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TMI Blog2021 (6) TMI 399X X X X Extracts X X X X X X X X Extracts X X X X ..... . He noted that the assessee has claimed this capital loss by deducting the indexed cost of acquisition of the property at Rs. 90,71,000/- based on a valuation report dated 25th August, 2014 wherein he has claimed the construction cost of ground, first and second floor. However, on perusal of the copy of the sale deed dated 25th February, 2014, he noted that only ground floor of the property was sold. He, therefore, issued a show cause notice dated 03.11.2016 asking the assessee to explain as to why the construction cost should not be restricted to ground floor only. He also asked the assessee to give proof of Rs. 5,50,000/- which he claimed as expenditure on transfer. 3. It was submitted by the assessee that his father had purchased this property in 1959 from custodian of evacuee property in 1959 and to the best of his memory no construction of any type was added after 1969. Subsequently, it was stated that he had shifted to Paschim Vihar during 1984 riots and has sold the complete property from ground floor to roof and requested to consider the total construction cost of the property mentioned in valuation report. So far as the expenditure of Rs. 5,50,000/- is concerned, it was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mplaint is also attached for reference. - Also while valuation report gas omitted to mention it, post the 1984 riots, there was some damage to building. - Two third of property was sold in 2014. At that time valuation of the property was undertaken. A copy of the valuation report has been already submitted to the Department. - Two third portion of the building sold in 2014 was subsequently demolished by the new owners. A photograph showing the demolition under progress is attached for ready reference. - Currently, about one third (about 100 sq yds of the total built area) is still present in its original state. Hope this justifies my stand on the subject. " 4. However, the AO was not satisfied with the arguments advanced by the assessee. He noted that the assessee now is submitting that construction was carried out in the sold property in late 1980's whereas the assessee, vide his reply dated 16.11.2016 had clearly stated that no construction of any type was added after 1969. Further, the assessee submitted a plan made by an architect in 1984-85 and a receipt of Rs. 600/- mentioning the existence of three storey building whereas assessee in his earlier statement had stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indexed cost of construction in respect of first and second floor as also deduction of Rs. 5,50,000/- on account of transfer charges. As regards the issue of deduction of Rs. 5,50,000/-on account of transfer charges it may be mentioned that as per section 49(1 )(iii)(a) of IT Act the cost of acquisition of asset will be increased by the cost of any improvement of the asset incurred or borne by the previous owner or the assessee as the case may be. In the appellant's case the expenditure of Rs. 5,50,000/- was stated to be in account of electricity and water expenses and partly on account of payment made to the cousins of the assessee for settling the issues for transfer of the asset. It is noted that the assessee has not furnished specific details as to how much payment was made to the cousins and what was the main consideration for such payment. As regards the expenses on account of electricity and water charges, these expenses were for the regular maintenance of the property and cannot said to be on account of improvement of the asset. In other words, the assessee has not incurred any expenditure which may have qualitatively improved the assets. Therefore, the claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition made by the AO on account of Long Term Capital Gain for Rs. 40,93,635/- is confirmed." 7. Aggrieved with such order of the CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds:- "1. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in arbitrarily confirming the assessment order passed by Ld AO in making additions of Rs. 40,93,635/- on account of redetermination of long term capital gains without appreciating that assessee's major claim of indexed cost of construction is duly supported by impeccable evidences. 2. That on the facts and in the circumstances of the case and in law, ld CIT-A erred in arbitrarily confirming the assessment order passed by Ld AO in making additions of Rs. 40,93,635/- on account of redetermination of long term capital gains without appreciating that substantial part of adjustment relating to indexed cost of construction pertains to period prior to 1/4/1981 and on said date statute requires fair market value FMV to be seen which is duly supported by approved valuer report which has not been put for cross valuation by DVO as per law. 3. That on the facts and in the circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irst floor and second floor. The claim for various expenses are also clearly not coming under the purview of expenses on transfer. No specific details for payments were filed. The map enclosed along with the sale deed also mentions only one floor. Therefore, in view of the decision of the Hon'ble Supreme Court in the case of Sumati Dayal and Durga Prasad More where it has been held that surrounding circumstances may also be considered, the ld.CIT(A) is fully justified in sustaining the addition made by the AO. 11. The ld. Counsel, on the other hand, relying on the decision of the Ahmedabad Bench of the Tribunal in the case of Symbiotic Ltd., reported in 481 ITR (AT) 2010, submitted that it is the assessee or the Registered Valuer who can decide the fair market value and not the AO. He submitted that the assessee had given the report of the architect, the municipal tax receipt for three storied building evidencing the existence of the first floor and second floor. Therefore, the addition sustained by the CIT(A) should be deleted. 12. I have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and CIT(A) and the paper book filed on beh ..... 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