TMI Blog2022 (12) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... see nor narrated the contents of reply in the assessment-order. Even during hearing before us, Ld. DR has not been able to rebut or defend this submission of Ld. AR. We also find merit in the submission of Ld. AR that FMG is an existent-company and the Ld. AO could have made enquiry from FMG but the same was not made - revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal, which proves, without saying anything more, that the revenue authorities have accepted the factum of receipt by assessee from the said owner. Lastly, we also find merit in the contention of Ld. AR that revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants. We are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in BEPL - By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure has been incurred to earn interest-receipt disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, the assessee deserves deduction of interest expenditure, which the Ld. AO has wrongly disallowed but the Ld. CIT(A) has rightly allowed. Accordingly, we dismiss Ground No. 5 of the Revenue as well. Allowability of long-term capital loss from sale of shares - HELD THAT:- AO has not denied the authenticity of these statutory documents, but he had simply formed a view about bogus claim on the footing that the buyer is a relative of assessee and substantial portion of the consideration had been received after 2 years of sale. We observe that the company was a loss making company and the buyer was also sister of assessee, therefore there is a justification in the deferred receipt of consideration by the assessee. We also agree with the observations of Ld. CIT(A) that even otherwise such trivial considerations should not be a basis to deny the transaction, which has a statutory backi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn of income for the relevant AY 2015-16 on 31.03.2017 declaring a total income of Rs. 12,78,540/-. The case was subjected to scrutiny and statutory notices u/s. 143(2)/142(1) were issued from time to time, which the assessee complied with. Finally, the Ld. AO completed assessment vide order dated 29.12.2017 at a total income of Rs. 3,53,93,932/- after making certain additions. Aggrieved by order of assessment, the assessee filed appeal to Ld. CIT(A) wherein the assessee got part-relief. Now, the revenue has filed appeal assailing the order of Ld. CIT(A). GROUND NO. 1 and 2 : 3. In these Grounds, the revenue has challenged the action of Ld. CIT(A) in accepting the income of Rs. 3,25,00,000/- from long-term capital gain as declared by assessee. 4. Facts qua this issue are such that the assessee claimed to have a subtenancy right in a commercial property known as Khandelwal Chambers situated at 2, AB Road, Indore, which was jointly owned by Shri Dipesh Khandelwal and others. The assessee claimed to have surrendered such sub-tenancy right and received a sum of Rs. 3,25,00,000/- as consideration therefor vide Memorandum of Understanding (MOU) dated 02.05.2014, a copy pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers became the sole Owner of the said premises. However, the tenancy rights of the FMG in the said premises continued and thenceforth, instead of paying rent to Mr. Baxi, the FMC started paying rent to Khandelwal Chambers. A copy of the letter conferring right of tenancy as well as change in the name of owners, addressed by Mr. M.Y. Baxi in favour of FMG is being submitted herewith for kind perusal and record, as Annexure C-1.00. 7.00 That, somewhere in the year 1986, there arose a dispute between the landlord and the FMG and the landlord Khandelwal Chambers filed Eviction Suit against the FMG vide Civil Suit No. 12A dated 30-04-1986 before the Addl. District Judge, Indore (Special Court). The Civil Court passed the Decree against the FMG vide the Decree passed on 21-04-1997 in Civil Suit No. 12A of 97. A copy of the Decree passed against the FMG by the Civil Court is submitted as Annexure C-2.00. 8.00 That, against the Decree passed by the Civil Court, the assessee filed an appeal before the Hon'ble High Court of Madhya Pradesh, at Indore. The Hon'ble High Court, vide its Order delivered on 01-08-2003, vide Para No. 27, reversed the Order passed by the Trial Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28-02-2014. As per the said MOU landlords agreed to pay consideration aggregating to a sum of Rs. 5 Crores, to the assessee, the main tenant and other sub-tenants. As per the draft MOD and the subsequent negotiations amongst the tenant and sub-tenants, as the assessee was in possession/occupation of 65% of the said premises, he became entitled for a consideration of Rs. 3.25 crores. 