Loading judgment…
No AI summary yet for this case.
PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of ld. Commissioner (Appeals)- 55, Mumbai dated 30th December 2016, which arises from assessment order passed by Assessing Officer under section 143(3) of the Act dated 28th of March 2014 for Assessment Year 2011-12. The assessee has raised following ground of appeal:-
1. On the facts and circumstances of the case, the Learned Commissioner of Income-tax [hereinafter referred to as "Ld. CIT(A)"] had failed to appreciate that the appellant had spent Rs 4,77,534/- as Land Improvement Cost, hence rightfully allocated this Capital Cost to Villa Aldemar. The Ld. CIT(A) therefore erred in not directing the Ld. Assessing Officer (LAO) to allow Land Improvement Cost of Rs.3,18,536/- being 2/3rd of Rs 4,77,534/- from the sale consideration. 2. On the facts' and circumstances of the case and in law, the Ld. CIT(A) had failed to appreciate that the amount of Rs.17.45,000/- out of the amount paid to Contractor, was for construction of the Villas and non-completion and short delivery of the work done by Contractor amounts to a Capital Loss to the Appellant and therefore the Ld. CIT(A) erred in not allowing the same.
3. On the facts and circumstances of the case and in law, the Ld. CIT(A) had failed to appreciate that the amount of Rs.10,60,447/- was spent by the appellant on the construction of Villa Aldemar and ought to have been treated as part of the Construction Cost thereof and therefore the Ld. CIT(A) erred in not allowing the same.
4. On the facts and circumstances of the case and in law, the Ld. CIT(A) had erred in confirming the nomenclature of the asset from Land to Building and further foiled to appreciate that construction of a Villa on Land is an improvement of original asset i.e. land and therefore Ld. CIT(A) erred in confirming that the Long Term Capital Gain of Rs.87,96,361/- in respect of the Land as Short Term Capital Gain.
5. On the facts and circumstances of the case, the Ld. CIT(A) had failed to appreciate that Land and Building are two separate distinct assets and therefore profit from sale of each of the independent assets is to be computed separately. The Ld. CIT(A) also failed to appreciate the provisions of Section 2(29A) and 2(42A) which provide that the Long Term Capital Gain and Short Term Capital Gain in respect of any asset ought to be determined based on the period of holding of an assets and therefore Ld. CIT(A) erred in confirming that both land and building of Aldemar Villa as a single asset and wrongly confirming that the entire gain as Short Term Capital Gain. 2. Brief facts of the case are that assessee is a non-resident Indian, during the period relevant to the Assessment Year 2011-12 the 2 assessee sold a property namely “Aldimar Villa” in Goa and claimed income from Long Term Capital Gain and Short Term Capital Gain.
During the assessment, the Assessing Officer noted that assessee had purchased land underneath the Villas on 28th of March 2016 and after obtaining necessary permission from local authorities, the assessee completed construction of three Bungalows /Villas. The remaining two villas were sold by the assessee in earlier years. The assessee has shown to have sold one Villa during the period under consideration, on the sale of which the assessee computed Long Term Capital Gain of Rs. 87,96,361/- and Short Term Capital Gain of Rs. 1,33,683/-.
The assessee claimed cost of improvement of Rs. 47,77,534/-. It was further noted by Assessing Officer that as per the cost allocation schedule provided by assessee, the cost of improvement is not allocated amongst other two Villas sold by assessee in earlier years.
Therefore, the Assessing Officer allowed only one third of cost of improvement, thereby disallowed two third i.e. Rs.3,18,356/-. The Assessing Officer treated the entire Capital Gain as STCG and also disallowed Rs. 17,45,000/- paid to contractor and Rs. 10,60,447/- on account of construction cost. On appeal before the Ld. Commissioner (Appeals) the action of Assessing Officer was confirmed. Thus, further aggrieved by the order of ld. Commissioner (Appeals), the assessee has filed present appeal before us. 3
We have heard the submission of learned Authorized Representative (AR) of the assessee and learned Departmental Representative (DR) for the revenue and perused the material available on record. The learned AR of the assessee submits that the assessee is non-resident Indian. The assessee was out of India during the pendency of appeal before First Appellate Authority. The ld. Commissioner (Appeals) passed the order ex-parte. The Authorised Representative appointed by assessee neither appeared before the Ld. Commissioner (Appeals) nor intimated the assessee. Due to non-representational of facts before the Ld. Commissioner (Appeals) the assessee suffered adverse finding against her. The ld. AR submits that the assessee has filed her affidavit that notices issued by ld. Commissioner (Appeals) dated 15.02.2016, 04.07.2016, 31.08.2016 & 22.12.2016 was not received by her. The learned AR of the assessee prayed that the grounds of appeal raised by assessee may be restored to the file of Ld. Commissioner (Appeals) for fresh adjudication after granting fair and proper opportunity to the assessee. The learned AR of the assessee further submits that he undertake on behalf of assessee to be more vigilant and careful in representing the case before ld. Commissioner (Appeals). The learned AR further submits that the assessee would provide her latest address to the file of Assessing Officer as well as to ld. Commissioner (Appeals) for service of summons/notices. 4
On the other hand, the ld. DR for the Revenue submits that the ld. Commissioner (Appeals) passed the order on the basis of material available on record.
We have heard the rival submission of the parties and have gone through the orders of authorities below. We have noted that the ld. Commissioner (Appeals) issued notice of hearing dated 15.02.2016, 21.03.2016, 04.07.2016, 31.08.2016, & 22.12.2016, none appeared or responded in response to such notices. The ld. Commissioner (Appeals) decided the appeal on the basis of material available on record. We have noted that the assessee filed an affidavit before us and contended that she is non-resident Indian and mainly living in USA. The assessee further contended that she was dependent upon her Chartered Accountant namely Ashok Kumar Mehra & Co. In the affidavit, it is contended that a notice was received from the office of ld. Commissioner (Appeals) to appear on 13.08.2014, on which the assessee sought adjournment and handed over the required to her Chartered Accountant. However, due to her non-availability in India completed details were not provided to them. The other C.A.
Karnavat & Co. was also appointed to represent her case. As we have already mentioned that the ld. AR of the assessee vehemently submitted that in absence of assessee her C.A did not appear before the ld. Commissioner (Appeals) which resulted in passing ex-parte 5 order. Considering the contents of affidavit and keeping in view the Principle of Natural Justice, the contention/submission raised by ld. AR of the assessee that the order was passed ex-parte and that the assessee suffered order against her, the grounds of appeal raised by assessee are restored back to the file of ld. Commissioner (Appeals) for adjudicating the issue afresh. The assessee is directed to fully co- operate and provide all necessary detail and evidence to ld. Commissioner (Appeals). The assessee is also directed to supply her address and other details for communication for date of hearing. The assessee is further directed not to seek adjournment without any valid reason. Needless to say that ld. Commissioner (Appeals) shall grant reasonable opportunity before passing the order in accordance with law.
In the result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 15/10/2018.