2020 (8) TMI 846 - AT - Income Tax

Rectification of mistake u/s 254 - deduction u/s 54 - assessee has pointed out that even after allowing deduction u/s. 54 of the Act, there would still be long term capital gain that would be chargeable to tax - Tribunal has proceeded on the basis that consequent to allowing deduction u/s. 54, there would be no long term capital gain that would remain for taxation - HELD THAT - There is a mistake apparent on the face of record inasmuch as even after allowing deduction u/s 54 of the Act, there would still be long term capital gain that would be chargeable to tax and therefore the question of period from which indexation benefit should be allowed to the assessee ought to have been adjudicated. We accordingly recall the order of the Tribunal dated 30.12.2019 for the limited purpose of examining the question with reference to period for which the assessee should be allowed the benefit of indexation while computing the long term capital gain. The Registry is directed to post the appeal for hearing in due course with notice to the parties.

Summary

Issues:
Computation of long term capital gain - Denial of exemption u/s. 54 of the Act, adoption of guideline value u/s. 50C of the Act, and indexation benefit.

Analysis:

The Appellate Tribunal ITAT Bangalore considered a miscellaneous petition filed by the assessee under section 254(2) of the Income-tax Act, 1961, seeking rectification of the order dated 30.11.2019, claiming a mistake apparent on the face of the record. The primary issue in the appeal was the computation of long term capital gain, involving the denial of exemption under section 54 of the Act, adoption of guideline value under section 50C of the Act, and the indexation benefit. The Tribunal, in its order dated 30.12.2019, allowed the benefit of exemption under section 54, leading to the conclusion that there would be no long term capital gain remaining for taxation, thereby not addressing the other two issues.

The assessee contended in the petition that even after allowing the deduction under section 54, there would still be long term capital gain chargeable to tax. The counsel highlighted the mistake apparent on the face of the record, emphasizing the need to adjudicate the other issues. The Tribunal acknowledged this argument and decided to recall its previous order for the limited purpose of examining the period for which the assessee should be entitled to the benefit of indexation in computing the long term capital gain. Consequently, the appeal was directed to be posted for a hearing with notice to the parties.

Moreover, the counsel for the assessee admitted that the sale consideration mentioned in the Sale Deed exceeded the valuation for stamp duty purposes, making the adjudication on adopting the guideline value under section 50C unnecessary. The Tribunal, after considering the submissions, concluded that the order suffered from a mistake, leading to the decision to allow the miscellaneous petition to the extent indicated above. The judgment was pronounced in open court on August 14, 2020.