Income Tax Appellate Tribunal - Delhi
Sh. Ashok Puri, New Delhi vs Dcit (International Taxation), New ... on 28 May, 2018
//FIT FOR PUBLICATION//
Sd/- Sd/-
A.M. J.M.
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'A' NEW DELHI
BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER
AND
SHRI L.P.SAHU, ACCOUNTANT MEMBER
S.A.No.-263/Del/2018
(In ITA No. 3487/Del/2017)
(ASSESSMENT YEAR: 2012-13)
Sh.Ashok Puri, Flat No.703, vs DCIT(International
Mahavir Prasad Block, Asaid Taxation),
Village, New Delhi-110049. Circle-2(2)(2),
PAN-AJMPP4093P New Delhi
(Appellant) (Respondent)
ITA No. 3487/Del/2017
(ASSESSMENT YEAR: 2012-13)
Sh.Ashok Puri, Flat No.703, vs DCIT(International
Mahavir Prasad Block, Asaid Taxation),
Village, New Delhi-110049. Circle-2(2)(2),
PAN-AJMPP4093P New Delhi.
(Appellant) (Respondent)
Appellant by Sh. Vivek Bansal, Adv.
Respondent by Sh. Ravi Kant Gupta, Sr.DR
Date of Hearing 16.05.2018
Date of Pronouncement 28.05.2018
ORDER
PER BHAVNESH SAINI, JUDICIAL MEMBER
This order shall dispose of the appeal as well as stay application filed by the assessee.
2. We have heard Ld. Representatives of both the parties and perused the material available on record. The appeal of the assessee is directed against the order of Ld.CIT(A)-43, New Delhi dated 21.03.2017 for AY 2012-13, challenging the addition of Rs.4,84,56,912/-.
Page | 1 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017
3. Briefly stated facts of the case are that the assessee is an individual and non-resident. During the course of assessment proceedings, it was observed that the assessee shown to have sold out two house properties/flats during the relevant period as under:-
(i) Property at 802, A Wing, Prabha Devi, Mumbai-25 at the sale consideration of Rs.6.90 crores (described herein as "Mumbai Property");
(ii) Plot No.42, Gulmohar Cross Road NO.1, Vile Parle, Mumbai (West) at the sale consideration of Rs.1,92,73,000/-.
4. During the course of scrutiny assessment, the assessee was asked to produce the details and documents in support of the cost of acquiring and cost of improvement related to aforesaid properties to arrive at the correct indexed cost of the property and subsequent computation of correct Long Term Capital Gain (in short "LTCG") arising out of sale of the aforesaid properties. In the commutation of income filed, the assessee has shown following LTCG:-
4.1. A. Flat No.802, A Wing Prabha Devi, Mumbai-400025
(i) sale consideration Rs.6,90,00,000
(ii) Less Indexed Cost as per detail attached Rs.6,93,52,392 Long Term Capital gains (i-ii) Rs.(-) 3,52,392 B. Plot No.42, Gulmohar Cross Road No.1, JVPD Schemes, Ville Parle, West Mumbai-400049.
(i) Sale Consideration Rs.1,92,73,000
(ii) Less Indexed Cost as per detail attached Rs.1,94,50,851
Long Term Capital Gain (i-ii) Rs.(-) 1,77,851
5. In this regard, the assessee filed related details and documents of the property sold at Plot No.42, Gulmohar Cross Road, Mumbai. Regarding other Page | 2 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 property sold at Flat No.802, A Wing, Mumbai (Mumbai Property). The assessee filed a consolidated list of the cost of acquiring and improvement which is reproduced in para 4.2 of the assessment order. The list is not reproduced for the sake of gravity. However, it is noted that same starts from AY 1995-96 to 2006-07 and the amount of cost of acquiring and improvement have been shown at Rs.4,10,03,449/- and indexed cost have been shown at Rs.6,93,52,391/-. The assessee, however, could not produce the required documents/evidences related to Mumbai property. The assessee was, therefore, asked to provide evidences relating to cost of acquiring improvements/renovation claimed to have been incurred by the assessee in the aforesaid property. The assessee filed a reply before the AO which is reproduced in para 5 of the order in which the assessee submitted that flat of Mumbai was allotted to the assessee at the cost of Rs 95.50 Lakhs with the cost of stamp duty at Rs.6,90,750/-. The total payment was incurred in a sum of Rs.1,04,68,750/-. It was submitted that the assessee also incurred other incidental expenses in the acquisition of the flat such as interest cost on loan for payments and other allied expenses etc. Renovation was carried out in the flat and the expenses were incurred on the renovation and improvement of the flat. The details of the total cost of the flat has been filed based on the figure available. Further, the assessee is a Non-Resident Indian for the last more than 30 years and all the renovation work was undertaken by the mother of the assessee, Smt. S.K.Puri who managed and looked after the entire job of renovation and improvement in the flat. Unfortunately, she has expired and Page | 3 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 the assessee at present is unable to find out the supporting documents for renovation work etc. undertaken by her long back i.e. about 10-12 years ago.
