2018 (7) TMI 1318 - AT - Income Tax

Addition on account of car parking space - Held that - In the assessment order, AO mentions that assessee has accepted in his statement that he has received ₹ 2. 5 lakhs per flat towards sale of car parking space and made addition. When particular evidence, more specifically the evidence in the form of diary, has been found in the course of survey and the assessee has explained the said evidence being a yellow diary, to discard the recordings in that diary, in the absence of any substantial or cogent evidence is impermissible. This being so, as no further evidence has been found to show that the assessee has sold car parking space to more than six persons as has been recorded in the diary, which is the foundation evidence, on the basis of which the assessment has been done in the assessee s case, no further addition can be made in the hand of assessee. Consequently, the additions made on the issue of car parking spaces sold stands deleted, to such extent as is in excess to car parking space sold in respect of six flats as has been mentioned in page-28 of yellow diary. In the result, ground No 2 to 2. 5 of assessee s appeal for all the three assessment years stand allowed. Additional consideration received in respect of balance 12 flats - Held that - the assessment order also does not talk of any evidence, much less the CIT(A) in respect of any evidence has been found to show that the assessee had received any additional sale consideration other than what has been disclosed by the assessee for assessment years 2009-10 & 2010-11 also, no evidence has been recorded to show that the assessee has received additional sale consideration of ₹ 1,42,10,000 less ₹ 54,99,000 ₹ 87,11,000/-. In fact, Revenue has not been able to dislodge the claim of assessee nor does Revenue deny that the Revenue had not recorded the statements from the purchasers of the flats who have denied having paid any amounts as additional consideration. This being so, the addition made by the AO and confirmed by the Ld. CIT(A) on this issue is liable to be deleted and we do so. Assessment of cost of acquisition - Held that - The total cost claimed at ₹ 9,32,80,000/- is indisputably the cost of the land. The ld. Assessing Officer has not disputed the Stamp paper cost, or the Registrar fee and the commission paid. Out of the balance, the assessee has produced the evidences of the document writing paid by cheque to the extent of ₹ 3 lakhs, which is part of the cost of acquisition. Consequently the same is allowed. The bank charges in respect of taking DD s is also substantiated with evidences and consequently is allowable expenditure. Expenses under the head Vehicle maintenance, the Rent, Leveling and compound wall, Telephone charges and vehicle insurances have not been shown to be intrinsically associated with the acquisition of the said land and consequently, the same cannot be treated as part of the cost of acquisition of land

Summary

Issues Involved:
1. Addition on account of car parking space charges.
2. Addition representing additional consideration received by the assessee.
3. Calculation of the cost of acquisition of land.

Issue-wise Detailed Analysis:

1. Addition on Account of Car Parking Space Charges:

The primary issue raised in grounds Nos. 2 to 2.5 across all three appeals concerns the addition on account of car parking space charges upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee, an individual deriving income from long-term capital gains, was subjected to a survey under Section 133A. During the survey, it was discovered that the assessee had entered into a Joint Venture Agreement with a construction company for property development in Kerala and had received flats as part of the joint venture. The assessee admitted to charging Rs. 2.5 lakhs per flat for car parking space for six flats, as recorded in a yellow diary. However, the Assessing Officer (AO) interpreted the statement to imply charges for more flats and made additional assessments. The Tribunal found that the AO did not provide substantial evidence to support the additional charges beyond the six flats mentioned in the yellow diary. Therefore, the Tribunal deleted the excess additions made by the AO.

2. Addition Representing Additional Consideration Received by the Assessee:

The second issue raised in Ground Nos. 3 to 3.5 for assessment years 2009-10 and 2010-11 pertains to the addition of alleged additional consideration received by the assessee. The assessee admitted to receiving Rs. 25,80,000 as additional consideration from one buyer in the assessment year 2009-10. However, the AO assumed additional consideration from other buyers and made further additions totaling Rs. 51,60,000 for that year and Rs. 87,11,000 for the assessment year 2010-11. The Tribunal noted that no evidence was found during the survey to support these additional considerations, and the statements from the purchasers denied any such payments. Consequently, the Tribunal deleted the additions made by the AO and confirmed by the CIT(A) for both assessment years.

3. Calculation of the Cost of Acquisition of Land:

The third issue, raised in Ground Nos. 4 to 4.6 for assessment years 2009-10 and 2010-11, and Ground Nos. 3 to 3.6 for assessment year 2011-12, involves the computation of the cost of acquisition of 2.38 acres of land in Cochin, Kerala. The assessee claimed a cost of Rs. 10,05,28,650, supported by a detailed breakdown of expenses, including the purchase price, commission, registration fees, and other related expenditures. The AO accepted the total expenditure but limited the cost of acquisition to Rs. 4,49,33,080, citing unsupported cash payments. The Tribunal reviewed the agreement and supporting documents and found that the agreed rate per cent and the payments made were genuine and accepted by the Revenue. The Tribunal allowed the cost of acquisition at Rs. 9,88,58,190, including documented expenses but excluding unrelated costs like vehicle maintenance and rent.

Conclusion:

In conclusion, the Tribunal allowed the appeals of the assessee for the assessment years 2009-10, 2010-11, and 2011-12, partly deleting the additions made by the AO and confirming the cost of acquisition of land as claimed by the assessee, with certain adjustments. The order was pronounced on 12th July 2018, at Chennai.