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2017 (11) TMI 325

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..... the submission of the Ld. AR that whatever may be the consideration receivable by the vendors under the sale deed had to be apportioned between the assessee and GKS Holdings and the entire ₹ 53,98,763/- cannot be thrown to the share of the assessee. Further the documents indicate that the assessee held the property for more than three years and the acquisition of the property was for the purpose of their office and it is only since it was insufficient for their office they sold it away to one Vaishnavi Associates. Period of holding of the property and the expenses for Genset and Air conditioner also support the contention of the assessee that the property was purchased as a capital asset but not stock in trade. It is a verifiable fact as to what exactly the portion of the sale consideration under sale deed dated 27.03.2004 was receivable by the assessee so as to apportion the amount of ₹ 53,98,763/- could be attributed to the assessee. While working out the amounts received or receivable by the assessee the liquidated damages have to be taken into consideration for the purpose of reducing the cost of acquisition. For this purpose, we deem it just and proper to set as .....

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..... short term capital asset, adopting the guideline value of ₹ 53,98,763/- and calculating the short term capital gain at ₹ 28,78,692/-. 5. That the appellant craves leave to add, alter, amend, substitute, forgo any or all the grounds of appeal before or at the time of hearing. 2. Briefly stated facts are that the predecessors of the assessee insofar as the subject matter of this appeal is concerned was one Road Tech Construction Pvt. Limited. They were engaged in the business of development of buildings and money lending. For the AY 2004-05 they have filed their return of income declaring a total income as per Income Tax Act as Nil and book profit u/s 115JB at ₹ 7,09,831/-. The assessee company through its incidental objects in the memorandum of association carried on the business of money lending and received a sum of ₹ 32,710/- as interest. During the 143(3) proceedings AO noticed that the assessee acquired undivided right in respect of 4.431% of 8 grounds and 843 sq. ft of land in New R.S. No. 543/14 (part) and New R.S. No. 543/15 (part) on 19.01.2001 for a total consideration of ₹ 22,20,387.50/- and by way of an agreement with M/s Chaitan .....

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..... the treatment given to the gains as short term capital gains instead of long term capital gains, in view of the fact that the property was acquired on 19.01.2001 and was sold on 27.03.2004 i.e. after holding the same for more than 36 months. Ld. CIT (A) dismissed the appeal of the assessee and confirmed the additions made by the AO. Hence, this appeal by the assessee. 3. In so far as the disallowance of the office expenses to a tune of ₹ 1,64,286/- is concerned. it is the argument of the Ld. AR that the action of the AO is arbitrary and without pointing out to any defect in the books of accounts of the assessee or showing the escalation of the expenses by the assessee, it is not open for the AO to arbitrarily disallow any part of expenses. He drew our attention to page nos. 13 14 of the Paper Book and to the details of the expenditure enumerated therein. He further submitted that the assessee derived income from interest as well as rentals from property and profit on sale of property rights, which is evident from the books of accounts. The profit and loss account at page no. 14 of the Paper Book clearly shows that the assessee derived income from rentals profit on sale o .....

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..... d attributed it to the assessee, which is an error apparent on the face of record. Thirdly, assessee submits that having regard to the period of holding of the asset, the gain or loss is only long term one, but not short term one. Basing on this it is the submission of the assessee that the gains of the assessee have to be reworked out on the apportionment of the guideline value and also by reducing the cost of acquisition by the liquidated damages received and whatever the figure that the AO reaches on this exercise, he has to treat it as long term capital gains. 5. We have gone through the record, and the decisions in Rita Sunil Manaktala vs. Income Tax Officer (Mumbai) (In ITA No. 255/Mum/2013) and Delhi Development Authority vs. Income Tax Officer (1995) 53 ITD 19 (Delhi), wherein it is held that the composition paid on account of delay in construction of a building would represent a non taxable capital receipt. In the decisions cited by the assessee the coordinate benches of this Tribunal held that the compensation paid on account of construction is a non taxable capital receipt. We have also perused the agreements dated 19.01.2001 and 27.01.2002, and sale deed dated 27.03. .....

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