Shri Manilal Virchandbhai Patel, Mehsana V. The ACIT.,Cent.Circle-1(4), Ahmedabad

ITA 993/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94232 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 10-06-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MK SINGH
• Keywords: Capital asset; Business expenditure; Cost of acquisition; Revised return
• Section: 143(3); 153A; 56; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH BEFORE: S H RI N.S. SAINI , ACCOUNTANT MEMBER AND SHR I RAJPAL YADAV , JUDICIAL MEMBER ACIT, CENTRAL CIRCLE 1(4), ROOM NO. 337, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD (APPELLANT) VS SHRI MANIBHAI VIRCHANDBHAI PATEL , GANGA MAIYA S OCIETY, OPP. PATEL AUTO, MEHSANA HIGHWAY, OPP. CLASSIC PLAZA, MEH SANA, GUJARAT PAN: AHKPP8276C (RESPONDENT) SHRI MANIBHAI VIRCHANDBHAI PATEL, GANGA MAIYA SOCIETY, OPP. PATEL AUTO, MEHSANA HIGHWAY, OPP. CLASSIC PLAZA, MEHSANA, GUJARAT PAN: AHKPP82 76C (APPELLANT) VS ACIT, CENTRAL CIRCLE 1(4), ROOM NO. 337, 3 RD FLOOR, AAYKAR BHAVAN, ASHRAM ROAD, AHMEDABAD (RESPONDENT) REVENUE BY : S H RI M. K. SINGH , SR. D . R. ASSESSEE BY: S H RI ANIL KSHATRIYA , A.R. DATE OF HEARING : 10 - 06 - 2 015 DATE OF PRONOUNCEMENT : 18 - 08 - 2 015 I T A NO . 644/ A HD/20 12 A SSESSMENT YEAR 20 08 - 09 ITA NO. 993 /AHD/20 12 A SSESSMENT YEAR 2008 - 09 I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 2 / ORDER P ER : RAJPAL YADAV , JUDICIAL MEMBER : - ASSESSEE AND REVENUE ARE IN CROSS APPEALS AGAINST THE ORDER OF LD. CO MMISSIONER OF INCOME TAX (APPEALS) DATED 9 TH JANUARY, 2012 PASSED FOR ASSESSMENT YEAR 2008 - 09. 2. GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF ITAT RULES, THEY ARE DESCRIPTI VE AND ARGUMENTATIVE IN NATURE. IN BRIEF HIS GRIE VANCE REVOLVES AROUND A SINGLE ISSUE WHICH IS INTERCONNECTED WITH GROUND NO. 1 RAISED BY THE REVENUE. THE ISSUE IN THESE GROUNDS OF APPEAL IS THAT ASSESSEE HAD CLAIMED AN EXPENDITURE OF RS. 1, 0 9,29,139/ - TOWARDS INTEREST. THE ASSESSING OFFICER HAS DISALLO WED A SUM OF RS . 1, 0 7,38, 1 91/ - . ON APPEAL, LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ALLOWED THE DEDUCTION OF RS. 47,76 ,424/ - AND CONFIRMED THE D ISALLOWANCE OF BALANCE AT RS. 59,62,567/ - . THE REVENUE IN ITS APPEAL IS IMPUGNING DELETION OF DISALLOWANCE AT RS. 47,76,424/ - WHEREAS ASSESSEE IS IMPUGNING THE CONFIRMATION OF ADDITION AT RS. 59,62,567/ - . 3 . BRIEF FACTS OF THE CA SE ARE THAT ASSESSEE HAS FIL E D HIS ORIGINAL RETURN OF INCOME ON 23 - 10 - 2008 I.E. MUCH AFTER THE DUE DATE OF FILING OF RETURN U/S. 139 (1). THIS RETURN WAS REVISED ON 30 TH MARCH, 2009. IN THE ORIGINAL RETURN, A LOSS OF RS. 51,56,527/ - WAS CLAIMED WHICH WAS REDUCED TO RS. 25,41,139/ - IN THE ALLEGED REVISED RETURN. A NOTICE U/S. 143(2) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS ISSUED ON 4 TH OF AUGUST, 2009 WHICH WAS SERVED UPON THE ASSESSEE. ACCORDING TO THE ASSESSING OFFICER, DUE TO CHANGE OF THE ASSESSING OFFICER , A FRESH NOTICE I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 3 WAS ISSUED U/S. 143(2). THE LD. ASSESSING OFFICER HAS NOT ACCEPTED THE REVISED R ETURN ON THE GROUND THAT ORIGINAL RETURN FI LED WAS NOT FILED WITHIN TIME, THER EFORE , ASSESSEE CANNOT FILE REVISE D RETURN. 4 . ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS. 1, 0 9,29,139 / - AS AGAINST INTEREST INCOME OF RS. 50,27,815/ - . THE LD. ASSESSING OFFICER HAS NOTICED THE DETAILS OF INTEREST EARNED AND INTEREST PAID. AFTER CONSIDERING THE EXPLANATION OF ASSESSEE, HE DISALLOWED THE CLAIM OF ASSESSEE TO THE EXTENT OF RS. 1, 0 7,38,991/ - . THE FINDING RECORDED BY THE ASSESSING OFFICER READS AS UNDER : - 4. INTEREST EXPENSES ON PERUSAL OF THE ORIGINAL RETURN OF INCOME FILED ON 23.10.2008 IT IS OBSERVED THAT THE ASSESSEE HAS CLAIMED INTEREST EXPENSES OF RS. 1,09,29,139/ - AS AGAINST T HE INTEREST INCOME OF RS.50,27,815/ - AS DETAILED