15.00 That, a copy of the final MOU dated 02.05.2014 has already been furnished by the assessee along with his earlier submission letter dated 08-12-2017. On a perusal of the clause No. (S) of the said MOD, it becomes evident that the assessee was, inter alia, having physical possession and occupation of the said premises as tenant/sub-tenant along with other tenant/sub-tenant. From the clause (3) of the MOD, it is also apparent that the assessee was one of the sub-tenants of FMG. 16.00 That, receipt of consideration for surrendering the tenancy right by the assessee is evident from the break-up of the consideration of Rs. 5 crores. It is submitted that the entire consideration for relinquishment of tenancy right' has been received by the assessee through account pare cheques only which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lthough in the case of a different assessee i.e. father of the assessee. In view of the above submission and various documentary evidences, we hope that we could be able to establish with the documentary evidences that the assessee was a co-tenant (sub-tenant) of the superstructure situated at the subject premises. 6. However, after considering aforesaid submission of assessee, Ld. AO held that the assessee was not having any kind of sub-tenancy right and the long-term capital gain declared in the return was just a managed capital gain to claim exemption u/s. 54F of the act. Ld. Accordingly, Ld. AO rejected the claim of long-term capital gain and assessed the income of Rs. 3,25,00,000/- as income from other sources by holding thus: 5.8 A notice under section 133(6) of the Act was issued to Shri Dipesh Khandelwal, the owner and land lord of the property under discussion i.e. 'Khandelwal Chambers' situated at 2 A.B. Road, Indore. He filed detailed reply with documentary evidences. Considering the submission filed by the assessee as well as Shri Dipesh Khandelwal, it is seen that the assessee was never been tenant in the said property, therefore, question of rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... titled for receiving consideration of relinquishment tenant right if any. At the most the director of the company may be entitled for tenancy right but not the assessee by any stretch of immigration. In the year 1986 first legal dispute between the landlord of M/s. Khandelwal Chambers and M/s. Fairdeal Marwar Garages Pvt. Ltd. arose. At that time the assessee was minor and only 05 years old having no right in the said tenancy occupied by company. From the year 1986 to year 2014, the said property was in dispute before the various courts, i.e., Civil Court, High Court and Supreme Court for adjudication. (the copies of Court orders and related documents are placed on records) Therefore, it is evident fact that the tenancy itself was under dispute. As par the claim of the assessee, in the year 2003, M/s. Fairdeal Marwar Garages Pvt. Ltd., tenant of the said property, sub-let out a substantial portion (65%) of the disputed property to the assessee Shri Gaurav Tekriwal. However, the owner of property who was under dispute with his tenant M/s. Fairdeal Marwar Garages Pvt. Ltd. was not the party of this documents. For ready reference, the document is reproduced as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Gaurav Tekriwal, and signed by Shri Gaurav Tekriwal (as a sub-tenant) and Shri Rajendra Telaiwal (on behalf of the company M/s. Fairdeal Manvar Garages Pvt. Ltd. as a tenant of the property) without consent of the landlord, without any witness/s, even the documents was not executed on stamp paper. Therefore, the so-called Kirayanama is not having any legal authenticity and does not create any sub-tenancy right in favour of the assessee. There was no tenancy right, therefore, there is no question of relinquishment of the rights and capital gain as per section 48 of the Act. This entire edifice was basically a colourable device through which the assessee has tried to show a huge amount of taxable income as LTCG and subsequently claimed deduction u/s. 54F of the Act. The Hon'ble Apex Court in the case of McDowell Vs. CTO has given strong verdict against any such arrangements by stating that Colourable devices cannot be part of tax planning and it is wrong to encourage or entertain the belief that it is honourable to avoid the payment of tax by resorting to dubious methods. It is the obligation of every citizen to pay the taxes honestly without resorting to subt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... um of Understanding [MOU] duly made on 02/05/2014 by and between M/s. Khandelwal Chambers through Shri Dipesh Khandelwal and the appellant and other co-tenants, a copy of sale deed duly executed by the original owner of the property situated at 2, A.B. Road, Indore to M/s. Khandelwal Chambers on 31/07/1980, a copy of letter dated 01/11/1980 given by the original landlord to the Fairdeal Marwar Garages Pvt. Ltd. (in short 'FMG'), the main tenant intimating the change in the ownership of the property, copies of various court orders from page No. 98 to 155, copy of kirayanama written by the appellant