SH. SURINDER KUMAR SINGLA,PATIALA vs. ITO, W-3, PATIALA

Per Sanjay Garg, Judicial Member:

The present appeal has been preferred by the assessee against the order

of the Commissioner of Income Tax(A) (hereinafter referred to as ‘CIT(A)’) dt.

01/01/2018.

the Ld. CIT(A) in confirming the disallowance of Rs. 3,50,000/- out of the total

disallowance of Rs. 4,85,000/- made by the Assessing Officer in respect of cost of

improvement claimed by the Assessee in respect of capital gains returned on

account of sale of the property.

by him as Pagri(Premium) to the three tenants for vacation of the property

which since long was occupied by them.

respect of the premium / compensation paid by the assessee to the tenants for

vacation of the property. However, the Ld. CIT(A) allowed the amount which

was paid through cheque amounting to Rs. 1,35,000/-and confirmed the

remaining disallowance amounting to Rs. 3,50,000/-. The assessee, thus has

came in appeal before us.

through the record. The assessee before the lower authorities had claimed that

three tenants namely Shri Brij Mohan Singh, Shri Rajinder Pal Singh and Shri Upkar

Singh were in possession of the property. The assessee to prove his case

produced the copy of the assessment register of Municipal Corporation, Patiala

wherein the name of the three tenants alongwith annual rents assessed were

duly mentioned. Apart from that, the assessee also tendered the affidavit of all

the three tenants who confirmed that they have vacated the property before

the sale of the same by the assessee . However the Assessing Officer made the

impugned disallowance observing that the assessee has not produced the

evidence of payment of the aforesaid amount.

property in the possession of the tenants cannot be vacated at the whims and

wishes of the owner but under some exceptional circumstances such as

personal need etc. It is also a common knowledge that generally some

premium / compensation amount is paid by property owner to the tenants for

vacation of the property. In this case, the assessee before sale of the property

had got the property vacated from three tenants and has also given the

bifurcation of the amount given to each of the tenant. Out of the total

expenditure claimed Rs. 4,85,000/-, an amount of Rs. 1,35,000/- was paid

through cheque. Under the circumstances, when the assessee has proved

beyond doubt that three tenants were in possession of the property and the

asessee got the property vacated from them and then sold the property in

question then in the absence of any other evidence which can be said to have

prompted the tenants to vacate the property, the reasonable presumption

would be that the assessee might have paid some premium / compensation to

the tenants. The total amount paid by the assessee has been claimed at

Rs.4,85,000/- out of which Rs. 1,35,000/- has been paid through cheque. In our

view, the interest of justice would be well served if sum of Rs. 3,00,000/- is further

allowed to the assessee as expenditure incurred for getting vacated the

property. Therefore, out of the addition of Rs. 3,50,000/- sustained by the CIT(A),

the assessee is accordingly allowed relief of Rs. 3,00,000/- and the addition to

the extent of Rs. 50,000/- only is confirmed on this issue.

claim of expenditure of Rs. 1,95,000/- on account of renovation and claimed as

cost of improvement.

assessee could not produce bills / vouchers in this respect. However the plea of

the assessee is that renovation was done six years back from the date of sale

and hence the assessee could not produce the bills / vouchers due to so much

lapse of time, which even was practically not possible.

towards statutory fees such as on account of improved map and water

charges etc. Out of the remaining amount of Rs. 1,81,000/-, we deem it fit to

allow the sum of Rs. 1,00,000/- towards cost of improvement and hence the

disallowance on this issue is restrict to Rs. 81,000/- only.

of Rs. 50,000/- claimed as commission paid for procuring the deal of the sale of

property. Neither the assessee could produce any evidence in this regard nor it

seems to be justified, hence, ground no. 3 is hereby dismissed.

Order pronounced in the open Court.

Sd/- Sd/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated : 17.12.2018 AG Copy to: 1. The Appellant 2. The Respondent 3. The CIT(A) 4. The CIT 5. The DR