AI Drafter 
TaxTMI 
TaxTMI 
2015 (12) TMI 108
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....has . entered into master development agreement with classic Infrastructure and Development Ltd., for joint development of the land vide agreement dated 5/12/2000. All these assessee's purchased the respective lands in the year 1996. As per the agreement, the assessee received a refundable deposit of Rs. 11,70,00,000/- and was entitled to receive a specific parts of build up area in the project as its share. However, the agreement did not materialized and the joint agreement was consequently terminated vide settlement dated 29/8/2007 between the parties. Thereafter the assessee vide sale deed dated 29/9/2007 transferred the property to ITC Ltd., for a consideration of Rs. 16,62,80,172/- In the meanwhile survey u/s 133A was conducted on 5/6/2008 and subsequent to survey, the assessee filed return of income for the assessment year under consideration declaring capital gain as well as income from other sources. While completing the assessment vide order dated 31/2/2010, the AO made addition on account of full value consideration u/s 50C of the Income-tax Act apart from the addition on account of cost of acquisition and cost of improvement of asset while computing the long term capital....
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....or sale guarding the title of property held by the appellant have to be allowed as capital cost of improvement against sale consideration and consequently erred in confirming the disallowance. c) The learned CIT(A) failed to appreciate that but for safe guarding the title from such claimants and trespassers the appellant would not have got the price for which the property was ultimately sold. Consequently, she erred in confirming the disallowance of the cost of improvement. d) The learned CIT(A) failed to appreciate that when survey was conducted much after the sale of the property, the survey team was handicapped in properly apprising itself on the cost of maintaining the property in the past decade. Consequently, she erred in confirming the cost of improvement incurred over a period of about ten years. 5) For the above grounds and such other grounds that may be urged at the time of hearing, the appellant prays that the appeal be allowed." 4. Ground No.1 is general in nature and does not require any specific adjudication. 5. Ground No.2 is regarding disallowance of cost of improvement of Rs. 1,25,78,425/-. The assessee has claimed the cost of acquisition as well as ....
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....e claimed by the assessee is for improvement of the property or incurred for the purpose of acquisition of property. He has submitted that the AO has already allowed Rs. 7 lakh out of the total claim of the assessee which pertains to the payment made by the assessee in settlement of dispute regarding the property. The other expenditure incurred by the assessee has no connection with the cost of acquisition or improvement of property in question. 9. We have considered the rival submission as well as relevant material on record. The assessee claimed a total expenditure of Rs. 1,32,78,425/- incurred from the financial year 1995-96 to 2007-08. It is claimed by the assessee that the said expenditure has been incurred on account of cost of acquisition and improvement of the land in question. The details of the expenses are given at page No.241 of the paper book and for the sake of ready reference we reproduce the details comprising the item of the expenditure and grand total of each expenditure for all the years as under: Item of Expenditure Grand Total Particulars 23,834.00 Audit Fees 7,274.00 Bank charges 52,993.00 Bank Interest on OD 500.00 Cap in C....
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....iture can be allowed either as cost of the acquisition or cost of improvement of the land as per the provision of sec. 48 of the Act. As regards interest expenditure, the same is allowable as cost of acquisition if paid on the amount used for acquisition of the land in question. Further the interest paid for the period prior to the joint development agreement would be allowable as cost of the acquisition. Accordingly, the AO is directed to verify and determine the interest paid on the borrowed funds used for acquisition of the land in question up to the date of Development agreement and allowed the same as cost of acquisition while computing the capital gain on the sale of land. Accordingly, this ground of the assessee is allowed in part. Ground No.3 11. Disallowance of the indexed cost of expenses 12. While computing the capital gain, the assessee reduced the sale consideration by index cost of acquisition and index cost of improvement. The details of the expenditure are reproduced by the AO at page 4 as under: Financial Year Cost of acquisition/improvement Indexed cost of acquition/improvement 1996-97 29556636 53395759 1997-98 2231765 371....
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.... that the assessee was at receiving end and under the obligation to incur the expenditure to obtain necessary sections and permission as well improvement work. 15. On the other hand, the learned DR has referred the finding of the AO and CIT(A) and submitted that in the absence of supporting evidence the AO has doubted the genuineness of the expenditure and vouchers which are self made without any bills of details of the work executed by the 3rd party . Further, the voucher were produced after the gap of 18 days from the date of survey conducted. Therefore, the same are after thought and self serving record produced by the assessee. Even otherwise the expenditure does not result in any improvement of the asset and claim of the assessee is contrary to the statement of the directors of the assessee company recorded during the survey proceedings. The claim of the assessee was also found to be incorrect by the ITO who visited the site. 16. We have considered the rival submissions as well as relevant material on record. The entire expenditure is claimed to have been incurred in cash. However, the assessee has not produced any bills or details of work as well as parties to whom the ....