2011 (12) TMI 552 - AT - Income Tax

Summary

Issues Involved:
1. Determination of Sale Consideration of Agricultural Land.
2. Cost of Acquisition of Land.
3. Consideration u/s 48 of the I.T. Act.
4. Sale Consideration for Land Not Produced Before AO.
5. Expenditure Incurred for Registry and Stamp.
6. Indexed Cost of Acquisition.

Summary:

1. Determination of Sale Consideration of Agricultural Land:
The assessee contested the sale consideration of agricultural land at Rs. 17,35,301/- upheld by the ld. CIT(A) against Rs. 7.51 lacs declared by the assessee. The AO applied Section 50C, which specifies that if the value adopted by the registering authorities is more than the sales consideration declared by the assessee, the higher value should be adopted for calculating capital gain. The AO adopted the sale consideration at Rs. 27,08,000/- based on the valuation by the DVO, Ajmer. The ld. CIT(A) directed the AO to adopt the sale value of Rs. 17,35,301/- instead of Rs. 27,08,000/- as the AO was not justified in proportionately increasing the sale value without corroborative evidence. The Tribunal upheld the ld. CIT(A)'s decision, stating that the provisions of Section 50C are applicable, and the sale consideration should be Rs. 17,35,301/-.

2. Cost of Acquisition of Land:
The assessee argued that the cost of acquisition should be Rs. 72,914/- as per the registry, while the AO calculated it at Rs. 58,800/- presuming a 10% growth rate. The ld. CIT(A) upheld the AO's decision, but the Tribunal found no basis for adopting a 10% appreciation rate and held that the cost of acquisition should be Rs. 72,914/-.

3. Consideration u/s 48 of the I.T. Act:
The Revenue's appeal against the relief allowed by the ld. CIT(A) regarding consideration to be considered u/s 48 was dismissed. The Tribunal upheld the ld. CIT(A)'s direction to adopt the sale consideration of Rs. 17,35,301/-.

4. Sale Consideration for Land Not Produced Before AO:
The Revenue contended that the ld. CIT(A) erred in treating the sale consideration at Nil for the land measuring 0.3754 hectare as two registries were not produced before the AO. The Tribunal found no evidence to show that the assessee sold the entire land and upheld the ld. CIT(A)'s decision to consider capital gain for 0.6696 hectare only.

5. Expenditure Incurred for Registry and Stamp:
The Revenue argued that the assessee deposited the entire sale consideration of Rs. 7.51 lacs in his savings bank account, and there was no withdrawal except for Bond of Rs. 4.00 lacs. The Tribunal noted that this issue was not raised before the ld. CIT(A) and decided the issue based on the documentary evidence suggesting that the cost of registry and stamps was borne by the seller out of sale consideration.

6. Indexed Cost of Acquisition:
The Revenue's grievance that the ld. CIT(A) erred in adopting the indexed cost of acquisition at Rs. 2,62,836/- for the entire 1.045 hectare as against sale consideration for 0.6696 hectare was restored back to the AO. The AO was directed to provide an opportunity to the assessee to clarify whether the acquisition cost of Rs. 72,914/- was for the entire land or the land sold.

Conclusion:
The appeals of both the assessee and the Revenue were partly allowed. The order was pronounced in the open Court on 09-12-2011.