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Income Tax Appellate Tribunal, DIVISION BENCH ‘B’, CHANDIGARH
Before: SHRI SANJAY GARG & MS.ANNAPURNA GUPTA
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.
Vide ground No. 1, the assessee in this appeal has agitated the action of
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.
The Assessee claimed that the aforesaid amount of Rs. 4,85,000/- was paid
by him as Pagri(Premium) to the three tenants for vacation of the property
which since long was occupied by them.
The Ld. Assessing Officer disallowed the entire claim of the assessee in
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.
We have heard the rival contention of the parties and have also gone
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.
It is in the common knowledge that as per the law of the land, the
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.
Second effective ground taken by the assessee is regarding the denial of
claim of expenditure of Rs. 1,95,000/- on account of renovation and claimed as
cost of improvement.
The lower authorities disallowed the aforesaid claim observing that the
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.
It is to be noted that the assessee has claimed expenditure Rs. 14,000/-
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.
In the third ground of appeal the assessee has agitated the disallowance
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.
In the result, appeal of the Assessee is partly allowed.
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