DCIT Vs A.M. Builders and Developers (ITAT Bangalore)
ITAT Bangalore held that claim of deduction of cost of building is not allowable as there was no mentioning of any value of the building in the schedule of the fixed assets.
Facts- Assessee contested disallowance of indexed cost of improvement of Rs. 26,52,22,757/-.
Facts of the case are the assessee owned a property at Veerasandra village, Attibele Hobli, Anekal Taluk, Bangalore District, Bangalore which was sold to M/s Titan Company Ltd. for a consideration of Rs.51,43,40,778/-. The AO found that there was a construction on the plot of land but the sale deed does not mention the construction on the land and therefore he arrived at the conclusion that the price has been paid by the purchaser for the piece of land and not for the construction thereon.
Conclusion- In the present case on hand, there was no iota of evidence shown by the assessee with regard to the transfer of the building in the sale deed entered by the assessee with M/s. Titan Company Ltd. and also the balance sheet of the assessee as on 31.3.2013 have no reference of building and it shows only the land-electronic city Rs.14,13,42,439/-.
Held that there was no mentioning of any value of the building in the schedule of the fixed assets and now assessee again says that sale of land also includes the sale of building so as to claim deduction towards cost of building from the sale value of the land, actually it was not so. Accordingly, this ground of appeal of revenue is allowed.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by the revenue is directed against order of CIT(A) daed 14.9.2018 for the assessment year 2014-15. The assessee has raised following grounds:-
1. The order of the learned CIT(A) is opposed to facts of the case.
2. The CIT(A) was not justified in not appreciating that the JDA dated 17,10.2007 did not speak anything about the compensation to be paid for termination of the said JDA?
3. The CIT(A) erred in not considering that para 4.1 & 4.5 of the JDA mentioned clearly about the conditions/stipulations and time period for cancellation, if the property does not appear to be marketable or if any legal problem arises in progressing the project and the refund of amount to be paid by the developers alongwith specific rate of interest, if the envisaged time limit exceeds”.
4. The CIT(A) erred in not appreciating the fact that there was no mention of any building in the sale deed executed by the assessee and hence no deduction on account of cost of such building was allowable in the computation of income under the head ‘Capital Gain’ as the consideration had been received solely for the transfer of land.
5. The CIT(A) was not right in not considering that clause 12 of the JDA dated 17.10.2007 clearly mentions that the owners shall get the hostel building premises vacated at their own cost within 180 days from the date of signing the JDA and till then, access to the property shall be through specified pathway only.
6. The CIT(A) erred in not appreciating the fact mentioned in para 3.1(a)(ii) of the JDA, wherein it is mentioned that an amount of Rs.2.5 crores will be paid to the owners within 30 days of fulfilling the three conditions, which also includes getting the hostel premises vacated.
7. For these and other grounds that may be urged at the time of hearing, it is prayed that the order of the CIT(A) in so far as it relates to the above grounds may be reversed and that of the Assessing Officer may be restored.
8. The appellant craves leave to add, alter, amend and/or delete any of the grounds mentioned above.
2. Ground Nos.1 & 8 are general in nature, which do not require any adjudication.
3. Ground Nos.2 & 3 are with regard to allowability of sales expenses at Rs.9,86,52,619/-.
3.1 Facts of the case are that in the assessment year under consideration, assessee has sold the property measuring 254.43 guntas in survey Nos.4, 5, 6, 8/1, 8/2, 9/2, 9/3, 9/4, 10/1, 10/2, 14/1 & 14/2 at Veerasandra Village, Attibele Hobi, Anekal Taluk, Bangalore District, Bengaluru for a consideration of Rs.51,43,40,778/-. The assessee has claimed following expenses:-
a) Sales expenses – 9,86,52,619/-
b) Indexed cost of improvement – 26,52,22,757/-
c) Details of sales expenses
