Income Tax Appellate Tribunal - Bangalore
Mrs. Rizwana Ameen, Bangalore vs Assessee on 29 November, 2011
Page 1 of 19 1 ITA Nos.425 & 562/Bang/2010
INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCHES 'B'
BEFORE SHRI N BARATHVAJA SANKAR, VICE PRESIDENT
AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER
ITA No. Asst. year Appellant Respondent
425/Bang/10 2005-06 Mrs. Rizwana Ameen, The ITO, Ward-1(2),
No.110, Coles Road, Frazer Bangalore.
Town, Bangalore-5.
PA No.ADUPA 6746 Q
562/Bang/10 2005-06 ITO, Ward-1(2),Bangalore. Mrs. Rizwana Ameen,
Bangalore-5.
Date of hearing : 29/11/2011
Date of pronouncement: 20/12/2011
Assessee by : Smt. Sheethal Borkar, Advocate
Revenue by : Smt. Susan Thomas Jose, JCIT
ORDER
PER BENCH ;
These appeals instituted by the assessee as well as the Revenue are directed against the impugned order of the Ld. CIT (A)-I, Bangalore dated 1.2.1020 for the assessment year 2005-06.
Page 2 of 19 2 ITA Nos.425 & 562/Bang/2010I. ITA No.562/B/2010 - [by the Revenue]:
2. The revenue has raised five grounds, in which, ground Nos.1, 4 & 5 being general and no specific issues involved, they have become non-consequential. In the remaining grounds, the crux of the issue is confined to a lone ground, namely:
"that the Ld. CIT (A) had erred in adopting the cost of acquisition of the land at Rs.175/- per sft as on 1.4.1981 as against Rs.24/sft determined by the AO."
II. ITA No.425/B/2010 - [by the assessee]:
3. The assessee has raised seven grounds, out of which, ground Nos.1 and 7 being general in nature, they do not survive for adjudication. Ground No.6 is not maintainable as charging of interest u/s 234B of the Act is mandatory and consequential in nature and, thus, this ground is dismissed as not maintainable. In the remaining grounds, the essences of issues revolve that -
(i) that the CIT (A) ought to have accepted the assessee's contention that she had satisfied the conditions required for claiming deduction u/s 54 of the Act; &
(ii) that the CIT (A) ought to have appreciated that the subject land was located even in 1980 in a prime place and ought to have directed the AO to adopt the value of the land at Rs.480/sft instead of Rs.175/sft.
3.1. Subsequently, the assessee had also raised the following additional grounds:
(i) the Ld. CIT (A) erred in upholding the
disallowances of the following claims:
Page 3 of 19 3 ITA Nos.425 & 562/Bang/2010
(a) commission and legal expenses of Rs. 1,85,607/-
(b)compensation paid to tenant Rs.17,25,000/-
- without prejudice, the CIT (A) ought to have allowed
the compensation of Rs.17.25 lakhs for which the AO had conceded in her remand report.
4. As the issues raised in these appeals pertaining to the same assessee and for the same assessment year, they were heard, considered together and disposed off, for the sake of convenience and clarity, in this consolidated order.
Let us now proceed to adjudicate the Revenue's grievance as under:
I. ITA No.562/B/2010 - [by the Revenue]:
5. Briefly stated, the assessee, an individual, furnished her original return of income on 21.10.2005, admitting, a total income of Rs.13,550/- after claiming deduction of Rs.39.60 lakhs u/s 54F of the Act which was subsequently revised on 12.3.2007, admitting the identical income of Rs.13,550/-, but, the claim of deduction of Rs.39.60 lakhs was made u/s 54 of the Act. During the course of verification of details furnished along with the returns, the Ld. AO observed that the assessee had not shown any taxable capital gains and, therefore, the assessee was issued with a notice u/s 148 of the Act on 16.7.2007. As there was no compliance to the said notice, the assessee was served with a proposal to conclude the assessment u/s 144 of the Act for which the assessee furnished certain details/submission. After due consideration of the assessee's contentions, the Ld. AO, for the reasons recorded in his impugned assessment order under dispute, determined a sum of Rs.92,34,445/- as income from capital gains.
