Income Tax Appellate Tribunal - Pune
Assistant Commissioner Of Income Tax,, ... vs Nitin Prakash Wagaskar,, Nashik on 28 February, 2019
आयकर अपील य अ धकरण "बी" यायपीठ पण
ु े म ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, PUNE
BEFORE SHRI ANIL CHATURVEDI, AM AND
SHRI PARTHA SARATHI CHAUDHURY, JM
आयकर अपील सं. / ITA No. 369/PUN/2017
नधा रण वष / Assessment Year : 2013-14
Mr. Nitin P. Wagaskar,
Flat No. 4 & 5, Anand Kunj
Apartment, Old Gangapur
Naka, Gangapur Road,
Nashik- 422 005
PAN : AAPPW0728C
.......अपीलाथ / Appellant
बनाम / V/s.
The Assistant Commissioner of Income Tax,
Circle-1, Nashik.
...... यथ / Respondent
आयकर अपील सं. / ITA No. 400/PUN/2017
नधा रण वष / Assessment Year : 2013-14
The Assistant Commissioner of Income Tax,
Circle-1, Nashik.
.......अपीलाथ / Appellant
बनाम / V/s.
Mr. Nitin P. Wagaskar,
Flat No. 4 & 5, Anand Kunj
Apartment, Old Gangapur
Naka, Gangapur Road,
Nashik- 422 005
PAN : AAPPW0728C
...... यथ / Respondent
Assessee by : Shri Kishor Phadke
Revenue by : Shri Abhijit Halder
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ITA Nos. 369 & 400/PUN/2017
A.Y.2013-14
सन
ु वाई क तार ख / Date of Hearing : 27.02.2019
घोषणा क तार ख / Date of Pronouncement : 28.02.2019
आदे श / ORDER
PER PARTHA SARATHI CHAUDHURY, JM :
These cross appeals preferred by the assessee and Revenue emanates from the common order of Ld. CIT(Appeal)-1, Nashik dated 01.12.2016 for the assessment year 2013-14 as per respective grounds of appeal on record.
Since the facts are common, issues similar, these cross appeals are disposed of vide this consolidated order.
2. The brief facts in this case are that the assessee is an individual and has derived income from salary, income from house property, income from business or profession, income from capital gain and income from other sources. The assessee has filed return of income for assessment year 2013-14 on 01/11/2013 declaring total income at Rs.18,14,280/-. The case was selected for scrutiny under CASS. Subsequently, order u/s.143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') was passed on 03/02/2016, assessing total income at Rs.2,96,36,034/- by making the addition of Rs.2,78,21,754/- on account of interest, construction cost and cost of improvement claimed by the assessee.
3. Being aggrieved with the assessment order passed, the assessee preferred appeal before the Ld.CIT(A) and the assessee got part relief from the First Appellate Authority. With regard to the allowability of expenses incurred on construction of house, it was observed by the Ld. CIT(A) that the assessee 3 ITA Nos. 369 & 400/PUN/2017 A.Y.2013-14 has claimed construction cost of Rs.1,39,12,951/-. The Assessing Officer has denied the claim for want of proof. The assessee before the Assessing Officer as well as before the Ld. CIT(A) has produced bills, Kaccha receipts cash vouchers in support of his claim. The Ld. AR has stated that since the father of the assessee has passed away they are not in position to produce other corroborative evidences nor can link up the cash payments with withdrawal from the bank. The matter being old it is not possible to trace the party who has undertaken the work. The AR has further submitted that it is a fact that the bungalow was constructed and sold. Therefore, disallowance of construction expenses is not warranted. It is an undisputed fact that the sale of bungalow has taken place. Thus in all fairness cost of construction has to be allowed. But it is also a fact that due to unique circumstances the genuineness of the entire expenditure cannot be verified. The Ld. CIT(A) therefore, allowed 75% of the cost of construction/improvement of the residential house and disallowed remaining 25%. The assessee is in appeal with regard to this said disallowance of the 25% of the cost of improvement/construction as held by the Ld. CIT(A).
4. At the time of hearing, the Ld. AR of the assessee reiterated the submissions made before the Ld. CIT(A) and stated that all the bills, vouchers, kaccha receipts available with the assessee were submitted before the Revenue Authority and that is not disputed. However, other corroborative evidences could not be procured as has been accepted even by the Ld. CIT(A), since the construction is old one and after demise of the father of the assessee, information could not be gathered to identify other corroborative evidences to justify the entire cost of improvement of the residential house. 4
ITA Nos. 369 & 400/PUN/2017 A.Y.2013-14
5. The Ld. DR on the other hand appraised the Bench that in the Revenue's appeal ground No.1 pertains to the grievance of the Revenue to the fact that Ld.CIT(A) has allowed 75% of cost of improvement/construction of the house and the Ld. DR vehemently opposed the order of Ld. CIT(A) by placing strong reliance in the findings of the Ld. Assessing Officer.
