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TMI Blog2015 (1) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... inent to note that apart from ₹ 9.90 lakh as sum of ₹ 25,600/- was also paid by the assessee to the society as entry fee which was allowed by the Assessing Officer as part of the cost of the acquisition of flat. Thus it is clear that for entrance in the society, the charges were only ₹ 25,600/- which has been allowed. There is no mandate of payment of ₹ 9.90 lakh to the society as a pre condition for transfer of flat in question when the entrance fee is separately paid by the assessee. Further it was paid for maintenance and development fund of the society and has no connection with acquisition of or transfer of flat in question. The stand of the society in the assessment proceedings of the society is that the amount is collected from the members for carrying out repair of the building of the society and not of any particular flat. Such repair is carried out once in every 10 to 12 years, therefore, when the payment is not for acquisition or transfer of flat then it cannot be part of the cost of the new flat for the purpose of exemption u/s 54F of the Income Tax Act. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTION CLAIMED U/S 54F OF THE ACT 1 On the facts and in the circumstances of the case and in law, the learned C.I.T. (A) erred in restricting the claim of the Appellant for deduction u/s 54F of the Act to ₹ 5,20,65,966/- and thereby disallowing the claim of the Appellant for deduction u/s 54F of the Act to the extent of ₹ 23,62,8401- (Rs.9,90,0001- plus ₹ 13, 72,8401-). 2 On the facts and in the circumstances of the case and in law, the learned C.IT. (A) erred in ignoring the fact that the Appellant had rightfully claimed the capital expenditure incurred for the purposes of purchase of a residential flat, over and above the purchase consideration which entitled her for claim of deduction u/s 54F of the Act. 3 On the facts and in the circumstances of the case and in law, the learned C.IT. (A) erred in ignoring the fact that the Appellant had paid Contribution of ₹ 9,90,0001- towards Building Repairs Development Fund, which is a precondition to obtain the membership to the Loyal Coop. Hsg. Soc. Ltd., in which the residential flat is situated and claimed as deduction u/s 54F of the Act. 4 On the facts and in the circumstances of the case and in law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is issue. 4 Before us, the Ld. Authorized Representative of the assessee has submitted that no expenses were incurred by the assessee for earning the dividend income, therefore, no disallowance can be made u/s 14A. He has further contended that the Assessing Officer worked out the administrative expenses under Rule 8D(2)(III) which is many times more than the actual expenditure claimed by the assessee in the P L Account. He has further contended that the expenditure claimed by the assessee in the P L Account cannot be attributed to the earning of dividend income. 5 On the other hand, the Ld. DR has relied upon the order of Assessing Officer and submitted that the disallowance has to be worked out as per Rule 8D and, therefore, the Assessing Officer is justified in disallowing the amount of edxpenses under Rule 8D. 6 We have considered the rival submissions as well as relevant material on record. The assessee has claimed the expenses while computing the income from profits gains of business as under:- Nature of expenses incurred Amount in Rs. Audit Fees 7,304 Bank charges ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he disallowance u/s 14A without considering the actual expenditure it comes to ₹ 1,27,354/- which is more than five times higher than the actual expenses claimed by the assessee. Therefore, the provisions of Rule 8D(2)(iii) cannot be invoked in this case. 9. Even, otherwise, these two item of expenditure i.e. audit fee and bank charges do not fall under the category of the expenditure incurred for a composite activity resulting taxable and non taxable income, therefore, there is no direct or proximate nexus of these two expenditures with the earning of dividend income. Under the provisions of section 14A, the apportionment of an expenditure is required to be made only when the expenditure is incurred for a composite activity or indivisible activity which results taxable and non taxable income. In the absence of any nexus of the expenditure in question with earning of the dividend income, no disallowance is called for u/s 14A of the Act. Accordingly we delete the disallowance made u/s 14A on account of administrative expenditure. 