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TMI Blog2010 (8) TMI 820X X X X Extracts X X X X X X X X Extracts X X X X ..... r the property which is sold by him. In our considered opinion such claim of the assessee could not be denied unless proved otherwise. There is no material on record to suggest that the payments which are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year under consideration. It is so with respect to base price, processing fee, preference charges, external development charges, fire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assessee is entitled to get deduction thereof under the provisions of s. 48(ii). Computation of indexed cost of acquisition - date from which the indexed cost of acquisition is to be computed? - HELD THAT:- The assessee had acquired a right to get a particular flat from the builder and that right of the assessee itself is a capital asset. The word held used in s. 2(14) as well as Explanation to s. 48 clearly depicts that assessee must have some right in the capital asset which is subject to transfer. By making the payment to the builder and having rece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee sold a flat No. F-011, Richmond Park, DLF City Phase IV, Gurgaon vide sale deed dt. 30th Nov., 2006 for a sum of Rs. 90 lacs. After claiming brokerage paid thereon of Rs. 45,000, the sale price arrived at by the assessee was Rs. 89,55,000. Out of the said sale consideration, the assessee claimed that it had incurred cost of acquisition in various financial years amounting to Rs. 55,81,062. The cost as per indexation was worked out at Rs. 84,54,439. The details of indexation as described in computation of capital gain by the assessee is as under : 1995-96 13,35,850* 519/281 24,67,282 1996-97 74,042* 519/305 1,25,993 1997-98 15,20,000* 519/331 23,83,323 1999-2000 21,39,232* 519/389 28,54,142 2001-02 5,11,938* 519/426 6,23,699 55,81,062 84,54,439 3. After reducing the indexation cost of Rs. 84,54,439 from the net sale consideration of Rs. 89,55,000, long-term capital gain was computed by the assessee at Rs. 5,00,561. After claiming the exemption under s. 54EC by making investment in REC bonds of Rs. 5,50,000, the taxable long-term capital gain was computed at 'nil'. 4. The AO did not accept the said computation of long-term capital gain submitted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... F.Y. 1997-98 F.Y. 1999-02 F.Y. 2001-02 Total 1. Purchase price as per conveyance deed 12,72,702 74,042 6,43,865 20,55,359 - 40,45,968 2. Stamp duty - - - - 5,05,752 5,05,752 3. Other expenses - - - - - - (i) Interest - - 8,60,061 2,016 4,971 8,67,048 (ii) Fire fighting charges - - - 34,916 - 34,916 (iii) Generator charges - - - 46,941 - 46,941 (iv) Processing fee and other miscellaneous charges 63,148 - 16,074 - 1,215 80,437 Total 13,35,850 74,042 15,20,000 21,39,232 5,11,938 55,81,062 7. Considering the submissions made by the assessee before the CIT(A), learned CIT(A) has framed the following issues : (i)Whether sale price of Rs. 90,00,000 realized by the assessee is to be adopted or Rs. 1,26,43,800 as adopted by the AO ? (ii)Whether cost of acquisition is Rs. 55,81,062 as claimed by the assessee or Rs. 40,45,968 as adopted by the AO ? (iii)Whether the year of allotment of flat is to be taken the year in which the asset is said to have been acquired ? (iv)Whether indexation is to be allowed from 1995-96 as adopted by the assessee ? (v)Whether each payment made by the assessee towards cost of acquisition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lates to applicability of the cost indexation factor, learned CIT(A) has observed that as sale has taken place in financial year 2006-07, cost inflation factor should be taken at 519 and vide para 24.2 of the impugned order, the capital gain as worked out by learned CIT(A) is as under : "24.2 The capital gain is worked out as under : Sale consideration (as per paras 10 to 12 above) Rs. 90,00,000 Brokerage paid Rs. 45,000 Rs. 89,55,000 Less : Purchase consideration (as per para 13 above) Rs. 45,51,720 × 519 Rs. 55,45,405 426 Rs. 34,09,595 Less : Investment in bonds under s. 54EC as allowed Rs. 5,50,000 Taxable capital gain Rs. 28,59,595" 12. In this manner, learned CIT(A) has sustained the addition of Rs. 28,59,595. The computation made by the CIT(A) is objected to by the assessee and the above-mentioned grounds of appeal have been raised. 13. Learned Authorised Representative has submitted before us a synopsis on the basis of which he argued the matter. 14. The first objection of learned Authorised Representative would be that the CIT(A) has erred in not treating the cost which as per the assessee was Rs. 55,81,062. The CIT(A) only included in the cost a f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... making payment from 2nd Aug., 1995 and was making payment till 28th Sept., 2001. He in this regard referred to the copy of the receipts submitted at pp. 16 to 38 of the paper book. He also submitted that conveyance deed was executed on 27th Dec., 2001. 18. He submitted that the AO is wrong in holding that the benefit of indexation will be available to the assessee from 27th Dec., 2001 i.e., from the date of execution of the conveyance deed and for that purpose the AO has relied upon s. 48. He submitted that the CIT(A) is also incorrect to confirm the stand of AO on the ground that there was no asset existed at the time of allotment and the same was not held by the assessee from financial year 1995-96. He submitted that according to the proviso to s. 48, the word used is 'held'. He submitted that exactly the same word is appearing in s. 2(42A) which defined short-term capital asset and which definition also describing (sic) the word 'held'. He submitted that while interpreting analogous provisions i.e., provision of s. 2(42A) it has been held by Hon'ble Gujarat High Court in the case of CIT v. Anilaben Upendra Shah [2003] 184 CTR (Guj.) 129/[2003] 262 ITR 657 (Guj.) that for the pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentative that he is making a statement at the Bar that the said interest was not claimed by the assessee under any other section. 23. We have carefully considered the rival submissions in the light of the material placed before us. Sec. 48 prescribes the mode of computation of capital gain. The relevant portion whereof reads as under : "48. The income chargeable under the head 'Capital gains' shall be computed, by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely- (i)expenditure incurred wholly and exclusively in connection with such transfer, (ii)the cost of acquisition of the asset and the cost of any improvement thereto." 24. It can be seen from the above provision that the assessee is entitled to deduct the expenditure incurred by it wholly and exclusively in connection with such transfer and also the cost of acquisition of asset and cost of any improvement thereon. Therefore, the section itself permits the assessee to deduct the cost of acquisition as well as cost of any improvement thereon. The assessee has given full details of payments made by him to the developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are stated to be made by the assessee were not incurred by him as the cost of the said flat which has been subject-matter of sale during the year under consideration. It is so with respect to base price, processing fee, preference charges, external development charges, fire fighting charges, generator charges, etc. which all will form cost of acquisition incurred by the assessee for getting the ownership of the asset and, therefore, the assessee is entitled to get deduction thereof under the provisions of s. 48(ii). 26. Now, coming to the second question, which relates to the date from which the indexed cost of acquisition is to be computed. Here, it has been the case of the assessee that on the date of allotment of flat, the property was identified. The assessee got the right over the said property and from that date the indexation benefit has to be given to the assessee. Explanation (iii) to s. 48 reads as under which makes entitle the assessee to the indexation benefit : "(iii)'indexed cost of acquisition' means an amount which bears to the cost of acquisition the same proportion as cost inflation index for the year in which the asset is transferred bears to the cost infla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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