Page 4 of 19 4 ITA Nos.425 & 562/Bang/20106. Aggrieved, the assessee took up the issue, among others, with the Ld. CIT (A) for relief. After considering the assessee's submissions with additional evidences, valuation report from the Registered Valuer, remand report, rejoinder of the assessee, and also for the detailed reasons recorded therein with regard to the adoption of value of Rs.175/sft for determining the cost of acquisition as on 1.4.1981, the Ld. CIT (A) had observed thus:
"5.1. Records shows that the assessing officer got mistaken by the fact that the original asset was only a vacant site and probably therefore the value adopted was Rs.24/- per sft. However, there are three different figures available for this purpose. Firstly, the original return dated 21.10.05 showed the figure at Rs.450/-. The second figure is of Rs.325/- per sqft as per the revised return dated 12.3.07. The Registered Valuer's report showed such figure at Rs.350 per sqft for the site and the building value at Rs.10 lakhs with 10% less for forced sale. I do not adopt the third value because the assessing officer has given justified reason not to accept the value based on registered valuer's report in the remand report reproduced below:
5.1.1. 'Now before the CIT (A), the assessee had submitted a valuation report which has been forwarded for examination report. The valuer was summoned to examine on what basis the value of Rs.350 per sft was adopted for valuing the land. The valuer, Sri Ramamurthy appeared on 12.11.2009 and deposed that since there were no comparables for that area Brigade road for that period, he had relied on the market information and trend and the real estate values of similar areas. The valuer admitted that there were no concrete material on the basis of which he could base his valuation; there being no comparables.Page 5 of 19 5 ITA Nos.425 & 562/Bang/2010
Hence, it is concluded that the value arrived at by the valuer is an estimate based on inference and surmise and not on any concrete material. (The statement recorded from the valuer is placed on record). As against this, the assessing officer has based his valuation on the material extracted from the Sub-Registrar's office regarding the one sale instance in Brigade Road on 18.6.1981. hence, the order of the assessing officer needs to be confirmed.' 5.2. In view of the facts and inconstancies and evidences filed, I deem it fit the appropriate value would be Rs.175 for land and building cost at Rs.5 lakhs i.e., half the rates of valuation report making discount, to such report because it was an admitted fact Bangalore was not a metro in 1981 and it was only a cluster of villages as like other cities having no such potentialities as it has achieved after 2001. This estimation of value per sqft @ Rs.175/- is based on the guidelines enunciated by the Supreme Court in the case of Chimanlal Hargovinddas v. Special L.A.O A.I.R. 1988 S.C. 1652. This is considered as the most judicious guidelines in 1980s when the State Government had no prescribed valuations of land in their prime localities. The Hon'ble Court has in the case of Chimanlal Hargovind Das v.
Special LAO AIR 1988 SC 1652 (SC) laid down some plus factors which intends to increase the normal price and some negative factors leading to decrease in the price of land in big cities. Such guidelines are as under:
........................................................................... ..........................
Following the yardsticks narrated supra, I find the value of land taken at Rs.175/- per sqft as on 1.4.1981 is justified in view of the facts that the land had also many negative factors in 1981 viz., an old tenanted building thereon, not so developed area in 1981 having only road front in west side.Page 6 of 19 6 ITA Nos.425 & 562/Bang/2010
5.3. in view of the fore-going discussion the assessing officer is directed to adopt this value to arrive at the cost of acquisition while calculating the capital gains on sale of property located at 70/71, Brigade Road, on 8.10.2004 instead of Rs.24/- per sqft. Hence appeal is partly allowed on this issue."
7. Not satisfied with the finding of the Ld. CIT (A) in directing the AO to adopt the value of land at Rs.175/sft as against Rs.24/sft adopted, the Revenue has come up with the present appeal.
