2024 (1) TMI 575 - AT - Income Tax

Computation of LTCG - cost of acquisition from the sale consideration to compute the long term capital gains - HELD THAT - DRP found the sale consideration of 29 flats at Rs. 5,12,07,000/- and the cost of acquisition was Rs. 3,80,05,661/-. Since the AO failed to reduce the cost of acquisition from the sale consideration to compute the long term capital gains, learned DRP directed the AO to consider this aspect and to allow the indexed cost of acquisition to be reduced from the sale consideration to compute the correct long term capital gains. AO mistook this direction and he computed the long term capital gains at Rs. 3,80,05,664/-. We, therefore, accept the request of the assessee and direct AO to reduce the sale consideration by indexed cost of acquisition, taking the cost of acquisition at Rs. 3,80,05,664/-. Ground No. 2 is accordingly allowed. Deduction u/s 54F - For the assessment year 2012-13, a Co-ordinate Bench of the Tribunal directed the learned CIT(A) to verify whether the assessee is entitled to claim deduction under section 54F of the Act; that pursuant to such a direction, learned CIT(A) called for remand report of the learned Assessing Officer and such an appeal is pending at that stage. As submitted that pending finalization of the issue relating to section 54F of the Act in the appeal for the assessment year 2012-13, this issue may be restored to the file of the learned Assessing Officer to be taken up after the learned CIT(A) finalizes the issue for the assessment year 2012-13. Learned DR placed reliance on the assessment order and argued in justification thereof. Since there is no dispute on the factual aspect, we deem it just and proper to restore the issue to the file of the learned CIT(A) to take a view inconsonance with the view to be taken in the appeal for the assessment year 2012-13. Ground No. 3 is, therefore, treated as allowed for statistical purposes.

Summary

Issues involved:
The judgment involves issues related to assessment year 2014-15 under section 147 r.w.s. 144C(13) of the Income Tax Act, 1961. The key issues include computation of long-term capital gains, disallowance of deduction under section 54F of the Act, and credit of taxes paid in the assessment years 2013-14 and 2015-16.

Computation of Long-term Capital Gains:
The appellant, an NRI, sold 29 flats in the assessment year 2014-15 and received a total consideration of Rs. 5,12,07,000. The Assessing Officer failed to reduce the cost of acquisition from the sale consideration to compute long-term capital gains accurately. The Direction by the DRP highlighted the cost of acquisition for the 29 flats at Rs. 3,80,05,661, which should have been allowed for indexation. The Assessing Officer, however, added this amount to the long-term capital gains by disallowing the claim of section 54F of the Act. The Tribunal directed the Assessing Officer to reduce the sale consideration by the indexed cost of acquisition to compute the correct long-term capital gains, accepting the appellant's request.

Disallowance of Deduction under Section 54F:
The Assessing Officer disallowed the deduction under section 54F of the Act, previously allowed by the CIT(A) for the assessment year 2012-13. However, a Co-ordinate Bench of the Tribunal had directed the CIT(A) to verify the entitlement of the appellant to claim this deduction. As the issue was still pending, the Tribunal ruled that unless the entitlement of the appellant to claim benefit under section 54F for the assessment year 2012-13 is conclusively decided, any addition for the assessment year 2014-15 should be on a protective basis. The issue was restored to the CIT(A) for further consideration.

Credit of Taxes Paid:
The appellant raised concerns about the Assessing Officer not allowing the credit of taxes paid in the assessment years 2013-14 and 2015-16 concerning the sale of 29 flats, contrary to the directions of the DRP. As the main grounds were restored to the Assessing Officer for compliance with the DRP's directions, this issue was also sent back for proper consideration. The Tribunal treated this issue as allowed for statistical purposes.

Conclusion:
The Tribunal partly allowed the appeal of the appellant for statistical purposes, directing the Assessing Officer to accurately compute the long-term capital gains by reducing the indexed cost of acquisition from the sale consideration. The issues related to the disallowance of deduction under section 54F and the credit of taxes paid were restored to the CIT(A) and the Assessing Officer, respectively, for further compliance with the directions provided.