OF THE ASSESSEE OF RS.33 LAKHS PAID TO M/S. RUPLILA STEELS ON ACCOUNT OF COURTS ORDER. 9. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE TOOK US THROUGH THE FACTS OF THE CASE AND ALSO THE PROCEEDINGS BEFORE THE LOWER AUTHO RITIES AND POINTED OUT THAT THE ASSESSEE HAD CLAIMED COST OF IMPROVEMENT AT AUTHO RITIES AND POINTED OUT THAT THE ASSESSEE HAD CLAIMED COST OF IMPROVEMENT AT RS. 45,71,451/ - WHICH INCLUDED RS.33 LAKHS BEING PAID TO RUPLILA STEELS. IT WAS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE ASSESSEE HAD SOLD TW O PORTIONS OF ITS LAND, ONE TO ADI TYA AND SECOND TO M/S. SHREE MAH ALAXMI ENTERPRISES . THOUGH THE LAND SOLD TO M/S. SHREE MAHALAXMI ENTERPRISES , THE COMPENSATION WAS ON BEHALF OF THE LAND PORTIONS SOLD TO ADI TYA AND IT WAS INCUMBENT UPON THE ASSESSEE TO DE MONSTRATE THAT THE COMPENSATION WAS FOR THE LAND SOLD TO M/S. SHREE MAHALAXMI ENTERPRISES . IT WAS POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE ASSESSEE HAD ENTERED INTO TWO DIFFERENT SALE TRANSACTIONS I.E. IN ASSESSMENT YEAR 2002 - 03 ON ACCOUNT OF LAND SOLD TO M/S. SHREE MAH ALAXMI ENTERPRISES AND IN ASSESSMENT YEAR 2003 - 04 ON ACCOUNT OF LAND SOLD TO ADI TYA AND DEVAKI HOUSING. IN RESPECT OF BALANCE EXPENDITURE INCURRED BY THE ASSESSEE, IT WAS POINTED OUT BY THE LEARNED DE PARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE PAYMENTS TO ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 7 ARCHITECT WERE MADE, BUT THE BILLS WERE IN THE NAME OF MOTHER OF THE ASSESSEE OR THE WARDEKAR ASSOCIATES. 10. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT 24 ACRES O F LAND WHICH WAS JOINTLY HELD , WAS LEASED OUT BY M/S. WARDEKAR ASSOCIATES TO SHRI AVINASH S. WARDEKAR FOR 99 YEARS IN ASSESSMENT YEAR 2008 - 09 , OUT OF WHICH, 4 ACRES 16 GUNTAS WERE SUB - LEASED TO THE ASSESSEE. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE A SSESSEE FURTHER EXPLAINED THAT THE LOAN WAS TAKEN BY WARDEKAR AND ASSOCIATES, WHICH WAS PARTNERSHIP CONCERN OF LOAN WAS TAKEN BY WARDEKAR AND ASSOCIATES, WHICH WAS PARTNERSHIP CONCERN OF FATHER OF THE ASSESSEE I.E. SHRI AVINASH S. WARDEKAR AND HER BROTHER SHRI SOUMITRA A. WARDEKAR. THE ORIGINAL LIABILITY WAS TO BE PAID TO CREDENT IALS FINANCE LTD. HOWEVER, IN THE ABSENCE OF LIABILITY BEING DISCHARGED, CREDENTIALS FINANC E LTD. MOVED TO THE HONBLE BOMBAY HIGH COURT AND ATTACHMENT ORDERS WERE PASSED BY THE HONBLE HIGH COURT, WHICH ARE PLACED AT PAGES 80 TO 86 OF THE PAPER BOOK. TH E LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE THE PAPER BOOK. TH E LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT ORIGINALLY 24 ACRES OF LAND W ERE OWNED BY SHRI AVINASH S. WARDEKAR