P.C. Shivlingaiah, Bangalore V. Assistant Commissioner of Income Tax, Bangalore

ITA 1823/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7548 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-08-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R RAMESH J
• Assessee Lawyers: R K GANERIWALA
• Keywords: Cost of acquisition

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, BENGALURU BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI J.SUDHAKAR REDDY , ACCOUNTANT MEMBER ITA NO. 18 23 / BANG/20 16 (ASSESSMENT YEAR: 2011 - 12 ) SHRI P.C.SHIVALINGAIAH, NO.3, RNS BUILDING, NEAR SAPTAGIRI COLLEGE, CHIKKASANDRA BENGALURU - 560 057. PAN:AZHPP 9519 P VS. APPELLANT ASST. COMMISSIONER OF INCOME - TAX, CIRCLE 6 ( 2 )(1), BENGALURU. RESPONDENT APPELLANT BY : SHRI R.K.GANERIWALA, CA. RESPONDENT BY : SHRI B.R.RAMESH, JCIT(DR) DATE OF HEARING : 30/08/2017 DATE OF PRONOUNCEMENT : 27 /0 9 /2017 O R D E R PER SUNIL KUMAR YADAV, JM : THIS APPEAL IS PREFERRED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME - TAX(APPEALS) - 6 , BENG ALURU, [CIT(A ) ] DATED 25/ 08/2016, INTER ALIA RAISING THE FOLLOWING GROUNDS: ITA NO . 1823 /BANG/201 6 PAGE 2 OF 5 2. DURING THE COURSE OF HEARING THE LEARNED AR OF THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER (AO) INSTEAD OF TAKING VALUATION OF THE LAND AND BUILDING AS ON 01/04/1981 , HAS TAKEN 30% OF THE VALUE TAKEN BY BANGALORE METRO RAIL CORPORATION LTD., (BMRCL) , AS THE COST OF ACQUISITION OF THE ITA NO . 1823 /BANG/201 6 PAGE 3 OF 5 PROPERTY . LEARNED AR OF THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE ACQUIRED A PROPERTY COMPRISING OF LAND AND THREE HOUSES ON 19/0 2/1905 AND THE AO HAS TAKEN THE COST OF LAND AT RS.550/ - AS ON 01/ 0 9/1905 AND THEREAFTER INDEXATION WAS GIVEN WHEREAS HE SHOULD HAVE ADOPTED THE VALUE AS ON 01/04/1981 AND THE VALUE OF LAND COULD NOT HAVE REMAINED SAME AS ON 01/04/1981 AFTER 76 YEARS. THE CONSIDERATION WAS ALSO NOT PROPER L Y DETERMINED BY THE AO. THEREFORE, CAPITAL GAIN SHOWN BY THE ASSESSEE SHOULD HAVE BEEN ACCEPTED , AS THE COMPUTATION WAS IN ACCORDANCE WITH PROVISIONS OF LAW. BUT THE AO COMPUTED LONG TERM CAPITAL GAINS [LTCG] AT RS.3,61 ,94,006/ - AGAINST LTCG SHOWN B Y THE ASSESSEE AT RS.67,64,352/ - RESULTING IN TO AN ADDITION OF RS.2,94,29,654/ - . 3. IN APPEAL BEFORE THE CIT(A ), ASSESSEE DID NOT FIND FAVOUR FROM HIM. NOW, THE ASSESSEE IS BEFORE US AND REITERATED ITS CONTENTION. 