TMI Blog2017 (12) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... which it was acquired. This ground of the appeal of the assessee is allowed. Payment of commission for sale of the property - Held that:- As observed by the CIT(A) that from the bank account of the assessee with the ING Vysya Bank account no.716010022199 shows that the assessee had received an amount of ₹ 5 lakhs from D. Srinivas on 8.1.2007, which indicates that impugned payment may not be towards commission. During the appeal hearing, the Ld. A.R. did not bring any evidence to show that the payment in fact was made for the commission. However the assessee has furnished the addresses and the AO should have verified the genuineness of payment of commission. When the addresses were given without making enquiries taking adverse view is unjustifiable. Therefore we are of the considered opinion that the issue should go back to the file of the assessing officer to make the necessary enquiries with regard to the payment of commission and decide the issue afresh on merits. Accordingly we set aside the orders of lower authorities and remit the, matter back to the file of the AO for fresh consideration. Expenditure incurred towards the stamp duty expenses - Held that:- Stamp du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI D.S. SUNDER SINGH, ACCOUNTANT MEMBER For The Appellant : Shri C. Subrahmanyam, AR For The Respondent : Shri Y. Sesha Srinivas, DR ORDER PER D.S. SUNDER SINGH, Accountant Member: This appeal filed by the assessee is directed against order of the Commissioner of Income Tax(Appeals){CIT(A)}, Visakhapatnam vide ITA No.0249/2013-14/ITO W-5(1)/2014-15 dated 12.8.2014 for the assessment year 2010-11. 2. All the grounds of appeal are related to the expenses claimed by the assessee for acquiring property and for sale of the property in computing the capital gains. Assessee filed the return of income declaring total income of ₹ 80,42,430/- and the agricultural income of ₹ 30,000/- on 30.3.2011. During the assessment proceedings the A.O. found that the assessee sold two properties owned by the assessee along with his wife Smt. V. Gunavati. The assessee admitted ₹ 17,61,775/- being 50% share in the property as capital gains. The assessee sold property of 328 Sq.yds. of site with 1330 Sqft. in ground floor and 1987 sq.ft. in first floor RCC house at Dr.No.47-10- 7/2, Dwarakanagar, Visakhapatn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Net Capital gains Rs.22,60,455/- 50% share of the above Rs.11,30,227/- 3. The assessee claimed cost of acquisition for both the properties as under: Property (1) Property (2) 1 Document cost Rs.85,00,000/- Rs.75,00,000/- 2 Stamp duty Rs.8,07,120/- Rs.7,12,470/- 3 Commission paid Rs.5,00,000/- Rs.5,00,000/- 4 Watchman salary paid Rs.30,000/- Rs.30,000/- TOTAL Rs.98,37,120/- Rs.87,42,470/- 4. The Assessing Officer (A.O.) disallowed ₹ 5 lakhs in each property relating to the commission paid for acquiring the property and ₹ 30,000/- salary paid to the watchman and computed the cost o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rified the cost of acquisition of property in the assessment order, the same issue cannot be revisited by the A.O. at the time of the sale of the property. Therefore, the Ld. A.R. argued that there was no case for making any addition, the expenditure to be allowed. 7. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee has furnished confirmation letters from the following persons for receipt of commission which are placed in page Nos.14 to 17 of the paper book. P. Tata Rao Rs.2,50,000/- B. Siva Prasad Rs.2,50,000/- K. Doctor Rao Rs.2,50,000/- K. Appa Rao Rs.2,50,000/- 7.1. The assessee has furnished the confirmation letters, dated 26.12.2006 and the payments to all the recipients were made in cash. The assessee has declared the cost of acquisition of the property inclusive of the commission paid in the balance sheet for the FY 2006-07. The Ld commissioner of Income tax confirmed the addition, since the assessee did not explain t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2007-08 and furnished the relevant balance sheet along with return of income, we do not see any reason to disturb the cost of acquisition declared by the assessee in the return of income. The fact that the cost of acquisition declared by the assessee was not disputed by the assessing officer. Having declared the cost of acquisition by the assessee in the year of acquisition and filed the relevant balance sheet it is not correct to revisit the issue again in the year under consideration. Therefore, we set aside the order of the Ld.CIT(A) and direct the assessing officer to allow the cost of acquisition of properties as declared in the balance sheets and the return of income relating to the year in which it was acquired. This ground of the appeal of the assessee is allowed. 