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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN
O R D E R Per Bench The instant Appeal by the assessee-individual is directed against the Order dated 29/3/2022 by the Commissioner of Income Tax (Appeals)-12, Bengaluru (‘CIT(A)’, for short), partly allowing the assessee’s appeal contesting his assessment under section 143(3) of the Income Tax Act, 1961 (‘the Act’ hereinafter) dated 17/12/2019 for Assessment Year (AY) 2017-18.
The appeal, even as it projects several grounds, making in fact the Grounds before the first appellate authority as part thereof vide its last Gd. 4, raises a single issue, i.e., the eligibility or otherwise in law, and in the facts and circumstances of the case, of the deduction of cost of improvement, claimed at Rs. 5 lacs (before indexation), in the computation of capital gains on sale of house property by the assessee during relevant year. The same, stated to be toward interior works done on the property, a Villa, purchased by the assessee 1 | P a g e (AY 2017-18) Shaju Ninan John v. Dy. CIT during fy 2003-04, in the following year, i.e., fy 2004-05, was disallowed by the Assessing Officer (AO) in absence of any substantiation (para 3 of the assessment order). In appeal, the assessee furnished a handwritten note from the Contractor, Shri Jaya Kumar, Proprietor, M/s. Seema Engineering Works, Alappuzha, dated 05/11/2004 (PB pgs. 4,5), which states of an agreement to execute interior works on shelf, cupboards, kitchen cabinet, etc. in the rooms and kitchen of the Villa owned by the assessee. The ld. CIT(A) did not find it convincing and dismissed the appeal, holding as under:- “11. The assessee has further claimed to have incurred an expenditure of Rs. 5,00,000 towards interior and furniture works. The assessee has submitted copy of a hand written receipt from the vendor acknowledging receipt of Rs. 5,00,000. However, it is seen that the assessee has not been able to produce evidence of the interior and furniture works undertaken. Assessee is also not able to explain the mode of payment and produce any evidence in this regard. The payment is claimed to have been made in 2004. However, no specific/general evidence regarding the works undertaken and mode of payment is given. Considering the above, this amount of Rs. 5,00,000 claimed towards interior works cannot now be allowed on a mere claim. The grounds of appeal
w.r.t. this cost of improvement are rejected.” (pg.6)
3. We have heard the parties, and perused the material on record. 3.1 The assessee, a non-resident Indian settled in UK, claims to have undertaken interior works at his Villa through a Contractor vide an agreement entered into on 05/11/2004. The least therefore the assessee ought to have shown is of a visit to India at the relevant time, only whereupon the details of the work, as well as cost thereof at Rs. 5 lacs, no mean sum considering that the property itself costed, exclusive of taxes & fees, Rs. 21 lacs and odd, could be settled between the parties and, further, of having stayed up to 31/12/2004, i.e., the time by which the work was envisaged to be completed. Two, of having made payment/s thereto, stated to be made in instalments with the progression of work, ostensibly in cash, as there is no mention of any bank transfer/s. If the assessee left in the meanwhile, or had instead instructed someone else to engage 2 | P a g e (AY 2017-18) Shaju Ninan John v. Dy. CIT the or with the contractor in India, there is no whisper thereof. The work by its very nature requires detailing, as indeed regular supervision, with, rather, the payments for work being admittedly linked with the progression of work, so that the same would be required to be verified at regular intervals, both for it being in order as well as its quantum. The claim is sans any evidence, with that furnished, as afore-noted, raising more questions than it answers. Why, it is not even shown, with reference to the purchase and sale deeds, that the house property purchased was any different from that sold, as where the former states of an unfurnished or semi-furnished property, while the latter states of it being furnished or fully furnished. We note that the ld. CIT(A) states of the assessee having furnished a ‘hand written receipt’ from the contractor, or he acknowledges the receipt of Rs. 5 lacs. The same, reproduced hereunder, is not a receipt, but a handwritten note, and the word ‘receipt’, clearly, a misdescription. In fact, there is no question of payment of Rs. 5 lac on 05/11/2004, which is to be admittedly made over the period of work, in stages, with reference to its completion. No wonder, he himself states of there being no evidence of the manner and mode of receipt: ‘REF. No.25 CONTRACT AGREEMENT This Contract Agreement for execution of Interior works of SHELFS, CUPBOARDS, KITCHEN CABINET etc. (Appx. 460 Sq. Ft) in Wood & Plywood in the Rooms & Kitchen in the New Villa – PALMDALE at Rajagiri Road, Kakkanad, Ernakulam owned by Shri Shaju John (Thoppil House, Karthikapally, Alappuzha) is undertaken to be completed before 31st December, 2004. The Contracted amount of Rs. 5,00,000/- to be released on progressive completion of works which includes KITCHEN CABINET etc. and it is hereby agreed and signed for execution. Shri JAYAKUMAR For Seema Engineering Works Sd/- 3 | P a g e (AY 2017-18) Shaju Ninan John v. Dy. CIT Choolatheruvu Proprietor 05/11/2004’ Much less receipt, the assessee in the instant case has not even exhibited the availability of cash with him on the relevant dates, themselves unspecified. 3.2 The Tribunal is to decide by issuing definite finding/s of facts, considered in their entirety, based on material on record, and not de hors the same. The law in the matter is well-settled, and toward which we may cite some, as under: Omar Salay Mohamed Sait v. CIT [1959] 37 ITR 151 (SC) CIT v. Daulat Ram Rawatmull [1973] 87 ITR 349 (SC) CIT v. Radha Kishan Nandlal [1975] 99 ITR 143 (SC) In Meenakshi Mills Ltd. v. CIT [1957] 31 ITR 28 (SC), it stands clarified that in appreciating facts, they must be considered not in isolation, but by assessing the cumulative effect of all the facts in their setting as a whole. In CIT v. Walchand & Co. (P.) Ltd. [1967] 65 ITR 381 (SC), it was held that the Tribunal is to deal with and determine questions which arise out of the subject-matter of the appeal in the light of the evidence, and consistently with the justice of the case. 3.3 We, for the reasons aforestated, based on the material on record and the explanations furnished, find the assessee’s claim as wholly unproved and no more than an afterthought. The assessee has placed an order by the Tribunal in Jai Kishan Saini v. Addl. CIT (ITA Nos.477 & 463/Asr/2012, dated 06/08/2013) in his compilation. The matter being factual; the same would be of no moment, with the facts of the two cases being materially different. The decision by the Tribunal in that case is based on the evidences led by the assessee, which were unrebutted, while we find them as absent in the instant case.
4. The assessee’s claim, in view of the above, stands rightly not accepted by the Revenue. We decide accordingly.