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TMI Blog2022 (9) TMI 291X X X X Extracts X X X X X X X X Extracts X X X X ..... banking channel. However, as observed by the A.O, and rightly so, we too are unable to comprehend as to why services of four persons would have been required to facilitate transfer of the property in question by the assessee. Although the confirmations of the aforementioned persons had been made available on record but the same does not inspire much of confidence. As is discernible from the aforesaid stereotype confirmations, it transpires that the same have been prepared by the assessee and had simply been signed by the persons concerned without mentioning a word about the services which were rendered by them as regards the sale transaction under consideration. We though are not oblivious of the fact that the payments to the aforementioned persons have been made through banking channel, however, the said fact on a standalone basis would not irrefutably substantiate the authenticity of the transaction under consideration. Apart from that the fact that the payments have been made to the aforementioned persons on 20.07.2011 i.e. much prior to 6 months from the date of execution of the sale transaction on 31.03.2012 also raises serious doubts as regards the veracity of the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in sustaining addition of Rs.1,50,39,153/- out of addition of Rs.1,69,89,153/- made by the Assessing Officer on account of Long term capital gains while adjudicating claim under section 54F. 3. Without prejudice to above, the addition is excessive high and be reduced reasonably. 4. That the appelant denied her liability to interest chargfed uner section 234C of the Income Tax Act, 1961 which the Ld. CIT(A) failed to adjudciate. 5. That any other releif/deduction which the Hon ble Court may deem fit be granted to yoru appellant. 6. That the appellant craves leave, to urge, add, amend, alter, enlarge, modify, substitute, delete any of the ground or grounds and to adduce fresh evidence at the time of the hearing the appeal. 2. Succinctly stated, the assessee had filed her return of income for the assessment year 2012-13 on 20.03.2013, declaring an income of Rs.23,67,189/-. The return of income filed by the assessee was initially processed as such u/s.143(1) of the Act. Subsequently, the case of the assessee was selected for scrutiny assessment u/s.143(2) of the Act. 3. During the course ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property. It was observed by the A.O that the aforesaid impugned brokerage/commission of Rs.11 lac was paid by the assessee on 20.07.2011 i.e. much prior to the execution of the sale transaction that took place on 30.03.2012. Also, it was noticed by the A.O that there was no written agreement between the brokers and the owner of the property i.e. the assessee. Accordingly, the A.O being of the view that the assessee had failed to substantiate her claim of having paid the aforesaid brokerage expenses of Rs.11 lac to facilitate the sale of the property, thus, disallowed the same. 5. As regards the claim of the assessee of having paid an amount of Rs.1 lac towards brokerage/commission for purchase of the new residential house, the same too did not find favor with the AO. It was observed by the A.O that now when the assessee had purchased the new residential house from a famous builder/developer, therefore, there was no reason for her to have availed the services of a commission agent. Accordingly, the A.O disallowed the assessee s claim for deduction of brokerage expenses of Rs.1 lac that was stated to have been incurred for purchase of the new residential house. 6. Adverting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aim of the assessee of having paid brokerage expenses of Rs.11 lac to four persons in order to facilitate the sale of the property in question, the CIT(Appeals) taking cognizance of the facts, viz. (i) there was no agreement of the assessee with the alleged brokers; (ii) that the sale transaction was completed six months after the payment of brokerage; and (iii) it was beyond comprehension that for a single deal the assessee would have paid commission/brokerage to four persons, thus, restricted her claim for deduction of brokerage expenses to an amount of Rs.3 lac and upheld the disallowance of the balance amount. As regards the assessee s claim of having incurred stamp duty expenses w.r.t the registered sale deed of the property sold by her, the CIT(Appeals) was of the view that as per the prevailing practice the stamp duty a/w. registration charges were borne by the purchaser of the property, therefore, the aforesaid unsubstantiated claim of the assessee did not merit acceptance. Adverting to the assessee s claim for deduction u/s.54F of the Act i.e. towards her investment made in the new residential house, it was observed by the CIT(Appeals) that as the assessee had purchased th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - Interior work Rs.1,16,12,809/- (Total Investment Rs.1,55,98,187) Rs.1,32,64,097/-. Taxable Capital gain Rs.21,81,189/- 11. We shall now deal with the grievance of the assessee to the extent she has assailed before us the modification of the assessee s computation of LTCG and claim of deduction u/s.54F by the lower authorities, as under: - (A) Expenditure incurred on sale :- 12. It is the claim of assessee that the lower authorities have erred in disallowing her claim for deduction of expenditure that was incurred towards stamp duty/registration charges of the registered sale deed dated 31.03.2012. On a perusal of the aforesaid registered sale deed dated 31.03.2012, Page 13-17 of APB, it transpires that as per the mutual consent of the purchaser and the seller i.e the assessee, the entire registration expenditure, stamp duty etc. was incurred by the assessee, viz. Smt. Kiran Agrawal. For the sake of clarity the relevant extract of the registered sale deed is culled out as under: On the basis of the afor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at now when the payment of brokerage made to the respective persons through banking channels had