AI Drafter 
TaxTMI 
TaxTMI 
2018 (3) TMI 1524
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....sessee were stated to be not pressed by the ld AR at the time of hearing for which necessary endorsement was made in our file. Accordingly, the Ground Nos. 2 & 3 are dismissed as not pressed. 5. The issues to be decided in this appeal are as under:- a) Whether the ld CITA and the ld AO were justified in treating the assessee as a 'Resident' instead of 'Non-Resident' in the facts and circumstances of the case. b) Whether the ld CITA was justified in upholding the addition made towards credit found in the bank account to the tune of Rs. 71,00,000/- in the facts and circumstances of the case. c) Whether the ld CITA was justified in not giving any direction with regard to allowability of cost of construction of the property transferred by the assessee, in the facts and circumstances of the case. d) Whether the ld CITA was justified in upholding the action of the ld AO in denying the exemption u/s 54 of the Act in the facts and circumstances of the case. All these issues are interconnected and hence are taken up together and disposed off together for the sake of convenience. 6. The brief facts of this issue is that the assessee is an individual ....
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....0/- 21.4.2008 - 6,00,000/- 21.4.2008 - 9,00,000/- 2,21,00,000/- d) The sale consideration reflected in the sale deed was only Rs. 1,50,00,000/-. There was no valuation made by the Stamp valuation authority for the subject mentioned property at the time of registration of the said sale deed. Hence there is no scope for determining the value u/s 50C of the Act. 6.1. The assessee considered the sale consideration at Rs. 2,21,00,000/- and worked out capital gains accordingly. The assessee claimed exemption u/s 54F of the Act in the sum of Rs. 1,33,93,317/-. During the course of assessment proceedings, the assessee filed a revised computation of income dated 23.3.2015. The assessee filed an affidavit during the course of assessment proceedings duly notarized on 27.3.2015 that she had received total sale consideration of Rs. 2,21,00,000/- on sale of property. 7. The ld AO observed that the assessee ought to have shown this amount of Rs. 2,21,00,000/- in the year 2008 and not in the year 2015 and accordingly rejected the plea of the assessee. Accordingly, he proceeded to treat the excess credit lying in the bank account over and abov....
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....ained supra. 8. Before the ld CITA, the assessee produced the photo-copy of the pay in slip on account of two cheques (i) Cheque No. 174501 dated 18.4.2008 drawn on Indian Overseas Bank, Posta Branch, Kolkata for Rs. 50,00,000/- and (ii) Cheque No. 987962 dated 17.4.2008 drawn on Development Credit Bank , Shakespeare Sarani Branch, Kolkata for Rs. 21,00,000/- aggregating to Rs. 71,00,000/- , which according to the assessee is only sale proceeds of the property at 45, Bhupen Bose Avenue, Kolkata - 700004 received from the buyers of the property namely Ajoy Dalchand Gupta and Amit Dalchand Gupta residing at GUPTA House, Sanpara Railway Station, Navi Mumbai - 400905. It was pleaded that the plea of the assessee has been completely disbelieved by the ld AO without making any enquiry with the bankers to understand which would have made things clear that these amounts of Rs. 71,00,000/- were given only by the buyers of the property. Alternatively, if the verification had been carried out with the buyers , whose address was very much available with the ld AO, things might have been very clear. Without resorting to any verification, the ld AO simply disbelieved the version of the assess....
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....hich is completely arbitrary, unjustified and illegal. 5. For that on the facts of the case, the Ld. CIT(A) was wrong in dittoing the order of the AO and not considering the facts that the assessee has made investment in purchasing a pent house amounting to Rs. 1,33,93,317/- out of the sales consideration of the property sold during the assessment year 2009-10 which is exempted u/s 54 of the Income Tax Act, therefore the assessee not liable for any tax liability for any tax liability on capital gain, but the AO vindictively computed as income form capital gain amounting to Rs. 1,50,00,000/- which is confirmed by Ld. CIT(A), as such, his finding is completely arbitrary, unjustified and illegal. 6. For that on the facts of the case, the Ld. CIT(A) was wrong that the status of the appellant is "Resident" in place of 'Non-Resident Indian' which is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case, the AO was wrong in adding Rs. 71,00,000/- (Rs. 71,50,000/- mentioned in AO's order) as unexplained investment deposit in bank which is completely arbitrary, unjustified and illegal. 8. For that on the facts and in the circ....
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....nation given by the assessee that the amount found credited in the bank account of the assessee in the sum of Rs. 71,00,000/- represents sale consideration received by the assessee on sale of property is to be believed in the absence of any other source for the assessee other than meager rental income. We are inclined to accept this argument of the ld AR that the credit of Rs. 71,00,000/- represents sale consideration received on sale of subject mentioned property over and above the value mentioned in the sale deed at Rs. 1,50,00,000/-. Accordingly the total sale consideration of property was Rs. 2,21,00,000/- which has been rightly considered by the assessee for the purpose of computation of capital gains on sale of property. In any case, we find that the ld AO had erroneously added a sum of Rs. 71,50,000/- instead of Rs. 71,00,000/-. We hold that the assessee being a non-resident , could not have any other source other than the sale of subject mentioned property and the retnal income from yet another property which has been subjected to tax. In the instant case, the action of the assessee in depositing the two cheques received in the sum of Rs. 71,00,000/- ( 50,00,000 + 21,00,000....
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....of the assessee as soon as the latter's explanation happened to be rejected. On that view the Tribunal allowed the appeals of the assessee and cancelled the assessment made by the ITO. Thereafter the Tribunal at the instance of the revenue referred the question abovementioned to the High Court for its opinion. The High Court has agreed with the said view of the Tribunal and has held that in the instant case, it could not be said that the Tribunal was wrong in having differed from the ITO and the AAC in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances, the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. (underlining provided by us) Respectfully f....
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....ed relevant in this regard. 10.3. We find that though the ld AO had not given deduction towards cost of acquisition of the property that was the subject matter of transfer, the same was directed to be granted by the ld CITA subject to verification by the ld AO about the veracity of the quantum claimed. Against this direction, the revenue is not in appeal before us. 10.4. We find that the assessee having purchased the land in the financial year 1999- 2000 had carried out construction during the financial year 2001-02 which is supported by the registered valuation report . The value as per registered valuation report (enclosed in pages 55 to 76 of the paper book ) is Rs. 64,31,517/-. It is not in dispute that the assessee was a non-resident even during the financial year 2001-02 which is also evident from the fact that the passport was issued to her in London on 2.5.2000. Hence out of her earnings in London, the construction cost could have been met by the assessee. In any case, there is no dispute with regard to the source for cost of construction carried out by the assessee. Hence we hold that the assessee is entitled for deduction towards cost of construction at Rs. 64,31,51....