7.1. It was the contention of the Revenue that the CIT (A) had erred in adopting the cost of acquisition of the land taken at Rs.175/-
per sft as on 1.4.1981 as against Rs.24/- per sft determined by the AO while calculating the capital gains on sale of property located at 70/71, Brigade Road on 8.10.2004. It was, further, submitted that the CIT (A) was also not justified in adopting the cost of acquisition of the land at Rs.175/sft without a scientific basis as against the value adopted by the AO on the basis of guideline rate fixed by the Government at Rs.24/sft. It was, therefore, pleaded that the stand of the AO requires to be restored.
7.2. On the other hand, the Ld. AR's submission highlighting various issues, the substances of which, are summarized as under:
(i) that as per the records of the Sub-
Registrar at that relevant period, the sale transaction was almost nil except one sale transaction which appears to have been registered some time in 1981 in which the transaction was at an abnormally low rate and appears to be more a gift, but, for some small value mentioned only for the purpose of registering the sale deed which was Rs.25/sft Page 7 of 19 7 ITA Nos.425 & 562/Bang/2010 and that during that relevant period, there was no prescribed guideline value for registration of properties by the Government;
(ii) that the present value of land on Brigade Road is Rs.7000/sft and if the value is worked back by applying the cost of inflation index, it came to around Rs.1270/sft whereas the assessee had taken the FMV at Rs.325/sft in her revised return merely to buy peace with the Department and that the properties in Bangalore had suddenly gone upward from 1980 onwards and in the prime localities such as Commercial Street, M.G.Road, Brigade Road etc., the rate was roosting around Rs.600 to Rs.800/sft.
(iii) considering the documentary evidences produced before the first appellate authority, the Ld. CIT (A) ought to have directed the AO to adopt Rs.480/sft instead of Rs.175/sft.
7.2.1. To substantiate the assessee's claim, the Ld. A R came up with a paper book containing 1 -97 pages which, inter alia, consisted of copies of (i) valuation report; (ii) sale deeds; (iii) remand report;
(iv) rejoinder etc.
8. We have duly considered the rival submissions, meticulously gone through the relevant case records and also various documentary evidences advanced during the course of hearing on behalf of the assessee to substantiate her claim.
8.1. On a quick look at the assessment order, it has been observed that the Ld. AO, in his proposal u/s 144 of the Act, had suggested to adopt the FMV as on 1.4.1981 at Rs.24/sft whereas the Page 8 of 19 8 ITA Nos.425 & 562/Bang/2010 assessee's A R in his refutation (dt.31.1.2008) contended that the value of land for indexation comes to Rs.1270/sft whereas the assessee had only adopted FMV at Rs.325/sft presumably to buy peace with the Department and earnestly requested the AO to refer the issue to a Registered Valuer (sic) Valuation Officer of the Department to ascertain the FMV of the subject property as on 1.4.1981 together with structures thereon. The AO, in his impugned order, had fairly conceded that as per the Government Circular dated 10.11.1982(courtesy: Government Circular No.RD 329 EST 79], the value, came to Rs.41/sft in 1981. It is also noteworthy to mention here that the assessee had claimed the value of land at Rs.325/sft as on 1.4.1981 whereas the AO had adopted the value at Rs.24/sft as FMV as on 1.4.1981 based on a reference obtained from the Sub- Registrar's office. This has been contested by the assessee that the property referred to by the AO was located in the rear portion of Brigade Road which was considered to be part of a slum like area - near Shoolay Circle - whereas the property under dispute was situated on the Main Road which was facing Brigade Road and also in a prime location. There is considerable force in the contention of the assessee which, of course, has been conveniently side-tracked by the AO. In fact, the AO should have dealt with the issue elaborately and recorded his reasons for rejecting the assessee's claim on this score. However, there was no trace of any such worth discussion; instead, the assessee's contention was brushed aside as vague.
8.2. As highlighted by the Ld. CIT (A), the AO got mistaken by the fact that the original asset was only a vacant site which attributed, perhaps, to come to a conclusion to adopt the value at Rs.24/sft whereas the assessee's claim was that the property consisted of a main building and also an adjoined building resided by some tenants.
