2021 (1) TMI 288 - AT - Income Tax

Rectification u/s 254 - disallowance of indexed cost of improvement claimed by the assessee on sale of plots, thereby computing the long term capital gain as against long term capital loss computed by the assessee - HELD THAT - Coordinate Bench has duly considered the contents of the sale deed and even where description of the property at page 2 of the sale deed is taken into consideration, we find that the same will not lead to any change or impact the outcome or the findings of the Coordinate Bench where it was held that there was inconsistency in the sale deed so executed as far as the exact description of the property is concerned. Decision of the Coordinate Bench is not based solely on review of the sale deed but it has taken into consideration the agreement with the contractor dated 30.04.2009 and subsequent affidavit of the contractor dated 23.10.2017 and has thereafter arrived at its findings that, given the inconsistency in the description of the property in the sale deed and in absence of any corroboration in terms of buyer s confirmation/affidavit or photographs of the property at the time of sale which can demonstrate that what has been sold is not just a plot of land but a plot of land along with construction thereon, the assessee has failed to discharge the necessary onus placed on him in support of his claim of construction on the property at the time of sale and cost of construction as so claimed has therefore rightly been rejected by the lower authorities. We therefore donot find any basis to interefere with the findings of the Coordinate Bench within the well-laid down limited jurisdiction u/s 254(2). Miscellaneous application so filed by the assessee is dismissed.

Summary

Issues:
Challenge of disallowance of indexed cost of improvement on sale of plots leading to computation of long term capital gain or loss.

Analysis:
The assessee challenged the disallowance of indexed cost of improvement on the sale of plots, resulting in a long term capital gain or loss computation discrepancy. The ITAT found inconsistencies in the sale deed regarding the property description and construction details. The sale deed indicated a residential plot without mentioning the constructed area, although it referenced a 900 sq feet construction. The ITAT noted the absence of buyer confirmation or property photographs supporting the claim of a plot with construction. The agreement with the contractor and subsequent affidavit were deemed insufficient evidence of actual construction. The ITAT emphasized the need for verifiable evidence to substantiate the construction claim. The timing of construction completion and immediate sale raised doubts about the actual construction status. The Coordinate Bench upheld the lower authorities' decision to reject the claimed cost of construction due to the assessee's failure to provide adequate proof, resulting in the dismissal of the miscellaneous application.

The Coordinate Bench's decision was based on a thorough review of the sale deed, contractor agreement, and affidavit. Despite considering the sale deed's property description and additional documentation, the Coordinate Bench found no substantial evidence supporting the construction claim. The lack of buyer confirmation or property photographs further weakened the assessee's case. The Coordinate Bench emphasized the importance of meeting the burden of proof in claiming construction costs, which the assessee failed to do. The ITAT's decision was upheld within the limited jurisdiction of section 254(2) of the Act, as there was no valid reason to overturn the findings. The dismissal of the miscellaneous application signified the affirmation of the lower authorities' rejection of the claimed construction costs.