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Facts
The assessee, ALMAC Enterprises, engaged in providing storage facilities, sold an immovable property. The Assessing Officer (AO) recalculated capital gains after the assessee failed to provide documentary evidence for the cost of improvement and brokerage. The CIT(A) allowed the claim. The revenue appealed against this decision.
Held
The Tribunal noted that improvements were made over 20 years and that past assessments had accepted similar claims. While some invoices were missing, the Tribunal found it pertinent that income from warehousing business was declared and accepted, and standard deductions were claimed. The Tribunal decided to remand the issue to the AO for verification of expenses with available documents.
Key Issues
Whether the CIT(A) erred in allowing the indexed cost of improvement without sufficient documentary evidence from the assessee, and whether the revenue's grounds of appeal are valid.
Sections Cited
143(2), 142(1), 46A
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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SMT. BEENA PILLAI, JM & SHRI OMKARESHWAR CHIDARA, AM
Appellant) : Respondent) Appellant /Assessee by : Shri Anant N. Pai Revenue / Respondent by : Shri Ram Krishn Kedia, (SR. DR) Date of Hearing : 03.10.2024 Date of Pronouncement : 30.10.2024 O R D E R Per Beena Pillai, JM: Present appeal filed by the revenue is against order dated 21/06/2024 passed by NFAC for assessment year 2020-21 on following grounds of appeal: 1. “Whether on the facts and in circumstances of the case and in law, the Ld. CIT(A) has not appreciated the facts of the case that the AO asked for documentary evidences regarding cost of improvement for property but the assessee not submitted any evidences.
Brief facts of the case are as under: 2. The assessee is in the business of providing storage facility and also undertakes the work of storage of goods. For the year under consideration assessee filed its return of income on 30/12/2020 declaring total income of Rs.02,99,160/-. The return was selected for scrutiny, and notice under section 143(2) of the act along with 142 (1) of the act were issued. In response to the notices the assessee provided details/explanation/documents as called for from time to time. 2.1. During the assessment proceedings the Ld.AR noted that, the assessee sold immovable property situated at number 1, Block-F, sector 12, Gandhidham Kutch on 18/03/2024, for total consideration of ₹14,75,00,000/-. It was noted that, the assessee Description Date of Financial Cost of Nature of of property Purchase Year Improvement Improvement Improvement Plot No 2 21/03/1990 2002-03 6,85,215 Construction of Godown No. 15 Exit 2007-08 12,50,103 Reconstruction of Godown No. 9 2009-10 18,33,511 Reconstruction of Godown No.1 to No.3 2013-14 1,43,85,330 Construction cost of Tank No. 5 t No. 11 2014-15 29,55,371 Construction cost of Tank No. 12 to No. 13 2016-17 6,65,187 Construction of Tank Shed 2018-19 84,016 Reconstruction of Tank No. 5 to No. 11 Total 2,18,58,733 Description Date of Financial Cost of Nature of of property Purchase Year Improvement Improvement Improvement Plot No 1 26/03/1996 2001-02 30,85,035 Construction of Godown No. 16 to No. 20 2002-03 48,72,274 Construction of Godown No. 19 to No. 22 2004-5 7,53,419 construction of Godown No.23 to No.24 2014-15 5,19,420 Repairs to Godown No.1 to No. 15 2016-17 16,50,035 Major Repairs to 3.1. It was submitted that the assessee kept on making additions in the form of improvements to the said properties from your to your to increase the area of the property which could be rented out. The Ld.AR submitted that all the improvements were made by the assessee over a period of 18 years and hence the supporting documents in respect of the same are voluminous. It was submitted that, the cost incurred on the improvements from year to year were duly audited by the auditors of the assessee and was very much part of the audited accounts that formed part of the return of income. 3.2. It was submitted that, all the submissions were filed before the Ld. AO but the assessee not submit the evidences in respect of the cost of improvement brokerage. It is submitted by the Ld.AR that the assessing officer never disputed the additions made in the preceding years. It is submitted by the Ld.AR that, the assessee had earned income from the warehousing business through these godowns, and that the earned income offered to tax under the head income from house property from year to year. And therefore the 3.3. The Ld.AR submitted that Ld.CIT(A) appreciated the evidences filed and allowed the claim of assessee. He thus relied on the observations of the Ld.CIT(A). 3.4. On the contrary, the Ld.DR though vehemently opposed the submissions of the assessee argued that unless the expenditure claimed by the assessee is not verified, the claim cannot be allowed. He has supported the order passed by the Ld. AO. We have perused the submissions advanced by both sides in light of records placed before us.
At the time of hearing, considering the fact that the addition/improvements were made to the warehouses and tanks constructed by the assessee on the plots purchased by it were made over a period of 20 years, the Ld.AR was directed to furnish details of cost incurred towards improvement/renovation in the immediately passed for assessment years. The Ld.AR furnished paper book number 3, wherein details of invoices carried out by the assessee are placed.