SH. JATINDER SINGH TANEJA,NEW DELHI vs. ACIT, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES “SMC” : DELHI

BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER

ITA.No.4885/Del./2015 Assessment Year 2006-2007 Shri Jatinder Singh Taneja, 52, 1st Floor, The ACIT, Circle-23(1), vs Omaxe Square, Jasola, New Delhi. New Delhi – 110 044. PAN AADPT3999G (Appellant) (Respondent)

For Assessee : Shri Sushil Kumar & Shri R.R. Maurya, Advocates For Revenue : Shri S.L. Anuragi, Sr. D.R.

Date of Hearing : 13.07.2018 Date of Pronouncement : 06.08.2018 ORDER

This appeal by assessee has been directed against

the Order of the Ld. CIT(A)-13, New Delhi, Dated 12.06.2015,

for the A.Y. 2006-2007.

notice under section 148 was issued on 19.03.2012 after

recording reasons. The assessee stated before the A.O. that

2 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. return already filed declaring total income of Rs.8,88,380/- on

30.10.2006, in response to notice under section 148 of the I.T.

Act, 1961. The A.O. noted that the assessee declared income

under the head "Short Term Capital Gains" to the tune of

Rs.3,62,847/-. In support of the capita! gain computation, the

assessee has placed on record P & L A/c from where it was

noticed that assessee has claimed certain expenses which are

not as per the computation of capital gains under section 48 of

the Income Tax Act, 1961, which are Bank charges, Brokerage

paid, Depreciation, Interest on loan, Interest on TDS,

Professional Expenses, Short and Excess transfer fees,

Miscellaneous Expenses and Bank charges (ICICI). The A.O.

referred to Section 48 of the I.T. Act because the computation

of capital gain made by assessee was not as per Income Tax Act.

The same reads as under :

“The income chargeable under the head "Capital

gains" shall be computed, by deducting from the full

value of the consideration received or accruing as a

3 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. result of the transfer of the capital asset the following

amounts, namely

(i) Expenditure incurred wholly and exclusively in

connection with such transfer

(ii) The cost of acquisition of the asset and the cost

of any improvement thereto;”

2.1. The A.O. considered Section 48 of the I.T. Act above

and noted that expenditure as mentioned by the assessee

except brokerage paid and transfer fees, are not wholly and

exclusively in connection to the transfer of the property as per

sub-section (i) of Section 48 of the I.T. Act. Accordingly,

expenditure, except brokerage and transfer fees, which

amounts to Rs.2,98,103/- is disallowed and added to the total

income of the assessee. The income was computed at

Rs.11,86,480/-.

2.2. The assessee submitted before Ld. CIT(A) that he is a

commission agent and has income from commission from

sale/purchase of properties. The assessee purchased two

4 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. properties during the A.Y. 2005-2006 and sold the same in A.Y.

2006-2007 and has made a short term capital gain. It was

submitted that there is a direct nexus between the loans taken,

on which, interest is charged and the payment made for the

purchase of the property. The assessee relied upon several

decisions in support of the same. The Counsel for the Assessee

made submission regarding disallowance of interest on loan

Rs.2,80,336/- and giving up the remaining claim of

disallowance of other expenses. The Ld. CIT(A) noted that the

main contention of the assessee is that interest on borrowed

capital used for the acquisition of the asset should be included

in the cost of acquisition as per Section 48(ii) of the I.T. Act. The

Ld. CIT(A), however, noted that interest paid by the assessee is

towards service of the loan and not a part of the capital asset.

Since the interest on borrowed capital is also allowed as revenue

expenditure under the Act, therefore, it cannot be considered as

capital expenditure. This ground of appeal of assessee were

dismissed. As regards the reopening of the assessment, Ld.

