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TMI Blog2021 (9) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... f construction, this fact is evident from invoices vide which water proofing charges were paid. OC was received by the assessee in the month of June 2007 and the water proofing charges were paid in the month of October December 2007. The water proofing definitely adds value to the asset as it improves the life of the structure/building - subsequent water proof coating may be considered in the nature of repairs and maintenance, in so far as initial water proofing is concerned it is integral part of construction activity, hence, it is to be included towards the cost of asset. 3rd component that has been disallowed by the AO/CIT(A) is vacant land tax and property tax. The payment of said taxes to the municipal authorities are perennial an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see is directed against the order of Commissioner of Income Tax (Appeals)-37, Mumbai [hereinafter referred to as the CIT(A) ] dated 30.11.2019 for the Assessment Year (AY) 2011-12. 2. Sh. N.R. Agarwal appearing on behalf of the assessee narrating the facts of the case submitted, that the assessee during the period relevant to AY under appeal had sold an immovable property for a consideration of ₹ 1.60 crores. After deducting index cost of acquisition, brokerage, stamp duty, cost of improvement, etc. the assessee offered Long Term Capital Gain (LTCG) of ₹ 43,38,125/- to tax. The immovable property sold during the relevant period was constructed on lease hold land. The indexed cost of property with the year 1998 as base the LT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital and has disallowed remaining instalments aggregating to ₹ 1,34,247/- 2.2. In respect of water proofing charges, the ld. AR submitted that water proofing is always done after construction of building is complete. Water proofing charges are integral part of construction activity. The ld. AR asserted that in alternate water proofing charges can be allowed as cost of improvement under section 48(2) of the Act. The ld. AR pointed that water proofing charges were paid on 29.10.2007 and 20.12.2007 and Occupancy Certificate (OC) for the building was obtained on 04.06.2007. Though, there is no co-relation between water proofing and obtaining OC, however, proximity of the dates would show that water proofing of the building is the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registered on 03.07.1997, hence, it is from the date of registration, the AO has rightly allowed the benefit of indexation. 5. Both sides heard, orders of authorities below examined. The assessee in appeal has assailed the orders of CIT(A) on two counts i.e. 1. Disallowance of certain expenditure being not considered as capital/cost of improvement; and 2. The correct date of indexation for computing LTCG. 6. In ground no.1 of appeal, the assessee has assailed that while computing cost of acquisition, the AO has excluded: 1. Lease rental payments - ₹ 1,34,247/- 2. Water proofing charges - ₹ 2,11,001/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e OC was received by the assessee in the month of June 2007 and the water proofing charges were paid in the month of October December 2007. The water proofing definitely adds value to the asset as it improves the life of the structure/building. The subsequent water proof coating may be considered in the nature of repairs and maintenance, in so far as initial water proofing is concerned it is integral part of construction activity, hence, it is to be included towards the cost of asset. 7.2. The 3rd component that has been disallowed by the AO/CIT(A) is vacant land tax and property tax. The payment of said taxes to the municipal authorities are perennial and does not add value to the property, hence, are not capital in nature. Payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition the same proportion as Cost Inflation Index for the year in which the asset is transferred bears to the cost Inflation Index for the first year in which the asset was held by the assessee or for the year beginning on the 1st day of April [2001], whichever is later; A bare perusal of above definition would show that the expression the first year in which the asset was held by the assessee , cannot be interpreted in narrow sense to mean date of transfer of physical possession of asset or date of registration of title deed alone. The expression inter alia includes a date when both sides perform certain legal obligations which ultimately culminates in transfer of title and physical transfer of immovable property. The dat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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