TMI Blog2022 (3) TMI 897X X X X Extracts X X X X X X X X Extracts X X X X ..... er that the assessee has demolished existing building and dismantled plant fittings. Unless the Assessing Officer proves that the assessee has demolished existing building and dismantled machinery fittings and realized amount from sale of said dismantled assets or written off as scrap, then he cannot deny cost incurred by the assessee to acquire those assets. In our considered view, the Assessing Officer has completely erred in not considering cost incurred by the assessee to acquire asset while computing capital gain derived from sale of property. CIT(A), after considering relevant facts has rightly deleted additions made by the Assessing Officer Disallowance of amount paid for construction of building - AO has disallowed payment on the ground that the assessee could not produce original bills in support of various expenditure incurred for construction of building - Amount paid to M/s. Bharath Polymers - HELD THAT:- We do not agree with the reasoning given by the Assessing Officer for the simple reason that when the assessee has explained reasons for not furnishing original bills and further, filed photocopies of bills along with corroborative evidence to prove incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of purchase having been demolished by the assessee before sale of the impugned land. 2.2 The Ld. CIT(A) erred in directing the assessing officer to allow the cost of acquisition and cost of indexation to the building which was never part of land sale affected by the assessee. 3.1 The CIT(A) erred in deleting the disallowance of ₹ 1,52,19,882/- while computing the short term capital gains without verifying the genuineness of the bills submitted before him more so when such bills were not produced before the assessing officer during the course of assessment proceedings. 3.2 The CIT(A) erred in deciding the matter of disallowance of ₹ 1,52,19,882/- without giving opportunities to the assessing officer by remanding the matter under Rule 46A of IT Rules,1962. 3.3 The CIT(A) erred in invoking the sub-rule (4) of Rule 46A of IT Rules,1962 when no independent enquiry or production of any document was sought by CIT(A) and on the contrary documents furnished by the assessee on his own including Xerox copy of the bills were accepted without any verification or remand. 3.4 The CIT(A) erred in accepting the claim of the assessee that M/s AGS properties an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenditure claimed by the assessee, including payment made to M/s. Bharath Polymers M/s. Devi Designers Decorations on the ground that the assessee could not produce necessary bills vouchers in support of expenses. 3. Being aggrieved by the assessment order, the assessee preferred an appeal before the learned CIT(A). Before the learned CIT(A), the assessee agitated additions made by the Assessing Officer towards long term capital gain derived from sale of land and short term capital gain computation from transfer of building. The assessee has filed certain additional evidences in the form of photocopies of bills in respect of payment made to M/s. Bharath Polymers M/s. Devi Designers Decorations along with value of document and letter of intent / contract awarded by the assessee. The learned CIT(A), after considering relevant facts and also taken note of additional evidences filed by the assessee, deleted additions made towards computation of long term capital gain derived from transfer of land as well as short term capital gain computed from sale of building by holding that as per provisions of section 48 of the Income Tax Act, 1961, cost of acquisition of property s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f building along with machineries etc. was fixed at ₹ 14.05 crores. The assessee has computed long term capital gain from transfer of land, because holding period of land was more than three years and while computing long term capital gain, the assessee has claimed deduction towards indexed cost of acquisition at ₹ 5,31,65,173/-, which includes consideration paid by the assessee for land as well as building. The Assessing Officer has recomputed indexed cost of acquisition by taking into account cost of land which was paid by the assessee at ₹ 2.61 crores plus applicable stamp duty. The Assessing Officer had ignored cost of building on the ground that assessee has demolished existing old building and has constructed new building. Therefore, the A.O. was of the opinion that cost of existing old building cannot be considered as cost of acquisition. It was the explanation of the assessee before the Assessing Officer that it has paid total consideration of ₹ 4 crores for acquiring property, which includes cost of land as well as building, plant and fittings and thus, as per provisions of section 48 of the Income Tax Act, 1961, cost of acquisition includes total a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer. Hence, we are inclined to uphold findings of the learned CIT(A) and reject ground taken by the revenue. 7. The next issue that came up for our consideration from ground no. 3.1 to 3.4 of the revenue appeal is disallowance of amount paid to M/s. Bharath Polymers M/s. Devi Designers Decorations amounting to ₹ 1,52,19,882/- for construction of building. The Assessing Officer has disallowed payment made to M/s. Bharath Polymers on 24.11.2007 and 09.10.2007 amounting to ₹ 2,64,071/- and ₹ 1,94,471/- on the ground that the assessee could not produce original bills in support of various expenditure incurred for construction of building. It was explanation of the assessee that original bills could not be traced, because building was developed by previous company before amalgamation and thus, it could not locate documents and hence, obtained photocopies of bills from the supplier and produced before the Assessing Officer .The Assessing Officer did not satisfy with the explanation furnished by the assessee and according to him, the assessee could not explain payment made to the above party with necessary evidences. 8. We have heard both the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 1,47,61,340/- and made payment. The Assessing Officer disallowed payment made to M/s. Devi Designers Decorations only on the ground that the assessee could not produce original bills submitted by the supplier, otherwise, the Assessing Officer never disputed fact that supplier has carried out construction work. In fact, the assessee has furnished photocopies of bill submitted by the supplier along with tender documents and letter of intent, which undoubtedly proves fact that the supplier has carried out work of construction of building and the assessee has made payment. The Assessing Officer without appreciating above facts has simply disallowed payment made to above party only on the ground of non-furnishing of original bills, even though the assessee has filed photocopies of bills submitted by the supplier. In our considered view, reasons given by the Assessing Officer to disallow amount paid to above party is incorrect and without any basis. If at all, the Assessing Officer was having any doubt on payment made by the assessee, then A.O. should have summoned the supplier to verify fact of payment made by the assessee. The Assessing Officer without carrying out ..... X X X X Extracts X X X X X X X X Extracts X X X X
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