9911796707
TMI Blog2024 (11) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... of land admeasuring 9900 sqmts. We find that the assessee has maintained a separate account for each parcel of land in its books of account since FY 2013- 14 as non-current asset. Since the accounts are separately maintained for each parcel of land, the cost of the parcel of land admeasuring 9900 sqmts can be determined and taken from the books of account itself unless it is bogus or unsubstantiated. We therefore, hold that the CIT(A) has rightly accepted the assessee bifurcation of land parcel for determining the cost of the parcel of 9900 sq mts as per the books. Other aspect for determining the cost of improvement - As we find that the assessee has claimed an amount in FY 2015-16. AO has held that the assessee has not been able to substantiate the expenses on improvement of land to the extent of Rs 65,78,905/-. Before us also the ld AR admitted that details were not filed before the AO earlier but the same can be filed if required. In the light of the above, we find it appropriate to set aside the issue of determining the cost of improvement to the file of the AO for a fresh investigation and determination. In view of the above discussion, the ground number 1 is partly allowed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS and accordingly, statutory notices were issued to the assessee alongwith questionnaire. 4. The facts of the case is that the assessee is a private limited company and during the FY 2015-16 had sold a part of land measuring 9900.36 Sq mt (out of total land of 16686.68 sq mts) located in Industrial Area, Boranada, Jaipur for a total consideration of Rs. 4,11,00,000/-. The assessee claimed benefit of indexation on the sale of 9900 sq mt and has taken cost of acquisition/improvement at Rs. 4,16,02,854/- and showed long term capital loss at Rs. 5,02,854/- 5. The Assessing Officer did not accept the cost of acquisition/improvement as worked out by the assessee. The AO calculated a proportionate total cost on the basis of proportionate land sold. The Assessing Officer also denied benefit of indexation and cost of acquisition/improvement was taken at Rs. 1,94,79,490/- and sale consideration at Rs. 4,11,00,000/-. Accordingly, the Assessing Officer worked out long term capital gain at Rs. 2,16,20,510/- and added the same to the income of the assessee. Penalty proceedings u/s 271(1)(c) of the Act was separately initiated for concealment of income. The AO also disallowed an amount of Rs 47, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f land. 10. Per contra the ld DR vehemently defended the AO s order and argued that the AO has rightly taken proportionate cost of acquisition of land of 9900 sq mts. It is argued that the assessee failed to provide any evidence on account of expenses of Rs 65,78,905/- out of Rs 93,05,215/- on account of improvement on the land in the impugned FY 2015-16, on boundary wall, land filling, boundary construction and land leveling. It was argued therefore, that the Assessing Officer validly reached the conclusion that expenses to the extent of 65,78,905/-cannot be considered as cost of the improvement. 11. We have heard the rival submissions and have perused the relevant material on record. On the issue of indexation, we find that the CBDT Circular No. 471 dated 15.10.1986 and the ratio of the decision of the Hon'ble Delhi High Court in the case of CIT Vs, Ram Gopal (supra) squarely applies to the facts and circumstances of the case. In the case of CIT Vs. Ram Gopal [supra], the Hon'ble Jurisdictional High Court has held as under: This Court, in the decision reported as Gulshan Malik v. CIT [2014] 223 Taxman 243/43 taxmann.com 200 had the occasion to, inter alia, consider what a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is bogus or unsubstantiated. We therefore, hold that the CIT(A) has rightly accepted the assessee bifurcation of land parcel for determining the cost of the parcel of 9900 sq mts as per the books. 15. The other aspect for determining the cost of improvement, we find that the assessee has claimed an amount of Rs 93,05,215/- in FY 2015-16. The AO has held that the assessee has not been able to substantiate the expenses on improvement of land to the extent of Rs 65,78,905/-. Before us also the ld AR admitted that details were not filed before the AO earlier but the same can be filed if required. In the light of the above, we find it appropriate to set aside the issue of determining the cost of improvement to the file of the AO for a fresh investigation and determination. In view of the above discussion, the ground number 1 is partly allowed for statistical purposes. 16. With regard to Ground No. 2 being disallowance of expenses of Rs. 47,05,802/-, brief facts are that during the course of assessment proceedings the Assessing Officer observed that the assessee has debited Rs. 47,05,802/-as expenses under various heads, out of which assessee has paid Rs. 33,63,831/- as interest to o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land, the expense on interest needs to be allowed to be capitalized. 20. Having heard the rival submissions, we have perused the relevant material on record. We find that the AO has not examined the issue of commencement of the business in a proper manner for allowance of expenses u/s 37(1) of the I T Act. The assessee has also not been able to substantiate the factum of commencement of business in the previous year. We also note that assessee has merely claimed that the interest has been paid towards the loans borrowed for the purchase of land which the assessing officer has not examined thoroughly. There is, however, some substance in the alternate claim of the ld AR of the assessee that where the interest paid is towards loans borrowed for purchase of land, the same may be allowed to be capitalized. We find that the complete facts on this issue have not been enquired/examined by the AO. We therefore deem it appropriate to set aside this issue to the file of the AO to enquire and examine the facts comprehensively and reach a conclusion in accordance with law. The assessee is directed to furnish the requisite evidences/documents for examination and the Assessing Officer is direct ..... X X X X Extracts X X X X X X X X Extracts X X X X
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