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Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
आदेश / ORDER
PER SUSHMA CHOWLA, JM
The appeal filed by the assessee is against the order of Commissioner of Income Tax (Appeals), Pune-10 dated 07.12.2016 relating to assessment year 2012- 13 against order passed under section 143(3) of the Income Tax Act, 1961 ( in short ‘the Act’).
The assessee has raised following grounds of appeal:-
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“1. Commissioner of Income Tax(Appeals) erred in not allowing cost of acquisition of Residential Flat of Rs.21,00,000/- and indexation thereof for computation of Capital gain on the said Flat. Appellant prays for deduction u/s.48 in respect of whole cost including indexation thereof.
Commissioner of Income Tax (Appeals) has erred in giving direction in respect of claim of appellant u/s.54 of Rs.1,21,10,536/- for verification, which Assessing Officer restricted to Rs.1,07,41,933/-, instead of allowing it. Appellant prays for full claim u/s.54 of Rs.1,21,10,536/-. 3. Appellant prays for just and equitable relief. 4. Appellant prays to cancel the interest charges u/s.234B. 5. Appellant prays to add, alter, amend, modify and or withdraw the ground/s during the proceedings.”
The Ld. AR for the assessee moved an application for adjournment. However,
on earlier occasion, adjournment was granted to the assessee on 09.04.2018,
08.05.2018 and 14.08.2018 at the request of Ld. AR. Accordingly, adjournment
application dated 08.10.2018 filed by Ld. AR for the assessee was refused and the
matter was taken up for adjudication. The assessee had filed written submissions.
The Ld. DR for the Revenue placed reliance on the order of CIT(A).
The issue raised in the present appeal is with regard to computation of capital
gain on sale of residential flat. The assessee is aggrieved by the order of CIT(A) in
not allowing cost of acquisition of residential flat of Rs.21,00,000/- and indexation
thereof. The assessee is further aggrieved with the direction of CIT(A) in respect of
assessee’s claim u/s.54 of the Act wherein the issue has been sent back to the file of
Assessing Officer for verification. The assessee also filed written submissions which
are taken on record.
Briefly in the facts of the case, the assessee had sold two flats bearing Flat
No.603A & 603B at Royal Residency, Shivajinagar, Pune-5 for total consideration of
Rs.2,15,00,000/-. The said flats were purchased in the year 2004 vide deed of
agreement registered on 29.07.2004 at Rs.40,00,000/-. However, in order to compute
long term capital gain, the net purchase cost was declared at Rs.60,91,586/- which
3 ITA No.97/PUN/2017 A.Y.2012-13
includes sum of Rs.21,00,000/- which was claimed to have been incurred for
additional amenities in the year of purchasing itself. The Assessing Officer objected
to the said computation of cost of acquisition specifically in respect of the major
amount of Rs.21,00,000/-. The assessee failed to furnish any copy of bills/vouchers
for the items specified as additional amenities provided by the seller/ builder on
account of which an amount of Rs.21,00,000/- i.e. more than 50% of the cost of the
flats was claimed to be paid. The assessee claims to have paid some amount on the
basis of mutual agreement between him and builder but the said agreement was
unregistered. The Assessing Officer, thus, held the claim of the assessee to be not
genuine and the amount was excluded from the cost of acquisition of the said flat.
The assessee had further claimed deduction u/s.54 of the Act on account of
investment in another flat. The assessee had declared the said investment in the new
asset at Rs.1.21 Crores whereas, the Assessing Officer restricted the same at
Rs.1.07 Crores.
Before the CIT(A), assessee furnished explanation. However, the first issue of
Rs.21,00,000/- being additional cost of the said flat paid to the builder, was not
accepted. Further in respect of the second claim of deduction u/s.54 of the Act, the
matter was remanded back to the file of Assessing officer for verification.
Now aggrieved by the order of CIT(A), assessee filed appeal before the
Tribunal.
