Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2014 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2014 (10) TMI 736 - AT - Income TaxCapital Gains - Cost of construction and indexation disallowed – Cost of improvement – Payment to clear the dues – Held that:- Section 48 provides the mode of computation of capital gain - the income chargeable under the head “capital gain” shall be computed by deducting from the full value of the consideration received or accruing as a result to the transfer of capital asset - The tenants have been manufacturing the goods which were subject to excise clearance - The occupancy certificate issued by the Department of Town & Planning is placed on the record and he further drew our attention towards the lease agreement between her and the tenants - On the strength of these documents he pointed out that building was in existence - Her inability to quantify the cost of construction should not be considered as a sole criteria to exclude that cost of construction while computing the capital gain - The assessee has already taken a report from the Registered Valuer and calculated the cost of construction on that basis - As far as the objection of the AO is concerned that building has not been mentioned in the sale deed, according to the assessee the terms and conditions mentioned in the sale deed are negotiated terms and conditions between the vendor and vendee and does not carry the value equivalent to any statute - There may be a different object of the vendee for not mentioning the building and one of the relevant factors can be a lower payment of stamp duties - Thus non mention of building in the sale deed would not authorize the AO to deny the claim of assessee - During the course of hearing we had confronted to the assessee that the rental income can be an income from the land only - if it was an income simply from leasing out of the land then it would have been assessed as income from other sources and not income from house property. Relevant balance sheet for arriving at the conclusion that these companies constructed the buildings can only be examined from the balance sheet of 31.3.1997 - If the examination of these balance sheets as of this year reveals that there was no building appearing in the fixed assets, then the obvious conclusion is that initially building was constructed by assessee and further these tenant companies had made further additions, the value of which is represented in the balance sheets of these companies as on 31.3.2005 - for this verification the matter is to be remitted back to the AO for verification of balance sheets of these companies for the years 31.3.1997 and if there is no amount appearing with respect to buildings, then he should allow the benefit to the assessee as all other evidences are in favour of assessee - the AO can get verified the valuation report for the purpose of rates taken by valuer as the constructed area matches with the occupancy certificate – Decided in favour of assessee. Payment not made by assessee but in the name of husband of assessee – Held that:- Disallowance only on this account is not a valid disallowance as the AO has not otherwise doubted the payments - CIT(A) himself had held that a considerable portion in the nature of permanent structure was also constructed by tenants - CIT(A) also makes a finding that in the case of M/s Excalibur in the balance sheet as on 31.3.2008, a deduction of an amount was made from the value of building - CIT(A) inferred it to be against the assessee as assessee was not able to reconcile the figure with the amount of compensation received by Excalibur - cost of building as appearing as on 1.4.2006 as per paper book page 140 is ₹ 1,17,77,207/- and on receipt of compensation of Rs..1,30,00,000/- the assessee reduced the total amount from building account in subsequent year - there is nothing wrong in it as when an asset is sold for an amount which exceeds the cost price, the only amount which can be reduced from the cost price is maximum up to cost price appearing in the balance sheet – Decided in favour of assessee.
|