UNDER: INTEREST EARNED INTEREST PAID BANK INTEREST 3142 MANIBHAI V. PATEL, HUF 1157595 INTEREST ON FDRS WITH BANKS 3563608 KAILASHBEN M ANIBHAI PATEL 1082772 NSS INTEREST 27266 MANAN MANIBHAI PATEL 1771542 PRABHU INFRASTRUCTURE 164166 MAULIK MANIBHAI PATEL 2169499 PRABHU STEEL CORPORATION 564328 MANIBEN MANIBHAI PATEL 1007684 RAJE NDRA NARANBHAI 284055 MEHSANA URBAN BANK 23/421 1108063 I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 4 PATEL DIYABEN MURLIKUMAR PATEL 267268 MEHSANA URBAN BANK 17/6269 2091248 AILESH INDUSTRISE 144896 MEHSANA URBAN BANK 20/53 193804 UNIT 64 BOND INTEREST. 9086 PINALBEN MANAN BHAI PATEL 70287 AMBAL AL DOSACHAND SHAH 190148 GUJARAT TUBWELL CO. 23281 PRAGNABEN MADHUBHAI PATEL 20853 BHAVESHBHAI MADHUBHAI PATEL 20853 JAYESHKUMAR MADHUBHAI PATEL 20853 MOTILAL OSWAL 657 TOTAL 5027815 TOTAL 10929139 HENCE THE ASSESSEE VIDE THIS OFFICE SHOW CAUSE DATED 19. 11.2010 REQUESTED TO SHOW CAUSE FOR THE ALLOWABLY OF THE INTEREST EXPENSES. ALSO THE ASSESSEE WAS REQUESTED TO FURNISH THE DETAILS OF TDS DEDUCTED ON INTEREST PAYMENT TO THE VARIOUS PERSONS ALONGWITH THE COPIES OF CHALLANS OF TDS DEPOSITED INTO GOVT. A/C. AND RETURNS OF TDS FILED WITH THE DEPARTMENT, IF HE IS TREATING T HE SAME AS BUSINESS EXPENSES. IN REPLY THE ASSESSEE VIDE HIS LETTER DATED 25.11.2010 SUBMITTED AS UNDER: 'FOR THE ALLOW ABILITY OF THE INTEREST EXPENSES CLAIMED IN THE PROPRIETARY BUSINESS IN THE NAME OF M/S. APOLLO ORGANIZERS & I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 5 BUILDERS, THE ASSESSEE RELIE S ON THE DECISION OF ITAT DELIVERED IN HIS OWN CASE FOR AY 2003 - 04. FURTHERMORE THE INTEREST EXPENSE OF RS.1,90,148/ - DEBITED AND CLAIMED IN THIS PROPRIETARY CONCERN PERTAINS TO SHAH AMBALAL DOSACHAND ONLY AND TDS OF RS. 19,585/ - IS DEDUCTED ON IT. IN SUPPORT DETAILS OF TDS EXPENSES AND COPY OF TDS CHALALN IS ENCLOSED HEREWITH. THE SAME SHOULD THEREFORE BE ALLOWED IN FULL. MOREOVER THERE IS AN OPENING BALANCE OF RS. 21,81,42L/ - AS ON 1/4/2007 AND SO IT IS AN OLD BALANCE WHICH JUSTIFY THE ALLO WABILITY AS PER ITAT'S ORDER.' THE ASSESSEE ONLY FUR NISHED THE DETAILS OF TDS OF RS. 1 9585/ - ON INTEREST PAID OF RS. 1,90,148/ - . THE ASSESSEE FURNISHED THE COPY OF CHALLAN OF RS.19585/ - ONLY AS A PROOF OF DEPOSITING THE TDS INTO THE GOVT. A/C. ON 16.04.200 8. FROM THE SUBMISSION OF THE ASSESSEE IT IS SEEN THAT THE ASSESSEE HIMSELF ADMITTED THAT INTEREST EXPENS ES OF RS. 1,90, 148/ - IS CLAIMED AS BUSINESS EXPENSES IN HIS PROPRIETARY CONCERN M/S. APOLLO ORGANIZERS & BUILDERS WHICH MEANS THE BALANCE INTEREST EXPE NSES OF RS.1,07,38,991/ - HAS BEEN CLAIMED TO EARN INCOME FROM OTHER SOURCES I.E. INTEREST INCOME OF RS.50,27,815/ - WHICH IS APPARENTLY UNREASONABLE AND CANNOT BE ALLOWED IN WHOLE. ACCORDING LY THE INTEREST EXPENSES OF RS.1,07,38,991 / - IS DISALLOWED FOR THE FOLLOWING REASONS : I) THE ASSESSEE FAILED TO ESTABLISH THE NEXUS BETWEEN INTEREST PAID AND INCOME EARNED. THE INT EREST PAYMENT OF RS 1,07,38,991 / - DID NOT HAVE ANY CORRELATION WITH THE INTEREST INCOME EARNED IN ACCORDANCE TO SECTION 57 OF THE INCOME - TAX ACT, 1961. THE ASSESSEE HAS MERELY PASSED THE ENTRIES OF INTEREST PAID ON 31.03.2008 TO THE DEPOSITOR'S ACCOUNT AND COULD NOT PROVE THE ACTUAL PAYMENT BY PROVIDING ANY DOCUMENTARY EVIDENCES. FURTHER IT IS SEEN THAT MOST OF THE DEPOSITORS ARE THE RELATIVES OF THE ASSESSEE WHO HAVE ACCOMMODATED THE ASSESSEE TO PASS THE NECESSARY ENTRIES IN THEIR NAME. II) IN SUPPORT OF HIS CLAIM THE ASSESSEE HAS FURNISHED THE COPIES OF LEDGER ACCOUNTS OF THE DEPOSITORS IN HIS BOOKS OF ACCOUNT AND COPY OF ACKNOWLEDGEMENTS OF THE RETURN FILED BY THEM FROM WHICH IT CANNOT BE ESTABLISHED THAT THE INCOME SHOWN BY THE DEPOSITORS IS THE SAME ONE RECEIVED FROM THE ASSESSEE. III) IN RESPECT OF INTEREST PAID TO MEHSANA URBAN CO - OP. BANK THE ASSESSEE COULD NOT FURNISH ANY EVIDENCES FROM