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2016 (7) TMI 380 - ITAT AHMEDABAD

2016 (7) TMI 380 - ITAT AHMEDABAD - TMI - Disallowance of deduction claimed u/s 54F - cost on improvement - assessee failed to claim the deduction as cost on improvement rather it was claimed as deduction u/s 54F of the Act at the time of filing of revised return - Held that:- On examining the facts of the case of assessee with respect to the provisions of section 54F of the Act it seems that assessee is trying to take benefit of section 54F of the Act by one way or the other without placing on .....

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aim of ₹ 3,06,250/- were put forth by the assessee through which it was made clear that ₹ 3,06,250/- was actually the cost of improvement which the assessee was entitled to deduction from the sale consideration. This fact gets further proved when we looked into the income-tax return of other co-owners who have claimed deduction as cost of improvement incurred towards construction of the immovable property which has been sold thereafter. However, assessee failed to claim the deduction .....

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,000/- shown, cannot be entertained as it was not claimed in the return of income and certainly one cannot get the benefit of rightful claim if it has not been put forth in the return of income and in the given case assessee has changed the stories for getting deduction of ₹ 3,06,250/- and has miserably failed to make proper claim at the right place. - Decided against assessee - ITA No.2096 /Ahd/2015 - Dated:- 3-6-2016 - Shri R. P. Tolani, JM, and Shri Manish Borad, AM. For The Appellant : .....

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ned CIT (A) has erred in law and on facts in confirming the addition of ₹ 3,06,250/- made by A.O. 2) The learned CIT (A) has erred in holding that the appellant has not filed relevant details and failed to appreciate the fact that appellant has filed all necessary details to substantiate his contention in form of paper book along with the written submission dated : 27/04/2015 and 18/05/2015. 3) The learned CIT (A) has erred in dismissing the ground of appeal for charging of interest u/s. 2 .....

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lled out from the assessment records are that the assessee is an individual engaged in the business of trading of grains under some proprietary concern in the name of M/s D. M. Hirani. E-return of income was filed on 21.9.2011 declaring total income at ₹ 2,63,310/-. It was further revised on 23.9.2011 declaring income at ₹ 6,55,530/- after including long term capital gain of ₹ 4,05,359/-. The only addition was disallowance of deduction claimed u/s 54F of the Act at ₹ 3,06 .....

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g term capital gain of ₹ 7,11,609/-, deduction u/s 54F of the Act was claimed for investment in a residential property vide agreement dated 31.3.2011 at ₹ 3,06,250/- towards purchased residence from assessee s brother and grand mother and ld. AR further submitted that the said purchase deed could not be registered due to the death of assessee s father and, therefore, assessee should have been allowed the claim u/s 54F of the Act. 6. On the other hand, ld. DR supported the orders of l .....

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of assessment proceedings in order to rightly justify the claim u/s 54F of the Act following submissions were made before ld. Assessing Officer :- "/ have sold plot for ₹ 7:50.000/- said plot was purchased on 16.05.03 for ₹ 25,000/- & earned profit of ₹ 7,25,000/- I have purchased residence for ₹ 306250/- from my brother & Grand Mother on 31.03.11.. I have claimed above investment u/s.54F of the l. T. Act 1961, to save capita! gain tax. Because of my Father&# .....

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erent submissions which reads as under :- 4. During appeal proceedings, appellant filed following submission: "2. At the outset, it is respect/ally submitted that it is not the case for claim for purchase of new residential house but it is the amount given to the parties who have constructed the guest house on the land, which is the subject matter of Long Term Capita! Gain. 3. The appellant along with other five co-owners purchased the various plots from no. 88 to 252 totaling 165 plots sit .....

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mar V. Hirani 6 Kavitaben Hardeshkumar Hirani 23/06/2003 2663 213 to 252 8 4. The copy of the purchase deed of the appellant bearing no. 1947 dated consideration of ₹ 25000/-is furnished herewith. (Page 38 to 42), 5. The appellant along with other co-owners were" granted .permission for construction on the said plots bearing no. from 88 to 252 by Dhanera Municipality on 22/07/20.05 vide permission no,27 and completion certificate from Dhanera Municipality was also, obtained on 20/04/2 .....

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ant has also received ₹ 7,50,000/- towards cost of land and construction. (Page 24 to 26) 8. The plot of land was purchased by six persons as mentioned in para 3 but the cost of construction was met by Mithiben Mohanlai Thakker & Mahendrakumar Diliphhai Thakker. Therefore on account of sale cf plot with construction, the cost of construction met by Mithiben Mohanlai Thakker & Mahendrakumar Dilipbhai Thakker (Hirani) was paid back to them by the other co-owners. 9. The details of co .....

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% Sales price Construction towards cost of construction given to Total construction contribution Page Mithibai M. Thakker Mahendra D. Thakker 1 Rajnish D. Hirani (appellant) 12.50 ₹ 750000 ₹ 181250 ₹ 125000 ₹ 306250 47 2 Ravikumar V. Thakker 12.50 ₹ 750000 ₹ 187500 125000 ₹ 312500 51 3 Chandraben Hirani V. 25.00 ₹ 1500000 ₹ 375000 ₹ 225000 ₹ 60000 55 4 Kavitaben Hirani H. 25.00 ₹ 1500000 ₹ 362500 ₹ 225000 ₹ .....

