Magal Smitha Karpur, USA V. ITO INTERNATIONAL TAXATION ,WARD-2(2), Chennai

ITA 283/CHNY/2022

AI Insights

The case involves Smt. Magal Smitha Karpur, an NRI, who appealed against the order of the Commissioner of Income Tax (Appeals) 16, Chennai, concerning the assessment year 2016-17. The primary issue was the valuation of a property sold by the assessee in Adyar, Chennai, which was assessed at a significantly lower rate by the Assessing Officer for calculating capital gains. The assessee argued that the property was in a prime area and the rate adopted for valuation was grossly inadequate. The Tribunal agreed with the assessee's contention regarding the property’s prime location and adjusted the indexed cost for the purpose of calculating capital gains.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 135115 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: C
• Next Hearing Date: 09-01-2023
• Assessment Year: 2016-2017
• Appeal Filed On: 04-05-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 143(3); 143(2)

Judgement Text

आयकर अपीलीय अिधकरण, ‘सी’ Ɋायपीठ, चेɄई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ŵी वी. दुगाŊ राव, Ɋाियक सद˟ एवं ŵी मनोज कु मार अŤवाल, लेखा सद˟ के समƗ । Before Shri V. Durga Rao, Judicial Member & Shri Manoj Kumar Aggarwal, Accountant Member आयकर अपील सं./I.T.A. No.283/Chny/2022 िनधाŊरण वषŊ/Assessment Year: 2016-17 Smt. Magal Smitha Karpur, 19/8, BRB Apartments, Bazullah Road, T. Nagar, Chennai 600 017. [PAN:FUNPS2222G] Vs. The Income Tax Officer, International Taxation, Ward 2(2), Chennai. (अपीलाथŎ/Appellant) (ŮȑथŎ/Respondent) अपीलाथŎ की ओर से / Appellant by : Shri T.N. Seetharaman, Advocate ŮȑथŎ की ओर से/Respondent by : Shri P. Sajit Kumar, JCIT सुनवाई की तारीख/ Date of hearing : 10.01.2023 घोषणा की तारीख /Date of Pronouncement : 22.02.2023 आदेश /O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 16, Chennai dated 28.02.2022 relevant to the assessment year 2016-17. 2. Brief facts of the case are that the assessee is an NRI and filed her return of income for the assessment year 2016-17 on 27.07.2016 admitting total income of ₹.9,01,28,750/-. The case was selected for scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was issued. After following due procedure, the I.T.A. No.283/Chny/22 2 Assessing Officer has completed the assessment under section 143(3) of the Act dated 26.12.2018 assessing taxable income of the assessee at ₹.16,56,91,507/- after making various additions/disallowances. In the assessment order, the Assessing Officer has adopted the ground rate as on 01.04.1981 at ₹.18,000/- (2400 sq. ft.) as against ₹.5,00,000/- adopted by the assessee for the purpose of computing the indexation value of the property. On appeal, the ld. CIT(A) confirmed the value adopted by the Assessing Officer and dismissed the ground raised by the assessee. 3. On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that value adopted by the Assessing Officer as on 01.04.1981 was grossly inadequate/very low. It was further submission that the property sold by the assessee was situated at Gandhi Nagar, Adyar, a fully developed prime area of Chennai even in the year 1981 and the land rate of ₹.200/- per sq. ft as on 01.04.1981 claimed by the assessee is a fair rate. 4. On the other hand, the ld. DR has strongly supported the orders of authorities below. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including written I.T.A. No.283/Chny/22 3 submissions of the assessee. The assessee and Mrs. Janaki sold the property at Adyar for a total sale consideration of ₹.22,24,00,000/- and offered capital gain of ₹.18,87,12,345/-. In her computation, the assessee has adopted the indexed cost as on 01.04.1981 at ₹.200/- per sq. ft. or ₹.5,00,000/- per ground. After verification from the Sub-Registrar, Adyar, the Assessing Officer has adopted the indexed cost per ground as on 01.04.1981 at ₹.18,000/- [₹.7.50 per sq. ft.] and determined the long term capital gains, which was confirmed by the ld. CIT(A). The contention of the assessee is that the property is located at Gandhi Nagar, Adyar, which is fully developed prime area of Chennai city even in the year 1981 and the assessee sold the same at ₹.25,059/- per sq. ft. representing an hike of 3,341 times over the rate adopted by the Assessing Officer as on 01.04.1981. However, the assessee has not brought on record any concrete evidence which could repel the submissions of the assessee. In this case, the Assessing Officer has not disputed the sale consideration of the property, but, we find that the value adopted at the rate of ₹.7.50 per sq. ft. by the Assessing Officer for computing the indexed cost appears to be very low. Accordingly, to meet the ends of natural justice and considering the prime locality of the property sold by the assessee, we direct the Assessing Officer to adopt the indexed cost at the rate of 100/- per sq. ft. for the purpose of computing the indexation value of the I.T.A. No.283/Chny/22 4 property. 6. In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 22 nd February, 2023 at Chennai. Sd/- Sd/- (MANOJ KUMAR AGGARWAL) ACCOUNTANT MEMBER (V. DURGA RAO) JUDICIAL MEMBER Chennai, Dated, 22.02.2023 Vm/- आदेश की Ůितिलिप अŤेिषत/Copy to: 1. अपीलाथŎ/Appellant, 2.ŮȑथŎ/ Respondent, 3. आयकर आयुƅ (अपील)/CIT(A), 4. आयकर आयुƅ/CIT, 5. िवभागीय Ůितिनिध/DR & 6. गाडŊ फाईल/GF.