6. We have perused the case records and heard the rival contentions and analyzed the facts and circumstances in this case. The facts on records are that the assessee incurred capital gain on sale of building and the assessee has claimed construction cost, interest on housing loan. It is an undisputed fact that the land on which the building was constructed, was bought by father of the assessee, grandmother and father of the assessee and construction of residential house was undertaken and completed in 2006. Thereafter, during the assessment proceeding, regarding cost of construction, the assessee has produced before the Assessing Officer as well as Ld. CIT(A) the bills, vouchers, kaccha receipts in support of his claim. The Ld. AR of the assessee submitted that since father of the assessee has passed away, they are not in a position to gather other corroborative evidences nor can link up the cash payments with withdrawal from the bank. The matter being old it is not possible to trace the party who has undertaken the work. It is a fact that the sale of bungalow has taken place. We also observe that most of the details, documentary evidences were furnished by the assessee. However, validity and correctness of those documentary evidences could not be further verified. Thus, in all fairness, we are of considered view that the purpose of justice would be served if 10% of the construction cost/improvement cost is disallowed.
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ITA Nos. 369 & 400/PUN/2017 A.Y.2013-14 Accordingly, we set aside the order of the Ld. CIT(A) on the issue and direct the Assessing Officer to provide relief to the assessee up to 90% of entire cost of construction/ improvement while remaining 10% is disallowed. Accordingly, the Assessing Officer should provide appeal effect. Therefore, this ground in both Revenue and assessee's appeal is partly allowed.
7. The Revenue is also in appeal with regard to deletion of addition of Rs.22,19,520/- on account of claim of interest.
8. The Ld. CIT(A) in his order on the issue of interest on housing loan observed that the assessee's father constructed a house who is no more. Therefore, no verification from him is possible. The documents placed on records shows that the loan from LIC Housing Finance was taken by the assessee, his father and mother jointly and the same was transferred to his father's HUF. From the HUF, the loan was taken by the father and house was constructed. The Ld. CIT(A) scanned these documents filed in support of the loan from LIC Housing Finance which are there on record as appearing in the order of Ld. CIT(A). Thereafter, the Ld. CIT(A) relied on the case laws in the case of CIT Vs. Raja Gopala Rao (2001) 252 ITR 459 ( Mad.) and CIT & ITO Vs. Hariram Hotels (P.) Ltd. (2010) 229 CTR 455 and also in the decision of Chennai Bench of the Tribunal in the case of ACIT Vs. Ramabrahmam in 2012 27 taxmann.com 104 (Chenni-Trib.) and thereafter, applied it to the facts of the assessee's case and opined and held that the assessee has constructed the house and not bought readymade house. Therefore, cost of acquisition is not on a fixed date but an ongoing one. The loan was obtained for improvement also depicts that construction activity had not stopped but was in progress. The facts on record show that assessee has obtained loan towards construction and improvement of the house. In view of the aforesaid 6 ITA Nos. 369 & 400/PUN/2017 A.Y.2013-14 judicial pronouncements, it is clear that the interest paid is to be allowed towards cost of acquisition and improvement while computing capital gain at the time of sale of property. The Ld.CIT(A) allowed interest taken for construction/improvement of the house.
9. We have perused the case records and have given thoughtful consideration to the findings of the Ld.CIT(A). It is evident from the record that loan was taken from LIC Housing Finance for construction/ improvement of the house by the assessee. Therefore, it is legally justified that whatever interest is paid towards cost of acquisition and improvement should have been allowed while computing capital gain at the time of sale of property. This has been very truly observed by the various judicial binding decisions as referred in the order of the Ld. CIT(A). We, therefore, find no infirmity in the order of the Ld. CIT(A) and relief provided to the assessee is thereby sustained.
10. In the result, this ground of appeal by the Revenue is dismissed.
11. In the combined result, appeal of the assessee and ground No.1.1 in the Revenue's appeal are partly allowed. Ground No.1.2 of the Revenue appeal is dismissed.
Order pronounced on 28th day of February, 2019.
Sd/- Sd/-
ANIL CHATURVEDI PARTHA SARATHI CHAUDHURY
ACCOUNTANT MEMBER JUDICIAL MEMBER
पण
ु े / Pune; दनांक / Dated : 28th February, 2019.
SB
7
ITA Nos. 369 & 400/PUN/2017
A.Y.2013-14
आदे श क! " त$ल%प अ&े%षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeal)-1, Nashik.
4. The Pr. CIT-1, Nashik.
5. "वभागीय %त%न&ध, आयकर अपील य अ&धकरण, "बी" ब*च, पण ु े / DR, ITAT, "B" Bench, Pune.
6. गाड- फ़ाइल / Guard File.
// True Copy // आदे शानुसार / BY ORDER, %नजी स&चव / Private Secretary आयकर अपील य अ&धकरण, पण ु े / ITAT, Pune.
8ITA Nos. 369 & 400/PUN/2017 A.Y.2013-14 Date 1 Draft dictated on 27.02.2019 Sr.PS/PS 2 Draft placed before author 28.02.2019 Sr.PS/PS 3 Draft proposed and placed JM/AM before the second Member 4 Draft discussed/approved by AM/JM second Member 5 Approved draft comes to the Sr.PS/PS Sr. PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order