AND THOUGH ON 10.07.1989 , PORTION OF LAND WAS LEASED TO THE ASSESSEE FOR 99 YEARS, AS PER LEASE AGREEMENT PLACED AT PAG ES 66 TO 76 OF THE PAPER BOOK. ON 22.02.2000, THERE WAS DECREE BY THE HONBLE BOMBAY HIGH COURT AND RUPLILA STEELS STEPPED INTO SHOES OF CREDENTIALS FINANCE LTD. IN ORDER TO MEET THE DECREE PASSED BY THE HONBLE BOMBAY HIGH COURT, PART OF THE PROPERTY WA S THE DECREE PASSED BY THE HONBLE BOMBAY HIGH COURT, PART OF THE PROPERTY WA S SOLD BY THE ASSESSEE AND PAYMENT OF RS. 33 LAKHS WAS MADE TO RUPLILA STEELS. IN 1989, THERE WERE NO ENCUMBRANCES WHEN IT WAS LEASED TO THE ASSESSEE. HOWEVER, ENCUMBRANCES I.E. THE LOAN WAS TAKEN BY FATHER OF THE ASSESSEE AND HER BROTHER ON A LATER DATE, TO WHICH THE ASSESSEE HAD NO OBJECTION. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN TURN, RELIED ON THE RATIO S LAID DOWN IN GOPEE NATH PAUL & SONS & ANR. VS. DEPUTY CIT (2005) 278 ITR 240 (CAL) AND IN CIT VS. BRADFORD TRADING CO. (P) LTD. ( 2003) 261 ITR 222 (MAD) . IT WAS FURTHER POINTED OUT BY THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 8 THAT IT HAD SOLD TWO PORTIONS OF LAND I.E. 100% OWNERSHIP RIGHTS TO DEVAKI HOUSING AND 20% SHARE IN THE PROPERTY TO ADIT YA IN ASSESSMENT YEAR 200 3 - 04 AND THE ASSESSEE HAD PAID RS.25 LAKHS TO RUPLILA. FURTHER EXPENDITURE WAS CLAIMED ON ACCOUNT OF NON - AGRICULTURAL CHARGES PAID OF RS.3.31 LAKHS, WHICH WAS AN ALLOWABLE DEDUCTION, AS PER THE RATIO LAID DOWN BY MUMBAI BENCH OF TRIBUNAL IN VIDHYAVIHAR CO NTAINERS LTD. VS. DCIT (2011) 133 ITD 363 (MUMBAI) . FURTHER, IN RESPECT OF PAYMENT TO S E GAL REAL TORS OF RS.11,75,000/ - , THE CLAIM OF THE ASSESSEE WAS THAT THESE WERE THE DEVELOPMENT EXPENSES AND WERE ALLOWABLE. 11. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE POINTED OUT THAT IN THE HANDS OF MRS. MANJU WARDEKAR I.E. THE MOTHER OF ASSESSEE, PAYMENT TO RUPLILA STEELS HAS BEEN DISALLOWED, WHICH WAS ALSO CLAIMED AS EXPENDITURE AGAINST THE PORTION OF LAND SOLD BY HER. IT WAS FURTHER POINTED OUT BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE THAT THE DECREE PASSED BY THE HONBLE BOMBAY HIGH COURT DOES NOT MENTION SALE TO ADITYA . HONBLE BOMBAY HIGH COURT DOES NOT MENTION SALE TO ADITYA . 12. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE, DURING THE YEAR UNDER CONSIDER ATION, HAD SOLD LAND SITUATED AT SR.NO.662/1+2, BIBVEWADI, PUNE. THE FATHER OF THE ASSESSEE, SHRI AVINASH S. WARDEKAR HAD ACQUIRED 24 ACRES AND 32 GUNTAS OF LAND AT SR.NO.662/1+2 AND 665, MOUJE BIBWEWADI, PUNE FROM M/S WESTERN INDIA ENTERPRISES LTD., THRO UGH A LEASE DEED FOR 9 99 YEARS ON 12.04.1989 ON A RENT OF RS.275 PER YEAR. OUT OF THIS LAND, HE SUB - LEASE D PART OF