10. Ground no. 2 is regarding reduction of claim u/s 54F. The assessee has earned the Long Term Capital Gain of ₹ 7,53,44,067/- from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entrance in the society, the charges were only ₹ 25,600/- which has been allowed. There is no mandate of payment of ₹ 9.90 lakh to the society as a pre condition for transfer of flat in question when the entrance fee is separately paid by the assessee. Further it was paid for maintenance and development fund of the society and has no connection with acquisition of or transfer of flat in question. The stand of the society in the assessment proceedings of the society is that the amount is collected from the members for carrying out repair of the building of the society and not of any particular flat. Such repair is carried out once in every 10 to 12 years, therefore, when the payment is not for acquisition or transfer of flat then it cannot be part of the cost of the new flat for the purpose of exemption u/s 54F of the Income Tax Act. Accordingly, we do not find any error or illegality in the order of CIT(A) qua this issue. 15. Ground no. 2 is regarding reduction of deduction u/s 54F on account of expenditure on renovation. In the claim of deduction u/s 54F, the assessee also included the renovation expenditure of ₹ 13,72,814/-. The Assessing Officer noted that a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es below or adjudicated by the authorities below. Even no argument was addressed by the assessee before us on this issue except the ground. Therefore, this ground of the assessee s appeal does not emanate from the impugned orders of the authorities below and accordingly the same is dismissed. 22. The revenue in its appeal has raised following grounds:- 1. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 1,02,5881- made u/s14A of the Income Tax Act without appreciating the fact that the disallowance uls 14A has been made as prescribed under Rule 8D of the Income Tax Rules. 2. On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 60,95,0001 - being income from other sources without appreciating the fact that no remand report was called for from the AO to substantiate the claim of the assessee. 23. Ground no. 1 is regarding disallowance u/s 14A restricted by the CIT(A). 24. We have heard the Ld. DR as well as Ld. AR and considered the relevant material on record. We find that this ground is common to the ground no. 1 of the assessee s appeal and in v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this credit. (ii) During assessment proceedings, the appellant filed copies of balance sheet for the years ending on 31-03-2006, 31-03-2007, 31-03-2008 and 31-03-2009. However these balance sheets were not accepted by the AO. on the ground that they were unsigned. Once these documents were submitted by the appellant herself, there is no need for her to sign the document personally. Further, the earlier returns of the appellant were available with the AO. and he has given no finding that these balance sheets were different from the balance sheet submitted along with the return of income field by the appellant. (iii) It is seen that appellant has been showing this property under the head investment with a narration Pawana Property . The copies of balance sheets have been filed right from the year 2000-01 onwards. The land of this property has been separately shown in the Balance Sheet through these years on a value of ₹ 25,000/-. The year-wise construction and corresponding increase in the value of property has been shown as below:- 1) 31-03-2000 RS.33,85,000/- 2) 31-03-2001 RS.54,75,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of creditor, and (iii) Genuineness of transaction From the above discussion, it is clear that in the case of appellant the identity and capacity of the creditor and genuineness of transaction have been sufficiently proved by the appellant. The A.O. has not given any finding that this amount was funded from the income of the appellant from undisclosed sources and therefore this amount cannot be added to the income of the appellant u/s.68 of ITAct. Accordingly, the addition made by the A.O. of ₹ 60,95,000/- u/s.68 of ITAct is deleted. This ground is allowed. 30. Thus it is clear that the assessee produced the record to show the payment towards construction of the property in question from the year 2000 till 31.03.2007 total amounting to ₹ 60,95,000/-. As per MOU the assessee has received back only the invested amount of ₹ 60,95,000/- without any surplus or gain on the same. Further we note in the case of Shri Chandrakant S. Choksi HUF Vs. ACIT in ITA No. 3540/Mum/2013, the Tribunal vide order dated 18.11.2014 has accepted the fact of transfer of the share in the property in question by the assessee in favour of the HUF. The relevant part of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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