INCOME TAX ACT, 1961

Section 55

Capital gains - Cost of acquisition - Amenities charges claimed by assessee as part of cost of acquisition of the flat -

Assessee had sold flat and claimed long-term capital loss. From the working of long term capital loss furnished by the assessee during the course of assessment proceedings, total indexed cost of the property was taken by the assessee at Rs. 47,89,632 as against which the sale consideration of the property was shown at Rs. 46,00,000, thereby arriving at long-term capital loss. Assessee along with her husband purchased the property at Rs. 7,29,750 and paid stamp duty of Rs. 26,300 whereas the assessee had shown purchase cost of Rs. 18,39,397 before indexation and deduction of Rs. 44,88,413 was claimed after indexation. Assessee had submitted that amount of Rs. 9,38,250 was paid to the builder towards amenities charges on the flat and this amount was regularly shown in the balance sheet since the year 1995. Further, assessee also contended that the said amount should be considered as cost of acquisition/improvement to the said property. However, AO observed that construction of flat which, in fact, are fully covered by the purchase deed of the said flat. It was further observed that as per the amenities agreement the amount was required to be paid on or before 30-4-1994, however, assessee did not disclose the details of payment, mode of payment with date and supporting evidences. Accordingly, AO reduced the indexed purchase price and garage cost from the sale consideration. Held: ITAT had principally agreed with assessee's claim but had directed the authorities below to examine whether similar agreement had been entered for amenities by other flat owners. Upon subsequent enquiry AO got information that 33 of the flat owners have also entered into such amenities agreements. Despite this information the authorities below disallowed the assessee's claim by holding that the veracity of the same was not established. Veracity of claim was already established by the agreement already submitted by the assessee earlier which the ITAT has accepted. The matter was only remanded to find out the position of other flat owners. From the enquiry of the authorities below it came to light that 33 other flatters had entered into similar amenity agreement. This position was further fortified that the amenity charges had already been paid and the same was appearing in the balance sheet of the assessee. Accordingly, denial of the assessee's claim towards amenities charges paid as part of cost of acquisition was not sustainable.

REFERRED :

FAVOUR : In assessee's favour

A.Y. :

SUBSCRIBE FOR FULL CONTENT