THE BUILDING TO HIS WIFE SMT. MANJU WARDEKAR , HIS SON SOUMITRA AVINASH WARDEKAR AND HIS DAUGHTER MRS. SEEMA HEMANT SHIRALI I.E. ASSESSEE BEFO RE US. CONSEQUENT THERETO, THE ENTIRE LAND OF 24 ACRES AND 32 GUNTAS WERE DISTRIBUTED BETWEEN FOUR FAMILY MEMBERS OF SHRI AVINASH S. WARDEKAR. DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD HER LAND TO M/S. SHREE MAHALAXMI ENTERPRISES . THE SALE CONSIDERATION DECLARED BY THE ASSESSEE HAS BEEN ACCEPTED. IN THE ORIGINAL ASSESSMENT ORDER, THE ASSESSING ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 9 OFFICER ALLOWED THE COST OF ACQUISITION AT RS.1,21,11,706/ - AND COST OF IMPROVEMENT OF RS.45,71,451/ - AGAINST THE SALE CONSIDERATION OF RS.1.48 CRORE S AND COMPUTED THE LONG TERM CAPITAL LOSS OF RS.18,13,156/ - . THE COMMISSIONER THEREAFTER PASSED AN ORDER UNDER SECTION 263 OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO ADOPT THE COST OF ACQUISITION OF THE SAID LAND AT NIL AND ALSO TO VERIFY THE COST O F IMPROVEMENT OF THE SAID PROPERTY IN THE HANDS OF THE ASSESSEE AFTER ALLOWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. CONSEQUENT THERETO, THE ORDER PASSED BY THE ASSESSING OFFICER WHICH, IN TURN, HAS BEEN REVERSED BY THE CIT(A) IS THE SUBJECT - MATTER OF APPEAL BEFORE US. IN THE INTERIM, THE TRIBUNAL VIDE ORDER DATED 11.06.2010 (SUPRA) HAS UPHELD THE DIRECTION OF THE COMMISSIONER UNDER SECTION 263 OF THE ACT AND TO ADOPT THE COST OF ACQUISITION IN THE HANDS OF THE ASSESSEE AT NIL. THE CIT(A) WH ILE PASSING THE ORDER IN APPEAL AGAINST THE ORDER PASSED UNDER SECTION 143(3) R.W.S. 263 OF THE ACT HAS UPHELD THE COST OF ACQUISITION OF THE PROPERTY TO BE TAKEN AT NIL. THE SECOND ASPECT FOR CONSIDERATION BY THE CIT(A) WAS THE COST OF IMPROVEMENT OF RS. 45,71,451/ - , WHICH COMPRISED OF RS.33 LAKHS PAID TO RUPLEELA STEELS TO REMOVE THE INJUNCTION. THE FATHER OF THE ASSESSEE, MR. AVINASH S. WARDEKAR AND HIS SON SOUMITRA WARDEKAR WERE PARTNERS IN THE PARTNERSHIP CONCERN, NAMED, WARDEKAR & ASSOCIATES, WHO IN TURN HAD RAISED LOAN FROM M/S CREDENTIAL FINANCE LTD.. SINCE THE SAID PARTNERSHIP FIRM HAD FAILED TO DISCHARGE ITS LIABILITY, A SUIT WAS FILED BEFORE THE HONBLE HIGH COURT WHICH PASSED AN ATTACHMENT ORDER IN RESPECT OF LAND OWNED BY THE FAMILY MEMBERS OF THE ASSESSEE, COPY OF WHICH IS PLACED AT PAGE 82 TO 86 OF THE PAPER BOOK. THE PERUSAL OF THE SAID ATTACHMENT ORDER REFLECTS THAT THE SUIT WAS FILED SEEKING MONEY DECREE OF SUM OF RS.7.62 CRORES WITH INTEREST. THE FATHER OF THE ASSESSEE MR. AVINASH S. WA RDEKAR WAS FOUND TO HAVE LEASED OUT PORTIONS OF THE LAND IN FAVOUR OF THE FAMILY MEMBERS AND HAD ALSO ENTERED INTO THE TRANSACTIONS WITH THIRD PART