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2018 (3) TMI 374 - AT - Income TaxCalculation of capital gain - adoption of cost of asset - Net sale consideration - Held that - A perusal of computation of income made by the ld.AO on page no.8 of the assessment order would indicate that the ld.AO took net sale consideration falling to the share of assessee at Rs. 59, 14, 747/-. The indexed cost of acquisition in the hands of assessee was computed at Rs. 29, 42, 376/-. Thus net LTCG worked out in the hands of assessee is of Rs. 29, 72, 370/- i.e. (Rs.59, 14, 747 minus Rs. 29, 42, 376). The ld.AO granted benefit of set off as under Capital gain x cost of new asset /Net sale consideration The cost of new asset was taken at Rs. 30 lacs only and in this set off was granted upto Rs. 15, 07, 606/-. The balance i.e. total capital gain Rs. 29, 72, 370 minus Rs. 15, 07, 606 Rs. 14, 64, 764/- has been taxed at the rate of 20%. I allow this appeal and direct the AO to take cost of new asset at Rs. 70 lakhs instead of Rs. 30 lakhs and calculate the amount of capital gain if any. In other words there will be no capital gain for tax in the hands of assessee.
Issues:
1. Consonance of grounds of appeal with Rule 8 of ITAT Rules, 1963 2. Re-opening of assessment 3. Restriction of deduction under section 54F to Rs. 30 lakhs Issue 1 - Consonance of Grounds of Appeal with Rule 8 of ITAT Rules, 1963: The appellant's grounds of appeal were found to be descriptive and argumentative, not in line with Rule 8 of the ITAT Rules, 1963. The primary grievances of the appellant revolved around the re-opening of assessment and the restriction of deduction under section 54F. The counsel for the appellant did not press the ground regarding the re-opening of assessment, leading to its rejection. Issue 2 - Re-opening of Assessment: The appellant had sold land along with co-owners and claimed deduction under section 54F for the purchase of a residential house. The Assessing Officer (AO) granted benefit under section 54F but did not allow set off of loan amounts against the capital gain. The appellant's plea to set off the capital gain against the loan amount for the house purchase was rejected by the Revenue authorities. The Tribunal noted that the issue was not pressed by the appellant's counsel. Issue 3 - Restriction of Deduction under Section 54F: The appellant contended that the cost of the new asset should be considered as Rs. 70 lakhs instead of Rs. 30 lakhs for the purpose of calculating capital gain. Citing various decisions, the appellant argued that the capital gain should be exempt as the cost of the new asset exceeded the net consideration. The Tribunal agreed with the appellant and directed the AO to consider the cost of the new asset as Rs. 70 lakhs, resulting in no capital gain for tax in the appellant's hands. The Tribunal analyzed the provisions of section 54F of the Income Tax Act, emphasizing the conditions for claiming exemption on capital gains from the sale of assets. The Tribunal referred to relevant case laws, including judgments from the Kerala High Court and the Punjab & Haryana High Court, to support the appellant's contention regarding the utilization of capital gains for the purchase of a new asset. The Tribunal allowed the appeal partly, directing the AO to recalculate the capital gain based on the revised cost of the new asset at Rs. 70 lakhs, leading to no capital gain tax liability for the appellant. This comprehensive analysis of the judgment highlights the issues raised by the appellant, the arguments presented, and the Tribunal's decision based on legal provisions and precedents.
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