SUMAN AGARWAL, MUMBAI v. ITO 18(2)(3), MUMBAI

ITA 5409/MUM/2008 | 2005-2006
Pronouncement Date: 28-01-2011 | Result: Allowed

Appeal Details

RSA Number 540919914 RSA 2008
Assessee PAN AETPA9506Q
Bench Mumbai
Appeal Number ITA 5409/MUM/2008
Duration Of Justice 2 year(s) 5 month(s)
Appellant SUMAN AGARWAL, MUMBAI
Respondent ITO 18(2)(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted I
Tribunal Order Date 28-01-2011
Date Of Final Hearing 05-08-2010
Next Hearing Date 05-08-2010
Assessment Year 2005-2006
Appeal Filed On 28-08-2008
Judgment Text
1 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I BEFORE SHRI D. MANMOHAN VP AND SHRI P.M. JAGTAP A .M. ITA NO. 7270/MUM/2008 ASSESSMENT YEAR 2005-06 ITO WARD -18(2)(3) PIRAMAL CHAMBERS MUMBAI. VS. SMT. SUMAN AGARWAL APTE HOUSE 3 RD FLOOR 1076 DR. E. MOSES ROAD WORLI MUMBAI. 18 PAN AETPA9506Q APPELLANT RESPONDENT ITA NO. 5409/MUM/2008 ASSESSMENT YEAR 2005-06 SMT. SUMAN AGARWAL APTE HOUSE 3 RD FLOOR 1076 DR. E. MOSES ROAD WORLI MUMBAI. 18 PAN AETPA9506Q VS. ITO WARD -18(2)(3) PIRAMAL CHAMBERS MUMBAI. APPELLANT RESPONDENT ASSESSEE BY SHRI S.C. TIWARI DEPARTMENT BY SHRI SUNIL KUMAR SINGH ORDER PER P.M. JAGTAP A.M. THESE TWO APPEALS ONE FILED BY THE REVENUE BEING ITA NO. 7270/MUM/2008 AND THE OTHER FILED BY THE ASSESSEE BEING ITA NO. 5409/ MUM/2008 ARE CROSS APPEALS WHICH ARE DIRECTED AGAINST THE ORDER OF LD. CIT(A) XVIII DATED 23.7.08. 2 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL 2. AT THE OUTSET WE MAY NOTE THAT THERE IS A DELAY OF 71 DAYS ON THE PART OF THE REVENUE IN FILING ITS APPEAL. THE REVENUE HAS FILE D AN APPLICATION SEEKING CONDONATION OF THE SAID DELAY. IN THE SAID APPLICATION AS WELL AS IN THE SUBMISSIONS MADE IN WRITING SUBSEQUENTLY IN SUPPORT THEREOF THE REVENUE HAS SU BMITTED THAT THE IMPUGNED ORDER OF THE LD. CIT(A) WAS RECEIVED IN THE OFFICE OF THE CO NCERNED CIT ON 13.8.08. A SCRUTINY REPORT THEREON PREPARED BY THE A.O. WAS SUBMITTED B Y THE A.O. ON 27.8.08 ON WHICH THE LD. CIT GAVE THE FOLLOWING DIRECTIONS:- 1) PLEASE FILE APPLICATION TO CIT(A) FOR MISREPRES ENTATION BY THE ASSESSEE BEFORE HIM FOR ISSUE OF SUMMONS U/S 131 AND REQUEST TO REFER THE COMMISSION TO VALUATION CELL TO ASCERTAIN ONE RESIDENTIAL UNIT OR TWO SEPARATE RESIDENTIAL HOUSES. 2) PLEASE FILE APPEAL IF REQUEST IS REJECTED BY H IM. AS PER THE DIRECTION OF THE LD. CIT AN APPLICATION WAS MOVED BY THE A.O. TO THE LD. CIT(A) XVIII MUMBAI SEEKING RECTIFICATION OF HIS APPELLATE ORDER DTD. 23.7.08. THE SAID APPLICATION WAS REJECTED BY THE LD. CIT(A) XV III MUMBAI VIDE ORDER DTD. 24.10.08. THE SAID ORDER OF THE LD. CIT(A) WAS RECEIVED IN TH E OFFICE OF THE A.O. ON 4.11.08 WHO MADE A REQUEST TO THE LD. CIT(A) FOR ISSUE OF AUTHO RIZATION MEMO TO FILE AN APPEAL BEFORE THE TRIBUNAL. THE CIT ISSUED THE AUTHORIZATION MEM O ON 21.11.08 WHICH WAS RECEIVED IN THE OFFICE OF THE A.O. ON 24.12.08 AND THE APPEAL W AS ALSO FILED ON THE VERY SAME DAY I.E. 24.12.08 BEFORE THE TRIBUNAL. REFERRING