IES . THE HONBLE HIGH COURT IN VIEW OF THE FACTS AND CIRCUMSTANCES PASSED AN ORDER GRANTING AN ORDER OF ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 10 ATTA CHMENT BEFORE JUDGEMENT BEING PASSED IN THE CASE. CONSEQUENT THERETO, A CONSENT DECREE WAS PASSED IN DARKHAST NO.41 OF 2001 DATED 15 TH OCTOBER, 2003 UNDER WHICH A SETTLEMENT WAS MADE BETWEEN THE PARTIES FOR PAYMENT OF DUES . THE ASSESSEE AS PER THE SAID D ECREE UNDERTOOK TO PAY A SUM OF RS.75 LAKHS AGAINST WHICH THE LAND ADMEASURING 235.78 SQ.MTRS. WAS ATTACHED. ADMITTEDLY, THE ASSESSEE PAID THE SAID AMOUNT TO THE JUDGMENT DEBTOR I.E. RUPLEELA STEELS LTD., WHO HAD STEPPED INTO THE SHOES OF CREDENTIAL FINAN CIAL LTD. IN ASSESSMENT YEARS 2002 - 03 AND 2003 - 04 , T HE QUESTION ARISING BEFORE US IS WHETHER SUCH PAYMENT BY THE ASSESSEE IS TO BE ALLOWED AS COST OF IMPROVEMENT OF THE PROPERTY. THE PERUSAL OF THE VARIOUS EVIDENCES FILED BY THE ASSESSEE REFLECT THAT IN THE YEAR WHEN THE FATHER OF THE ASSESSEE LEASED OUT PORTION OF HIS LAND HOLDING TO THE ASSESSEE FOR A LEASE OF 99 YEARS VIDE DEED DATED 10.07.1999, THERE WERE NO E NCUMBRANCES ON THE SAID LAND. IT WAS ONLY ON A LATER DATE THAT THE PARTNERSHIP FIRM M/S WARD EKAR & ASSOCIATES RAISED LOAN FROM M/S CREDENTIAL FINANCE LTD., WHICH WAS NOT PAID IN TIME AND ATTACHMENT ORDER WAS PASSED BY THE HONBLE HIGH COURT AGAINST THE PARTNERSHIP CONCERN AND ITS PARTNERS. THE ASSESSEE ADMITTEDLY WAS NOT A PARTNER OF THE SAID CO NCERN, THOUGH THE SAID ATTACHMENT ORDER TALKS OF THE LAND, WHICH WAS LEASED OUT TO THE ASSESSEE. THE PLEA OF THE COMPLAINANT BEFORE THE HONBLE HIGH COURT WAS THAT AVINASH WARDEKAR WAS TRYING TO LEASE OUT ITS ASSETS OR DISPOSE OF ITS ASSETS , IN ORDER TO D EFEAT THE EXECUTION OF ITS LIABILITIES TO M/S CREDENTIAL FINANCE LTD.. IN THE TOTALITY OF THE ABOVE - SAID FACTS AND CIRCUMSTANCES, WHERE THE LIABILITY RELATED TO A PARTNERSHIP CONCERN OF WHICH THE ASSESSEE WA S NOT A PARTNER, IT CANNOT BE SAID THAT THE SAID LIABILITY HAD BEEN FASTEN ED UPON THE ASSESSEE. THE OFFER MADE BY THE ASSESSEE TO DISCHARGE THE LIABILITY OF A PARTNERSHIP CONCERN, WHICH CON SISTED OF HER FATHER AND BROTHER WITH REGARD TO A LOAN OBTAINED BY THE PARTNERSHIP FIRM, CANNOT BE HELD TO BE ATTR IBUTABLE TO ASSESSEE. SUCH PAYMENT IS NOT ALLOWABLE AS COST OF IMPROVEMENT OF THE PORTION OF LAND OWNED BY THE ASSESSEE. THE SAID ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 11 OFFER AT BEST WAS A FAMILY OBLIGATION CLEARED BY THE ASSESSEE , WHICH IN NO TURN COULD BE HELD TO BE A LIABILITY OF THE ASSES SEE. IN VIEW THEREOF, WE FIND NO MERIT IN THE CLAIM OF THE ASSESSEE WITH REGARD TO PAYMENT OF 33 LAKHS TO M/S RUPLEELA