THE BANK TO HAVE RECEIVED INTEREST FROM THE ASSESSEE. ALSO FROM THE I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 6 LEDGERS ACCOUNTS OF THE FDRS FURNISHED BY THE ASSESSEE IT IS SEEN THAT THE OPENING BALANCE AND CLOSING BALANCE ARE SAME WHICH MEANS THERE IS NO TRANSACTION OF LOANS TAKEN DURING THE YEAR AS FDOD. IV) THE ASSESSEE WHILE IN HIS TIME BARRED REVISED RETURN OF INCOME FILED ON 30.03.2009 HAS CLAIMED THE INTEREST EXPENSES UNDER THE HEAD 'BUSINESS OR PROFESSION' WHICH CAN BE SEEN FROM THE STATEMENT OF INCOME FURNISHED BY THE ASSESSEE WITH THE REVI SED RETURN OF INCOME. THUS HE WAS LIABLE TO DEDUCT TDS THEREON BEING THE PROPRIETOR OF THE CONCERN. THE ASSESSEE ONLY FUR NISHED THE DETAILS OF TDS OF RS. 1 9585/ - ON INTEREST PAID OF RS. 1,90,148/ - . IN VIEW OF THE ABOVE DISCUSSION THE INTER EST EXPENSES OF RS.1,07,38.991/ - ARE DISALLOWED AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. PENALTY PROCEEDINGS U/S. 271(1)(C) OF THE I.T. ACT ARE INITIATED FOR FURNISHING INACCURATE PARTICULAR OF RETURN OF INCOME . 5 . ON APPEAL, LD. FIRST APPELL ATE AUTHORITY HAS PARTLY DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. THE RELEVANT FINDING RECORDED BY LD. FIRST APPELLATE AUTHORITY IN PARA 5.6 & 5.7 IS WROTH TO NOTE. THUS, THEY READ AS UNDER: - 5.6 ON PERUSAL OF THE RECORDS OF THE APPELLAN T, I FIND THAT THE APPELLANT HAS DECLARED THE IMPUGNED INTEREST INCOME OF RS.50,27,81 5/ - AND EXPENDITURE OF RS. 1,09,29,139/ - UNDER THE HEAD 'INCOME FROM OTHER SOURCES' IN THE ORIGINAL RETURN OF INCOME FILED ON 23.10.2008 F OR A.Y.2008 - 09 . SUBSEQUENTLY, THE APPELLANT FILED REVISED RETURN OF INCOME ON 30.03.2009, DECLARING IMPUGNED INTEREST INCOME AND EXPENDITURE UNDER THE HEAD 'BUSINESS AND PROFESSION'. IT IS A FACT ON RECORD OBSERVED BY THE ASSESSING OFFICER THAT THE ORIGINAL RETURN OF I NCOME WAS BELATED RETURN AND THEREFORE, THE REVISED RETURN WAS TREATED AS NONEST BY THE ASSESSING OFFICER. MEANING THEREBY, THE IMPUGNED INTEREST INCOME AND EXPENDITURE WERE ASSESSED BY THE ASSESSING OFFICER UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. TH E ASSESSING OFFICER NOTICED THAT THE INTEREST INCOME IS ONLY RS.50,27,815/ - AND INTEREST EXPENDITURE AGAINST THE SAME CLAIMED BY THE APPELLANT IS RS.1,09,29,139/ - AND THEREFORE, NOT SATISFIED WITH EXPLANATION OFFERED FOR VARIOUS REASONS DISCUSSED ABOVE DIS ALLOWED INTEREST EXPENDITURE OF RS.1,07,38,991/ - . AS DISCUSSED, SUPRA, THE LD. A.R. SUBMITTED VOLUMINOUS DETAILS AND I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 7 ARGUMENTS TO ALLOW THE IMPUGNED INTEREST EXPENDITURE. FROM THE FACTS ON RECORD, IT IS GATHERE D THAT THE APPELLANT HAS SHOWN THE INTEREST INCOME AND EXPENDITURE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' SINCE LAST - SEVERAL YEARS AND MOST OF THE PARTIES FROM WHOM INTEREST IS RECEIVED AND PAID ARE THE SAME. NO DOUBT A FEW OF THE PARTIES HAVE BEEN ADDED AS NEW PARTIES TO WHOM INTEREST HAVE BEEN PAID DURING THE YEAR UNDER CONSIDERATION. IT IS ALSO A FACT T HAT THE NEW ADVANCE/LOANS HAVE BEEN OBTAINED FROM THE EXISTING PAR TIES AS WELL AS NEW PARTIES AND INTEREST HAS BEEN PAID ON THE SAME. THE LD. A.R. COULD NOT ESTABLISH FROM ONE TO ONE ENTRY THAT ALL THE LOANS AND ADVANCES ON WHICH INTEREST HAS BEEN PAID ARE DIRECTLY CONNECTED FOR EARNING INTEREST AND TAXABLE UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. APPARENTLY, IF THE AMOUNT TAKEN ON INTEREST IS INVESTED DIRECTLY FOR EARNING INTEREST THEN THERE SHOULD NOT BE ANY LOSS AS SHOWN BY THE APPELLANT. THE LOSS CAN ARISE ONLY IF THE LOAN / ADVANCES ARE TAKEN AT HIGHER RATE OF INTEREST AND THOSE ARE INVESTED TO EARN LOW RATE OF INTEREST. THE LD. A.R. COULD NOT ESTABLISH DURING APPELLATE PROCEEDINGS WHETHER BORROWINGS WERE AT HIGHER RATE OF IN TEREST AND INVESTMENTS WERE AT L OWER RATE OF INTEREST EXCEPT AN ARGUMENT THAT THE INTEREST