in favor of FMG regarding his subtenancy dated 01/06/2003 and copy of relevant bank statement of the appellant with ICICI Bank Ltd. demonstrating the transactions of receipts of a sum of Rs. 3,25,00,000/- by the appellant through banking channels. Further, in support of the various contentions, the appellant has also furnished copies of some judicial pronouncements at page No. 165 to 190 of the paper book. 4.3.1 I find that from the copy of the letter dated 01/11/1980, written by some Mr. M.Y. Bakshi in favour of FMG, the scanned copy whereof has been reproduced by the AO him ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said property from the then landlord in the year 1974, the appellant was a minor as rightly pointed out by the AC in assessment order but, subsequently, when the appellant derived sub-tenancy right in the said property by way of kirayanama duly written by him in favor of FMG on 01/06/2003, I find that the appellant having the date of birth as 14/06/1981, had attained the majority and therefore, he was competent to enter into sub-tenancy agreement. I find that at no point of time, the appellant claimed that he was the main tenant of the subject property but, his claim all through had been that he was a sub-tenant in the subject property as the main tenant had closed their business when the appellant obtained subtenancy right in the property. I find that the AO in the body of the assessment order has disputed such kirayanama merely on the ground that the original landlord was not made a party to such kirayanama and further, by stating that the kirayanama was executed on a simple piece of paper only. In my considered view, sub-tenancy arrangements are always made between the main tenant and the sub-tenant and it is not always necessary that in every such arrangement, the main landlord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition cannot be brought to tax under s. 45. In my considered view, once the tenancy or sub-tenancy is established, any amount received towards the relinquishment thereof cannot get escaped to tax in view of the provisions of s. 55(2)(a) of the Act introduced in the statute after the decision of the Hon'ble Apex Court in the case of B.C. Srinivasa Setty (supra), merely on technical grounds. 4.3.5 I find that in the wake of the decades long legal disputes of tenancy, Shri Deepesh Khandelwal entered into a Memorandum of Understanding [MOU] duly executed on a stamp paper worth of Rs. 1000/-, on 02/05/2014, a copy whereof is placed at page No. 78 to 80 of the paper book. From such MOU, I find that in such MOU, Shri Deepesh Khandelwal is representing M/s. Khandelwal Chambers as one of the co-owners of the subject property and the FMG, the original tenant, one other group company, namely, M/s. Pithampur Poly Products Ltd., Shri R.K. Tekriwal (appellant's father), Smt. Meera Tekriwal (appellant's mother) and the appellant as 'Tenants'. I find that in the clause (a) of such MOU, there is a clear mention of the dispute lasting between the owners and the FMG and at cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that at para (5.8) of the order, the AO has averted that Shri Deepesh Khandelwal was issued a notice u/s. 133(6) and in response, Shri Deepesh Khandelwal filed detailed reply with documentary evidences. The AO then simply reached to the conclusion that the appellant had never been the tenant in the said property without specifying or bringing on record her basis for reaching to such conclusion. I find that it is not the case of the AO that Shri Deepesh Khandelwal had denied to have made any payment to the appellant. In my view, Shri Khandelwal could have only stated that the appellant was not his direct tenant but, even such fact would not alter the nature of right of the appellant in the said property and as also the nature of the receipt, by the appellant of the subject sum of Rs. 3,25,00,000/-. 4.3.7 I find force in the contention of the appellant that on the basis of such MOU, a deduction under the provisions of Income-Tax Act, has duly been granted by the Income-Tax Department while making the assessment in the cases of Shri Deepesh Khandelwai. Further, in the cases of other co-tenants, namely, M/s. Pithampur Poly Products Pvt. Ltd., Shri R.K. Tekriwal and Smt. Meera Tek ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... njoying possession of Property and for peaceful vacation thereof it had received the impugned amount which was described by both the parties as the amount so revived would be chargeable to capital gains and cannot be assessed as 'income from other sources'. Furthermore, in the similar circumstances with that of the appellant, the Hon'ble ITAT Mumbai Bench, in the case of P.N. Amersey-HUF vs. ITO (2012) 31 CCH 252 (MumTrib), decided the case in favour of revenue, has held that the amount received by the assessee on surrender of tenancy rights is liable to capital