9911796707
TMI Blog2023 (9) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. We direct the A.O to adopt the cost of acquisition as fair market value in the present case of the assessee as on 01.04.2001 as the assessee has adopted this fair market value at Rs. 1,360/- per Sq. ft. and for this, the assessee has taken the basis. The indexation benefit from 01.04.2001 is available to the assessee in view of Section 2(42A) more particularly Explanation 1(b) Thus we direct the A.O to adopt the guideline value on as 01.04.2001 as the cost of acquisition and thereby, given index benefit accordingly. Indexation benefit - We direct the A.O to allow the indexation benefit to the cost of improvement as on the date of 01.04.2001 in term of the decision given above by taking the cost of construction/cost of improvement at Rs. 10,00,000/- and taking fair market value as on 01.04.2001 of the same and allow index accordingly. We direct the A.O accordingly. Denial of claim of tax exemption u/s. 54 - assessee invested a sum in the purchase of house property - As per the project completion certificate this property which is beyond stipulated time of 3 years as mandated in the Act - HELD THAT:- We noted that as per project completion certificate, this proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... argumentative and hence, need not be reproduced. IV) The last issue in this appeal (only in this appeal and not other co-owners case) is as regards to denial of claim of exemption u/s. 54 of the Act being amount invested in purchase of property not completed within stipulated period of three years. For this, the assessee has raised Ground Nos.12 to 15, which are argumentative and hence, need not be reproduced. The Ground Nos. 1, 2 and Ground Nos.16 to 19 are general in nature as contended by Ld. counsel for the assessee and not pressed and hence, dismissed as not pressed. Now, we deal this appeal in issue wise. 4. The brief facts of the case are that the assessee, Shri Suresh Allada is an individual and NRI. He filed his return of income for the relevant A.Y 2019-20 admitting an income of Rs. 49,68,858/- from capital gains arising out of the sale of immovable property at Plot No.1246, 13 th Main Road, Annanagar West, Chennai comprised in R.S No.1631 (Old Survey No.16/2). The A.O selected the case for scrutiny and accordingly, notice u/s. 143(2) of the Act dated 31.03.2021 was issued. The A.O noted the fact that the assessee along with three other co-owners namely Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see declared net long term capital gain of Rs. 49.86 Lakhs. 4.2. The A.O while completing assessment, first of all, disallowed the claim of cost of construction and improvements amounting to Rs. 10 Lakhs invested during various years as under: Year Floor Sq. Ft. Cost 1982 GF 2055 1,38,291 1982 FF 1660 1,11,709 1993 SF 482 5,00,000 2000 Compound Wall -- 2,50,000 4.3. The A.O noted that the assessee has not filed any evidence or proof for expenses and hence, the A.O denied the claim of exemption for the purpose of computation of long term capital gain and indexation of the same thereof. Aggrieved, the assessee raised objections before DRP and the DRP also confirmed the action of the A.O. 5. The DRP while rejecting the claim of the assessee observed in para 3.2 to 3.3 as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in cost of construction/cost of improvement as originally claimed and we allow the same. 7. As regards to third issue, the facts are that the property sold by the assessee i.e, Plot No.1246, Anna Nagar, Chennai was acquired by the assessee by way of inheritance settled by his father Shri A. Joga Rao on 04.11.2013 vide settlement deed No. 5847/2013. By virtue of which the assessee became 1/4th co-owner of this property. This property was acquired by assessee s father Shri A. Joga Rao, as originally purchased from Tamil Nadu Housing Board on 28.02.1980 for a sum of Rs. 28,215/-. The A.O while computing the long term capital gain has taken the cost of acquisition of this land at Rs. 28,125/- and indexed the same from the date when the assessee acquired this property by way of inheritance settled by his father in his favour on 04.11.2013. The A.O took the value for indexation purpose as on 04.11.2013 and indexed the cost of acquisition at Rs. 35,795/- and adopted the capital gain at Rs. 7,79,64,205/-. Aggrieved, the assessee raised objection before DRP, the DRP rejected the objection of the assessee by observing in Para 5.1 to 5.3 as under: 5.1 Panel: During the course of DR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent and not the amount as on the date of settlement deed. The Ld. counsel for the assessee stated that in the case of family settlement, it is the cost of the previous owner, on the date on which previous owner became only, is to be taken into account as the cost of acquisition upon family settlement and not the value as on the date of family settlement i.e., on 04.11.2013. The Ld. counsel for the assessee particularly referred to the provision of Section 49(1)(iii)(a) of the Act. The Ld. counsel for the assessee also relied on one CBDT Circular No.31 (LXXVII-5) D of 1962, dated 21.09.1962, which reads as under: Capital gains tax property acquired by inheritance-Deduction of cost of acquisition of asset Cost to the previous owner-whether previous owner includes previous owners -Whether substitution of fair market value as on 1-1-1954 permissible. For the purposes of computation of capital gains under section 45 read with section 48, section 49 and section 55(2)(ii) of the Income-tax Act, 1961, a question has arisen as to how the cost of acquisition of an asset should be determined where it has been inherited by an assessee from a person who in turn had inherited it from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in the case of CIT v. S. Krishnamurthy , supra, has held interpreting the provision of Section 49(1)(iii)(a) of the Act that speaks of succession, inheritance or devolution. In view of the above position, we are of the view that it is the cost of acquisition of the assessee will be of cost of acquisition by his father on 28.02.1980 at Rs. 28,215/-. But, by virtue of second Proviso to Section 48 of the Act and determination of holding period I.e., inclusion will be according to clause(b) of Explanation 1 to Section 2(42A) of the Act, the indexed cost of acquisition is to be taken as the year beginning as on 01.04.2001 as the first year in which the asset was held by the assessee. The relevant provision of Section 48 of the Act reads as under: Provided further that where long-term capital gain arises from the transfer of a long-term capital asset, other than capital gain arising to a non-resident from the transfer of shares in, or debentures of, an Indian company referred to in the first proviso, the provisions of clause (ii) shall have effect as if for the words cost of acquisition and cost of any improvement , the words indexed cost of acquisition and indexed cost of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted a copy of completion certificate as per the project completion and handing over on 01.04.2022. The objection of A.O was that the property was not registered within the stipulated period of three years as mandated by provisions of Section 54 of the Act. The DRP also rejected the claim of the assessee by observing in para 6.2 to 6.4 as under: 6.2 Having considered the submissions, this panel has examined the tax exemptions claimed under section 54 by assessee. Having examined the facts, this panel found that assessee submitted copy of agreement dated 23.10.2018 along with project completion certificate. As per the project completion certificate this property was handed over 01.04.2022 which is beyond stipulated time of 3 years as mandated in the Act. Since the property is not registered within stipulated time, the transfer is not complete within the meaning of transfer of property act and ineligible to claim deduction under section 54. 6.3 During the course of DRP proceedings, assessee stated that delay in getting completion certificate and handing over of the flat (as at 01.4.2022) is attributable to the covid 19 related lockdown and restrictions. Thus, it is clear ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
