Shri Kiritkumar Kantilal Shroff, Surat v. The Dy.CIT.,Cent.Circle-3,, Surat

ITA 1023/AHD/2008 | 1999-2000
Pronouncement Date: 28-05-2010 | Result: Dismissed

Appeal Details

RSA Number 102320514 RSA 2008
Bench Ahmedabad
Appeal Number ITA 1023/AHD/2008
Duration Of Justice 2 year(s) 2 month(s) 10 day(s)
Appellant Shri Kiritkumar Kantilal Shroff, Surat
Respondent The Dy.CIT.,Cent.Circle-3,, Surat
Appeal Type Income Tax Appeal
Pronouncement Date 28-05-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted D
Tribunal Order Date 28-05-2010
Date Of Final Hearing 18-05-2010
Next Hearing Date 18-05-2010
Assessment Year 1999-2000
Appeal Filed On 18-03-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH AT SURAT CAMP AHMEDABAD BEFORE SHRI T.K. SHARMA JUDICIAL MEMBER AND SHRI D. C. AGRAWAL ACCOUNTANT MEMBER ITA NO.1023/AHD/2008 ASSESSMENT YEAR: 1999-00 DATE OF HEARING:18.5.10 DRAFTED:24.5.10 SHRI KIRITKUMAR KANTILAL SHROF FLAT NO.8-F ANJAN SHALAKA APPT. OPP. JAIN TEMPLE LAL BUNGLOW ATHWALINES SURAT PAN NO.AXIPS8738B V/S . DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT (APPELLANT) .. (RESPONDENT) ITA NO.1024/AHD/2008 ASSESSMENT YEAR: 2001-02 SHRI KIRITKUMAR KANTILAL SHROF FLAT NO.8-F ANJAN SHALAKA APPT. OPP. JAIN TEMPLE LAL BUNGLOW ATHWALINES SURAT PAN NO.AXIPS8738B V/S . DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT (APPELLANT) .. (RESPONDENT) ITA NO.1025/AHD/2008 ASSESSMENT YEAR: 2002-03 SHRI KIRITKUMAR KANTILAL SHROF FLAT NO.8-F ANJAN SHALAKA APPT. OPP. JAIN TEMPLE LAL BUNGLOW ATHWALINES SURAT V/S . DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 2 PAN NO.AXIPS8738B (APPELLANT) .. (RESPONDENT) ITA NO.1026/AHD/2008 ASSESSMENT YEAR: 2005-06 SHRI KIRITKUMAR KANTILAL SHROF FLAT NO.8-F ANJAN SHALAKA APPT. OPP. JAIN TEMPLE LAL BUNGLOW ATHWALINES SURAT PAN NO.AXIPS8738B V/S . DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-3 SURAT (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI RASESH SHAH AR REVENUE BY:- SMT. JYOTI LAXIMI SR-DR O R D E R PER D.C.AGRAWAL ACCOUNTANT MEMBER:- FIRST WE SHALL TAKE UP ASSESSEES APPEAL IN ITA NO. 1023/AHD/2008. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(APPEALS) DATED 30-01-2008 RAISING FOLLOWING GRO UNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.32 000/- FOR ALLEGED UNEXPLAINED CASH DEPOSITED IN BANK ACCOUNT. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS WE LL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN M AKING ADDITION OF RS.2 00 000/- FOR ALLEGED U9NEXPLAINED RECEIPTS. ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 3 2. THE FACTS OF THE CASE ARE THAT A SEARCH AND SEIZ URE OPERATION U/S.132 OF THE ACT WAS CARRIED OUT AT THE RESIDENCE OF THE ASSESSE E ON 20-12-2004. DURING THE COURSE OF SEARCH JEWELLARY VALUABLES AND INCRIMINAT ING DOCUMENTS WERE FOUND AND SEIZED. THE VALUE OF JEWELLERY BONDS AND OTHER VALUABLES WAS WORKED OUT AT RS.3 18 68 695/-. THE ASSESSEE MADE A DISCLOSURE AT RS.1.65 CRORES TAKING ALSO INTO CONSIDERATION THE ON-MONEY RECEIVED ON SALE OF LAND AT ATHWALINES GATE AND OTHER INVESTMENTS WHOSE EVIDENCE WERE FOUND IN THE SEARCH. THE ENTIRE AMOUNT DISCLOSED BY THE ASSESSEE WAS OFFERED TO TAX IN THE RETURNS OF INCOME FILED IN RESPONSE TO NOTICE U/S.153A(A) OF THE ACT. EVEN THOUGH THE ASSESSEE HAD OFFERED TO TAX CERTAIN DEPOSITS MADE IN THE BANK AC COUNT AND NOT SHOWN IN THE BOOKS OF ACCOUNTS BUT A CREDIT OF RS.32 000/- MADE BY WAY OF CASH DEPOSIS IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR 1999-00 WAS NEITHER RECORDED IN REGULAR BOOKS NOR DECLARED U/S.132(4). IT WAS S UBMITTED BY THE ASSESSEE THAT HE HAS SOLD THE PLOTS OF THE LAND ON WHICH BUNGALOW OF THE ASSESSEE EXISTED AT ATHWA GATE SURAT WHOSE SALE DEED WAS EXECUTED ON 26-09-2000 AND FROM WHICH ASSESSEE HAS RECEIVED ON-MONEY IN CASH. THIS CASH WAS CLAIMED TO BE DEPOSITED IN THE BANK. HOWEVER ASSESSING OFFICER DI D NOT ACCEPT THE EXPLANATION ON THE GROUND THAT THERE IS NO REASON F OR RECEIPT OF CASH BEFORE THE DATE OF EXECUTION OF SALE DEED. NO EVIDENCE WAS FUR NISHED IN SUPPORT OF THE CLAIM THAT CASH WAS RECEIVED BEFORE THE DATE OF SAL E. 3. LD. CIT(APPEALS) CONFIRMED THE ADDITION FOR SIMI LAR REASONS. 4. WE HAVE HEARD THE PARTIES. IN OUR CONSIDERED VI EW NO INTERFERENCE IS CALLED FOR IN THE ORDER OF LD. CIT(APPEALS). EVEN T HOUGH THE ASSESSEE HAS RECEIVED ON-MONEY BUT IT WAS RECEIVED IN ASSESSMENT YEAR RELEVANT TO THE FINANCIAL YEAR 2000-01 AND AFTERWARDS AS A RESULT O F AGREEMENT FOR SALE OF LAND AND AT ATHWA GATE. THIS ON-MONEY CANNOT BE AVAILABL E IN THE A.Y. 1999-00. IN ANY CASE NO EVIDENCE THAT ON-MONEY ON SALE OF LAND IN F.Y. 2000-01 WAS AVAILABLE IN ASSESSMENT YEAR 1999-00 HAS BEEN FURNI SHED. THUS THE EXPLANATION ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 4 OF THE ASSESSEE THAT IT WAS ON-MONEY RECEIVED ON SA LE OF LAND WHICH WAS DEPOSITED IN THE BANK OR THAT TELESCOPING SHOULD B E GIVEN CANNOT BE ACCEPTED. AS A RESULT THIS GROUND OF THE ASSESSEE IS REJECTED . 5. SIMILARLY THE ADDITION OF RS.2 LAKH MADE BY ASSE SSING OFFICER ON ACCOUNT OF UNEXPLAINED RECEIPTS OF RS.2 LAKH DURING THE FIN ANCIAL YEAR RELEVANT TO ASSESSMENT YEAR 1999-00 WAS SOUGHT TO BE EXPLAINED FROM THE ON-MONEY ON SALE OF LAND. 6. WE HAVE HEARD THE PARTIES. FOR THE SIMILAR REASO NS WE UPHOLD THE ORDER OF LD. CIT(APPEALS) THAT ON-MONEY RECEIVED ON SALE OF LAND COULD NOT BE AVAILABLE TO THE ASSESSEE PRIOR TO 26-09-2000 WHEN SALE DEED OF LAND WAS EXECUTED. AS A RESULT THIS GROUND OF THE ASSESSEES APPEAL IS REJ ECTED. OTHER TWO GROUNDS ARE GENERAL IN NATURE THEREFORE THEY DO NOT REQUIRE ANY SPECIFIC ADJUDICATION. 