TO THIS SE QUENCE OF EVENTS THE LD. D.R. HAS SUBMITTED THAT THE DELAY ON THE PART OF THE REVENUE IN FILING THE PRESENT APPEAL BEFORE THE TRIBUNAL WAS AS A RESULT OF ALTERNATIVE REMEDY WHIC H WAS BEING PURSUED BY THE DEPARTMENT BY FILING AN APPLICATION FOR RECTIFICATI ON OF THE IMPUGNED ORDER OF LD. CIT(A) AND THERE WAS THUS A SUFFICIENT CAUSE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTH ER HAND STRONGLY OPPOSED THE APPLICATION FILED BY THE REVENUE FOR CONDONATION OF DELAY BY SUBMITTING THAT PERUSING OTHER REMEDY CANNOT BE ACCEPTED AS SUFFICIENT CAUSE FOR DELAY IN FILING THE APPEAL BEFORE THE TRIBUNAL. HE HAS CONTENDED THAT THE REVENUE CO ULD HAVE FILED THE APPEAL BEFORE THE 3 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL TRIBUNAL SIMULTANEOUSLY WITH APPLICATION FOR RECTIF ICATION WHICH WAS MOVED BEFORE THE LD. CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON THIS ISSUE AND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED FROM TH E CHRONOLOGY OF EVENTS GIVEN BY THE LEARNED D.R. THAT THE DELAY IN FILING THIS APPEAL B EFORE THE TRIBUNAL HAS OCCURRED DUE TO ALTERNATIVE REMEDY WHICH WAS BEING PURSUED BY THE R EVENUE BY FILING THE APPLICATION FOR RECTIFICATION OF THE IMPUGNED ORDER OF THE LD. CIT( A). ON REJECTION OF THE SAID APPLICATION BY THE LD. CIT(A) THE REVENUE HOWEVER HAS IMMEDI ATELY TAKEN THE NECESSARY STEPS TO FILE ITS APPEAL BEFORE THE TRIBUNAL WITHOUT ANY FUR THER DELAY. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERUSING THE RELEVANT MATERIAL ON R ECORD IT IS OBSERVED THAT A SIMILAR ISSUE HAD COME UP FOR CONSIDERATION BEFORE THE HON BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. K.S.P. SHANMUGAVEL NADAR & OTHERS 153 ITR 5 96 WHEREIN IT WAS HELD THAT IN DECIDING THE QUESTION WHETHER THE APPELLANT HAD SUF FICIENT CAUSE FOR PRESENTING THE APPEAL WITHIN THE PRESCRIBED TIME THE MOST RELEVANT FACTO R TO BE TAKEN INTO ACCOUNT IS WHETHER THE PARTY CONCERNED HAS BONAFIDE PROSECUTED SOME OT HER PROCEEDINGS BECAUSE OF WHICH DELAY HAS OCCURRED IN FILING THE APPEAL. IT WAS HE LD THAT IF A PARTY HAD BONAFIDE PROSECUTED OTHER REMEDIES THAT SHOULD BE TAKEN INT O ACCOUNT WHILE EXERCISING IN CONDONING THE DELAY. KEEPING IN VIEW OF THE DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. K.S.P. SHANMUGAVEL NAD AR & OTHERS 153 ITR 596 AND HAVING REGARD TO THE RELEVANT FACTS OF THE CASE WE ARE OF THE VIEW THAT THERE WAS A SUFFICIENT CAUSE WHICH RESULTED IN THE DELAY ON THE PART OF THE REVENUE IN FILING ITS PRESENT APPEAL BEFORE THE TRIBUNAL. WE THEREFORE CONDONE THE SAID DELAY AND PROCEED TO DISPOSE OF THE SAID APPEAL OF THE REVENUE ON MERIT ALONG WI TH THE CROSS APPEAL FILED BY THE ASSESSEE. 