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and return receipt for A.Y.2011-12 is also furnished herewith. (Mithiben - page 68 to 70; (Mahendrabhai Page 60 to 63) 11. All the sellers except the appellant has shown the amount given towards cost of construction as cost of transfer in their statement of income and return and same is accepted by the department. 12. The appellant has also mentioned in the statement of income as construction instead of cost of construction. Smt. MKhsben Mohanlal Thakker & Mahendrakumar Dilipbhai Thakker ha .....

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ker and for which appellant has received ₹ 7,50,000/- (12.5%) to his share towards sale of plot and construction standing on the said plot of land. 14. in view of the above facts and in the circumstances of the case, the disallowance of ₹ 3,06,250/- needs to be deleted as the said amount is not for purchase or investment in any residential property but the same is given towards reimbursement of cost of construction as mentioned above and also allowed in all the other five co-owners. .....

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The plot \vas sold along with the above referred construction by the six GO-' owners for Rs, 6000000/- 2. As the construction cost was borne by the Mithiben M Thakker & Mahendrakumar D Thakker, the appellant has to pay ₹ 181250 to Sint. Mithiben M Thakker and ₹ 12500 to Mahendrakumar D Thakker as per his share of 12.50% 3. The appellant was having account with Smt. Mithiben M Thakker from, so many .years. There was a debit balance of ₹ 187967.60 of Smt. Mithiben M Thakk .....

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ayment by cash or cheque tor contribution towards cost of construction, (page 4) Copy of Mithiben M Thakkefs account from books of appellant (page 1 to 4) and copy of appellant's account from books of MiLhiben M Thakker is furnished herewith for your kind reference (Page 5 to 8) 4. With regard to payment to Mahendrakumar Dilipbhai, it is to submit that appellant has taken unsecured loan from Mahendrakumar Dilipbhai & the entire outstanding loan including contribution for construction of .....

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31.03.2013 Nil (page 17) -As the entire outstanding payment of ₹ 908450 is paid by account payee cheque of HDFC Bank bearing No.416262 on 20.12.2012 (page 9-10) Thus the appellant has paid the contribution for cost of construction of ₹ 125000 to Mahendrakumar Dilipbhai by account payee cheque. The copy of account of Mahendrakumar Dilipbhai from books of appellant from FY 2007-08 to FY 2012-13 (page 11 to 17) and copy of appellant s account from books of Mahendrakumar Dilipbhai from .....

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ransfer of certain capital assets not to be charged in case of investment in residential house read as under :- [Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section ref .....

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respect of the original asset, the whole of such capital gain shall not be charged under section 45 ; (b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: [Provided that nothing contained in this sub-section shall apply where- (a) the assessee,- (i) owns more .....

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f transfer of the original asset, is chargeable under the head Income from house property .] Explanation.-For the purposes of this section,- [***] [***] net consideration , in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of [two years] afte .....

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e chargeable under the head Capital gains relating to long-term capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, .....

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e the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section 139] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in thi .....

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n,- (i) the amount by which- (a) the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of the new asset as provided in clause (a) or, as the case may be, clause (b) of sub-section (1), exceeds (b) the amount that would not have been so charged had the amount actually utilised by the assessee for the purchase or construction of the new asset within the period specified in sub-section (1) been the cost of the new asset, sha .....

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set not being a residential house then if investment is made in a residential house subject to fulfillment of certain conditions as envisaged in section 54F of the Act then deduction is allowable as per the calculation of amount with respect to provisions of section 54F of the Act for such investment in residential house. Now examining the facts of the case of assessee with respect to the provisions of section 54F of the Act it seems that assessee is trying to take benefit of section 54F of the .....

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at initially, before the AO during assessment proceedings, appellant claimed that he has purchased a residential property from his grandmother and brother for which agreement could not be made because of his father's death but all the payments were made. As against this, during appeal proceedings, appellant came up with a new stand. Now, it is claimed that his grandmother and brother have constructed a guesthouse on the same plot of land which was sold by appellant and other co-owners. It is .....

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was subsequently repaid by the appellant and therefore appellant has claimed these expenses of ₹ 3,06,250/- against the capital gain earned on the sale of plot of land. No such explanation was given by the appellant before the AC and in fact it was claimed that he has actually purchased a new residential property from his grandmother and brother. Appellant even produced an agreement on ₹ 100 stamp paper. Before the AO, appellant gave the explanation for explaining his eligibility for .....

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on for purchasing new residential house. Still, in order to ensure natural Justice, by order sheet noting dated 27/4/15, AR of the appellant was directed to furnish proof of investments by the relatives and also proof of payment cf the amounts to the relatives by the appellant. After considering details filed by the appellant, it is seen that appellant did not make any payment to the relatives during the relevant previous year and only journal entries were passed crediting their accounts, that t .....

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urred by his relatives which were subsequently reimbursed by him. In the case of his grandmother, only journal entries have been passed without any actual payment through bank. In the case of his brother, appellant has claimed that during the year, journal entry was passed crediting his account and entire amount, along with unsecured loan taken from him, was paid on 20/12/12 totaling to ₹ 908,450/-. Appellant has filed copy of bank account from which it is seen that above amount was paid t .....

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e facts, various contentions raised by the appellant in the submissions cannot be accepted. Therefore, it is held that AO was justified in denying exemption of Rs, 3,06,250/- claimed by the appellant under section 54F of the Act The theory of the appellant of investment by relatives and subsequent reimbursement is also rejected. Ground numbers 1 to 3 are hereby dismissed. 12. From going through the submissions made by the assessee before the lower authorities and the observations of ld. CIT(A) w .....

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