7. IN THE RESULT APPEAL FILED BY ASSESSEE IS DISMIS SED. NOW WE SHALL TAKE UP ASSESSEES APPEAL NO.1024-1025 /AHD/2008. 8. THESE TWO APPEALS FOR ASSESSMENT YEAR 2001-02 AN D 2002-03 ARE FILED BY THE ASSESSEE RAISING FOLLOWING COMMON GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INCOME-TAX(APP EALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN E NHANCING INCOME FROM LONG TERM CAPITAL GAIN ON SALE OF PLOTS BY DISALLOW ING THE CLAIM OF DEDUCTION OF THE INDEXED COST OF BUNGALOW. 2. EVEN OTHERWISE ON THE FACTS AND CIRCUMSTANCES O F THE CASE AS WELL AS LAW ON THE SUBJECT THE LEARNED COMMISSIONER OF INC OME-TAX(APPEALS) HAS ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFF ICER IN NOT SEPARATELY COMPUTING CAPITAL LOSS ON ACCOUNT OF DEMOLITION OF BUNGALOW AND ADJUSTING IT AGAINST LONG TERM CAPITAL GAIN ON SALE OF PLOTS. ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 5 9. THE FACTS OF THE CASE ARE THAT THE ASSESSEE HAD A BUNGALOW AT ATHWA GATE SURAT WHICH WAS CLAIMED AS RECEIVED IN INHERITANCE. THE OWNERSHIP OF BUNGALOW IS 50% IN THE NAME OF SHRI KIRITKUMAR KANTILAL SHRO FF AND 25% EACH IN THE NAME OF HIS TWO SONS NAMELY SHRI PRATIK KIRITKUMR SHROFF AND SHRI SAMIR KIITKUMAR SHROFF. THE ASSESSEE SOLD OUT THE LAND O F THE BUNGALOW TO SHRI KANTIBHAI G PATEL AND SHRI TUSHAR GHELANI. THE SALE DEED WAS REGISTERED IN THE NAME OF KANTHBHAI G PATEL AND MEMBERS OF THE FAMILY OF KANTHBHAI G PATEL WHO SUBSEQUENTLY DEVELOPED LAND WHICH IS KNOWN AS J OLLY PLAZA. THE ASSESSEE DIVIDED THIS LAND INTO 22 PLOTS BEING 11 PLOTS ON E ITHER SIDE. THE ASSESSEE HAD SOLD 11 PLOTS IN THE FINANCIAL YEAR 2000-00 AND REM AINING 11 PLOTS IN THE FINANCIAL YEAR 2001-02. ENTIRE SALE CONSIDERATION W AS AGREED AT RS.4.85 CRORES. IN ADDITION RS.1 CRORE WAS RECEIVED AS ON-MONEY BY THE ASSESSEE. THEREFORE ASSESSEE AND HIS FAMILY OFFERED RS.50 LAKH IN FINAN CIAL YEAR 2000-01 AND REMAINING 50 LAKH IN FINANCIAL YEAR 2001-02. THE O N-MONEY OF RS.1 CRORE WAS OFFERED IN TWO PARTS BECAUSE 11 PLOTS WERE SOLD IN ONE YEAR AND REMAINING 11 PLOTS WERE SOLD IN ANOTHER YEAR. 10. ON THE ABOVE LAND ASSESSEE HAD A BUNGALOW WHOSE MARKET VALUE AS ON 01- 04-1981 WAS SHOWN AT RS.3 49 400/-. THE BUNGALOW WA S DEMOLISHED AND ASSESSEE AND HIS SONS RECEIVED A SUM OF RS.3.20 LAK H ON ACCOUNT OF SALE OF MALWA (SCRAP). THIS CONSIDERATION WAS DULY SHOWN I N THE CAPITAL ACCOUNT OF RESPECTIVE PERSONS AS PER THEIR SHARE. THE