SHRI SANJAY KUMAWAT,JAIPUR vs. INCOME TAX OFFICER -2-2, JAIPUR

In this appeal, the assessee is aggrieved for declining deduction of construction of cost of Rs. 3,67,996/- while computing the capital gains.

Rival contentions have been heard and record perused. Facts in brief are that the assessee purchased a land through an agreement to sale on 2 ITA 182/JP/2019_ Sanjay Kumawat Vs. ITO dated 15.09.2001 from power of attorney holder of Smt. Vijaya Kumari and paid entire consideration of Rs. 200000.00 (Rs. Two lakhs) in cash as evident from sale deed (placed on page no3-9 of paper book), executed on dated 28.02.2005. The assessee also spent Rs. 60000.00 on registration stamp duty and fee as is evident from sale deed (paced on page no.3-9 of paper book). Thereafter, assessee and co-owners constructed the property in phase manner between 2001 to 2005. Since they were short of funds, they also approached LIC Housing Corporation for funding. Banks and housing finance institution denied to finance in absence of registered sale deed. In such compelling circumstances, assessee got the registered sale deed in his favour and the sale deed was executed on same consideration on which it was purchased. After getting sale deed, assessee and co- owners again approached for housing loan for construction and finishing of property and received housing loan for construction amounting to Rs. 930000.00 from LIC Housing Finance in installment as per phases of construction. In the return of income while computing capital gains on sale of land, the assessee claimed his share of cost of construction. To prove the construction cost so incurred, the assessee also filed valuation report by the Architect Shri Sunil Jain. The assessee also filed duly sworn affidavit. However, the affidavit was not taken in cognizance by both the lower authorities and entire construction cost so incurred was declined by 3 ITA 182/JP/2019_ Sanjay Kumawat Vs. ITO the A.O. And the order of the A.O. was confirmed by the ld. CIT(A), against which the assessee is in further appeal before us.

From the record we found that in the Computation of total income, assessee declared the cost of property as under:- Cost of land Rs.200000.00 (As per Deed) Stamp duty and fee Rs.60000.00 (As per Deed) Construction Funded by LIC Housing Rs.930000.00 (Letter enclosed) Margin money by assessee Rs.371170.00 (30% estimated) Total Rs. 1561170.00 1/3 part of assessee Rs.520390.00 The Assessing Officer, on rely on the phrase in purchase deed that part construction was made by seller, disallowed all the improvement cost ignoring the fact of housing construction loan from LIC Finance and even ignoring the phrase 'part construction’.

We have carefully gone through the deed executed on 28/02/2005 where it was clearly mentioned that the construction was incomplete which can be verified from page no 5 of paper book. On 7 March 2007 the above-mentioned property was sold and indeed it was mentioned that there is complete construction of basement, ground floor and first floor. From the record we found that the total construction was around 3000 Sq.ft. which was made in phased manner between the year 2002 to 2007. Cost of construction of this 3000 sq.ft. was claimed by the assessee while

4 ITA 182/JP/2019_ Sanjay Kumawat Vs. ITO computing his share of capital gains. Under these facts and circumstances, we do not find any merit in the action of the Assessing Officer in totally declining the cost of construction so incurred by the assessee which was supported by valuation report filed by the assessee without referring the matter to DVO and without bringing any positive material on record to the effect that no construction work was done by the assessee, the A.O. has declined to accept the assessee’s share of cost of construction shown by the assessee amounting to Rs. 3,67,996/-. We do not find any justification for denying entire cost of construction incurred by the assessee before sale. Keeping in view the area so constructed by the assessee, we direct the A.O. to take construction cost at Rs. 3.00 lacs while computing income under the head capital gains. We direct accordingly.

In the result, appeal of the assessee is allowed in part. Order pronounced in the open court on 04th April, 2019. Sd/- Sd/- ¼fot; iky jko½ ¼jes'k lh 'kekZ½ (VIJAY PAL RAO) (RAMESH C SHARMA) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 04th April, 2019 *Ranjan आदेश की प्रतिलिपि अग्रेf’ात@ब्वचल वf जीम वतकमत वितूंतकमक जवरू vihykFkhZ@The Appellant- Shri Sanjay Kumawat, Jaipur. 1. izR;FkhZ@ The Respondent- The ITO, Ward 2(2), Jaipur. 2. vk;dj vk;qDr@ CIT 3. vk;dj vk;qDr¼vihy½@The CIT(A) 4.