2018 (4) TMI 1365 - AT - Income Tax

Capital gain computation - cost of acquisition of the house property sold by the assessee - single or joint ownership - Held that - The claim of the assessee that she along with her husband had purchased the property from three co owners for total sale consideration of ₹ 1,10,00,001, prima facie, appears to be correct. The documentary evidences as submitted before both the Assessing Officer and the learned Commissioner (Appeals), unfortunately, without properly looking into them they have considered the sale consideration mentioned in respect of a single co owner in one agreement at ₹ 36,36,000 for the purpose of indexation benefit. The aforesaid approach of the Departmental Authorities is completely untenable and unfair. When the assessee through proper documentary evidence is making a claim, the Departmental Authorities are duty bound to examine the correctness of assessee s claim. Departmental Authorities have completely ignored / overlooked documentary evidences brought on record while making the addition on account of long term capital gain. Eligibility to claim deduction 54F - assessee has not invested the capital gain in new residential house within the prescribed time limit - Held that - Commissioner (Appeals) completely misconceived the facts and misapplied the provisions of law while coming to the conclusion that the assessee being the owner of more than one residential house apart from the new residential house is not eligible to claim deduction 54F of the Act. In the process, the learned Commissioner (Appeals) has completely over looked the fact that the assessee has claimed deduction under section 54 of the Act and not under section 54F of the Act. Thus, the conditions and restrictions imposed under section 54F of the Act are not applicable to the assessee. We are inclined to set aside the impugned order of the learned Commissioner (Appeals) and restore all the issues arising in the present appeal relating to computation of long term capital gain and deduction claimed under section 54 of the Act to the file of the Assessing Officer for de novo adjudication - Decided in favour of assessee for statistical purposes.

Summary

Issues involved:
1. Disallowance of deduction claimed under section 54 of the Income Tax Act, 1961.
2. Inaccuracies/mistakes in the computation of long term capital gain on account of cost of acquisition and indexation benefit.

Detailed Analysis:
1. Disallowance of deduction claimed under section 54 of the Income Tax Act, 1961:
The appellant challenged the disallowance of deduction claimed under section 54 of the Act. The Assessing Officer observed that the new house property was purchased by the appellant outside the prescribed time limit, leading to the proposal of disallowing the deduction. The appellant justified the claim, but it was rejected by the Assessing Officer. The first appellate authority upheld the decision, citing restrictions under section 54F. However, the appellant argued that the restrictions under section 54F were not applicable as the deduction was claimed under section 54. The Tribunal found errors in the application of law by the authorities, leading to the gross error in computation and denial of the deduction. The Tribunal set aside the order and restored the issues to the Assessing Officer for fresh adjudication.

2. Inaccuracies/mistakes in the computation of long term capital gain:
The Assessing Officer calculated the cost of acquisition for indexation at a lower amount compared to the actual purchase price, based on incorrect information. The appellant provided documentary evidence showing the correct purchase price, but the authorities overlooked it. The Tribunal noted that the authorities failed to examine the correctness of the appellant's claim properly. The Tribunal found the approach of the Departmental Authorities untenable and unfair. The Tribunal concluded that due to the non-application of mind by the authorities, there were errors in the computation of long term capital gain. Therefore, the Tribunal set aside the decision and directed the Assessing Officer to reexamine the issues with proper consideration of the facts and materials presented.

In conclusion, the Tribunal allowed the appellant's appeal for statistical purposes, emphasizing the need for a fresh adjudication by the Assessing Officer considering all relevant facts and evidence presented.