TMI Blog2022 (1) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... he DVO s report and accordingly make the computation for long term capital gains. Ground allowed for statistical purposes. Disallowance of Brokerage in respect of transfer of his old asset - HELD THAT:- Admittedly, the brokerage paid for sale of old asset was not claimed by the assessee neither in the original return of income nor in the revised return of income. The payment has been made in cash. The assessee has only produced receipt of Sri.S.T.Yogesh, Neetha Real Estate, Bangalore stating that towards brokerage charges for arranging residential premises. Since the payment has been made in cash and the claim has not been made in the original nor in the revised return, we confirm the orders of the Income Tax Authorities on this issue. Unexplained cash credit u/s 69A - HELD THAT:- As the amount was received through banking channel from the purchaser of the old asset. Therefore, the source of amount was never in dispute. The agreement for sale with regard to amenities and movables dated 16.03.2014 narrate the details of the furniture and fixture that are transferred to the buyer of the old asset. The said sum is nothing but linked with the sale of capital asset. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed are placed from 43 to 48 of the paper book. The A.O. has also referred the new asset for valuation as per point 8(d) of the reference u/s 55A of the I.T.Act. However, the DVO has not done the same. Therefore, we restore the issue raised in ground 8 to the A.O. The AO is directed to afford a reasonable opportunity of hearing to the assessee and shall take a decision in accordance with law. - ITA No.2925/Bang/2018 - - - Dated:- 3-1-2022 - Shri George George K, JM And Shri B.R.Baskaran, AM For the Appellant : Sri.R.E.Balasubramaniyan, CA For the Respondent : Smt.Priyadarshini Besaganni. JCIT-DR ORDER PER GEORGE GEORGE K, JM This appeal at the instance of the assessee is directed against CIT(A) s order dated 06.08.2018. The relevant assessment year is 2015-2016. 2. Eight grounds are raised in this appeal. Ground 1 is general in nature and no adjudication is required. Hence, the same is rejected. The surviving grounds, namely, grounds 2 to 8 reads as follows:- 2. The ld.CIT(A) misdirected himself in upholding the order of the ld.AO in respect of improvements carried out and builtup area of the assets sold and in doing so he failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or these and such other grounds that may be adduced or removed in time to time, it is requested that the Hon ble ITAT may be pleased to examine the case in the light of justice and grant the relief sought for. 3. The brief facts of the case are as follows: The assessee is an individual deriving income from business, capital gains and other sources. For the assessment year 2015-2016, the return of income was filed on 30.09.2015 declaring total income of ₹ 15,16,330. The assessee had disclosed under the head income from long term capital gains (LTCG) a sum of ₹ 6,77,702. The assessee during the relevant assessment year sold self-occupied residential house in Bangalore. In the computation of income, the assessee had disclosed sale consideration of ₹ 2.42 crore under the head capital gains, which included an amount of ₹ 15 lakh received from the buyers over and above the sale consideration mentioned in the sale deed. The assessee had invested a portion of the sale consideration amounting to ₹ 1.05 crore towards purchase of a residential house and claimed exemption u/s 54 of the I.T.Act. 4. The assessment was completed u/s 143(3) of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed return was filed, increasing the cost of improvement to ₹ 6,50,000/- and changing the year of improvement to 1998-99. During the course of scrutiny the assessee was required to furnish the necessary evidences in this regard. In support of the claim, the assessee furnished another valuation report where the cost of improvement is shown at ₹ 6,50,000/-. The heading fo the valuation report reads as under: ESTIMATE OF ADDITIONS 7 ALTERATIONS WORK OF THE BUILDING SIT NO.145, SY. 67 65/45,65/3,65/2,70/5, 66/6, 66/4M66/5M66/2M 6/ N.G.E.F.H.B NAGASETTY HALLI BANGALORE INCURRED DURING 1998 (AS PER INFORMATION FURNISHED AND PHYSICAL VERIFICATION OF PROPERTY) Thus the above description goes on to show that there is no evidence either in respect of the improvements carried out, or in respect of the year in which the improvements are stated to be carried out. Basically there is no difference in the facts between the original return and revised return. At the time of filing the revised return, the assessee had the same facts as the existed at the time of filing the original return. This aspect is being dealt with separately. The descriptions in the valuation r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 22.05.2018 has determined an amount of ₹ 9,35,000 and ₹ 4,64,600 as cost of improvement for financial year 1990- 1991 and financial year 1998-1999, respectively. It was submitted that the A.O. has considered only the improvement made in the financial year 1990-1991. In this context, it was contended that the amount determined by the DVO for financial year 1998-1999 has to be considered. 7.3 The learned Departmental Representative supported the orders of the Income Tax Authorities. 