gains tax if assessee was having substantial rights as tenant (Sub-tenant) in the property. Further, the Hon'ble ITAT Mumbai in the case of Kishorilal Basanti Lal Patodia vs. ACIT (2013) 35 CCH 450 (Mum Trib) has held that the assessee certainly derived some right in the property, legal or otherwise, the same have to be regarded as tenancy rights within the meaning of s. 55(2). In the instant case too, even if the right of tenancy by the appellant is held as illegal by the AO, then too, the amount of compensation received by the appellant from the landlord against surrender of his rights of possession in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same as Income from Other Sources. Accordingly the Ground Nos. 3(i) to 3 (iii) of the appellant are Allowed. 8. Before us, Ld. DR vehemently supported the order of Ld. AO and emphasized following contentions: (i) The property in which the assessee is claiming to have sub-tenancy right, was originally taken on rent by M/s. Fairdeal Motors. Subsequently, the business of M/s. Fairdeal Motors was taken over by M/s. Fairdeal Marwar Garages Pvt. Ltd. (in short FMG ). Shri Prahlad Rai Tekriwal (grandfather of assessee) and Shri R.K. Tekriwal (father of assessee) were directors in FMG but the assessee, Shri Gaurav Tekriwal, was not a director in FMG. FMG paid rent from time to time to the owners, Shri Dipesh Khandelwal and others. This way, it was FMG who was tenant and who had tenancy-right in the property. But the assessee had no interest whatsoever in the property. The assessee is claiming to have taken 65% portion of the property on sub-tenancy from FMG on the basis of a Kirayanama dated 01.06.2003. But (i) the said Kirayanama is on a simple piece of paper which is not stamped; and (ii) the original owners of the property are not a party to the Kirayanama . Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 014. Carrying our attention to a copy of the MOU, placed at Page No. 78 of the Paper-Book, Ld. AR submitted that the MOU is executed by and between six persons, viz. (i) Shri Dipesh Khandelwal owner of property on First Part, and (ii) five tenants/sub-tenants in the property on Second Part. Ld. AR submitted that the assessee is one of the five tenants/sub-tenants on the Second Part. Ld. AR submitted that the MOU is executed on a stamp-paper of Rs. 1,000/- and duly witnessed. Ld. AR submitted that the MOU contains full details of the impugned property, its owners, all tenants/sub-tenants (including assessee), the disputes which arose between the owners of property and tenants/sub-tenants, the legal battle, how amicable settlement is finally reached for surrender of rights of various tenants/sub-tenants (including assessee), etc. Ld. AR drew our attention to various clauses of the MOU, particularly the followings clauses on Page No. 2 of the MOU: 5) That, in order to resolve all the disputes and differences, the Party of the First Part has approached to M/s. Fairdeal Marwar Garages Pvt. Ltd. through it authorized representative, Shri R.K. Tekriwal for an amicable resolution and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made any enquiry from FMG. (viii) Ld. AR submitted that the revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal. As a necessary corollary, it is automatically proved that the revenue-authorities have accepted the factum of receipt by assessee from the said owner. (ix) Ld. AR submitted that the revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/- [Rs. 5,00,00,000 (-) Rs. 3,25,00,000]. How can authorities approbate and reprobate the same transaction? With these submissions, Ld. AR argued that the Ld. AO has wrongly rejected the receipt of Rs. 3,25,00,000/- on surrender of sub-tenancy right declared by the assessee and assessed the same as income from other sources. Ld. CIT(A) has, however, correctly accepted the claim of assessee and therefore the conclusion arrived at by Ld. CIT(A) must be upheld. 10. We have considered rival contentions of both sides and perused the material held on record. We observe that both sides have ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was a serious legal battle between the owners and FMG. When it is so, how can we expect that the owners would help FMG/assessee in making a MOU for creating a frivolous long-term capital gain in the hands of assessee who is necessarily a party on the side of FMG. Taking into account all these factors, we do not find any valid reason for the Ld. AO to raise doubt on the authenticity of Kirayanama or MOU . Other contention of revenue is that Clause 5 of the MOU dated 02.05.2014 states that the assessee had physical possession over the property but mere physical possession does not establish any kind of sub-tenancy right. But this contention is due to a half-reading of the Clause No. 5 of the MOU, reproduced earlier, which clearly states As the remaining parties of the Second Part are also lawful tenants in the tenanted property, having the physical possession and occupation of the tenanted property.... . A bare perusal of this Clause demonstrates that the parties of the Second Part were lawful tenants in the tenanted property, having the physical possession and occupation . It is apparent that the Ld. AO has taken a part of this Clause and derived a misunderstanding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants. 11. In view of foregoing discussion, we are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum of Rs. 3,25,00,000/- which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. Therefore, the Ld. