2018 (12) TMI 181 - AT - Income Tax

Long term capital gain - benefit of the indexation and the cost in respect of cost of construction incurred by the assessee s mother in respect of property, which has been sold, when computing the long term capital gains - cost inflation index in respect of mother s investment - Held that - A perusal of the returns filed by Mrs.M.A.Ahamed Asia, mother of the assessees herein, clearly show that investments in the said property are fully disclosed. A perusal of the assessment order passed u/s.143(3) r.w.s.147 of the Act on 02.03.2016 for assessment year 2010-11 in the case of one of the sisters of the assessee, namely, Smt.Wavoo Fathima Muneera, shows that the same AO has accepted the cost of construction of ₹ 14,96,157/- and granted indexation in respect of the said property. This being so, as the cost of construction has been accepted by the Revenue in the case of one of the sisters of assessees, it is not open to Revenue to say that the evidences are not available. This being so, the Assessing Officer is directed to grant the assessee s benefit of the indexation and the cost in respect of cost of construction incurred by the assessee s mother in respect of the said property, which has been sold, when computing the long term capital gains. - Decided in favour of assessee.

Summary

Issues: Appeal against separate orders of the Commissioner of Income-tax (Appeals) regarding cost inflation index and cost of acquisition for a property sold during the assessment year 2011-12.

Analysis:
1. Issue of Cost Inflation Index and Cost of Acquisition: The appeal involved the dispute over the allowance of the cost inflation index and the cost of acquisition for a property sold during the assessment year 2011-12. The assessee, represented by Mr. U. Mohamed Khailullah, claimed that the mother of the assessees had purchased a property in 1988 and incurred significant expenditure on reconstruction between 2007 and 2010. The Assessing Officer did not allow the cost inflation index, citing lack of documentary evidence. However, the ld. CIT(A) allowed indexation from the assessment year 1988-89 but did not allow the cost of acquisition for the re-constructed building. The appellant highlighted that the same Assessing Officer had accepted indexation and cost of construction for another sister in a previous assessment year, indicating inconsistency in treatment. The tribunal noted that the investments in the property were fully disclosed by the mother in her returns, and as the cost of construction had been accepted for another sister, directed the Assessing Officer to grant the benefit of indexation and cost of construction for the property sold, when computing long-term capital gains.

2. Decision and Outcome: After considering the submissions from both parties, the tribunal allowed the appeals of the assessees, Mrs. Fathima Fahima, and Mrs. Fathima Fahrhna. The tribunal pronounced the order in the open court, directing the Assessing Officer to grant the benefit of indexation and the cost of construction incurred by the assessees' mother for the property sold during the assessment year 2011-12. The decision was based on the inconsistency in treatment by the Assessing Officer and the full disclosure of investments in the property by the mother in her returns.