Mathew Pradeep Francis Vs ACIT (ITAT Bangalore)
In the instant case, we noticed that the assessee has made investment in acquiring new residential house property within the time given in section 54 of the Act and also within the time limit prescribed u/s 139(4) for filing revised return of income. Accordingly, following the binding decision of the Hon’ble jurisdictional High Court in the case of Fatima Bai Vs. ITO (2009) 32 DTR (Kar), we direct the AO to allow the deduction u/s 54 to the extent of Rs.1,48,26,257/-.
ITAT restrict deduction for brokerage to 1% of sale consideration due to incomplete documents
Assessee could not prove the payment of brokerage with concrete evidences. It is a common practice to pay brokerage while purchase or selling the properties. Since the assessee is in USA, it is quite possible that he would have paid brokerage to the broker who introduced the buyer. Hence, the payment of brokerage by the assessee cannot be discounted altogether and in our view, in the facts of the present case, in the absence of concrete evidences, the genuineness of the payment may be determined on the basis of circumstantial evidences, which are acknowledgement given on the letter pad of the assessee and the bank entries. Since these are incomplete documents, it is not clear as to whether the entire amount of Rs.4,90,000/- represented only brokerage amount or not. Accordingly, in the absence of proper evidences, we are of the view that the entire claim of brokerage of Rs.4,90,000/- may not be allowed. Accordingly, we restrict the brokerage payment to the extent of 1% of the sale consideration may be allowed and direct the AO to allow brokerage expenses to the extent of Rs.2,45,000/- as against the claim of Rs.4,90,000/-. Accordingly, we set aside the order of Ld. CIT(A) passed on this issue and direct the A.O. to allow brokerage expenses to the tune of Rs.2,45,000/-.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
The assessee has filed this appeal challenging the order dated 29.11.2021 passed by Ld. CIT(A)-12, Bengaluru and it relates to the assessment year 2013-14. The assessee is aggrieved by the decision of Ld. CIT(A) in granting only partial relief in respect of long term capital gains arising on sale of house property.
2. The facts relating to the issue are stated in brief. The assessee is an NRI, residing in USA. During the year under consideration, he sold a house property located at Survey No.917, ChembuKavu village, Thrissur, Kerala, which was inherited from his father. The area of the house property consisted of 23 cents of ground and 2433 sq.ft.,of constructed building. The assessee sold the above said house property for a consideration of Rs.2,45,20,000/-. The assessee declared nil capital gain after claiming exemption u/s 54 and u/s 54 EC of the Income-tax Act,1961 [‘the Act’ for short]. The A.O. however computed the longterm capital gain at Rs.60,32,849/-. The Ld. CIT(A) granted partial relief and hence the assessee has filed this appeal before us.
3. The capital gain workings made by the assessee and by the A.O. are extracted below for the sake of understanding the dispute before us:-
