2024 (11) TMI 420

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....es of the case, the Ld. CIT(A) has erred in allowing the benefit of indexation in respect of capital gain on sale of land from the date of allotment letter although the payment for acquisition of land is made in F.Y. 2015- 16 only and there is no bill available for cost of improvement. 2. On the facts and in the circumstances of the case. the Ld. CIT(A) has erred in allowing disallowance of expenses of Rs. 47,05,802/- charged to profit and loss account ignoring that the assessee has carried out no business during the year under consideration. 3. The appellant craves leave for reserving the right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal." 3. Br....

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....(A) who allowed the appeal of the assessee. The CIT(A) allowed the benefit of indexation from the date of allotment letter i.e. 17.01.2008 on the basis of the CBDT Circular No. 471 dated 15.10.1986 and the ratio of the decision of the Hon'ble Delhi High Court in the case of CIT Vs, Ram Gopal 55 Taxguru.in 536. 7. Now the Revenue is in appeal before us against this action of the ld. CIT(A). 8. Fulcrum of the quarrel on the issue of capital gains, revolves around two issues one being the benefit of indexation available to the assessee and second the cost of acquisition/improvement of the land sold. The ld AR of the assessee vehemently argued that the assessee was allotted a land of 16686 sq mts, vide allotment letter dated 17.01.200....

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....ted the proportionate cost of acquisition for the 9900 sq mt piece of land. 10. Per contra the ld DR vehemently defended the AO's order and argued that the AO has rightly taken proportionate cost of acquisition of land of 9900 sq mts. It is argued that the assessee failed to provide any evidence on account of expenses of Rs 65,78,905/- out of Rs 93,05,215/- on account of improvement on the land in the impugned FY 2015-16, on boundary wall, land filling, boundary construction and land leveling. It was argued therefore, that the Assessing Officer validly reached the conclusion that expenses to the extent of 65,78,905/-cannot be considered as cost of the improvement. 11. We have heard the rival submissions and have perused the relevant m....

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....al asset." 12. Further the said CBDT Circular dt.15/1 0/1986 has stated that "the allottee gets title to the property on the issuance of the allotment letter and the payment of installments is only a follow up action and taking the delivery of possession is only a formality" 13. In view of the facts enumerated hereinabove and in the context of the Board's Circular No. 471 dated 15.10.1986 and the decision of the Hon'ble Jurisdictional High Court in CI'T vs. Ram Gopal (supra), we hold that the Assessing Officer has erred in denying the benefit of indexation from FY 2007-08. In that view of the matter, the assessee is allowed benefit from the date of allotment letter i.e. 17.02.2008. To that extent, the decision of the CIT(A....

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....he above discussion, the ground number 1 is partly allowed for statistical purposes. 16. With regard to Ground No. 2 being disallowance of expenses of Rs. 47,05,802/-, brief facts are that during the course of assessment proceedings the Assessing Officer observed that the assessee has debited Rs. 47,05,802/-as expenses under various heads, out of which assessee has paid Rs. 33,63,831/- as interest to others. Further, it was observed that there has been no business in the year except the sale of land which has already been discussed above. As the assessee failed to explain as to why such expenses are being claimed when there is no revenue in the given year, the entire amount of Rs. 47,05,802/- was disallowed. 17. Aggrieved, the assesse....

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....nt of the year ended 31.03.2015 where the company made turnover of Rs 25,000 and also claimed depreciation. It was argued therefore, that the assessee maybe allowed the expenses claimed majority of which are in the nature of interest paid on the loan taken. It was also submitted that the person to whom interest was paid have deducted TDS and the interest income is shown by them in their income tax return. Therefore, these expenses may be allowed. The ld AR of the assessee argued that in the alternative, as the interest was paid on the borrowings for purchase of land, the expense on interest needs to be allowed to be capitalized. 20. Having heard the rival submissions, we have perused the relevant material on record. We find that the AO h....