2022 (3) TMI 844 - AT - Income Tax

Capital gain computation - FMV determination - cost of acquisition incurred by his forefathers in obtaining the land in Inam - assessee requested for making a reference to the DVO u/s 50C for the purpose of determining fair market value as on 01.04.1981 and also as on the date of transfer - AO opined that the transfer took place on such date only - HELD THAT - Assessee did not take up the issue of Inami land before the AO. It was for the first time that the assessee raised this issue before the CIT(A) contending that in the absence of any cost of acquisition incurred by his forefathers in obtaining the land in Inam, machinery provisions for computing the capital gains failed. In support of the said contention, the assessee placed before the ld. CIT(A) some documents asserting Inam Patrak containing the entry of impugned land which was in torn condition and not legible. Assessee did not take up the issue of Inami land before the AO. It was for the first time that the assessee raised this issue before the ld. CIT(A) contending that in the absence of any cost of acquisition incurred by his forefathers in obtaining the land in Inam, the machinery provisions for computing the capital gains failed. In support of the said contention, the assessee placed before the ld. appeals are allowed for statistical purposes. CIT(A) some documents asserting Inam Patrak containing the entry of impugned land which was in torn condition and not legible. Second view canvassed by the assessee that there was no cost of acquisition in view of such property being received as Inam, the ld. CIT(A) observed that payment of Nazarana to the Govt. of Maharashtra was a pre-condition to receive a marketable title and for transfer of such land, such payment of Nazarana would constitute the cost of acquisition. The ld. AR submitted that there was no such provision in the relevant Statute providing for payment of Nazarana as a pre-condition for receiving Inam property. A prayer was made that the ld. CIT(A) ought to have examined the assessee‟s claim of Inami land by directing the enquiry to the concerned officials. It would be in the fitness of things, if the impugned orders are set aside and the matter is restored to the file of AO. Order accordingly and direct the AO to decide the issue afresh after conducting proper enquiries about the assessee‟s claim of having received the land in question by his forefathers as Inam and further about the Nil cost of acquisition claim raised by the assessee - Appeals are allowed for statistical purposes.

Summary

Issues:
Appeals by connected assessees regarding capital gains computation for properties transferred.

Analysis:
The judgment involves three appeals by connected assessees concerning capital gains computation for properties transferred in the assessment year 2009-10. The Assessing Officer (AO) observed the transfer of properties at values lower than stamp values and computed capital gains based on share percentages. The assessees contended that the properties were received as Inam and had no cost of acquisition. The ld. CIT(A) rejected the claims, stating that Nazarana payment constituted the cost of acquisition for Inami land. The Tribunal noted that the Inam issue was raised for the first time before the ld. CIT(A) and directed the AO to reexamine the claim of Inami land and Nil cost of acquisition, emphasizing proper enquiries and a fair hearing for the assessee.

Conclusion:
The Tribunal allowed all appeals for statistical purposes, setting aside the previous orders and remanding the matter to the AO for a fresh decision after conducting thorough enquiries regarding the Inam claim and cost of acquisition. The judgment highlights the importance of providing a fair opportunity for the assessee to present their case and have their claims properly examined.