ASSESSEE CLAIMED INDEXED COST OF ACQUISITION OF THE BUNGALOW FROM THE SALE OF PLOTS. THE ASSESSEE HAD HOWEVER NOT CONSIDERED THE VALUE OF THIS SCRAP IN THE SALE CONSIDERATION OF THE LAND. LATER THE ASSESSEE INCLUDED THE INDEXED COST OF BUNGALOW WHILE COMPUTING CAPITAL GAINS ON SALE OF LAND. ASSESSING OFFICER SOUGHT AN EXPLANATION FROM THE ASSESSEE AGAINST THIS CLAIM BUT THE EXPLANATION RECEIVED FRO M THE ASSESSEE WAS REJECTED AND ASSESSEES CLAIM OF INCLUSION OF INDEXED COST O F BUNGALOW WAS NOT ACCEPTED. LD. CIT(APPEALS) ALSO UPHELD THE ORDER OF ASSESSING OFFICER ON THE GROUND THAT ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 6 INDEXED COST OF BUNGALOW WAS NOT CLAIMED IN THE RET URN OF INCOME. HE CITED THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF GOITZ INDIA LTD. V ITO 284 ITR 323 (SC). HE FURTHER HELD THAT BUNGALOW WAS NOT INEXISTENCE AT THE TIME OF SALE OF LAND AND HENCE INDEXED COST OF BUNGALOW CAN NOT BE INCLUDED WHILE COMPUTING THE CAPITAL GAINS ON SALE OF LAND. 11. LD. AR SUBMITTED THAT LAND OF BUNGALOW WAS PART AND PARCEL OF THE SAME ASSET. IT WAS AT THE DIRECTION OF THE PURCHASER TH AT BUNGALOW WAS DEMOLISHED AND PLAIN LAND WAS HANDED OVER TO HIM. EVEN THOUGH BUNGALOW AS SUCH WAS NOT PART OF THE SALE DEED BUT DEMOLITION WAS CARRIED OU T AT THE INSTRUCTION OF THE PURCHASER AS THEY INTENDED TO PURCHASE ONLY OPEN LA ND. ALTERNATIVELY ASSESSEE HAD DEMOLISHED BUNGALOW AND ITS DIFFERENT PARTS WER E SOLD THOUGH AS SCRAP IN RESPECT OF WHICH HE OFFERED CAPITAL LOSS WHICH COUL D BE ADJUSTED AGAINST CAPITAL GAINS ARISING ON THE SALE OF LAND. 12. AGAINST THIS LD. SR-DR SUBMITTED THAT DEMOLITIO N OF BUNGALOW CANNOT BE EQUIVALENT TO TRANSFER WITHIN THE MEANING OF SEC.2( 47). THERE IS NO PURCHASER AVAILABLE FOR THE PURCHASED A OF THE BUNGALOW AS SU CH. SALE OF SCRAP CANNOT BE EQUAL TO SALE OF BUNGALOW AND THEREFORE COMPUTATION OF CAPITAL GAINS/LOSS THEREON CANNOT BE DONE. THE SALE PROCEEDS OF SCRAP IS SEPARATELY ASSESSED AS INCOME FROM OTHER SOURCES AND NOT AS PART OF SALE P ROCEEDS OF LAND AND BUNGALOW. IN VIEW OF THESE THE ASSESSEE IS NOT EN TITLED TO SET OFF OF INDEXATION OF COST OF BUNGALOW AGAINST CAPITAL GAINS ON SALE O F LAND. 13. THUS ACCORDING TO LD. SR-DR SINCE THE INCOME FROM THE SALE OF SCRAP IS NOT ASSESSABLE UNDER THE HEAD OF CAPITAL GAINS THE ASSESSEE IS NOT ENTITLED TO THE BENEFIT OF COMPUTATION OF CAPITAL LOSS/PROFIT FOR T HIS SOURCE. ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 7 14. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIALS ON RECORD. IN OUR CONSIDERED VIEW THE ON LY ISSUE IN BRIEF IS THAT WHETHER THE SCRAP VALUE OF BUNGALOW RECEIVED BY THE ASSESSEE COULD BE TREATED AS SALE OF BUNGALOW AS SUCH. AND THEREFORE CAPITAL GAIN ARISING ON SALE OF LAND WOULD BE ADJUSTED AGAINST ANY GAIN OR LOSS ARISING ON SALE OF SCRAP OF BUNGALOW. IT IS UNDISPUTED FACT THAT CAPITAL GAINS CAN BE SEP ARATELY COMPUTED ON LAND AS WELL AS ON BUNGALOW. THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. CITY BANK (2003) 263 ITR 570 (BOM) AND HONBLE MADRAS HIGH CO URT IN THE CASE OF CIT V RAMCHANDRA ROW D.L. (1999) 236 ITR 51 (MAD) HAVE HELD THAT LAND AND BUILDING ARE SEPARATE CAPITAL ASSETS AND S HORT-TERM AND LONG TERM CAPITAL GAINS CAN BE COMPUTED THEREON. IN THE CASE OF CIT V. CITY BANK (SUPRA) LAND WAS PURCHASED IN YEAR 1975 AND BUILDING WAS CO NSTRUCTED IN 1978 LAND AND BUILDING WERE SOLD IN 1978 HONBLE BOMBAY HIGH CO URT HELD THAT GAINS ATTRIBUTABLE ON SALE OF LAND WOULD BE ASSESSED AS L ONG TERM CAPITAL GAINS WHEREAS GAINS ATTRIBUTABLE TO BUILDING WOULD BE ASSESSED AS SHORT-TERM CAPITAL GAINS. FROM THIS JUDGMENT WE INFER THAT IF LAND IS SOLD T O ONE PARTY AND BUILDING IS SOLD TO ANOTHER PARTY THEN CAPITAL GAINS IN RESPEC T OF BOTH CAN BE COMPUTED SEPARATELY AND WOULD BE FINALLY CLUBBED TOGETHER TO FIND OUT TOTAL CAPITAL GAINS. IF ONE IS SHORT-TERM AND ANOTHER IS LONG TERM CAPIT AL THEN LEVY OF TAX WILL VARY ACCORDINGLY. THEREFORE THERE IS NO DISPUTE IN THIS PROPOSITION THAT LAND AND BUILDING STANDING THEREON CAN BE CONSIDERED AS TWO DIFFERENT ASSETS AND CAPITAL GAINS CAN BE WORKED OUT SEPARATELY IF THEY ARE SOL D INDEPENDENTLY TO DIFFERENT PARTIES OR IN DIFFERENT PERIOD OR BOTH. IN THE PRE SENT CASE LAND WAS SOLD TO SHRI KANTIBHAI G PATEL AND SHRI TUSHAR GHELANI WHEREAS BUILDING WAS EARLIER DEMOLISHED AND SOLD AS A SCRAP. THE FACT THAT ASSES SEE RECEIVED MONEY FROM SCRAP AND IS CREDITED IN THE CAPITAL ACCOUNT WOULD INDICATE THAT A TRANSACTION HAS TAKEN PLACE FOR DISPOSAL OF THE BUNGALOW. WE ARE UN ABLE TO AGREE WITH THE LD. SR-DR THAT WHAT WAS SOLD WAS NOT THE SAME ASSET AS OWNED BY THE ASSESSEE. THE SCRAP OF THE BUILDING WAS PURCHASED BY CERTAIN PERSONS MAY BE BY A ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 8 CONTRACTOR AS CLAIMED BY THE ASSESSEE FOR A SUM OF RS.3.20 LAKH. THE SHARE OF ASSESSEE WAS RS.1.60 LAKH. IT IS UNDISPUTED FACT TH AT THE ASSESSEE WAS THE OWNER OF THE BUILDING AND AFTER DEMOLITION HIS RIGHT IN THE BUILDING IS EXTINGUISHED. WHEN BUILDING DOES NOT SURVIVE THE RIGHT THEREIN WI LL ALSO NOT SURVIVE. THE DEFINITION OF TRANSFER U/S.2(47) PROVIDES THAT EXTI NGUISHMENT OF RIGHT IN IMMOVABLE PROPERTY WOULD BE A TRANSFER. SUCH EXTING UISHMENT MAY BE DUE TO NATURAL FORCES OR BY OPERATION OF LAW OR BY SOME CONTRACTUAL EVENTS. THIS CAN ALSO HAPPEN DUE TO VOLUNTARILY ACT OF THE