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TMI Blog2015 (6) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... ver of possession within a specified period as per memorandum of understanding - Held that:- Undisputedly there was a clause in the agreement to sell that the assessee would pay ₹ 30 lakhs to the seller if the possession is delayed. The explanation has furnished for the delay in handing over the possession to the seller for which assessee has paid ₹ 30 lakhs, therefore, the payment is compensatory in nature and is a part of sale transaction. Had it not been paid, the deal would not have been materialized. Therefore, the payment of ₹ 30 lakhs is an allowable deduction from sale consideration. The lower authorities have looked this payment from a different angle and treated it to be penal in nature; whereas the payment was made for the delay in handing over the possession. Since it was compensatory in nature, the same is allowable for deduction. We accordingly set aside the order of the ld. CIT(A) and direct the Assessing Officer to allow deduction of ₹ 30 lakhs against sale consideration.- Decided in favour of assessee. - ITA No.211/LKW/2013,C.O. No.17/LKW/2013 - - - Dated:- 5-6-2015 - Shri Sunil Kumar Yadav, and Shri. A. K. Garodia,JJ For the Petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which has also been disclosed under the head income from house property . The Assessing Officer formed a view that there is a clear violation of clause (1) (a) read (1) (b) of the provisions of section 54F of the Act. He accordingly denied exemption with regard to the claim of deduction of ₹ 30 lakhs relating to sale of Mumbai property. The Assessing Officer was of the view that it was penal charges for late possession, therefore, the same cannot be allowed for the purpose of deduction from the cost of transfer. 5. The assessee preferred an appeal before the ld. CIT(A) and filed written submissions explaining the nature of properties held by him at the time of purchase of residential house No.10/495, Khalasi Lines, Kanpur along with certain evidence relating to other properties. The ld. CIT(A) called comments from the Assessing Officer with regard to the evidence furnished by the assessee relating to different properties held by him and after obtaining comments from the Assessing Officer, the assessee s comments were also sought on the submissions of the Assessing Officer and thereafter has admitted the additional evidence. The ld. CIT(A) has adjudicated the issue in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act without making necessary verification. Before the ld. CIT(A), the assessee has filed enormous evidence in order to establish that the alleged properties held by the assessee were not of residential nature, as they were used for commercial purposes. The ld. CIT(A), while adjudicating the issue, has taken into account various evidences placed before him. The additional evidence was also confronted to the Assessing Officer and reply of the Assessing Officer was also taken into account by the ld. CIT(A) while adjudicating the issue. The relevant observation of the ld. CIT(A) in this regard are extracted hereunder for the sake of reference:- I have carefully considered the rival submissions furnished by the Assessing Officer and the ld. AR, the legal position and case laws on the issues involved in the present appeal. After examining the various evidences relied upon by both the parties relating to the issue of claim of deduction under section 54F of the Act, I find that Assessing Officer has based his decision vide remand report dated 6.11.2012 simply on the narration given I the sale deed of the properties at Parampurwa Civil Lines which mention the nature of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the property in question was a commercial property. It was submitted that the Assessing Officer in his report has not disbelieved these evidences and merely on the basis of narration in the sale deed reached to the conclusion that the property was a residential house. The Assessing Officer also did not make any effort to inspect the property during assessment as well as in remand proceedings. Decision: (With reference to Prampurwa Property) I have carefully considered the rival submission and evidences placed on record. The documentary evidences furnished by the appellant have not been disbelieved by the Assessing Officer. The Assessing Officer only on the basis of same narration in the sale deed has come to the conclusion vide remand report dated 6.11.2012 that property under reference was a residential property. In my opinion the Assessing Officer has failed to place any cogent material and evidences to disprove the contention of the appellant. Even personal inspection of the property was also not made. On consideration of- 1. Valuation report dated 27.7.2007 2. Intimation dated 22.1.2006 to Trade Tax Department 3. Income statement for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional evidence) 4. Copy of wealth tax returns of the appellant. In the wealth tax return no exemption for residential house property was claimed for this property. The copy of wealth tax returns for assessment year 2004-05 to 2009-10 are enclosed (Evidence available on record with Assessing Officer) 5. Copy of valuation report of Shri. A.S. Agarwal (Additional evidence) Reliance is placed on the decision of Punjab Haryana High Court in the case of Asha Sayal vs. CIT in I.T.A. No. 566 of 2005 decided on 4.5.2012. The Assessing Officer in the remand report has observed as under:- The assessee also filed certain additional evidence in respect of property at 14/6-B, Civil Lines, Kanpur, in which assessee has submitted that the said property is a piece of land and not a residential property. Further, evidence i.e. Registration certificate under CST, Roop Patra Form No.15 (Trade Tax), Permanent registration certificate of Directorate of Industries and wealth tax returns for assessment year 2004-05 to 2009-10 have also been submitted by the assessee. On perusal and comparative analysis of wealth tax returns for the aforesaid assessment years, it is found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated the fair market value of the property as on 31.03.2006. There was no further investment in the property. The increase in value was as per estimate of the approved value which always vary from year to year. Details of evidences furnished with paper book are as under:- S.No. Documents/Evidences Nature of such documents PB Page No. 1 Certificate of Registration dt. 27/8/02 with Trade Tax Department Certificate shows that the property was a commercial property 63 2 Registration Certificate dt. 27/08/03 with D.I.C. Unnao Certificate shows that the property was a commercial property 64-65 3 Wealth Tax Returns for Asstt Year 2004-2005 to 2009-20 10 Property was a commercial property 66 to 87 4 Valuation report dt. 15/07/2009 for estimate of the proposed construction to be done in premises No. 14/63 Civil Lines Kanpur T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential house at the time of purchase of new residential house out of sale proceeds received from his capital asset at Mumbai. We, therefore, find no merit in the order of the ld. CIT(A) in this regard. Accordingly we confirm the same. 13. So far as disallowance of deduction of ₹ 30 lakhs is concerned, we find that the assessee has paid a sum of ₹ 30 lakhs to the seller through cheque for delay in execution of sale deed and handing over of possession within a specified period as per memorandum of understanding. Undisputedly there was a clause in the agreement to sell that the assessee would pay ₹ 30 lakhs to the seller if the possession is delayed. The explanation has furnished for the delay in handing over the possession to the seller for which assessee has paid ₹ 30 lakhs, therefore, the payment is compensatory in nature and is a part of sale transaction. Had it not been paid, the deal would not have been materialized. Therefore, the payment of ₹ 30 lakhs is an allowable deduction from sale consideration. The lower authorities have looked this payment from a different angle and treated it to be penal in nature; whereas the payment was made for the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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