LATE LAXMANJI DANDOTIKAR REP. BY L/R BAJRANG DANDOTIKAR,HYDERABAD vs. INCOME TAX OFFICER, WARD-15(1), HYDERABAD

Learned counsel is fair enough in not pressing for the assessee's second substantive ground challenging the initiation of proceedings u/s.148/147 of the Income Tax Act (in short 'the Act'). Accordingly, this ground is rejected.

Next comes the main issue of correctness of both the lower authorities' action making Long Term Capital Gains (LTCG) addition after adopting full value of the construction for transfer of capital asset as Rs.2,45,25,000 u/s.50C of the Act. Learned counsel, inter alia, argued that the assessee / vendor had in fact transferred only his limited right(s) to his sister-in-law / vendee Smt. D. Vimala Bai by way of a family arrangement than a sale. And that both the learned lower authorities' have failed to consider the foregoing clinching fact before making the impugned LTCG addition. It is further contended that section 50C of the Act would not apply in case gift from brother-in-law to his

Learned departmental representative has strongly supported the impugned addition made after invoking 50C of the Act.

Learned counsel further submitted that we are only dealing with sale agreement cum GPA who has not seen any transfer of the capital asset till date. This last argument also fails to evoke our concurrence since the assessee had transferred all his absolute rights and possession in favour of the vendee / sister-in-law without any stipulation to the contrary. He has also not placed the latest revenue record in support of this last argument. We thus affirm both the lower authorities' action making the impugned LTCG addition after invoking section 50C of the Act. The assessee's third to fifth substantive grounds to this effect are rejected therefore.

Lastly comes the issue of cost of acquisition u/s. 48(ii) Expln. (iii) r.w.s. 49(1) Explanation. Both the learned lower authorites' have adopted the cost of acquisition @ Rs.1 per square yard on estimation basis without even determining the previous owner’s cost of acquisition of the capital asset who had acquired it for a valuable consideration in light of the foregoing statutory provisions. We further see no justification in estimation of cost of acquisition being acquired per yard basis as on 1.4.1981 since deceased assessee herein had become its Pattadar on acreage / gunta basis only. We therefore direct the Assessing Officer to re-examine the issue of assessee's cost of acquisition on acreage basis only as per law within three effective opportunities of hearing.

No other arguments have been raised before us.

This assessee's appeal is partly allowed for statistical purposes in above terms.