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TMI Blog2020 (7) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... the property as per ready reckoner rate was 4,53,00,690/-, but then, we cannot remain oblivious of the fact that there is no material available on record from where it could be gathered that the valuation adopted by the stamp valuation authority at 5,53,35,670/- had been substituted by the aforesaid ready reckoner rate of 4,53,00,690/-. In sum and substance, there is nothing discernible from the records which would reveal that the valuation adopted by the stamp valuation authority had been revised at 4,53,00,690/-. In the backdrop of the aforesaid facts, we find that the Pr. CIT had directed the A.O to verify as to whether the excess payment of stamp duty was refunded to the assessee or not. No infirmity in the aforesaid direction of the Pr. CIT, except for the fact that as the stamp duty qua the transfer of the property under consideration was paid by the purchaser party viz. M/s SVG Investments Pvt. Ltd., therefore, the question of refund of any part of the excess stamp duty paid to the assessee would not arise. Accordingly, we to the said extent modify the directions of the Pr. CIT., and direct the A.O to verify as to whether or not the valuation adopted by the stamp valuation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty - A.Y 2014-15 - HELD THAT:- Admittedly, the assessee while computing its income in the previous years under the head Income from House Property had claimed deduction u/s 24(b) of the interest paid on loan raised from Janalaxmi Co-op Bank Ltd , which funds are stated to have been utilized in construction of the property in question. In our considered view, there is substance in the view taken by the CIT(A) that now when the interest expenditure was allowed as a deduction to the assessee while computing its income under the head Income from house property , the same could not have thereafter been allowed as a deduction by allowing it to be capitalized as a part of the cost of acquisition while computing its income under the head capital gains at the time of sale of the property. In fact, a view to the contrary would lead to allowing of a deduction to the assessee twice. Our aforesaid view is fortified by the judgment in the case of CIT Vs. Maithreyi PaiI [ 1983 (11) TMI 43 - KARNATAKA HIGH COURT ]. Now when the assessee in the case before us had claimed deduction of the interest paid to Janalaxmi Co-op Bank Ltd while computing its income for the previous years under the head Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctive orders passed by the Pr. Commissioner of Income-tax-2, Mumbai [Pr. CIT] under Sec. 263 of the Income-tax Act, 1961 [for short 'Act'], dated 26.03.2019 AND the order passed by the CIT(Appeals)-6, Mumbai, dated 08.11.2017, both of which arises from the assessment framed by the A.O u/s 143(3) of the Act, dated 28.12.2016. As the issues involved in the captioned appeals are inextricably interlinked or in fact interwoven, therefore, the same are being taken up and disposed off together by way a common order. We shall first advert to the appeal filed by the asssessee against the order passed by the Pr. CIT u/s 263 of the Act, wherein the impugned order has been assailed on the following grounds of appeal before us : "1. On the facts and the circumstances of the case and in law, the Learned Commissioner of Income-tax -2, Mumbai (hereinafter said "the CIT") erred in passing order under section 263 of the Income-tax Act, 1961 {Act}, dated 26th March, 2019 (hereinafter referred to as the "impugned order") despite the fact that the CIT was appraised of the fact that an appeal against the order under section 143(3) of the Act passed by the Assessing Officer is pending before the Hon'bl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its Office premises (I.T Building) located at Pune for a consideration of ₹ 4,55,00,000/-, against which it had worked out the 'Long Term Capital Gain' (for short 'LTCG') at ₹ 62,75,410/-. On a perusal of the working of the LTCG, it was observed by the A.O that the assessee had claimed deduction for cost of acquisition/improvement, as under: Particulars Financial Year Cost (Rs.) Indexed Cost (Rs.) Cost of Acquisition 2004-05 ₹ 95,27,993/- ₹ 1,86,39,136/- Interest paid 2008-09 ₹ 20,06,379/- ₹ 32,37,096/- ..........do........ 2009-10 ₹ 18,31,764/- ₹ 27,21,561/- ..........do........ 2010-11 ₹ 19,49,290/- ₹ 25,74,379/- ..........do........ 2011-12 ₹ 32,03,444/- ₹ 38,31,890/- ..........do........ 2012-13 ₹ 34,66,596/- ₹ 38,20,579/- Repairs & Maintenance 2013-14 ₹ 33,99,949/- ₹ 33,99,949/- Total ₹ 3,82,24,590/- Being of the view, that the deduction of the interest expense would had been claimed by the assessee u/s 24(b) while computing its income under the head 'Income from house property', the A.O declined to accept the said amount as a part of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00,000/- instead of ₹ 5,53,35,670/- for the purpose of computation of capital gain without applying provisions of section 50C of the Act. Further, it is also observed that the assessee had claimed substantial sums of ₹ 3.8 crores as indexed cost of acquisition and cost of improvement in this case. It is brought to the notice that the same comprised of cost of construction as shown by the assessee on old balance sheets and interest on loan, stated to be utilized for construction of the property. Hence, the same have to be verified whether they have been claimed as expenditure under any head such as business income or income from house property in the previous assessment years and if so, the same have to be disallowed during the year under consideration. Failure of the Assessing Officer to do so has rendered the assessment order u/s 143(3) dated 28.12.2016 as