TaxTMI 
TaxTMI 
2023 (8) TMI 815
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....e claim of the assessee, without considering the fact that the loan sanction letter dated 31.03.2015 mentions that the "disbursal amount" of Rs 13,45,88,871/- is for the property i.e. C-2901 and not Flat No C-3501 for which the assessee has claimed benefit of interest paid of Rs 3,19,28, 276/- to the lender, in the computation of capital gain? " 3. "On the facts and in the circumstances of the case, whether the learned CIT(A) was justified in holding that flat No C-3501 was allotted to the assessee on 23.04.2013 thereby allowing the claim of the assessee without considering the fact that in the absence of any verifiable details that the amount of Rs. 11,33,10,868/- was paid for Flat No. 3501, from F.Yr. 2013-14 to F.Yr. 2016-17, the same cannot be considered as correct and therefore, no cost of acquisition can be allowed to the assessee in respect of sale of Flat No. C-3501?" 4. "On the facts and in the circumstances of the case, whether the learned CIT(A) was justified in deleting the addition of Rs 11,53,38,145/- on account of unexplained investment w/s 69B of the Act by observing that Rs 22.86 crores as mentioned in MOU dated 14.12.2016 is nothing but the conso....
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....2/-. (b) The Assessing Officer declined claim of interest of Rs. 3,19,28,276/- as cost of acquisition, which was paid on housing loan borrowed for acquiring right in the flat,. (c) In respect of flat, the developer confirmed the payment received from the assessee of Rs. 22,86,49,013/- whereas the assessee while computing the LTCG shown purchase cost incurred at Rs. 11,33,10,868 /- only and therefore, the difference amount of Rs. 11,53,38,145/- was held by the Assessing Officer as not recorded in the books of accounts and assessed as unexplained investment within the meaning of section 69B of the Act. (d) The Assessing Officer also observed that the assessee acquired entire right in property against part payment only and neither paid the balance amount of Rs. 13,88,737/- for acquisition of the said rights and nor reported the same as liability in his books of accounts . This difference was held to be benefit received by assessee and taxable as income falling under the provisions of section 56(2)(vii) of the Act. (e) The Assessing Officer also held the cash found at the residence of the assessee amounting to Rs. 2,78,000/- as unexplained in absence....
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....oper and Rs. 3,19,28,276/- paid as interest to the bank/financial institution for housing loan during the F.Y. 2013-14 to F.Y. 2016-17. On further indexation, the indexed cost of acquisition was computed to Rs. 16,36,12,777/-. Accordingly, the assessee after reducing the indexed cost of acquisition Rs. 16,36,12,777/- out of deemed sale consideration i.e. market value of the rights transferred for stamp duty purpose at Rs. 25,32,72,150/-, computed long term capital gain of Rs. 8,96,59,373/-, as under: Particulars Cost Indexed Cost 1. Amount paid in FY 2013-14 6,62,55,210 7,93,79,245 2. Amount paid in FY 2014-15 4,70,55,658 5,16,96,890 Paid to developer 11,33,10,868 13,10,76,135 4. Amount paid in FY 2015-16 ( interest) 1,49,46,436 1,55,54,802 5. Amount paid in FY 2016-17(interest) 1,69,81,840 1,69,81,840 Interest Cost 3,19,28,276 3,25,36,642 Total cost 14,52,39,144 16,36,12,777 Sale consideration 25,32,72,150 Less : indexed Cost of acquisition 16,36,12,777 Long term Capital Gain 8,96,59,373 5.2 The ass....
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....as also taken as cost of acquisition as interest paid to bank on housing loan. Thus, the total cost of acquisition of the property was taken at Rs. 14,52,39,144/- and the indexed cost was worked out at Rs. 16,36,12,777/-. The market value of the property was taken at Rs. 23.48,98,517/- and the long term capital gain was worked out at Rs. 8,96,59,373/-. During the remand report proceedings, the AO has verified the allotment letter and the sources of funds for purchase of property. After verification of the additional evidences submitted by the appellant, the AO has stated that the appellant had paid Rs. 2,00,00,000/-vide cheque No.876744 dated 22.04.2013. from the bank account with HDFC Bank Ltd for 'booking of Flat No.C-3501. Tower C in the project Indiabulls BLU, Worli, Mumbai. The allotment letter was issued by the developer, Indiabulls Infrastate Ltd. On 23.04.2013. Thus, the flat was booked by the appellant on 23.04.2013 and the date of allotment was 23.04.2013. The AO has further stated that the assessee was eligible for long term capital gain in respect of the above mentioned property. On perusal of the loan agreement and loan sanction letter dated 3103.....
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....sum of Rs. 2 crores towards the booking of Unit No. C-3501, available on page 10 of paper book. The Ld. Counsel also referred to the allotment letter dated 23.04.2023 issued by the developer in respect of Flat No. C-3501, which is available on page 11 of the Paper Book. The ld Counsel of assessee submits that the allegation of the Ld. AO, by relying on the sanction Loan agreement/sanction letter dated 31.03.2015, that the assessee had booked Unit C2901, is incorrect. The assessee states that the contention of the Department that the assessee had acquired provisional rights in flat C-2901, is not correct as the assessee had never booked two flats and the same was clarified by the assessee during the course of appellate proceedings vide letter dated 11.11.2021 (annexed at Pages 49-50 of the Paper Book) as well as during the remand proceedings. Further, the assessee during the remand proceedings before the AO, furnished a letter dated 01.12.2021 wherein confirmation letter dated 26.11.2021 from the Developer i.e. IndiaBulls intrasestate ltd, as well as from Bank/financial institution i.e. the Indiabulls Commercial Credit Ltd. (ICCL), which had given housing loan to the assessee (annex....
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....pect was further clarified by the CBDT in its later circular No.672 dated 16th December, 1993. In such circular representations were made to the board that in cases of allotment of flats or houses by co-operative societies or other institutions whose schemes of allotment and consideration are similar to those of D.D.A., similar view should be taken as was done in the board circular dated 15th October, 1986. In the circular dated 16th December, 1993 the board clarified as under: 2. The Board has considered the matter and has decided that if the terms of the schemes of allotment and construction of flats/houses by the co-operative societies or other institutions are similar to those mentioned in para 2 of Board's Circular No.471, dated 15-10-1986, such cases may also be treated as cases of construction for the purposes of sections 54 and 54F of the Income-tax Act." 5.8 In the rejoinder, the Ld. DR submitted a note prepared by the Assessing Officer while filing scrutiny report to the Commissioner of Income-tax. In the said report, the Assessing Officer has rebutted the factual finding recorded by the Ld. CIT(A). The relevant part of the said note as reproduced as under....
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....are reproduced as under On request, we hereby confirm that Unit bearing No. C-2901 situated at 29* Level, IndiabullsBlu, GanpatreoKadam Marg. Lower Parel, Mumbei - 400 013 was originally identified by Shri Nerendra Gehlaut. However, on his request, unit no. C-3501 was allotted to him w.e.f. 23.04.2013. We further confirm that Shri Narendra Gehlaut did not hold the units i.e. Unit No. C-2901 and Unit No. C-3501 together, at any given point of time. Sd/- For IndiabullsInfraestate Limited* "To whomsoever it may concern Dated: 26.11.2021 It is hereby confirmed that a home loan was granted to Shri Narendra Gehlautvide Loan Account No. HHLL VRA00223143 for a maximum amount of Rs. 258, 887,000/-. Shri Narendra Gehlaut had opted for Unit No. C-2901 initially in Project IndiabullsBlu, 29 Level, IndiabullsBlu, GanpatraoKadam Marg, Near Worli Circle, Mumbai - 400 013 and loan documentation was prepared accordingly. However, we were later informed he had finally chosen Unit No. C-3501 in the said project. We hereby confirm that the said loan was closed on 21.2.17. Sd/- For Indiabulls Commercial Credit Limited" ....
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....dated 31.03.2015 for Unit No. C2901 is subsequent to provisional allotment of Unit No. C3501 vide letter dated 23.04.2013. Therefore, certificate dated 26.11.2021 issued by both IL & ICCL is selfcontradictory, inasmuch as assessee's opting for flat No C-3501 cannot be an occasion prior to date of loan sanction letter dated 31.03.2015, which clearly mentions details of property towards which loan was sanctioned i.e. C-2901. iv. Further, in the certificate dated 26.11.2021 submitted by IFL, it is inter-alia stated that it is confirmed that Shri Narendra Gehlaut did not hold both the Unit No. C-2901 and Unit No. C-3501 together, at any given point of time thereby admitting that Shri Narendra Gehlaut held the Flat No. 2901 at some point of time, the details which are not submitted by the assessee. The Loan Disbursal Certificate dated 31.03.2015 clearly mentions that Flat No. 2901 was held by Shri Narendra Gehlaut. v. Further, on perusal of the first page of the impugned Application Form (Page 1 -18- page numbering made by this Office) submitted by the assessee, vide which it has been claimed that the Flat No. 3501 was allotted to him on 23.04.2013 does not indicat....
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....is document an amount of loan of Rs. 13,45,88,871/- was disbursed by Indiabulls Infrastructure Credit Ltd. to M/s. Indiabulls Infrastate Ltd. vide their Reference No. 471337 to the applicant Shri Narendra Gehlaut. Further, the above issues noticed at SI No. (i) to (vi) does not support the correctness of the claim of the assesAse regarding the allotment of Flat No. C-3501 to him on 23.04.2013. 8. Therefore, in view of the facts mentioned above, the so-called Provisional Reservation of Apartment for Flat No.C- 3501 on 23.04.2013 has not been established by the assessee. 9. .................... 10 Therefore, the decision of the CIT(Appeal) is not acceptable in holding that the Flat No. C-3501 was allotted to the assessee on 23.04.2013 and not on 31.10.2015, and therefore, the second appeal is required to be filed on this issue." 5.9 We have considered the rival submission of the parties on the issue in dispute. The first issue in dispute before us is whether the right in the flat namely, C-3501 was held by the assessee for a period of more than 36 months or not. The Assessing Officer has referred to MOU dated 14.12.2016 for transfer of rights in the said....
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....ents were accordingly modified. However, it is just a matter of chance that documentation with the lender continued in old unit number. However, records of the developer were perfectly aligned and both the parties had always mutually consented for Unit No. C-3501. A confirmation thereto from the Developer is enclosed here-with as Annexure-1. The factual position regarding shifting of unit was duly communicated during the course of assessment proceedings vide Annexure-VI of our submission dt. 21.12.18. A copy of the same is enclosed here-with as Annexure-2. The said factual position is also evident in the Application Form made by the assessee to the Developer where-in; it is mentioned on the First Page itself that the assessee is shifting Unit from C-2901 to C-3501. A copy of the same is enclosed as Annexure-3. It is important to note that the assessee did not take possession of immovable property and only relinquished his allotment rights. Hence, there was no occasion for the lender to get its records corrected. And once the rights were sold, the lender got its money back and closed the assessee's loan account. Confirmation from the lender regarding t....
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....possession or control in respect of Flat No. C-3501and there is no reference of any allotment letter dated 23/04/2013 . 5.12. This fact of allotment dated 31/10/2015 , also gets supported from the loan sanction letter dated 31.03.2015 which is in respect of flat No. C-2901. It is to be noted here that the assessee i.e. flat owner, Developer, Bank/ financial institution, all are part of same 'Indiabulls' group and therefore possibility of making documents at their convenience can't be denied. The authenticity of the receipt of Rs. 2.00 lakhs dated 23/04/2013 mentioning flat No. C-3501 and allotment letter dated 23/04/2013 are therefore not reliable. Further, during the course of hearing before us, the ld counsel of the assessee was asked as the immovable property rights have been transferred by the assessee in favour of the purchasers parties for a value more than Rs. 100/- and thus as per Transfer of Immovable Property Act, 1882 , the sale transaction must have been registered before the stamp duty authorities and the said document might have details of date of allotment of flat C-3501 to the assessee, but no such copy of registered sale deed was filed before us. In the case law....