On perusal of the record, and after hearing the Ld. D.R for the Revenue and
also perusing the written submissions filed by the Ld. AR for the assessee, the first
issue which needs to be addressed is against cost of acquisition of the said flat sold
by the assessee and the second issue is against deduction claimed u/s.54 of the Act.
The assessee during the year under consideration had sold two residential flats
bearing No. 603A and 603B in Royal Residency at Gokhale Road, Model Colony,
Pune for sale consideration of Rs.2,15,00,000/-. The assessee had purchased the
4 ITA No.97/PUN/2017 A.Y.2012-13
said flats for Rs.40,00,000/- vide agreement dated 29.07.2004. The assessee had
further claimed to have made certain additional works to the said flat which was made
by builder itself for which sum of Rs.21,00,000/- was given to the builder. Other
amounts were also claimed as additional expenses to the said flats which have not
been disputed. The Assessing Officer did not accept the plea of the assessee vis-a -
vis Rs.21,00,000/-. In order to support its case regarding payment of Rs.21,00,000/-,
the assessee relied on unregistered document between the builder and assessee
dated 04.10.2004 under which the builder agreed to provide extra fittings and fixtures.
The Assessing Officer noted that undisputedly onus was upon the assessee to
establish its case on the claim of deduction. In response, the assessee furnished
certificate dated 15.07.2004 from M/s. Bhosale Manas Developers of having received
Rs.65,42,750/- towards two flats including the basic price, maintenance deposits and
other amenities. Undisputedly, the said agreement is an unregistered document but
the assessee had furnished confirmation from builder and also break-up of the
additional specification provided. The amounts were paid by way of cheque as per certificate/confirmation dated 15th July, 2004 from M/s. Bhosale Manas Developers.
The assessee stated that due to an inadvertent mistake of not registering the additional amenities agreement and annexure, it could not be said that it is not a cost
of acquisition of property. I find merit in the plea of assessee, specifically in the
circumstances, where the assessee had furnished confirmation from builder and had
also paid the amount for acquisition of residential flats by cheque. Accordingly, I hold
that the cost of acquisition in the hands of assessee needs to be increased by the
said sum of Rs.21,00,000/- on which the assessee is entitled to claim indexation.
Accordingly, the Assessing Officer shall compute the indexation of cost of acquisition
after including the sum of Rs.21,00,000/-. Accordingly, ground of appeal No. 1 raised
by assessee is allowed.
Now coming to the second issue i.e. claim of deduction u/s.54 of the Act
wherein the assessee had claimed an investment in new flat at Rs.1.21 Crores which
was allowed by the Assessing Officer at Rs.1.07 Crores. Before the CIT(A), the
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assessee furnished certain information and the matter has been restored back to the file of Assessing Officer by the CIT(A) to go through the claim and in case the claim is found to be correct then necessary effect is to be given in the order considering all documentary evidences and provisions of section 54 of the Act. The plea of the assessee against the same is not sustainable since the issue has been sent back by the CIT(A) to the file of Assessing Officer for verification and who shall allow the claim of assessee in accordance with the direction of CIT(A). Accordingly, ground of appeal No. 2 raised by assessee is dismissed.
In the result, appeal of the assessee is partly allowed.
Order pronounced on 22nd day of October, 2018.
Sd/- (SUSHMA CHOWLA) �या�यक सद�य/JUDICIAL MEMBER
पुणे / Pune; �दनांक / Dated : 22nd October, 2018. SB आदेश क� ��त�ल�प अ�े�षत / Copy of the Order forwarded to :
अपीलाथ� / The Appellant. 1. ��यथ� / The Respondent. 2. 3. The CIT(Appeals), Pune-10. 4. The Pr. CIT-4, Pune. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “एक-सद�य” ब�च, 5. पुणे / DR, ITAT, “SMC” Bench, Pune. गाड� फ़ाइल / Guard File. 6.
// True Copy // आदेशानुसार / BY ORDER,
�नजी स�चव /Private Secretary आयकर अपील�य अ�धकरण, पुणे / ITAT, Pune.