erroneous in so far as it is prejudicial to the interests of the revenue." On the basis of his aforesaid observations, the Pr. CIT was of the view that the assessment order passed by the A.O was erroneous insofar it was prejudicial to the interest of the revenue on two grounds viz. (i). the A.O had failed to appre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration of ₹ 4,55,00,000/-, which was less than the value assessed by the stamp valuation authority at ₹ 5,53,36,670/-. On being confronted with the said fact in the course of the assessment proceedings, it was submitted by the assessee vide his letters dated 26.12.2016 and 28.12.2016, that as per Clause No. 8 of the ready reckoner published by the collector of stamps, dated 31.12.2012, large shops/offices were entitled to deduction of 20% from ready reckoner value if the size of office was above 929 sq. Metres. The assessee also produced a copy of the "deed of correction" dated 26.12.2016 in which both the parties had mentioned that the value of the property as per ready reckoner rate was ₹ 4,53,00,690/-. In the backdrop of the aforesaid, the A.O taking cognizance of the fact that the assessee had taken the sale consideration of the property in question at ₹ 4,55,00,000/- which was higher than its ready reckoner value of ₹ 4,53,00,690/- as per the "deed of correction", therefore, accepted the same. On the contrary, the Pr. CIT observing that as the assessee had paid stamp duty on valuation of ₹ 5,53,36,670/-, therefore, it was incumbent on the pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no material available on record from where it could be gathered that the valuation adopted by the stamp valuation authority at ₹ 5,53,35,670/- had been substituted by the aforesaid ready reckoner rate of ₹ 4,53,00,690/-. In sum and substance, there is nothing discernible from the records which would reveal that the valuation adopted by the stamp valuation authority had been revised at ₹ 4,53,00,690/-. In the backdrop of the aforesaid facts, we find that the Pr. CIT had directed the A.O to verify as to whether the excess payment of stamp duty was refunded to the assessee or not. We do not find any infirmity in the aforesaid direction of the Pr. CIT, except for the fact that as the stamp duty qua the transfer of the property under consideration was paid by the purchaser party viz. M/s SVG Investments Pvt. Ltd., therefore, the question of refund of any part of the excess stamp duty paid to the assessee would not arise. Accordingly, we to the said extent modify the directions of the Pr. CIT., and direct the A.O to verify as to whether or not the valuation adopted by the stamp valuation authority had been revised at ₹ 4,53,00,690/-. In case, the valuation adopted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wever, he had confined such exclusion from the cost of only part of such interest expenses viz. (a). A.Y 2011- 12: ₹ 38,31,890/-; and (ii). A.Y 2012-13: ₹ 38,20,579/-. Resultantly, the indexed interest expenses for the remaining three years viz. (i). A.Y 2008-09: ₹ 32,37,096/-; (ii). A.Y 2009-10: ₹ 27,21,561/-; and A.Y 2010-11 : ₹ 25,74,379/- ,therein aggregating to ₹ 85,33,036/- had continued to form part of the Indexed cost of acquisition/improvement as claimed by the assessee and allowed by the A.O. (ii). We find that the Pr. CIT had observed that as the assessee for computing the indexed cost of acquisition/improvement had included interest paid on borrowed funds as having been utilized for construction of property, therefore, whether the same were claimed by the assessee as expenditure under any head viz. "business income" or "Income from house property" in the previous assessment years, and if so, the same were liable to be disallowed during the year under consideration. In our considered view there in no infirmity in the aforesaid observation of the Pr. CIT. As a matter of fact, the inconsistent approach adopted by the A.O for partly sust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acquisition/improvement of the property in question, which had been adopted by the A.O at ₹ 2,71,72,172/-, as the A.O had failed to make necessary inquiries and verifications, therefore, the Pr. CIT in our considered view had rightly exercised his revisional jurisdiction u/s 263 of the Act. 8. Resultantly, finding no merit in the appeal of the assesee, we dismiss the same in terms of our aforesaid observations. A.Y 2014-15 ITA No. 345/Mum/2018 9. We shall now take up the appeal of the assessee against the order passed by the CIT(A)-6, Mumbai, dated 08.11.2017, wherein the impugned order has been assailed on the following grounds of appeal before us : "1. The learned Commissioner of Income-tax (Appeals-6, Mumbai ["CIT(A)"] has erred in upholding assessment order passed by the Assessing officer ("A.O") by making an addition of ₹ 1,05,52,418/- towards Long Term Capital Gain, by rejecting the evidence placed on record. Hence, the order dated 8th November, 2017 (hereinafter said as "impugned order") passed by the learned CIT(A) is therefore bad in law and liable to be set aside. 