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TMI Blog2010 (9) TMI 1253X X X X Extracts X X X X X X X X Extracts X X X X ..... t while taking indexed cost." 4.1 The facts of the case, in brief, are that the assessee is a notified person under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992, and all its assets, including bank accounts were attached and vested in the hands of the custodian appointed under the said Act. Although the return was due on 30-11-2004, the assessee did not file the same before the due date despite having taxable income, for which the AO issued notice u/s. 148 of the I.T. Act on 25-01-2007. In response to the said notice, the assessee filed his return of income on 26-02-2007 declaring total income of ₹ 8,66,520/-. During the course of assessment proceedings, the AO noted that the assessee/custodian has sold his flat at NCPA, Nariman Point, Mumbai-400 021, on order of Special Court for a consideration of ₹ 7,26,50,000/-. The AO noted that this was a residential flat and no depreciation was claimed. The cost of flat was shown at ₹ 2,32,01,800/-. The assessee has capitalized brokerage of ₹ 1,31,000/- to the cost. The receipt for brokerage issued by Rupal Estate was filed. The AO noted that this receipt does not indicate th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is concerned, it falls under "improvements" as it enhanced the cost of the property. For this proposition, he relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Ramaswamy Mudaliar reported in 191 ITR 939. Rejecting the various explanations given by the assessee, the AO determined the indexed cost on the basis of the payment made which is as under : Fin. Yr. Payment Index cost 1991-92 6560000 X 463/199 15262713 1994-95 10266335 X 463/259 18352560 1996-97 6244465 X 463/305 9479303 TOTAL : 430-94576 In reply to the counter query raised by the assessee that in case of EMI of loan is taken for flat for 15 years which date will be taken for indexation purpose while calculating long-term capital gains, the AO held that the ld. counsel has failed to understand that in such a case the Builder or seller of the flat has received full sale consideration and the EMI is only a mode of repayment of loan availed by the purchaser. He accordingly determined the long-term capital gains at ₹ 98,42,162/-. 7. Before the CIT(A), the assessee reiterated the same submissions as made before the AO. It was submitted that since the assessee was notifie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the CIT(A), the assessee is in appeal before us. 9. The ld. counsel for the assessee, while challenging the order of the CIT(A), submitted that the crucial date is when the asset was held by the assessee for the first year and the date of transfer. The dates of payment are irrelevant. He submitted that the assessee, in the instant case, due to unavoidable circumstances, has only deferred the payment. Referring to the provisions of sec. 2(42A), he submitted that "short-term capital asset" means a capital asset held by an assessee for not more than 36 months immediately preceding the date of transfer. Therefore, the language used by the legislature is "held by the assessee" and not "owned by the assessee". Therefore, for the purpose of indexation, it should be from the date of agreement for purchase and not on the basis of payment thereof. For this proposition, he relied on the following decisions : 1. Smt. Lata G. Rohra vs. DCIT (21 SOT 541.(Mum.) 2. I.T.O. vs. Smt. Kashmiraben M.Parikh (44 TTJ 68) (Ahd). 3. ACIT vs. Sharad Thandani (104 TTJ 567) Lucknow). 4. CIT vs. Vimal Lalchand Mutha (187 TTJ 613) (Bom). 5. CIT vs. Ved Prakash & Sons (HUF) (207 ITR 148) (P&H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of agreement. We find the Co-ordinate Bench of the Tribunal in the case of Smt. Lata G. Rohra (supra) has held that under the provisions of sec. 48benefit of indexation should be given on the basis of date of cost of acquisition of asset and not on the basis of dates of actual payments made. Similarly, the Ahmedabad Bench of the Tribunal in the case of Smt. Kashmiraben M. Parikh (supra) has held as under : "………The right in any immovable property which has already been constructed or is yet to be constructed is a capital asset which admittedly was acquired by her in November, 1978. The mere fact that possession of the flat was received in February, 1981 would not lead to the conclusion that the assessee became entitled to such rights in the flat only in the month of February, 1981 when possession was taken. The possession was taken by her pursuant to the booking made in November, 1978 and in accordance with the agreement executed in the month of March, 1979. It is thus obvious hat the assessee acquired right in the said property more than three years before its transfer made on 1st November, 1983. The capital gains derived by the assessee has, therefore, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , that the Tribunal was right in law in holding that the capital gain was a long-term capital gain." In view of the decisions cited above, we are of the considered opinion that the assessee is entitled to indexation benefit on the NCPA flat from the date of agreement and not on the basis of actual payment. The order of the CIT(A) on this issue is accordingly set aside and the ground raised by the assessee in ground no.4 is allowed. 13. So far as the issue relating to capitalization of brokerage is concerned, admittedly, the receipt filed by the assessee in the paper book does not contain either the name of the assessee or brokerage received for purchase of the flat in question. Further, the amount was paid by one Mrs. J.H. Mehta. Rupal Estate is mainly engaged in the real estate brokerage business. However, unless there is some evidence to show that the payment is made by the assessee company or the brokerage has been paid to purchase of the flat in question, the same, in our opinion, cannot be allowed to be included in the cost of the asset. So far as the argument advanced by the ld. counsel for the assessee that such brokerage was already included in the cost of the asset in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal in the case of Orion Travels P.Ltd. vs. DCIT vide ITA Nos.6888 & 6889/M/08 for the asst. years 2004- 05 and 2005-06 dated 09-10-2009, interest under sections 234A, 234B and 234C should not be levied on the assessee which is a notified person under the Special Court (Trial of Offences relating to Transactions in Securities) Act, 1992. It is the submission of the ld. D.R. that interest u/s. 234A, B and C, being mandatory and consequential in nature, has rightly been upheld by the CIT(A). We find the Coordinate Bench of the Tribunal in the case of Orion Travels P.Ltd. (supra), while deleting such interest u/s.234A, B and C in the case of a notified person, has held as under : "24. In the backdrop of the above, it was impossible for the Assessee to have paid the advance tax even if he had wanted to. It is a well known legal dictum "LEX NON COGITAD IMOSSIBILIA" (Law cannot compel you to do the impossible). Assessee cannot therefore be foisted with interest liability u/s.234A, 234B and 234C. Interest u/s.234B and 234C are directly related to payment of advance tax and hence is not leviable on notified persons. Even though levy of interest u/s.234A is really on the delay i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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