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TMI Blog2012 (9) TMI 789X X X X Extracts X X X X X X X X Extracts X X X X ..... PER GEORGE GEORGE K : This appeal instituted by the assessee is directed against the order of the CIT, Mysore dated 17.3.2011 passed u/s 263 of the Act. The relevant assessment year is 2006-07. 2. The assessee has raised eleven grounds. However, the crux of issues is as follows (i) The Ld. CIT ought to have appreciated that the cost of inflation index was rightly applied while computing the capital gains (CG) and, thus, there was no error in the assessment order ; (ii) That the CIT ought to have appreciated that the additional consideration received was for equipments and other fittings and, thus, was not liable to be considered for working out capital gains on the sale of immovable property. 3. Briefly stated the facts are as follows:- The assessee is an individual. She is a distributor for Indane Gas. The assessee had furnished return of income for the assessment year under consideration, admitting a total income of Rs.4,44,800/-. The assessment was initially processed u/s 143 (1) of the Act and, subsequently, concluded u/s 143(3) of the Act on 22.12.2008, determining her total income at Rs.3.49 lakhs and Long Term Capital Gains [LTCG] of Rs.1.26 lakhs. Subse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and he will fully indemnify the purchaser (emphasis supplied) Hence, it is very clear that the possession of the property was handed over to the assessee only on7.9.2001. Be it as it may, the indexed cost of acquisition has to be computed for the year in which the asset is transferred to the name of the assessee only and not on the days when the advance for the purchase of the property was made, as claimed by the asssessee 4.1 Placing reliance on Explanation (iii) to s. 48 of the Act, the learned CIT further, recorded that - the order of the assessing officer u/s 143(3) dated 22.12.2008 is considered to be erroneous and prejudicial to the interest of revenue and is set-aside with a direction to pass orders afresh and re-compute the capital gains taking the indexed cost of acquisition on the entire cost of the asset to the year 2001-02 only .. 4.3. Addition to building of Rs.3,35,800/- and sale consideration of Rs.11,00,000/- received: The assessee had shown Rs.11 lakhs towards sale consideration of equipments and other fittings and has added the same to the sale consideration of Rs.42,00,000/- received for the property whereas no details of the same ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purpose of holding of the property by the assessee; - That the transfer of property was complete in accordance with the provisions of s.2(47)(v) of the Act in 1998/1999 and, consequently, the assessee had rightly computed the increase in accordance with the cost inflation index from 1999 and, thus, the computation of Capital Gains as made by her was right and complete and no interference was called for; - That the evidence of payment of full consideration and taken possession in 1998/1999 was conclusive and the mere averments in the final sale deed was not conclusive to suggest the transfer of property was only on 7.9.2001; (ii) That the additional consideration receive was for equipments and other fittings and, thus, was not liable to be considered for working out CG on the sale of immovable property; - That the CIT ought to have appreciated that the deduction towards the addition to the building while computing the Capital Gains was rightly claimed for which adequate proof was furnished; - That the CIT ought to have accepted the explanation/evidence furnished thereby refraining from directing the AO to revise the cost for the purpose of computation of LTCG by applying c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n was registered in her name much latter in the year 2001-02. Taking shelter u/s 2 (47) of the Act, the assessee had been consistently maintaining that the transfer includes possession of immovable property given without registration of conveyance deed; and also transactions in agreement to buy or sell any immovable property or any rights therein. Further, she went on to claim that she was put in the possession of the property in the FY 1998-99 itself and the indexed cost of acquisition claimed by her effective from the FY 1998-99 was in order. To drive home her point, it appears that she had produced before the learned CIT a copy of an unregistered agreement for sale alleged to have been entered into on 21.12.1998 and as per clause 14 of the said agreement, the assessee claims that the possession of the property had been delivered to the purchaser with the said agreement. However, according to the learned CIT, the evidences produced before the AO during the course of assessment proceedings by way of a sale deed dated 7.9.2001 [source: Page 4 of CIT s order] which exhibits a different theory. For appreciation of facts, clause 9 of the said sale deed (at page 23) goes like this: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efly, in the cases of: CIT v. Electro House (1971) 82 ITR 24 (SC); Malabar Industrial Co. Ltd v. CIT (2010) 243 ITR 83 (SC) observed thus: 23. Though learned Counsel for the assessee have placed strong reliance on two judgments of the Bombay High Court and the Delhi high Court in the cases of GABRIEL INDIA LTD and ASHISH RAJPAL (supra) respectively and the Delhi High Court, in fact, has made reference to the decision of the supreme Court in the case of MAX INDIA LTD (supra), with great respect, we are unable to apply the ratio of these two decisions to the present circumstance and we are quite satisfied that the law declared by the supreme Court not only in the case of ELECTRO HOUSE (supra) and also in the case of MALABAR INDUSTRIES CO (supra) fully covers the situation, no further need to discuss with any greater elaboration on the view expressed by the Bombay and the Delhi High Courts. 24. In the present situation, the Commissioner having only directed the assessing authority to compute it or re-compute it and make it explicit as to the entitlement of the assessee, an order of this nature, in fact, could not have been contended as detrimental to the interest of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be any dichotomy of this nature as every conclusion and finding by the assessing authority should be supported by reasons, however brief it may be, and in a situation where it is only a question of computation in accordance with relevant articles of a double taxation avoidance agreements and that should be clearly indicated in the order of the assessing authority, whether or not the assessee had given particulars or details of it. It is the duty of the assessing authority to do that and if the assessing authority had failed in that, more so in extending a tax relief to the assessee, the order definitely constitutes an order not merely erroneous but also prejudicial to the interest of the Revenue and, therefore, while the Commissioner was justified in exercising the jurisdiction under section 263 of the Act, the Tribunal was definitely not justified in interfering with this order of the commissioner in its appellate jurisdiction. 7.4 With regard to the additional consideration received for equipments and other fittings, though the assessee had stated that adequate proof was furnished while claiming deduction towards the addition to the building etc., we find that the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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