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TMI Blog2018 (3) TMI 1524X X X X Extracts X X X X X X X X Extracts X X X X ..... essee was a non-resident even during the financial year 2001-02 which is also evident from the fact that the passport was issued to her in London on 2.5.2000. Hence out of her earnings in London, the construction cost could have been met by the assessee. In any case, there is no dispute with regard to the source for cost of construction carried out by the assessee. Hence we hold that the assessee is entitled for deduction towards cost of construction at ₹ 64,31,517/- and subject to indexation benefits. - Decided in favour of assessee. Claim of deduction u/s 54 - Held that:- As we have already held that the assessee having reinvested a sum of ₹ 1,60,16,103/- before 31.3.2009 is entitled for claim of exemption u/s 54 of the Act.- Appeal of assessee allowed. - I.T.A No. 748/Kol/2017 - - - Dated:- 28-3-2018 - Shri M.Balaganesh, AM And Shri S.S.Viswanethra Ravi, JM For The Appellant : Shri Soumitra Chowdhury, Adv. For The Respondent : Shri Sallong Yaden, Addl. CIT ORDER Per M.Balaganesh, AM 1. This appeal by the assessee arises out of the order of the Learned Commissioner of Income Tax(Appeals)-13, Kolkata [in short the ld CIT(A)] in Appeal No ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the buyer of the property in tranches and deposited the same in his Vijaya Bank, Shyambazar Branch. The assessee also offered ₹ 2,21,00,000/- as his sale consideration towards property in the return. The assessee also filed an objection before the ADSR-II, Kolkata on 17.6.2017 on the issue of not providing certificate of market value as required to be mentioned in the Deed of Conveyance. The ld AR informed that no reply was received in this regard by the assessee. The following facts pertaining to the property are relevant :- a) The assessee bought the property at No.45, Bhupen Bose Avenue , Kolkata in Financial Year 1999-2000 for ₹ 55,54,000/- from four co-owners. b) The assessee undertook construction activities in the said property during Financial Year 2001-02 and total cost of construction as per registered valuation report was ₹ 64,31,517/-. c) The assessee sold this residential property in April 2008 for ₹ 2,21,00,000/- and consideration received from buyer and found credited in the Vijaya Bank, Shyambazar Branch, Kolkata are as below:- 16.4.2008 - 9,00,000/- 16.4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. The ld AO observed that the assessee ought to have shown this amount of ₹ 2,21,00,000/- in the year 2008 and not in the year 2015 and accordingly rejected the plea of the assessee. Accordingly, he proceeded to treat the excess credit lying in the bank account over and above the sale consideration reflected in the sale deed amounting to ₹ 71,00,000/- as unexplained cash credit u/s 68 of the Act. 7.1. The ld AO with regard to the claim of section 54F of the Act observed that the assessee vide original return claimed an amount of ₹ 1,33,93,317/- and vide revised computation filed during the assessment, claimed ₹ 1,48,33,019/- towards purchase of four flats bearing numbers 22A, 22B, 23A and 23B at Krishnachura Tower-2 , New Town, Kolkata which the authorized representative of the assessee contended to be a Pent house. The ld AO observed that from the perusal of the allotment letter submitted during the course of hearing, it was seen that the different flats were purchased on different dates. Hence the same cannot be considered as a single unit and accordingly observed that exemption u/s 54F of the Act cannot be given to the assessee. He also observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ₹ 71,00,000/- were given only by the buyers of the property. Alternatively, if the verification had been carried out with the buyers , whose address was very much available with the ld AO, things might have been very clear. Without resorting to any verification, the ld AO simply disbelieved the version of the assessee. The assessee produced the latest addresss of the buyers of the property before the ld CITA. Communication was also made with the ACIT, Circle 22(1), Piramal Chambers, 9th Floor, Jijibhoy Lane, Laibaug, Parel, Mumbai 400012 who is the AO of the buyer of the property vide letter dated 29.8.2016 and delivered on 30.8.2016. Thereafter 4 remainders were sent to the address of the buyer of the property on 5.11.2016, 7.11.2016 , 10.11.2016 and finally on 15.11.2016 but unfortunately the buyers kept silent without responding to the communication of the assessee even after receiving the letters addressed to them for the reason best known to them. 8.1. It was further pleaded that the ld AO failed to deduct the cost of acquisition of the land together with construct cost of the building comprised of Ground plus 4 storied building having built up area of 6750 sq.ft, v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an which is completely arbitrary, unjustified and illegal. 