TaxTMI 
TaxTMI 
2024 (1) TMI 1037
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....ed at Rs. 19,56,688/-. 3) In the facts and circumstances of the case the Id. Commissioner of Income-tax (Appeals) (NFAC) has erred in confirming action of Id. Assessing Officer restricting subsequent investment in residential house property made at Rs. 65,00,000/- to Rs. 5,00,000/- 4) In the facts and circumstances of the case and in law the Id. Commissioner of Income-tax (Appeals) (NFAC) has erred in confirming action of Id. Assessing Officer restricting claim of exemption made u/s. 54 of the Income-tax Act 1961 at Rs. 1,58,91,312/- to Rs. 95,95,525/-. 5) The impugned order is bad in law and on facts. 6) The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice. 2. Briefly stated, the facts of the case are that the assessee filed his return of Income for the Assessment Year 2015-16 on 29.08.2015, declaring a total income of Rs. Nil, claiming a refund of Rs. 2,33,180/-. The case of the assessee has been selected for limited scrutiny under Computer-Assisted Scrutiny Selection (CASS), stating the reason "Sale consideration of property in ITR is less than sale consideration reported in form - 26QB and large dedu....
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....he order of Ld. CIT(A) in the present appeal before us. 5. Ground No. 1: Regarding the Fair Market Value as on 01.04.1981 to Rs. 50,000/- instead of 5,00,000/- u/s55(2)(b)(i) 5.1 At the outset, Ld. AR on behalf of the assessee has submitted the Fair Market Value of Rs. 5,00,000/- as on 01.04.1981 adopted by the assessee is duly supported by the valuer's report which was submitted before the Ld. AO, copy of the same is furnished before us at page no. 72-76 of the Assessee's paper book, as per the certificate by the valuer the Market value of the impugned property i.e., Land & Building as on year 1981 was valued at Rs. 4,19,000/-, it is the submission of Ld. AR that the value certified by the valuer is near to the value adopted by the assessee for Rs. 5,00,000/-, if the AO had any doubt, the matter could have rendered to DVO instead of adopting of value on his own. The value of Rs. 50,000/- adopted by the Ld. CIT is also totally arbitrary, baseless. It is the argument of Ld. AR that the valuation is a technical matter which neither the assessee nor the revenue authorities can estimate therefore, there was no justification to adopt Rs. 50,000/- as Fair Market Value by the Ld....
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....rih Nirman Samiti, the initial cost of acquired land in 1965 was at Rs. 20,555/-. Accordingly, the AO adopted cost acquisition of land as on 01.04.1981 at Rs. 20,555/-. 5.3 In view of the above facts, I agree with the contention of the AO that the appellant has tried to manipulate the value as on 01.04.1981 to reduce the quantum of taxable capital gains. As per the information obtained by the AO, the cost of acquisition 1965 was at Rs. 20,555/-. However, since there is a gap of 16 years from the date of acquisition i.e., 1965 and the fact that there was not much increase in land values in those days, I consider it reasonable to adopt the cost of acquisition as on 01.04.1981 at Rs. 50,000/-. Therefore, I direct the AO to adopt the cost of acquisition of land at Rs. 50,000/- instead of Rs. 20,555/- and compute the Long-Term Capital Gain accordingly. 5.4 In view of aforesaid observations, we do find merit in the perception of the Ld. AO, wherein it is explained that the cost of construction and site development including tubewell and boundary wall cannot be included in the fair market value of the impugned immovable property, since such items were not part of the immovable property....
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....age no. 25-46. 5.5 In view of aforesaid facts, we are of the considered view that the fair market value of the impugned immovable property should be adopted at Rs. 1,20,000/- as on 01.04.1981, which is backed by a corroborative document, as valued by the government approved valuer in absence of any valuation by DVO which should have been proposed by the AO, and also the value of watchman room shall be added at Rs. 45,000/- as declared by the assessee in registered sale deed. We, therefore, direct to modify the order of Ld. CIT(A) to the extent to adopt the fair market value of the subject property at Rs. 1,20,000/- as on 01.04.1981(indexation benefit applicable) towards land and Rs. 45,000/- (without indexation benefit) instead of Rs. 50,000/- in aggregate as estimated by the Ld. CIT(A) without support of any corroborative evidence. In result, Ground No. 1 of the assessee is partly allowed for statistical purposes. 6. Ground no. 2. Regarding index value of renovation expenses claimed at Rs. 19,56,688/- 6.1 Ld. AR, at the outset has submitted a written synopsis on the aforesaid ground, the same is extracted as under: Ground no. 2 1. House was more than about 45 years old. Asse....