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as income from other sources. We do not find any infirmity in the order of Ld. CIT(A) who has, after mindful consideration, reversed the action of Ld. AO and allowed claim of assessee. Accordingly, we dismiss Ground No. 1 and 2 of the Revenue. GROUND NO. 3: 12. In this Ground, the issue involved is the exemption of Rs. 2,32,13,084/- u/s. 54F of the act. 13. Facts qua this issue are such that the assessee has claimed to have invested a sum of Rs. 1,79,00,000/- in purchasing an incomplete structure of resident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant but, the AO has recharacterized such receipts from income, from capital gain as shown by the appellant to income from other sources. I find that while adjudicating the Ground Nos. 3(i) to 3(iii) of the present appeal, I have already held that the amount received by the appellant at Rs. 3,25,00,000/- was a capital receipt and assessable to tax under the head income from capital gain. 7.3.1 I further find that during the course of the appellate proceeding before me, the appellant has made a detailed written submission which has been extracted hereinabove. I also find that along with such written submission the appellant has submitted various documentary evidences such as copy of agreement for sale dated 15/05/2014 duly executed between the appellant and BPEL, in which the appellant happens to be one of tire directors at page No. 219 to 221 of the paper book. Further, at page No. 222, the appellant has furnished a copy of his house purchase account from BPEL in which the date wise payments of details of purchase consideration of Rs. 1,79,00,000/- is getting clearly reflected. Further, at page No. 223 to 226, the appellant has furnished copy of his bank statements with ICI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of the appellant firstly by stating that the nature of receipt of Rs. 3,25,00,000/- was not falling under the head Long Term capital Gain, which I have already overruled. Secondly, I find that the AO has disregarded the transaction of purchase of incomplete structure by the appellant from BPEL, in which he was one of the directors. I find that during the course of the assessment as well as appellate proceedings, the appellant had duly furnished a copy of agreement duly executed between the BPEL and appellant on 15/05/2014 and-under such agreement, the BPEL had clearly agreed to sale its residential structure under construction on leasehold land bearing survey No. 106 admeasuring 0.39 hectares situated at patwari halka No. 106 at Bicholi Hapsi, Kanadia Road, Indore for a total consideration of Rs. 1,79,00,000/- Further, I find that the entire payment consideration was made by the appellant to the abovenamed seller company through banking channel only which is clearly getting reflected in the copies of the bank statements of the appellant filed before me. I further find that in support of the ownership of the land, tire appellant has also furnished copies of the sale deed' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invested the amount received on sale of capital asset either in purchasing a residential house or in construction of a residential house, even though the transactions are not complete in all respects, the assessee would be entitled to the benefit under s. 54F of the Act. Further, the Hon'ble High court of Bombay in the case of CIT vs. Mrs. Hilla J.B. wadia (1995) 216 ITR 0376 (Bom.) has held that the assessee was entitled to relief under s. 54 where she entered into an agreement with co-operative housing society for purchase of residential flats and paid almost entire consideration within two years of conveyance of her residential property. I find that the Hon'ble High Court of Andhra Pradesh in the case of CIT vs. Mrs. Shahzada Begum (1988) 173 ITR 397 (AP) has also held that when the assessee who has sold the residential house property has agreed, to buy another property for self-occupation and secures possession of the property within one year from the date of sale of other property, he is entitled for exemption from capital gains under s. 54(1) notwithstanding registration of sale deed beyond the period of one year. The Hon'ble Income Tax Appellate