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Income Tax Appellate Tribunal, DELHI BENCHES : SMC-I : NEW DELHI
Before: SHRI R.S. SYAL
Assessee By : None Department By : Shri Rajesh Kumar, Sr. DR Date of Hearing : 28.09.2016 Date of Pronouncement : 28.09.2016 ORDER This appeal filed by the assessee is directed against the order passed by the CIT(A) on 1.2.2016 in relation to the assessment year 2011-12.
The only issue raised in this appeal is against the confirmation of disallowance of Rs.7,72,147/-.
Briefly stated, the facts of the case are that the assessee sold his 2.5 storey built up property situated at A-29, Sector-19, Rohini, Delhi for a total consideration of Rs.55 lac. This 180 sq. mtr DDA plot was purchased by the assessee on 6.6.1997 which was later on constructed three storeys during the financial year 1999-2000 for a consideration of Rs.23,92,500/-. The same was again renovated in the financial year 2004- 05 for a sum of Rs.1,75,500/-. The AO required the assessee to explain as to how construction and renovation expenses were claimed as deduction in entirety as incurred for three storeys, whereas the property sold was only 2.5 storeys as per the sale deed. Not convinced with the assessee’s contention, he proportionately reduced construction expenses of ½ storey by a sum of Rs.7,72,147 for which disallowance was made. The ld. CIT(A) affirmed the addition.
I have heard the ld. DR and perused the relevant material on record.
There is no appearance from the side of the assessee. Request for adjournment has been rejected as this appeal involves only a trivial issue.
It is apparent from the submissions made by the assessee before the ld. CIT(A) that: “the entire property with all freehold rights of the land 2
along with the whole of the constructed structure was passed on to the purchaser of the said property.” I fail to appreciate the view taken by the authorities below in disallowing proportionate expenses for ½ storey when the assessee did not retain any part of the building and transferred the entire structure. This was also submitted before the AO, who simply chose to ignore the same by noticing that in the sale deed the property transferred was 2.5 storeys whereas the assessee had three storeys. It is obvious that when the entire property is transferred, there cannot be any question of reducing the cost of construction/renovation on a hyper technical ground. Under such circumstances, I hold that the authorities below erred in making and sustaining disallowance of Rs.7,72,147/-. The same is, therefore, deleted.
In the result, the appeal is allowed.
The order pronounced in the open court on 28.09.2016.