2021 (10) TMI 110 - AT - Income Tax

Revision u/s 263 - LTCG computation - in statement of LTCG, the assessee had not adopted the market value/SRO value as sale consideration as per section 50C - HELD THAT - On going through the latest amendments made by the Finance Act, in section 50(C)(1), 3rd proviso, where the value adopted or assessed or assessable by the same valuation authority does not exceed 10% of the consideration received or accruing as a result of transfer of consideration so received or accruing as a result of the transfer shall for the purpose of section 48 deemed to be the full value of the consideration. As per the above proviso, it is clear that if there is variation of 10% of stamp duty value adopted by the SRO or the value shown by the assessee for computation of capital gains, in such a case, the value offered for tax by the assessee is to be adopted and section 50C does not apply to the case of the assessee. This amendment take effect as retrospective in nature. The assessee in AY 2012-13, has taken the value of ₹ 9,44,98,000/- whereas Pr. CIT adopted the value which is less than 10% as per the amended provision - we are of the view that the order passed by the AO is not erroneous and prejudicial to the interests of revenue, as held by the Pr. CIT. AO has taken a view on the issue, on which two views are possible, the view which is taken by the AO, if Pr. CIT does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law, as per the ratio laid down by the Hon ble Supreme Court in the case of Malabar Industries ltd. 1991 (10) TMI 26 - KERALA HIGH COURT . Every loss of revenue as a consequence of an order of AO cannot be treated as prejudicial to the interests of the revenue, for example, when an Income-tax Officer adopted one of the courses permissible in law and it has resulted in loss of revenue; or where two views are possible and the Income-tax Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the Income-tax Officer is unsustainable in law. Therefore, in the case under consideration, the view which has been taken by the AO is one of the courses permissible in law, which cannot be brushed aside by the Pr. CIT u/s 263 of the Act. In view of the above observations, we set aside the order of the Pr. CIT passed u/s 263 of the Act, and restore the order of the AO. Accordingly, the grounds raised by the assessee on this issue are allowed.

Summary

Issues Involved:
1. Condonation of Delay
2. Revision of Assessment Order by Pr. CIT under Section 263
3. Computation of Long-Term Capital Gains (LTCG)
4. Eligibility for Deduction under Section 54F
5. Legal Expenses Deduction

Detailed Analysis:

1. Condonation of Delay
The appeal filed by the assessee suffered from a 36-day delay. The assessee attributed the delay to the time taken for legal advice on whether to appeal. The Tribunal referred to the case laws of *Collector Land Acquisition vs Mst. Katiji & Ors, 1987 AIR 1353 (SC)* and *University of Delhi Vs. Union of India*, which support condonation of delay for substantial justice. The Tribunal found the delay neither intentional nor deliberate and condoned it.

2. Revision of Assessment Order by Pr. CIT under Section 263
The Pr. CIT exercised powers under Section 263 to revise the assessment order passed by the AO, deeming it erroneous and prejudicial to the interests of revenue. The Pr. CIT noted discrepancies in the market value of the property and the amount deposited in the Capital Gains Account Scheme (CGAS). The Pr. CIT directed the AO to bring the differential capital gain and the uninvested amount to tax under LTCG.

3. Computation of Long-Term Capital Gains (LTCG)
The AO initially accepted the assessee's computation of LTCG based on the market value of ?9,44,98,000. However, the Pr. CIT found that the correct market value was ?9,75,22,000, resulting in a shortfall of ?30,24,000 in the sale consideration. The Pr. CIT held that the AO failed to consider this discrepancy, leading to an underreported LTCG by ?7,56,000.

4. Eligibility for Deduction under Section 54F
The Pr. CIT observed that the assessee did not deposit the entire sale consideration in the CGAS within the stipulated time, making a portion of the amount ineligible for deduction under Section 54F. The assessee argued that the total investment made was more than the actual amount received from the sale, thus fully entitled to the exemption under Section 54F. The Tribunal found that the AO had already examined these issues and accepted the claims, and the Pr. CIT's revision was not warranted.

5. Legal Expenses Deduction
The Pr. CIT disallowed ?5,00,000 of the claimed legal expenses due to lack of supporting evidence. The assessee contended that the AO had already examined and accepted the legal expenses during the assessment. The Tribunal supported the assessee's position, noting that the AO had considered the evidence provided.

Tribunal's Conclusion:
The Tribunal concluded that the AO had taken a permissible view on the issues, and the Pr. CIT's revision under Section 263 was not justified. The Tribunal relied on the Supreme Court's judgment in *Malabar Industries Ltd. Vs. CIT, 2000 (243) ITR 83*, which states that an order cannot be deemed erroneous and prejudicial to the interests of revenue if the AO's view is sustainable in law. The Tribunal set aside the Pr. CIT's order and restored the AO's original assessment order.

Final Decision:
The appeal of the assessee was allowed, and the order of the Pr. CIT passed under Section 263 was set aside. The Tribunal acknowledged the delay due to COVID-19 and pronounced the judgment on 30th September 2021.