SRIMATHI RAJAMANI,SALEM V. ITO, WARD-2(1), SALEM

ITA 1874/CHNY/2024

AI Insights

This case involves an appeal by Smt. Rajamani against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, concerning the computation of long-term capital gains from the sale of land. The land, originally purchased by Shri M.R. Vellappan in 1974, was later gifted to Smt. Rajamani by her sons in 2005. The AO had adopted a sale consideration under section 50C of the Act, which was contested by the assessee. The Tribunal found merit in the assessee's argument that the cost of acquisition should be considered from the date it was acquired by the previous owner, as per section 49 of the Act.

• Counselvise Citation: [2024] 140 COUNSELVISE.COM (IT) 107301 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 14-10-2024
• Assessment Year: 2011-2012
• Appeal Filed On: 09-07-2024
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Matter Remanded
• Court: TRIBUNAL
• Department Lawyers: R.ANITA
• Assessee Lawyers: T.S. LAKSHMI VENKATARAMAN
• Keywords: Condonation of delay; Capital asset; Sale consideration of property below Jantri Value; Cost of acquisition; Gift
• Section: 50C

Judgement Text

"आयकर अपीलीय अिधकरण, ‘सी’ ᭠यायपीठ,चे᳖ई IN THE INCOME TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI ᮰ी महावीर ᳲसह, उपा᭟यᭃ एवं ᮰ी जगदीश, लेखा सद᭭य के समᭃ BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENTAND SHRI JAGADISH, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.: 1874/CHNY/2024 िनधाᭅरण वषᭅ/Assessment Year: 2011-12 Smt. Rajamani, 5/80, MVS House, Salem Street Plant Road, Jagir Ammapalayam, Salem – 636 302. PAN: AFPPR 2492K Vs. The Income Tax Officer, Ward-2(1), Salem. (अपीलाथᱮ/Appellant) (ᮧ᭜यथᱮ/Respondent) अपीलाथᱮ कᳱ ओर से/Appellant by : Shri T.S. Lakshmi Venkataraman, FCA ᮧ᭜यथᱮ कᳱ ओर से/Respondent by : Ms. R. Anita, Addl.CIT सुनवाई कᳱ तारीख/Date of Hearing : 14.10.2024 घोषणा कᳱ तारीख/Date of Pronouncement : 14.10.2024 आदेश /O R D E R PER MAHAVIR SINGH, VICE PRESIDENT: This appeal by the assessee is arising out of the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in Order No.ITBA/NFAC/S/250/2024- 25/1064653302 (1) dated 06.05.2024. The assessment was framed by the Income Tax Officer, Ward-2(1), Salem for the assessment year 2011-12 u/s.143(3) r.w.s.147 of the Income Tax Act, 1961 (hereinafter the ‘Act’) vide order dated 31.12.2018. - 2 - ITA No.1874/Chny/2024 2. At the outset, it is noticed that this appeal is barred by limitation by four days. The facts are that the order of CIT(A) dated 06.05.2024 was received by assessee on 06.05.2024 as per Form No.36. The appeal should have been filed on or before 05.07.2024 but appeal was actually filed on 09.07.2024, thereby there is a delay of four days. The assessee has stated the following reason in its affidavit:- “b) Due to age factor and health conditions of the assessee was unable to contact her Chartered Accountant for making ready the appeal papers and for signing the same.” The ld.Senior DR has objected for condonation of delay but by going through the smallness of delay and reason stated, we feel that there is sufficient cause for condonation of delay and hence, we condone the delay and admit the appeal. 3. The only issue in this appeal of assessee is as regards to computation of long term capital gain out of sale of 9716 sq.ft. of land at SF No.258/6, Rasi Nagar, Jagir Ammapalayam, Salem. 