CIT(A) noted that assessee did not raise the issue of validity of

5 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. notice under section 148 before A.O. as well as in the

submissions before him. Ld. CIT(A) also noted that since part of

the expenditure disallowed by A.O. is accepted by the assessee

are disallowable, therefore, it would prove that there was

escapement of income. Therefore, there is justification for

initiating re-assessment proceedings. This ground was also

dismissed. The appeal of assessee has been dismissed.

parties and perused the material on record. Earlier, this appeal

of assessee was dismissed for default. Assessee, however, filed

M.A. giving reasons for non-appearance. The assessee in his

M.A. has also given an undertaking that he will not seek any

adjournment in the aforesaid matter in future. The Tribunal

after considering the explanation of assessee and the

undertaking above, allowed the M.A. of assessee and appeal was

re-fixed for hearing on merits. The assessee moved for

adjournment that reasons for reopening of the assessment have

not been provided and made a request for inspection of the

6 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. assessment record in April, 2016 and till today, no inspection

have been done. Considering it is a old appeal for A.Y. 2006-

2007 and that assessee did not obey his undertaking given

before the Tribunal in M.A. that assessee would not seek

adjournment in future, the request for adjournment is rejected.

submissions made before the authorities below regarding

disallowance of interest of Rs.2,80,336/- and submitted that

interest was paid on borrowed funds which was utilized for

acquisition of an asset. Therefore, assessee is entitled for

inclusion of the cost of the interest in the cost of acquisition of

asset as per Section 48(ii) of the I.T. Act. In support of his

contention, he has relied upon the following decisions :

(i) Mr. Praveen Gupta vs. ACIT (2012) 20 taxmann.com 309 (Del.) (Tribu.)

(ii) CIT vs. Mithlesh Kumar (1973) 92 ITR 9 (Del.) (HC)

(iii) Pratibha Paliwal vs. ACIT (2012) 19 taxmann.com 355 (Del.) (Tribu.)

7 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. (iv) Gayatri Maheshwari vs. ITO, Ward-1(2), Jodhpur (2017) 88 taxmann.com 757 (Jodhpur) (Tribu.)

the authorities below.

view that the matter requires reconsideration at the level of the

A.O. The A.O. has examined the issue in the light of Section

48(i) of the I.T. Act and noted that except brokerage paid and

transfer fee, other expenditure were not incurred wholly and

exclusively in connection to the transfer of the property. The

A.O. did not examine the issue whether interest was paid on

borrowed capital which was used for acquisition of the asset.

No details have been mentioned in the impugned orders and

even no specific details have been referred to during the course

of arguments. Therefore, interest of justice requires that the

matter should be re-examined by the A.O. in the light of

contention of the assessee, in the light of provisions of Section

48(ii) of the I.T. Act and the decision relied upon by the Learned

8 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. Counsel for the Assessee. I, accordingly, set aside the orders of

the authorities below on this issue and restore the matter in

issue to the file of A.O. with a direction to re-decide the above

issue strictly on merits, as per law, by giving reasonable,

sufficient opportunity of being heard to the assessee.

issue of initiation of re-assessment proceedings under section

147/148 of the I.T. Act. Learned Counsel for the Assessee stated

that he is not in a position to argue this ground because he is

not having even copy of the reasons recorded under section 148

of the I.T. Act. In the absence of any material on record and any

serious challenge to the issue of re-assessment proceedings, I

am of the view that no interference is called for in the order of

the Ld. CIT(A) in rejecting this ground of appeal of assessee.

This ground of appeal of assessee is accordingly dismissed.

statistical purposes.

9 ITA.No.4885/Del./2015 Shri Jatinder Singh Taneja, New Delhi. Order pronounced in the open Court.

Sd/- (BHAVNESH SAINI) JUDICIAL MEMBER Delhi, Dated 06th August, 2018 VBP/- Copy to 1. The appellant 2. The respondent 3. CIT(A) concerned 4. CIT concerned 5. D.R. ITAT ‘SMC’ Bench, Delhi 6. Guard File.

// BY Order //

Assistant Registrar : ITAT Delhi Benches : Delhi.