STEELS LTD. AS COST OF IMPROVEMENT OF THE PROPERTY, SINCE E NCUMBRANCES ON THE SAID PROPERTY NEITHER RELATED TO ASSESSEE NOR WAS CREATED BY THE ASSESSEE AND WAS NOT THE LIABILITY O F THE ASSESSEE. ACCORDINGLY, WE REVERSE THE ORDER OF THE CIT(A) IN THIS REGARD AND RESTORE THE ORDER OF ASSESSING OFFICER IN HOLDING THAT THE SUM OF RS.33 LAKHS CANNOT BE ALLOWED AS A COST OF IMPROVEMENT. WE FIN D SUPPORT FROM THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CIT VS. ROSHANBABU MOHAMMED HUSSEIN MERCHANT REPORTED IN (2005) 275 ITR 231 (BOM) IN THIS REGARD. 13 . NOW, COMING THE OTHER ITEMS WHICH WERE CLAIMED AS COST OF IMPROVEMENT OF THE PROPE RTY. THE FIRST ITEM OF RS.1,32,450/ - PAID TO PMC FOR PASSING THE PLANS I.E. FOR GETTING THE LAND CONVERTED FROM AGRICULTURAL TO NON - AGRICULTURAL. THE SAID I.E. FOR GETTING THE LAND CONVERTED FROM AGRICULTURAL TO NON - AGRICULTURAL. THE SAID EXPENDITURE BEING RELATABLE TO US AGE OF THE PROPERTY WHICH, IN TURN, IMPROV ES THE MARKET PRICE OF T HE PROPERTY, SQUARELY RELATE S TO THE PROPERTY AND IS TO BE ALLOWED AS IMPROVEMENT OF THE PROPERTY. FURTHER, THE ASSESSEE HAD INCURRED CERTAIN EXPENDITURE ON ACCOUNT OF THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE THROUGH AN AGREEMENT WITH M/S A. B. CONSTRUCTION AND RAJ CONSTRUCTION, THE TOTAL CONSIDERATION IN THIS REGARD WAS RS.8,39,000/ - . THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER SINCE THE BILLS WERE IN THE NAME OF HER MOTHER AND IN THE NAME OF THE FIRM. IN REPLY, THE ASSE SSEE CLAIMED SHE WAS A NON - RESIDENT AND HAD GIVEN POWER OF ATTORNEY TO HER MOTHER IN ORDER TO CARRY OUT THE SAID DEVELOPMENT. WE FIND MERIT IN THE SAID PLEA OF THE ASSESSEE AND AFFIRMING THE ORDER OF THE CIT(A) WHEREIN HE HAD DIRECTED THE ASSESSING OFFICE R TO VERIFY THE ACTUAL PAYMENT AND ITS INCIDENCES TO THE ASSESSEE BEFORE ALLOWING IT, WE PARTLY ALLOW THE CLAIM OF THE ASSESSEE IN THIS REGARD. IN VIEW THEREOF, THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE PARTLY ALLOWED. ITA NO S . 935 & 936 /PN/20 1 1 SMT. SEEMA H. SHIRALI 12 14. THE FACTS AND ISSUES IN I TA NO. 936 /PN/201 1 ARE IDENTICAL TO THE FACTS AND ISSUES IN ITA NO. 935 /PN/201 1 AND OUR DECISION IN ITA NO. 935 /PN/201 1 SHALL APPLY MUTATIS MUTANDIS TO ITA NO. 936 /PN/201 1 . 15 . IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE PARTLY ALLOWED . ORDER P RONOUNC ED ON THIS 31 ST DAY OF AUGUST , 201 5 . SD/ - SD/ - ( R.K. PANDA ) ( SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 31 ST AUGUST , 2015 . GCVSR /SUJEET / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - I , PUNE ; 4. / THE CIT - I, PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE