TaxTMI 
TaxTMI 
2023 (8) TMI 815
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....t 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 consolidated payment received from assessee as well as the lender of the ass....
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....quisition, 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 of source explained thereof along with documentary evidence. 2.1 On further appeal, the ld CIT(A) allowed relief to the ....
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....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 assessee however has considered the allotment of the said flat C-3501 on 23.04.2013. Since, the flat has been transferred by the assessee on 14.12.2016, therefore, the assessee considered holding of the rights for more th....
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.... 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 3103.2015 issued by India Bulls Commercial Credit Ltd., loan of Rs. 25,88,87.000/- was sanctioned @10.5% p.a. On verification of the details submitted by the appellant, it is seen that the appellant had paid Rs. 2,00,00,000/- on 23.04.2013, Rs. 4,52,55,210/- on 23....
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.... 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 (annexed at Page 51 - 54 of the Additional Paper Book). It was further stated that the said housing loan was closed by ICCL and same could be clearly seen from the closure account annexed at Pages 55 - 58 of the additional paper book. Thus, it was contested that the entire co....
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....deration 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: "In this case, it is seen from the loan sanction letter dated 31.03.2015 issued by Indiabulls Infrastructure Credit Ltd-Transaction date 31.03.2015 that the 'Disbursal Amount of Rs. 13,45,88,871/- is for a property under description as under - Flat No. C-2901, 29 Floor, Tower No.....
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....ri 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" 6. The above facts show that the assessee is claiming Long Term Capital Gains in respect of sale of property being Flat No. C-3501 whereas the loan disbursal document states that the loan was sanctioned for Flat No. C-2901. In this regard, following issues are noticed : i. No verifiable evidence has been submitted by the assessee in support of its claim that the Flat No. C-3501 was allotted ....
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....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 indicate any amount or cheque number vide which the so called payment was made, which is very unlikely in respect of booking of a flat. No such requirement of terms and payment conditions has also been indicated in the Payment Plan CLPP - Toner 'C" (Page 12 of the Application Form) of this Application Form to demonstrate that an amount of Rs. 2 crore payment was required as a pre-booking amount for booking either Flat No. C-2901 and ....
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....ation 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 flat, wherein it is recorded that the flat was allotted to the assessee by the developer on 31.10.2015. A copy of said allotment letter dated 31.10.2015 is also enclosed and available on Paper Book page 33. The contention of the assessee is however that the assessee had applied for allotment of the flat on 23.04.2013 and accordingly it was allotted to him on 23.04.2013. The assessee has referred to allotment letter dated 23.04.2013 available on Paper Book Page 11 as first allotment letter. The conten....
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....e 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 the same is enclosed here-with as Annexure-4. In the humble submission of the assessee, incorrect Unit no. in the lender's records does not vitiate assessee's argument that he got the allotment rights on 23.04.2013. More so, when agreement between the assessee and the Developer is absolutely clear about the unit number. We humbly request your good-self to consider the facts of the assessee's case rationally while giving due consideration to business realities." 5.10 The assessee has also filed a letter from the India Bulls Infra Esate ltd (now known as Indiabulls Real E....
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....tter 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 laws relied upon by the assessee, it is held that date of allotment of flat should be taken as date of construction of property for the purpose of section 54F of the Act, but in the instant case issue is determination of date of allotment itself. There is no dispute on the ratio laid down in case laws, accordingly those case laws are distinguishable. Before the Ld. CIT(A), it was submitted that for computing the holding period for capital gain, the period should be taken from the date of the application of the flat however, we do not agree with the said contention of the assessee. The rights of the assesse....
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....terest 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, the assessee can't be allowed deduction of the interest paid as cost of acquisition for housing loan taken for Flat No. C-2901. Secondly, he submitted that interest paid on housing loan in respect of right acquired in flat is a financial liability of the assessee and not part of the cost of acquisition. He submitted that said interest payment is allowable under the head 'income from house property' as revenue expenditure and therefore, cannot be included as part of capital expenditure for computing cost of acquisition. 6.3 We have heard rival submission of the parties and perused the relevant material on record.....
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....y 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 allowable. 6.5 Further we note that the loan sanction letter filed by the assessee is in respect of another flat i.e. C-2901 and not in respect of the flat in relation to which capital gain has been declared by the assessee. The clarification letter issued subsequently by the banker or financial institution does not seem to be part of a regular practice of the bank or financial institution. In the case of the assessee the developer and the financial institution both being part of the same group, of which the assessee is part, otherwise in normal course no bank can give loan against the property which was not owned by the assess....
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....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 1837,86,057 Loan repaid by the Buyer (1837,86,057) (1837,86,057) Total (A) 1452,39,144 1636,12,777 7.2.1 The assessee also contended that loan amount of Rs. 18,37,86,057 was disbursed by the Financial Institution to the developer. If we take that amount into account, the amount paid by the assessee would exceed the total agreement value of the flat. The assessee while calculating sale consideration of Rs. 25,32,72,150/- mentioned that he has received refund of Rs. 11,32,72,150/- from the developer along with premium of Rs. 14,00,00,000/- received from the buyers/purchasers. When we take into all these amount we find that figure are not reconciling with claims made before the lower auth....
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....p 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 the same, the stamp duty value on the date of the agreement may be taken for the purposes of this sub-clause: Provided further that the said proviso shall apply only in a case where the amount of consideration referred to therein, or a part thereof, has been paid by any mode other than cash on or before the date of the agreement for the transfer of such immovable property;" 8.2.1 On perusal of the above provisions it is evident that deemed income u/s 56(2)(vii) of the Act can be considered at the time of the receipt of the property in the hand of the assessee since in the year under consideration the property has not been received and therefore, provisions of section 56(2)(vii) are not applicable in the case of the assessee in the instant a....