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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-18, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-18/U/s 263/19/2012-13/2726, dated 19-11-2012. The Assessments were framed by Income Tax Officer, Ward-18(1)(3), Mumbai (in short ITO or AO) for the assessment year 2008-2009 vide order dated 14-11-2010 under section 143(3) of the Income Tax Act, 1961(hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) revising the assessment framed by the AO under section 143(3) of the Act for claiming higher cost of acquisition and excess indexation cost. For this assessee has raised following four grounds: -
Smt. Malti S. Johari (A.Y:2008-09) “1. The learned Commissioner of Income tax erred in setting aside the order passed by the Income-tax Officer tinder section 143(3) and directing the Assessing Officer to pass a fresh assessment order.
He failed to appreciate and ought to have held that Assessing Officer calculated Long term capital loss at Rs. 29,63,637/- after verifying the evidence placed on record.
3. He further erred iii not considering the evidence placed before him and the written submissions submitted to him.
4. The appellant prays that the order passed by Commissioner of Income tax under section 263 be quashed and the order of the Assessing Officer passed under section 143(3) be restored.”
3. We have heard the rival contentions and gone through the facts and circumstances of the case. Briefly stated facts are that the original assessment was completed under section 143(3) of the act for the relevant assessment year 2008-09 by ITO vide order dated 14-11-2010. Subsequently, the CIT(A) noticed from the records that the assessee has shown purchase cost of row houses No. 10 and 11 at Rs. 53,69,696/- and also claimed indexation from FY 1994-95 and calculated the indexed cost of acquisition at Rs. 1,10,28,659/-. According to CIT(A), as per the agreement dated 18-04-2000, the actual cost of acquisition of both row houses is Rs. 23,16,100/-. According to CIT(A), the order of the AO is erroneous and prejudicial to the interest of the Revenue as far as adopting the cost of acquisition of row houses No. 10 and 11 which at Rs. 23,16,100/- as against adopted by AO at Rs. 53,69,696/-. According to CIT(A), the AO has also allowed excess indexation cost of acquisition from FY 1994-95 instead of calculating the indexed cost from 18-04-
Smt. Malti S. Johari (A.Y:2008-09) 2000. The CIT(A) was not convinced by the explanation of the assessee and therefore noted that as per agreement dated 11-04-2000 cost of the property referred to house No. 10 and 11 is at Rs. 23,16,100/- as against disclosed by an assessee and adopted by AO during the assessment at Rs. 53,69,696/-/- and also indexing from FY 1994-95 as against indexation from FY 2000-01. Accordingly, he directed to the AO to pass a fresh assessment order in term of the revision order under section 263 of the Act.
At the outset, the learned Counsel for the assessee filed copies of balance sheet for the year ended 31-03-1995, 31-03-1996, 31-03-1997, 31-03-1998, 31-03-1999, 31-03-2000, 31-03-2001, 31-03-2002, 31-03- 2003, 31-03-2004, 31-03-2005, 31-03-2006, 31-03-2007 and the total purchase price is Rs. 53,69,696/-, which reads as under: - Date Opening Details of Closing Balance pament balance made Cheque No. Cheque Amount Purchase 4,900,001 031632 Date 500,000 price 031633 27/10/1994 2,200,000 031634 12/11/1994 2,200,000 12/11/1994 31/03/1996 4,900,001 25/06/1996 168,845 5,068,846 31/03/1997 5,068,846 5,068,846 31/03/1998 5,068,846 31/03/1999 5,068,846 31/03/2000 5,068,846 31/03/2001 5,068,846 03/04/2000 145,250 Stamp duty 5,248,646 28/04/2000 34,550 Registration fees 31/03/2002 5,248,646 5,248,646 31/03/2003 5,248,646 5,248,646 31/03/2004 5,248,646 5,248,646 31/03/2005 5,248,646 5,248,646 31/03/2006 5,248,646 5,248,646 07/12/2006 1050 Entrance 5,369,696 17/02/2007 120,000 fees 31/03/2007 5,248,646 Membership fees
