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2014 (5) TMI 778 - HC - Income TaxComputation of capital gain - Sale of land Indexed cost of acquisition - Demand raised including interest u/s 234B of the Act Held that - Assessee contended that the sale deed was relating to 7 kanals 8 marlas of land of which the value was estimated by the Registrar for stamp duty purposes at Rs. 13, 87, 500/- whereas the AO had taken the land sold to be measuring 1 kanal only - The AO as well as the CIT had taken the land sold to be measuring 1 kanal instead of 7 kanals 8 marlas the orders passed by the AO and the CIT cannot be legally sustained this the order is set aside and the matter is remitted back to the AO for fresh adjudication Decided in favour of Assessee.
Issues:
Prayer for quashing orders under Articles 226/227 of the Constitution of India - Demand raised under Section 234-B of the Income Tax Act, 1961 - Dispute over sale of land - Assessment order challenged - Revision petition dismissed - Principles of natural justice alleged to be violated. Analysis: The petitioner filed a petition under Articles 226/227 of the Constitution of India seeking to quash the orders dated 30.12.2011 and 4.3.2013, which raised a demand of Rs. 5,39,275/- including interest under Section 234-B of the Income Tax Act, 1961. The dispute revolved around the sale of land measuring 7 kanals 8 marlas by the petitioner, purchased in 1995 for Rs. 2,10,000/-. The petitioner claimed the total cost of acquisition to be Rs. 12,79,417/-, but the assessing officer calculated the taxable capital gain on Rs. 13,34,842/- by considering only 1 kanal of land sold. The petitioner's case was reopened under Section 147 of the Act, leading to the assessment order and subsequent revision petition before the Commissioner of Income Tax, which was dismissed on 4.3.2013. The High Court noted that the sale deed was for 7 kanals 8 marlas of land, as confirmed by both parties. However, the assessing officer and the CIT erroneously considered only 1 kanal of land sold instead of the entire plot. Consequently, the court found the orders passed by the assessing officer and the CIT to be legally unsustainable. Therefore, the High Court set aside the impugned orders dated 30.12.2011 and 4.3.2013, remitting the matter back to the assessing officer for a fresh order after providing an opportunity of hearing to the petitioner in accordance with the law. As a result, the petition was allowed, granting relief to the petitioner in the matter regarding the incorrect assessment of the land sold for tax purposes.
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