2023 (9) TMI 743 - AT - Income Tax

Capital gain computation - Deduction of cost of land with expenses for exploitation on land and others - as stated that the assessee has shown the amount as advance in books of account and not capitalized because the registration was pending - Whether legal rights in the property can be extinguished by an agreement to sell as per Section 2(47) of the Income-tax Act which defines the word transfer in relation to capital asset? - HELD THAT - When the assessee is a statutory body incorporated under Companies Act and maintaining statutory books of account, why it is not proving the expenses on exploitation and others incurred by it or the cost incurred by it being shown as advance in accounts? We fail to understand the approach of assessee. The matter does not stop here. Interestingly, we find that the assessee had claimed before AO that it had declared the receipt of Rs. 29,20,000/- in AY 2010-11 and the AO has accepted this version of assessee too but the authenticity of this claim is also doubtful. We find that both of the lower authorities have made a concurrent finding that the assessee has not filed any evidence to prove the cost of Rs. 99,20,000/-. We are also aware that if the land is sold for Rs. 1,28,50,000/- the department cannot tax entire sum of Rs. 1,28,50,000/- as income of assessee; the department has to allow deduction of actual cost incurred by assessee since the impugned land actually belonged to RLM once upon a time and the assessee purchased from RLM and therefore certainly incurred cost whatever amount may be. Therefore, it is necessary to ascertain the correct cost incurred by assessee and give deduction to assessee. At the same time, we also note that it s assessee onus to prove conclusively the amount of cost incurred. We also find that all three original owners, namely RLM from whom the land was purchased, have already expired and their death certificates are filed in the Paper-Book. We feel that the legal heirs/relatives of RLM have not co-operated the department in earlier proceeding and it would be unreasonable to expect any assistance from them at this stage for the transactions done by deceased RLM. As mentioned earlier, we note that the assessee is a company and maintaining books of accounts in terms of statutory provisions of Companies Act as well as Income-tax Act. Assessee is having complete documents and information from which it can easily file documentary evidences to AO to prove cost without any difficulty. Therefore, it is most appropriate in the situation to remand this case back to the file of AO who will decide the issue afresh. Needless to mention that the AO would give adequate opportunities to assessee and the assessee shall avail those opportunities; in the event of any failure by assessee without just cause, the AO shall be free to take a decision as the situation warrants. We direct the assessee to submit all documentary evidences including production of audited balance-sheets of past years, books of accounts and accounting entries therein, as may be required by AO, to prove its claims. The assessee shall make clear submissions with documentary evidences so that there remains no ambiguity on the factual aspects and the litigation does not multiply again. The AO shall also take a decision afresh without being influenced by his earlier order. Appeal of assessee is allowed for statistical purpose

Summary

Issues Involved:
1. Double taxation of income.
2. Rejection of additional evidence under Rule 46A.
3. Determination of the cost of land and its taxation.

Summary:

Double Taxation of Income:
The appellant challenged the addition of Rs. 99,20,000/- confirmed by CIT(A), arguing that the income was already offered in AY 2010-11 based on an MOU dated 18.03.2010. The AO, however, assessed the income in AY 2011-12, stating the sale-deed was executed on 24.06.2010, thus falling within the previous year 2010-11. The Tribunal noted that the assessee had indeed received Rs. 1,28,50,000/- from KMM and accepted that Rs. 29,30,000/- was already declared in AY 2010-11. However, the Tribunal found discrepancies in the assessee's claims regarding the cost of land and required further verification.

Rejection of Additional Evidence:
The appellant contended that CIT(A) erred in rejecting additional evidence, specifically death certificates of the original landowners, under Rule 46A. CIT(A) acknowledged the death certificates but noted the absence of evidence supporting the cost of Rs. 99,20,000/- paid to the original owners. The Tribunal emphasized that the assessee failed to provide documentary evidence to substantiate the cost claimed.

Determination of Cost of Land and Its Taxation:
The Tribunal observed that the assessee's claims regarding the cost of land were inconsistent and lacked documentary support. The assessee initially claimed the cost included "expenses for exploitation on land and others," but later stated it was shown as an advance in the books. The Tribunal found the assessee's approach unclear and noted discrepancies in the audited accounts. Given the need to ascertain the correct cost incurred by the assessee, the Tribunal remanded the case back to the AO for fresh examination, directing the assessee to provide clear submissions and documentary evidence.

Conclusion:
The appeal was allowed for statistical purposes, with the case remanded to the AO for fresh consideration. The AO was instructed to give the assessee adequate opportunities to present evidence and to make a fresh decision without being influenced by the earlier order.