2022 (8) TMI 777 - AT - Income Tax

Long term capital gain - addition after holding the assessee to have sold/transferred area measuring 3277.2 sq. mtrs at Yerangal - CIT( A) held that the assessee had vide sale deed dated 05.01.2011 actually transferred only 777.20 Sq.Mts. of land to the purchaser and erred in directing the AO to adopt the proportionate Stamp Duty value as the sale consideration and recompute the capital gain after giving benefit of indexation - HELD THAT - As it has come on record that the CIT(A) has held the assessee as having sold/transferred the area measuring 777.2 sq. mtrs of land only than 3277.2 sq. mtrs taken at the Assessing Officer s behest. We sought to verify the factual position ourselves from the corresponding sale deed executed in the relevant previous year. Mr. Walimbe produced the said documents before us dated 5-1-2011 during the course of hearing. It very well emerges therefrom that the assessee indeed sold area measuring 777.2 sq. mtrs only. That being the case, we find no merit in the Revenue s sole substantive grievance since going against the clinching recital made in the sale deed

Issues Involved:
1. Determination of the actual area of land transferred and its impact on capital gains calculation.
2. Validity of the evidence provided by the assessee regarding the sale of 2500 sq. meters of land in 1991.
3. Assessment of whether the capital gains from the sale of 2500 sq. meters were previously taxed.
4. Application of Section 50C of the Income-tax Act regarding the valuation of the transferred property.

Issue-wise Detailed Analysis:

1. Determination of the actual area of land transferred and its impact on capital gains calculation:
The Revenue's primary contention was that the assessee sold a total area of 3277.2 sq. meters, whereas the assessee claimed to have sold only 777.2 sq. meters. The CIT(A) found that the sale deed dated 05.01.2011 explicitly mentioned the transfer of only 777.2 sq. meters. Consequently, the CIT(A) directed the Assessing Officer (AO) to adopt the proportionate stamp duty value of Rs. 1,78,24,707/- as the sale consideration and recompute the capital gain after giving the benefit of indexation. The Tribunal upheld this finding, confirming that the actual area transferred was 777.2 sq. meters and not 3277.2 sq. meters.

2. Validity of the evidence provided by the assessee regarding the sale of 2500 sq. meters of land in 1991:
The AO contended that the assessee did not provide sufficient evidence to prove that 2500 sq. meters of land were sold in 1991. However, the CIT(A) noted that the sale deed dated 05.01.2011 and other documents clearly referenced the sale of 2500 sq. meters to Mr. Azim Premji in 1991. The Tribunal supported this finding, emphasizing that the sale deed and other records consistently indicated that only the remaining 777.2 sq. meters were sold in 2011.

3. Assessment of whether the capital gains from the sale of 2500 sq. meters were previously taxed:
The AO argued that there was no evidence to show that the capital gains from the sale of 2500 sq. meters were taxed in an earlier assessment year. The CIT(A) and the Tribunal found that the AO failed to appreciate the historical context and the documentation provided, which indicated that the sale of 2500 sq. meters occurred in 1991 and was not part of the 2011 transaction. Thus, the capital gains from the 2011 sale should only pertain to the 777.2 sq. meters.

4. Application of Section 50C of the Income-tax Act regarding the valuation of the transferred property:
The AO applied Section 50C, adopting the stamp duty value of Rs. 7,51,61,000/- for the entire 3277.2 sq. meters as the sale consideration. The CIT(A) and the Tribunal found this approach incorrect, as only 777.2 sq. meters were transferred in 2011. The Tribunal confirmed that the proportionate stamp duty value of Rs. 1,78,24,707/- should be used for computing the capital gains, aligning with the actual area transferred and the provisions of Section 50C.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the assessee transferred only 777.2 sq. meters of land in 2011. The capital gains should be computed based on the proportionate stamp duty value of Rs. 1,78,24,707/-, with the benefit of indexation. The Tribunal found no merit in the Revenue's arguments, confirming the correctness of the CIT(A)'s findings and the documentation provided by the assessee. The delay in filing the appeal was condoned due to the Covid-19 pandemic.

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