Tribunal, Chandig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces placed on record and as also in the light of the various judicial pronouncements, as referred to herein above, I hereby 'hold that by way of making investment towards purchase of incomplete residential structure at Rs. 1,79,00,000/- and further by incurring construction expenses on such house to the extent of Rs. 53,13,484/-, the appellant was eligible for claim of deduction u/s. 54F of the Act on an aggregate sum of Rs. 2,32,13,084/- in respect of such investment, as against the deduction claimed by him at Rs. 2,41,02,339/-, with the result that while computing the total income of the appellant, the addition for the remaining amount of Rs. 8,88,855/- would be required to be made by the AO for giving effect to my above findings. Accordingly, the grounds No. 6(i) to 6(iii) so raised by the appellant are partly allowed. 16. Before us, the Ld. DR supported the order of Ld. AO. Re-iterating the observations of Ld. AO, the Ld. DR argued that the exemption claimed by assessee is not allowable, hence the Ld. AO has rightly disallowed the same. 17. Per contra, Ld. AR made a detailed submissions as under: (i) Sufficient explanation has already been given which goes on p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, facts and legal position and thereafter allowed relief to the assessee, which must be upheld. 15. We have considered rival submissions made by both sides, the relevant material held on record and the judicial precedents cited before us. We observe that the first reason assigned by Ld. AO for disallowing exemption that the assessee has not earned long-term capital gain, does not hold good because we have already accepted the claim of long-term capital gain of assessee. Regarding second reason assigned by revenue, we observe that the assessee has given adequate evidences of the investment of Rs. 1,79,00,000/- (+) Rs. 53,13,484/-, aggregating to Rs. 2,32,13,484/- to the Ld. AO as well Ld. CIT(A). The investment of Rs. 1,79,00,000/- is by way of payment to BEPL from which the assessee purchased incomplete residential structure and the investment of Rs. 53,13,484/- is by way of expenditure on completing that structure to make habitable. The assessee has placed on record a copy of agreement in support of purchase of structure from BEPL, which cannot be doubted because the agreement is executed on a stamp-paper, sealed and signed by both sides and also witnessed. The agreement also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal. This Court observed that substantial investment was made in construction of the house. In view of the requirement of Section 54F of the Act, the Tribunal, in the facts and circumstances of the case, was not justified. We are fortified in the above view by the decision of the Delhi High Court in Balmj v. CIT to the effect that for the purpose of attracting the provision, it was not necessary that the assessee should have become the owner of the property. Section 54F spoke of purchase and registration was not imperative. In this view of the matter, the question No. 2 is answered against the Revenue and in favour of the assessee. 17. In view of above discussion, we do not fine any strength in the findings of Ld. AO and the contentions raised by Ld. DR. After a careful consideration, we are in agreement with the submission of Ld. AR that the Ld. CIT(A) has carefully dealt with facts, figures, evidences and legal position at length and rightly concluded that the assessee was entitled to exemption u/s. 54F to the tune of Rs. 2,32,13,484/-. We do not find any infirmity in the action of Ld. CIT(A). Therefore, we uphold his action and dismiss the Ground No. 3 of Revenue. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent inquiry and merely on the basis of some information found in ITS made the impugned addition. In my considered view, since from the documentary evidences furnished by the appellant during the course of the assessment proceedings, the alleged transactions of shares are not getting reflected and further since, the AO has not brought on record any material to rebut the denial of the appellant, the addition so made by the AO at Rs. 7,66,500/- merely on the basis of unverifiable information of the ITS, cannot be upheld. Accordingly, the addition of Rs. 7,66,500/- so made by the AO is hereby deleted. Accordingly, the Ground No. 5 of the appellant is allowed. 