ON FD R FROM BANKS IS RS.35,63,608/ - WHICH WILL BE AT LOWER RATE OF INTEREST THAN THE HIGHER RATE OF BORROWINGS. IN THE TO TALITY OF THE FACTS, IN MY CONSIDERED OPINION, THE APPELLANT HAS TAKEN LOAN / BORROWINGS AT INTEREST AND INVESTED THOSE FOR EARNING INTEREST AS SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES AND PART OF SUCH BORROWINGS HAS BEEN INVESTED BY THE APPELLANT FO R SOME OTHER P URPOSES OR FOR BUSINESS PURPOSE FOR WHICH INTEREST EXPENDITURE CANNOT BE ALLOWED UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AGAINST IMPUG NED INTEREST INCOME. AS PER THE PROVISIONS OF SECTION 57 OF THE IT ACT, 196, ONLY THE EXPENDITURE INCURR ED FOR TH E PURPOSE O F EARNING INCOME TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES IS ALLOWABLE. IN THE INSTANT CASE, THE APPELLANT HAS EARNED INTEREST INCOME OF RS.50,27,815/ - TAXABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE APPELLANT HAS CLAIMED INTEREST EXPENDITURE OF RS. 1,09,29,139/ - TO EARN AFORESAID INTEREST INCOME. NEITHER DURING ASSESSMENT PROCEEDINGS NOR DURING APPELLATE PROCEEDINGS, THE APPELLANT COULD ESTABLISH THAT BORROWINGS WERE AT SUBSTANTIALLY HIGHER RATE OF INTEREST THAN TO THE INV ESTMENT WHICH RESULTED INTO SUCH HUGE LOSS TO THE APPELLANT UNDER THE HEAD 'INCOME FROM OTHER SOURCES'. IT IS AN UNDISPUTED FACT THAT THE AP PELLANT HAS SHOWN THE IMPUGNED INTEREST INCOME AND EXPENDITURE UNDER THE HEAD 'INCOME FROM OTHER SOURCES' AND THEREF ORE, ONLY THE INTEREST EXPENDITURE INCURRED FOR EARNING IMPUGNED INTEREST INCOME I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 8 CAN BE ALLOWED TO THE APPELLANT IN VIEW OF DIRECT PROVISIO NS OF SECTION 57 OF THE IT. ACT. THE ARGUMENT OF THE APPELLANT THAT T HE UNSECURED LOAN BORROWED ON I NTEREST HAS BEEN USED FOR EARNING IMPUGNED INTEREST INCOME AS WELL AS FOR OTHER BUSINESS PURPOSES WILL COME TO HIS RESCUE ONLY TO THE EXTENT THE BORROWINGS UTILIZED DIRECTLY FOR EARNING INTEREST CHARGEABLE UNDER THE HEAD INCOME FROM OTHER SOURCES. THE ARGUMENT OF THE APPE LLANT THAT MOST OF THE PARTIES TO WHOM INTEREST HAS BEEN PAID ARE OLD AND THE INTEREST PAYMENT TO SUCH OLD PARTIES HAS BEEN ACCEPTED BY THE DEPARTMENT AS WELL AS THE HON'BLE ITAT, AHMEDABAD HAS CONSIDERABLE FORCE. ON RANDOM VERIFICATION OF THE PAST RECORD, I OBSERVED THAT THE APPELLANT HAS DECLARED INTEREST INCOME AND EXPENDITURE UNDER THE H EAD INCOME FROM OTHER SOURCES, BUT IN MOST OF THE EARLIER YEARS, THE INTEREST INCOME IS MORE THAN THE INTEREST EXPENDITURE. IN THE YEAR UNDER CONSIDERATION, THE UNIQUE F EATURE IS THAT THERE IS LOSS TO THE APPELLANT FROM INTEREST ACTIVITY. IT IS A COMMON FACT THAT NO BUSINESS MAN WOULD BORROW THE FUNDS AT HIGHER RATE OF INTEREST AND INVEST THOSE FUNDS AT LOWER RATE OF INTEREST WHICH WILL RESULT INTO LOSS VENTURE. THE MATER IAL AVAILABLE ON RECORD SUGGESTS THAT THE APPELLANT HAS BORROWED THE FUNDS AT LESSER RATE OF INTEREST THAN TO THE INTEREST ON INVESTMENT. 5. 7 IN VIEW OF THESE FACTS, IN MY CONSIDERED OPINION, THE APPELLANT WOULD HAVE INCURRED 95% OF INTEREST EXPENDITURE TO EARN INTEREST INCOME OF RS.50,27,815/ - . IN OTHER WORDS, THE APPELLANT WOULD EARN HIGHER RATE OF INTEREST, WHICH WILL RESULT INTO 5% EARNING FROM INTEREST ACTIVITY. MEANING THEREBY, THE INTEREST EXPENDITURE OF RS. 47,76,424/ - (RS.50,27,815 - RS.2,51,391 ) SHOULD BE ALLOWED TO THE APPELLANT. I, THEREFORE, DIRECT THE ASSESSING OFFICER TO DELETE THE INTEREST ADDITION OF RS.47,76,424/' - . THE BALANCE INTEREST ADDITION OF RS.59,62,567/ - IS CONFIRMED. AS SUCH, THIS GROUND OF APPEAL IS PARTLY ALLOWED. 6 . WITH THE ASSISTANCE OF LD. REPRESENTATIVE, WE HAVE GONE THROUGH THE RECORD CAREFULLY. 