The AO referred to section 48 of the Act for computation of capital gain which shall be computed with reference to cost of acquisition of the assets and cost of improvement thereto. The AO, therefore, noted that for the purpose of computing LTCG, the assessee is required to calculate the indexed cost of the acquisition of the property after considering, firstly the cost of acquisition of the assets and the cost of any improvement and secondly expenditure incurred wholly and exclusively in connection with such transfer of property. The AO noted that despite giving sufficient opportunity, the assessee filed evidences of cost of acquisition for a sum of Rs.1,04,68,750/- only towards purchase of the said property and its indexed cost comes to Rs.2,03,65,245/-. In the absence of any evidence of cost of improvement and cost of renovation, the Long Term Capital Gain of Mumbai property at No.-A 0802, Chaitanya Towers Co-op. Housing Society Ltd., Appadaheb Marathe Marg, Prabhadevi, Mumbai was computed as under:-
Sale Consideration Rs.6,90,00,000/-
Less Indexed cost of acquisition being allowed Rs.2,03,65,245/-
Taxable LTCG Rs.4,86,34,755/-
5.1. The taxable income was computed at Rs.4,84,56,904/-.
6. The assessee challenged the addition before Ld.CIT(A). Same facts were reiterated. The written submission of the assessee is reproduced in the appellate order in which the assessee further explained that the AO completely ignored the statement of affairs as on 31.03.2011 as was filed before the AO Page | 4 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 which shows the cost of acquisition of the property at Rs.4,10,03,449/-. The assessee is preparing and maintaining statement of affairs every year and cost incurred from year to year is debited to the flat account at Mumbai. The income tax assessment of the assessee for AY 2005-06 & 2006-07 have been completed u/s 143(3) of the Act and claim of the assessee have been accepted of investment which are available with the Revenue Department in earlier years. Therefore, claim of the assessee should not be doubted. Ld.CIT(A) noted that the assessee has not filed basis of arriving at such figure as was filed in the statement of affairs, therefore, the claim of the assessee is rejected and the appeal of the assessee has been dismissed.
7. Ld. Counsel for the assessee reiterated the submissions made before the authorities below. Referred to P.B 6-8 which is assessment order u/s 143(3) for AY 2006-07 and P.B 10-14 is the assessment order u/s 143(3) for AY 2005-
06. Ld. Counsel for the assessee submitted that in assessment order for AY 2006-07, the AO has considered the income from house property and other source and in assessment order for AY 2005-06, the AO has mentioned that the assessee filed bank statements and statement of affairs as on 31.03.2004 and 31.03.2005 and after discussion, assessment have been completed. He has submitted that the assessee filed statement of affairs as on 31.03.2005 and 31.03.2006 with the returns of income. Copies of which are also filed on the record to support the fact that the assessee claimed cost of improvement and renovation in the statement of affairs which have been accepted by the AO in scrutiny assessments. P.B.34 is reply filed before Ld.CIT(A) on the same basis.
Page | 5 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 P.B.30-32, is the statement of affairs for the year ending on 31.03.2011 in which also, the assessee has disclosed the value of residential flats at Mumbai at Rs.4,10,03,449/-. P.B.21 is reply filed before AO. P.B.23 to 29 are evidences of cost of acquisition of the property accepted by the A.O. Ld. Counsel for the assessee submitted that these evidences were sufficient to hold that the assessee incurred cost of improvement and renovation on the Mumbai property, therefore, the claim of the assessee should have been accepted. In support of his contention, he has relied upon the order of ITAT, Delhi Bench in the case of ITO vs Anil Kumar [2015] 56 taxmann.com 320 (Delhi-Trib.) and order of ITAT, Chandigarh Bench in the case of Nand Lal Popli vs DCIT [2016] 71 taxmann.com 246 (Chandigarh-Trib.).
8. On the other hand, Ld. DR relied upon the orders of the authorities below and submitted that no evidence of cost of improvement have been filed, therefore, the appeal of the assessee may be dismissed.
9. We have considered rival submissions and perused the material available on record. ITAT, Delhi Bench in the case of ITO vs Anil Kumar (supra) held as under:-
II. "Section 48 of the Income Tax Act, 1961-Capital gains-Computation of (Cost of improvement)-Assessment Year 2009-10-Whether where an assessee was an individual and not a corporate, for improvement expenses on leveling, etc. It was not always possible to have third party evidences of such expenses and if small amount was claimed by assessee, same was to be allowed-Held, yes [Para 5] [In favour of assessee]."
Page | 6 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 9.1. ITAT, Chandigarh in the case of Nand Lal Popli vs DCIT (supra) held as under:-
II. "Where assessee sold a house property Assessing Officer considered cost of acquisition and cost of construction of property at nil and brought entire sale proceeds to tax as capital gain, since assessee had filed evidence in form of completion certificate, depositing compounding fee for change in structure etc. which were enough to show that some construction work must have been carried out on said plot matter was to be remanded back for recomputation of capital gain."