5. THE RELEVANT FACTS OF THE CASE GIVING RISE TO TH IS APPEAL ARE THAT THE ASSESSEE IS AN INDIVIDUAL WHO FILED HIS RETURN OF INCOME ON 24.8.0 5 DECLARING A TOTAL INCOME OF ` 3 70 420/-. DURING THE YEAR UNDER CONSIDERATION T HE ASSESSEE HAD SOLD HER FLAT IN KAMANI 4 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL HOUSE PEDDAR ROAD MUMBAI FOR A CONSIDERATION OF ` 2.75 CRORES VIDE AN AGREEMENT DTD. 7.10.04. AFTER DEDUCTING BROKERAGE LEGAL FEES AND TRANSFER FEES AMOUNTING TO ` 3 25 090 ` 65 000/- AND ` 12 500 RESPECTIVELY FROM THE SAID CONSIDERATION AN D AFTER CLAIMING DEDUCTION ON ACCOUNT OF INDEXED COST OF AC QUISITION AND COST OF IMPROVEMENT THE NET CAPITAL GAIN WAS SHOWN BY THE ASSESSEE AT ` 1 86 16 650/-. THIS ENTIRE CAPITAL GAIN WAS CLAIMED TO BE EXEMPT BY THE ASSESSEE U/S 54 IN VIEW OF THE INVESTMENT MADE BY HER IN PURCHASE OF RESIDENTIAL FLAT IN THE BUILDING KNOWN AS SIMRAN AT BANDRA-KHAR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS WORKING OF LO NG TERM CAPITAL GAIN GIVEN BY THE ASSESSEE WAS EXAMINED BY THE A.O. DURING THE COURS E OF SUCH EXAMINATION HE SENT NOTICES TO THE CONCERNED PERSONS TO WHOM BROKERAGE AND RENOVATION CHARGES WERE CLAIMED TO BE PAID BY THE ASSESSEE. SUCH NOTICE IS SUED BY THE A.O. TO ONE OF THE PARTIES RETURNED UNSERVED BY THE POSTAL DEPARTMENT WHEREA S THE OTHER PARTIES DID NOT TURN UP FOR THEIR EXAMINATION BY THE A.O. ON THE GIVEN DATE. M EANWHILE IN A REPLY GIVEN VIDE LETTER DTD. 22.10.07 TO THE ENQUIRY MADE BY THE A.O. THE SECRETARY KAMANI HOUSE CHS LTD. INTIMATED THAT THERE WAS NO PERMISSION GIVEN TO THE ASSESSEE BY THE SAID SOCIETY TO CARRY OUT THE RENOVATION WORK IN HER FLAT. ALL THESE ADV ERSE FINDINGS OF HIS ENQUIRY WERE CONFRONTED BY THE A.O. TO THE ASSESSEE AND SHE WAS ASKED TO OFFER HER EXPLANATION. IN REPLY A LETTER DTD. 14.12.07 WRITTEN BY SHRI NARESH MAHADIK & SHRI SANTOSH DALVI ADDRESSED TO THE OFFICE OF THE A.O. WAS FILED BY TH E ASSESSEE CONFIRMING THE RENOVATION WORK CARRIED OUT BY THEM IN THE FLAT OF THE ASSESSE E. THE COPIES OF THEIR BANK STATEMENTS WERE ALSO FILED SHOWING THE RECEIPT OF AMOUNT PAID BY THE ASSESSEE FOR RENOVATION WORK. A LETTER DTD. 20.12.07 PROCURED FROM KAMANI HOUSE C HS LTD. WAS ALSO FILED BY THE ASSESSEE STATING THEREIN THAT SOCIETY RULES DO NOT REQUIRE PERMISSION FROM THE SOCIETY FOR RENOVATION WORK UNDERTAKEN BY THE FLAT OWNERS IN TH EIR FLATS SO LONG AS NO STRUCTURAL CHANGES ARE CONTEMPLATED. THE ASSESSEE HOWEVER CO ULD NOT PRODUCE SHRI NARESH MAHADIK AND SHRI SANTOSH DALVI FOR THEIR EXAMINATIO N BEFORE THE A.O. FROM THE BANK STATEMENTS OF THE SAID PERSONS IT WAS NOTED BY THE A.O. THAT THEY HAD OPENED THE BANK ACCOUNTS ONLY ON 2.2.05 BY DEPOSITING A CASH OF ` 100/- AND ALMOST THE ENTIRE SUM RECEIVED FROM THE ASSESSEE TOWARDS RENOVATION WORK WAS IMMEDIATELY WITHDRAWN BY 5 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL THEM. HE ALSO NOTED THAT THE SAID AMOUNT WAS PAID BY THE ASSESSEE ONLY AFTER A PERIOD OF 6-7 MONTHS FROM THE DATE WHEN RENOVATION WORK WAS C OMPLETED. HE THEREFORE HELD THAT THE CLAIM OF THE ASSESSEE OF HAVING CARRIED OUT THE RENOVATION WORK IN HER FLAT BEFORE SALE WAS NOT GENUINE AND THE DEDUCTION CLAIMED BY THE AS SESSEE FOR THE RENOVATION CHARGES WHILE COMPUTING THE LONG TERM CAPITAL GAIN