21. The issue involved is very simple and neat. The Ld. AO has made addition on the basis of alleged transactions of shares done by the assessee with Client Code No. 1017855 and Broker Code No. 13470. The Ld. AO has obtained information of transactions from the database maintained by income-tax department. But, however, during assessment-proceeding, the assessee has denied to have made any transaction of shares with Client Code No. 1017855 and Broker Code No. 13470. Despite clear-cut denial of assessee, Ld. AO heavily relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has also filed evidences in the form of (i) Ledger A/c of Interest Expenditure which shows date-wise party-wise interest-payments; (ii) Ledger A/c of BEPL which shows the loans given to BEPL from time to time on which interest has been received; and also (iii) a detailed Statement showing a co-relation of the amounts borrowed from different persons and investment made in BEPL at Page No. 191 to 201 of the Paper-Book. By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure of Rs. 8,48,892/- has been incurred to earn interest-receipt of Rs. 9,78,814/- disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, the assessee deserves deduction of interest expenditure, which the Ld. AO has wrongly disallowed but the Ld. CIT(A) has rightly allowed. Accordingly, we dismiss Ground No. 5 of the Revenue as well. GROUND No. 6: 25. In this Ground, the issue involved is the allowability of long-term capital loss of Rs. 80,23,177/- from sale of shares. 26. Facts qua this issue are such that the assessee was holding 3,74,193 shares of M/s. Pitampur Poly Pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceeding, Ld. CIT(A) allowed claim of assessee by holding as under: 8.2 I find that the AO has dealt with the subject issue at Para (8) to Para (8.5) of the Order. The AO noted that the securities transfer form was a simple paper and not any legal document and further, on a perusal of share certificates, it was noted by the AO that they were issued in lieu of old shares. The AO further noted that the company PPPL was a family concern of the appellant which was incurring losses since 17 years and further, the shares have been sold to Smt. Suchita Agrawal who is sister of the appellant and thus, shares remained in the family and loss was artificially created in the hands of the appellant. Further, the AO averted that the consideration was received after two years and it was highly impossible that shares were sold on credit. According to the AO, the loss was not earned from sale of shares but the loss has been artificially created to claim set-off of the same against the LTCG. 8.3 I find that during the assessment proceedings, as well as before me the appellant in support of the genuineness of loss as claimed on sale of shares, furnished various documentary evidences such as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buyer Smt. Suchita Agrawal, after executing the share transfer deed, had applied to the share transfer agent namely M/s. Purva Sharegistry (India) Pvt. Ltd., vide her letter dated 19/06/2015, for issuing her the consolidated share certificates in lieu of the shares received by her. Accordingly, the aforesaid share transfer agent has issued the fresh copies of consolidated certificates in the name of the buyer namely Smt. Suchita Agrawal. In the said Share Certificates, there IS a mention that such consolidated certificates were issued in lieu of old share certificates. Thus, I find that merely for the reason that the share transfer agent has issued a consolidated share certificate to the buyer in exchange of the old certificates, no adverse inference can be drawn and cannot be regarded as colorable device. 8.5.2 I find substance in the contention of the appellant that he was in need of funds and he could not find any buyer in the market who could buy the bulk number of shares of a company which was already running in losses. Since the value of his investment in shares were already diminishing every day, he decided to make a distress sale of the shares on credit. Thus, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficates to the buyer, copies of share-certificate are placed in the Paper-Book. (iii) A copy of ledger account of the buyer and the bank statement are placed at Page No. 399 to 402 of the Paper-Book according to which entire sale-consideration has been received through banking channel. (iv) A copy of the certificate issued by Mr. Harish Modani, practicing Company Secretary, accompanied by the copies of Annual Return of the Company in Form No. MGT-7 filed to ROC containing a list of shareholders and list of share-transfers, is also placed in the Paper-Book. These documents are part of the statutory records under company laws and they clearly evident that the shares were transferred from assessee to the buyer. On the basis of these documents, which are statutory, we observe that the assessee has in fact sold impugned shares to buyer. We also observe that even the Ld. AO has not denied the authenticity of these statutory documents, but he had simply formed a view about bogus claim on the footing that the buyer is a relative of assessee and substantial portion of the consideration had been received after 2 years of sale. We observe that the company was a loss making compa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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