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2022 (4) TMI 1376 - AT - Income TaxAddition on account of long term capital gains - claim of deduction u/s.54F - claim of deduction of the investments made in purchase of residential house - HELD THAT - The assessee has invested this amount in purchase of residential house and he has not made any other claim of deduction u/s.54F of the Act. Admittedly, the assessee reinvested in the new asset within the due date of filing of return u/s.139(4) of the Act and not u/s.139(1) of the Act. It is also admitted position that there was only a delay of 9 days for registration of new asset due to certain compelling reasons as there were defects in the power of attorney and due to that the assessee has to re-register the power of attorney and accordingly, the sale deed has to be executed. Finally, the assessee registered the sale deed of this residential house on 12.09.2015 whereas the due date for filing of return u/s.139(1) was 07.09.2015, as noted by the AO in his order. Practically there was delay of some days. We noted that this issue has been considered in the case of Fathima Bi 2008 (10) TMI 563 - KARNATAKA HIGH COURT and case of CIT vs. Rajesh Kumar Jalan,. 2006 (8) TMI 126 - GAUHATI HIGH COURT . Accordingly, we are of the view that the assessee is entitled for claim of deduction of the investments made in purchase of residential house at Nanganallur for an amount of ₹ 4.41 crores and the AO will re-compute the deduction accordingly. Claim of indexed cost of acquisition - The assessee has made claim as regards to expenditure incurred towards refilling with soil and evacuation of earth work, costing ₹ 16.40 lakhs for the financial year 1994-95 and the indexed cost of which works out to ₹ 64,84,015/-. Further in financial year 2003-04, as per contractors bills, the assessee incurred expenditure towards fencing, gating, cement, concrete blocks, etc., to the extent of ₹ 19,00,000/- and the indexed cost of improvement works out to ₹ 42,02,160/-. Similarly, in financial year 2009-10, as per contractors bills, the assessee incurred expenditure towards clearing bushes, labour and material supplied which works out to ₹ 18,00,000/- and the indexed cost of improvement comes to ₹ 29,16,456/-, which the Revenue has not negated. Hence, we feel that these three items can be allowed. We direct the AO accordingly. Claim of assessee that in financial year 1994- 95, the assessee has gifted certain portion of land through a release deed to Municipal Commissioner, same should be taken as cost of improvement. The cost of said portion of land works out to ₹ 13,31,580/- and assessee has claimed indexed cost of acquisition at ₹ 52,64,623/-. We cannot accept the argument of assessee or the findings of CIT(A) that this indexed cost is to be allowed for the reason that the land has already been gifted by assessee to Municipal Commissioner through release deed and for that portion, the assessee is not entitled because the land is already gifted and no improvement in land is made. According to us, that cost cannot be attributed for claim of cost of improvement and consequently indexed cost, for the purpose of Section 48 of the Act. Hence, we direct the AO to remove this amount while computing indexed cost of improvement and recomputed the capital gain accordingly. Rectification of mistake u/s 154 - Additional sale consideration while computing long term capital gain as there is no evidence to support the claim of assessee - HELD THAT - The admitted facts are that the assessee made this claim after completion of assessment just before the date of passing of the first appellate order i.e., 24.01.2018 and application is dated 27.01.2018, which was received in the office of ITO on 28.01.2018. We noted that the claim of additional sale consideration whether genuine or not there is no facts available on record and we find no mistake apparent from record in the order of AO and altogether this is a new claim which cannot be entertained while acting u/s.154 of the Act. The CIT(A) has completely misdirected himself on the legal situation as well as factual situation. Hence, we reverse the order of CIT(A) on this issue and uphold the rectification order passed by the AO. This appeal of Revenue is allowed.
Issues Involved:
1. Deletion of addition made by the AO on account of long-term capital gains. 2. Adoption of cost of acquisition and cost of improvement. 3. Allowance of additional sale consideration of ?2 crores while computing long-term capital gain. Issue-wise Detailed Analysis: 1. Deletion of Addition Made by the AO on Account of Long-Term Capital Gains: The primary issue in ITA 2960/CHNY/2018 pertains to the CIT(A) deleting the addition of ?7,36,02,980/- made by the AO on account of long-term capital gains. The assessee claimed a deduction under Section 54 of the Income Tax Act for an amount of ?6,97,60,030/- on long-term capital gain of ?6,89,39,241/-. The AO disallowed the deduction on the grounds that the assessee failed to deposit the unutilized capital gains in the capital gains account within the due date of filing the return of income under Section 139(1), and the assessee had purchased/constructed multiple residential houses and a commercial building, which did not satisfy the conditions under Section 54F(1). The CIT(A) allowed the deduction, noting that the reinvestment in the new asset was within the due date of filing the return under Section 139(4), and the delay of 9 days was due to defects in the Power of Attorney. 2. Adoption of Cost of Acquisition and Cost of Improvement: The AO adopted the cost of acquisition as on 01.04.1981 at ?1,36,800/- based on the Sub-Registrar's report, whereas the assessee claimed an indexed cost of ?48,60,759/-. The CIT(A) accepted the assessee's valuation based on the Registered Valuer's report, which estimated the fair market value as on 01.04.1981 at ?30,000/- per ground, leading to an indexed cost of ?20,99,200/-. Regarding the cost of improvement, the CIT(A) accepted the assessee's claims based on contractor bills for expenditures incurred in financial years 1994-95, 2003-04, and 2009-10, totaling an indexed cost of improvement of ?1,88,67,255/-. However, the CIT(A) allowed the cost of land gifted to the Municipal Commissioner as indexed cost of acquisition, which the Tribunal did not accept, directing the AO to exclude this amount while computing the indexed cost of improvement. 3. Allowance of Additional Sale Consideration of ?2 Crores: In ITA No.2961/CHNY/2018, the issue revolves around the CIT(A) allowing an additional sale consideration of ?2 crores while computing long-term capital gain, which the Revenue contested due to lack of evidence. The assessee claimed this amount through a rectification application after the completion of the assessment. The AO rejected the application under Section 154, stating that the case did not merit rectification. The CIT(A) accepted the additional sale consideration without substantial evidence. The Tribunal noted that the claim was made after the assessment and lacked factual support, ruling that it could not be entertained under Section 154. The Tribunal reversed the CIT(A)'s decision and upheld the AO's rectification order. Conclusion: The Tribunal partly allowed the appeal in ITA No.2960/CHNY/2018, directing the AO to recompute the deduction under Section 54F and exclude the cost of land gifted to the Municipal Commissioner from the indexed cost of improvement. In ITA No.2961/CHNY/2018, the Tribunal allowed the Revenue's appeal, reversing the CIT(A)'s decision to include the additional sale consideration of ?2 crores, upholding the AO's rectification order.
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