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2023 (2) TMI 1064 - AT - Income TaxCapital gain Computation - sale of property liable to be taxed - assessee share in property - Admission of additional evidences rejected by CIT-A - assessee s share in the property sold was 1/12th and not 1/9th as taken by the AO - HELD THAT - We find that while the ld.CIT(A) states that all additional evidences filed by the assessee were admitted by him, but in the subsequently states that vis- -vis the shares of the assessee in the property sold, he refuses to admit additional evidence. There appears to be no clarity in the order of ld.CIT(A) on this aspect of the matter. Even otherwise, we find that the share of the assessee being a crucial aspect for determining the capital gains earned by the assessee, the ld.CIT(A) was not right in rejecting the admission of additional evidences. We therefore hold that rejection of the assessee s claim of share in the property sold being 1/12th by the Revenue authorities was without any basis and highly unjustified. We find that the assessee had clearly demonstrated his share in the property at 1/12th and accordingly, we direct the AO to re-compute the capital gain taking the assessee s share in the property as 1/12th. This contention raised by the ld.counsel for the assessee is accordingly allowed. Stamp duty value/jantri value of the land sold on the date of entering into agreement to sell should have been adopted as per the provision of section 50C - The agreement to sell has been found to have stamped on 6.10.2009 while the agreement was entered into much later on 5.2.2010. There is also over-writing on the date mentioned in the agreement to sell. Most importantly, the original agreement to sell was never produced before the Revenue authorities. The fact that as per prevailing law of the State of Gujarat, a partnership firm could not have purchased an agriculture land, this agreement to sell between a partnership firm(M/s Vishwas Builders)as the buyer and the assessee as seller was in any case invalid. Further, the agreement to sell finds no mention in the final sale deed entered into between the parties. The fact that the agreement to sell is in relation to land admeasuring 15580 sq.meters, and the land actually sold as per the registered sale is only 8741sq.meters also remained un-reconciled. We agree with the ld.CIT(A) that this agreement to sell was only an after-thought of the assessee, and the ld.CIT(A) therefore has rightly denied the benefit of proviso to section 50C of the Act. This contention of the ld.Counsel for the assessee of substitution of the sale consideration with the jantri value on the date of entering into agreement to sell is accordingly rejected. Claim of exemption under section 54F on account of investment of capital gain/ sale consideration in purchase of residential property - denial of claim as per CIT(A) is for the reason that the investment in the new property was not made within the period stipulated as per law - HELD THAT - We are not in agreement with the Ld.CIT(A) on the issue. It is not denied that the assessee had made complete investment of Rs. 21 lacs for purchase of property well within the stipulated time. It is only that the construction was completed later on and sale deed entered into on completion of construction. Courts have held the conditions for claiming exemption u/s 54F of the Act to be fulfilled in such circumstances. The Hon ble Karnataka High Court in the case of CIT Vs Smt. Shantha Kumari (2015) 233 taxmann.com 347(Kar) has held that if after making complete payment merely because a registered sale deed has not been executed be it because construction was not completed in all respects, that would not disentitle the assessee from claiming the benefit u/s 54F of the Act. We hold that the assessee has substantially complied with the provisions of section 54F of the Act by making complete investment in purchase of flat. The assessee we hold is eligible to claim deduction u/s 54F of the Act of the amount invested of Rs.21 lacs. The contention vis-a-vis share of the assessee in the property sold being 1/12th is accepted, as also his claim to deduction u/s 54F of the Act. The plea for taking jantri value on the date of entering into agreement to sell in terms of proviso to section 50C is rejected. The AO is directed to re-compute the capital gains accordingly.
Issues Involved:
1. Legality of the addition of Rs. 65,39,434/- as long-term capital gains. 2. Determination of the assessee's share in the property sold. 3. Adoption of stamp duty value as per section 50C of the Income Tax Act. 4. Denial of exemption under section 54F of the Income Tax Act. Issue-wise Detailed Analysis: 1. Legality of the Addition of Rs. 65,39,434/- as Long-term Capital Gains: The assessee contested the addition of Rs. 65,39,434/- as long-term capital gains made by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued that the CIT(A) erred in confirming the addition without considering the submissions and evidence provided. The Tribunal found that the CIT(A) had not properly considered the assessee's contentions and evidence, leading to an unjustified addition. 2. Determination of the Assessee's Share in the Property Sold: The assessee claimed his share in the property was 1/12th, not 1/9th as taken by the AO. The Tribunal noted that the AO presumed an equal share among the nine co-owners without considering the specific shares pointed out by the assessee, supported by a family tree and other evidence. The CIT(A) also dismissed this claim without proper consideration. The Tribunal found merit in the assessee's contention and directed the AO to re-compute the capital gains by taking the assessee's share as 1/12th. 3. Adoption of Stamp Duty Value as per Section 50C of the Income Tax Act: The assessee argued that the stamp duty value/jantri value on the date of entering into the agreement to sell should be adopted instead of the value on the date of registration of the sale deed. The Tribunal found that the agreement to sell had several infirmities, such as being on a stamp paper dated earlier than the agreement date, overwriting on the date, lack of registration, and the fact that a partnership firm could not purchase agricultural land as per Gujarat law. The Tribunal agreed with the CIT(A) that the agreement to sell was an afterthought and denied the benefit of substituting the sale consideration with the jantri value on the date of the agreement to sell. 4. Denial of Exemption under Section 54F of the Income Tax Act: The assessee claimed exemption under section 54F for investment in a new residential property. The CIT(A) denied the exemption, stating that the investment was not made within the stipulated period. The Tribunal noted that the assessee had made the complete investment within the stipulated time, and the delay in the execution of the sale deed was due to the builder's delay in completing the construction. Citing the Karnataka High Court's decision in CIT Vs. Smt. Shantha Kumari, the Tribunal held that the assessee had substantially complied with the provisions of section 54F and allowed the exemption. Conclusion: The Tribunal partly allowed the appeal, directing the AO to re-compute the capital gains by taking the assessee's share as 1/12th and allowing the exemption under section 54F. The plea for adopting the jantri value on the date of the agreement to sell was rejected. The order was pronounced on 24th February 2023 at Ahmedabad.
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