Page 9 of 19 9 ITA Nos.425 & 562/Bang/2010The AO, in her remand report, had fairly conceded that the assessee had referred a case law - Pushpa Sofat (2002) 81 ITD 1 (Chd) (SMV)
- in support of her claim that the cost of indexation should be considered from the year of acquisition by the previous owner and not the date on which the property devolved on the assessee and as the assessee had not furnished a copy of the said order on which she had relied on, the AO, taking cue from the provisions of s.48 in Explanation
(iii), justified that the AO had correctly calculated the indexed cost from the year in which the property first came to be held by the assessee [source: P 68 - 76 of PB AR].
8.2.1. However, the Ld. CIT (A), rejecting the Registered Valuer's report for the reasons recorded in his impugned order and by relying on the remand report of the AO on the issue, determined the value of the land at Rs.175/sft and building cost at Rs.5 lakhs. To arrive at the figure of Rs.175/sft as value of the land as on 1.4.1981, the Ld. CIT (A) took refuge in the guidelines laid down by the Hon'ble Supreme Court in the case of Chimanlal Hargovind Das v. Spl. LAO cited supra.
8.3. Taking into account all the above facts and circumstances of the issue as discussed in the fore-going paragraphs and also keeping the provisions of s.55A of the Act in view, we are of the considered view that the issue requires through investigation /verification and fresh consideration at the AO's level and, accordingly, the issue is remitted back to the file of the AO on the following grounds, namely:
(i) the assessee had strongly objected to the value of land to be adopted at Rs.24/sft as on 1.4.1981;
(ii) the assessee's A R in his letter dt.31.1.2008 requested the AO to refer the matter to the Valuation Officer to ascertain the Fair Market Value. However, the AO's Page 10 of 19 10 ITA Nos.425 & 562/Bang/2010 stand - the basis for adopting FMV of Rs.24/sft as on 1.4.1981 based on information collected from Sub-
Registrar - doesn't carry much conviction as the subject property was adorned with a building whereas the sale instance quoted by the AO appears to be a vacant land and also not in the neighborhood of the subject property;
(iii) the subject property was located at 70/71, Brigade Road consisted of a main building whereas the AO appears to have considered the subject property as a piece of vacant land and he had cited only a single sale instance of a vacant land that too not in the vicinity of the subject property, but, a property which was situated at a considerable distance, namely, nearer to Shoolay Circle which was branded as surrendered by slum;
(iv) the assessee had, in her original return, adopted the value of land at Rs.450/sft, however, in the revised return adopted the value at Rs.325/sft and the Registered Valuer's report furnished before the CIT (A), the value was adopted at Rs.350/sft for the site and the building value at Rs.10 lakhs with 10% less for forced sale. The AO, in her remand report, submitted that the Registered Valuer deposed during the remand proceedings that as there were no comparable instances in the vicinity of Brigade Road, he had relied on market information and trend and the real estate values of similar areas which, in our considered view, have no sanctity;
(v) the CIT (A), on his part, estimated the value of land at Rs.175/sft and taking into account the building cost of Rs.5 lakhs which has again only on estimation;
(vi) At the remand proceedings, the AO has been deprived of perusing the order in the case of Pushpa Sofat (2002) 81 ITD 1 (Chd) (SMV) to consider the assessee's contentions as the assessee's A R had failed to furnish the same;
(vii) the issue has not properly been dealt with at the assessment proceedings by the AO and the assessee, Page 11 of 19 11 ITA Nos.425 & 562/Bang/2010 on her part, had not furnished the required documentary evidences to substantiate her claim.
8.4. Accordingly, the AO is directed to look into the issue afresh with reference to the guidelines detailed supra and to take appropriate action in accordance with the provisions of the Act at that relevant period. The AO shall be at liberty to invoke the provisions of s.55A of the Act, if the matter so warrants. The assessee, on her part, furnishes all the relevant documentary evidence at her possession which would facilitate the AO to implement the directions of this Bench expeditiously. It is ordered accordingly.
We shall now take up the assessee's grievances for adjudication.
II. ITA No.425/B/2010 - [by the assessee]:
9. The first ground of the assessee being that the CIT (A) ought to have accepted the assessee's contention that she had satisfied the conditions required for claiming deduction u/s 54 of the Act.
