2012 (8) TMI 86 - AT - Income Tax

Capital gains - fair market value of immovable property as on 01.04.1981 - cost of indexation - Exemption u/s 54 of the Act - purchased of a new house or deposit an amount in the capital gain scheme before the due date of filing of return Held that - property was acquired by the material grand father of appellant being a society member in 1951. Though there was dispute between Govt. of Delhi and society, and finally wife of late Bipin Chandra got the land registered by the society in her name in 1984 (06.02.1984). The portion of land had come to appellant s share due to inheritance. - Fair market Value as on 1.4.1981 to be accepted. Assessee in his revised computation of capital gain enclosed as annexure to this order before the completion of assessment proceedings before Assessing Officer - assessee had invested in the new property within the time allowed u/s 139 (4) of the Act, the assessee will be entitled for exemption u/s 54 of the Act to the extent the amount invested in the new property In favor of assessee

Issues Involved:
1. Justification of the CIT(A) in directing the AO to take the fair market value of immovable property as on 01.04.1981.
2. Allowance of exemption under Section 54 of the Income-tax Act.
3. Interpretation of Section 45(2) and Section 139(1) of the Income-tax Act.
4. Requirement of filing a revised return for revising income.

Detailed Analysis:

Issue 1: Justification of the CIT(A) in directing the AO to take the fair market value of immovable property as on 01.04.1981

The Revenue contested the CIT(A)'s decision to direct the AO to take the fair market value of immovable property as on 01.04.1981, relying on Section 2(47)(vi) of the Income-tax Act, which was introduced w.e.f. 01.04.1988. The CIT(A) justified this by stating that the property was acquired by the assessee's grandfather in 1951, and the land was registered in 1984. The CIT(A) argued that the AO should have referred the matter to the DVO or obtained a circle rate as on 01.04.1981. The ITAT upheld the CIT(A)'s decision, referencing the case of co-owner late Shri Bipin Chandra, where it was concluded that the cost of acquisition should be taken as on 01.04.1981 for indexation purposes. The ITAT found no infirmity in the CIT(A)'s decision, supported by the Special Bench decision in DCIT vs. Manjula J. Shah.

Issue 2: Allowance of exemption under Section 54 of the Income-tax Act

The Revenue challenged the CIT(A)'s allowance of exemption under Section 54, arguing that the assessee neither purchased the house nor deposited the amount in the capital gain scheme before the due date of filing the return under Section 139(1). The CIT(A) allowed the exemption, referencing the Punjab & Haryana High Court decision in CIT vs. Jagriti Aggarwal, which interpreted that the due date under Section 139(1) includes the extended period under Section 139(4). The ITAT upheld this view, confirming that the assessee's investment in the new property within the time allowed under Section 139(4) entitled her to the exemption under Section 54.

Issue 3: Interpretation of Section 45(2) and Section 139(1) of the Income-tax Act

The Revenue argued that the CIT(A) ignored specific provisions of Section 45(2) and Section 139(1), which mandate the deposit of the capital gain amount before the due date of filing the return under Section 139(1). The CIT(A) and subsequently the ITAT, referencing the case of co-owner late Shri Bipin Chandra, interpreted that the due date for filing the return under Section 139(1) is subject to the extended period provided under Section 139(4). Therefore, the assessee's compliance with Section 139(4) was deemed sufficient for the exemption under Section 54.

Issue 4: Requirement of filing a revised return for revising income

The Revenue contended that the CIT(A) erred in not deciding whether the assessee could revise income through a revised computation without filing a revised return. The ITAT noted that there were no findings from the CIT(A) on this issue, and the assessee was not in appeal before the ITAT. Consequently, this ground was dismissed as it did not survive for adjudication.

Conclusion:

The ITAT dismissed the Revenue's appeal, upholding the CIT(A)'s decisions on all grounds. The ITAT's order was pronounced in open court, concluding that the CIT(A) was justified in directing the AO to take the fair market value as on 01.04.1981, allowing the exemption under Section 54, interpreting the due date under Section 139(1) to include the extended period under Section 139(4), and dismissing the issue regarding the requirement of filing a revised return.

← Previous Next →