2017 (12) TMI 112 - AT - Income Tax

Long term capital gains tax on sale deed - Held that - The sale deed recitals show that the building was demolished and vacant plot was handed over. Whereas the MOU shows the existence of super structure. The assesse claims the sale of vacant site after demolition of the building State Bank of Hyderabad letters referred in the appellate order evidences the existence of the building and the process of demolition. From the above it is clear that neither the assessee nor the AO has collected nor the assessee has furnished the complete facts. It appear that the sale tranasaction is interlinked with Smt. Anuradaha Shri Anil kumar the purchaser and the assessee. Further examination of the contents of the suit referred by Shri Anil kumar and D. Sri Rama Krishna are also appear to be crucial for arriving at the correct factual position. Therefore we are of the considered opinion that the case required to be remitted back to the file of the AO to verify the entire facts and to decide both the issues of sale consideration and the cost of construction on merits. Both the ld.AR and the DR have agreed for remitting the matter back to the file of the AO. Accordingly we set aside the orders of the lower authorities and remit the matter back to the file of the AO for de-novo consideration.

Issues:
1. Condonation of delay in filing cross objections citing health reasons.
2. Assessment of long-term capital gains on property sale.
3. Disallowance of cost of construction and improvement claimed.
4. Discrepancy in sale consideration and existence of building.
5. Appeal against CIT(A) order on cost of construction and sale consideration.
6. Verification of facts and remittance of case back to AO for reconsideration.

Analysis:
1. The appeal addressed the delay in filing cross objections by the assessee due to health reasons, which was condoned after considering the reasons provided, allowing the cross objections.

2. The case involved the assessment of long-term capital gains on property sale for the assessment year 2014-15. The Assessing Officer (A.O.) re-opened the assessment due to findings during a survey, leading to discrepancies in the sale consideration and cost of acquisition, resulting in the determination of long-term capital gains.

3. The A.O. disallowed the cost of construction and improvement claimed by the assessee, as the property sold was a vacant site according to the sale deed, conflicting with the assessee's argument of an existing building not mentioned in the deed.

4. Discrepancies arose regarding the sale consideration and existence of the building, with various agreements and statements supporting different claims, leading to conflicting interpretations by the A.O., CIT(A), and the parties involved.

5. The appeal against the CIT(A) order focused on challenging the decision regarding the cost of construction and sale consideration. The department contested the allowance of construction costs, while the assessee defended the correctness of the sale consideration and claimed cost of construction.

6. After hearing both parties and reviewing the evidence, the tribunal remitted the case back to the A.O. for a thorough verification of all facts related to sale consideration and cost of construction, emphasizing the need for a complete examination to arrive at a correct factual position. Both parties agreed to this remittance for further consideration.

This detailed analysis covers the issues involved in the legal judgment, highlighting the complexities and discrepancies in the assessment of long-term capital gains and the related aspects of cost of construction and sale consideration, ultimately leading to the decision to remit the case back to the Assessing Officer for a fresh evaluation.

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