COMMISSIONER OF INCOME TAX DELHI Vs. RAM GOPAL

JUDGEMENT

(1.) The Revenue is aggrieved by the order of Income Tax Appellate Tribunal (ITAT) in respect of its appeal ITA No. 5910/Del./2012. The impugned common order also allows the cross-objections preferred by the assessee in C.O.No.479/Del./2012. The Revenue complains that the ITAT fell into error in misappreciating that the amounts spent by the assessee were towards acquisition of a capital asset, during the relevant year, and that the amount spent towards improvements was deductible.

(2.) The assessee, in the return for the Assessment Year (AY) 2009-10 reported sales of two capital assets in the form of half shares in a residential property in Marine Drive, Mumbai and half share in a Kashmere Gate, property. The assessee claimed that a sum of Rs. 73,27,000/- (hereinafter called as "Acquisition Cost") was used to acquire another property within a period stipulated in Section 54, i.e. MC 1-901 Moon Court Apartment, Jay Pee Green, Greater Noida (UP). It also claimed, inter alia, that a sum of Rs. 25,14,700/- (hereinafter referred as "improvement expenses") was spent towards cost of improvement. The Assessing Officer (AO), in framing the assessment order, rejected the assessee's contention and held that in the absence of an agreement to sell, the rights acquired by the provisional booking of the property did not meet with the requirements spelt out under Section 64, i.e. acquisition of new capital asset. The AO also held that the improved cost was not deductible. The CIT (Appeals) accepted the assessee's contention and directed the deletion of both amounts. The Revenue unsuccessfully appealed to the ITAT.

(3.) It is argued by Mr.Rohit Madan, learned counsel on behalf of the Revenue that the AO's position with respect to acquisition of a new capital asset was correct. He said that the ITAT's reliance on CIT vs. R.L. Sood, 2000 245 ITR 727 and the ruling in Suraj Lamps and Industries Pvt. Ltd. vs. State of Haryana and Anr., 2012 340 ITR 1, has arisen the issue of acquisition as follows:-