ASSESSEE. IF ASSET CEASED TO EXIST THEN RIGHT THEREIN WILL ALSO CEASE TO EXIST AND EVEN IF THE EXTINGUISHMENT OF ASSET IS DUE TO VOLUNTARILY ACT OF THE ASSESSEE STILL THE N ET EFFECT IS THAT ASSET FINALLY CAME TO AN END. ONCE IT IS SO RIGHT THEREIN ALSO GOT EXTINGUISHED. EXTINGUISHMENT OF RIGHT IN THE BUILDING DOES NOT NECESSARILY BE IN FA VOUR OF A PERSON. IT COULD ALSO BE DONE VOLUNTARILY GIVING UP A LEGAL OWNERSHIP IN THE PROPERTY. ONCE THE PERSON DEMOLISHES BUILDING IT CONVERTS HIS RIGHT I NTO BUILDING AS A RIGHT IN A SCRAP. WHAT HE GETS IN RETURN OF HIS BUILDING IS S CRAP THOUGH THIS IS ONLY VOLUNTARILY DONE FOR GETTING GREATER BENEFIT ON SA LE OF VACANT LAND. THEREFORE ONCE THE SCRAP IS SOLD TO SOMEONE THEN CONSIDERATIO N FOR SALE OF BUILDING IS EQUIVALENT TO CONSIDERATION RECEIVED ON SALE OF SCR AP. THERE IS A DIRECT NEXUS OF BUILDING AND CONSIDERATION OF SCRAP AS IN FACT AT THE END IT BECOMES CONSIDERATION FOR BUILDING AND TRANSFEREE WOULD BE THE PURCHASER OF THE SCRAP. THEREFORE IT IS TRANSACTION OF TRANSFER OF BUILDIN G AS THERE IS AN ASSET A TRANSFER AND TRANSFEREE. EVEN OTHERWISE WE ARE OF THE VIEW THAT WHEN BUILDER MADE AGREEMENT WITH THE ASSESSEE TO PURCHASE THE LAND FR EE OF BUILDING BUILDING STOOD AS ENCUMBRANCE. ACCORDINGLY BUILDING WAS DISPOSED OF AS A SCRAP. FOR THE ASSESSEE LAND AND BUILDING ARE THE ASSETS ON ONE S IDE AND CONSIDERATION RECEIVED FROM BUILDER AND CONSIDERATION RECEIVED FROM THE SC RAP IS ON THE OTHER SIDE OF THE TRANSACTION. EVEN THOUGH ASSESSEE GETS VERY LI TTLE CONSIDERATION FOR DISPOSAL OF BUILDING AS A SCRAP BUT HE IS COMPENSATED BY B ETTER CONSIDERATION ON SALE OF VACANT LAND. THE DEMOLITION OF BUILDING AND SALE TH E SCRAP CANNOT BE GIVEN ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 9 DIFFERENT TREATMENT AS THE TWO TRANSACTIONS ARE INT IMATELY CONNECTED AND THEREFORE SALE CONSIDERATION OF THE TWO I.E. ONE IN RESPECT OF LAND AND OTHER IN RESPECT OF BUILDING AS A SCRAP HAS TO CLUBBED TOGET HER TREATING THE COMBINE SUM AS SALE CONSIDERATION OF LAND AND BUILDING. THUS T HE COST OF THE BUILDING CANNOT BE IGNORED WHILE WORKING OUT CAPITAL GAINS. ACCORDI NGLY ASSESSEE IS ENTITLED FOR GETTING ADJUSTMENT OF INDEXED COST OF BUNGALOW WHIL E COMPUTING FINAL CAPITAL GAINS. IT MAY BE COMPUTED AS A PART OF SALE TRANSA CTION BY TREATING SALE PRICE OF THE LAND AND SCRAP VALUE AS FULL CONSIDERATION OF T HE LAND AND BUILDING AND INDEXED COST OF BUNGALOW AND COST OF LAND AS COST O F ACQUISITION OR AS TWO TRANSACTIONS ONE FOR TRANSFER OF LAND AND ANOTHER FOR TRANSFER OF BUNGALOW AS A SCRAP. AS A RESULT WE DECIDE IN FAVOUR OF ASSESSE E AND ALLOWED HIS APPEAL. 