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....ing the cost of acquisition, development cost and expenses towards the sale of the property the value of building cannot be considered which was not in existence or part of property sold/transferred at the time when the registered sale/transfer deed was executed. As evident from the sale/transfer deed that so far as building is concerned there was only one room for watchman (chowkidar) consisting of 8x7 Sq. Ft. i.e., 56 Sq. Ft. for which the consideration was declared at Rs. 45,000/-. Accordingly, we are of the view that on account of construction to be included in the cost of the immovable property sold should be only Rs. 45,000/-, It is the cost of chowkidar room declared by assessee himself in the registered sale/transfer deed. Under such facts and circumstances the amount towards cost of building is to be allowed to the extent of Rs. 45,000/- only, which we have already considered and included while deciding cost of acquisition and development as per our observations while deliberating upon ground no. 1 of the present appeal, therefore, the order of Ld. CIT(A) disallowing the entire expenses incurred on renovation of such non-existent building is sustained. Accordingly, the gro....
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.... had allowed only 5,00,000/-, observing that the expenditure incurred was on furniture, fixers, fitting and interiors and not on the structure of the building. To dislodge such conviction of the Ld. AO, Ld. AR has placed his reliance on certain case laws and argued that the entire expenditure of renovation of the newly purchased residential property should be allowed. Ld. AR further mentioned that the Ld. CIT(A) has increased the amount to Rs. 10,00,000/- on estimated basis without considering the bills and bank statements submitted by the assessee. Under such facts and circumstances, it was the prayer of Ld. AR that the entire expenditure of Rs. 65,00,000/- should be allowed as expenditure incurred by the assessee. 7.3 The relevant findings in the case of Smt. Kiran Agrawal vs ACIT, ITA no. 233/RPR/2016 dated 29.08.2022, as relied upon by the Ld. AR, wherein the identical issue has been dealt with by the coordinate bench of ITAT, Raipur, following the judicial principle guided by Hon'ble Karnatka High Court in the case of Rahana Siraj vs CIT (2015) 232 Taxman 327 (Karn.), the observation of the tribunal are as under: Smt. Kiran Agrawal vs ACIT, ITA no. 233/RPR/2016 dated 29.08.20....
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....s unsustainable. To that extent, the impugned order passed by the Tribunal as well as the Lower authorities require to be set-aside and it is to be held that in arriving at cost of the new asset, Rs. 18 lakhs spent by the assessee for modification, alterations and improvements of the asset acquired is to be taken note of. Thus, the second substantial question of law is answered in favour of the assessee and against the Revenue. Hence, we pass the following order: Appeal is allowed in part." Also, we find that a similar view had been taken by the ITAT, Mumbai (SMC) in the case of Mrs. Sonia Gulati Vs. ITO in ITA No.1300/Mum/1998 dated 03.10.2000, wherein the Tribunal had observed that as the concept of habitability was inherent in the word "house", therefore, where an assessee after purchasing a house makes investment for rendering the same habitable, the amount so spent should be considered as having been spent for purchase of house and would be eligible for deduction u/s 54F of the Act. 20. Considering the aforesaid facts, we are of the considered view that the Assessee's claim for deduction u/s. 54F w.r.t investment made towards furnishing/additions/alteration of the ne....
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....e flats with certain alterations in the floor work, but flat no. 501 & 504 are not found interconnected with the flat no. 502-503, on the contrary flat no. 501- 504 are totally separate and were let out to two different parties, namely, M/s Param Pujya Solar Energy Pvt. Ltd. and the other one to certain information technology engineers working as startup IT projects with some US based company. On thoughtful deliberations of the aforesaid facts, wherein specific inquiry was conducted by the AO and categorical observations of the inspector were recorded in the assessment order, that 2 flats are let out to two parties with specific name and contact details of the tenants which establishes that the flats are used by external parties and not by the assessee for his family, also on perusal of the floor lay out map of the flats furnished before us, nothing is emanating that the four flats are converted into one residential unit. It is, thus, incomprehensible to concur with the contentions raised by Ld. AR without any cogent supporting evidence that all the 4 flats are converted into one residential unit and are in use or to be used by the family of the assessee. 7.6 Under such scenario, ....