7 . THE LD. FIRST APPELLATE AUTHORITY HAS NOT DI S P U TED WITH REGARD TO TH E PROPOSITION THAT SUB - SECTION III OF SECTION 57 PROVIDES FOR ALLOWANCE OF ANY EXPENDITURE WHICH HAS B EEN INCURRED BY THE ASSESSEE DIRECTLY FOR EARNING I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 9 THE INCOME WHICH IS TO BE ASSESSED INCOME UNDER THE HEAD, INCOME FROM OTHER SOURCES . IF WE APPRECIATE THE CLAIM OF ASSESSEE ALONG WITH CONJOINT READING OF SECTION 56 AND 57 , THEN , IT WOULD REVEAL THAT IN COME DISCLOSED BY THE ASSESSEE UNDER THE HEAD INCOME FROM OTHER SOURCES WOULD MAKE HIM ELIGIBLE FOR CLAIM OF ANY EXPENDITURE INCURRED DI RECTLY FOR EARNING SUCH INCOME. THE LD. FIRST APPELLATE AUTHORITY HAS PARTLY CONFIRMED THE DISALLOWANCE FOR THREE REAS ONS NAMELY; (A) THAT IT APPEARS ASSESSEE HAD TAKEN LOAN/BORROWINGS AT INTER EST AND INVESTED THESE FOR EARNING INTEREST INCOME AS SHOWN UNDER THE HEAD INCOME FROM OTHER SOURCES AND PART OF SUCH BORROWING HAS BEEN INVESTED BY THE ASSESSEE FOR SOME OTHER P URPOSE OR FOR BUSINESS PURPOSE FOR WHICH INTEREST EXPENDITURE CANNOT BE ALLOWED UNDER THE HEAD, INCOME FROM OTHER SOURCES AGAINST IMPUGNED INTEREST INCOME, (B) ON RANDOM VERIFICATION OF THE PAST RECORD , IT REVEALS THAT ASSESSEE HAS DECLARED INTEREST INC OME AND EXPENDITURE UNDER THE HEAD INCOME FROM OTHER SOURCES BUT IN MOST OF EARLIER YEARS, THE INTEREST INCOME IS MORE THAN THE INTEREST EXPENDITURE, THEREFORE, IT WAS ALLOWED . (C) NO PRUDENT BUS INESSMAN WOULD BORROW THE FUNDS AT HIGHER RATE OF INTEREST AND INVEST THOSE FUNDS AT LOWER RATE OF INTEREST. 8 . A PERUSAL OF THE FINDING OF LD. COMMISSIONER OF INCOME TAX (APPEALS) MAKES IT CLEAR THAT IN PRINCIPLE LD. COMMISSIONER OF INCOME TAX (APPEALS) WAS SATISFIED THAT ASSESSEE HAD TAKEN LOANS/BORROWINGS AT INTEREST AND INVESTED THOSE FOR EARNING INTEREST INCOME WHICH HAS BEEN SHOWN AS INCOME FROM OTHER SOURCES . IN THE PAST , SUCH INCOME WAS ACCEPTED AND EXPENDITURE WAS ALLOWED BECAUSE ASSESSEE HAS MORE I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 10 INTEREST INCOME THAN T H E EXPENDITURE. THIS YEAR, LD. FIRST APPELLATE AUTHORITY DID NOT ALLOW THE CLAIM OF ASSESSEE FULLY FOR THE REASON THAT INTEREST INCOME WAS NOT SUFFICIENT TO TAKE CARE OF INTEREST EXPENDITURE AND , LD. FIR ST APPELLATE AUTHORITY INFERRED THAT ASSESSEE MUST HAVE INVESTED THE FUNDS SOMEWHE RE ELSE. THIS OBSERVATION IS NOT BASED ON ANY EVIDENCE F R O M THE RECOR D. IT IS ONLY AN ASSUMPTION ON THE GROUND THAT NO BUSINESSMAN WOULD TAKE FUNDS ON A HIGHER RATE OF INTEREST AND INVEST THEM AT A LOWER R ATE. AT THIS STAGE, WE WOULD LIKE TO REFER THE A SSESSMENT OF ASSESSEE IN THE EARLIER YEARS AND SUBSEQUENT YEARS AND HOW THE DEPARTMENT HAS TREATED THE ASSESSEE ON THIS ISSUE . 9 . FIRST WE TAKE ASSESSMENT YEAR 2007 - 08 , ALONG WITH THE COMPUTATION OF INCOME, A SSESSEE HAS SHOWN FOLLOWING DETAILS. INCOME FROM INTEREST INTEREST FROM S/B AND NOTIFIED COMPANIES BANK INTEREST 979 INTEREST ON F.D. WITH BANKS BANK FOR INTEREST 3340500 OTHER INTEREST INCOME NSS INTEREST 25364 NEPTUNE INFRACTURE PVT LTD 8863 MAHAL AXMI BHAVAN CO OP SOCIETY 68196 SIMANDHAR OWNERS ASSOCTION 282990 INCOME TAX REFUND INTEREST 41310 PATEL DIPABEN MAULIKBHAI 178542 ROYAL CONSTRUCTIN CO. 261167 ROYAL CONSTRUCTIN CO. 915245 .. 1781677 INTEREST ON GOVT. SECURITIES UNIT 64 BOND INTEREST 9086 LESS: DEDUCTIONS MANIBHAI V. PATEL (HUF) 890481 KAILASHBEN MANIBHAI PATEL 786483 MANAN MANIBHAI PATEL 2067640 MAULIK MANIBHAI PATEL 1469794 MAN IBEN MANIBHAI PATEL 902013 MEHSANA URBAN BANK 23/421 1578540 MEHSANA URBAN BANK 17/6269 915834 I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 11 MEHSANA URBAN BANK 20/53 148106 PINALBEN MANANBHAI PATEL 61278 AMBALAL DOSACHAND SHAH 300886 GUJARAT TUBEWELL CO. 20787 ( - )9141842 ( - )4009600 10 . COPY OF THE ASSESSMENT ORDER DATED 31 ST DECEMBER, 2008 PASSED U/S. 153A READ WITH SECTION 143)(3) IS AVAILABLE ON THE RECORD. THE ASSESSEE HAS FILED HIS ORIGINAL RETURN OF INCOME ON 31 ST AUGUST, 20 07 DECLARING A LOSS OF RS. 55,65,831/ - . SINCE A SEARCH WAS CARRIED OUT AT HIS PREMISES ON FIRST OF NOVEMBER, 2006 , A NOTICE U/S. 153A WAS ISSUED AND HE FILED THE RETURN ON 28 TH FEBRUARY, 2008 AGAIN AND CLAIMED THE LOSS OF RS . 