15. IN THE RESULT BOTH APPEALS OF ASSESSEE ARE ALL OWED. WE SHALL DEAL WITH ASSESSEES APPEAL IN ITA NO.1026 /AHD/2008. 16. THIS IS AN APPEAL FILED BY ASSESSEE RAISING FOL LOWING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AS W ELL AS LAW ON THE SUBJECT THE LEANED COMMISSIONER OF INCOME-TAX(APPE ALS) HAS ERRED IN PARTLY CONFIRMING ADDITION OF RS.5 24 710/- MADE ON ACCOUNT OF UNEXPLAINED INVESTMENT IN JEWELLERY BY NOT ACCEPTIN G THE CLAIM OF 483 GMS. OF GOLD ORNAMENTS RECEIVED BY ASSESSEES WIFE BY WAY OF WILL. 17. ONLY GROUND INVOLVED IN THIS APPEAL THAT LD. CI T(APPEALS) HAS NOT ALLOWED CREDIT OF GOLD JEWELLERY RECEIVED BY THE AS SESSEE FROM HIS MOTHER. THE FACTS OF THE CASE ARE THAT DURING THE COURSE OF SEA RCH ON 22-12-2004 SOME JEWELLEY WAS FOUND AT THE RESIDENCE AS WELL AS IN T HE LOCKER WITH VARIOUS BANKS. THE TOTAL JEWELLEY FOUND DURING THE COURSE OF SEARC H WAS AS UNDER:- SR. NO PLACE WEIGHT VALUE (RS.) 1. RESIDENCE OF PRATIK SHROFF 275 GRAMS. 2 33 450 2. LOCKER NO.494 WITH SUTEX CO- OP. BANK IN THENME OF PRTIK & ALPNA SHROFF 701 GRAMS 4 55 650 ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 10 3. RESIDENCE OF KIRTIBHAI K SHROFF 549.5 GRAMS 5 79 015 4. LOCKER NO.9 WITH SUTEX CO.OP BANK IN THE NAME OF SAMIR & JHANVI SHROFF 211 GRAMS 1 83 980 5. LOCKER NO.215 WITH SUTEX CO- OP. BANK IN THE NAME O KIRTIBHAI & KIRAN SHROFF 2576 GRAMS 19 10 050 6. LOCKER NO.1-165 WITH SURAT DIST. CO-OP. BANK IN THE NAME OF SAMIR & JHANVI SHROFF 180 GRAMS 1 09 800 TOTAL 4492.5 34 71 945 THE ASSESSEE FURNISHED EXPLANATION IN RESPECT OF 28 70.5 GM. OF JEWELLERY AS UNDER:- SR. NO. NAME OF THE FAMILY MEMBER OF WHOM IT BELONGED. JEWELLERY SHOWN IN W.T. RETURN (GRAMS) 1. SHRI KIRAN K SHROFF 700.05 2. SHRI PRATIK K SHROFF 695.00 3. ST. ALPNABEN P SHROFF 1070.45 4. SAMIR K SHROFF 405.00 TOTAL 2870.50 IN ADDITION TO THIS IT WAS CLAIMED THAT 722 GM. JE WELLERY IS COVERED BY DISCLOSURE AND ANOTHER 900 GM. OF JEWELLERY BELONGE D TO VARIOUS FAMILY MEMBERS AS PER BOARDS CIRCULAR. THE ASSESSING OFFI CER NOTED THAT JEWELLERY IN RESPECT OF SHRI KIRAN K SHROFF CLAIMED AT 700.05 GM IS NOT CORRECT. THE CORRECT FIGURE IS 216.09 GM. WHICH IS AS PER WEALTH TAX ACT RETURN. FURTHER IT WAS CLAIMED BY THE ASSESSEE THAT SMT. ALPNABEN P SHROFF WIFE OF THE ASSESSEE HAD RECEIVED 483.15 GM. JEWELLERY THROUGH WILL FROM SMT . PUSPABEN K SOROFF MOTHER OF THE ASSESSEE BUT NO EVIDENCE IN RESPECT OF THIS CLAIM WAS FURNISHED. ASSESSING OFFICER THEREFORE DID NOT ACCEPT THE CLAI M OF JEWELLERY OF 483.15 GM. HE ALSO DID NOT ALLOW THE CLAIM OF JEWELLERY AT 500 GM IN ACCORDANCE BOARDS ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 11 CIRCULAR ON THE GROUND THAT CIRCULAR WAS MEANT FOR NOT