2018 (4) TMI 1265 - AT - Income Tax

Revision u/s 263 - adoption of cost of improvement - indexed cost of improvement grant - Held that - AO has taken the cost of improvement at ₹ 15,11,000/- in the year 1998-99 as supported by the valuation report of the registered valuer. With respect to grant of indexed cost of improvement, considering the amount of ₹ 15,11,000/- pertaining to construction of shops in 1998-99, the Assessing Officer himself has recorded this fact in the assessment record and the relevant computation we have already reproduced above. With respect to the amount of ₹ 3.40 lakhs towards expenses on transfer i.e., dalali expenses, Assessing Officer has allowed the said claim after going through the documents and after being satisfied about the claim. The assessee s issue is squarely covered in his favour by the decision of Hon ble Supreme Court in the case of CIT Vs. Max India Ltd.(2007 (11) TMI 12 - Supreme Court of India). Thus this is not a fit case for revision as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue. - Decided in favour of assessee.

Summary

Issues:
1. Revision order under Section 263 of the Income-tax Act, 1961 regarding long term capital gain valuation and disallowance of dalali expenses.

Analysis:
1. The appeal challenges the revision order under Section 263 of the Income-tax Act, 1961, by the Principal CIT-2, Nagpur, revising the assessment related to long term capital gain valuation and disallowance of dalali expenses. The appellant raised six grounds questioning the legality of the notice and order issued under Section 263, the validity of the proceedings, and the adequacy of the AO's examination of the long term capital gains. The appellant argued that the AO had independently calculated the capital gains and granted the benefit of transfer expenses, making the order not amenable to revision under Section 263.

2. The facts reveal that the assessee, along with co-owners, sold an immovable property acquired before 1981. The appellant submitted a valuation report estimating the property's value as on 1.4.1981 and claimed improvement expenses. The AO computed the long term capital gain based on the submitted details. However, the CIT observed discrepancies in the claimed indexed cost of improvement and dalali expenses, directing the AO to revise the assessment. The Tribunal noted that the AO had properly considered the cost of improvement and transfer expenses, as supported by documentary evidence, and ruled in favor of the appellant citing the decision in CIT Vs. Max India Ltd.

3. The Tribunal found that the AO had not erred in allowing the indexed cost of improvement and dalali expenses, as the AO had correctly assessed the relevant amounts based on documentary evidence and satisfaction. The Tribunal emphasized that the assessment order was not erroneous or prejudicial to the Revenue's interest, aligning with the Supreme Court's decision in CIT Vs. Max India Ltd. The appeal was allowed, and the decision was pronounced in the open court on 05.03.2018.