duly been confirmed by them, therefore, there was no justification on the part of the CIT(Appeals) to have restricted her claim for deduction of the said expenses to an amount of Rs. 3 lac. 14. Admittedly, it is a matter of fact borne from record that the respective payments to the aforementioned persons have been made through banking channel. However, as observed by the A.O, and rightly so, we too are unable to comprehend as to why services of four persons would have been required to facilitate transfer of the property in question by the assessee. Although the confirmations of the aforementioned persons had been made available on record but the same does not inspire much of confidence. As is discernible from the aforesaid stereotype confirmations, it transpires that the same have been prepared by the assessee and had simply been signed by the persons concerned without mentioning a word about the services which were rendered by them as regards the sale transaction under consideration. We though are not oblivious of the fact that the payments to the aforementioned persons have been ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount Scheme, 1988 ( CGAS ), we are unable to totally subscribe to the same. On a perusal of sub-section (1) of Sec. 54F of the Act, it transpires that the assessee in order to claim deduction under the said statutory provision remains under an obligation to appropriate the amount of the net sale consideration towards purchase of the new residential within a period of one year before or two years after the date on which the transfer of the original asset took place; or has within a period of three years after that date constructed a residential house. In a situation where the net sale consideration is not appropriated by the assessee towards purchase or construction of the new residential property within the period contemplated under Sec. 139, then, as per sub-section (4) of Sec. 54F the assessee would though be entitled to claim deduction under the said statutory provision, but the same would be subject to a rider that he had deposited the amount of such unutilized amount of net sale consideration in a CGAS account with a specified bank by the due date contemplated under Sec. 139(1) of the Act. Further, in a case where any part of the net sale consideration had already been utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls within the sweep of the aforementioned first limb i.e sub-section (1) of Sec. 54F of the Act. As the assessee in the case before us had appropriated the amount of the net sale consideration of the property sold by her towards purchase of the new residential property, viz. Unit A-405, 4th Floor, V-3, Dharohar i.e before the date contemplated in subsection (4) of Sec.139, thus, by having utilized the said amount before the date of furnishing the return of income under Sec. 139 her claim of deduction under Sec. 54F is found to be in order. Our aforesaid view stands fortified by a judgment of the Hon ble High Court of Punjab Haryana in the case of CIT Vs. Jagriti Aggarwal (2011) 339 ITR 610 (P H). The High Court in the said case had observed as under: Section 54, read with section 139, of the Income-tax Act, 1961 - Capital gains - Profits on sale of property used for residence - Assessment year 2006-07 - Assessee sold her house property on 13-1-2006 while filed her return on 28-3-2007 claiming deduction under section 54 on ground that she had purchased another property jointly on 2-1- 2007 for higher sum - Assessing Officer declined said claim - One of grounds was that asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ills/vouchers were filed with the A.O in the course of the assessment proceedings. In order to fortify his claim the Ld. AR took us through a letter dated 07.01.2015 that was filed by the assessee in the course of the assessment proceedings. Complete details of the expenses incurred towards refurnishing of the new residential flat amounting to Rs.1,16,12,809/- were mentioned in the aforesaid letter that was filed with the A.O, Page 35-37 of APB. It was submitted by the Ld. AR that not only the A.O had erred by principally declining the assessee s claim for deduction of the aforesaid expenses that were incurred by her for rendering the house habitable, but had also wrongly observed that no supporting documents were filed by her in the course of the assessment proceedings to substantiate the incurring of said expenditure. It was further submitted by the ld. AR that the CIT(Appeals) had without any rhyme and reason restricted the said claim of the assessee to an amount of Rs. 15 lac. On a specific query by the Bench that now when the entitlement of the assessee for claiming deduction u/s.54F ends up with the purchase or construction of the residential house, then, on what basis the ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of capital gain that would exigible to tax in its hands. For the sake of clarity, the relevant observations of the Hon ble High Court are culled out as under: 8. Insofar as the second substantial question of law is concerned, it is not in dispute that the property purchased by the assessee was habitable but had lacked certain amenities. The assessee has spent nearly about Rs. 18 lakhs towards removal of mosaic flooring and laying of marble flooring, alteration of the kitchen, putting up compound wall, protecting the property with grill work and attending to other repairs. Section 54F of the Act provides that if the cost of the new asset, which is to be taken into consideration while determining the capital gain, the words used is cost of new asset and not the consideration for acquisition of the new asset . In law, it is permissible for an assessee to acquire a vacant site and put up a construction thereon and the cost of the new asset would be cost of land plus (+) cost of construction. On the same analogy, even though he purchased a new asset, which is habitable but which requires additions, alterations, modifications and improvements and if money is spent on those aspects ..... X X X X Extracts X X X X X X X X Extracts X X X X
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