MAGAL SMITHA KARPUR,USA vs. ITO INTERNATIONAL TAXATION ,WARD-2(2), CHENNAI

This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 16, Chennai dated 28.02.2022 relevant to the assessment year 2016-17.

Brief facts of the case are that the assessee is an NRI and filed her return of income for the assessment year 2016-17 on 27.07.2016 admitting total income of ₹.9,01,28,750/-. The case was selected for scrutiny under CASS and notice under section 143(2) of the Income Tax Act, 1961 [“Act” in short] was issued. After following due procedure, the Assessing Officer has completed the assessment under section 143(3) of the Act dated 26.12.2018 assessing taxable income of the assessee at ₹.16,56,91,507/- after making various additions/disallowances. In the assessment order, the Assessing Officer has adopted the ground rate as on 01.04.1981 at ₹.18,000/- (2400 sq. ft.) as against ₹.5,00,000/- adopted by the assessee for the purpose of computing the indexation value of the property. On appeal, the ld. CIT(A) confirmed the value adopted by the Assessing Officer and dismissed the ground raised by the assessee.

On being aggrieved, the assessee is in appeal before the Tribunal. The ld. Counsel for the assessee has submitted that value adopted by the Assessing Officer as on 01.04.1981 was grossly inadequate/very low. It was further submission that the property sold by the assessee was situated at Gandhi Nagar, Adyar, a fully developed prime area of Chennai even in the year 1981 and the land rate of ₹.200/- per sq. ft as on 01.04.1981 claimed by the assessee is a fair rate.

On the other hand, the ld. DR has strongly supported the orders of authorities below.

We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including written submissions of the assessee. The assessee and Mrs. Janaki sold the property at Adyar for a total sale consideration of ₹.22,24,00,000/- and offered capital gain of ₹.18,87,12,345/-. In her computation, the assessee has adopted the indexed cost as on 01.04.1981 at ₹.200/- per sq. ft. or ₹.5,00,000/- per ground. After verification from the Sub-Registrar, Adyar, the Assessing Officer has adopted the indexed cost per ground as on 01.04.1981 at ₹.18,000/- [₹.7.50 per sq. ft.] and determined the long term capital gains, which was confirmed by the ld. CIT(A). The contention of the assessee is that the property is located at Gandhi Nagar, Adyar, which is fully developed prime area of Chennai city even in the year 1981 and the assessee sold the same at ₹.25,059/- per sq. ft. representing an hike of 3,341 times over the rate adopted by the Assessing Officer as on 01.04.1981. However, the assessee has not brought on record any concrete evidence which could repel the submissions of the assessee. In this case, the Assessing Officer has not disputed the sale consideration of the property, but, we find that the value adopted at the rate of ₹.7.50 per sq. ft. by the Assessing Officer for computing the indexed cost appears to be very low. Accordingly, to meet the ends of natural justice and considering the prime locality of the property sold by the assessee, we direct the Assessing Officer to adopt the indexed cost at the rate of 100/- per sq. ft. for the purpose of computing the indexation value of the property.

In the result, the appeal filed by the assessee is partly allowed. Order pronounced on 22nd February, 2023 at Chennai.