55,65,831/ - . THE ASSESSING O FFICER HAS PASSED HIS ASSESSMENT ORDER ON 31 ST DECEMBER, 2008. HE DETERMIN ED THE TOTAL INCOME OF THE ASSESS EE AT ( - ) 55,15,806/ - . THUS, THE LD. ASSESSING OFFICER HAS ACCEPTED THE LOSS OF RS . - 55,15,806/ - . T HE ONLY ADDITION MADE BY THE ASSESSING OFFICER IS THE ADDITION FOR DIVIDEND INCOME OF RS. 50,025/ - . IN THE COMPUTATION, ASSESSEE HAS SHOWN A LOSS OF RS. 40, 0 9,600/ - UNDER THE HEAD INCOME FROM OTHER SOURCES . 11 . THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2006 - 07 HAS ALSO BEEN PLACED ON RECORD. THIS YEAR, ASSESSEE HAS SHOWN A NET LOSS OF RS. 37,13,028/ - UNDER THE HEAD INCOME FROM INTEREST. THE COPY OF THE ASSESSMENT IS AVAILABLE ON THE RECORD. IN THIS YEAR ALSO, THE ASSESSEE HAS FILED HIS ORIGINAL RETURN ON 31 ST AUGUST, 2006 DECLARING A LOSS OF RS. 24, 03,707/ - . THE SAME RETURN WAS FI LED IN RESPONSE TO THE NOTICE U/S. 153A. THE ASSESSING OFFICER HAS ONLY MADE AN ADDITION OF RS. 60,000/ - ON ACCOUNT OF DIVIDEND INCOME AND ACCEPTED THE LOSS OF RS. 23,43,707/ - I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 12 12 . IN TH E SUBSEQUENT YEAR, THE INCO ME F R O M INTEREST INCOME HAS BEEN SHOWN BY THE ASSESSEE IN THE COMPUTATION OF INCOME. IT READ S AS UNDER: - INCOME FROM INTEREST INTEREST FROM S/B AND NOTIFIED COMPANIES BANK INTEREST 2303 INTEREST ON F.D. WITH BANKS BANK FOR INTEREST 4189997 OTHER INTEREST INCOME NSS INTEREST 29311 PINALBEN MANANBHAI PATEL 87297 DEEPABEN MAULIKKUMAR PATEL 342183 MANAN MANIBHAI PATEL 65711 PRABHU STEEL CORPORTION 264495 MAHENDRABHAI HARANBHAI 232603 BHIKHABHAI NARANBHAI 232603 PYANK JAYANTILAL 78904 JAYANTILAL SOMABAHI 12329 ANANIBEN JAYNTILAL 78904 . 1424340 LESS: DEDUCTIONS UNJHA SPCIES COPRIATON 6019 SHAH AMBALAL DOSARAM 16110 MEHSANA URBAN BANK A/C. 13/09/70 61767 MEHSANA URBAN BANK A/C 20/53 211796 MEHSANA URBAN BANK A/C 17/626 9 2420427 MEHSANA URBAN BANK A/C 23/421 486140 AJITKUMAR TRIBHOVANDAS PATEL 121879 MAULIK MANI BHAI PATEL 2580591 MANIBEN MANILAL PATEL 1254959 KAILASHBEN MANIBHAI PATEL 1948456 MANIBHAI V. PATEL HUF 1344735 ( - ) 10452879 ( - )4836239 13 . TH E ASSESSEE HAS COMMISSION INCOME ALSO WHICH IS A POSITIVE FIGURE OF RS. 18,33,271/ - . THIS INCOME WAS ALSO OFF ERED AS INCOME FROM OTHER SOURC ES . THE ASSESSMENT ORDER FOR ASSESSMENT YEAR 2009 - 10 WAS PASSED U/S. 143(3) ON 30 TH DECEM BER, 2011. THE ASSESSE E HAS FI L E D HIS RETURN ON 2 ND NOVEMBER, 2010 DECLARING A LOSS OF RS. 23,69,658/ - . THE ASSESSING OFFICER HAS MADE AN ADDITION OF RS. 3,44,417/ - . THIS ADDITION I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 13 WAS MADE WITH REGARD TO THE SALE OF LAND WHERE ASSESSEE HAS RECEIVED SOME CASH COMPONENT IN HIS SHARE, EXCEPT RS. 3,44,417/ - ASSESSING OFFICER HAS ACCEPTED THE LOSS AT RS. 20,25,241/ - . APART FROM THESE THREE ASSESSMENT YEARS AND COMPUTATION OF INCOME, ASSESSEE HAS PLACED ON RECORD, THE COPIES OF THE ASSESSMENT ORDERS STARTING FORM ASSESS MENT YEAR 20 01 - 02 UP TO 2012 - 1 3. WE HAVE PERUSED ASSESSMENT YEAR 2004 - 05 AND 2005 - 06 ALSO. WE FIND THAT AS FAR AS PERSONS NAMELY ; NANIBHAI V. PATEL HUF MEHSANA URBAN BANK LTD. MEHSANA URBA N BANK LTD CO - OP BANK OF MEHSAN A MANIBEN MANILAL PATEL KAILASHBEN MANIBHAI PAT EL MAULIK MANIBHAI PATEL ARE CONCERNED, THEY ARE THE PERSONS WHO HAVE ADVANCE D THE MONEY TO THE ASSESSEE AND TO WHOM INTEREST WAS PAID. TO THESE VERY PERSONS, INTEREST S HAVE ALSO BEEN PAID IN THE PRESENT YEAR. THUS, THE LOAN WAS TAKEN FROM THESE P ERSONS LONG BACK AND EVERY YEAR ASSESSSE HAS BEEN PAYING AT THE SAME RATE OF INTEREST . I N SPITE OF THE SEARCH NEITHER IN THE EARLIER Y E AR NOR IN THE SUBSEQUENT YEARS, C LAIM OF THE ASSESSEE WAS DISPUTED THAT THE MONEY TAKEN FROM THEM WAS NOT USED BY THE ASSESSEE FOR EARING INCOME WHICH IS TO BE ASSESSED AS INCOME FROM OTHER SOURCE . IN THE PRESENT YEAR, LD. FIRST APPELLATE AUTHORITY HAS ALLOWED THE DEDUCTION TO THE EXTENT , HE ASSUMED THAT ASSESSEE MUST HAV E INCURRED INTEREST EXPENDITURE UP TO 95% OF THE INTERES T INCOME EARNED BY HIM. IN OTHER WORDS, LD. FIRST APPELLATE AUTHORITY HAS ASSUMED THAT ASSESSEE HAS SHOWN INTEREST INCOME OF RS . 