2024 (3) TMI 1197 - AT - Income Tax

Calculation of Capital Gain - Non-Resident - Applicability of section 144C - eligible assessee - Disallowance of brokerage expenses - Fair market value determination of the rear basement - HELD THAT - We are of the considered view that the facts as brought before us require verification and therefore in regard to disallowance of brokerage the issue is restored to the file of ld. AO for giving an opportunity to the assessee and allow the same in totality if found verified. Fair market value of the rear basement - We are of the considered view that before the DRP the assessee had brought on record evidences indicating that the assessee had acquired interest in the rear basement by way of agreement to sell dated 15.04.1994. The fact that this property was rented out and Form 16A against the rent paid by Israel Aircraft Industries Ltd. for the period 01.04.1996 to 31.03.1997 was sufficient piece of evidence to show that the rear basement was acquired before 01.04.2001. Thus there was no justification for the DRP to disregard the registered valuer s report and instead direct AO to accept the circle rates. Thus the directions of the DRP to the AO to apply circle rate is also not sustainable and to that extent the DRP directions and the findings of the ld. AO in the final assessment order require to be reversed with the direction that the indexed cost of rear basement should be taken on the basis of the valuation report as provided by the assessee as per law. Assessee has sold the second floor of D4/5 Vasant Vihar New Delhi in which she had 50% of the share by way of sale deed dated 07.12.2018 for a sale consideration coming to her share at Rs. 6, 87, 50, 000/-. The assessee has claimed that there was a brokerage of Rs. 20, 28, 125/- and a copy of invoice is made available aThe claim of the assessee is that the assessee has been charged brokerage of Rs. 20, 28, 125/- in respect of her 50% share in the second floor and the AO ought to have allowed the same in full. A clarification of the broker Satia Homes Pvt. Ltdis provided certifying and confirming that the assessee was owner of 50% of second floor of D4/5 Vasant Vihar New Delhi for which separate tax invoice No.18 dated 04.12.2018 was issued on account of brokerage to the assessee and the same was paid by her. This amount was inclusive of GST @ 18%. This brokerage amount pertains only to 50% share in the second floor of D4/5 Vasant Vihar New Delhi. We are of the considered view that the facts as brought before us require verification and therefore in regard to disallowance of brokerage the issue is restored to the file of ld. AO for giving an opportunity to the assessee and allow the same in totality if found verified. Stamp duty paid by the assessee for purchase of second floor have not been considered by the AO in the cost of acquisition - As submitted on behalf of the assessee that stamp duty of Rs. 10 lakhs was paid at the time of sale deed on 09.02.2009 in regard to front portion of the second floor on and a stamp duty of Rs. 7 lakh was paid on the purchase of rear portion of the second floor by sale deed dated 07.02.2009 and thus for arriving at the cost of acquisition for second floor this amount of Rs. 17 lakhs should have been considered. We are of the considered view that apparently the ld. AO has failed to take note of the directions of the DRP in this regard and accordingly we direct the AO to give benefit of the stamp duty for arriving at the cost of acquisition in regard to second floor. As a consequence of the aforesaid discussion the grounds No.4-7 are cumulatively decided in favour of the assessee.

Summary

Issues involved:
The appeal involves issues regarding the assessment order passed by the Assistant Commissioner of Income Tax, Circle, International Taxation for Assessment Year 2019-20. The key issues raised by the Assessee in the appeal include the validity of notices issued, application of provisions under section 144C, limitation of the assessment order, rejection of valuation report, adoption of circle rates, addition of income from Long Term Capital Gain, consideration of documents, and initiation of penalty under section 270A of the Act.

Validity of Notices and Assessment Order:
The Assessee challenged the notice issued under section 143(2) of the Act, arguing that it was beyond the prescribed time limit, rendering it void ab initio. The Assessee also contended that the assessment order was barred by limitation. However, these grounds were not pressed during the hearing.

Rejection of Valuation Report and Adoption of Circle Rates:
The Assessee submitted a valuation report for two properties sold, disputing the rejection of the report by the AO. The Assessee argued against the adoption of circle rates for indexation of the properties, claiming that the properties were acquired before 2001. The Tribunal found in favor of the Assessee, directing that the indexed cost of the properties should be considered based on the valuation report provided.

Disallowed Brokerage Expenses and Stamp Duty Consideration:
The AO disallowed brokerage expenses claimed by the Assessee, citing discrepancies in the invoice. The Tribunal directed the AO to verify the brokerage expenses and allow them if found verified. Additionally, the stamp duty paid by the Assessee for the purchase of a property was not considered in the cost of acquisition by the AO. The Tribunal instructed the AO to include the stamp duty amount in the cost of acquisition for the property.

Decision and Conclusion:
The Tribunal found in favor of the Assessee on the grounds related to the rejection of the valuation report, adoption of circle rates, disallowed brokerage expenses, and consideration of stamp duty. The appeal of the Assessee was allowed with consequential effects to follow as per the directions provided. The order was pronounced in the open court on 26.02.2024.