TaxTMI 
TaxTMI 
2018 (2) TMI 668
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....re were issued. In response to which, the A/R of the assessee appeared and filed submissions in respect of questionnaire issued along with details. On perusal of the said return and submissions of the assessee, the AO disallowed of Rs. 4,50,000/- under the head brokerage & other expenses and Rs. 40,00,000/- towards claim of exemption u/s. 54EC of the Act and determined the long term capital gains at Rs. 70,06,500/- vide his order dt. 13-03-2013 u/s. 143(3), 153A and 153B(1)(b) of the Act. 3. Ground no.1 relates to restriction of disallowance to Rs. 1,50,000/- under the head 'brokerage & other expenses' by the CIT-A against Rs. 4,50,000/- made by the AO. 4. The facts relating to ground no.1 are that a search & seizure operation was conducted on the assessee u/s. 132 of the Act at the Netaji Subhash Chandra Bose International (NSCB) Airport on 26-01- 2011. According to AO, the said search & seizure operation was conducted on receipt of information from DDIT, AIU, New Delhi, wherein the search team found cash of Rs. 51.50 lakhs roughly and 20,000 Pounds Sterling from the assessee. But, for not providing any supporting evidence and documents in respect of source of said cash a warran....
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....be allowed for deduction as it was within the generally accepted practice of paying up the property brokers in the real estate business. The argument of the AR cannot be accepted at face value in the absence of any proof that such expenditure was actually incurred by the assessee. Since no such evidence is adduced in this regard, the argument of the AR is rejected and the claim for deduction of Rs. 1, ,50,000/- on account of brokerage payment is held to be inadmissible. 14. As regards the other expenses also, the AR was unable to produce any documentary evidence which could prove a nexus between the alleged expenditure and the sale of the property. In the written submission, the AR stated that the assessee came to India for 15 days with a purpose to sell the property in question. He also made a very naive and simplistic statement that 'the cheapest round-trip airfare for economy class between London and India is approx. Rs. 50,000/- and lodging expenses in India is normally @ Rs. 7,000/- per day. So, in the case of his client, lodging expenses comes to Rs.l,05,0001- ( i.e., Rs. 7,000 x 15) and fooding expenses in hotels comes to approx. Rs. 75,000/- for 15 days. For visiting ....
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....xpenses incurred by the assessee during the course of sale transaction of said ancestral property. The assessee travelled from London to India and stayed in India from 17-01-2011 to 2-2-2011 to complete the said transaction and urged to allow the same as it were incurred during the course of said transaction. 7. The CIT-A considering the submissions of assessee deleted the disallowance of Rs. 1.5 lakhs towards brokerage and for the balance of Rs. 3 lakhs towards other expenses, directed the AO to restrict the same to Rs. 1.5 lakhs i.e. 50% of disallowance of Rs. 3 lakhs by stating as under:- 3.2. I have considered the facts of the case. The claim of Rs. 4.5 lakhs made by the appellant consists of two parts. The first part relates to brokerage of Rs. 1.5 lakhs paid to Shri Avtar Singh, broker. The assessing officer has disallowed the same on account of lack of documentary evidence. However, it is noted that in the statement recorded u/s 131 of the IT Act, 1961 on 27.1.2011 i.e. during the search proceedings itself, the appellant had stated that the cash found on him was out of sale proceeds of land which was carried out through Shri Avtar Singh, broker. In the subsequent statemen....
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.... the entire expenditure on the visit was wholly and exclusively for purpose of sale of land. It is would be more reasonable to say, that the expenses incurred on the visit were incurred partly for purpose of sale of land and partly for personal and social purpose. Considering all these facts, I am of the view that it would meet ends of justice if claimed for the said expenses on travelling, food and lodging is allowed to the extent of 50%. 3.4. Considering the above discussion the assessing officer is directed to reduce the disallowance of Rs. 4.5 lacs to Rs. 1.5 lakhs." 8. Before us the ld.AR reiterated the same submissions made before the authorities below. He further submits that all the details were submitted before the AO, but, he did not consider the same in terms of the transaction, which were related to the sale of said ancestral property. The CIT-A ought to have allowed the entire expenses of Rs. 3 lakhs. The assessee came to India to complete transaction of sale of ancestral landed property and the said expenditure were incurred during his stay in India i.e the period of sale of said property. The assessee is entitled to claim the remaining expenditure of Rs. 1.5 lakhs....