WAS DISA LLOWED BY HIM. AS REGARDS THE CLAIM OF THE ASSESSEE FOR EXEMPTION IN RESPECT OF CAPITAL GAIN U/S 54 AMOUNTING TO ` 1 86 16 650/- THE A.O. FOUND THAT THE CORRESPONDIN G INVESTMENT WAS ACTUALLY MADE BY THE ASSESSEE IN PURCHASE OF TWO RESIDENTIAL FLATS I .E. FLAT NO. 701 & 702 IN THE BUILDING KNOWN AS SIMRAN AT BANDRA-KHAR. IN THIS REGARD A PHOTOCOPY OF THE LAY OUT PLAN OF THE FLATS ACQUIRED BY HER WAS SUBMITTED BY THE ASSE SSEE BEFORE THE A.O. TO SHOW THAT THE TWO FLATS ACQUIRED WERE ACTUALLY ONE ONLY. ACCORDI NG TO THE A.O. IT WAS HOWEVER NOT VERY CLEAR AS TO HOW AND WHEN THE TWO FLATS PURCHAS ED BY THE ASSESSEE UNDER TWO SEPARATE AGREEMENTS HAVE BECOME ONE. ACCORDING TO HIM THER E WAS FAILURE ON THE PART OF THE ASSESSEE TO ESTABLISH ON EVIDENCE THAT THE FLATS PU RCHASED BY HER WERE NOT TWO BUT THERE WAS PURCHASE OF ONLY ONE FLAT. HE THEREFORE REST RICTED THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54 TO ` 1 01 72 389/- BEING THE COST OF ACQUISITION OF ONE FLAT IE. FLAT NO. 701 WHICH WAS LARGER THAN FLAT NO. 702. ACCORDINGL Y THE LONG TERM CAPITAL GAIN CHARGEABLE TO TAX IN THE HANDS OF THE ASSESSEE WAS WORKED OUT BY THE A.O. AT ` 98 36 272/- IN THE ASSESSMENT COMPLETED U/S 143(3) VIDE AN ORDER DATED 24.12.07. 6. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) AN APPEAL WAS FILED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND AFTER CONSIDERIN G THE SUBMISSIONS MADE ON HER BEHALF BEFORE HIM AS WELL AS THE MATERIAL AVAILABLE ON REC ORD THE LD. CIT(A) DECIDED THE MAIN ISSUE RELATING TO ASSESSEES CLAIM FOR EXEMPTION U/ S 54 VIDE PARAGRAPH NO. 17 OF HIS IMPUGNED ORDER WHICH READS AS UNDER:- THE BIGGER ISSUE HOWEVER PERTAINS TO THE DISALLOWAN CE OF CLAIM U/S 54. THE ASSESSING OFFICER HAS NOTICED THAT THE APPELLANT HA D PURCHASED TWO FLATS I.E. 701 AND 702 AT SIMRAN APARTMENTS BANDRA-KHAR MUMBAI. THE APPELLANT HAS SHOWN THAT THE SAID TWO FLATS ARE ADJOINING AND CONNECTED TO EACH OTHER. THERE IS A COMMON 6 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL ENTRANCE TO THE SAME AND COMMON PASSAGE. THE SAME IS INTENDED TO BE UTILIZED AND TREATED AS SINGLE DWELLING UNIT. THE FACTS OF THE CASE ARE SIMILAR AS REPORTED IN THE CASE OF ITO VS. MRS. SUSHILA M. JHAVERI [107 ITD 32 7] (SPECIAL BENCH MUMBAI ITAT). THE MAIN CONTENTS OF WHICH ARE REPRODUCED A S ABOVE (PARA 11). IN THAT CASE DECIDED BY THE HONBLE ITAT IT WAS HELD THAT THE E XEMPTION U/S 54 WAS ALLOWABLE IN RESPECT OF INVESTMENTS IN TWO ADJACENT OR CONTIG UOUS UNITS CONVERTED INTO ONE RESIDENTIAL HOUSE BY HAVING COMMON PASSAGE/STAIRCAS E COMMON KITCHEN ETC. INTENDED TO BE USED AS SINGLE HOUSE FOR THE RESIDEN CE OF THE FAMILY. THE HONBLE ITAT FURTHER HELD THAT THE EXEMPTION U/S 54 COULD B E RESTRICTED TO ONE OUT OF TWO HOUSES IN A SITUATION WHERE THE TWO RESIDENTIAL PRO PERTIES INVOLVED WERE INDEPENDENT EVEN IF LOCATED IN THE SAME COMPLEX. IN VIEW OF TH IS BINDING JUDGMENT THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE EXEMPTIO