2. The learned CIT(A) erred in disallowing the amount of ₹ 76,52,469/- i.e interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med deduction of the interest expense u/s 24(b) while computing its income under the head "Income from house property", the A.O inter alia partly declined the assesse's claim for deduction of the interest expenses for the purpose of working out the LTCG on the sale of the aforesaid property. Also, the claim of repair and maintenance expenses as a part of the cost of acquisition/improvement by the assesse was also declined by the A.O It was observed by the A.O, that though 'cost of improvement' as defined in Sec. 55 of the Act included all expenditure of a capital nature incurred in making of any addition or alterations to the capital asset by the assessee after it had became his property, however, the same would not include any expenditure which was deductible while computing the income chargeable under the head "Income from house property". In the backdrop of his aforesaid deliberations, the A.O declined the assess's claim of the following expenses as a part of the cost of acquisition/improvement: Particulars Financial Year Cost (Rs.) Indexed Cost (Rs.) Interest expenses 2011-12 ₹ 32,03,444/- ₹ 38,31,890/- Interest expenses 2012-13 ₹ 34,66,596/- ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as cost of acquisition and further has claimed indexation on the same while computing the capital gain on the I.T building that it sold during the year. In support of its claim, the appellant has relied upon the decision of the Hon'ble ITAT, Chennai Bench in the case of ACIT Vs. C. Ramabrahaman in ITA No. 943/Mds/2012 reported in 52 SOT 130. It is the fact o the case that the appellant has claimed deduction on the interest paid u/s 24(b) in the assessment years when it offered the income from the property chargeable to tax under the head "Income from House Property". It is the contention of the appellant that the income from house property and capital gains are under two different heads of income and therefore, the interest paid should e allowed as cost of acquisition and indexation on the same should be allowed. In this regard, it is stated that the cost of acquisition cannot be fluctuating but it should be fixed, except in circumstances where the law permits substitution. Further, in the case of Captain B.L Lingaraju vs. ACIT [ITA No. 906/Bang/2014], the Hon'ble Bangalore Tribunal observed that in the case of CIT Vs. Maithreyi Pai [1985] 152 ITR 247 (Kar), Hon'ble Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Bangalore Tribunal would get primacy over the decision of Hon'ble Chennai Tribunal in the case of ACIT Vs. C. Ramabrahaman (supra). Accordingly, the contention and submission of the assessee that it is entitled to claim the interest payment made by it to the bank and claim it as cost of acquisition together with indexation while computing the capital gain is not found to be acceptable and is accordingly, rejected." Further, upholding the disallowance by the A.O of the repair and maintenance expenses incurred as a part of the cost of improvement, it was observed by the CIT(A) as under: "12. The appellant has also contended that A.O has disallowed the cost of improvement of ₹ 33,99,949/- which was incurred by the appellant as repairs and maintenance. In this regard, it is stated that the appellant but for mentioning the same, has not given any factual details whatsoever as to where these expenses incurred and how are they for the purpose of cost of improvement. Further, the expenditure incurred towards repair and maintenance which is routine in nature does not bring in any benefit to the capital value of the building, and the same cannot be considered as cost of im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould not be eligible to once again claim deduction of such interest expenditure in the garb of cost of acquisition of the property while computing the income under the head "Capital gains" at the time of sale of the property in question. Accordingly, finding no infirmity in the view taken up the CIT(A) in context of the issue under consideration, we uphold the same. 15. We shall now advert to the claim of the assessee that the lower authorities were in error in disallowing its claim for deduction of repairs and maintenance expenses as part of the "cost of improvement" of the property while computing its income under the head "Capital gain". We have perused the observations of the lower authorities and are unable to persuade ourselves to subscribe to the same as such. As is discernible from the order of the CIT(A), the assesse's claim as regards repairs and maintenance was inter alia rejected, for the reason, that the assessee had failed to furnish any factual details as regards the expenses which were claimed to have been incurred and also as to how the same qualified as "cost of improvement". However, the assessee had taken us through the details of such expenses i.e invoices/bi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was concluded but, where it is not practicable so to do on the ground of exceptional and extraordinary circumstances of the case, the Bench shall fix a future day for pronouncement of the order, and such date shall not ordinarily be a day beyond a further period of 30 days and due notice of the day so fixed shall be given on the notice board. As such, "ordinarily" the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression "ordinarily" has been used in the said rule itself. This rule was inserted as a result of directions of Hon'ble High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein it was inter alia, observed as under: "We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his Court, the period for which the order dated 26th March 2020 continues to operate shall be added and time shall stand extended accordingly", and also observed that "arrangement continued by an order dated 26th March 2020 till 30th April 2020 shall continue further till 15th June 2020". It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus "should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure…". The term 'force majeure' has been defined in Black's Law Dictionary, as 'an event or effect that can be neither anticipated nor controlled' When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an "ordinary" period. 10. In the light of the above discussions, we are of the considered view that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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