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2015 (1) TMI 603 - ITAT DELHICost of construction and indexation thereon disallowed - computation of capital gain - Held that:- Relevant balance sheet for arriving at the conclusion required 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. Therefore, for this verification we set aside the issue to the office of Assessing Officer with a direction to verify the 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. Regarding cost incurred, the Assessing Officer can get verified the valuation report for the purpose of rates taken by valuer as the constructed area matches with the occupancy certificate. Regarding indexation, the same can be given from financial year 1996-97 as the occupancy certificate dated 28.5.1997 establishes the completion of building before 28.5.1997. - Decided in favor of assessee for statistical purposes. Cost of improvement disallowed - Held that:- Disallowance on the account that payments were not made by the assessee and these were made by the husband of the assessee is not a valid disallowance as the Assessing Officer has not otherwise doubted the payments. 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 ₹ 1,30,00,000/- the assessee reduced the total amount from building account in subsequent year , therefore, 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. Therefore, upholding of disallowance relying upon these findings is not correct. - Decided in favor of assessee.
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