2022 (4) TMI 836 - AT - Income Tax

Computation of capital gains - application of Sec.50C - land was sold through power of attorney holder - land was sold through power of attorney holder - assessee submitted by the assessee that entire land to the extent of 1 Kani 70 Kuzhees was sold through power of attorney for sale consideration of ₹ 210 Lacs and no extra consideration flowed to the assessee - Claim of exemption u/s 54F - Deduction on two properties on the ground that the properties were within one boundary / compound - HELD THAT - Assessee, along with another co-owner, has executed General Power of Attorney on 05.08.2010 in favor of Shri P.Vaidyanathan. As per the Schedule, POA encompasses a total extent of land of 1 Kani 70 Kuzhi which has been sub-divided into plots. It further states that total extent of 13747 square feet has been sold by the co-owners earlier and the balance 1 Kani 46 Kuzhi 2 -1/4Veesam is left. Thus, the POA has been executed to that extent. However, as per the receipt dated 22.12.2010, POA is stated to have paid a sum of ₹ 210 Lacs against land admeasuring 1 Kani 7 Kuzhi. Therefore, there is clear contradiction between these two documents and the correct factual matrix is required to be brought on record. To resolve the same, we remit the issue back to the file of Ld. AO to ascertain the correct factual matrix. It could be noted that the property under consideration is immoveable property and the sale value of the same could be ascertained on the basis of sale deeds. AO is directed to ascertain the aggregate sale consideration arising out of sale of pots of land sold by the assessee during the year. The assessee is directed to file the relevant details / explanation. Application of Sec.50C AO shall consider the submissions / objection of the assessee to the adoption of stamp duty value and readjudicate the same. The assessee s plea that Sec.50C would have no application in case of sale executed through POA would not hold much water since no such distinction has been created under the statute. Similarly, the cost of improvement could not be allowed in the absence of any documentary evidences forthcoming from the assessee. Deduction u/s 54F would also stand restored back to the file of Ld. AO in the light of inspector s report as placed by the revenue before us. The same would be confronted to the assessee and the issue may be re-adjudicated in the light of submissions made and findings arrived at thereafter. Appeal stands partly allowed for statistical purposes

Summary

Issues:
Computation of capital gains.

Detailed Analysis:

Assessment Proceedings:
The assessee computed taxable capital gain on the sale of housing plots through a Power of Attorney (POA) holder. The Assessing Officer (AO) examined the computation and applied Sec.50C for valuation. The AO also restricted the exemption u/s 54F to one property only, resulting in re-computation of capital gains. The AO found discrepancies in the sale of plots and denied the cost of improvement claimed by the assessee. The AO adopted the guideline value for valuation and re-computed the capital gains.

Appellate Proceedings:
During the appeal, the assessee argued that the entire land was sold through the POA holder for a specific amount, and no extra consideration was received. The assessee disputed the application of Sec.50C, claiming that the land was sold exclusively through the POA holder. The assessee also sought deduction u/s 54F for two properties, arguing they were part of a single unit. However, the CIT(A) upheld the AO's findings, rejecting the assessee's claims and justifying the application of Sec.50C and the denial of cost of improvement.

Findings and Adjudication:
Upon review, discrepancies were found in the documents related to the sale through the POA holder. The case was remitted back to the AO to ascertain the correct factual matrix. The AO was directed to determine the aggregate sale consideration and re-evaluate the application of Sec.50C. The cost of improvement was denied due to lack of evidence. The issue of deduction u/s 54F was also sent back for re-evaluation based on new evidence. The appeal was partly allowed for statistical purposes.

In conclusion, the judgment focused on the computation of capital gains, highlighting discrepancies in the sale transactions and the valuation process. The case was remitted back to the AO for further examination to ensure accurate determination of capital gains and proper application of relevant provisions, including Sec.50C and Sec.54F.