L. Vivekananda M/s. Vivek Hotels Vs ACIT (ITAT Bangalore)
In our opinion, in this case for computing the inflation cost of the asset, the date to be reckoned from the date of allotment of the property to the assessee and not the date on which possession certificate issued to the assessee. Further, a judgement relied by CIT in the case of CIT Vs. Balbir Singh Maini (SC) (supra) have no application and it was delivered on different context with reference to section 2(47)(v) of the Act and the judgement of Hon’ble High Court relied by the assessee’s counsel in the case of A. Suresh Rao cited (supra) is a direct judgement applicable to the facts of the case. Being so, we have no hesitation in reversing the finding of the Ld. CIT(A) on this issue and direct the A.O. to consider the date of allotment of property i.e. 20.5.1986 for the purpose of determining the cost of inflation of the assets, while computing the cost of acquisition of property in terms of section 49 of the Act.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
PER CHANDRA POOJARI, ACCOUNTANT MEMBER:
This appeal by the assessee is directed against order of the CIT(A) dated 31.10.2017. The assessee has raised following grounds of appeal:
1. The order of the CIT(Appeals). in so far as it is prejudicial to the appellant is opposed to law, probabilities, weight of evidences, and facts and circumstances of the
2 The learned CIT(Appeals) erred in not recognising that the appellant acquired the right in the asset at No.S 4 Siddartha Layout, Nazarbad Mohalla, Mysore in the financial year 1986-87 when the allotment letter was issued by Mysore Urban Development Authority and he made the full payment towards the cost of the asset and became entitled to take the inflated cost of acquisition of the Financial Year 1986-87 while working out the capital gain arising from the transfer of that asset.
3. The learned CIT(Appeals) failed to appreciate that theappellant “held– the property in question right from the date of payments and no cost was paid later to MUDA, which allotted the site in favour of the appellant, and these facts establish that the property was acquired in the financial year 1986-87
4. The learned CIT(Appeals) erred in not considering thedecisions of various High Courts, including the jurisdictional High Court and orders of ITATs relied upon by the appellant during the appeal which squarely apply to the facts of the appellant’s case.
5.. The learned CIT(Appeals) erred in not allowing the inflated, cost of improvement on the construction of a building at a cost of Rs.3,00,000 as claimed by the appellant before the Assessing Officer.
6. The Learned CIT(Appeals) erred in not noticing that the appellant had offered income from house property in respect of the structure existing on the land for many years and had shown the property in the Wealth – tax return also, which all corroborate the fact that improvement was effected in construction of a
7. The learned CIT(Appeals) erred in not specifically dealing with this ground of appeal and there is no discussion in his appellate order about the claim of the
8. Without prejudice to the right of the appellant to approach the Assessing Officer to give credit for TCS as per 26AS as directed by the CIT (Appeals) in his order, it is submitted that the CIT(Appeals) ought to have specifically directed the Assessing Officer to give credit for TCS of 18,165 /-as claimed in the return while computing the tax liability.
9. The appellant craves leave to add, delete, substitute any ofthe grounds before the hearing of
10. The appellant, therefore, prays that the ITAT may be pleased to set aside the order of CIT(Appeals), delete the additions made in the order of assessment, direct the Assessing Officer to accept the income returned and give credit for TCS as claimed in the return of income, in the interest of justice.
2. The facts of the case are that the appellant was allotted a site bearing S-4, Siddhartha Layout, Mysuru on 20.5.1986 by the then Mysore City Improvement Trust Board measuring 3095.50 sq.yards for a consideration of Rs.3,34,314/-, with a condition that the consideration should be paid within 15 days from the date of receipt of that allotment letter dated 20.5.1986. From the Allotment Letter it is evident that the allotment was done pursuant to a petition made by the appellant to the Chief Minister of the Government of Karnataka. Accordingly, the appellant paid the consideration by way of two Demand Drafts dated: 29.5.1986 vide DD No. 921565 and 897247 respectively for Rs.100,000/- and Rs.2,34,314/-, the receipt of which has been acknowledged by the then Mysore City Improvement Trust Board. Thus, the entire consideration was paid on 29.5.1986 as per the terms of allotment. It is clarified that the erstwhile City Improvement Trust Board was re-named as Mysuru City Improvement Trust Board. Pursuant to the payment made, the Mysuru Development Authority (MUDA for short) executed an agreement on 16.6.1998 vide Regn. No.1482, Volume No.1692, PP 33-36 of Book No.1 dated: 18.6.1998. In the Agreement, a mention has been made about the allotment of the site to the appellant on 20.5.1986 and the same has been confirmed by the Authority on 11.9.1986 has also been mentioned. The relevant clause of the agreement reads as follows:
“WHEREAS the First Party has purchased the site described int he Schedule for a sum of Rs. 3,34,314/-(Rupees Three lakh thirty four thousand three hundred fourteen only) as per allotment order dated: 20-5-1986, and the same has been confirmed by the Authority on 11.9.1986. On confirmation the First Party, has paid the full cost of the schedule site on 29.6.1986.
3. Apossession Certificate was issued on 23.6.1998. Later, the MUDA has executed a deed on 61h January, 2004 conferring the title on the site to the appellant. The property held by the appellant from the date of allotment was sold by him on 5.2012 in favour of one Sri Parasmal Dak. Significantly, the sale deed at page 2 clearly mentions about the allotment letter dated: 20.5.1986. The claim of the appellant is, that since the entire consideration was paid to MUDA as per the letter of allotment, and an agreement has also been entered into on 19.6.1998, confirming the purchase of the site by the appellant by allotment letter dated:20.5.1986, the appellant became entitled for the ownership of the property. The appellant “held” the property for all practical purposes on de facto basis from the date of letter of allotment and the payment of the total consideration, more particularly in view of the fact that the allotment letter identified the property and the entire consideration was also paid during the financial year 1986-87. For the purpose of easy reference, the chronology of events is given below:
