2022 (11) TMI 888 - AT - Income Tax

LTCG computation - FMV determination - HELD THAT - SRO has provided Rs. 35 lakhs per acre which can be utilized for the purpose of calculating the stamp duty valuation of the said agricultural lands. However, it cannot be considered as a FMV as on 12/5/2013. Similarly the FMV adopted by the assessee at Rs. 90 lakhs per acre also is on the higher side and there cannot be such huge difference between the FMV adopted by the assessee and the SRO value. AR also failed to provide any basis for adopting Rs. 90 lakhs per acre as market value. Considering the peculiar circumstances, we are of the considered view that the market value can be estimated at Rs. 60 lakhs per acre and accordingly, AO is directed to compute the capital gains for the impugned assessment year. Thus, the grounds no. 2 and 5 raised by the assessee are partly allowed. Deduction u/s. 54B - assessee has claimed deduction U/s. 54B but has failed to produce the evidence carrying of agricultural activities on the said agricultural lands - HELD THAT - We therefore are in concurrence with the findings of the Ld. CIT(A) as no evidences have been produced even before us. Accordingly, we are of the considered view that there is no infirmity in the order of the Ld.CIT(A) and no interference is required on this issue. Thus, the Ground No.3 raised by the assessee is dismissed. Deduction u/s. 54F - AR argued that the assessee has purchased a residential property and has incurred certain expenditure for renovation - AR also submitted that the proof of expenditure was also provided before the Ld. AO - HELD THAT - We find from the written submissions and the paper book submitted by the Ld. AR that the assessee has claimed renovation expenses which were mostly though self-made vouchers. No cogent evidences are provided before us or before the Ld. Revenue Authorities. In the absence of any material evidence, we find no infirmity in the order of the Ld. CIT (A) and hence no interference is required on this ground. Thus, this Ground No.4 raised by the assessee is dismissed. Restriction of land development expenses - HELD THAT - We find that the Ld. CIT(A) has reasonably considered the disallowance of expenses to the extent of 20% of the total expenses in the absence of any cogent evidences such as bills, vouchers etc., not produced by the assessee either before the Ld. Revenue Authorities or before us. We are therefore inclined to uphold the order of the Ld. CIT(A) on this issue. Thus, this ground No.6 raised by the assessee is dismissed.

Summary

Issues Involved:
1. Assessment of capital gains and business income for AY 2014-15.
2. Claim of deduction under sections 54B and 54F of the Income Tax Act.
3. Determination of fair market value (FMV) and cost of acquisition.
4. Disallowance of land development expenses.

Detailed Analysis:
1. The appeal challenged the order of the Commissioner of Income Tax (Appeals) regarding the assessment of capital gains and business income for AY 2014-15. The assessee converted ancestral land into stock in trade and created plots for sale. Discrepancies arose in determining the cost of acquisition and capital gains. The Assessing Officer (AO) adopted a lower value than claimed by the assessee. The Appellate Tribunal directed the AO to compute capital gains based on an estimated market value, partially allowing the appeal.

2. The issue of deduction under sections 54B and 54F was raised. The assessee claimed deductions but failed to provide evidence of agricultural activities on the land. The AO rejected the deductions, citing lack of proof of agricultural income. The Appellate Tribunal concurred with the Commissioner's findings, stating that no evidence was presented to support the claim. Therefore, the deduction under section 54B was denied.

3. The determination of fair market value (FMV) and cost of acquisition was contested. The assessee claimed a higher FMV for the land, while the AO relied on a lower value. The Appellate Tribunal found discrepancies in both values and estimated the FMV at an intermediate value, directing the AO to calculate capital gains accordingly. The Tribunal emphasized the importance of providing a reasonable basis for determining the FMV.

4. Disallowance of land development expenses was also disputed. The assessee submitted expenses for development, but the AO and Commissioner disallowed a portion due to lack of supporting evidence. The Appellate Tribunal upheld the Commissioner's decision, restricting the disallowance to 20% of the claimed expenses. The Tribunal emphasized the need for proper documentation to substantiate expenses claimed for land development.

Overall, the Appellate Tribunal partially allowed the appeal, addressing discrepancies in the assessment of capital gains, denial of deductions under sections 54B and 54F, determination of fair market value, and disallowance of land development expenses. The judgment highlighted the significance of providing sufficient evidence and reasonable bases for tax-related claims and assessments.