9.1. Briefly, in the original return of income, the assessee had claimed deduction at Rs.39.60 lakhs u/s 54F of the Act and, subsequently, in the revised return, she claimed deduction of an identical amount u/s 54 of the Act. However, the AO took a stand that as the assessee had sold 1/8th share of land in a total area ad- measuring 14760 sft and the capital asset sold was a land, the assessee was eligible for deduction u/s 54F of the Act. As discussed above, the assessee had claimed the value of land Rs.325/sft as on 1.4.1981, however, the AO determined the value of land at Rs.24/sft as on 1.4.1981. The assessee had claimed indexation from 1981, but, Page 12 of 19 12 ITA Nos.425 & 562/Bang/2010 the AO took a stand that as per the sale deed, the property was received by the assessee only in 2003 and, hence, as per explanation
(iii) to s.48, the assessee was eligible for indexation from the FY 2003- 04 as the assessee was eligible to claim deduction u/s 54F and, accordingly, worked out the taxable capital gains at Rs.27,15,991/- as against Rs.Nil declared by the assessee. According to the AO, the assessee had not furnished (i) purchase deed of property for claiming exemption of Rs.39.60 lakhs u/s 54F and (ii) proof of construction/renovation etc., the long term capital gains was worked out at Rs.92.34,445/- which was treated as income from Capital Gains.
9.2. It was contended by the assessee before the first appellate authority that the AO mistook the property i.e., the original asset owned by eight persons, being vacant land ad-measuring 14760 sft, resulting in, allowing the claim of capital gains u/s 54F of the Act. During the appellate proceedings, copies of gift deed as well as the valuation report were furnished, according to which, the property consisted of a main building and also an adjoined building resided by some tenants and also some by the owners. It was, therefore, contended that the original asset being a residential house, deduction u/s 54 of the Act should have been allowed to the assessee.
9.3. After analyzing the provisions of s.54 of the Act, the Ld. CIT (A) had rejected the assessee's claim on the following ground:
(i) the assessee had failed to fulfill the condition No.iv, namely, 'the assessee has, within the specified period, purchased/constructed another residential house(s). To illustrate further the assessee had purchased a vacant site measuring 219 sqm for Rs.39.60 lakhs located at 407, 1st Stage, 2nd Page 13 of 19 13 ITA Nos.425 & 562/Bang/2010 Block, HBR Layout, Bangalore as per Purchase Deed dated 20.6.2005 and not a residential house and the ITI's report also corroborates that the land was still a vacant site as on 27.10.2009 i.e., even after 4 years from the date of transfer of the original capital asset i.e., 8.10.2004;
9.3.1. An alternative plea was put-forth before the AO at the remand stage to the effect that the assessee had invested in purchase of a flat along with her husband on 24.12.2007 in Spencer Road which makes her eligible for claiming exemption u/s 54 of the Act. The claim of the assessee has been rejected by the AO for the reasons recorded in her remand report.