7. For that on the facts of the case, the AO was wrong in adding ₹ 71,00,000/- (Rs. 71,50,000/- mentioned in AO s order) as unexplained investment deposit in bank which is completely arbitrary, unjustified and illegal. 8. For that on the facts and in the circumstances of the case, the Ld. CIT(A) ought to have considered that the assessee had discharged its onus by furnishing all the relevant documents in connection with sales consideration of flat as reflected in the bank account and also proved the identity and creditworthiness and genuineness of property sales, therefore, the said addition u/s 68 amounting to ₹ 71,00,000/- should be deleted. 10. We have heard the rival submissions. At the outset, we find that the ld AR filed the following details regarding the date of arrival into India and departure from India to prove that assessee is a non-resident :- Arrival Date Departure Date No. of Days 15.6.2005 26.8.2005 (15+31+26) = 72 2006 to 2008 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ld AR that the credit of ₹ 71,00,000/- represents sale consideration received on sale of subject mentioned property over and above the value mentioned in the sale deed at ₹ 1,50,00,000/-. Accordingly the total sale consideration of property was ₹ 2,21,00,000/- which has been rightly considered by the assessee for the purpose of computation of capital gains on sale of property. In any case, we find that the ld AO had erroneously added a sum of ₹ 71,50,000/- instead of ₹ 71,00,000/-. We hold that the assessee being a non-resident , could not have any other source other than the sale of subject mentioned property and the retnal income from yet another property which has been subjected to tax. In the instant case, the action of the assessee in depositing the two cheques received in the sum of ₹ 71,00,000/- ( 50,00,000 + 21,00,000) in the same Vijaya Bank Account along with other sale proceeds of ₹ 1,50,00,000/- comprising of various cheques, goes to prove the bonafide intention of the assessee in not hiding any amount from the eyes of the income tax department. There cannot be any other source for ₹ 71 lacs for the assessee other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court for its opinion. The High Court has agreed with the said view of the Tribunal and has held that in the instant case, it could not be said that the Tribunal was wrong in having differed from the ITO and the AAC in the matter of exercising judicial discretion as to whether even after rejecting the explanation of the assessee the value of the investments were to be treated as the income of the assessee. According to the High Court, the Tribunal had not committed any error in taking into account the complete absence of resources of the assessee and also the fact that having regard to her age and the circumstances in which she was placed she could not be credited with having made any income of her own and in these circumstances, the Tribunal was right in refusing to make an addition of the value of the investments to the income of the assessee. (underlining provided by us) Respectfully following the ratio laid down in the aforesaid case and applying the same to the facts and circumstances of this case, we hold that the additional amount credited in the bank account in the sum of ₹ 71,00,000/- could not have emanated to the assessee out of some undisclosed sources but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out the veracity of the quantum claimed. Against this direction, the revenue is not in appeal before us. 10.4. We find that the assessee having purchased the land in the financial year 1999- 2000 had carried out construction during the financial year 2001-02 which is supported by the registered valuation report . The value as per registered valuation report (enclosed in pages 55 to 76 of the paper book ) is ₹ 64,31,517/-. It is not in dispute that the assessee was a non-resident even during the financial year 2001-02 which is also evident from the fact that the passport was issued to her in London on 2.5.2000. Hence out of her earnings in London, the construction cost could have been met by the assessee. In any case, there is no dispute with regard to the source for cost of construction carried out by the assessee. Hence we hold that the assessee is entitled for deduction towards cost of construction at ₹ 64,31,517/- and subject to indexation benefits. Accordingly, the question number 3 raised above is answered in the affirmative in favour of the assessee. 10.5. With regard to the claim of deduction u/s 54 of the Act, we have already held that the assessee having ..... X X X X Extracts X X X X X X X X Extracts X X X X
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