4. HAVING CAREFULLY EXAMINED THE ORDERS OF THE LOWER AUTHORITIES IN THE LIGHT OF RIVAL SUBMISSIONS, WE FIND THAT CAPITAL GAINS ACCRUED TO THE ASSESSEE ON ACQUISITION OF LAND AND THREE HOUSES OF THE ASSESSEE BY BMRCL. THE TOTAL COMPENSATION RECEIVED BY THE AS SESSEE FOR LAND AND THREE H OUSES ACQUIRED BY THE BMRCL WAS RS.4,70,81,266/ - . THE INDEXED COST OF ACQUISITION CLAIMED BY THE ASSESSEE WAS OF RS.3,588/ - FOR LAND AND INDEXED COST OF IMPROVEMENT OF RS.3,38,42,308/ - . A FTER TAKING INTO ITA NO . 1823 /BANG/201 6 PAGE 4 OF 5 ACCOUNT INDEXED COST O F ACQUISITION AND INDEXED COST OF IMPROVEMENT , THE ASSESSEE ARRIVED AT LTCG OF RS.1,32,31,782/ - AND ON THIS CAPITAL GAINS , THE ASSESSEE CLAIMED DEDUCTION AT RS.64,67,43/ - U/S 54 OF THE INCOME - TAX ACT,1961 [ THE ACT FOR SHORT]. FINALLY, TAXABLE CAPITAL GA IN COMPUTED BY THE ASSESSEE IS OF RS.67,64,352/ - . THE AO ASKED THE ASSESSEE TO FURNISH BASIS OF INDEXED COST OF IMPROVEMENT OF RS.3,38,42,308/ - BUT THE ASSESSEE COULD NOT FURNISH THE EXPLANATION BEFORE THE AO. THE ASSESSEE, HOWEVER, PRODUCED VALUATION R EPORT OF THE REGISTERED VALUER OF THREE HOUSES ACQUIRED, ACCORDING TO WHICH, TOTAL VALUE OF THREE HOUSES WAS OF RS.58,17,929/ - . THE ASSESSEE CLAIMED THE VALUE OF COST OF IMPROVEMENT AT RS.3,3842,308/ - FOR WHICH NO EXPLANATION WAS FURNISHED. UNDISPUTEDLY, THE LAND AND PROPERTY WAS CONSTRUCTED BEFORE 01/04/1981. THEREFORE, MARKET VALUE OF THE LAND AND PROPERTY SHOULD HAVE BEEN ESTIMATED AS ON 01/04/1981. THEREFORE, AFTER GIVING INDEXATION, COST OF ACQUISITION OF ASSET HAS TO BE WORKED OUT FOR THE PURPOSE OF COMPUTING LTCG. BUT FROM PERUSAL OF THE ORDER S OF THE CIT(A) AS WELL AS THE AO WE FIND THAT THEY HAVE ESTIMATED COST OF LAND AND COST OF BUILDING ON THEIR OWN WITHOUT FOLLOWING THE PROCEDURE LAID DOWN UNDER THE ACT. THE COST OF ACQUISITION AND IMPROVE MENT AS CLAIMED BY THE ASSESSEE AND AS ESTIMATED BY THE REVENUE CANNOT BE ACCEPTED AS IT IS NOT IN ACCORDANCE WITH LAW. THEREFORE, WE SET ASIDE THE ORDER OF THE CIT(A) AND RESTORE THE MATTER TO THE FILE OF THE AO WITH A DIRECTION TO ESTIMATE COST OF LAND AS WELL AS BUILDING ITA NO . 1823 /BANG/201 6 PAGE 5 OF 5 AS ON 01/04/1981 AND THEREAFTER, AFTER GIVING INDEXATION, LONG TERM CAPITAL GAIN IS TO BE WORKED OUT AND TO ALLOW DEDUCTION U/S 54, IF ANY. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH SEPTEMBER, 2017 S D/ - SD/ - ( J.SUDHAKAR REDDY ) ( SUNIL KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PLACE : B ENGALURU. D A T E D : 27 /0 9 /2017. SRINIVASULU, SPS COPY TO : 1 APPELLANT 2 RESPONDENT 3 CIT(A) 4 CIT 5 DR, ITAT, BANGALORE. 6 GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY INCOME - TAX APPELLATE TRIBUNAL BANGALORE