MOGALAPALLI MAHALAKSHMI,VISAKHAPATNAM vs. INCOMW TAX OFFICER (WARD INTERNATIONAL TAXATION), VISAKHAPATNAM

1. This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)]-10, Hyderabad, in Appeal No.10/10323/2014-15 dated 23.11.2023, arising out of order passed u/s 144 r.w.s.144C(3) of the Income Tax Act, 1961 (in short ‘Act’) dated 10.02.2023 for the Assessment Year (A.Y.) 2015-16.

Brief facts of the case are that the assessee is a non-resident individual and during the impugned assessment year, the assessee had sold immovable property bearing Document No.3645/2014 and got it registered on 09.06.2014 with SRO, Visakhapatnam for a consideration of Rs.35,65,700/-. The Assessing Officer(AO) issued noticed u/s 148 of the Act on 29.03.2021 in order to bring to tax the income from long term capital gains arising out of sale of immovable property. Subsequently, the AO completed the assessment and passed order u/s 144 r.w.s. 144C(3) of the Act, dated 10.02.2023, by assessing the income of the assessee at Rs.18,19,013/ and raised a demand of Rs.6,13,013/-.

Aggrieved by the order of the Ld.CIT(A), the assessee preferred an appeal before the Tribunal by raising the following grounds of appeal :

The order of the learned Commissioner of Income Tax (Appeals) is contrary to the facts and also the law applicable to the facts of the case.

The learned Commissioner of Income Tax (Appeals) ought to have affirmed that had the DIN been mentioned in the notice issued on 29.08.2021, there was no need to intimate again on 19.09.2022.

Ground No.2 and 3 are not pressed by the assessee, hence, dismissed as not pressed.

With regard to Ground No.4, it was the submission of the Ld.AR that the AO made disallowance of indexed cost of improvement of Rs.14,21,650/- with supporting documents, such as source of funds, mode of payment and bank statement etc. It was further submitted that to substantiate assessee’s claim, the assessee has produced confirmation letter from the civil contractor, but the Ld.AO as well as the Ld.CIT(A) rejected the submissions and confirmation letters filed by the assessee, saying that the assessee has not produced any supporting bills, vouchers, source of funds, in respect of the claim of indexed cost of improvement. The assessee has filed Memorandum of Understanding (MoU) dated

On the other hand, the Ld.DR(CIT) has submitted that the MoU is unregistered and it is only notarized agreement, therefore, it is not a valid document. Hence, the order passed by the Ld.AO is to be confirmed.

I have heard both the parties and perused the material available on record. It is an undisputed fact that the agreement cum MoU is unregistered. The main grievance of the revenue is that the assessee has not produced any bills for the cost of improvement. It is undisputed fact that the civil contractor who entered into MoU has offered the amount received for cost of improvement from the assessee as income and the same is shown in the return of income filed by the contractor for the A.Y.2015-16. Therefore, the AO, simply cannot disbelieve the MoU on the ground that it was not registered. Therefore, I am of the view that the Mogalapalli Mahalakshmi, Visakhapatnam assessee is entitled to indexed cost of improvement as claimed by the assessee, therefore, the ground raised by the assessee is allowed.

In the result, appeal of the assessee is allowed.