50,27,815/ - . HE MUST HAVE INCURRED 95% OF THIS INCOME AS EXPENDITURE ON INTEREST AND, THEREFORE, ONLY TO THAT EXTENT , INTERES T EXPENDITURE IS TO BE ALLOWED. BUT THAT IS NOT THE REQUIREMENT IN LAW , THE REQUIREMENT IS THAT EXPENDITURE MUST BE LAID DOWN BY THE ASSESSEE WHOLLY AND EXCLUSIVELY FOR EARNING OF INCOME. THE EXPRESSION WHOLLY REFERS TO QUANTUM OF EXPENDITURE AND EXCLUSI VELY REFERS TO THE OBJECT AND PURPOSE OF EXPENDITURE. THOUGH THESE EXPRESSION S ARE NOT USED IN I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 14 SECTION 57 BUT THE OVERALL MEANING OF SECTION 57 IS ALSO TO THE SAME EFFECT THAT, THE EXPENDITURE OUGHT TO BE INCURRED FOR EARNING INCOME WHICH IS ASSESSABLE UN DER THE HEAD INCOME FROM OTHER SOURCE S . IF THE LOGIC OF LD. COMMISSIONER OF INCOME TAX (APPEALS) IS ACCEPTED , THEN , IN EACH AND EVERY CASE , EXPENDITURE WOULD BE ALLOWED ONLY , WHEN THERE IS RESULTANT INCOME. IN OTHER WORDS, THERE CANNOT BE ANY LOSS IN A NY ACTIVITY WHICH RESULT S INCOME F R O M OTHER SOURCES . ALL THE DETAILS WERE BEFORE THE LD. COMMISSIONER OF INCO ME TAX (APPEALS) BUT INSTEAD OF PIN POINT ING ANY CONCRETE DIVERSION OF INTEREST BEARING FUNDS; LD. COMMISSIONER OF INCOME TAX (APPEALS) ONLY ASS UMED THAT SOME FUNDS MIGHT HAVE BEEN USED BY THE ASS ESSEE FOR SOME OTHER PURPOSES. THE DEPARTMENT HAS BEEN CONSISTENTLY ACCEPTING THE CLAIM IN EARLIER YEARS AND IN SUBSEQUENT YEARS. IT APPEARS THAT IN THE BEGINNING , ASSESSEE HAS MORE INCOME UNDER THE HEA D INCOME FROM OTHER SOURCES AS THAN THE INTEREST EXPENDITURE , BUT IN ASSESSMENT YE AR 2006 - 07, 2007 - 08 AND 2009 - 10, THE INTEREST EXPENDITURE WAS MORE THAN INCOME, IN SP ITE OF THAT LOSS UNDER THE HEAD INCOME FROM OTHER SOURCE WAS ALLOWED BY THE LD. ASSES SING OFFICER IN SCRUTINY ASSESSMENT . THUS CONSIDERING THE PAST HISTORY AND STAND OF THE REVENUE ITSELF , WE ARE OF THE VIEW T HAT LD. ASSESSING OFFICER HAS ERR ED IN MAKING THE DISALLOWANCE. LD. COMMISSIONER OF INCOME TAX (APPEALS) ALSO FAILED TO APPRECIATE THAT TOTAL EXPENDITURE IS TO BE ALLOWED WHICH IS INCURRED WHOLLY AND EXCLUSIVELY FOR EARNING INCOME. IT C ANNOT BE RESTRICTED IN PROPORTION OF INCOME. WE ALLOW THE GROUND OF APPEAL RAISED BY ASSESSEE AND CONSEQUENTLY REJECT THE GROUND RAISED BY THE REVENU E. THE ASSESSEE IS ENTITLED TO EXPENDITURE OF RS. 1 , 09 , 29 , 139 / - CLAIMED BY HIM. I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 15 14 . IN GROUND NO. 2, REVENUE HAS PLEADED THAT LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN DELETING THE ADDITION OF RS. 6 LACS WHICH WAS ADDED BY THE ASSESSING OFF ICER ON ACCOUNT OF LONG TERM CAPITAL GAIN. THE FINDING RECORDED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) ON THIS ISSUE READS AS UNDER: - 6.1 DURING THE COURSE OF APPEAL HEARING THE APPELLANT HAS SUBMITTED DETAILED WRITTEN SUBMISSION ALONG WITH RELE VANT ENCLOSURES (P.B. 390 T O 394). RELEVANT PORTION MAY BE REPRODUCED AS BELOW: - 'FROM THE RECORDS IT VERIFIABLE THAT THE ASSESSEE HAS ALREADY EXPLAI NED THE MATTER VIDE 'ASSESSEE'S ; LETTER DATED 23 RD NOVEMBER, 2010. IT IS ALSO TO BE NOTED FROM THE RECORD S THAT THE ASSESSING OFFICER HAS NOT ACCEPTED THE ASSESSEE'S CLAIM OF ADDITIONAL COST TO THE TUNE OF RS.6 LACS IN COMPUTING CAPITAL GAINS CHARGEABLE TO TAX FOR, WANT OF CORRESPONDING BILL RAISED BY THE BUILDER. THE APPELLANT HAS FILED CO MPLETE DETAILS AS P ER PARA 2.5(I ) & (II ) OF SUBMISSION DATED - 03.11.210 WHICH INTER ALIA INCLUDES