2020 (4) TMI 821 - AT - Income Tax

Computation of capital gains - A.O. adopted the sale consideration as full value of consideration while computing the capital gains on transfer of land - HELD THAT - Assessee disclosed the capital gains by adopting the sale consideration at ₹ 19,85,000/-. This sale consideration figure was sought to be substituted by the Ld. A.O with ₹ 37,92,600/- being the consideration figure mentioned in the agreement for sale. A.O also recorded a statement from the purchaser of the land Smt.R.Pushpavalli on 23.11.2011 wherein on oath, she had categorically confirmed that she had paid actual consideration of ₹ 37,92,600/- to the assessee in cash in three installments. This fact when confronted with the assessee, the assessee was not able to counter the same.A.O. adopted the sale consideration figure of ₹ 37,92,600/- as full value of consideration while computing the capital gains on transfer of land. This action was upheld by the learned CIT(A). We do not find any infirmity in the said action of learned CIT(A) upholding the Ld. A.O s order with regard to adoption of sale consideration. Cost of improvement - Claim made said sum was incurred by her towards cost of development and assessee had incurred this expenditure through a mason Shri C.Vasudevan. - A.R. argued that without incurring of development cost on the said land, the sale of land could not have happened - HELD THAT - Except merely making a bald statement, the Ld. A.R. was not able to furnish any other evidence before us to substantiate the claim. However, as the last opportunity in the process of identifying truth behind the transfer of land by the assessee, we deem it fit and appropriate, in the interest of justice and fair play, to remit this aspect of the issue to the file of Assessing Officer for denovo adjudication i.e only with respect to amount of deduction towards cost of improvement of ₹ 5 lakhs while computing the capital gains. We hold that the assessee should furnish all necessary evidences in support of her claim before the Assessing Officer and the Assessing Officer should also make cross verification with Shri C.Vasudevan or any other person through whom the development work has been carried out to identify the truth involved thereon. Hence this aspect of the issue is remitted back to the file of A.O. for afresh adjudication. Exemption under Section 54F denied - reinvestment in new property has been made by the assessee in the name of her husband instead of in her name - HELD THAT - As relying on C.I.T Vs. V.Natarajan 2006 (2) TMI 136 - MADRAS HIGH COURT we hold that even though the new property has been invested in the name of assessee s husband, exemption under Section.54F cannot be denied to the assessee. - Decided in favour of assessee.

Summary

Issues:
1. Determination of sale consideration for computation of capital gains.
2. Claiming cost of development while computing capital gains.
3. Eligibility for exemption under Section 54F of the Act.

Analysis:

Issue 1: Determination of sale consideration for computation of capital gains
The assessee appealed against the order of the Commissioner of Income Tax regarding the consideration amount for the sale of land. The assessee disclosed the capital gains based on the registered sale deed amount, while the Assessing Officer (A.O) substituted it with the consideration mentioned in the agreement for sale. The A.O relied on a statement from the purchaser confirming the higher consideration. The CIT(A) upheld this decision, and the Tribunal found no fault in adopting the higher consideration for calculating capital gains.

Issue 2: Claiming cost of development while computing capital gains
The assessee claimed a deduction of ?5 lakhs for cost of improvement, stating it was spent on development through a mason. However, the A.O disbelieved this claim due to lack of evidence like PAN and address of the mason. The CIT(A) upheld this denial. The Tribunal, while acknowledging the necessity of development cost for the land sale, remitted this issue back to the A.O for fresh adjudication. The assessee was directed to provide supporting evidence for the claimed deduction.

Issue 3: Eligibility for exemption under Section 54F of the Act
The assessee reinvested in a new property in her husband's name, leading to a dispute over eligibility for exemption under Section 54F. Citing a relevant High Court decision, the Tribunal held that even though the property was in the husband's name, the assessee was entitled to the exemption. Consequently, the Tribunal directed the A.O to allow the exemption under Section 54F. The appeal of the assessee was allowed for statistical purposes.

In conclusion, the Tribunal addressed the issues of determining sale consideration, claiming development costs, and eligibility for exemption under Section 54F comprehensively, providing detailed reasoning for each decision. The judgment highlighted the importance of substantiating claims with evidence and applied relevant legal precedents to ensure a fair and just outcome for the parties involved.