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2022 (9) TMI 876 - AT - Income TaxCapital gain computation - applicability of section 50C - Scope of amended proviso to section 50C - sale of immovable property belonged to nine co-owners and capital gain arising thereon and application of provisions of section 50C and 54F - HELD THAT - As more than 99% of the payment was received by cheque mode by the assessees. Thus the genuineness of the transaction namely the sale consideration as per the date Agreement of Sale namely Rs. 7,000/- are substantially paid to the sellers. When the same piece and nature of land when registered as Sale Deed, 22 months thereafter then prevailing Jantri value of Rs. 16,500/- cannot be applied in this case. Taking overall circumstances of the case, in our considered opinion, it is a fit case to set aside the matter back to the file of the AO with direction to compute capital gain on sale of the property by applying amended proviso to section 50C of the Act and recompute the capital gain. Deduction u/s 54F - Similarly, the assessee having produced details of expenses incurred in the construction of house for availing benefit under section 54F of the Act, the ld.AO is directed to consider supporting evidences filed by the assessee and also examine the evidences for claiming improvement expenses incurred by the assessee, while computing capital gains and granting exemption u/s. 54F - we allow grounds of appeal of the assessee for statistical purpose - Appeal of the assessee is allowed for statistical purpose.
Issues Involved:
1. Addition under Section 50C: Whether the addition of Rs. 25,55,279/- under Section 50C of the Income Tax Act, 1961 was justified. 2. Denial of Cost of Improvement: Whether the denial of cost of improvement of Rs. 4,04,002/- while computing capital gain was justified. 3. Application of Section 54F: Whether the exemption under Section 54F of the Act was rightly denied. 4. Admissibility of Additional Evidence: Whether the additional evidence submitted by the assessee should be admitted. 5. Retrospective Application of Amended Section 50C: Whether the amended proviso to Section 50C, introduced by the Finance Act, 2016, should be applied retrospectively. Detailed Analysis: 1. Addition under Section 50C: The primary issue was the addition of Rs. 25,55,279/- under Section 50C. The assessee, along with eight co-owners, sold a piece of land for Rs. 1,70,64,489/- based on the prevailing jantri rate of Rs. 7,000/- per sq.meter at the time of the agreement on 31.12.2010. The sale deed was executed on 30.11.2012, by which time the jantri rate had increased to Rs. 16,500/- per sq.meter. The AO adopted the new jantri rate, resulting in a valuation of Rs. 4,00,62,000/-, leading to the addition under Section 50C. The Tribunal found that the sale consideration should be based on the jantri rate at the time of the agreement, not the execution of the sale deed, and directed the AO to recompute the capital gain applying the amended proviso to Section 50C. 2. Denial of Cost of Improvement: The assessee claimed a cost of improvement of Rs. 4,04,002/-, which was denied by the AO. The Tribunal directed the AO to re-examine the evidence provided by the assessee regarding the improvement expenses while recomputing the capital gains. 3. Application of Section 54F: The assessee claimed exemption under Section 54F for the construction of a new house. The AO disallowed this claim. The Tribunal directed the AO to consider the supporting evidence provided by the assessee for the expenditure incurred in constructing the new house and to grant the exemption if the evidence is satisfactory. 4. Admissibility of Additional Evidence: The CIT(A) had rejected additional evidence submitted by the assessee under Rule 46A of the IT Rules. The Tribunal did not specifically address the admissibility of this evidence but implicitly accepted its relevance by directing the AO to consider the supporting documents for the cost of improvement and Section 54F claims. 5. Retrospective Application of Amended Section 50C: The Tribunal held that the amended proviso to Section 50C, introduced by the Finance Act, 2016, should be applied retrospectively. This proviso states that where the date of the agreement and the date of registration are not the same, the stamp duty value on the date of the agreement should be considered if part of the consideration was received through banking channels. Despite a small portion of the consideration being paid in cash, the Tribunal found that the major portion was paid by cheque, thus allowing the benefit of the amended proviso. Conclusion: The Tribunal allowed the appeals for statistical purposes, directing the AO to recompute the capital gains by applying the amended proviso to Section 50C, considering the evidence for the cost of improvement and the Section 54F claim. The Tribunal emphasized a fair and reasonable interpretation of the law to avoid absurd and unreasonable results, aligning with the intent of the legislature.
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