M R RAJAKUMAR REDDY,CHENNAI vs. DCIT, CORP CIR-3(2), CHENNAI

This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) -11, Chennai, dated 16.10.2018 and pertains to assessment year 2012-13.

Shri S. Sridhar, the Ld.counsel for the assessee, very fairly submitted that he was instructed by the assessee not to press this ground of the appeal. The Ld.counsel has also made an endorsement to that effect in the appeal folder. The Ld. Departmental Representative Shri AR.V. Sreenivasan has no objection to dismiss this ground as not pressed. In view of the above, the ground relating to interest on refund is dismissed as not pressed.

The next ground arises for consideration is with regard to cost of construction for computation of long term capital gains / loss.

Shri S. Sridhar, the Ld.counsel for the assessee, submitted that the Assessing Officer disallowed the claim of the assessee on the ground that the return was not filed within the due date. According to the Ld. counsel, the cost of construction to the extent of ₹1,35,96,462/- credited to the M/s Agira Hotels India Pvt. Ltd. The Assessing Officer disbelieved the credit entry only on the ground that the assessee is also one of the shareholders in M/s Agira Hotels India Pvt. Ltd. According to the Ld. counsel, the expenditure incurred by the assessee was credited by M/s Agira Hotels India Pvt. Ltd., therefore, the cost of construction being one of the components for computation of long term capital gains has to be taken into consideration. Moreover, according to the Ld. counsel, the CIT(Appeals) enhanced the assessment without giving any proper opportunity to the assessee. The Ld.counsel submitted that the bills and vouchers are available for the payments made from 31.03.2008 to 31.03.2010, hence, the matter may be remitted back to the file of the Assessing Officer.

We heard Shri AR.V. Sreenivasan, the Ld. D.R. also. Admittedly , the assessee is a shareholder in M/s Agira Hotels India Pvt. Ltd. The assessee was having controlling interest in M/s Agira Hotels India Pvt. Ltd. Therefore, the Assessing Officer has doubted the genuineness of the credit in the absence of agreement, bill and voucher, etc. The CIT(Appeals) also found that bill, voucher, etc. was not available and it was not produced either before the Assessing Officer or before the CIT(Appeals). The assessee now claims that vouchers are available and the payments were made from 31.03.2008 to 31.03.2010, therefore, the matter may be remitted back to the file of the Assessing Officer for verification. This Tribunal is of the considered opinion that when the assessee claims that bills and vouchers are available for the payments made between 31.03.2008 and 31.03.2010, the matter needs to be re- examined. Accordingly, orders of both the authorities below are set aside and the issue with regard to cost of construction for computation of capital gain is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter on the basis of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.

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