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TMI Blog2013 (12) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... that he was entitled to the benefit of section 54 of the Act. The matter being principally factual, we shall take up each of the deductions in dispute in seriatim. 3. The first deduction under reference is for Rs.1,65,000/- paid by way of legal fees ostensibly toward purchase of the new asset. The assessee stood denied deduction in its respect by the Assessing Officer (A.O.) in the absence of proper details as to the purpose for which the same stood incurred. Even as stated by the ld. CIT(A), all that the receipt therefor states is: 'Agreement to be entered into for purchase of flat in Wilfred Apartments'. Before us the ld. AR would state that a person purchasing a property worth Rs.170 lacs would not mind spending a fraction of sum toward satisfying himself qua the legal title of the property being purchased, and that, therefore, the said sum could not be considered as excessive. We agree. But the purpose for which the fees stands paid cannot be a matter of presumption, and has to be established as a fact first. The receipt (PB pg.33) mentions the 'bill no.' (as 0175/2005) and 'matter' as 686/1/05, so that the work is well documented. What, therefore, prevents the assessee from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual findings. This becomes relevant in our view of both the parties having relied upon case law. The case law adverted to by both the sides has been perused and, in our considered view, the expression used in section 54 (as also section 54F) is 'purchase', in contradistinction to the 'cost of acquisition' in section 48. The scope of the said word is implicit therein, and would extend to acquiring a house property, i.e., in an inhabitable state by definition, inasmuch as a house which is not inhabitable or in a livable condition cannot be considered to be a house in the first place or, in any case, is not one as contemplated by the provision. Any further amount expended by the assessee, i.e., after the acquisition of the house property in a habitable state, cannot be considered as towards its purchase cost or cost of construction, as the case may be. The same may be toward providing further amenities or additions thereto, or renovation, etc., either qualifying as 'cost of improvement' or not so. But, the same cannot be considered as part of the purchase cost, which is applicable in the instant case. Coming to the facts of the present case, the assessee by own admission shifted to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not only chooses not to bring the same to his notice, but also moves into an uninhabitable flat. The very fact of his living for months thereafter while work was being carried out itself confirms that the modifications being made did not impact inhabitable state of the residential flat. The Architect, in any case, does little by way of structural modification. The work done, as a perusal of the bill would show, is toward upgrading interiors, interior designing, extending to curtains, expenditure in respect of which though has not been claimed. The total expenditure on waterproofing works to Rs. 0.44 lacs. The impugned sum has accordingly rightly been considered by the Revenue authorities as toward interior designing and renovation. We do observe that in a decision by the tribunal, i.e., Shrinivas R. Desai v. Asstt. CIT (OSD) [2013] 35 taxmann.com 170 (Ahd.), it has been stated that the improvements effected to bring the house property to a more immaculate condition after purchase, as to make it to the buyer's taste, would be a deductible expenditure. The said decision is without reference to any precedents; the predominant view as expressed by the decisions cited before us, listed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 30.10.2005, i.e., the date of the sale agreement (PB pg. 46). The same is disallowed as, though claimed as 'transfer charges', no material to support the claim stands led by the assessee, so that the purpose for which the money is given is not known. The position continues to be the same before us as well. Even a specific query raised by the Bench during hearing in this regard elicited no response. In fact, Clause 15 of the Agreement (AFS) provides for legal charges and security to be deposited by the buyer with the owner-builder. The legal charges are to cover the cost for formation of the (housing) society and it registration, and for the preparation of the AFS and conveyance (Cl. 16). The assessee's claim for deduction of Rs. 4 lacs is totally unsubstantiated, and the Revenue's action in denying its claim cannot be faulted with. We decide accordingly. 6. Finally, per Ground # 4, the assessee claims deduction for Rs. 7 lacs stated to be incurred on the improvement of the house property sold during the year, in the year 1993. The same was considered unacceptable by the Revenue for lack of evidence to establish the claim; the assessee furnishing an affidavit and a letter fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t as well) fetching Rs. 9 lacs in the year 1994 (PB pgs. 59 - 62), would exhibit the costs obtaining at the relevant time, so that the assessee's claim, even assuming its validity, is on a higher side. So, however, as some cost as being toward improvement cannot be denied, we estimate the same at Rs. 1.50 lacs, i.e., at around 20% of the expenditure claimed to have been incurred. The doubt expressed by the Revenue on the genuineness of the claim is to our mind misplaced, as any claim dating back by over 15 years, and not specifically documented for posterity, is bound to suffer from some deficiencies. As observed earlier, any property would warrant repairs, and that is what lends credence to the claim per se, so that the issue is essentially with regard to the nature of cost incurred. We are also not impressed with the Revenue's argument of the assessee owning 24% share in the property would be entitled to expenditure, if at all, in that ratio. This is as the assessee would, like any normal, prudent person, undertake work, the nature and quantum of which would also vary from person to person, incurring cost, only in respect of the property in his occupation and user. We decide acco ..... X X X X Extracts X X X X X X X X Extracts X X X X
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