TMI Blog2016 (6) TMI 326X X X X Extracts X X X X X X X X Extracts X X X X ..... estment in the building for construction of the flats up to the end of the financial year 31/03/2007 - Held that:- We find that the assessee has made investment in the building to the extent of cost involved. The assessee had sufficient funds to finance the investment in the building. There may be mismatch on the micro level but at the outset, it is established that the assessee had sufficient funds to make the investment. - Decided against revenue - ITA No. 779/Hyd/2014 - - - Dated:- 31-5-2016 - Smt P. Madhavi Devi, Judicial Member And Shri S. Rifaur Rahman, Accountant Member For the Revenue : Shri M. Sitaram For the Assessee : Shri M. Madhusudan ORDER Per S. Rifaur Rahman, A. M. This appeal is preferred by the revenue against the order of the learned Commissioner of Income-tax(Appeals), Vijayawada, dated 31/01/2014 for AY 2007-08. 2. Briefly the facts of the case are that the assessee, an individual, filed her return of income on 11/07/2008 for AY 2007-08 declaring total income of ₹ 2,50,330/-, which included income from long term capital gain of ₹ 1,82,803/-. The case was selected for scrutiny under CASS. The AO determined the taxable i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquired before 01/04/1981. As per the provisions of section 49(1), the cost of the previous owner is deemed to be the cost of acquisition to the assessee. Assessee should have adopted SRO value as on 01/04/1981. Since assessee has not adopted this valuation, AO adopted adhoc value of ₹ 50,000/- to the entire cost of land as on 01/04/1981 in the interest of revenue. AO has estimated ₹ 17,751/- as the cost of land which pertains to the two flats. 2.3. The Assessing Officer has also found from the computation of capital gains that the appellant has incurred expenditure of ₹ 25,25,000/- for the construction of flats bearing Nos.101 and 401 sold during the year. When the AO has asked about the sources of the improvements claimed by the appellant, it was submitted that the same were borne out the sale proceeds of flat Nos.101 and 401. The Assessing Officer observed that the appellant has explained the sources to the extent of ₹ 30 lakhs for the year under consideration. However, the appellant has not explained the sources for investment in the construction of all the flats as the same are also undertaken during the year. The Assessing Officer has therefore he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation card regarding Gruha Pravesham, photos of the house, loan taken by the appellant from Oriental Bank of Commerce for additional construction etc. These evidences produced by the appellant cannot be ruled out that there is no building constructed on the so called plot of land. The Assessing Officer further in the remand report has also accepted the contentions of the appellant prima facie. Hence, I am of the opinion that the Assessing Officer is not justified in stating that the open plot remained as open plot while construction activity of the flats was taken place in view of the fact that when construction of the new flats has to be taken, the previous structure on the said plot of land has to be demolished anyway for obtaining permissions to construct new flats. In view of the above, the. Assessing Officer is directed to take into account the cost of acquisition arrived by the appellant at ₹ 4,60,197/- for the purposes of computation of capital gains. 7.2. The other issue pertains to the addition made u/s.69 of the Act of ₹ 33,12,500/-. The Assessing Officer observed that the appellant could not explain the sufficient sources and details with supporting evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. 7. Ld. DR submitted that the assessee had completed the construction of the flats in the current AY itself as the AO had cross verified the construction activities with the Joint Developer, who gave the statement that 90% of the construction activities were already completed. As the assessee had confirmed that the construction cost of each flat is ₹ 12,62,500/-, AO had correctly calculated the undisclosed investment of ₹ 33,12,500/-. He also submitted that the source for the above investments were not properly explained before the AO. Ld. CIT(A) had given the relief to the assessee merely based on submission rather than on any evidence or findings. 8. Ld. AR relied on the order of CIT(A). 9. We have considered the rival submissions and perused the material facts on record. Since Revenue had raised grounds only relating to the undisclosed income, we are inclined to adjudicate only to the grounds of appeal raised. The main issue is, the assessee had built the five flats, two flats were sold during the current AY, two flats were sold in the subsequent AY and retained one flat for self occupation. AO, based on the statement of joint developer, treated the who ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
