TaxTMI 
TaxTMI 
TaxTMI 
2015 (1) TMI 603
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....for scrutiny. During assessment proceedings, the Assessing Officer observed that assessee had declared capital gains on sale of property measuring 8954 sq. yds. located at 422-B, Udyog Vihar, Gurgaon. The Assessing Officer further observed that from the sale consideration the assessee had reduced an amount of Rs. 2,16,00,000/- alleged to have been spent on construction of factory on the said land. He further observed that assessee had indexed such cost of construction from financial year 1994-95. In this regard he observed that the assessee was issued permission for change of land use on 30.9.1994 and it was impossible to construct a factory measuring 48000 sq. ft. in a period of 7-8 months. The Assessing Officer also noted that the sale deed executed by the assessee did not mention about the fact of any building constructed thereon and rather the sale deed clearly stated that covered area was nil. Therefore, he held that the capital asset which was subject to capital gain was only plot of land and therefore the assessee was show caused as to why cost of construction of factory was included in cost of acquisition to which the assessee did not reply. In view of the above the cost of....
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....ed with the explanation as in his opinion no evidence or supporting documents in respect of such claimed payment for attached liability was furnished. Therefore, he disallowed the amount of Rs. 1.75 crores and recomputed the capital gain after disallowing the above said deductions. 6. Aggrieved the assessee filed appeal before Ld CIT(A) and reiterated her submissions before Assessing Officer. The Ld CIT(A) after going through the submissions of Assessing Officer did not allow any relief to the assessee and decided the matter against the assessee by holding as under:- "8. A careful perusal of the various documents indicates that the appellant leased out built up area to the various tenants from about September, 1997 onwards. However, each of the tenants has also carried out considerable civil construction of a permanent nature. The appellant was required to state whether the fixed assets comprising civil construction appeared either in her Balance Sheet or in the Balance Sheets of the said tenants. The appellant has produced copies of the returns filed by her from the Assessment Year 1998-99 onwards, from which it appears that she has never filed a Balance Sheet with the return of....
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....iability of Rs. 1,70,00,000/- was to be paid to the two above mentioned tenants as compensation for the cost of construction incurred by them on the said land. The Assessing Officer found that the payment amounting to Rs. 1,30,00,000/- had been made not by the appellant, but by her husband Shri Narender Malik. The appellant submits that out of the total sale receipts of Rs. 10,55,22,000/-, the amount of Rs. 2,00,00,000/- was paid to Shri Narender Malik from which the payments were made on behalf of the appellant. It is also submitted that payments were made out of joint accounts, in which the account holders are both the appellant and her husband. 10. I have carefully perused the extracts of bank statements submitted by the appellant with the written submissions. Account number 17101507200 with ICICI Bank, Saket Branch, is jointly held by the appellant with her husband, in which 'she is the first account holder. Out of Rs. 1,70,00,000/-, the payments made to M/s. Excalibur India Pvt. Ltd. from this account are as under:- Date Cheque No. Amount 06.11.2006 816209 15,00,000/- 23.11.2006 816219 20,00,000/- 10.01.2007 820368 25,00,000/- Total 60,00,000/- &nbs....
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....eof. The Balance Sheet of M/s. Texcon India Pvt. Ltd. as on 31.03.2007 and as on 31.03.2008 was not produced at all. There can be no doubt, therefore, that the claim of compensation payable to M/s. Texcon India Pvt. Ltd. and M/s. Excalibur India Pvt. Ltd. by Shri Narender Malik on behalf of the appellant is not proven by the record. The payments made by Shri Narender Malik to M/s. Texcon India Pvt. Ltd. and M/s. Excalibur India Pvt. Ltd. are not proven to have any connection with the sale transaction of land. As payment of only Rs. 60,00,000/- has been made from the bank account of the appellant, as already allowed by the Assessing Officer, the appellant is not entitled to any further relief. The disallowance of Rs. 1,30,00,000/- is accordingly upheld. 11. The final issue for adjudication is the disallowance of claim of deduction of Rs. 1,94,80,000/- for payment of liability allegedly belonging to M/s. Concept International India Pvt. Ltd. In the computation of income filed with the return of income, the appellant had deducted the amount of Rs. 1,75,00,000/- from the sale consideration of Rs. 10,50,00,000/- on account of 'payment of liability attached to property directly from....