9.4. After analyzing the assessee's rejoinder as well as the provisions of s.54 (1) of the Act, the Ld. CIT (A) has observed:
"4.4.3. A careful analysis of the above would reveal that the emphasis is not on the spending of capital gains earned from the transfer or original asset, but, investment in a specific asset i.e., residential house called new asset either through purchase or through construction. The amount of exemption differs depending upon the comparative expenditure between the investment in new asset and capital gains from original asset. Thus, the stress is on 'residential house'. Unfortunately, no definition of residential house has been provided in the Act. Such definition and discussion has been made by the jurisdictional High Court in the case of Globe Theatre Ltd. v. Abdul Ghani AIR 1956 Mys 57 (at 59) that 'It has always been held that a man resides where he lives and has home. It denotes a place where an individual eats, drinks and sleeps or where his family or his servants eat, drink and sleep.' Page 14 of 19 14 ITA Nos.425 & 562/Bang/2010 But, such a meaning would restrict the residential house to a self-occupied house only. In s.54, the phrase 'residential house' was substituted by F.A. 1982 w.e.f. AY 1983-84. According to the Circular No.346 dated 30.6.1982 [138 ITR St.13] it was to remove the hardships by dispensing with the prior condition of self-occupation of the assessee or his parents. But still the intention remained, ie., the object to encourage construction of residential house. If legal history is a guide all that was required was that the property should not have been used by the assessee for business or profession or should not have been let out. S.54F also speaks of 'residential house' apparently in the same sense. But a word of caution here. It does not mean that the point relating to investment should be relegated to the background. It is equally important because finance is the prime mover and lubricant of purchase/construction and unless timely investment is made, purchase/ construction may not be possible. Therefore, giving emphasis to one of them at the cost of another would be unjustified. However, the discussion was on purchase and construction of a residential house the words used in 54F (1)/54 is 'purchased/constructed' i.e., past tense of words 'purchase/construct' which itself demonstrate that such purchase and construction must have been completed within the time specified for the purpose of purchase/construction or otherwise the benefit of exemption u/s 54F/54 of I.T. Act would not be available to the assessee. The above inference has been drawn from the analogy of the elucidation of word 'used' in s.32(1) of I.T. Act in the decision of jurisdictional High Court in Dy.CIT v. Yellamma Dasappa Hospital (2007) 290 ITR 353 (Kar) to hold that Tribunal was not correct in holding that the assessee was entitled for the claim of depreciation when the machineries were kept ready for use, although not used during the relevant accounting year.Page 15 of 19 15 ITA Nos.425 & 562/Bang/2010
Applying this legal exposition to the facts of the case, the impugned land located in HBR Layout can in no uncertain terms be called a residential house. Appeal on this issue is dismissed."
10. Not satisfied with the reasoning of the Ld. CIT(A) in rejecting her claim, the assessee's A R argued before this Bench that the CIT (A) ought to have appreciated that the appellant having made investment on the residential property and for the reasons beyond the control of the assessee, no construction could be made and the assessee thereafter having made the investment in a flat, and as such the assessee had satisfied the conditions u/s 54 of the Act. It was expressly stressed during the course of hearing that the proviso to sub-section (2) to s.54 of the Act has not been explored by the authorities below while considering the assessee's claim and, therefore, pleaded that the issue may be addressed to in lieu of the same.
10.1 The Ld. D R supported the orders of the Income Tax authorities.
11. We have duly considered the issue and also gone through the stand of the AO as well as the reasoning of the Ld. CIT (A) cited supra. It is a fact that the assessee had not purchased/invested in a residential house within the specified period as envisaged u/s 54 of the Act. However, the authorities below have not considered the proviso to sub-section (2) to s.54 of the Act while dealing with the assessee's claim. In view of the above and in the interests of natural justice and equity the issue is remitted back on the file of the AO for fresh consideration. In the meanwhile, the assessee, through her A.R, is Page 16 of 19 16 ITA Nos.425 & 562/Bang/2010 directed to place all the relevant facts before the AO for his consideration. It is ordered accordingly.
12. The second ground of the assessee is that the CIT (A) ought to have appreciated that the subject land was located, even in 1980, in a prime place and ought to have directed the AO to adopt Rs.480/sft instead of Rs.175/sft.
13. At the outset, we would like to reiterate that the issue of adopting the value of subject property as on 1.4.1981 has been remitted back to the file of the AO for fresh consideration for the detailed reasons recorded supra, and, accordingly, the findings referred above hold good for this ground too. It is ordered accordingly.
14. In her additional grounds, the assessee has raised the following issues, namely:
(i) commission and legal expenses of Rs. 1,85,607/-
(ii) compensation paid to tenant Rs.17,25,000/-
without prejudice, the CIT (A) ought to have allowed the compensation of Rs.17.25 lakhs for which the AO had conceded in her remand report.
14.1. It was contended that the expenses incurred were exclusively in connection with the sale of property and, accordingly, liable to be allowed as deduction u/s 48(ii) of the Act. With regard to the compensation of Rs.17.25 lakhs paid to the tenants, it was submitted that the compensation was paid to the tenants to have the subject property free from all encumbrance and, therefore, pleaded that the same requires to be allowed.