SEIZING JEWELLERY IN SEARCH TO THE EXTENT 500 GM. IN RESPECT OF EACH LAD Y MEMBER OF THE FAMILY AND IT DID NOT MEAN THAT JEWELLERY TO THIS EXTENT IN RESPE CT OF EACH LADY MEMBER OF THE FAMILY SHOULD BE TREATED AS EXPLAINED. THE AO HOWEV ER ALLOWED NORMAL HOLDINGS OF SRIDHAN TO THE EXTENT OF 200 GM. FOR EA CH LADY MEMBER AND 100 GM. IN RESPECT OF EACH CHILD. THUS 600 GM. JEWELLERY W AS FURTHER TREATED AS EXPLAINED. AS A RESULT AO TREATED FOLLOWING JEWELL ERY AS EXPLAINED:- SR. NO. NAME OF THE FAMILY MEMBER JEWELLERY SHOWN IN W.T. RETURN OR NORMAL HOLDING WEIGHT IN GRAMS. 1. SHRI KIRAN K SHROFF W.T. RETURN 216.90 2. SHRI PRATIK K SHROFF -DO- 695.00 3. SMT. ALPNABEN P SHROFF -DO- 1070.45 4. SAMIR K SHROFF -DO- 405.00 5. JHAANVI SAMIR SHROFF STRIDHAN 200.00 6. IRTIBHAI K SHROFF NORMAL HOLDING 100.00 7. MEETI P SHROFF -DO- 100.00 8. ROHAN P SHROFF -DO- 100.00 9. VISHAL S SHROFF -DO- 100.00 10. COVERED BY DISCLOSURE -DO- 722.00 TOTAL 3709.35 18. LD. CIT(APPEALS) CONFIRMED THE ORDER OF ASSESSI NG OFFICER BY HOLDING THAT NO EVIDENCE IN RESPECT OF THE CLAIM OF JEWELLE RY RECEIVED AS PER WILL WAS FILED. 19. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND MA TERIALS ON RECORD. IN OUR CONSIDERED VIEW NO INTERFERENCE IS CALLED FOR IN TH E ORDER OF LD. CIT(APPEALS) FOR THE REASONS THAT NO EVIDENCE IN SUPPORT OF WILL OF SMT. POSPABEN K SHROFF IS ITA NO.1023-26/AHD/2008 A.YS. 99-00 01-02 02-03 & 05-06 SH. KIRITKUMAR K SHROFF V. DCIT CC-3 SRT PAGE 12 FURNISHED. EVEN THOUGH ASSESSEE HAS SHOWN A COPY OF WILL BEFORE US APPARENTLY BUT WE ARE NOT CONVINCED ABOUT ITS TRUTHFULNESS AS IT IS NOT REGISTERED. THIS IS APPARENTLY DATED 08-01-1981. IT IS NOT KNOWN AS TO WHAT HAPPENED TO THE ALLEGED JEWELLERY OF SMT. PUSPA K SHRAFF AS THERE IS A LONG GAP OF TIME AND THERE IS NO EVIDENCE WHETHER THIS JEWELLERY IS MERGED WITH THE JEWELLERY OF OTHER FAMILY MEMBERS OR THAT IT WAS KEPT INTACT. THERE IS NO EVI DENCE AS TO WHETHER WILL WAS EXECUTED. IN ABSENCE OF PROPER EVIDENCE SUCH CLAIM CANNOT BE ACCEPTED. AS A RESULT WE DO NOT FIND ANY MERIT IN THE APPEAL BY T HE ASSESSEE WHICH IS ACCORDINGLY DISMISSED. 20. IN THE RESULT ASSESSEES APPEALS NO.1024-1025/AHD /2008 ARE ALLOWED WHEREAS ASSESSEES APPEAL NO.1023/AHD/2008 AND 1026 /AHD/2008 ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 28/05/2010 SD/- SD/- (T.K.SHARMA) (D.C.AGRAWAL) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) AHMEDABAD DATED : 28/05/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 4 . THE CIT CONCERNS. 2. THE RESPONDENT. 5. THE DR ITAT AHMEDABAD 3. THE CIT(APPEALS)- II AHMEDABAD 6. GUARD FILE. BY ORDER /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT AHMEDABAD