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2020 (9) TMI 759 - ITAT JAIPURDisallowance while working out the capital gains - disallowance of brokerage expenses - HELD THAT:- Hon'ble Allahabad High Court in the case of EMC (Works) Pvt. Ltd vs. ITO [1963 (4) TMI 79 - ALLAHABAD HIGH COURT] wherein it has been held that where application is made by the assessee requesting the AO to issue notice u/s 131 and application was rejected by the AO summarily and assessment completed, action of the AO was held to be without jurisdiction. Reliance is also placed on the decision in the case of Munnalal Murlidhar [1970 (7) TMI 11 - ALLAHABAD HIGH COURT] wherein it was held that the failure on the part of the AO to call for and examine the evidence which is offered by the assessee materially prejudices the assessee and it is denial to the assessee of opportunity to produce evidence in support of its case. As per our considered view when the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to tax, adverse inference cannot be drawn against the assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. There is no justification for the disallowance on account of brokerage paid by the assessee. We direct the A.O. to delete the disallowance of brokerage - appeal of the assessee is allowed. Interest paid on money borrowed for purchase of asset - HELD THAT:- The A.P High Court in case of Addl. CIT Vs. K.S. Gupta [1976 (8) TMI 9 - ANDHRA PRADESH HIGH COURT] has following judgement of Delhi High Court in CIT Vs. Mithilesh Kumari [1973 (2) TMI 11 - DELHI HIGH COURT] held that interest paid on amount borrowed for purchase of open plot of land forms part of cost of acquisition - the assessee has correctly claimed the interest paid on borrowings for purchase of plot as cost of improvements. The action of the A.O. and Ld. CIT(A) is contrary to law and thus cannot be sustained. Thus, the addition is grossly wrong and bad in law and accordingly deleted. Capital gain computation - brokerage payment disallowance - HELD THAT:- Since, the assessee has duly filed confirmations from all the brokers to whom commission has been paid and they are also assessed to tax, adverse inference cannot be drawn against the assessee if the brokers to whom the brokerage amount has already been paid and the assessee even had no moral pressure. Accordingly, we direct the A.O. to delete the disallowance of brokerage - Decided in favour of assessee.
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