LEDGE R ACCOUNT OF THE PARTY AND COPY ; OF CONSTRUCTION BILL AS FURTHER EXPLAINED AS PER PARA - 3 OF SUBMISSION DATED 23.11.2010. THE APPELLANT IS REGULARLY AN D CONSISTENTLY MAINTAI NING HIS BOOKS OF ACCOUNTS ON MERCANTILE BASIS AND THE SAME IS ACCORDINGLY ACCOUNTED FOR IN THE BOOKS AND PAYMENT OF RS. 6 LACS WAS MADE BY CHEQUE ON 06.04.2008 IN THE SUBSEQUENT YEAR. THE SAME IS REFLECTED IN THE CONTRA ACCOUNT FILED. HOWEVER, IN THE SAME PARA, THE ASSESSING OFFICER HOLDS THAT 'IN VIEW OF THE ABOVE IT IS 'ASCERTAINED THAT THE ASSESSEE HAS INCURRED THESE EXPENSES OUT OF HIS INCOME F ROM UNDISCLOSED SOURCES AND SUM ; OF RS. 6 LACS IS ADDED TO HIS TOTAL INCOME AS UNDISCLOSED INCOME OF THE ASSES SEE. THUS, THE ACTION OF THE ASSESSING OFFICER ON THIS COUNT IS CONTRADICTORY TO EACH OTHER AND AMOUNTS TO DOUBLE TAXATION AND NON - APPLICATION OF MIND FOR THE SAKE OF MAKING FLIMSY ADDITION. THE HON'BLE COMMISSIONER OF INCOME TAX (APPEALS) MAY BE PLEASED T O DELETE THE SAID DISALLOWANCE OF RS.6 LACS IN COMPUTING CAPITAL GAINS AND ALSO DELETE THE ADDITION OF RS.6 LACS A S ALLEGED UNDISCLOSED INCOME. FOR REA DY REFERENCE COPY OF APPELLANT'S LETTER DATED 23.11.2010 (ANNEX. 1), COPY OF APPELLANT'S LETTER DATED 03. 11.2010 (ANNEX.3 WITH RELEVANT ENCLOSURES MARKED AS I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 16 ANNEX.3.1 TO 3.6 ARE SUBMITTED HEREWITH FOR KIND - PERUSAL AND NECESSARY ACTIONS.' 6.2 I HAVE CAREFULLY CONSIDERED THE ABOVE SUBMISSIONS AND GONE THROU GH THE RECORD. I FIND THAT THE ASSESSEE HAS SUBMITTED A LL THE MATERIAL DETAILS DURING ASSESSMENT PROCEEDINGS BEFORE THE ASSESSING OFFICER VIDE HIS LETTER DA TED 03.11.2010 (P.B. 108 TO 388) AND FURTHER LETTER DATED 23.11.2010 (P.B. 390 TO 394). THE ASSESSEE HAS MADE PAYMENT OF RS.6 LAKHS BY ACCOUNT PAYEE CHEQUE ON 06.04.2008 FOR THE CONSTRUCTION MADE AND CORRESPONDING BILL RAISED BY THE PARTY AND THE A.O. HIMSELF HAS HELD THAT 'ASSESSEE HAS INCURRED EXPENDITURE BUT THAT THE PAYMENT OF BILL WAS FROM UNDISCLOSED SOURCES.' THE APPELLANT IS CONSISTENTLY FOLLOWING T HE MERCANTILE SYSTEM OF ACCOUNTING AND HAS MADE THE PAYMENT OF RS. 6 LAKH BY CHEQUE IN THE SUBSEQUENT YEAR AND THEREFORE IS ENTITLED TO THE CLAIM. THUS, THE A.O. IS DIRECTED TO ALLOW COST OF IMPROVEMENT OF RS.6 LAKHS AND ALSO THE FURTHER ADDITION MADE OF R S.6 LAKHS IS DELETED. 15 . WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE HAVE GONE T HROUGH THE RECORD CAREFULLY. SEC T I ON 48 OF THE INCOME TAX AC T, 1961 PROVIDES THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS, SHALL BE COMPUTED BY DE DUCTING FROM TH E FULL VALUE OF CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET , THE AMOUNTS NAMELY (A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER (B) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THEREOF. THE ASSESSEE WHILE OFFERING CAPITAL GAIN ON SALE OF A PLOT OF LAND HAD CLAIMED COST OF IMPROVEMENT FOR RS. 10,84, 275/ - . THE ASSESSING OFFICER REJECTED THE ADDITIONAL COST TO THE EXTENT OF RS . 6 LACS. ON APPEAL, LD. COMMISSIONE R OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF ASSESSEE ON THE GROUND THAT PAYMENT WAS MADE THROUGH ACCOUNT PAYEE CHEQUE FOR THE CONSTRUCTION MADE. THE DETAIL OF MATERIAL A ND OTHER EVIDENCE WERE PRODUCED ON THE RECORD. CONTRARY TO THIS FINDING OF FACT RE CORDED BY THE COMMISSIONER OF INCOME TAX (APPEALS), NOTHING WAS I.T. A NO. 644 & 993/AHD/2012 A.Y. 20 08 - 09 PAGE NO A CI T VS. SHRI MANIBHAI VIRCHANDBHAI PATEL 17 POINTED OUT TO US DURING THE COURSE OF HEARING, T HEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. IT IS REJECTED. ORDER PR O N OUNCED IN THE OPEN COURT ON 18 - 08 - 201 5 SD/ - SD/ - ( N.S. SAINI ) ( RAJPAL YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 18 /08 /2015 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONC ERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,