10. It is not in dispute that the assessee is an individual and non-resident. The assessee claimed cost of acquisition and improvement from the year 1995- 96 to AY 2006-07 and the cost was claimed in a sum of Rs.4,10,03,449/- and indexed cost was claimed at Rs.6,93,52,391/-. The assessment year under appeal is the assessment year 2012-13 and assessment have been framed on 31.03.2015. Thus, the AO was asking for evidence of the cost of improvement of the period which had expired about 09 years back. The assessee explained that he is an individual and amount on improvement have been incurred in the presence of his mother who has now expired. The assessee in support of his contention submitted that the assessee prepared statement of affairs for all the years in which cost of improvement have been claimed and filed with the returns of income. Copies of the same are also filed on the record. The assessee further claimed that for AY 2005-06 and 2006-07, the AO passed the assessment orders u/s 143(3) and similar claim of the assessee has been accepted. The AO in the assessment order for AY 2005-06 noted that the Page | 7 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 assessee has filed bank statements and statement of affairs as on 31.03.2004 and 31.03.2005. The copies of the statement of affairs for years 31.03.2005 and 31.03.2006 are also filed on record which clearly proved that the assessee claimed the entire amount of cost of improvement in the statements of affairs for both the years which have been accepted by the AO in the scrutiny assessments. Since the AO passed the assessment order u/s 143(3) in scrutiny assessment after considering material available on record, therefore, it is presumed that the orders have been passed in accordance with law by considering the entire material on record. Thus, the AO accepted the claim of the assessee based on material and evidence produced before him in the scrutiny assessment. It may be noted here that the assessee has claimed the amount of cost of acquisition and improvement upto A.Y. 2006-07 in a sum of Rs.4,10,03,499/-. Thus, the AO should not ask for the same evidence or material in assessment year under appeal which A.O. has already accepted earlier in scrutiny assessment u/s 143(3) for AY 2005-06 & 2006-07. It may also be noted here that in the statement of affairs for AY 2011-12, the assessee has mentioned the same amount of cost of improvement against the Mumbai property under reference. In the case of Anil Kumar (supra), ITAT, Delhi Bench has held that it is not always possible for an individual to have third party evidences of land improvement expenses and if small amount is claimed by the assessee, same is to be allowed. Similarly ITAT, Chandigarh Bench in the case of Nand Lal Popli (supra), considered the evidence in the form of completion certificate, deposit compounding fees for change in structure etc. and held that Page | 8 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 the same were enough to show that some construction work must have been carried out on the said plot, therefore, matter was remanded to the AO for recomputation of capital gains. The facts of the case of assessee are on better footing as against the above decisions of the Tribunal because in the case of the assessee, the assessee claimed cost of improvement and renovation upto AY 2006-07 and the assessments u/s 143(3) for AY 2005-06 & 2006-07 have been completed in scrutiny assessment u/s 143(3) and the AO after examining the bank statement and statement of affairs for these years accepted the claim of the assessee. Therefore, it is to believable that the assessee produced some material or evidence before the AO in those scrutiny proceedings for satisfying the AO about the cost of acquisition and improvement in property at Mumbai under reference. Therefore, subsequently, if those evidences were not available with the assessee after lapse of many years particularly when mother of the assessee has expired, who looked after improvement work, the assessee cannot be asked to do impossible after several years to do the same act which is already accepted by the assessing authority in AY 2005-06 & 2006-07.
11. Considering the totality of the facts and circumstances of the case in the light of the above-mentioned orders of the Tribunal and in the light of the statement of affairs filed by the assessee in earlier years and accepted by the Revenue Department, we are of the view that the assessee has been able to explain and prove that he has incurred expenditure wholly and exclusively on improvement and renovation of the property under reference at Mumbai in connection with such transfer of property. Therefore, the assessee is entitled Page | 9 S.A.No.-263/Del/2018 & ITA No. 3487/Del/2017 for the deduction of the same amount of Rs.4,10,03,449/-. The claim of the assessee has been wrongly rejected by the authorities below. We, accordingly, set aside the orders of the authorities below and direct the AO to re-compute the long term capital gain by giving the benefit of cost of acquisition and improvements of Rs.4,10,03,449/-. The addition made in the assessment order stands deleted. The appeal of the assessee is allowed.
12. In view of the above findings in the appeal of the assessee, the stay application has become infructuous and is, accordingly, dismissed.
13. In the result, the appeal of the assessee is allowed and the stay application is dismissed.
Pronounced in the open court on 28.05.2018.
Sd/- Sd/-
(L.P.SAHU) (BHAVNESH SAINI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Date:- May, 2018
*Amit Kumar*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT NEW DELHI
Page | 10