2018 (7) TMI 1470 - AT - Income Tax

Capital gains computation - as per valuation of stamp duty as of November 2010 when the sale agreement of agricultural land was executed between the parties OR the rate prevailing at the time of registration of the sale deed on 21.06.2011 - Held that - CIT(A) directed the AO to compute the capital gains on the sale of agricultural land as per valuation of stamp duty prevailing in November 2010 when the total consideration has been received by the assessee by way of cheques. The capital gains were directed to be calculated by the AO on such valuation as on November 2010 or total consideration received/receivable by the assessee, whichever is higher. Taking into consideration the entire facts of the matter, the provision of law and the judgment passed by the Co-ordinate Bench in DHARAMSHIBHAI SONANI VERSUS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 9, SURAT 2016 (9) TMI 1259 - ITAT AHMEDABAD we uphold the order passed by the Ld. CIT(A) and dismiss the ground of appeal preferred by the Revenue. Deduction claimed by the assessee u/s.54 - assessee has not filed this claim for exemption in the original return of income - CIT(A) opined that the said claim of the assessee though has not been in the original return of income, the same cannot be denied if the assessee is entitled for the same. He thus, directs the AO to verify the claim of the assessee in terms of the provisions of section 54B of the Act and to allow the same if the assessee satisfies the requirement under the said provisions of law - Held that - The approach taken by the Ld. CIT(A) in dealing with the claim u/s.54B of the assessee is just and proper, without any ambiguity, whatsoever, and we thus find no reason to interfere with the order passed by the CIT(A). The same is hereby upheld. To meet the ends of justice, we further add that the AO should give a reasonable opportunity of hearing to the assessee while considering the claim of under s.54B of the Act taking into consideration of the entire evidences already available on record as well as other documentary evidence which the assessee may choose to file in support of the claim on this issue. The ground of the appeal preferred by the Revenue is hereby dismissed.

Summary

Issues:
1. Calculation of capital gains based on stamp duty valuation date.
2. Allowance of deduction u/s.54B of the Income Tax Act.

Issue 1: Calculation of Capital Gains:
The appeal addressed whether the Commissioner of Income Tax (Appeals) erred in directing the Assessing Officer to compute capital gains based on stamp duty valuation from November 2010, when the sale agreement was executed, instead of the registration date in June 2011. The assessee sold properties undervalued according to stamp valuation authority, leading to a discrepancy in capital gains calculation. The AO added undisclosed income as long-term capital gain. The CIT(A) referred to a Co-ordinate Bench judgment and directed the valuation as per stamp duty in November 2010, as the total consideration was received through cheques then. The Tribunal upheld this decision, citing the retrospective effect of the provision from April 2003, not 2017.

Issue 2: Allowance of Deduction u/s.54B:
The second issue involved the deduction claimed by the assessee under section 54B of the Act, which was initially denied by the AO due to non-filing in the original return. The CIT(A) directed the AO to verify the claim based on the provisions of section 54B. The assessee had purchased new agricultural land within the stipulated time frame using part payment from the previous sale. The AO contended that the investment should have been made within two years from the sale, which the assessee failed to prove. The CIT(A) found the claim valid and directed the AO to reevaluate it, emphasizing a fair hearing for the assessee. The Tribunal upheld this decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal regarding both issues, upholding the CIT(A)'s orders. The judgment provided clarity on the computation of capital gains and the allowance of deductions under the Income Tax Act, ensuring fair treatment for the assessee based on relevant legal provisions and precedents.