2021 (7) TMI 937 - AT - Income Tax

Computation of capital gains - transfer of the subject property by the assessee and other co-owners - FMV determination - HELD THAT - Section 50C nowhere confers any jurisdiction to the assessing authority to change the nature of the capital asset other than that declared in the corresponding transfer instrument u/s. 2(47)(v) of the Act. Hon'ble apex court's recent larger bench's decision in Commissioner of Customs Vs. Dilip Kumar 2018 (7) TMI 1826 - SUPREME COURT settles the law that only strict interpretation is to be adopted whilst construing a taxing or an exemption provision; as the case may be. Coupled with this, the crucial statutory expression 'assessable' in Section 50C came to be inserted by way of Finance (No. 2) Act, 2009 w.e.f. 01-10-2009 whereas we are in A.Y. 2008-09 only. We thus hold in the foregoing factual backdrop that the CIT(A) has rightly reversed the impugned long term capital gain made in the assessees' hands. The same stands affirmed accordingly. Disallowance of claim towards cost of acquisition - HELD THAT - We find no reason to express our agreement with the learned CIT(A)'s foregoing remand directions going against the amendment in Section 251(1)(a) of the Act vide Finance Act, 2001 w.e.f. 01-06-2001 omitting the clinching statutory expression 'or he may set aside'. The fact also remains that the assessees have not been able to prove as to under what circumstances they had to pay the impugned sum over and above ₹ 8 crores as per the terms of settlement. We therefore deem it appropriate that these assessees need to be afforded one more effective innings before the AO to explain the justification of ₹ 3 crores made to the twin recipients (supra) as falling u/s. 48(i) and (ii) of the Act; as the case may be. These assessees are directed to appear themselves or through their authorised representative; as the case may be on or before 31-10-2021 with all the supportive evidence; at their own risk and responsibility to be followed by three effective opportunities of hearing for the consequential verification.

Summary

Issues Involved:
1. Delay in filing appeals condonation.
2. Discrepancy in valuation of property for capital gains computation.
3. Disallowance of cost of acquisition claim.

Issue 1: Delay in filing appeals condonation:
The appeals by six assessees faced identical delays, ranging from 60 to 80 days, attributed to reasons beyond their control. The department did not contest the delay, leading to its condonation by the tribunal.

Issue 2: Discrepancy in valuation of property for capital gains computation:
The Revenue's appeals contested the CIT(A)'s directive to adopt a lower open land value for capital gains calculation compared to the value assessed by the assessing officer. The CIT(A) based the decision on the Development Agreement, highlighting that the stamp duty value declared during registration should be considered. The CIT(A) emphasized that the Assessing Officer did not account for the nature of the land and the absence of development expenses. The tribunal upheld the CIT(A)'s decision, citing the strict interpretation principle for tax provisions and the statutory amendment post the assessment year.

Issue 3: Disallowance of cost of acquisition claim:
The assessees' appeals challenged the disallowance of a cost of acquisition claim related to payments made for settlement. The CIT(A) remanded the issue to the Assessing Officer, emphasizing the need for the assessees to substantiate the additional payments made beyond the settlement terms. The tribunal supported this decision, directing the assessees to provide evidence justifying the extra payments under relevant tax provisions.

In conclusion, the tribunal dismissed the Revenue's appeals while allowing the assessees' appeals for statistical purposes. The detailed analysis of each issue showcases the tribunal's meticulous approach in addressing the discrepancies and legal contentions raised by both parties, ensuring a fair and reasoned judgment.