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2022 (3) TMI 897 - AT - Income TaxLTCG - Computation of long term capital gain derived from sale of land by reducing indexed cost of acquisition of the property - assessee claimed that it has redeveloped building and renovated without removing existing structure, including plant and machinery - AO recomputed indexed cost of acquisition by taking into account cost of land which was paid by the assessee plus applicable stamp duty - HELD THAT:- When the Assessing Officer is not disputing fact that the assessee has paid ₹ 4 crores consideration for acquiring property, then the Assessing Officer ought to have allowed deduction towards cost of acquisition, including cost of building, machinery and fittings, because when the consideration was paid for fittings & machinery and same was integral part of building, then the AO cannot simply ignore amount paid for acquiring assets attached to the building. It was not the case of the AO that the assessee has claimed depreciation on machinery and fittings, including building. It is also not the case of the Assessing Officer that the assessee has demolished existing building and dismantled plant & fittings. Unless the Assessing Officer proves that the assessee has demolished existing building and dismantled machinery & fittings and realized amount from sale of said dismantled assets or written off as scrap, then he cannot deny cost incurred by the assessee to acquire those assets. In our considered view, the Assessing Officer has completely erred in not considering cost incurred by the assessee to acquire asset while computing capital gain derived from sale of property. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer Disallowance of amount paid for construction of building - AO has disallowed payment on the ground that the assessee could not produce original bills in support of various expenditure incurred for construction of building - Amount paid to M/s. Bharath Polymers - HELD THAT:- We do not agree with the reasoning given by the Assessing Officer for the simple reason that when the assessee has explained reasons for not furnishing original bills and further, filed photocopies of bills along with corroborative evidence to prove incurrence of expenditure for construction of building, AO ought to have allowed deduction towards payment made to above party. AO without appreciating facts has simply disallowed payment made by the assessee towards construction of building without assigning proper reasons. The learned CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer. Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue. Payment made to M/s. Devi Designers & Decorations - reasons given by the Assessing Officer to disallow amount paid to above party is incorrect and without any basis. If at all, the Assessing Officer was having any doubt on payment made by the assessee, then A.O. should have summoned the supplier to verify fact of payment made by the assessee. The Assessing Officer without carrying out proper enquiry, has simply rejected contention of the assessee only on the ground that original bill was not furnished by the assessee. In our considered view, whether the bill submitted by the assessee is in original or duplicate, as long as other corroborative evidences supports claim of the assessee, then the Assessing Officer ought to have allowed deduction towards amount paid for construction of building. The learned CIT(A), after considering relevant facts has rightly directed the Assessing Officer to allow deduction towards amount paid to M/s. Devi Designers & Decorations. Hence, we are inclined to uphold findings of the learned CIT(A) and reject grounds taken by the revenue. Appeal filed by the revenue is dismissed.
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