Even otherwise, we have examined these balance sheets and also ascertain the cost of acquisition. The cost of this row house no. 10 and 11 is Rs. 53,69,696/-. One interesting fact was brought to our notice by the Smt. Malti S. Johari (A.Y:2008-09) learned Counsel of the assessee during the course of hearing that while giving effect to the order of revision passed by CIT(A) under section 263 of the Act, the AO taken the value of cost of acquisition of these two row house at Rs. 23,16,100/- and also indexation was allowed from FY 2000- 2001 for the computation of indexed cost of acquisition property. The CIT(A) adjudicated both the issues and allowed indexation from the date of agreement i.e. 12.11.1994 vide its appellate order at Para 8.5 as under: - “8.5 In the above matter, I find that vide an amendment to original agreements letter, the developer M./s. Choudhury & Choudhry (India) Ltd., through another agreement cum-allotment letter dated 14.11.1996 informed that Bombay Municipal Corporation has not given permission to build 7th and 8th floors wherein flat nos. 81,82,83 and 84 were to be situated. Therefore, construction of 7th & 8th floors cannot be carried out. However, the developer MIs. Choudhury & Choudhury (India) Ltd., allotted Row House No. 10 to the appellant and Row House No. 11 to the appellant jointly with her daughter Miss Veena Johari in lieu of the allotments made in letter dated 12.11.1994. The vested interest tn the property of flat Nos. 81 .82,83 and 84 were converted into Row House No. 10 and partly 11. The appellant's interest in the flats continued to be vested in Row Houses. Therefore, the revised agreement can only be construed as an extension of I amendment to the agreement dated 12.11.1994. The agreement for sate dated 11th April. 2000 with respect to the row houses are just conveyance deed to recognize the ownership rights of the appellant which originated with signing of agreement-cum
Smt. Malti S. Johari (A.Y:2008-09) allotment latter dated 12.11 1994. In this regard, there is no substance in the argument of the AO that in the year 1994 and 1996, the plan was not approved by BMC. The material thing to be considered here is when the rights in the said flats or alternatively in the row houses germinated. There cannot be any doubt that the seeds of beneficial and enforceable rights" were sown with execution of agreement-cum- allotment latter on 12.11. 1994.”
The CIT(A) also allowed the entire cost of acquisition at Rs. 53,69,696/- by observing in Paras 9, 9.1, 9.2 and 9.3 as under: - “9.1 The AO has further given the findings that the assessee has paid for the 3 row houses W Rs 11,00,000/- plus expenses only and on material in support of the additional amenities constituting improvements has been placed on record. In this regard the appellant has claimed payment of Rs 53,69,696/- for the three row houses 10A, 10B and 11B including various amenities in these row house. The details of payments are listed as under:
Payments for Dates of Nature Amount Row houses payment along with amenities 5,00,000 27.10.1994 Cheque 22,00,000 12.11.1994 Cheque 22,00,000 12.11.1994 Cheque 22,00,000 25,06,1996 Cheque 1,68,864 25.06.1996 Total payments 50,68,846 for Row houses including amenities 03.04.2000 Stamp duty 1,45,250 28.04,2000 Registration fees 4,550 07.12.2006 Entrance fee 1050 17.02.2007 Membership fee 1,20,000 Total payment 53,69,696
Smt. Malti S. Johari (A.Y:2008-09) The purpose of payment is demonstrated as below- Para 5 of letter dated 14.11.1996, where the builder has given details of payments of Rs. 49 lac as under- 5) The total amount of Rs. 49 lakhs paid by Dr. (Mrs.) Ma/ti S. Johari. In terms of the allotment letter dated it November. 1994 issued to her shall be adjusted as under Towards full consideration Rs. 37 Iakhs For Row House No. 10.
Towards full consideration for Ps. 12 Iakhs One-third interest in Row House No. II. Rs. 49 lakhs 11) Except for the changes contained herein, the other terms and conditions of the allotment letters dated 121"November 1994 referred to hereinabove shall remain unaltered.
