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2018 (10) TMI 788 - AT - Income TaxComputation of Long Term Capital gains - benefit of indexation - selection of date - Held that - Indexation benefit against the cost of acquisition shall be available to the assessee on the basis of index of the year in which the payments were actually made by the assessee. The payment made up-to the date of agreement i.e. 18/10/2007 shall be indexed by applying the index for Financial Year 2007-08. Accordingly, subsequent payments made in different financial years shall be indexed by applying the respective indexes of those years. Ground Number-1 stand dismissed. As a logical consequence, the directions of Ld. CIT(A) in not allowing the indexation benefits to payments of ₹ 18.32 Lacs & ₹ 13.44 Lacs in FY 2011-12 could not be sustained since the payments made within a period of 36 months before the date of transfer of asset could not alter the nature of gains earned by the assessee and the same remain Long Term Capital Gain in nature only. Ground Number-2 stand allowed. Non-adjudication of VAT paid - Held that - Supporting documents, in this regard, have been placed on record. We find that this issue has not been considered even by AO. Therefore, the matter stand remitted back to the file of AO to consider this claim with a direction to the assessee to substantiate the same. This ground stand allowed for statistical purposes. It is also noted that the figures of stamp duty & Registration has wrongly been picked by AO as 18,32,137/- as against correct figures of ₹ 18,49,700/-.
Issues Involved:
1. Computation of indexed cost of acquisition for Long Term Capital Gains (LTCG). 2. Direction to Assessing Officer (AO) regarding non-allowance of indexation benefits for specific payments. 3. Non-adjudication of VAT paid on the purchase of the flat. Issue-wise Detailed Analysis: 1. Computation of Indexed Cost of Acquisition for Long Term Capital Gains (LTCG): The primary issue contested by the assessee was the method of computing the indexed cost of acquisition for LTCG. The assessee claimed indexation from the Financial Year (FY) 2007-08, when the purchase agreement was registered. However, the AO computed the indexed cost based on the actual years of payment, leading to a higher LTCG. The CIT(A) upheld the AO's computation, referencing the case of Shri Vikas P. Bajaj vs. ACIT, which supported indexation based on actual payment years. The Tribunal, after considering various judicial pronouncements, including the decisions in Ramprakash Bubna and Vikas P. Bajaj, concluded that the indexation benefit should be granted from the year of actual payments. Thus, the Tribunal dismissed Ground Number-1, affirming the AO's method of computation. 2. Direction to Assessing Officer Regarding Non-Allowance of Indexation Benefits for Specific Payments: The CIT(A) directed the AO not to allow indexation for payments of ?18.32 Lacs and ?13.44 Lacs made in FY 2011-12, as they were within 36 months before the date of sale. The Tribunal found this direction unsustainable, stating that payments made within 36 months before the sale do not alter the nature of the gains, which remain LTCG. Therefore, Ground Number-2 was allowed, and the AO was directed to allow indexation benefits for these payments. 3. Non-Adjudication of VAT Paid on the Purchase of the Flat: The assessee raised an additional ground regarding the non-adjudication of VAT paid amounting to ?11.35 Lacs. The Tribunal noted that this issue was not considered by the AO or CIT(A). Consequently, the matter was remitted back to the AO to consider the VAT claim, with instructions for the assessee to substantiate the claim. This ground was allowed for statistical purposes. Additionally, the Tribunal directed the AO to correct the figures of stamp duty and registration fees, which were wrongly recorded as ?18.32 Lacs instead of ?18.49 Lacs, and to re-compute the income accordingly. Conclusion: The appeal was partly allowed. The Tribunal upheld the AO's method of computing the indexed cost of acquisition based on actual payment years, allowed indexation benefits for payments made within 36 months before the sale, and remitted the VAT claim back to the AO for consideration. The order was pronounced in the open court on 03rd October 2018.
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