Issue which arises for our consideration is whether Rs. 12 lakhs paid by the appellant assessee to the seller at the time of purchase of the property in question must be construed as a cost of acquisition of the asset so as to be deducted from the full value of consideration received by the appellant assessee at the time when he had sold and transferred the property in question. Section 48 of the Act stipulates the manner in which the capital gain shall be calculated. We reproduce the said Section as under:
The income chargeable under the head capital gain shall be computed by deducting from the full value of consideration received or accruing as a result of transfer of capital asset, the following amounts namely:-
i) expenditure incurred wholly and exclusively in connection with such transfer;
ii) the cost of acquisition of the asset and the cost of any improvement thereto.”
From the perusal of the said Section, it is clear that; (1) asset sold should be a capital asset; (2) from the sale consideration, only the cost of acquisition of the asset, cost of improvement, if any, and expenses incurred wholly and exclusively in connection with such transfers, are to be reduced. The issue would be, whether the display windows, partition of drawing room, wooden grills, wooden temples, wardrobes, cupboards, crockery, windows, fans, geysers, light fittings, rugs, furniture, fixtures, can be said to be capital asset, which were acquired by the assessee. It is an admitted position as noted by the Authorities below that the assessee had acquired the property by way of four sale deeds, each of Rs. 4.50 lakhs, the total of which, was Rs.18 lakhs. Another amount of Rs. 12 lakhs has been paid for acquisition of furniture and fixtures, which was by way of a following bill:
|ENTIRE REMOVABLE WOOD WORI (….. THE FLAT I.E. ORNAMENTAL SHDW— CASE / DISPLAY WINDOWS. WKNH— ~ENTAL PARTITION ON DRAWING ROOM, WOODEN GRILLS. WOODEN TEMPLE, WARDROBES, CUPBOARDS.
CROCKERY, WINDOWS, FANS, GEYSERS ORNAMENTAL LIGHT FITTINGS, RUGS ~FURNITURE FIXTURE COMPLETE. L.S.
|Rs. TWELVE LACS ONLY”|
As noted by the Assessing Officer, there was no agreement, nor any registered deed in that regard. The Assessing officer was right in noting that there was no mention in the sale deeds of Rs. 18 lakhs about purchase of the furniture and fixtures by way of a separate agreement for Rs. 12 lakhs. The purported purchase was only effected by way of a bill. Even the perusal of the bill would not reveal the details of show case, windows, grills, wardrobes, crockery, fans, fittings, furniture etc. It is also not known whether the seller of the property to the appellant assessee had, in fact, sought the benefit of the capital gain. The inventory has noted to mean “except two cotton rugs size 2‟ X 2‟ and two Pooja stools” is vague. Similarly, the deed of 2008 also does not give the inventory of the furniture and fixtures as sold in the year 2008, which aspect has been conceded by the learned counsel for the appellantassessee at the time of the arguments. These findings are primarily findings of fact.
Further, the issue can be looked from another perspective, which is, most of the items which are said to have been acquired, are primarily „personal effects‟ which are excluded from the definition of capital asset under Section 2(14) of the Act if they are meant for personal use. It is not the case of the appellant-assessee that the items like wooden temple, crockery, fans, geysers, light fittings etc. were not for personal use, nor such a case was put forth before the Authorities below. In fact, Rs. 12 lakhs was for all the fixtures and fittings including furniture. It is noted, the break up of Rs. 12 lakhs was not given. In any case, as noticed above it is a pure question of fact.
In view of the aforesaid position, we find that the Authorities below were right in disallowing Rs. 12 lakhs for the purpose of computation of the capital gain.