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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI D.KARUNAKARA RAO, AM & SHRI VIKAS AWASTHY, JM
आदेश आदेश / ORDER आदेश आदेश
PER D. KARUNAKARA RAO, AM :
This is the appeal filed by the Revenue against the order of CIT(A)-1&2, Kolhapur, dated 10-06-2015 for the A.Y. 2011-12.
The only ground raised by the Revenue in this appeal relates to the relief granted by the CIT(A) in respect of the addition made by the AO.
When the case is coming up for hearing, there is none to represent the assessee despite service of notice by the Tribunal. Acknowledgement of the said service of notice is placed on record. Considering the availability of the assistance of Ld. DR and the fair
2 ITA No.1220/PUN/2015 M/s. Mangalmurty Developers
decision of CIT(A), we proceed to adjudicate the appeal after hearing
the Ld. DR for the Revenue.
Briefly stated relevant facts are that the assessee is a dealer in
Real Estate and decided to join its plot of land with that of M/s.
Shriram Developers. Subsequently, both the parties sold the joined
land to M/s.Avenue Super Marts Pvt. Ltd. for a consideration of
Rs.4.56 crores (Rounded off). The Deed of Conveyance dated
25-10-2010 evidences the said transaction. Assessee’s share, being ½,
works out to Rs.2.28 crores (Rounded off). In the return of income,
assessee claimed expenditure on the maintenance of the said plot of
land and explained that same were incurred on the construction
activity as well. In the return, assessee claimed Rs.85,21,735/-
towards his share of expenditure on maintenance/construction. On
the other hand, other partner - M/s. Shriram Developers claimed the
expenditure of only Rs.45,64,699/-. Considering the inequality of
claim of expenditure between the two partners in their respective
income-tax returns, AO proceeded to disturb the same and restricted
the claim to Rs.45,64,699/- in assessee’s case too. The assessed
income is determined at Rs.1.56 crores (Rounded off) against the
returned income of Rs.1,02,12,860/-.
The above addition was subject matter of the litigation before the
First Appellate authority. Before the CIT(A) assessee submitted that
the disallowance made by the AO, i.e. restricting the claim of
expenditure to Rs.45,64,699/-, as against the original claim of
Rs.85,21,735/-, is not proper in view of the fact that AO failed to
identify any irregularities in the books of account maintained by the
assessee. Eventually, the CIT(A) allowed the appeal of the assessee as
per the discussion given in Para No.8 and 9 of the order.
3 ITA No.1220/PUN/2015 M/s. Mangalmurty Developers
Before us, Ld. DR for the Revenue fairly submitted that there is
no dispute about the genuineness of the expenditure of
Rs.85,21,735/- claimed by the assessee. Ld. DR read out the contents
of Para No.8 and of the order of CIT(A) which basically contains the
discussion on the genuineness of expenditure and the details of
breakup of the expenditure of Rs.85,21,735/-.
After hearing the Ld. DR and on perusing the order of CIT(A) on
this solitary issue, we proceed to extract the findings given by the
CIT(A) in Para Nos. 8 and 9 of his order. The same reads as under :
“8. From the above facts it is seen that the assessing officer has denied claim of appellant on the ground that since the co-owner has shown lesser expenses on improvement, same amount should be allowed in the case of the appellant. However, we have to examine facts of the case. Earlier both the plots were separate and adjoining. The two owners decided to develop the two plots together and obtained necessary permission for vilinikaran or amalgamation. Some construction was also made. Later on the co-owners decided to execute a lucrative offer and sale was made. Assessing Officer has not pointed out that the expenses as claimed by the assessee were not incurred by him in the improvement of his part of land. Assessing Officer has taken deposition of contractor, Shri Ghat and himself mentioned at paragraph 8.2 that on verification of documentary evidence and in view of the deposition made by Shri Ghat, the contention of the assessee that construction work was carried out prior to its sale was found to be in order. Since some work was already done in a portion of the plot owned by the appellant, there is no reason to disallow the claim of expenses.
Coming to the nature of expenses, the assessee’s claim includes Rs.63,28,200/- as per contractors bill, Rs.2,42,600/- cement purchase, Rs.6,28,553/- steel purchase, Rs.63,000/- cement purchase, Rs.9,60,000/- partner’s salary, Rs.3,95,607/- murum, purchase and Rs.1,79,374/- ceramic purchase. Assessing Officer has not pointed out specifically which of these expenses are not allowable. When the expenses have been duly verified, just because the co-owner has claimed lesser expenses the disallowance cannot be made by the assessing officer. Therefore, the disallowance is hereby deleted and grounds taken by the appellant are allowed.”
From the above, it is the finding of fact that the AO has not
made out any case about the genuineness of the expenditure,
personal/capital nature of the expenditure involved. Expenditure
details provided in Para No.9 of the CIT(A)’s order indicate that an
4 ITA No.1220/PUN/2015 M/s. Mangalmurty Developers
amount of Rs.63,28,600/- constitutes the contract bill and other
payments are incurred on purchase of Cement/Steel, payment of
salary of the partners, murum purchases, ceramic purchases etc. All
these expenses prima-facie suggest that assessee incurred the same
towards the construction activity on the land before the same was sold
to the Avenue Marts Pvt. Ltd. (supra).
Therefore, in our considered view, the order of CIT(A) deleting
the addition in the hands of the assessee is fair and reasonable and it
does not call for any interference. Accordingly, the grounds raised by
the Revenue are dismissed.
In the result, appeal filed by the Revenue is dismissed.
Order pronounced in the open court on this 25th day of January, 2018.
Sd/- Sd/- (VIKAS AWASTHY) (D. KARUNAKARA RAO) �याियक �याियक सद�य �याियक �याियक सद�य सद�य /JUDICIAL MEMBER लेखा सद�य लेखा लेखा सद�य लेखा सद�य सद�य / ACCOUNTANT MEMBER सद�य पुणे Pune; �दनांक Dated : 25th January, 2018. सतीश आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत/Copy of the Order forwarded to : आदेश क� �ितिलिप अ�ेिषत आदेश क� �ितिलिप अ�ेिषत
अपीलाथ� / The Appellant 1. ��यथ� / The Respondent 2. 3. CIT(A)-1 &2, Kolhapur 4. CIT-1 &2, Kolhapur िवभागीय %ितिनिध, आयकर अपीलीय अिधकरण, “A Bench” 5. Pune; गाड� फाईल / Guard file. 6. आदेशानुसार आदेशानुसार/ BY ORDER,स आदेशानुसार आदेशानुसार
स�यािपत �ित //True Copy// Senior Private Secretary //True Copy// आयकर अपीलीय अिधकरण ,पुणे / ITAT, Pune