2017 (11) TMI 1593 - AT - Income Tax

Reducing the cost of acquisition - Held that - CIT (A) has noted that the fact that the copy of registry which the Assessing Officer claimed to reflect the cost per acre at ₹ 50,000/- per acre was never provided to the assessee for his comments and, therefore, the Assessing Officer s reliance on the same was not justified. As placing reliance on the judgment Jagat Mohan Kapur (1994 (4) TMI 50 - CALCUTTA High Court) as well as Heera Lal Lokchandani vs ITO (2006 (11) TMI 241 - ITAT CUTTACK) for holding that the cost inflation index cannot be applied in the reverse direction. As DR in the course of proceedings before us, could not point out any judgment to the contrary favouring the revenue in this regard. Therefore, in such a circumstance, we find no reason to interfere with the order of the Ld. CIT (A) on this issue and we uphold the same. Income from sale of land - nature of land - Held that - As undisputed that the land existed in the name of the assessee and the copies of Jambandi were also filed as a proof of the agricultural land being registered in the name of the assessee and, therefore, the ld. CIT (A) was correct in negating the claim of the Assessing Officer that the income of ₹ 1,06,62,500/- had to be treated as income from capital gains. Deduction u/s 54B - Held that - As per revised agreement dated 20.03.2008, the date of possession was shifted to 3.5.2009. He has also noted that the land was finally registered on 28.05.2009 in the name of the assessee and the payments till then were kept by the assessee in the capital gain account scheme. Ld. CIT(A) has also noted that the agreement was made first and the possession was transferred as per the terms of the agreement and that the Assessing Officer had not been able to point out anything adverse or defective in that agreement. The Ld. CIT(A) had also referred to the provisions of section 53A of the Transfer of Property Act and provisions of section 2(47)(v) applicable to the assessment order in question and has held that the assessee satisfied all the conditions for claiming of deduction u/s 54B of the Act. This factual finding of the Ld. CIT (A) could not be negated by the Ld. Sr. DR during the course of proceedings before us. The department has not been able to point out any factual or legal defect in the action of the Ld. CIT (A) in directing the Assessing Officer to allow claim of deduction u/s 54B. In the circumstances, we find no reason to interfere with the order of the Ld. CIT (A) on this issue also - Revenue appeal dismised.

Summary

Issues:
1. Calculation of indexed cost of acquisition for capital gains tax.
2. Treatment of agricultural income as long term capital gain.
3. Allowance of deductions u/s 54B and u/s 54F of the Income Tax Act.

Indexed Cost of Acquisition Calculation:
The appeal by the Revenue challenged the order of the Ld. CIT(A) regarding the indexed cost of acquisition for capital gains tax. The Assessing Officer had reduced the cost of acquisition based on certain rates, which the Ld. CIT(A) found unjustified. The Ld. CIT(A) noted that the Assessing Officer's reliance on certain registry documents was not backed by evidence provided to the assessee for review. The Ld. CIT(A) upheld the appeal, citing legal precedents and the lack of contrary evidence from the Revenue. The department's appeal was dismissed, affirming the Ld. CIT(A)'s decision.

Treatment of Agricultural Income:
The Ld. CIT(A) deleted the addition of agricultural income treated as long term capital gain by the Assessing Officer. The Ld. CIT(A) found that the assessee had provided relevant evidence of ownership of agricultural land through documents like Jambandi and Girdawari. The Ld. CIT(A) noted that the Assessing Officer did not actively verify these documents and passed the order without further investigation. The department failed to challenge these findings during the appeal proceedings. Consequently, the Ld. CIT(A)'s decision was upheld, and the department's appeal on this issue was dismissed.

Deductions u/s 54B and u/s 54F:
Regarding the deductions claimed by the assessee under sections 54B and 54F of the Income Tax Act, the Ld. CIT(A) found in favor of the assessee. The Ld. CIT(A) detailed the timeline of land registration and payments made by the assessee, concluding that the conditions for deductions were satisfied. The department could not establish any defects in the agreement or the fulfillment of statutory requirements. The Ld. CIT(A)'s decision to allow the deductions was supported by the lack of evidence or legal arguments from the department. The department's appeal on these deductions was dismissed, upholding the Ld. CIT(A)'s order.

In summary, the ITAT Delhi dismissed the Revenue's appeal against the Ld. CIT(A)'s order. The judgment addressed issues related to the calculation of indexed cost of acquisition, treatment of agricultural income, and allowances under sections 54B and 54F of the Income Tax Act. The decision was based on detailed analysis, legal precedents, and the lack of substantial evidence or arguments from the Revenue to challenge the Ld. CIT(A)'s findings.