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2022 (8) TMI 1018 - AT - Income TaxProportionate deduction u/s 54 / 54F - Computation of capital gain - direct construction cost as stated to be paid by the assessee was held to be not admissible for want of documentary evidence and the pre-construction housing loan was held to be not admissible - HELD THAT:- The assessee has paid construction cost under a construction agreement. The perusal of ledger account of the said party as placed on record would reveal that majority of these payments are through banking channels which are evidenced by assessee’s bank statements. Shri J. Bhaskaran responded to the notice issue by AO u/s 133(6) and file the requisite details. AO found that the said party was not maintaining books of accounts and no tax return was filed since the income was stated to be below taxable limit. However, the aforesaid fact, in our opinion, could not jeopardize assessee’s claim since the assessee had paid the amount through banking channels under a construction agreement, a fact which stood confirmed by the contractor. In such a case, restricting the construction cost to the extent of Rs.49.95 Lacs could not be held to be justified. Accordingly, we direct Ld. AO to allow full construction cost of Rs.74.09 Lacs as paid to the contractor. So far as cost of Rs.40.88 Lacs stated to be incurred by the assessee is concerned, upon perusal of ledger as placed on record, it could be seen that the assessee has paid the construction cost of Rs.5.18 Lacs through banking channel whereas the remaining amount of Rs.35.67 Lacs has been paid in small trenches for various construction work which is evident from the narrations appended with each of the entry. In such a case, the denial of deduction of the same is not justified. The Ld. AO is directed to allow this cost. It could be seen that the assessee has not claimed any deduction on sale of property which is situated at Kolathur and in fact, the computations have resulted into capital loss for assessee on sale of this property. Therefore, the sale consideration of this property was not to be considered while computing proportionate deduction u/s 54 / 54F. We order so. The Ld. AO is directed to re-compute assessee’s income. Assessee appeal partly allowed.
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