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Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI
Before: Shri Shamim Yahya
O R D E R This appeal by the assessee is directed against the order of learned CIT(A) dated 30.11.2016 and pertains to assessment year 2012-2013.
The grounds of appeal
read as under:- “Addition of Rs. 17,92,840/- on account of non-inclusion of corpus charges in actual cost of asset as per section 50(1)(iii)
1. The CIT (A) failed to appreciate that the corpus charges of Rs. 17,92,140/-paid by the Appellant formed part of the actual cost of asset acquired during the year, all details of which were filed before the CIT (A). Therefore, the CIT (A) erred in not reducing the corpus charges from the sale consideration as per section 50(l)(iii) for computing capital gains. The appellant craves leave to add, amend, alter or delete any of the above grounds of appeal.”
3. In this case the Assessing Officer did not allow payment for corpus fund amounting to Rs.17,92,840 and development charges amounting to Rs.4,28,000 as cost of acquiring new asset.
. M/s.Four Star Engineering Ind.Pvt.Ltd.
Against this order, the assessee appealed before the learned CIT(A). In the submission before the learned CIT(A) it was contended by the assessee that the assessee had made payment of Rs.17,92,140 towards corpus fund and apart from it, it has also made payment of Rs.4,28,400 towards development charges which were not considered by the Assessing Officer while calculating the short term capital gain. In support of its claim the assessee filed a copy of the agreement for sale.
Considering the above the learned CIT(A) held as under:-
“The appellant was specifically asked to clarify the nature of corpus fund and the purpose for which it was paid. The appellant was also asked to provide copy of the bye-laws of Association of Persons for which corpus fund was created. The appellant did not provide any copy of corpus fund. In absence of it, it cannot be ascertained whether the payment made was part of cost of the property and the payment was compulsory for purchasing such a property. In absence of details, it cannot be held that the payments made in lieu of corpus fund was a part of the cost of the property. Appellant had failed to prove that corpus fund paid was part of the cost of property. In view of it, the claim of corpus fund of Rs.17,92,840/- cannot be allowed.”
As regards the development charges, the learned CIT(A) held that it was directly connected with the improvement of building hence it was part of the cost.
As against the above order, assessee is in appeal before the ITAT.
I have heard both the Counsel and perused the records. The learned Counsel of the assessee submitted that the corpus fund has been paid as per the agreement of sale. It is very much part of the cost hence the same
. M/s.Four Star Engineering Ind.Pvt.Ltd. should be allowed as part of the cost. In this regard, I note that assessee has not submitted the bye-laws of the society before the learned CIT(A).Hence there was no occasion for the Revenue authorities to examine the nature of the corpus fund. However in this regard it is the submission of the learned Counsel of the assessee that the bye-laws of the said society were not available. In my considered opinion, corpus fund cannot be treated as part of the cost if the same is refundable. However this aspect needs an examination. The learned Counsel of the assessee fairly agreed that the issue may be remitted to the file of the Assessing Officer to ascertain as to whether the said corpus fund is refundable or not. If the same is not refundable, the same shall be allowed as part of the cost to the assessee. Accordingly this issue stands remitted to the file of the Assessing Officer. The Assessing Officer shall examine whether the said corpus fund is refundable are not and thereafter decide as per directions hereinabove. Needless to add, assessee should be granted adequate opportunity of being heard.
In the result, this appeal filed by the assessee stands allowed for statistical purposes.