JOGINDER SINGH CHAWLA, MUMBAI v. ACIT 19(3), MUMBAI

ITA 349/MUM/2010 | 2006-2007
Pronouncement Date: 29-10-2010 | Result: Dismissed

Appeal Details

RSA Number 34919914 RSA 2010
Bench Mumbai
Appeal Number ITA 349/MUM/2010
Duration Of Justice 9 month(s) 15 day(s)
Appellant JOGINDER SINGH CHAWLA, MUMBAI
Respondent ACIT 19(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 29-10-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted I
Tribunal Order Date 29-10-2010
Assessment Year 2006-2007
Appeal Filed On 14-01-2010
Judgment Text
I .T.A NO.349/MUM/2010 ASSESSMENT YEAR: 2006-07 1 IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI. BEFORE SHRI N.V.VASUDEVAN (JUDICIAL MEMBER) AND SHRI PRAMOD KUMAR(ACCOUNTANT MEMBER) I.T.A NO.349/MUM/2010 ASSESSMENT YEAR: 2006-07 JOGINDER SINGH CHAWLA APPELLANT FLAT NO.G-1 SANTA RITTA PREMISES CHS 556 ST. ALEXIOUS ROAD BANDRA(W) MUMBAI. PA NO.AABPC 7072 P VS ASST. COMMISSIONER OF INCOME TAX -19(3) .. RESPO NDENT MUMBAI. APPELLANT BY: SHRI SATISH R MODY RESPONDENT BY : SMT RITA DOKANIA O R D E R PER PRAMOD KUMAR: 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AND IS DIRE CTED AGAINST THE ORDER DATED 30.10.2009 PASSED BY THE CIT (A)-30 MUMBAI IN THE MATTER OF ASSESSMENT U/S.143(3) OF THE INCOME TAX ACT 1961 FOR THE ASSESSMENT YEAR 2006-0 7. THE GRIEVANCES RAISED IN THIS APPEAL ARE AS FOLLOWS:- 1. THE LEARNED ASSESSING OFFICER HAS ERRED IN DISA LLOWING RS. 1 92 820/- THE INTEREST PAID ON HOUSING LOAN AS THE COST OF THE FL AT WHICH IS SOLD DURING THE RELEVANT ASSESSMENT YEAR. AS THE INTEREST PAID ON HOUSING LOAN OF THE SAME IS CAPITALIZED THE DISALLOWANCE OF `.1 92 820/- O F INTEREST SHOULD BE ALLOWED. 2. WITHOUT PREJUDICE TO THE ABOVE THE INTEREST PAID ON HOUSING LOAN IS ALLOWABLE DEDUCTION U/S.24 WHICH IS ALSO ACCEPTED B Y THE AO WHILE PASSING THE ORDER. HENCE INTEREST ON HOUSING LOAN SHOULD BE ALLOWED AS DEDUCTION WHILE COMPUTING THE INCOME. I .T.A NO.349/MUM/2010 ASSESSMENT YEAR: 2006-07 2 3. THE LEARNED AO HAS ERRED IN DISALLOWING OF RS. 4 7 000/- PAYMENT MADE FOR BUILDING REPAIR FUND AS COST OF ACQUISITION. A S THE PAYMENT IS MADE FOR TOWARDS THE FLAT REPAIR FUND THE SAME SHOULD BE AL LOWED THE ADDITION SHOULD BE DELETED. 2. BRIEFLY STATED THE RELEVANT MATERIAL FACTS ARE LIKE THIS. THE ASSESSEE IS AN INDIVIDUAL AND HIS MAIN SOURCE OF INCOME IS FROM PARTNERSHIP F IRM M/S. DOLSUN JEWELS. IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE SOLD HOUSE PROPERTY AND IN THE COMPUTATION OF SHORT TERM CAPITAL GAINS ON THE SALE OF THIS PROPERTY THE ASS ESSEE HAS CLAIMED DEDUCTION OF RS. 1 92 820/- BEING PAYMENT OF INTEREST FOR HOUSING LO AN AND RS. 47 000/- BEING PAYMENT MADE ON ACCOUNT OF BUILDING REPAIR FUND TO THE SOC IETY. THE ASSESSING OFFICER NOTED THAT NONE OF THESE EXPENSES CAN BE TREATED AS COST OF AC QUISITION OF THE PROPERTY IN QUESTION. IN RESPONSE TO THE ASSESSING OFFICERS SHOW CAUSE NOTI CE REQUIRING THE ASSESSEE TO SHOW CAUSE AS TO WHY THESE AMOUNTS SHOULD NOT BE DISALLOWED IN COMPUTATION OF SHORT TERM CAPITAL GAINS IT WAS CLARIFIED BY THE ASSESSEE THAT THESE AMOUNTS HAVE NOT BEEN CLAIMED AS DEDUCTION AND THEREFORE CAPITALIZED. THE ASSESSI NG OFFICER REJECTED THE ARGUMENTS AND ACCORDINGLY MADE AN ADDITION OF RS. 2 39 820/- TO THE SHORT TERM CAPITAL GAINS DISCLOSED BY THE ASSESSEE. AGGRIEVED THE ASSESSEE CARRIED THE MATTER IN APPEAL BUT WITHOUT ANY SUCCESS. THE CIT (A) NOTED THE ASSESSEES ARGUMENTS THAT AS THESE EXPENSES WERE CAPITALIZED THE SAME SHOULD BE ALLOWED AS COST OF ACQUISITION BUT REJECTED THE SAME ON THE GROUND THAT THESE EXPENSES CANNOT BE INCLUDED IN THE COST OF AC QUISITION FOR THE PURPOSE OF THE ACT. THE CIT (A) FURTHER NOTED THAT THE ASSESSEE HAS