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Income Tax Appellate Tribunal, MUMBAI BENCH “H”, MUMBAI
Before: SHRI PRASHANT MAHARISHI & SHRI KULDIP SINGH
Per : Kuldip Singh, Judicial Member:
The appellant, Mr. Hasmukh Purushottam Gandhi (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 03.03.2021 passed by National Faceless Appeal Centre(NFAC) [Commissioner of Income Tax (Appeals), Delhi] (hereinafter referred to as CIT(A)] on the grounds inter alia that::- “In View of the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeal)(Ld. CIT-A) has erred in upholding the impugned assessment order, without considering the 2 Mr. Hasmukh Purushottam Gandhi fact that the learned assessing officer(Ld AO) had failed to consider the facts already available on record and the Ld CIT-A has also erred in not considering the facts on record.
2. On the facts, in the circumstances of the case and in law, the Ld. CIT-A has failed to appreciate that the Ld, A.O. had erred in disallowing Indexed Cost of Improvement consisting of Repairs, Renovation, Furniture and Fixtures amounting to Rs.2,56,59,868/- while computing Capital Gain/ Loss on sale of House Property.
3. Without prejudice to above grounds, on the facts, in the circumstances of the case and in law, the Ld CIT-A has further erred not considering the fact that, the Indexed Cost of Furniture and Fixtures was alternatively allowable as a deduction as the agreement for sale specifically mentioned that the sale of Premises was along with Furniture and Fixtures and the sale consideration included the value of furniture and fixtures.
4. The appellant therefore prays your honour to be kind enough to – 1. Admit the appeal and grant stay against the recovery of demand, 2. Set aside the order of A.O., 3. Delete all illegal additions and disallowances made by A.O.
Grant justice.
5. The appellant craves leave to add, amend, alter, delete, change or modify all or any of the above grounds of appeal which are independent & without prejudice to each other.”
Briefly stated facts necessary for adjudication of the controversy at hand are : assessee during the year under consideration has sold two properties one residential and another an office premises. The assessee while computing the capital gain, claimed indexed cost of improvement and renovation of flat and office premises and cost of furniture and fixtures to the tune of Rs.1,56,15,833/- and Rs.25,88,219/- respectively.
Declining the contentions raised by the assessee the Assessing Officer (AO) proceeded to disallow the indexed cost of improvement and renovation claimed by the assessee to the extent 3 Mr. Hasmukh Purushottam Gandhi of Rs.1,82,04,052/-. The AO also disallowed the payment of brokerage and documentation of Rs.10,12,400/- and brokerage on sale of Rs.1,86,000/- and thereby framed the assessment under section 143(3) of the Income Tax Act (for short ‘the Act’).
4. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has upheld the order passed AO by dismissing the appeal. Feeling aggrieved the assessee has come up before the Tribunal by way of filing present appeal.
We have heard the Ld. Authorised Representatives of the parties to the appeal, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and law applicable thereto.
The Ld. CIT(A) dismissed the appeal filed by the assessee by returning the following findings: “I have gone through the assessment order, submission and grounds of appeal
made by the appellant. Ground 2, 3 & 4 deals with disallowing indexed cost of improvements and renovation of flat and office premises and costs of furniture and fixture, while computing capital gain/loss of the property. On going through the assessment order it is found that the appellant claimed Rs.1,56,15,833/- as cost of improvement of towards the House Property and Rs. 25,88,219/- towards cost of improvement of office premises. During the proceeding of assessment the assessee furnished the invoices/bills for purchase of fridge/freezer, LED TVs, Home Theatres systems, Projector Screen, Blue Ray Players, Amplifiers, iPad etc. The bill pertaining to furniture and fixture shows purchase of plywood, laminate, fevicol, upholstery fabric, curtain rods, mirror and labour charges, paints and paints brushes etc. The appellant included the cost of material/equipment in the cost of improvement but these material/equipment are personal effects which do not add any value to the property.
4. Mr. Hasmukh Purushottam Gandhi
During assessment proceedings as well as appellate proceeding the appellant has only filed some sample bills/invoices as mentioned above which has not clearly explain what kind of works have been done. The A.O has mentioned that “ the assessee has included the cost of material/equipment in the cost of improvement but these material/equipment are personal effects which do not add any value to the property but are meant for personal use and are generally taken away by the owners and cannot be in any way considered as being incurred for the improvement of the House Property. The expenses incurred on furniture fixture and fittings are also to full fill personal taste and desire. The cost incurred for painting etc. can only be incurred for the maintenance of the House Property, which again would depend on the owner and cannot be considered as expense of capital nature, as the same would be incurred on a recurring basis depending upon the need of the occupant" Hence, the entire cost of improvement of Rs. 1,82,04,0527- has not been justified by the assessee. I fully concur with the findings of the A.O. Further, the assessee has also failed to furnish any proof for the payment of Brokerage & Documentation of Rs. 10,12,400/- on purchase of flat claimed in the working, and brokerage on sale of Rs.1,86,000 /-. Therefore, the claim of the assessee is not sustainable on this ground. Hence, the appeal of the assessee is dismissed and the order of the A.O is confirmed.”
Bare perusal of the findings returned by the Ld. CIT(A) goes to prove that the Ld. CIT(A) has not passed a reasoned order by examining the assessment order in the light of the facts and circumstances of the case rather upheld the assessment order by seconding the findings given by the AO. The Ld. A.R. for the assessee contended that he has given complete details of the improvement and renovation made by him in the property in question but his document has not been considered neither by the AO nor by the Ld. CIT(A). We have examined the paper book running into two hundred twenty seven pages wherein document viz. summary of cost of improvement, with electrification, civil 5 Mr. Hasmukh Purushottam Gandhi work etc. has been given, available at page 26 to 97 of the paper book. 8. The Ld. A.R. for the assessee also filed written submissions dated 02.07.2019, 21.08.2019 and 09.10.2019 before the Ld. CIT(A) available at page 98 to 103 wherein the improvement claimed has been duly explained with documents. However, the AO as well as the Ld. CIT(A) have not discussed all these documents to decide the issue in controversy.
In these circumstances, we are of the considered view that issue in controversy is required to be decided afresh by the AO by examining and verifying all the documents brought on record by the assessee. Consequently, appeal filed by the assessee is allowed for statistical purposes directing the AO to decide afresh after providing opportunity of being heard to the assessee.
Order pronounced in the open court on 23.05.2022.