TaxTMI 
TaxTMI 
2022 (1) TMI 630
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.... the original asst and in doing so:- (a) He failed to appreciate that the assessee had only inadvertently claimed the same under section 54 instead of under section 48. (b) He failed to appreciate that there is no bar on making payment in cash for claiming deduction under section 48. 4. The ld.CIT(A) erred in upholding the addition of rupees 15 lakhs under section 69A and in doing so he failed to appreciate that amenities and movable properties which were sold along with the original assets were agreed to be transferred by a separate agreement and the fact that no stamp duty was paid on the same does not make that an unexplained credit in as much as the source and the nature of the transaction were fully explained by the appellant. 5. Without prejudice to ground no.4 the appellant further submits the ld.CIT(A) ought to have considered and adjudicated upon the claim made by the appellant to the effect that the entire amount of Rs. 15 lakhs is exempt from tax since the same represented the sale of personal effect which are outside the definition of capital assets within the meaning of section 2(14). 6. The ld.CIT(A) erred in upholding the disallowance of Rs. 14.5 lakhs unde....
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....f commission etc. 5. Aggrieved by the order of the Assessing Officer determining the LTCG at Rs. 77,74,494, the assessee preferred an appeal to the first appellate authority. The CIT(A) partly granted relief to the assessee. The CIT(A) directed the A.O. to adopt the cost of construction as determined in the valuation report and also granted benefit of exemption u/s 54 of the Act of Rs. 41,456 representing bank charges and membership fees. However, the CIT(A) confirmed most of the disallowances made by the A.O. 6. Aggrieved by the order of the CIT(A), the assessee has filed this appeal before the Tribunal. The learned AR has filed a paper book comprising of 97 pages enclosing therein the sale agreement dated 16.03.2014 for transfer of amenities and movables, assessee's computation of original income and revised income, DVO's valuation report dated 25.02.2018, the assessee's independent valuation report for the property sold, proof with regard to brokerage, copy of the agreement dated 06.05.2014 for renovation of new asset, proof with regard to brokerage paid for purchase of the new property, invoices for additional amount spent by the assessee on the purchased property, the refere....
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.... to arrive at a figure of Rs. 6,50,000 /-. Thus the above description goes on to show that there is no evidence either in respect of improvement carried out, or in respect of the year in which the improvements are stated to be carried out. Basically, there is no difference in the facts between the original return and. the revised return. At the time of filing the revised return, the assessee had the same facts as this existed at the time of filing the original return. This aspect has been dealt with separately. Thus in the absence of any evidences, the cost of improvement of Rs. 6,50,000/- cannot be allowed. Given the efflux of time and the supposed physical verification carried out by the valuer, it is to be safely assumed that the improvement, if any, is covered by the valuation report as discussed in the earlier paragraph, which itself is already affected towards higher side in view of the apparent modification carried out subsequently by the buyer." 7.1 The view taken by the AO was affirmed by the first appellate authority. The relevant finding of the CIT(A) disallowing the claim of the assessee on the cost of improvement in respect of sold / old assets amounting to Rs. 6,50....
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....nto consideration the DVO's report, wherein it is clearly mentioned the probable cost of improvement undertaken during the financial year 1998-1999 as per Annexure-II is amounting to Rs. 4,64,600. The Hon'ble Allahad High Court in the case of CIT v. Dr.Indra Swaroop Bhatnagar (2013) 30 taxmann.com 293 (Allahabad) had held that DVO's report is binding on the Income Tax Authorities. In the instant case, the DVO's report has been received subsequent to the order of the A.O. The A.O. did not have an occasion to consider the same. In the facts and circumstances of the case, it is necessary the same needs to be considered. Therefore, we restore the issue to cost of improvement of assets sold (with reference to cost of improvement made in the financial year 1998-1999) to the files of the A.O. The A.O. shall take into consideration the DVO's report and accordingly make the computation for long term capital gains. 7.6 In the result, ground 2 is allowed for statistical purposes. Brokerage (Rs. 1,00,000) (Ground 3) 8. The assessee had claimed an amount of Rs. 1 lakh as brokerage in respect of transfer of his old asset. In support of his claim the assessee had given a receipt signed by Sri.....