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....non submission of any evidence as required by him, disallowed the claim of exemption by stating as under:- Disallowance of claim for exemption u/s. 54EC: " 15. It is pertinent to note that the AR of the assessee vide order sheet noting dt.06.03.20 13 has submitted that the assessee had no bank account in India for the A.Y.2011-12. However, the assessee in his computation of income for the relevant A.Y.2011-l2 has claimed exemption u/s 54 EC of the Income Tax Act, 1961 to the extent of Rs. 40,00,000/- on account of 'Proposed NHAI Bond) (Not made due to money seized)'. Section 54EC(I) of the Income Tax Act provides that [Capital gain not to be charged on investment in certain bonds. 54EC. (1) Where the capital gain arises from the transfer of a long-term capital asset (the capital asset so transferred being hereafter in this section referred to as the original asset) and the assessee has, at any time within a period of six months after the date of such transfer, invested the whole or any part of capital gains in the long-term specified asset, the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the....
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....ssessee and was not in possession of sale consideration to invest in specified bonds and as such, the assessee was prevented from making such investments. The assessee also submitted that the seized amount was in the account of the Government and the same was used for welfare of the country and the assessee is entitled to claim the benefit of exemption u/s. 54EC of the Act. The submission of the assessee before the CIT-A is reproduced herein below:- 4.1 The appellant has made the following submission in the matter:- " The appellant had deducted an amount of Rs. 40,00,0001- as exemption U/s. 54EC while computing his capital gain. The Ld. Assessing Officer disallowed the same and made in his findings that" no actual investment U/s. 54EC of the Income Tax Act, 1961 amounting to Rs. 40,00,000/- was made by the assessee. The assessee has claimed the said exemption based on his intention to invest in such bonds however, the section 54EC(1) of the act specifically provides that exemption can be allowed 'provided' that he investment has been made within a period of six months from the date of transfer of the capital asset. In the instant case, it is evident that no investment a....
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....oceedings received in hands. In the Present case the facts of the case clearly signifies that although the appellant had sold the asset but just within two days of this sale the whole amount of the sale consideration was seized by the Income Tax Authority of India. As such the appellant was prevented to invest the amount and hence in this circumstance the intention of the appellant had to be given a thought. Moreover it shall be noted by your honour that till date the seized amount is not been received by the appellant and hence it can be rightly concluded that the appellant was in no position to invest the amount as he was not having the possession of the sale consideration. It is to be note that the sale consideration was not laying anywhere else but, was in the account of the Government it elf. As such being the amount being ultimately used for the welfare of the country (as the amount was in Government's account) the benefit U/s. 54EC should be provided to the appellant. Further, we would like to submit that from the reading of section 54EC of the Income Tax Act 1961 it can be said that the exemption would be allowed to the assessee only when the amount of capital gain de....
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....raw the attention of your honour towards the decision taken in the case of Mahesh Nemichandra Ganeshwade Vs. income tax officer ([2012]17 ITR (trib.)116(pune)) wherein the Hon'ble ITAT had made the following decision - "Though s. 54EC requires the investment to be made within 6 months of the date of transfer, a technical interpretation cannot be adopted but it has to be interpreted having regard to the purpose and spirit of the section. In Circular No. 791 dated 2.6.2000 the CBDT held in the context of capital gains arising u/s. 45(2), that though the transfer arises in the year of conversion of a capital asset into stock-in-trade, the period of 6 months for investment u/s. 54E has to be reckoned from the date of sale of the stock-in-trade. The CBDT appreciated the impossibility of the assessee being able to invest the amount in specified assets within six months from the date of transfer. This interpretation of the CBDT supports the assessee's claim that where the consideration is received much after the date of transfer and it is not possible to invest the same within 6 months of the date of transfer, the period of 6 months must be reckoned from the date of receipt of conside....
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....f sale rarely prevented the assessee to invest in the specified bonds. The assessee has rightly claimed the exemption u/s. 54EC as the money was kept in the account of government and it should be treated as investments made in specified bonds required to be invested under the scheme of National Highway Authority. The ld. AR argued that the finding of the AO is incorrect and the finding of the CIT-A is perverse and referred to para 4.2 of the CIT-A's order. The ld.AR also argued that the CIT-A was wrong in observing that the assessee could have arranged from other sources to make investment within prescribed time and as such finding of the CIT-A is uncalled for in view of peculiar circumstances in the present case. The ld.AR prayed to allow the ground nos. 2 & 3 by treating the sum of Rs. 40 lakhs as if invested in the Bonds. 16. On the other hand, the ld.DR submits that in order to claim exemption u/s. 54EC of the Act, the assessee must show the investment made as per provisions of relevant section. The assessee failed to show any investment before the AO and CIT-A for claim of exemption and submission of as seized amount is being in the Government account and it should be treated....