8. The next issue is related to the payment of commission for sale of the property. The assessee had claimed various expenses for the sale of property, out of which commission paid was ₹ 12 lakhs. During the assessment proceedings, the assessee did not furnish confirmations from the recipients of the commission. However, the payment was made by cheque and the full addresses were furnis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent through cheque, the Ld. A.R. argued that the payment of commission was genuine, which should be allowed as an addition. 11. On the other hand, the Ld. D.R. argued that the assessee has not established the payment of commission and did not explain the services rendered by the commission agents for payment of commission. The Ld. D.R. further argued that the assessee was unable to produce any evidence for payment of commission in the form of confirmation letter from the payee, hence argued that CIT(A) has rightly confirmed the addition and no interference is called for. 12. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. The assessee has claimed to have paid the commission of ₹ 6 lakhs to each property in respect of two properties sold by the assessee. The assessing officer noted that the assessee failed to produce confirmation from the parties for the said commission received. The payment was made by cheque and there was no evidence adduced by the assessee to show that the payment of commission was in fact made for commission. The assessee made payment of commission to 3 persons by name on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e appeal of the assessee. For ready reference, we extract the relevant part of the Ld. CIT(A) order which reads as under: 7.2 I have considered the submissions and perused the details flied. It is seen that the assessee had entered into a sale agreement with Shri Yedla Vasudeva Rao on 28.3.2008 for the sale of subject properties. At para 7 of the agreement, it is mentioned that Under this contract of sale as they are tenants in schedule mentioned property and Vendors are not able to get physical possession of the property by evicting tenant in physical possession of schedule mentioned property and Vendee is prepared to take symbolic delivery of schedule mentioned property and make his own arrangements to evict the tenants, the stamp duty and registration charges for the sale deed are being and to be borne by the Vendors at the time of execution of registered sale deed. With reference to this clause, the assessee contended that he has to bear the stamp duty and registration charges. However, the assessee did not furnish any evidence as to the disputes in the subject properties. In fact, one of the properties which is of an extent of 369 Sq.Yds was a vacant site which is evide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the stamp duty expenses also, which is supported by the sale agreement dated 28.3.2008. As per the agreement, the stamp duty and registration charges for the sale deed had to be borne by the vendors and the ld. A.R. further argued that the assessee has paid the above stamp duty expenses through DD and debited to its bank account. As an evidence, the assessee referred the paper book page no.38 and 39 bank account copy and the Registration and Stamp department s customer copy and argued that the expenses required to be allowed as deduction. 15. On the other hand, the LD. D.R. vehemently opposed the assessee s argument and argued that the expenses were not incurred in connection with the transfer of property. 16. We have considered the submissions of both the parties perused the material placed before us. As per the provisions of section 45 of the Act, the expenses incurred for transfer of the property is allowable as deduction. Stamp duty and registration charges forms part of the cost of acquisition of the property, which is required to be borne by the buyer. As per the provisions of section 48 of the Act, the expenditure incurred wholly and exclusively in connection with the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of ₹ 6 lakhs was not admittedly the interest. 18. During the appeal hearing, referring the paper book page No.73 of paper book, the Ld. A.R. argued that the assessee had entered into the agreement for sale of agricultural property with M/s. VPL Projects Pvt. Ltd. for a consideration of ₹ 40 lakhs and received ₹ 30 lakhs on 10.1.2007, which was paid to the vendor of the impugned property. Subsequently, the sale transaction entered with M/s. VPL Projects Pvt. Ltd. could not be materialized, therefore, the assessee had to pay a sum of ₹ 6 lakhs towards compensation. Since the funds were utilized for the purpose of acquiring the property, the Ld. A.R. argued that the compensation should be treated as expenditure incurred for the purpose of acquiring the property and the same required to be allowed as a deduction. 19. We have heard both the parties, perused the materials available on record and gone through the orders of the authorities below. In this case, the assessee has not taken any loan for acquiring the property and the compensation was not in the nature of interest. The assessee has entered into an agreement for sale of its agricultural propert ..... X X X X Extracts X X X X X X X X Extracts X X X X
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