N U/S 54 COVERING BOTH THE FLAT NOS. 701 AND 702 PARTICULARLY BECAUSE THE HON. CALC UTTA HIGH COURT HAS ALSO DECIDED THIS MATTER IN THE FAVOUR OF THE APPELLANT AS PER THE CASE OF B.B. SARKAR VS. CIT [132 ITR 159](CAL) THE LD. CIT(A) THUS ALLOWED THE ENTIRE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54 IN RESPECT OF INVESTMENT MADE IN FLATS NO. 701 & 702 T REATING THE SAME AS A SINGLE DWELLING UNIT RELYING ON THE DECISION OF SPECIAL BENCH OF IT AT AT MUMBAI IN THE CASE OF ITO VS. MS. SUSHILA M. JHAVERI (107 ITD 327) [SB] AND ALSO THAT OF HONBLE CALCUTTA HIGH COURT IN THE CASE OF B.B. SARKAR VS. CIT (132 ITR 159). 7. AS REGARDS THE OTHER ISSUE RELATING TO DISALLOWA NCE MADE BY THE A.O. ON ACCOUNT OF RENOVATION CHARGES AND BROKERAGE THE LD. CIT(A) DE CIDED THE SAID ISSUE VIDE PARA NO. 15 & 16 WHICH ARE REPRODUCED BELOW:- THE ASSESSING OFFICER ISSUED SUMMONS TO BOTH THE AB OVE PARTIES. THE SUMMONS TO M/S NARESH INTERIORS HOWEVER WAS NOT SERVED. AS FA R AS M/S S.D. CORPORATION IS CONCERNED THE SUMMONS WAS DULY SERVED BUT THE CONC ERNED PERSON DID NOT ATTEND. AS CLEAR FROM THE DISCUSSION AS ABOVE THE PAYMENTS HAVE BEEN MADE THROUGH A/C PAYEE CHEQUES. IT IS UNDERSTANDABLE THAT DOUBTS HA VE ARISEN IN THE MINDS OF THE ASSESSING OFFICER ON ACCOUNT OF THE FACT THAT NO AD VANCE PAYMENT HAS BEEN RECEIVED BY THESE CONTRACTORS AND THE PAYMENTS HAVE BEEN MAD E TO THESE PERSONS RATHER LATE. THERE IS A SUSPICION ALSO ON ACCOUNT OF THE FACT TH AT THE CONCERNED SOCIETY ADMITTED OF NOT HAVING RECEIVED ANY COMMUNICATION/APPLICATIO N FROM THE APPELLANT FOR RENOVATION. HOWEVER UPON EXAMINING THE DETAILS OF THE EXPENSES FROM THE BILLS I OBSERVE THAT NO STRUCTURAL ALTERATIONS WERE INVOLVE D. THE SOCIETY HAS ALSO CLARIFIED IN A LETTER ALREADY PLACED BEFORE THE ASSESSING OFFICE R THAT NO PERMISSION/COMMUNICATION IS REQUIRED IN CASE THERE IS NO STRUCTURAL ADDITIONS/ALTERATIONS. IN ORDER TO CARRY OUT INVEST IGATIONS THE ASSESSING OFFICER ISSUED SUMMONS BUT THE ASSESSING OFFICER HAD NOT PU RSUED HIS OWN SUMMONS TO THE LOGICAL CONCLUSIONS. THERE IS NOTHING ON THE RECOR D TO SHOW THAT ANY COERCIVE 7 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL MEASURE WAS TAKEN TO ENFORCE ATTENDANCE. IT IS NOT A CASE OF A CREDITOR WHICH REMAINS IN SUSTAINED RELATIONSHIP WITH THE APPELLAN T. IT IS A CASE OF A CONTRACTOR WHOSE RELATIONSHIP WITH THE APPELLANT GETS ALMOST T ERMINATED WITH THE WORK OF HAVING BEEN FINISHED FROM THEIR SIDE. STILL THE AP PELLANT HAD MADE EFFORTS TO SUBMIT THE PAN OTHER PARTICULARS BANK STATEMENT ETC. EST ABLISHING THAT THE PAYMENTS HAVE BEEN MADE THROUGH A/C PAYEE CHEQUES. THE ASSESSING OFFICER COULD HAVE COME TO THE CONCLUSION ONLY IF THE ATTENDANCE HAD BEEN ENFO RCED AND A LOGICAL CONCLUSION COULD HAVE BEEN BUILT ON THIS ISSUE. HOWEVER AS F AR AS THE CASE OF M/S NARESH INTERIORS IS CONCERNED SINCE THE SUMMONS WERE RETU RNED BACK I DISBELIEVE THE SUBMISSIONS OF THE APPELLANT ON THIS ISSUE. I THE REFORE HOLD THAT THE