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....elied on the decision of the Tribunal in Jodhpur Bench in the case of Gyatri Maheshwari v. ITO. (supra), which was cited before the Ld CIT(A). The relevant part of the decision reproduced by Ld CIT(A) is extracted as under: "it is very much clear that if the property is purchased from borrowed funds then consideration for the purchased amount, the interest on borrowed fund also has to be paid. The amount of interest paid by the assessee constitutes the actual cost to the assessee for that property. To exclude the interest amount from the actual cost of the assets/property would lead anomalous result. The interest amount should be definitely added to the actual cost of the property. Respectfully following these legal propositions and on basis of our observations as held herein, we reverse the findings of the Id. CIT(A) and hold that the interest paid to bank for acquiring capital asset would be eligible as part of cost of acquisition." 6.2 On the contrary, the Ld. DR submitted that interest is not allowable as cost of acquisition to the assessee for two reasons. Firstly, the documentary evidences of loan sanction letter is not in respect of the Flat C-3501 and therefore,....
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.... 1 repayment of loan, there was a fluctuation in the rate of foreign exchange as a result of which, the assessee bad to repay a much lesser amount than he would have otherwise paid. In our judgment, this is not a factor which can alter the cost incurred by the assessee for purchase of the asset. The assessee may have raised the funds to purchase the asset by borrowing but what the assessee has paid for it, is the price of the asset. That price cannot change by any event subsequent to the acquisition of the asset. In our judgment, the manner or mode of repayment of the loan has nothing to do with the cost of an asset acquired by the assessee for the purpose of his business. We hold that the questions were rightly answered by the High Court. The appeals are dismissed. There will be no order as to costs." 6.4 Though in above case, the issue was impact of fluctuation of foreign currency loan borrowed for purchase of the asset, but the same analogy apply for interest for money borrowed purposes of capital asset , which in the case of the assessee is right in the flat. Thus following the decision of the Hon'ble Supreme Court (supra), the interest claimed as cost of acquisition is not ....
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....payment is loan taken from IICL and saving account of the appellant. Thus, source of entire payment for purchase of flat has been satisfactorily explained by the appellant. Therefore, addition of Rs. 11,53,38,145/- made by AO u/s.69B is deleted." 7.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. Though the Ld. CIT(A) has mentioned that the assessee has made payment of Rs. 24,68,01,021/- to 'Indiabulls Infra Ltd'. in respect of purchases of the flat, however no such detail has been provided by the assessee before us. The assessee has only provided amount paid of Rs. 11,33,10,868/- and claimed as part of the cost of acquisition detail of which is reproduced as under: Coat of acquisition Particulars Cost Indexed Cost Amount paid in FY 2013-14 662,55,210 793,79,245 Amount paid in FY 2014-15 470,55,658 516,96,890 Paid to developer 1133,10,868 1310,76,135 Amount paid in FY 2015-16 (Interes 149,46,436 155,54,802 Amount paid in FY 2016-17 (Interes 169,81,840 169,81,840 Interest Cost 319,28,276 325,36,642 Loan paid by ICCI to Developer 1837,86,057 ....
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.... the year under consideration, but has later sold the rights pertaining to said unit during the previous year relevant to the financial year 2017-18. In view of the same addition u/s 56(2)(vii) of the Act is not applicable in the case of the assessee. 8.2 We have heard rival submission of the parties on the issue in dispute and perused the relevant material on record. The relevant provision of section 56(2)(vii) of the Act are reproduced as under: ".. (vii) where an individual or a Hindu undivided family receives, in any previous year, from any person or persons on or after the 1st day of October, 2009 but before the 1st day of April, 2017,- (b) any immovable property,- (i) without consideration, the stamp duty value of which exceeds fifty thousand rupees, the stamp duty value of such property; (ii) for a consideration which is less than the stamp duty value of the property by an amount exceeding fifty thousand rupees, the stamp duty value of such property as exceeds such consideration: Provided that where the date of the agreement fixing the amount of consideration for the transfer of immovable property and the date of registration are not th....