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Income Tax Appellate Tribunal, DELHI BENCH: ‘A’ NEW DELHI
Before: SHRI G.D.AGRAWAL, HON’BLE & SHRI SUDHANSHU SRIVASTAVA
PER SUDHANSHU SRIVASTAVA, J.M.: This appeal is preferred by the assessee against order dated 27.10.2014 passed by the Ld. CIT (Appeals)- V, New Delhi for assessment year 2011-12.
The brief facts of the case are that the assessee had filed its return of income declaring a loss of Rs. 24,23,278/-. The case was selected for scrutiny and during the course of assessment proceedings, the Assessing officer observed that the assessee had sold house property for an amount of Rs. 2,65,00,000/-. The (Archi Medes India Consultants Pvt. Ltd.)
Assessing Officer (AO) noticed that the assessee had capitalized this property as a business asset and had claimed depreciation every year from the year of purchase till the date of sale. The AO noted that the written down value as on 31st March, 2011 for the building was zero as the complete block of assets had been sold off.
Accordingly, the AO made an addition of Rs. 40,61,380/- being the short term capital gain. Further, it was also noticed by the AO that the assessee had capitalized interest paid to ICICI bank amounting to Rs. 45,86,336/- and had added the same to the cost of the building. The AO did not agree with the capitalization of the interest and he added this amount also to the income of the assessee. Further disallowance of Rs. 3,00,000/- was made out of various expenses and the assessment was completed at an income of Rs. 65,24,440/-. On appeal, the Ld. CIT (Appeals) partly allowed the assessee’s appeal by deleting the ad hoc addition of Rs. 3,00,000/- out of the various expenses but upheld the addition on account of short term capital gains as well as disallowance of interest paid to ICICI Bank. Now, the assessee has approached the ITAT and has raised the following grounds of appeal:-
“1. That the assessee denies his liability to be assessee at an income of Rs. 62,24,440/-
(Archi Medes India Consultants Pvt. Ltd.)
2. That having regard to the facts and circumstances
of the case the Ld. CIT (A) has erred in law and on facts in not giving benefit of Rs. 80,98,103 while working out the short term capital gains on sale of property as done by Ld.
AO and that too by recording incorrect facts.
That the assessee craves the leave to add, alter or amend the grounds of appeal at any stage and all the grounds are without prejudice to each other.”
3. AT the outset, the Ld. Authorised Representative submitted that there was a delay of approximately seven and half months in filing of the appeal. Our attention was drawn to the delay condonation application submitted by the assessee and it was submitted that due to some family disputes, the Managing Director of the assessee company was jailed for 50 days and the appeal could be filed only after a family settlement had been reached. This resulted in delay in filing of appeal. It was submitted that there was no negligence on the part of the assessee in filing the appeal but the appeal could not be filed due to matters beyond the control of the assessee company. It was prayed that the delay be condoned.
(Archi Medes India Consultants Pvt. Ltd.)
The Ld. Departmental Representative opposed the application for condonation of delay and submitted that the averments of the assessee were not verifiable.
We have heard both the parties and have also gone through the contents of the affidavit filed by the assessee in this regard and looking into facts and circumstances of the case, we are of the opinion that the delay in filing of the appeal was indeed beyond the control of the assessee company and, therefore, we deem it fit to condone the delay and admit the appeal for hearing.
The Ld. Authorised Representative, appearing on behalf of the assessee, submitted that the interest portion was not capitalized by the assessee as has been averred by the AO in the assessment order and he drew our attention to the copy of the audited balance sheet for the assessment years 2009-10, 2010-11 and 2011-12 placed in the paper book to substantiate his argument. Our attention was also drawn to the interest certificate issued by the ICICI Bank Ltd. to substantiate the amount of interest. It was also submitted that the interest portion was not treated as part of the cost for the purpose of computation of capital gains and, therefore, the lower authorities had erred in disallowing the assessee’s claim and not giving benefit of Rs. 80,98,103/- while working out the (Archi Medes India Consultants Pvt. Ltd.)
short term capital gains. It was also submitted that both the lower authorities had recorded incorrect facts while adjudicating the issue.
In response the Ld. Sr. Departmental Representative placed heavy reliance on the orders of the lower authorities and submitted that the disallowance had rightly been made.
We have heard the rival submissions and have also perused the material available on record. A perusal of the orders of both the lower authorities shows that the averment of the Ld. Authorised Representative that the facts have not been correctly recorded by the lower authorities is correct in so far as both the lower authorities have not recorded facts in a proper manner while adjudicating the issue. Unfortunately, the assessee has also not cared to file a paper book in this regard to enable us to verify the veracity of the various figures and the facts, as submitted before the lower authorities, by the assessee could be verified. We feel that it was incumbent upon the assessee to have filed relevant documents before us to enable us to examine the matter in proper perspective. However, the assessee has failed in this regard. All the same, in interest of justice we deem it appropriate to restore the issue to the file of the Ld. CIT (Appeals) with the direction to re-
(Archi Medes India Consultants Pvt. Ltd.) examine the issue after correct appreciation and recording of facts and thereafter pass a speaking order after providing due opportunity to the assessee. We also direct the assessee to produce all relevant documents before the Ld. CIT (Appeals) in support of its claim when it is called upon to do so by the Ld. CIT (Appeals) failing which the Ld. CIT (Appeals) will be at liberty to proceed ex parte against the assessee and adjudicate the issue in accordance with law.
In the result, appeal of the assessee stand allowed for statistical purposes.
Order pronounced in the open court on 04.01.2019.