It is contended that the builder MIs. Choudhury & Choudhury (India) Ltd. has appropriated Rs. 11 Lacs for each of the three Row Houses out of the total payments of Rs. 49 paid by the appellant. The builder also appropriated the balance sum paid on allotment i.e Rs. 16 lac plus further amount collected at Rs. 1,68,846/- appropriated towards additional amenities listed in the allotment letter dated 12- 11.1994. It is found that on making specific query by the AO, the builder has issued a letter dated 13.09.2010 confirming contribution of Rs. 49 lac by the appellant towards cost of the flat along with providing additional amenities and alteration in Smt. Malti S. Johari (A.Y:2008-09) structure. For the sake of convenience, the content of the letter is reproduced as under-
"With reference to the above we would like to state that vide allotment letter dated 120 November, 1994 we have allotted a flat no. 71 & 72 to Miss. Veeno S. Johan and and Flat No. 81 to 84 to Mrs. Malt! S. Johari. Thereafter, vide our letter dated 14.111996 we had change the said allotment in place of flat no. 81 to 84 and 71 & 72 to Row House No. IOA & 108 to Mrs. Malti S. Johari, Row House No. I IA to Miss Veena S. Johari & 118 to Mrs. Malti S. Johari for a consideration of Ps. 11.00 lakh each totaling to Ps. 44.00 lakhs as per the Agreement of Sale dated 1 I" April 2000. An amount of Ps. 30.00 lakhs received from both the customer for providing additional amenities and alternation in structure as per their requirement.
In view of the above we state that we have received Ps. 4900 lakhs from Mrs. Ma/ti S. Johari and Rs. 2500 Iakhs from Ms. Veena S. Johari (total of Ps. 74.00 lakhs) towards the cost of said two Row Houses No. IOA, B & I 1 & 118 along with providing of additional amenities and alternation in structure.
9.2 In the above matter, I find the appellant has demonstrated successfully the purpose of payments of Rs. 53,69.6961- towards cost of the three row houses, additional amenities and other ancillaries expenses viz., stamp duty, registration fees, entrance fees and membership fee. The list of additional amenities are clearly listed in the original
Smt. Malti S. Johari (A.Y:2008-09) allotment letter dated 1211.1994. In this regard. I agree with the appellant on the submission made before the AO that the Income-tax department has accepted in past the value of investment in the books of accounts of the appellant at Rs. 53,69.696/- The agreement-cum-allotment letters dated 12-11-1994 and 14-11-1996 also gives details of additional amenities to be provided for the value of the consideration. During the remand reports too, cost of additional amenities was further confirmed by the developers MIs. Choudhury & Choudhury (India) Ltd by their letter dated 13-09-2010, which was examined and accepted by the AO.
9.3 Looking to the overall facts and circumstances of the case, the AO is directed to take the cost of acquisition of the three row house 10A, 10B and 11B at Rs. 53,69,696/- instead of Rs. 33 lac as adopted in the assessment order. “
When a query was put to the learned CIT DR, she could not controvert the facts stated above, she merely relied on the revision order passed by CIT(A) under section 263 of the Act.
After going through the facts and circumstances of the case, we are of the view that the evidences clearly leads us to the fact that the cost of acquisition of these two row houses i.e. No. 10 and 11 is Rs. 53,69,696/- and this was acquired as on 12-11-1994 vide agreement cum allotment letter from where the assessee started making payment as it is clearly evident from the above Paras. In view of the above facts and circumstances, we are of the view that the assessment framed by AO under section 143(3) of the Act is neither erroneous nor prejudicial to the interest of the Revenue. Accordingly, we quashed the revision order
Smt. Malti S. Johari (A.Y:2008-09) passed by CIT(A) under section 263 of the Act and allow the appeal of the assessee.
In the result, the appeal of assessee is allowed. 9.
Order pronounced in the open court on 25-10-2017.