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Income Tax Appellate Tribunal, “A” BENCH KOLKATA
Before: SHRI RAJPAL YADAV & SHRI GIRISH AGRAWAL
ORDER
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi vide Order No. ITBA/NFAC/S/250/2022-23/1051253553(1) dated 24.03.2023 passed against the order u/s. 154 of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 04.03.2020 for AY 2009-10.
2. Grounds of appeal of assessee are reproduced as under:
“1. THAT the appellant had filed the return of income for the relevant assessment year on 23.09.2009 having a refund of Rs. 268/-. However, while passing the intimation u/s 143(1) of the Income Tax Act, 1961 the Ld. AO. raised a disputed demand of Rs.718,050/-. The Ld. CIT(A) upheld the said demand without going through the facts and circumstances of the case which is unjustified, bad in law and against the natural law of justice.
THAT in accordance with the said intimation received by the appellant on the 14.09.2012 a rectification petition u/s 154 of the Income Tax Act, 1961
was filed on the 17.09.2012 which was finally disposed off by the department on 04.03.2020 which is approximately 8 years. While dealing with this petition the Ld. AO. was informed and submitted with all the details and evidences however the Ld. AO. did not consider the same and passed an order and the same was upheld by the Ld. CIT(A) without going through the facts and circumstances of the case which is unjustified, bad in law and against the natural law of justice and must be deleted..”
Assessee filed her return on 23.09.2009 reporting total income of Rs.26,79,770/- which included gain on sale of property. The said return was processed u/s. 143(1) raising a demand of Rs.7,18,050/-. Assessee came to know about a mistake in reporting of income from capital gain i.e. sale proceeds from the property amounting to Rs. 25 lacs which was shown under the head “Income from other sources” instead of capital gains. To rectify this mistake, an application u/s. 154 of the Act was made on 17.09.2012.
3.1. In the petition for rectification, assessee claimed index cost of acquisition and cost of improvement as deduction from sale consideration to arrive at the correct amount of long term capital gain on sale of property. To substantiate her claim, documentary evidences which included registered sale deed of the property sold, registered purchased deed for evidencing the purchase of the property as well as copy of valuation report obtained from govt. approved registered valuer for estimating the cost of construction during the period from April, 1990 to September, 1992. Ld. AO passed an order u/s. 154 read with sec. 143(1) dated 04.03.2020 wherein he noted that entire sale proceeds of the property has been taken into account without deducting the indexed cost of acquisition and stamp duty paid. He thus, recitfied the mistake to the extent of allowing indexed cost of acquisition and stamp duty paid in acquiring the said property and the total incom determined was at Rs.24,68,708/-.
3.2. Issue raised by the assessee is in respect of additional claim made for the deduction of cost of construction of the house property along with its indexation, from the sale proceeds, to arrive at the correct amount of long term capital gain accruing to the assessee. Assessee herself had not claimed the same in the original return filed by her. Additional claim made by her by way of application made u/s. 154 was partly considered by the Ld. AO to allow the benefit of cost of acquisition and payment of stamp duty thereon along with indexation. Assessee has placed on record, the relevant corroborative documents to establish that cost of construction has been incurred by her which is eligible for deduction while computing the long term capital gain.
In the first appellant proceeding before the Ld. CIT(A), the relevant documentary evidences were on record which have not been considered for the purpose of allowing the claim towards cost of construction and its indexation. Ld. CIT(A) has given his finding by observing that assessee cannot be given any benefit towards the cost of construction in the light of the fact that neither such deduction was claimed in the original return nor any original documents were furnished in support of the same. According to him, such claim should have been made by filing revised return and thus dismissed the appeal, by directing the Ld. AO to verify the computation of tax liability by allowing the cost of acquisition and stamp duty paid.
5. Before us, Ld. Counsel demonstrated that house property has in fact been constructed and, therefore, assessee is entitled to claim the benefit of deduction towards cost of construction along with its indexation also. Ld. Counsel referred to the purchase deed to point out that assessee had initially purchased a plot of land and what she sold as recorded in the registered sale deed is a house property on the same plot of land. To arrive at the cost of construction, ld. Counsel referred to the valuation report obtained from a registered valuer for estimating the cost of construction during the period April, 1990 to September, 1992 for which valuation certificate along with report of valuation is already on record. The said valuation certificate records that the valuer had inspected the property personally on 08.16.1993. The cost of construction estimated by the registered valuer is at Rs.4,57,700/-.
5.1. Assessee has placed on record a computation of long term capital gain on the sale of impugned house property. Considering the factual matrix and the documentary evidence placed on record, it is evidently demonstrated that a house property was constructed on the plot of land which has been sold by the assessee in the year under consideration, resulting into long term capital gain. Finding force from the decision of Hon’ble Supreme Court in the case of Goetz India Ltd. vs. CIT (2006) 289 ITR 323 (SC), we accept the claim of the assessee towards deduction of cost of construction along with its indexation for the purpose of computing long term capital gain on the sale of house property made during the year under consideration. For this, the value of Rs.4,57,700/- arrived at by the registered valuer towards cost of construction is taken into account along with its indexation from September, 1992 for which Ld. AO is directed to recompute the long term capital gain and tax it in accordance with the provisions of law. Accordingly, grounds taken by the assessee are allowed for statistical purposes.
In the result, appeal of the assessee is allowed for statistical purposes.