NOT BRO UGHT ON RECORD ANY MATERIAL CONTRARY TO THE STAND TAKEN BY THE ASSESSING OFFICER. THE ASSE SSEE IS NOT SATISFIED AND IS IN FURTHER APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE RIVAL CONTENTIONS AND ALSO PER USED THE MATERIAL ON RECORD. THE MAIN THRUST OF LEARNED COUNSELS ARGUMENTS BEFORE U S IS THAT THESE AMOUNTS HAVE BEEN CAPITALIZED AND HAVE NOT BEEN CLAIMED AS DEDUCTION IN COMPUTATION OF INCOME THEREFORE THE SAME SHOULD BE INCLUDED IN THE COST OF ACQUISITION. LEARNED COUNSEL FURTHER SUBMITS THAT IN CASE THESE AMOUNTS ARE NOT ALLOWED AS PART OF THE C OST OF ACQUISITION THE SAME SHOULD BE TAKEN INTO ACCOUNT IN THE COMPUTATION OF INCOME. L EARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND RELIED ON THE ORDERS OF THE AUTHORI TIES BELOW AND POINTED OUT THAT IN THE ABSENCE OF SPECIFIC PROVISIONS ENABLING DEDUCTION I N RESPECT OF THE AMOUNT GRANTED IT IS NOT INDEED OPEN TO THE AUTHORITIES BELOW TO INCLUDE THE SE EXPENSES AS COST OF ACQUISITION OR I .T.A NO.349/MUM/2010 ASSESSMENT YEAR: 2006-07 3 ALLOW DEDUCTION IN RESPECT OF THE SAME. WE HAVE NO TED THAT IN TERMS OF PROVISIONS OF SECTION 48 THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL G AINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED O R ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS NAMELY:- (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER AND (I I) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. UNLESS THE AM OUNTS FORM PART OF COST OF ACQUISITION OF ASSET OR COST OF ANY IMPROVEMENT THERETO THE SAME CANNOT BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. IT IS NOT EVEN THE ASSESSEES CASE THAT THE EXPENDITURE INCURRED ARE IN CONNECTION WITH COST OF ACQUISITION OF THE ASSETS BECAUSE ADMITTEDLY EXPENDITURES ARE INCURRED AFTER THE ASSET HAS BEEN ACQUIRED AND THEREFORE THIS CANNOT BE TREATED AS COST OF ACQUISITION. AS REGARDS THE COS T OF IMPROVEMENT IN TERMS OF THE PROVISIONS OF SECTION 55(1) ONLY CAPITAL EXPENDITURE INCURRED IN MAKING ANY ADDITIONS OR ALTERATIONS TO THE CAPITAL ASSET CAN BE TREATED AS COST OF IMPROVE MENT. IT IS NOT EVEN THE ASSESSEES CASE AND RIGHTLY SO THAT THE EXPENDITURE IN QUESTION WAS INCURRED IN MAKING ANY ADDITIONS OR ALTERATIONS TO THE ASSETS ACQUIRED BY THE ASSESSEE. THE EXPENDITURE IS NOT EVEN A CAPITAL EXPENDITURE IN NATURE AND MERELY BECAUSE THE ASSESS EE CLAIMED TO HAVE CAPITALIZED THE EXPENDITURE IT CANNOT BE TREATED AS COST OF IMPROV EMENT BECAUSE IT HAS TO BE COVERED BY SECTION 55(1) OF THE ACT. IN ORDER TO BE INCLUDED I N THE COSTS OF IMPROVEMENT NOT ONLY THAT THE EXPENDITURE HAS TO BE A CAPITAL EXPENDITURE IN NATURE BUT IT IS ALSO TO BE INCURRED IN MAKING ANY ADDITIONS OR ALTERATIONS RELATED TO THE CAPITAL ASSET. THE SECOND LIMB OF CONDITIONS OF THE ASSESSEE IS NOT CLEARLY SATISFIED IN THE PRESENT CASE. AS REGARDS THE LEARNED COUNSELS ALTERNATIVE SUBMISSIONS THAT THE EXPENDIT URE INCURRED IN COMPUTATION OF INCOME NO SPECIFIC PROVISIONS HAVE BEEN POINTED UNDER WHIC H THE CLAIM FOR DEDUCTION IS SOUGHT. IN VIEW OF THESE DISCUSSIONS AND BEARING IN MIND THE E NTIRETY OF THE CASE WE CONFIRM THE IMPUGNED ORDER AND DECLINE TO INTERFERE. 4. IN THE RESULT APPEAL FILED BY THE ASSESSEE STAN DS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 29 TH OCTOBER 2010 SD/- (N.V.VASUDEVAN) (JUDICIAL MEMBER) SD/- (PRAMOD KUMAR) (ACCOUNTANT MEMBER) MUMBAI DATED 29 TH OCTOBER 2010 I .T.A NO.349/MUM/2010 ASSESSMENT YEAR: 2006-07 4 PARIDA COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. COMMISSIONER OF INCOME TAX (APPEALS)-30 MUMBAI 4. COMMISSIONER OF INCOME TAX CITY-19- MUMBAI 5. DEPARTMENTAL REPRESENTATIVE BENCH I MUMBAI //TRUE COPY// BY ORDER ASSTT. REGISTRAR ITAT MUMBAI