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2020 (4) TMI 209 - AT - Income TaxCapital gain on sale of a property - entitled to the benefit of deduction u/s.54F - Assessment of right income - whether the property is HUF property or that of the Assessee in his individual capacity should be assessed? - HELD THAT - The said issue which is fundamental and vital has not been decided by the CIT(A) and since the view of the Revenue on this aspect in the form of order of AO/CIT(A) is not available for consideration by the Tribunal, we are of the view that the order of the CIT(A) should be set aside and the entire issues that arise for consideration before the Tribunal should be directed to be decided afresh by the AO. In this regard we find the issue whether the property belongs to HUF or individual was raised by the Assessee for the first time only before CIT(A). We therefore set aside the order of the CIT(A) and remand the issue of taxation of capital gain to the AO for consideration de novo after affording opportunity of being heard to the Assessee. We make it clear that all issues set out in the earlier part of this order is left open for adjudication de novo by the AO. Assessee's appeal is treated as allowed for statistical purpose.
Issues Involved:
1. Taxability of capital gain on the sale of property. 2. Determination of whether the land is a capital asset. 3. Computation of capital gain. 4. Entitlement to deduction under Section 54F of the Income Tax Act, 1961. 5. Ownership of the property (HUF vs. individual). Detailed Analysis: 1. Taxability of Capital Gain on the Sale of Property: The primary issue was whether the revenue authorities were justified in bringing to tax capital gain on the sale of a property by the Assessee. The Assessee, a doctor by profession, along with his family members, sold a property of 15 acres to M/s. Nirman Shelters (P) Ltd. The Assessee computed his share of long-term capital gain at ?74,98,442/-, while the AO computed it at ?1,44,94,857/-. The AO did not accept the Assessee's claim that ?40 lakhs paid to one of the daughters should be excluded from the full value of consideration and also disagreed with the indexed cost of acquisition computed by the Assessee. 2. Determination of Whether the Land is a Capital Asset: The Assessee claimed that the property was not a capital asset as it was agricultural land falling within the ambit of exception to the definition of capital asset under Section 2(14)(iii) of the Act. The AO held that the land in question was a capital asset and hence the gain on sale was exigible to tax on capital gain. The CIT(A) confirmed this view, stating that the land was not agricultural and the gain on sale was taxable. 3. Computation of Capital Gain: The AO computed the capital gain at ?4,59,83,685 and the Assessee’s share at ?1,44,94,857/-. The AO allowed a cost of improvement of ?15 lakhs but did not accept the index cost of acquisition computed by the Assessee. The CIT(A) upheld the AO's computation and denied the Assessee’s claims for additional expenses and higher cost of acquisition. 4. Entitlement to Deduction Under Section 54F: The Assessee claimed deduction under Section 54F for reinvestment in another property, which was denied by the CIT(A). The CIT(A) held that the Assessee did not furnish the return in the status of HUF within the required time and thus, the claim was not maintainable. 5. Ownership of the Property (HUF vs. Individual): The Assessee argued that the property belonged to the Hindu Undivided Family (HUF) and not to him individually. The CIT(A) did not agree, stating that the property was partitioned among the Assessee and his brothers, and the sale consideration was apportioned among the co-owners. The CIT(A) noted that the Assessee had consistently filed returns in his individual capacity and had not revised the return to reflect the HUF status. The Tribunal found merit in the Assessee's argument that the property continued to be ancestral and HUF property and that the right income should be assessed in the right hands. The Tribunal set aside the order of the CIT(A) and remanded the issue to the AO for de novo consideration, emphasizing the need to determine whether the property belonged to the HUF or the individual. Conclusion: The Tribunal remanded the case to the AO for fresh consideration, directing that all issues, including the ownership of the property and the correct computation of capital gain, be adjudicated de novo. The appeal was treated as allowed for statistical purposes.
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