ITO, Ward-4, Anand V. Smt. Madhuben V. Patel, Anand

ITA 1500/AHD/2018

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(A) which had deleted the addition made by the AO regarding capital gains tax on the sale of a property. The property was originally acquired by two individuals and later sold by their legal heirs. The main contention was the valuation of the sale consideration and the cost of acquisition for tax purposes. The AO had adopted a different sale consideration and cost of acquisition than what was accepted in a similar case involving a co-owner. The CIT(A) directed the AO to adopt the same figures as in the co-owner's case, which the Revenue challenged in this appeal.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135647 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 8 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-03-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-12-2022
• Assessment Year: 2009-2010
• Appeal Filed On: 06-06-2018
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Cost of acquisition; Fair market value; Valuation report; Reassessment proceedings
• Section: 147; 148; 54; 143(3); 54F; 191

Judgement Text

आयकर आयकरआयकर आयकर अपी अपीअपी अपीलीय लीयलीय लीय अिधकरण अिधकरणअिधकरण अिधकरण, अहमदाबाद अहमदाबादअहमदाबाद अहमदाबाद यायपीठ यायपीठ यायपीठ यायपीठ IN THE INCOME TAX APPELLATE TRIBUNAL, ‘’A’’ BENCH, AHMEDABAD BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER And SHRI SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER आयकर अपील सं./ITA No.1500/AHD/2018 िनधा रण िनधा रणिनधा रण िनधा रण वष वष वष वष /Asstt. Year: 2009-2010 Income-tax Officer, Ward-4, Ananad-388001. Vs. Smt. Madhuben V. Patel, Prit Bunglow, Nr. Patel Park, Vadtal Road, Bakrol, Ananad-388315. PAN: AOOPP1418F (Applicant) (Respondent) Revenue by : Shri Dilip Kumar Sr. D.R Assessee by : Shri M.K. Patel, A.R सुनवाई क तारीख/Date of Hearing : 07/12/2022 घोषणा क तारीख /Date of Pronouncement: 06/03/2023 आदेश आदेशआदेश आदेश/O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: The captioned appeal has been filed at the instance of the Revenue against the order of the Learned Commissioner of Income Tax (Appeals)-7, Ahmedabad, dated 30/09/2019 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as "the Act") relevant to the Assessment Year 2009-2010. ITA no.1500/AHD/2018 A.Y. 2009-10 2 2. The Revenue has raised the following grounds of appeal: 1. That in the facts and circumstances of the case and in law, the learned CIT(A) has erred in allowing relief to the assesses and in not confirming the additions made by the AO on these issues, 2.1 That in the facts and circumstances of the case, and in law, the Ld. CJ.T.(Appeals) erred in directing the AO to adopt the sale consideration at Rs.2.75 Cr. instead of Rs,5,99 Cr. without appreciating the facts discussed in the assessment order, and without appreciating that the assesses had failed to controvert the findings of the AO, and failed to substantiate its claim. 2.2 That in the facts and circumstances of the case, and in law, the Ld. CIJ',(Appeals) erred in directing the AO to adopt the sale consideration at Rs.2.75 Cr. instead of Rs.5.99 Cr. without appreciating that the assessee had failed to controvert the findings of the AO, and failed to furnish any documentary evidence to substantiate its claim regarding the sale consideration received. 2.3 That in the facts and circumstances of the case, and in law, the Ld. C.I.T.(Appeals) erred in directing the AO to adopt the sale consideration at Rs.2,75 Cr. instead of Rs.5.99 Cr. on the basis of an order of the CIT(A) in another case, without considering the facts arid without appreciating that the Department had filed appeal against this order of the CIT(A). 3. That in the facts and circumstances of the case and in law, the Ld. C.l,T,(Appeals) erred in directing the AO to consider the cost of acquisition of the impugned property at fair market value as on 1,4,81, as in another case in accordance with the directions pf the Hon'ble ITAT. 4. That in the facts and circumstances of the case, and in law, the Ld. C.I.T.(Appeals) erred in directing the AO to consider the claim of deduction u/s 54F based on the computation of income filed during reassessment proceedings, 5. That in the facts and circumstances of the case, and in law, the Ld. C.I.T.(Appeals) erred in allowing deduction towards brokerage. 6. The appellant craves leave to add, modify, amend or alter any grounds of appeal at the time of, or before, the hearing of appeal 3. The interconnected issue raised by the Revenue is that Ld. CIT(A) erred in deleting the addition made by the AO under the head “Capital Gain” on account of change in the value of sale consideration. 4. The facts in brief are that the assessee in the present case is an individual and has filed her return of income declaring an income under the head “other sources”. There was a piece of land located at Mumbai, admeasuring 2865.60 Sq. meter which was acquired by two persons namely Shri Vijay C. Patel and Dr. Kirti ITA no.1500/AHD/2018 A.Y. 2009-10 3 C. Patel dated 27/10/1959 for Rs. 61,000/- only. Both the persons held equal share in the property. On the demise of Shri Vijay C. Patel, 50 percent shares belonging to him was transferred to the legal heir as detailed below: Sr. No. Name Percentage 1. Smt. Madhuben V. Patel W/o. late Shri Vijay C. Patel 16.67 2. Shri Ripun V. Patel S/o Late Shri Vijay C. Patel 16.66 3. Smt. Shital V. Ptel D/o. late Shri Vijay C. Patel 16.66 5. The impugned property was sold by all the legal heirs in the month of June 2008 for Rs.8.25 crores through solicitor who retained one crore in the Escrow account for expenses to be incurred. Accordingly, the solicitor equally distributed balance amount of Rs. 7.25 crores to all the legal heirs being Rs. 2,41,66,667/- each. The solicitor has also incurred an expense of Rs. 25 lacs in connection with the transfer of the property. The assessee has declared capital gain in the return filed in response to the notice issued u/s 148 of the Act, at Rs.92,31,157/- only. The necessary working towards the capital gain is extracted on page 3 of the assessment order. 