7.4 We have heard rival submissions and perused the material on record. The assessee s independent valuation is placed at pages 27 to 32 of the paper book. At pages 33 and 34 of the paper book, the assessee has given the description of the improvement carried out in the sold property during the financial year 1998-1999. The A.O. has referred the matter to the DVO u/s 55A of the Act on 17.11.2017. The DVO submitted the report on 22.05.2018 (subsequent to the date of assessment order). The DVO in his report dated 22.05.2018 had clearly mentioned (refer page 23 of the paper book), as follows:- 10. Final Valuation : Having considered all aspects, relevant circumstances, details ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l submissions and perused the material on record. Admittedly, the brokerage of ₹ 1 lakh paid for sale of old asset was not claimed by the assessee neither in the original return of income nor in the revised return of income. The payment has been made in cash. The assessee has only produced receipt of Sri.S.T.Yogesh, Neetha Real Estate, Bangalore stating that towards brokerage charges for arranging residential premises. Since the payment has been made in cash and the claim has not been made in the original nor in the revised return, we confirm the orders of the Income Tax Authorities on this issue. 8.4 Hence, ground 3 is dismissed. Unexplained cash credit ₹ 69A of the Act (₹ 15,00,000) (grounds 4 and 5) 9. The assessee had stated that he was in receipt of ₹ 15 lakh over and above the sale consideration appearing in the sale deed. Though the amount has been stated to be from the buyer (buyer of the old asset), according to the A.O., no evidence was furnished in support of the claim. Accordingly, ₹ 15 lakh was added u/s 69A of the Act. Alternatively, the A.O. held that this amount is also assessable u/s 56(2)(vii) of the Act. However, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee u/s 69A of the Act is upheld. 9.2 Being aggrieved by the order of the CIT(A), the assessee has raised this issue before the Tribunal. The learned AR submitted that the entire consideration of ₹ 2.42 crore was disclosed by the assessee under the head capital gains . It was submitted that the amount indicated in the sale deed at ₹ 2.27 crore was done at the insistence of the buyer and the difference of ₹ 15 lakh represented consideration towards amenities in properties was transferred by the assessee in terms of the agreement dated 16.03.2014. 9.3 The learned DR, on the other hand, relied on the copy of the order of the ITAT, Chandigarh Bench in the case of ACIT, Patiala v. Jasvir Singh Anr. in ITA No.665/Chd/2016 Ors. (order dated 16.01.2018) wherein the recovered cash was sought to be linked with sale of property. The Tribunal in the said case rejected the plea of the assessee and confirmed the addition made u/s 69A of the Act. 9.4 In the rejoinder, the learned AR submitted that the case law relied on by the learned DR is distinguishable on facts. It was submitted that the amount was seized from the assessee in the case considered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Since in the foregoing paragraphs we have held that ₹ 15 lakh is linked to the sale of capital asset, is to be brought to tax as income from long term capital gains. Therefore, the ground 5 raised by the assessee is rejected. 9.8 In the result, ground 5 is rejected. Cost of improvement of assets purchased (ground 6) 10. For the new asset purchased, the assessee claims that he had paid ₹ 14.50 lakh to the seller by bank channel for making some renovation at his instance. The said amount paid was claimed as part of cost of the new asset for claiming deduction u/s 54 of the Act. The assessee also produced memorandum of understanding dated 06.05.2014 whereby this payment of ₹ 14.50 lakh was paid. The A.O. rejected the claim of the assessee. The relevant finding of the A.O. reads as follows:- It is surprising to note that the assessee and the seller of the property enter into this kind of a MOU on the same day of registering the sale deed, wherein the property was sold / purchased for ₹ 1,05,00,000. Even more surprising is that the amount is supposed to be paid to the sellers towards Renovations . It is not clear if the sellers are in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lat habitable. The A.O. has also referred the new property for valuation as point 8(d) of the reference u/s 55A of the Act. However, the DVO has not made valuation of the new property. The DVO in his covering letter dated 22.05.2018, enclosed with the valuation report has observed as under:- Para 8(d) of your reference letter has a mention about cost of improvement on new asset. This point is not clear as no new asset has been referred to us. In case it is required a fresh case may be referred for that building. 10.5 In the interest of justice and equity, we are of the view that this matter requires reexamination by the A.O. and if required the reference may be made to DVO u/s 55A of the Act for valuation of the new asset. It is ordered accordingly. 10.6 Hence, ground 6 is allowed for statistical purposes. Brokerage on purchase of new asset (₹ 50,000) (ground 7) 11. The assessee claims that he has paid a sum of ₹ 50,000 to one Sri.Saadiq Ahmed of Global Enterprises, when he purchased the new asset on 06.05.2014. The A.O. did not grant the benefit of exemption u/s 54 of the Act in respect of the above said amount since there was no addres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Mesh work 30,500 Part of ₹ 14.50 lakhs Electrical work 55,000 Part of ₹ 14.50 lakhs Painting work 1,65,000 No evidences. 12.1 Aggrieved, the assessee raised this issue before the first appellate authority. The CIT(A) confirmed the view taken by the Assessing Officer. The relevant finding of the CIT(A), reads as follows:- 11. Ground of appeal 11 of the appellant pertains to rejection of the claim for deduction under section 54 in respect of expenditure amounting to ₹ 19,70,000 by the AO. The appellant has claimed this amount being essential modification to property purchased and argued that the said expenditure is eligible for deduction under section 54 of the Act. The submission of the appellant on this issue has been considered. It is found that the AO has considered this claim and examined the details and evidence submitted by the assessee and has rejected the same for the reasons mentioned in the order. Having considered the facts, I f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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