JAYAKUMAR ANGARA,CHENNAI vs. THE DEPUTY COMMISSIONER OF INCOME TAX, INTERNATIONAL TAXATION 1(1), CHENNAI

The Assessee raised the following grounds of appeal : “1. For that the order of the Learned Assessing Officer ("Learned AO") dated 21.01.2026 passed u/s. 143(3) r.w.s.144C(13) of the Income Tax Act, 1961 ("the Act") pursuant to the directions of the Dispute Resolution Panel ("DRP") dated 26.12.2025 is erroneous and bad in law as it is passed on:

For that the Learned AO/ Hon'ble DRP (collectively referred to as "Revenue") erred in law and on facts in substituting the Fair Market Value of the land as on 01.04.2001 as Rs.79,500 per acre instead of Rs. 1,00,00,000/- per acre claimed by the appellant and consequently disallowing the Indexed Cost of Acquisition of Rs.4,94,58,550/-, being a differential amount between the claim made in the Return of Income and the computation of the Revenue. (Tax Effect Rs.1,40,93,708/-)

For that the Revenue erred in disallowing the brokerage expense of Rs.12,50,000/- incurred wholly and exclusively in connection with the transfer of the capital asset. (Tax Effect - Rs.3,56,200/-)

For that the disallowance of Rs.12,50,000/- made is not in accordance with the directions of the Hon'ble DRP since the issue relating to the claim of brokerage was never examined by the Learned AO and the disallowance thereof was made without affording any opportunity to the appellant.

For that the Learned AO erred in disallowing the brokerage expenditure without a whisper on this issue in the final Assessment Order passed by the Learned AO.

Briefly, the facts of the case are that the appellant is an Individual Non-resident. The appellant filed Return of Income u/s.139 of the Income Tax Act, 961 for the Assessment Year 2023-24 on 07.07.2023 disclosing income at Rs.2,58,06,200/-.

On receipt of the Draft Assessment Order, objections were filed before the Hon’ble Dispute Resolution Panel(DRP) raising the following objections : “Issue 1: Proposed addition of Rs.62, 19,600/- towards Long Term Capital Gains.

The Hon’ble Dispute Resolution Panel(DRP) after calling for remand report from the Assessing Officer, directed the Assessing Officer to re-compute the capital gains by adopting the aggregate of the sale consideration under both the instruments as full value of consideration. In regards, to adoption of Fair Market Value as on 01.04.2001, the DRP has directed the Assessing Officer to adopt the Fair Market Value as per the DVO’s Report, received subsequent to the completion of the Draft Assessment Order. The DRP set-aside the issue for deduction of Rs.12,50,000/- incurred in connection with the transfer of the capital asset. ON receipt of the directions of the DRP, the Assessing Officer passed the final assessment order on 21.01.2026 passed u/s.143(3) r.w.s 144C(13) of the Act at a total income of Rs.7,56,20,000/-. While doing so, the Assessing Officer adopted the consideration of Rs.6,93,80,400/- as per unregistered deed of transfer of possession on 11.07.2022, assessed income under head ‘Income from Other Sources’.

Being aggrieved by the final assessment order, the appellant is in appeal before us in the present case. The appellant had filed the petition seeking admission of additional ground of appeal seeking the quashing of the final assessment order on the ground that the Assessing Officer had failed to comply with the directions issued by the Hon’ble DRP with regard to the verification allowance of brokerage expenditure. Therefore, he submits that the very final assessment order passed by the Assessing Officer is vitiated.

The ld.AR submits that the Assessing Officer ought to have adopted Fair Market Value as on 01.04.2001 at Rs.1 crore for acre instead of Rs.79,500/- while computing the capital gains and sale of property. However, he submits that the Assessing Officer ought to have allowed the brokerage expenditure incurred of Rs.12,50,000/- as incurred in connection with the sale of property.

On the other hand, Learned CIT-DR submits that the DRP issued the direction after obtaining remand report from the Assessing Officer and the Assessing Officer passed the final assessment in confirming the directions according to the DRP only and therefore no interference is called in the impugned order by this Tribunal.

We heard rival submissions and perused the material available on record. At the outset, we find that the Assessing Officer while processing the final assessment order had not complied with the directions of Hon’ble DRP to verify the evidence with regard to claim for deduction of brokerage expenditure of Rs.12,50,000/-. Furthermore, the Assessing Officer had not dealt with the objections raised by the appellant on the defects in the DVO’s Valuation Report. Therefore, in order to meet the ends of justice, matter requires remand to the file of Assessing Officer. Accordingly, the matter is restored to the file of Assessing Officer for de novo assessment in accordance with law after affording opportunity of being heard to the appellant.

In the result, appeal filed by the assessee is partly allowed for statistical purpose.