2022 (4) TMI 281 - AT - Income Tax

Computation of capital gain on sale of land - cost of acquisition of shares in the hands of the sister - unwarranted computation of capital gains at an inflated figure - HELD THAT - We find that assessee has not made any fresh claim before the learned Assessing Officer but merely asked to correct wrong punching of the data of the cost of acquisition in the computation of the total income. According to us, only the correct income of the assessee should have been charged to tax. CIT(A) also did not consider the above claim on merit despite submitting the copy of account of cost of acquisition of those shares from the books of the sister of the assessee. The assessee has submitted that correct cost of acquisition is ₹ 20,25,000/- as shown in that account. The ledger account is also reproduced by the learned CIT(A) in his order but he did not consider the same. We find that the order of the learned CIT(A) itself shows that there is a confirmation available from the sister of the assessee about the correct cost of acquisition of these shares - no further proof is required. In the result, we find that the claim of the assessee is correct and therefore, we restore the grounds of appeal before the learned AO with a direction to compute the capital gain on sale of share of M/s. Liberty Urvarak Ltd. by taking the cost of acquisition of those shares at ₹ 20,25,000/- instead of ₹ 2,02,500/-. Accordingly, the orders of the lower authorities are reversed and appeal of the assessee is allowed.

Summary

Issues:
- Correcting arithmetic error in computation of capital gains on sale of shares
- Failure to follow binding judgments and decisions
- Refund of excess tax amount paid by the appellant

Analysis:
1. Correcting arithmetic error in computation of capital gains on sale of shares:
- The appeal was filed against the order passed by the Commissioner of Income-tax Appeals-48, Mumbai, dismissing the appeal of the assessee against the assessment order for Assessment Year 2013-14 under section 143(3) of the Income-tax Act, 1961. The assessee raised grounds related to an arithmetic error in the computation of capital gains on the sale of shares. The cost of acquisition of shares was mistakenly taken at a lower amount than the actual value. The Assessing Officer rejected the claim as the time for revising the return had expired. The Appellate Tribunal found that the correct cost of acquisition was established through evidence provided by the assessee, and directed the Assessing Officer to compute the capital gain by considering the correct cost of acquisition. The Tribunal held that only the correct income of the assessee should be charged to tax, reversing the decisions of the lower authorities.

2. Failure to follow binding judgments and decisions:
- The assessee contended that the lower authorities failed to correct an arithmetic error in the computation of capital gains on the sale of shares. The Appellate Tribunal noted that the assessee did not make a fresh claim but sought to rectify the error in the data entry of the cost of acquisition. Despite providing evidence from the sister of the assessee confirming the correct cost of acquisition, the Assessing Officer and the Commissioner of Income-tax Appeals did not consider the claim on merit. The Tribunal observed that the correct cost of acquisition was supported by ledger accounts and confirmed by the sister of the assessee, indicating no further proof was necessary. The Tribunal, therefore, allowed the appeal and directed the correct computation of capital gains.

3. Refund of excess tax amount paid by the appellant:
- The appeal also raised the issue of directing the Assessing Officer to refund the excess amount of tax paid by the appellant along with interest. However, the Tribunal's decision focused on rectifying the computation error in the capital gains on the sale of shares, leading to the allowance of the appeal. The specific issue of refunding the excess tax amount was not addressed explicitly in the judgment.

In conclusion, the Appellate Tribunal allowed the appeal of the assessee, directing the Assessing Officer to compute the capital gain on the sale of shares by considering the correct cost of acquisition. The Tribunal emphasized the importance of ensuring the accurate calculation of income and adhering to the correct legal principles in tax assessments.