PFA
Deuctibility of Cost of Furniture in Computation of Capital Gain on Property Sale
Issue which arises for our consideration is whether Rs. 12 lakhs paid by the appellant assessee to the seller at the time of purchase of the property in question must be construed as a cost of acquisition of the asset so as to be deducted from the full value of consideration received by the appellant assessee at the time when he had sold and transferred the property in question. Section 48 of the Act stipulates the manner in which the capital gain shall be calculated. We reproduce the said Section as under:
"Section 48:
The income chargeable under the head capital gain shall be computed by deducting from the full value of consideration received or accruing as a result of transfer of capital asset, the following amounts namely:-
i) expenditure incurred wholly and exclusively in connection with such transfer;
ii) the cost of acquisition of the asset and the cost of any improvement thereto."
From the perusal of the said Section, it is clear that; (1) asset sold should be a capital asset; (2) from the sale consideration, only the cost of acquisition of the asset, cost of improvement, if any, and expenses incurred wholly and exclusively in connection with such transfers, are to be reduced. The issue would be, whether the display windows, partition of drawing room, wooden grills, wooden temples, wardrobes, cupboards, crockery, windows, fans, geysers, light fittings, rugs, furniture, fixtures, can be said to be capital asset, which were acquired by the assessee. It is an admitted position as noted by the Authorities below that the assessee had acquired the property by way of four sale deeds, each of Rs. 4.50 lakhs, the total of which, was Rs.18 lakhs. Another amount of Rs. 12 lakhs has been paid for acquisition of furniture and fixtures, which was by way of a following bill:
| "S. NO. | DESCRIPTION | RATE | AMOUNT |
| ENTIRE REMOVABLE WOOD WORI (….. THE FLAT I.E. ORNAMENTAL SHDW— CASE / DISPLAY WINDOWS. WKNH— ~ENTAL PARTITION ON DRAWING ROOM, WOODEN GRILLS. WOODEN TEMPLE, WARDROBES, CUPBOARDS. CROCKERY, WINDOWS, FANS, GEYSERS ORNAMENTAL LIGHT FITTINGS, RUGS ~FURNITURE FIXTURE COMPLETE. L.S. | Rs.1 2,00,000/- | Rs.12,00,000/- | |
| Rs. TWELVE LACS ONLY" | |||
As noted by the Assessing Officer, there was no agreement, nor any registered deed in that regard. The Assessing officer was right in noting that there was no mention in the sale deeds of Rs. 18 lakhs about purchase of the furniture and fixtures by way of a separate agreement for Rs. 12 lakhs. The purported purchase was only effected by way of a bill. Even the perusal of the bill would not reveal the details of show case, windows, grills, wardrobes, crockery, fans, fittings, furniture etc. It is also not known whether the seller of the property to the appellant assessee had, in fact, sought the benefit of the capital gain. The inventory has noted to mean "except two cotton rugs size 2‟ X 2‟ and two Pooja stools" is vague. Similarly, the deed of 2008 also does not give the inventory of the furniture and fixtures as sold in the year 2008, which aspect has been conceded by the learned counsel for the appellantassessee at the time of the arguments. These findings are primarily findings of fact.
Further, the issue can be looked from another perspective, which is, most of the items which are said to have been acquired, are primarily „personal effects‟ which are excluded from the definition of capital asset under Section 2(14) of the Act if they are meant for personal use. It is not the case of the appellant-assessee that the items like wooden temple, crockery, fans, geysers, light fittings etc. were not for personal use, nor such a case was put forth before the Authorities below. In fact, Rs. 12 lakhs was for all the fixtures and fittings including furniture. It is noted, the break up of Rs. 12 lakhs was not given. In any case, as noticed above it is a pure question of fact.
In view of the aforesaid position, we find that the Authorities below were right in disallowing Rs. 12 lakhs for the purpose of computation of the capital gain.