4. We have heard rival contentions and gone through facts and circumstances of the case. We noted that the assessee during the financial year 2010-11 relevant to this assessment year 2011-12 sold land at Salem of 9716 sq.ft., out of total land owned by assessee along with her son Shri Rajeshkumar of 33,686 sq.ft., and assessee’s sale - 3 - ITA No.1874/Chny/2024 consideration for her share comes to Rs.23,80,615/-. As per sale deed registered vide document No.4559/2010 dated 17.06.2010, the assessee sold her share of land of 7,371 sq.ft., out of total land up to 26,550 sq.ft., mentioned in this document for consideration of Rs.47,85,800/-. According to AO, the sale consideration recorded in the sale deed is lesser than the value determined by the Stamp Valuation Authority for the purpose of section 50C of the Act. Therefore, the AO computed the total consideration of the entire land at Rs.82,53,900/- and therefore, adopted the rate per sq.ft., at Rs.245.02, thereby the AO computed the assessee’s share at Rs.23,80,615/- (9716 sq.ft., x 245.02). Aggrieved assessee preferred appeal before CIT(A), who directed the AO to recompute the long term capital gain considering the value of cost of acquisition as on 28.10.2002 at Rs.6,00,000/- and after indexing the same, recompute the capital gain. Further aggrieved, assessee came in appeal before the Tribunal. 5. We noted that the AO has adopted the assessee’s share of sale consideration in term of section 50C of the Act at Rs.23,80,615/- but cost of acquisition is taken by the AO at nil. Now, assessee before us only stated the facts that this land originally was purchased by one Shri M.R. Vellappan vide sale deed dated 08.03.1974 registered vide document No.1107/1974. Shri M.R. Vellappan gifted this land to her - 4 - ITA No.1874/Chny/2024 sons namely Shri S. Siddeshkumar and Shri S.Rajeshkumar (two sons of assessee) vide gift settlement deed dated 28.10.2002. This way Shri S.Rajeshkumar got this land from his paternal grandfather Shri M.R. Vellappan on 28.10.2002. Shri S.Rajeshkumar and Shri S. Siddeshkumar, two sons of the assessee, gifted the above said land by gift settlement deed dated 03.01.2005 to the assessee. It means the genesis of this land starts from land purchased by Shri M.R. Vellappan vide document No.1107/1974 dated 08.03.1974. Now, the ld.AR for the assessee before us only requested the cost of acquisition should be taken as on 08.03.1974, the property purchased by Shri M.R. Vellappan and value as on 01.04.1981 or 01.04.2001 as the case may be, should be ascertained and thereafter indexation should be allowed accordingly. For this, the ld.AR for the assessee relied on the provision of section 49 of the Act. We, after hearing both the sides and going through the provisions of section 49 of the Act are of the view that where the capital asset become the property of the assessee under a gift, the cost of acquisition of the capital asset shall be deemed to be the cost for which the previous owners of the property acquired it and not ‘nil’ value is to be taken while computing capital gain. We agree with the proposition that in term of section 49 of the Act, cost of acquisition for which the previous owners of the property acquired it. In the present case, the property was acquired by one Shri M.R. Vellappan by sale deed dated 08.03.1974 registered vide document No.1107/1974 and - 5 - ITA No.1874/Chny/2024 the AO has to compute the capital gain accordingly. We, after considering the facts in entirety, remand this matter for computing cost of acquisition as on the date of sale of this land by assessee i.e., as on 17.06.2010 in term of section 49 of the Act. The AO will verify the documents first and gather the facts and thereafter, in case the above stated position is correct, he will re-compute the cost of acquisition for the purpose of computing long term capital gain as per law. This issue of assessee’s appeal is allowed for statistical purposes. 6. In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court at the time of hearing on 14th October, 2024 at Chennai. Sd/- Sd/- (जगदीश) (JAGADISH) लेखा सद᭭य/ACCOUNTANT MEMBER (महावीर ᳲसह ) (MAHAVIR SINGH) उपा᭟यᭃ /VICE PRESIDENT चे᳖ई/Chennai, ᳰदनांक/Dated, the 14th October, 2024 RSR आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy to: 1. अपीलाथᱮ/Appellant 2. ᮧ᭜यथᱮ/Respondent 3. आयकर आयुᲦ /CIT, Salem 4. िवभागीय ᮧितिनिध/DR 5. गाडᭅ फाईल/GF. "