Page 17 of 19 17 ITA Nos.425 & 562/Bang/201015. We have considered the assessee's submission and also perused the remand report of the AO. The relevant observations of the AO are extracted as under:
Legal fee and commission paid:
"3.1..................................................................... .........From the perusal of records and the submissions of the assessee, it is seen that the sale of the property was not free from hassle. It was submitted that the property was negotiated to be sold to a certain 'Farah Builders' which did not materialize and, hence, sold to M/s.Frontline Buildcom. Hence, certain legal expenses could have been incurred on account of transfer of the property, but, how much was spent could not be substantiated by the assessee. As far as the claim for commission paid is concerned, the claim could not be supported by any evidence, nor could it be established to whom the commission was paid."
........................................................................... ................................
3.3. Compensation paid to evict the tenants:
the assessee has claimed an amount of Rs.4,75,000/- as being compensation paid by cheque for eviction of tenants in her return filed on 21.10.2005. subsequently, the assessee filed a revised return of income on 12.3.2007 making certain corrections of typographical mistakes that had crept into the original return and wherein the compensation paid to evict tenants was enhanced to Rs.17,25,000/-...........................Now, on being remanded for a report by the CIT (A), the assessee has submitted the declaration on stamp paper of two persons stated t be tenants of the erstwhile property at Brigade Road. The details are as under:Page 18 of 19 18 ITA Nos.425 & 562/Bang/2010
(1) Syed Nazeer for Rs.1,87,500/- (being assessee's share) vide cheque No.569008 paid on 20.8.2004 (2) Syed Muneer for Rs.62,500/- vide cheque No.569007 paid on 19.8.2004.
The assessee's A R expressed his inability to furnish proof from such tenants.
Both the above amounts add up-to Rs.2,50,000/- as against the original claim of Rs.4,75,000/-................"
15.1. However, the Ld. CIT (A), in his findings by taking refuge under the rulings of the Hon'ble jurisdictional High Court in the case of CIT v. Rarja Setty (R) (1986) 159 ITR 797 (Kar) and the Hon'ble Delhi High Court in the case of Ashok Soi v. CIT (2004) 192 CTR 535 (Del), had observed that such payments have been considered disallowable.
15.2. During the course of hearing before this Bench, the Ld. A R furnished a paper book which contained Bank statements and Receipt cum-letter of delivery of vacant possession [courtesy: P 81- 83]. However, on a glimpse of the same, it has been observed that the assessee had issued cheques to Syed Muneer and Syed Nazeer etc., whereas Syed Nazeer in his receipt claimed that 'I have no further claim whatsoever against Sri Syed Sajjid or any of her heirs or family members or anybody'. Likewise, Syed Munner in his receipt also claimed that 'I have no further claim whatsoever against Smt.Naseema Hashim......" These assertions of the alleged tenants, in our considered view, requires further investigation to ascertain as to whether this has any reference to handing over of the vacant possession of the subject property. However, the assessee's A R during the course of remand proceedings submitted the declaration on stamp papers of two persons alleged to have been tenants of the said Page 19 of 19 19 ITA Nos.425 & 562/Bang/2010 property which amounted to only (assessee's share) Rs.2.5 lakhs only as against the assessee's claim of Rs.17.25 lakhs.
15.3. In view of the conflicting claim of the assessee, this issue requires a detailed verification/investigation. To facilitate the AO to conduct further verification, the issue is remanded back on the file of the AO with a specific direction to look into all these aspects and to take appropriate action in accordance with the provisions of the Act, of course, after affording a reasonable opportunity to the assessee of being heard. It is ordered accordingly.
16. In the result:
(1) The Revenue's appeal is treated as allowed for statistical purposes; and (2) the assessee's appeal is treated as partly allowed for statistical purposes.
Order pronounced in the open court on 20th day of December, 2011 Sd/- Sd/-
(N BARATHVAJA SANKAR) (GEORGE GEORGE K)
VICE PRESIDENT JUDICIAL MEMBER
Copy to:-
1. The Revenue
2. The Assessee
3. The CIT concerned
4. The CIT(A) concerned
5. The DR
6. GF
MSP/- By Order
Asst. Registrar, ITAT, Bangalore.