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....t within section 2(14) of the I.T.Act. A copy of the sale agreement of movable dated 16.03.2014 is placed at page 51 to 60 of the paper book. The CIT(A), however, rejected the contentions of the assessee and confirmed the view of the A.O. The relevant finding of the CIT(A), reads as follows:- "7.1 The submission of the appellant has duly been considered. However, the reasons given for not showing the amount in the sale deed as part of total consideration lack conviction. Nothing prevented the appellant to claim it as consideration received for transfer of personal effect which is, as per the appellant, exempt from tax. The agreement for sale of amenities/movables was not produced before the AO. The agreement mentions that the sale consideration of Rs. 15 lakhs towards the amenities will be paid by the purchaser at the time of registration of the sale deed of the property. The property has been sold on 25-04-2014 but the amount has been received subsequent to this date. The sale consideration of the property is Rs. 2.27 crores as mentioned in the sales deed and accordingly TDS at 1% amounting to Rs. 2.27 lakhs has been effected. Therefore, the claim that the amount of Rs. 15 lakhs....
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....g recovered, he explained the same is out of sale proceeds of agricultural land. On perusal of the sale deeds, the sale consideration was disclosed only at Rs. 42,37,500. On asked to explain the source of remaining amount of Rs. 2,03,92,500, the assessee in the said case insisted that the entire amount was relatable to the aforesaid sale of agricultural lands. Since cash was recovered from the assessee, the assessee's version that the entire cash recovered is out of sale consideration of agricultural land was disbelieved. Accordingly, a sum of Rs. 2,03,92,500 was added u/s 69A of the Act (Rs. 2,46,30,000 - Rs. 42,37,500). The view taken by the Income Tax Authorities was affirmed by the ITAT. 9.6 In the instant case, admittedly, the amount was received through banking channel from the purchaser of the old asset. Therefore, the source of amount of Rs. 15 lakh was never in dispute. The agreement for sale with regard to amenities and movables dated 16.03.2014 narrate the details of the furniture and fixture that are transferred to the buyer of the old asset. The said sum of Rs. 15 lakh is nothing but linked with the sale of capital asset. Therefore, the sum of Rs. 15 lakhs received ov....
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....art of the cost of residential house purchased." 10.1 Aggrieved by the order if the Assessing Officer, the assessee raised this issue before the CIT(A). The CIT(A) confirmed the view taken by the Assessing Officer. The CIT(A) held that the payment of Rs. 14.50 lakh is outside the purchase deed and is only to avoid stamp duty. Therefore, it was concluded by the CIT(A) that expenditure of Rs. 14.5 lakh was not entitled to deduction u/s 54 of the I.T.Act. 10.2 Aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned AR submitted that the assessee had entered into a separate agreement with the seller. It was stated that this amount was paid by the assessee for the work already existing in the house on the date of sale of property and was paid through banking channels. It was further stated that the assessee has referred the new property for valuation as per point 8(d) of the reference u/s 55A of the Act. However, the DVO has not valued the improvements made on the assets purchased. 10.3 The learned Departmental Representative supported the orders of the Income Tax Authorities. 10.4 We have heard rival submissions and perused the mate....
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.... deduction u/s 54 of the Act, in respect of modification of new asset. The relevant observation of the A.O. reads as follows:- "Out of the total amount of Rs. 20,70,000/- an amount of Rs. 15,00,000 is stated to be paid to Contractor for upgrades of Wardrobes, Kitchen, Living room etc. Most of these are already covered by the amount of Rs. 14,50,000/- as discussed above. This amount is stated to be paid in cash in support of the claim the assessee furnished copies of certain writings under the letter head A.S.Suthar Interiors. However this document is not a bill, but is a mere write up and does not qualify as an evidence either for having done the work or for having received the amount. For these reasons this amount of Rs. 15,00,000/- is not allowed as qualifying amount for section 54. An amount of Rs. 1,00,000/- is claimed to be spent towards purchase of sofa set and chairs. These items do not qualify for deduction under section 54 as they cannot be considered as an integral part of a house. Other expenses of Rs. 92,200/-, Rs. 28,500/-, Rs. 30,500/-, Rs. 55,000/-, and Rs. 1,65,000/- have been disallowed for the following reasons. Air conditioner 92,200 Not an integral pa....