SHALINI KANWAR CHAND,DELHI vs. ACIT CIRCLE INT. TAX 1(2)(1), DELHI

During proceedings before us the Ld. Counsel for the assessee brought it to the notice of the Bench that the additional ground raised by the assessee are not being pressed, therefore, the additional ground raised by the assessee is dismissed as not pressed. 3. Ground No.2 and 3 are interconnected, the dispute is regarding liability of Rs.1,48,37,557/- paid to the developer as interest on delayed installment payments by treating it as penal in nature, and excluding it from ‘cost of acquisition’ u/s.48 of the Act for computing long term capital gains, despite it being as legitimate expense for acquiring the property falling within the scope of Section 48 of the Act. 4. During proceedings before us the Ld. Counsel of the assessee submitted that the original area to be handed over to the assessee by the builder was 5825 square ft but finally the builder handed over 6825 sq ft. Accordingly, the Ld. Counsel submitted that the extra cost in actual is not a penal interest but it is for acquiring additional space. On the other hand the ld. AO has treated this amount as penal in nature and, therefore, disallowed it. The Ld. Counsel of the assessee has relied on the order of the coordinate Bench of ITAT in the case of ACIT Vs. Sadhna Aggarwal in ITA No.6620/Del/2019 which is reproduced as under :- “The cost of acquisition claimed by the assessee relates to the area eventually vested to the assessee. For the same reason, the Assessing Officer is also not justified to artificially reduce the cost of interest on delayed payment in proportion to the originally allotted are instead of increased area. We find ourselves in agreement with the observation made by the CIT(A) and hence see no merit in Grounds Nos. 3 and 4 of the Revenue’s Appeal. 3 | P a g e

Per contra the Ld. DR relied on the order of the AO.

We have considered the findings given by the AO in the assessment order on the arguments of both the parties during proceedings before us. We have also considered the case laws brought on record by the Ld. Counsel for the assessee and we find that this issue is squarely covered by the finding given by the coordinate Bench of ITAT in the case of ACIT Vs. Sadhna Aggarwal. Accordingly, assessee’s appeal on this issue is allowed.

Another issue in this case is regarding denying the benefit of section 54 of the Act to the assessee. On this issue the Ld. Counsel of the assessee argued that the DRP in its order / directions u/s.144C (5) had clearly given a direction to the AO which is as under:-

The Ld. Counsel of the assessee argued that the AO did not implement the direction of the DRP, therefore, he requested the matter may be remanded back to the file of the AO for reconsideration of this issue. 4 | P a g e

Per contra the Ld. DR relied on the order of the AO. 10. We have considered the findings given by the AO in the assessment order and we have also considered the directions of the DRP in its order. We have also heard the arguments of the Ld. Counsel of the assessee and the Ld. DR. Having heard both the parties on this issue we are of this considered view that in the fitness of things the matter should be remanded back to the file of the AO for reverification as per the direction of the DRP. Accordingly, the AO is directed to revisit the issue and give categorical finding.

In the result, the appeal filed by the assessee is partly allowed.