6. However, the AO found that in case of co-owner the sale consideration was decided at Rs. 5,98,95,849/- and accordingly the AO has taken sale consideration at Rs.5,98,59,849/- for computing capital gain. The AO further found that the value of the land as on 01/04/1981 stand at Rs. 61,000/- only and accordingly worked out share of the assessee in cost of acquisition with indexation cost at Rs. 59,166/- only. ITA no.1500/AHD/2018 A.Y. 2009-10 4 6.1 The AO also found that the conditions specified u/s 54 of the Act have not been satisfied. As such the AO was of the view that the exemption u/s 54 was not claimed in the original return of income and thus he disallowed the deduction claimed by the assessee. However, the AO was pleased to allow the deduction u/s 54EC of the Act at Rs. 50 lacs only. Thus, the AO calculated the capital gain at Rs. 5,48,36,783/- only. 7. The aggrieved assessee preferred an appeal to the Ld. CIT(A) who deleted the addition made by the AO. 8. Being aggrieved by the order of the Ld. CIT(A), the Revenue is in appeal before. 9. The Ld. DR before us vehemently supported the order of the AO. On the contrary the Ld. AR before us filed a paper book running from pages 1 to 127 and contended that the sale consideration has been worked out in the case of co- owner at Rs. 2.75 crore by the AO in the proceedings under section 254 r.w.s. 143(3) of the Act vide order dated 22-10-2018. 10. The Ld. AR further submitted that the index cost of acquisition has been adopted in the case of co-owner at Rs. 67,31,650.00 in the proceedings under section 254 r.w.s. 143(3) of the Act vide order dated 22-10-2018. 10.1 The Ld. AR further submitted that the capital gain income has been assessed in the proceeding framed u/s 147 of the Act, and therefore, any deduction for which the assessee is entitled against the capital gain income, the same can be claimed in the return filed u/s 148 of the Act. 10.2 The Ld. AR also claimed that the brokerage expenses incurred by the assessee for Rs.8,33,333/- has been accepted in the case of co-owner and ITA no.1500/AHD/2018 A.Y. 2009-10 5 therefore the same should also be allowed as deduction in the year under consideration in the hands of the assessee. 11. The Ld. DR and the Ld. AR before us vehemently supported the order of the authorities below as favourable to them. 12. We have heard the rival contentions of both the parties and perused the materials available on record. There is no dispute to the fact that the sale consideration at Rs. 2.75 crores, cost/ indexed cost of acquisition as on 1-4-1981 and the expenses incurred in connection with the transfer has been duly examined and accepted in the case of co-owner i.e. SMT. Rital Ripun Patel in the proceedings under section 254 r.w.s. 143(3) of the Act vide order dated 22-10- 2018. The relevant extract of the order is reproduced below: However, the Ld.CIT(A) in his order No.CAB/IV-A-367/2011-12 dated 27.12.2013 directed the AO to adopt the sale consideration of Rs.2.75 Crores which is 1/3 rd of Rs.8.25 crores to be shares equally between the assessee and other two ladies for the purposes of computation of long term capital gain. XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX In response to the same the assessee vide 'his letter dated 11.06.2018 submitted the valuation report of Government approved valuer. According to the valuation report the fair market value of property "Deepavali" as on 01,04.1981 is Rs. 69,39,850/-Considering the same, the assessee's share of cost of acquisition is worked out as under: Cost of acquisition (Rs.69,39,850/-) = Rs.34,69,925/- 2 Out of Rs.34,69,925/-, the assessee's share of cost of acquisition worked out at Rs.11,56,6417-(34,69,925/-* 1/3 rd ) Indexed cost of acquisition = 11, 56,641 x 582/100 = Rs. 67,31,650/- XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX Sale consideration Less: Indexed cost of acquisition As discussed above Less: Brokerage Paid (1/3 rd of 25,00,000) Rs.2,83,33,333/- Rs.67,31,650/- Rs. 8,33,333/- 12.2 Regarding the claim made by the assessee u/s 54 of the Act, we find that the income under the head capital gain has been assessed u/s 147 of the Act. Therefore, any claim arises against such capital gain, the assessee is at liberty to claim the same in the proceedings u/s 147 of the Act. In holding so, we draw ITA no.1500/AHD/2018 A.Y. 2009-10 6 support and guidance from the judgment of Hon’ble SC in the case of Sun Engineering reported in 191 ITR 297 wherein it was held as under: “A matter not agitated in the concluded original assessment proceedings also cannot be permitted to be agitated in the reassessment proceedings unless relatable to the item sought to be taxed as 'escaped income'. Indeed, in the reassessment proceedings for bringing to tax items which had escaped assessment, it would be open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non- taxability of the items at all.” 12.3 In view of the above, we hold that the assessee is entitled to make the fresh claim against the capital gain income which has been assessed u/s 143(3) r.w.s. 147 of the Act. Hence, the ground of appeal of the revenue is hereby dismissed. 13. In the result, the appeal filed by the Revenue is dismissed. Order pronounced in the Court on 06/03/2023 at Ahmedabad. Sd/- Sd/- (SIDDHARTHA NAUTIYAL) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER (True Copy) Ahmedabad; Dated 06/03/2023 Manish