Shri Sachinder Mohan Mehta v. ACIT (Delhi High Court) , Appeal No. ITA 655/2014, Judgment delivered on December 03, 2014
As a part of Prime Minister's 'Good Governance Day' promise to provide an "open and accountable administration' it has been decided that all field offices of the Income Tax Department will observe Public Meeting Day ' during 10.00 AM to 1.00 PM every Wednesday to listen to and try to resolve the grievances of the members of the public.
CBDT Declares Wednesday as 'Public Meeting Day – Acche din aa gaye!
F .No.Dir(Hqrs.) /Ch.(DT)/29 /2013
Government of India
Ministry of Finance
Department of Revenue
{ Central Board of Direct Taxes }
Room No.157-B, North Block, New Delhi,
Dated the Gth January,2015.
OFFICE MEMORANDUM
Subject: Instructions regarding observance of Wednesdays as a 'Public Meeting Day' for hearing public grievances‑
As a part of Prime Minister's 'Good Governance Day' promise to provide an "open and accountable administration' it has been decided that all field offices of the Income Tax Department will observe Public Meeting Day ' during 10.00 AM to 1.00 PM every Wednesday to listen to and try to resolve the grievances of the members of the public. Heads of local income tax offices will not fix any official meeting on Wednesdays during the hours prescribed for interaction with the public and will ensure that their staff including staff at the reception and security personnel, are suitably instructed to allow the members of the public to meet the officers without prior appointment.
Accordingly, the undersigned has been directed to request all cadre controlling Principal Chief Commissioners /Director Generals of Income Tax to instruct all officers and staff under their cadre control to observe ',Public Meeting Day' during 10.00 AM to 1.00 PM every Wednesday with effect from 7th January, 2015 to listen to and to try and resolve the grievances of the members of the public.
A suitable feedback mechanism shall also be put in place by each cadre controlling Principal Chief Commissioner /Director General of Income Tax for offices under his control to record the number of grievances attended to and solved on every 'public meeting day', and to identify the deficiencies with a view to suggesting systemic changes required to avoid recurrence of delays in redressal of grievances.
A report in this regard shall henceforth also be incorporated in their Monthly DO letters submitted to the Zonal Members concerned. It is expected that the above instructions will be adhered to without fail.
This issues with the approval of Chairperson, CBDT.
Dr. B. K. Sinha
CIT(C&S), CBDT
S. 271(1)(c): If the High Court admits the appeal u/s 260A, it means that the issue is debatable and penalty cannot survive When the Hon'ble jurisdictional High Court has admitted substantial question of law on the addition, it becomes apparent that the addition so made has become debatable. The penalty was imposed on the basis of addition so made, therefore, when the addition on the basis of which the penalty was imposed has become doubtful/debatable, therefore, penalty imposed u/s 271(1)(c) of the Act cannot survive Read more of this post Santosh Kumar Agarwal | January 7, 2015 at 10:15 AM | Tags: it means that the issue is debatable and penalty cannot survive, S. 271(1)(c): If the High Court admits the appeal u/s 260A, Schrader Duncan Limited vs. ACIT (ITAT Mumbai) | Categories: Case Law | URL: http://wp.me/p2e8mQ-1b1
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(i) S. 40(a)(ia) disallowance cannot be made if the assessee has not claimed a deduction. (ii) S. 80-IB(10) deduction cannot be denied on the ground that the completion certificate has not been issued by the Municipality if the assessee has completed construction before the due date Explanation (ii) to section 80IB(10)(a) of the Act prescribes that the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority Read more of this post Santosh Kumar Agarwal | January 7, 2015 at 10:16 AM | Tags: (i) S. 40(a)(ia) disallowance cannot be made if the assessee has not claimed a deduction. (ii) S. 80-IB(10) deduction cannot be denied on the ground that the completion certificate has not been issued, Gera Developments Pvt. Ltd vs. JCIT (ITAT Pune) | Categories: Case Law | URL: http://wp.me/p2e8mQ-1b4
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