9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (2) TMI 592 - AT - Income TaxDisallowance in respect of cost of improvement while arriving at Long Term Capital Gain - Held that - The entire claim of the assessee is based on the various clauses in the sale deed and the copy of the ledger account of Rama Realty. As mentioned elsewhere, the sale deed was already executed without the assessee carrying out any work as mentioned in the sale deed. The assessee may have paid ₹ 45.90 lacs to the contractor in the subsequent year but then the payment is not supported by any actual work done by M/s. Rama Realty. To this extent, in our considered opinion, the same cannot be considered towards cost of improvement. We, accordingly, confirm the disallowance to the extent of ₹ 45.90 lacs. So far as the balance of ₹ 99.10 lacs is concerned, a perusal of the paper book shows that the assessee has offered the same as remission/cessation of liability in A.Y. 2013-14 and has paid the taxes accordingly. Since, the assessee has offered this amount as its income in subsequent year if the disallowance is sustained during the year under consideration, it would amount to double taxation of the same amount. Therefore, in our understanding of the fact, this disallowance cannot be sustained. We, accordingly, modify the findings of the ld. CIT(A) and direct the A.O. to confirm the addition of ₹ 45.90 lacs and delete the addition of ₹ 99.10 lacs. - Decided in partly in favour of assessee
Issues:
1. Disallowance of cost of improvement for Long Term Capital Gain. 2. Claim of deduction under Section 54EC for investment in infrastructure bonds. Issue 1: Disallowance of cost of improvement for Long Term Capital Gain: The case involved cross-appeals by the Assessee and the Revenue against the order of the Ld. CIT(A)-I, Baroda for A.Y. 2010-11. The Assessee contested the disallowance of ?1.45 crore in respect of cost of improvement while calculating Long Term Capital Gain. The Assessing Officer (A.O.) observed that the Assessee had not actually paid the full amount of ?1.45 crore during the relevant year. The Assessee argued that the amount was essential for selling the property and that a portion had been paid to the contractor. However, the A.O. denied the deduction due to lack of evidence of actual expenditure. The Assessee's appeal to the CIT(A) was unsuccessful. The ITAT, after thorough consideration, confirmed the disallowance of ?45.90 lakhs but allowed the deduction of ?99.10 lakhs, as it had been offered as income in a subsequent assessment year, avoiding double taxation. Issue 2: Claim of deduction under Section 54EC for investment in infrastructure bonds: The Revenue's appeal concerned the denial of exemption under Section 54EC by the A.O. The A.O. contended that the Assessee had exceeded the maximum investment limit of ?50 lakhs under Section 54EC by investing ?50 lakhs in two financial years. However, the Assessee argued that the investments were made within the six-month period from the date of transfer of the asset and did not exceed the annual limit. The CIT(A) upheld the Assessee's claim, allowing a deduction of ?1 crore under Section 54EC. The ITAT supported this decision, citing relevant court judgments and finding no error in the CIT(A)'s findings. The Revenue's appeal was dismissed. In conclusion, the ITAT upheld the disallowance of a portion of the cost of improvement for Long Term Capital Gain while allowing the deduction under Section 54EC for the investment in infrastructure bonds, following detailed analysis and legal precedents.
|