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....tment in the construction of building could not be filed before Assessing Officer and before Ld CIT(A) as considerable period had passed and Assessing Officer disallowed the cost of construction on the basis that sale deed did not contain any mention about the existence of the building. In this respect our attention was invited to paper book pages 178 to 183 where a copy of valuation report obtained by the assessee was placed and it was argued that since assessee had no evidence of amounts spent on construction of building, therefore, the report from the registered valuer was obtained and was filed with the Assessing Officer and the Assessing Officer did not consider the same. Our attention was also invited to paper book pages 1 to 37 where copies of returns along with Form No.16A issued in favour of assessee by various tenants companies was placed. On the strength of these documents it was submitted that assessee had been declaring the amount of rent received from the three companies i.e. M/s Concept International India P. Ltd., Excalibur India P. Ltd and M/s Texcon India P. Ltd. under the head income from house property. Particular reliance was placed on Form No.16A issued by the....
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....udgments it was argued that non mentioning of building in the sale deed cannot be reason to disallow the expenditure incurred by assessee on construction of building if other evidences proved that building was thereon on the said land. 11. Arguing on second ground of appeal, the Ld AR submitted that Assessing Officer disallowed the claim of assessee simply on the basis that payments were not made from the bank account of the assessee. In this respect it was argued that since the assessee had to make payments to these companies for making the proper title of property available to buyer and she was not having sufficient funds, therefore, money was paid from the bank account of her husband. He further argued that the fact of having made payment from the bank account of her husband is not disputed. Therefore, he argued that the payments were necessarily made to make property fit for sale. 12. Regarding third ground of appeal, the Ld AR submitted that the payments were made for outstanding liabilities of M/s Concept India P. Ltd. as nobody will buy a company which is loaded with outstanding liabilities. Therefore, the expenditure was a necessary expenditure in connection with transfer....
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....e subject to excise clearance., The occupancy certificate issued by the Department of Town & Planning is placed on the record and he further drew our attention towards the lease agreement between her and the tenants. On the strength of these documents he pointed out that building was in existence. Her inability to quantify the cost of construction should not be considered as a sole criteria to exclude that cost of construction while computing the capital gain. The alternative of it is that cost of construction can be ascertained with the help of expert i.e. the Valuation Officer. No doubt, it would be an estimated figure but after applying the relevant factors, a correct figure can be achieved. The assessee has already taken a report from the Registered Valuer and calculated the cost of construction on that basis. As far as the objection of the Assessing Officer is concerned that building has not been mentioned in the sale deed, according to the assessee the terms and conditions mentioned in the sale deed are negotiated terms and conditions between the vendor and vendee and does not carry the value equivalent to any statute. There may be a different object of the vendee for not men....
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....ic connection further fortifies the existence of buildings. The certified Bonded warehouse which was being used by Texcon India P. Ltd. placed at paper book pages 184 to 186 also proves the existence of building. There is no value of building appearing in the balance sheet of Texcon further strengthens the fact that building was not constructed by Texcon. Further the lease deeds entered into by assessee also establishes the fact that assessee had partly built the buildings as she was getting rent and was declaring income under the head income from house property. Keeping in view all these facts, it can be concluded that building was physically there on the land and that too its construction was completed before 28.5.1997 as occupation certificate is dated 28.5.1997. Therefore even if sale deed did not mention about the existence of building, the fact remains that there was building on the above land. Now the question arises as to who had constructed the building. The assessee had no proof of funds to establish that building was constructed by her. The Ld CIT(A) has relied upon the balance sheets of M/s Concept India & M/s Excalibur India to prove that since value of building was ap....