2023 (4) TMI 484 - AT - Income Tax

Rectification u/s 154 - Capital gain computation - rectification claiming correct computation of his long term capital gains after adopting cost of acquisition itself as the fair market value FMV - HELD THAT - Learned counsel first of all referred to this tribunal s coordinate bench s order in Atul C. Shah 2022 (1) TMI 535 - ITAT AHMEDABAD that such a correct cost of indexation and its appropriate computation indeed forms subject matter of section 154 rectification. Learned counsel also sought to highlight the fact that the assessee s co-owner s capital gains had been computed after determining the very cost of acquisition/indexation which has been denied in the impugned sec.154 proceedings. Faced with the situation, we deem it appropriate to reverse the learned lower authorities action declining the assessee s instant rectification petition as not maintainable and leave it open for the learned Assessing Officer to decide the same afresh as per law. Assessee s appeal is allowed for statistical purposes.

Summary

Issues involved: Appeal against the order of National Faceless Appeal Centre under section 154 of the Income Tax Act, 1961.

Summary:

Issue 1: Condonation of delay in filing appeal
The appellant sought condonation of a 16-day delay in filing the appeal citing the principle of substantial justice as per the decision in Collector, Land Acquisition vs. MST Katiji. The delay was condoned.

Issue 2: Rectification of long term capital gains computation
The appellant contended that the mistake in adopting historical value instead of Fair Market Value of land as on 01.04.1981 for computing long term capital gains was apparent from the record and should have been rectified under section 154. The appellant's rectification application was initially rejected, but the tribunal reversed the decision, allowing the appeal for statistical purposes and directing the Assessing Officer to decide the rectification petition afresh.

Significant Points:
- The appellant filed a rectification application claiming that the correct computation of long term capital gains required considering the Fair Market Value of the property as on 01.04.1981.
- The assessing authority and the lower appellate discussion held that rectification under section 154 was not available for such a course of action.
- The tribunal referred to a similar case and highlighted the discrepancy in the treatment of cost of acquisition/indexation between the appellant and the appellant's co-owner.
- The tribunal reversed the decision of the lower authorities, allowing the rectification petition and directing the Assessing Officer to decide the matter afresh.

This judgment highlights the importance of correct computation of long term capital gains and the applicability of rectification under section 154 in cases where mistakes are apparent from the record. The tribunal's decision emphasizes the need for factual verification and adherence to the law in such matters.