2023 (7) TMI 794 - AT - Income Tax

Disallowance of commission claimed as deduction while computing the cost of sale of land - AO had disallowed the same for want of details and confirmation of the payments - before the ld. CIT(A), assessee submitted that the expenses being share of stamp duty expenses as borne by the assessee, thus deleted the additio - HELD THAT - At the time of hearing also, assessee could not justify such share of stamp duty expenses and neither could place on record any evidence to show regarding the claim made by the assessee. We are not in conformity with the findings of the ld. CIT(A) on this issue and since he has come to a conclusion without examination of any evidence and also has failed to provide specific reasons regarding the allowability of share of stamp duty expenses while computing capital gains, the findings of the CIT(A) are therefore, reversed and the addition made by the AO is restored. Ground no.1 of Revenue s appeal stands allowed. Indexed cost of improvement while computing the capital gains - CIT(A) has deleted the addition by holding that such addition was made by the AO merely on suspicion, doubts and surmises without bringing any concrete evidence, simply rejecting the contentions of the assessee - HELD THAT - We are of the considered view that the onus always lies upon the assessee who seeks deduction of expenses. The assessee has to prove the genuineness of the expenditure claimed towards indexed cost of improvement. In this case, the assessee has failed to prove the genuineness of the expenditure and, therefore, it was not correct, judicially, for ld. CIT(A) allowing the indexed cost of improvement made to the asset sold. We do not find any merit in the findings of the ld. CIT(A) on this issue and the same is reversed. Ground No.2 of appeal of the Revenue stands allowed. Exemption u/s 54F - The findings of the ld. CIT(A) is devoid and bereft of any merit allowing benefit of exemption u/sec. 54F which is therefore reversed and accordingly, the ground of appeal no.3 filed by the Revenue stands allowed. Deduction u/sec. 54EC - time limit for investment exceeded - HELD THAT - The issue is covered by the decision of CIT vs. Coromandal Industries Limited 2014 (12) TMI 852 - MADRAS HIGH COURT as held from a reading of Section 54EC(1) and the first proviso, it is clear that the time limit for investment is six months from the date of transfer and even if such investment falls under two financial years, the benefit claimed by the assessee cannot be denied.

Summary

Issues:
The appeal involves issues related to the assessment order for A.Y. 2014-15, including disallowance of commission expenses, indexed cost of improvement, deduction u/s 54F, and deduction u/s 54EC.

Commission Expenses Disallowance:
The Revenue appealed against the deletion of the disallowance of commission expenses of Rs. 17,00,000 claimed by the assessee while computing the cost of sale of land. The AO disallowed it for lack of details and confirmation of payments. The ld. CIT(A) accepted the assessee's submission that the expenses were share of stamp duty expenses borne by the assessee without examining evidence. The Tribunal found the ld. CIT(A)'s decision lacking justification and evidence, reversing it and restoring the addition.

Indexed Cost of Improvement Disallowance:
The Revenue challenged the allowance of indexed cost of improvement of Rs. 35,40,600 by the ld. CIT(A) while computing capital gains. The AO disallowed it due to lack of proof of payment and source. The Tribunal held that the onus was on the assessee to prove the genuineness of the expenditure, which the assessee failed to do. Consequently, the Tribunal reversed the ld. CIT(A)'s decision and allowed the Revenue's appeal on this issue.

Deduction u/s 54F:
The Tribunal found the ld. CIT(A)'s decision to allow the benefit of exemption u/s 54F devoid of merit and reversed it. As a result, the Revenue's appeal on this ground was allowed.

Deduction u/s 54EC:
Referring to a decision by the Hon'ble Madras High Court, the Tribunal determined that the issue of deduction u/s 54EC was covered in favor of the assessee. The Tribunal dismissed the Revenue's appeal on this ground, citing the legislative intent and the time limit for investment specified in the relevant provisions.

Cross Objection Dismissal:
The assessee filed a cross objection, which was found to be time-barred by 22 months. Despite seeking condonation of delay, the Tribunal concluded that the reasons provided by the assessee for the delay were not justifiable, cogent, or supported by documentary evidence. Consequently, the cross objection filed by the assessee was dismissed.

Conclusion:
In conclusion, the appeal of the Revenue was partly allowed, with the disallowances of commission expenses and indexed cost of improvement being reinstated. The ld. CIT(A)'s decisions regarding deduction u/s 54F and exemption u/s 54EC were reversed in favor of the Revenue. Additionally, the cross objection filed by the assessee was dismissed.