ASSESSING OFFICER HAS CORRECTLY MADE THE ADDITION OF ` 6 47 695/- PERTAINING TO THIS CONTRACTOR (WHERE EVEN THE BASIS ONUS OF ESTABLISHING IDENTITY OF THE CONTRACTOR HAS NOT BEEN DISCHARGED BY THE APPELLANT). HOWEVER THE DISALLO WANCE OF ` 4 30 800/- PERTAINING TO M/S S.D. CORPORATION IS DELETED. FOR THE SIMILAR REASONS THE PAYMENTS MADE AS BROK ERAGE TO MR. TARUN MEHTA AND MR. SAMEER KAMANI AMOUNTING TO ` 3 25 090/- IS ALLOWED AND THE ADDITION MADE BY THE ASSESSING OFFICER IS DELETED TO THIS EXTENT. THE LD. CIT(A) THUS ALLOWED THE CLAIM OF THE ASSESS EE FOR DEDUCTION ON ACCOUNT OF BROKERAGE PAID WHILE COMPUTING THE LONG TERM CAPITA L GAIN AND ALSO ALLOWED THE DEDUCTION CLAIMED BY HER ON ACCOUNT OF RENOVATION C HARGES TO THE EXTENT OF ` 4 30 800/- BEING THE AMOUNT PAID TO M/S S.D. CORPORATION. HE HOWEVER CONFIRMED THE DISALLOWANCE MADE BY THE A.O. ON ACCOUNT OF RENOVAT ION CHARGES TO THE EXTENT OF ` 6 47 695/- BEING THE AMOUNT PAID TO M/S NARESH INTE RIORS. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENUE AND ASSESSEE BOTH ARE IN AP PEAL BEFORE THE TRIBUNAL. 8. GROUND NO. 1 RAISED BY THE REVENUE IN ITS APPEAL IS GENERAL IN NATURE SEEKING NO SPECIFIC DECISION THEREON. 9. AS REGARDS GROUND NO. 2 THE LEARNED REPRESENTAT IVES OF BOTH THE SIDES HAVE AGREED THAT THE ISSUE RAISED THEREIN RELATING TO ASSESSEE S CLAIM FOR EXEMPTION U/S 54 IS SQUARELY COVERED BY THE DECISION OF MUMBAI SPECIAL BENCH OF ITAT IN THE CASE OF ITO VS. MS. SUSHILA M. JHAVERI (SUPRA) WHEREIN IT WAS HELD THA T WHERE MORE THAN ONE UNIT ARE PURCHASED BY THE ASSESSEE WHICH ARE ADJACENT TO EAC H OTHER AND ARE CONVERTED INTO ONE HOUSE FOR THE PURPOSE OF RESIDENCE HAVING COMMON PA SSAGE COMMON KITCHEN ETC. THEN IT WOULD BE A CASE OF INVESTMENT IN ONE RESIDENTIAL HO USE AND CONSEQUENTLY THE ASSESSEE 8 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL WOULD BE ENTITLED TO EXEMPTION. AS FOUND BY THE LD . CIT(A) THE ASSESSEE IN THE PRESENT CASE HAS PURCHASED TWO FLATS WHICH ARE ADJOINING AN D CONNECTED TO EACH OTHER. THERE IS A COMMON ENTRANCE AND COMMON PASSAGE TO THE SAID TWO FLATS WHICH ARE INTENDED TO BE UTILIZED AND TREATED BY THE ASSESSEE AS SINGLE DWEL LING UNIT. AT THE TIME OF HEARING BEFORE US THE LEARNED D.R. HAS NOT BROUGHT ANYTHING ON RE CORD TO CONTROVERT/REBUT THIS FINDING OF FACT RECORDED BY THE LD. CIT(A) AND THIS BEING SO A ND RELYING ON THE DECISION OF SPECIAL BENCH OF ITAT IN THE CASE OF MS. SUSHILA M. JHAVERI (SUPRA) WE UPHOLD THE IMPUGNED ORDER OF THE LD. CIT(A) ALLOWING THE ENTIRE CLAIM O F THE ASSESSEE FOR EXEMPTION U/S 54 IN RESPECT OF INVESTMENT MADE IN TWO FLATS. GROUND NO . 2 OF THE REVENUES APPEAL IS ACCORDINGLY DISMISSED. 10. THE REMAINING GROUNDS OF THE REVENUES APPEAL I .E. GROUND NO. 3 & 4 AND THE SOLITARY SUBSTANTIVE GROUND RAISED IN THE ASSESSEE S APPEAL INVOLVE A COMMON ISSUE RELATING TO THE ASSESSEES CLAIM FOR DEDUCTION ON A CCOUNT OF BROKERAGE AND RENOVATION EXPENSES. 11. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES A ND ALSO PERUSED THE RELEVANT MATERIAL ON RECORD. IT IS OBSERVED THAT THE CLAIM O F THE ASSESSEE OF HAVING CARRIED OUT THE RENOVATION WORK WAS SUPPORTED BY THE CONFIRMATIONS ISSUED BY THE PARTIES WHO HAD DONE THE SAID WORK. IN THE AID CONFIRMATIONS PERMANENT ACCOUNT NO. AND OTHER PARTICULARS WERE ALSO FURNISHED BY THE SAID PARTIES. EVEN THE COPIES OF THEIR BANK STATEMENTS WERE ALSO FILED BY THE ASSESSEE TO ESTABLISH THAT THE RE NOVATION CHARGES WERE PAID TO THE SAID PARTIES THROUGH A/C PAYEE CHEQUES. THE A.O. HOWE VER STILL DID NOT ACCEPT THE CLAIM OF THE ASSESSEE OF HAVING ACTUALLY DONE THE RENOVATION WORK FOR SEVERAL REASONS. FIRSTLY HE NOTED THAT THE RELEVANT BANK ACCOUNTS WERE OPENED B Y THE CONCERNED PARTIES RECENTLY BY DEPOSITING A SUM OF ` 100/- IN CASH AND THE AMOUNT DEPOSITED IN THE SAID ACCOUNTS ON ACCOUNT OF RENOVATION CHARGES RECEIVED BY THE ASSES SEE WAS IMMEDIATELY WITHDRAWN BY THEM. AS RIGHTLY HELD BY THE LD. CIT(A) IN THIS CO NTEXT THIS NOTING BY THE A.O. WAS JUST ENOUGH TO CREATE A SUSPICION BUT THE SAME WAS NOT E NOUGH TO DRAW ANY ADVERSE INFERENCE 9 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL ABOUT THE GENUINENESS OF THE ASSESSEES CLAIM OF HA VING CARRIED OUT THE RENOVATION WORK WHICH WAS DULY SUPPORTED BY DOCUMENTARY EVIDENCE. SIMILARLY THE OBJECTION RAISED BY THE A.O. ON THE BASIS OF LETTER RECEIVED FROM THE C ONCERNED SOCIETY INFORMING NON- OBTAINING OF THE PERMISSION BY THE ASSESSEE FOR REN OVATION WORK WAS DULY MET BY THE ASSESSEE BY ESTABLISHING ON EVIDENCE THAT NO SUCH P ERMISSION WAS ACTUALLY REQUIRED AS PER RULES OF THE SOCIETY IN CASE OF RENOVATION WORK CAR RIED OUT IN THE FLATS SO LONG AS NO STRUCTURAL CHANGES ARE CONTEMPLATED. AS RIGHTLY HE LD BY THE LD. CIT(A) THE ASSESSEE THUS HAD MET THE OBJECTIONS RAISED BY THE A.O. WHILE DIS ALLOWING HER CLAIM FOR DEDUCTION ON ACCOUNT OF RENOVATION EXPENSES AND BROKERAGE AND WH AT REMAINED WAS ONLY SUFFICIENT TO GIVE RISE TO SUSPICION ABOUT THE ASSESSEES CLAIM W HICH COULD NOT TAKE PLACE OF THE DOCUMENTARY EVIDENCE PRODUCED BY THE ASSESSEE TO SU PPORT AND SUBSTANTIATE HER CLAIM FOR THE SAID DEDUCTION. THE LD. CIT(A) IN OUR OPINION THEREFORE WAS FULLY JUSTIFIED IN ALLOWING THE CLAIM OF THE ASSESSEE FOR RENOVATION C HARGES PAID TO M/S S.D. CORPORATION AND BROKERAGE PAID TO MR. TARUN MEHTA AND MR. SAMEE R KAMANI. 12. THE LD. CIT(A) HOWEVER CONFIRMED THE DISALLOW ANCE MADE BY THE A.O. ON ACCOUNT OF ASSESSEES CLAIM FOR RENOVATION CHARGES PAID TO M/S NARESH INTERIORS MAINLY BECAUSE THE SUMMONS SENT BY THE A.O. TO THE SAID PA RTY HAD RETURNED BACK IGNORING THE FACT THAT SIMILAR DETAILS AND DOCUMENTS AS FILED IN RESPECT OF S.D. CORPORATION WERE ALSO FILED BY THE ASSESSEE IN RESPECT OF PAYMENT MADE TO M/S NARESH INTERIORS. IT IS PERTINENT TO NOTE HERE THAT THE LD. CIT(A) HIMSELF HAS MENTIO NED IN HIS IMPUGNED ORDER THAT THE RELATIONSHIP BETWEEN THE ASSESSEE AND THE PARTIES W HO DID THE INTERIOR DECORATION WORK IS NOT LIKE CREDITOR WHICH REMAINS SUSTAINED. HE OBSE RVED THAT IT WAS A CASE OF CONTRACTOR WHOSE RELATIONSHIP WITH THE ASSESSEE GOT ALMOST TER MINATED IMMEDIATELY AFTER THE WORK WAS FINISHED. HE ALSO NOTED THAT THE ASSESSEE HOW EVER HAD MADE EFFORTS TO SUBMIT THE RELEVANT DETAILS OF THE CONTRACTORS INCLUDING COPIE S OF THEIR BANK STATEMENTS AND STILL NO EFFORTS WERE MADE BY THE A.O. TO ENFORCE THEIR ATTE NDENCE. HAVING MADE ALL THESE OBSERVATIONS THE LD. CIT(A) STILL CONFIRMED THE DI SALLOWANCE MADE BY THE A.O. ON ACCOUNT OF PAYMENT OF RENOVATION CHARGES TO NARESH INTERIORS MERELY BECAUSE THE 10 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL SUMMONS SENT BY THE A.O. TO THE SAID PARTY HAD RETU RNED BACK WHICH IN OUR OPINION WAS NOT JUSTIFIED. WE THEREFORE MODIFY THE IMPUGNED ORDER OF THE LD. CIT(A) AND DIRECT THE A.O. TO ALLOW THE ASSESSEES CLAIM FOR DEDUCTION ON ACCOUNT OF PAYMENT OF RENOVATION CHARGES MADE TO M/S NARESH INTERIORS. WE MAY NOTE HERE THAT WHILE CHALLENGING THE ACTION OF THE LD. CIT(A) IN DELETING THE DISALLOWAN CE MADE BY THE A.O. ON ACCOUNT OF BROKERAGE AND RENOVATION CHARGES PAID TO M/S S.D. C ORPORATION THE REVENUE IN THE RELEVANT GROUNDS HAS RELIED ON THE PROVISIONS OF SE CTION 69-C. THE SAID PROVISION HOWEVER IS APPLICABLE ONLY WHEN THE ASSESSEE IS FO UND TO HAVE INCURRED THE CORRESPONDING EXPENSES BUT HAS FAILED TO EXPLAIN TH E SOURCE THEREOF. IN THE PRESENT CASE PAYMENTS OF EXPENSES ON ACCOUNT OF BROKERAGE AND RE NOVATION CHARGES WERE MADE BY THE ASSESSEE BY A/C PAYEE CHEQUES DRAWN FROM HER BANK A CCOUNT REGULARLY MAINTAINED AND THERE WAS NO ALLEGATION MADE BY THE A.O. THAT SOURC E OF THE SAID PAYMENT MADE BY THE ASSESSEE FROM HER REGULAR BANK ACCOUNT HAD REMAINED UNEXPLAINED. SECTION 69-C THUS HAS NO APPLICATION TO THE FACTS OF THE ASSESSEES C ASE AND THE RELIANCE OF THE REVENUE ON THE PROVISIONS OF SECTION 69-C THUS IS CLEARLY MISP LACED. GROUND NO. 3 & 4 OF THE REVENUES APPEAL ARE ACCORDINGLY DISMISSED AND THE SOLITARY GROUND RAISED IN THE ASSESSEES APPEAL IS ALLOWED. 13. IN THE RESULT APPEAL OF THE REVENUE IS DISMISS ED WHEREAS APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 28 TH JANUARY 2011. SD/- SD/- (D. MANMOHAN) (P.M. JAGTAP) VICE PRESIDENT ACCOUNTANT MEMBER MUMBAI DATED 28 TH JANUARY 2011. RK 11 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) XVIII - MUMBAI 4. THE CIT- M.C. XVIII MUMBAI 5. THE DR BENCH F 6. MASTER FILE // TUE COPY// BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI 12 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL DATE INITIALS 1 DRAFT DICTATED ON 11.1.11 13.1.11 19 1.11 SR. PS 2 DRAFT PLACED BEFORE THE AUTHOR 18.1.11 20.1.11 S R. PS 3 DRAFT PLACED BEFORE THE SECOND MEMBER 4 APPROVED DRAFT COMES TO THE SR. PS SR. PS 5 KEPT FOR PRONOUNCEMENT ON SR. PS 6 FILE SENT TO THE BENCH CLERK SR. PS 7 DATE ON WHICH FILE GOES TO THE HEAD CLERK 8 DATE ON WHICH FILE GOES TO THE AR 9 DATE OF DISPATCH OF ORDER 13 ITA 7270/MUM/08 ITA 5409/M/08 MRS. SUMAN AGARWAL