TMI Blog2010 (8) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... er the property which is sold by him. In our considered opinion such claim of the assessee could not be denied unless proved otherwise. There is no material on record to suggest that the payments which are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year under consideration. It is so with respect to base price, processing fee, preference charges, external development charges, fire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assessee is entitled to get deduction thereof under the provisions of s. 48(ii). Computation of indexed cost of acquisition - date from which the indexed cost of acquisition is to be computed? - HELD THAT:- The assessee had acquired a right to get a particular flat from the builder and that right of the assessee itself is a capital asset. The word held used in s. 2(14) as well as Explanation to s. 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7) paid to DLF Universal Ltd. in connection with acquisition of the said flat. 2. The assessee sold a flat No. F-011, Richmond Park, DLF City Phase IV, Gurgaon vide sale deed dt. 30th Nov., 2006 for a sum of Rs. 90 lacs. After claiming brokerage paid thereon of Rs. 45,000, the sale price arrived at by the assessee was Rs. 89,55,000. Out of the said sale consideration, the assessee claimed that it had incurred cost of acquisition in various financial years amounting to Rs. 55,81,062. The cost as per indexation was worked out at Rs. 84,54,439. The details of indexation as described in computation of capital gain by the assessee is as under : 1995-96 13,35,850* 519/281 24,67,282 1996-97 74,042* 519/305 1,25,993 1997-98 15,20,000* 519/331 23,83,323 1999-2000 21,39,232* 519/389 28,54,142 2001-02 5,11,938* 519/426 6,23,699 55,81,062 84,54,439 3. After reducing the indexation cost of Rs. 84,54,439 from the net sale consideration of Rs. 89,55,000, long-term capital gain was computed by the assessee at Rs. 5,00,561. After claiming the exem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enerator charges Rs. 46,941; and (iii) processing fee and miscellaneous charges Rs. 80,437. The cost was described in the table filed before the CIT(A) which is as under : Sl. No. Particulars F.Y. 1995-96 F.Y. 1996-97 F.Y. 1997-98 F.Y. 1999-02 F.Y. 2001-02 Total 1. Purchase price as per conveyance deed 12,72,702 74,042 6,43,865 20,55,359 40,45,968 2. Stamp duty 5,05,752 5,05,752 3. Other expenses (i) Interest 8,60,061 2,016 4,971 8,67,048 (ii) Fire fighting charges 34,916 34,916 (iii) Generator charges 46,941 46,941 (iv) Processing fee and other miscellaneous charges 63,148 16,074 1,215 80,437 Total 13,35,850 74,042 15,20,000 21,39,232 5,11,938 55,81,062 7. Consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s raised by the assessee, learned CIT(A), referring to the decision of Karnataka High Court in the case of CIT vs. Maithreyi Pai (1984) 43 CTR (Kar) 88 : (1985) 152 ITR 247 (Kar) has denied the claim of interest to the assessee from being considered as cost of acquisition. Similarly, the other charges, namely, fire fighting charges, generator charges and processing fee and miscellaneous charges were not held to be allowable as cost by the CIT(A) on the ground that those were not substantiated by any evidence of payment and they being part of the cost of acquisition and in this manner, learned CIT(A) has rejected the additional grounds. So far as it relates to applicability of the cost indexation factor, learned CIT(A) has observed that as sale has taken place in financial year 2006-07, cost inflation factor should be taken at 519 and vide para 24.2 of the impugned order, the capital gain as worked out by learned CIT(A) is as under : "24.2 The capital gain is worked out as under : Sale consideration (as per paras 10 to 12 above) Rs. 90,00,000 Brokerage paid Rs. 45,000 Rs. 89,55,000 Less : Purchase c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssible and the matter was remanded for verification. He submitted that in the present case no such deduction was claimed and it is also not the case of the Revenue that the assessee has claimed double deduction. He referred to the decision of Karnataka High Court in the case of CIT v. Sri Hariram Hotels (P) Ltd. (supra) to contend that such interest is an allowable deduction. 17. Coming to the second issue of date from which the indexation benefit is to be allowed, it was submitted by learned Authorised Representative that the flat was allotted to the assessee vide allotment letter dt. 2nd Aug., 1995 and agreement was executed on 27th Sept., 1995. He drew our attention towards copy of agreement which is placed at pp. 45 to 59 of the paper book. He submitted that vide the said agreement all the necessary particulars regarding flat number, area, etc. were duly identified. He submitted that the terms and conditions of payments were also marked and those conditions have duly been complied with. The assessee started making payment from 2nd Aug., 1995 and was making payment till 28th Sept., 2001. He in this regard referred to the copy of the receipts submitted at pp. 16 to 38 of the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Departmental Representative that the other cost claimed by the assessee to the tune of Rs. 10,29,342 has rightly been disallowed by the AO and CIT(A). He submitted that these items cannot be considered to be cost as the same were not incurred on the construction, etc. Similarly, he argued that for interest also learned CIT(A) has rightly rejected the claim as it is not clear that whether the assessee has claimed the said deduction under any other section and if it is so, the interest cannot be allowed to him again in these proceedings. 21. On the issue of indexation, relying upon the orders of the AO and CIT(A) he submitted that the asset came into existence only on the date of conveyance deed and, therefore, learned CIT(A) was right in holding that the indexation benefit should be allowed only from the date of conveyance deed. Thus, it was submitted by learned Departmental Representative that order of the CIT(A) on both the issues should be confirmed. 22. In a rejoinder it was submitted by learned Authorised Representative that he is making a statement at the Bar that the said interest was not claimed by the assessee under any other section. 23. We have carefully considered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty would charge from the assessee various charges which are as per the agreement entered into by the assessee for allotment of a particular property. 25. According to the scheme of capital gain, as per s. 48, while computing the capital gain, the assessee is entitled to get deduction from the sale value of the asset liable for capital gain, the amount of cost of acquisition of asset and the cost of any improvement thereon. Without making the payment of the amounts to the builder the assessee could not have obtained the conveyance deed. Therefore, we are of the opinion that the AO is wrong in taking the cost of acquisition only as stated in the conveyance deed. As against that the assessee has filed evidence on record to contend that what is shown by him as cost of acquisition are the payments made to the builder for getting the right over the property which is sold by him. In our considered opinion such claim of the assessee could not be denied unless proved otherwise. There is no material on record to suggest that the payments which are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kind held by an assessee whether or not connected with the business or profession and it excludes certain items which while considering the facts of the present case are not relevant. Therefore, it has to be seen that whether by entering into an agreement vide which the assessee was allotted a particular flat by allotment letter whether the assessee has held any asset or not. By entering into an agreement to allot a flat, the assessee has identified a particular property which he intended to buy from the builder and the builder is also bound to provide the applicant with that property by accepting certain advance amount and making agreement for balance payment as scheduled in the agreement. Thus, going into the provisions, it is not necessary that to constitute a capital asset the assessee must be the owner by way of a conveyance deed in respect of that asset for the purpose of computing capital gain. The assessee had acquired a right to get a particular flat from the builder and that right of the assessee itself is a capital asset. The word held used in s. 2(14) as well as Explanation to s. 48 clearly depicts that assessee must have some right in the capital asset which is subj ..... X X X X Extracts X X X X X X X X Extracts X X X X
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