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2017 (10) TMI 1290 - AT - Income TaxAddition on account of long term capital gain - FMV determination - treating the land sold as a capital asset within the meaning of section 2(14)- not allowing the deduction for cost of acquisition Held that - Following the full bench decision of Hon ble Punjab and Haryana High Court in case of Thakur Dwara Shri Krishanji Maharaj Handiyaya, Barnala vs. CIT (2014 (6) TMI 14 - PUNJAB & HARYANA HIGH COURT) it is of the considered opinion that the land in question does not fall in the category of the capital asset for which the cost of acquisition is not possible to be ascertained. Accordingly, the cost of acquisition in the hand of the assessee would be the fair market value as on 01.04.1981. Accordingly this issue is decided against the assessee. Capital gain accessibility in the hand of HUF or assessee - admission of additional evidence - Held that - On careful perusal of the additional evidence proposed to be filed by the assessee. It is noted that all the documents sought to be filed by the assessee are either the copies of the Revenue record showing the status of the land in question in past or a sale deed dated 08.05.2008. Therefore from the very nature of the documents filed by the assessee as additional evidence it is clear that there is no possibility or scope of creating or manipulating with the evidence. Thus the question of creating any evidence or putting up a claim in the nature of afterthought is ruled out. Having admitted the additional ground no. 2 is required to be adjudicated after examination and verification of the evidence filed by the assessee at this stage.
Issues Involved:
1. Legality of the order passed u/s 144/147. 2. Treatment of the land sold as a capital asset within the meaning of section 2(14) of IT Act. 3. Deduction for the cost of acquisition. 4. Deduction u/s 54F on account of investment made. 5. Assessment of capital gain when the land was acquired by forefathers without cost. 6. Assessment of capital gain in the hands of the individual assessee versus HUF. Detailed Analysis: 1. Legality of the Order Passed u/s 144/147: The assessees challenged the legality of the order passed under sections 144 and 147, which was confirmed by the CIT(A). However, this ground was not pressed during the hearing and was subsequently dismissed as not pressed. 2. Treatment of the Land Sold as a Capital Asset: The CIT(A) confirmed the addition of ?41,35,500/- on account of long-term capital gain by treating the land sold as a capital asset within the meaning of section 2(14) of the IT Act. The assessees contended that the land was agricultural and believed no capital gain was chargeable. However, the AO assessed the land within the municipal limits of Jaipur, confirming it as a capital asset. 3. Deduction for Cost of Acquisition: The assessees argued that the land was acquired by their forefathers without any cost, and thus no capital gain could be charged. They cited the Supreme Court decision in CIT vs. B.C. Srinivasa Setty, which states that if the cost of acquisition is not ascertainable, no capital gain can be charged. The Revenue argued that the fair market value as on 01.04.1981 should be considered as the cost of acquisition. The Tribunal held that the cost of acquisition should be the fair market value as on 01.04.1981, following the decision of the Punjab and Haryana High Court in CIT vs. Raja Malwinder Singh. 4. Deduction u/s 54F on Account of Investment Made: This ground was not pressed by the assessees during the hearing and was subsequently dismissed as not pressed. 5. Assessment of Capital Gain When the Land was Acquired by Forefathers Without Cost: The Tribunal considered whether the land, acquired by the forefathers without any cost, should be charged to capital gain tax. The Tribunal concluded that the cost of acquisition in such cases should be the fair market value as on 01.04.1981, as per section 55(2)(b) and 55(3) of the Income Tax Act. The Tribunal dismissed the assessees' contention that no capital gain could be charged due to the absence of a cost of acquisition. 6. Assessment of Capital Gain in the Hands of the Individual Assessee Versus HUF: The assessees argued that the land was ancestral and should be assessed in the hands of the HUF, not the individual assessees. The Tribunal admitted additional evidence, including revenue records and sale deeds, to verify this claim. The Tribunal remanded this issue back to the AO for adjudication after examination of the additional evidence. Conclusion: The Tribunal partly allowed the appeals for statistical purposes. The issue of assessing capital gain in the hands of HUF was remanded to the AO for further examination. The Tribunal upheld the treatment of the land as a capital asset and determined the cost of acquisition as the fair market value as on 01.04.1981. The legality of the order passed u/s 144/147 and the deduction u/s 54F were dismissed as not pressed.
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