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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH, AHMEDABAD
Before: SMT. ANNAPURNA GUPTA & Ms. SUCHITRA KAMBLE
PER SUCHITRA KAMBLE, JUDICIAL MEMBER :
This appeal is filed by assessee against the order dated 19.01.2018 passed by the CIT(A)-6, Ahmedabad for the Assessment Year 2013-14.
The assessee has raised the following grounds of appeal :-
“1.1 The order passed under section 250 on 19.01.2018 for A.Y. 2013-14 by CIT(A)-6, Ahmedabad upholding the addition of Rs.43,20,167/- towards LTCG after taking into account Rs.3 Cr. as accrued sale consideration is wholly illegal, unlawful and against the principles of natural justice.
1.2 The Ld. CIT(A) has grievously erred in law and or on facts in not considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned addition.
2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming that the amount of Rs.3 Cr. was part of the sale consideration and thereby upholding the LTCG at Rs.43,20,167/-.
ITA No.655/Ahd/2018 A.Y. 2013-14 Page 2 of 3 2.2. That in the facts and circumstances of the case as well as in law, the Ld. CIT(A) ought not to have upheld that the amount of Rs. 3 Cr. was part of the sale consideration and thereby upheld the LTCG at Rs.43,20,167/-.
It is, therefore, prayed that the addition of Rs.43,20,167/- upheld by the CIT(A) may kindly be deleted.”
The assessee is an individual and his main source of income is income from business and income from other sources. The return of income was furnished on 27.09.2013 declaring taxable income of Rs.9,03,090/-. The Assessing Officer made addition of Rs.43,20,167/- as Long Term Capital Gain (LTCG)
Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee.
The Ld. AR submitted the amount of Rs.3 Crores was part of the sale consideration and thereby upholding the LTCG at Rs.43,20,167/- by the CIT(A) is not correct. The Ld. AR further submitted that the assessee had disclosed capital loss of Rs.2,56,79,833/- from sale of plots in GIDC Ankaleshwar and while computing capital gain, the assessee had claimed deduction of Rs.3 Crores towards unpaid sale price in respect of the disputed liability of electric bill of Daxin Gujarat Vij Co. Ltd (DGVCL). Ld. AR submitted that liability of Rs.3 Crores was not unquantified. It was joint bank account till the decision of the Court. Hence the consideration had accrued or arisen to that extent. But the CIT(A) confirmed the addition on the basis that the assessee had received Rs.3 Crores subject to Court order, so it was part of sale consideration and capital gain was rightly computed at Rs.43,20,167/- which is not correct proposition.
Ld. DR relied upon the assessment order.
We have heard both the parties and perused all the relevant material available on record. The assessee submitted that the reply towards electricity bill of DGVCL was not quantified and the same is not admissible as deduction out of sale consideration. The Assessing Officer has not taken cognizance of the provisions of
ITA No.655/Ahd/2018 A.Y. 2013-14 Page 3 of 3 Section 45(1) read with Section 48 which provide that sale consideration which arisen to the assessee on transfer of capital asset. During the relevant A.Y. the electricity bill of Rs.3 Crores estimated which was under litigation cannot be treated as income in this year if the same is not received/approved by the assessee in the relevant A.Y. There is a Minutes of Understand (MOU) dated 21.06.2012 which was entered between the assessee which shows that the deposit of Rs.3 Crores will be utilised for payment to DGVCL if the second party gives no due certificate from the said DGVCL to the first party then the deposit amount will be paid to the second party. Thus, it is clear from the perusal of the said MOU that the assessee has deposited the said amount as and when the amount is paid to DGVCL. Thus, the Assessing Officer as well as the CIT(A) has not rightly made the addition of Rs.43,20,167/- as LTCG as the said is obligation to the third party depending upon the Court decision. Thus, the appeal of the assessee is allowed.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open Court on this 8th day of August, 2022.
Sd/- Sd/- (ANNAPURNA GUPTA) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 8th day of August, 2022 PBN/*
Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order UE COPY
Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad