The Income Tax Appellate Tribunal (ITAT), Mumbai Bench while allowing the claim towards amenities charges on flat sale held that the amenities charges reduce the capital gains.
The issue in dispute is in respect of the amenities charges claimed by the assessee as part of cost of acquisition of the flat.
On perusal of the submission received from the builder, Hiranandani Lake Gardens and the group concern M/s. Lake View Developer, AO observed that out of 128 flats in Eternia CHS amenities agreement have been made only in respect of 33 flats.
This implies that there was no mandatory arrangement on the part of the builder to split the work into two different agreements, which is contrary to the facts submitted by the assessee.
The flat was handed over by the builder in complete constructed form and was fit for habitation in all respects as, apart from very few flat owners, the majority of other flat owners in Etemia CHS have not entered into such amenities agreement with the builder.
It is further observed from the amenities agreement that the amenities charges claimed include special waterproofing in toilets/kitchen, special wood for doors/windows etc. which are not in the nature of improvement cost. The amenities agreement-claimed by the assessee is also not with the builder but a group concern., M/s. Lake View Developer.
The assessee has not been able to co-relate the two agreements entered with two different business entities one with M/s. Hiranandani Lake Garden and others with M/s. Lake view Developers. The assessee has also not been able to disclose the. details of payment, mode of payment with date, supporting evidence in respect of such payments. In view of the above, long term capital gain determined as per order under section 250 of the Income Tax Act of Rs.25,13,902 is charged to tax.
The Coram of Ram Lal Negi and Shamim Yahya opined that the authorities below should have followed the ITAT order and allowed the assessee’s claim of amenities charges as part of the cost of the position.
This position is further fortified that the amenity charges had already been paid and the same was appearing in the balance sheet of the assessee.
“Accordingly, in our considered opinion the denial of the assessee’s claim towards amenities charges paid as part of the cost of acquisition is not sustainable. Accordingly set aside the orders of authorities below on this issue and decide the issue in favor of the assessee,” the ITAT said.
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