LAXMAN PANDURANG DUDHE,NAGPUR vs. PRINCIPAL C.I.T. -2, NAGPUR

The only issue in this appeal of the assessee is against the revision order of Principal CIT-2, Nagpur passed u/s 263 of the Act revising the assessment in relation to long term capital gain valuing the

Briefly stated, facts are that the assessee along with two other co-owners sold an immovable property situated at Plot No.2/3, Municipal No.192, Block No.11, Jagannath Ward, Hinganghat, District Wardha, known as Shriram Talkies. Admittedly, this property was acquired by the assessee along with other co-owners before 1981. The assessee has 59% share in the above sold property. Assessee during the course of assessment proceedings filed valuation report from the registered valuer N.V. Tiwaskar dated 6th November, 2008 estimating the value of the property as on 1.4.1981 at `23.62 lakhs. The assessee further claimed that he has incurred an amount of `15.11 lakhs towards improvement expenses in the year 1998-99 and Assessing Officer has accordingly valued the Long Term Capital Gain vide his assessment order dated 4th February, 2015 passed u/s 143(3) read with Section 147 of the Act. The Assessing Officer computed the Long Term Capital Gain as under :-

Subsequently, CIT, on examination of records, noted that the assessee has claimed indexed cost of improvement at `24,18,690/- but assessee has not submitted any supporting evidence in respect of these expenses. Further, CIT was of the view that the Assessing Officer has erroneously allowed dalali expenses of `3.40 lakhs without any

We have heard rival contentions and gone through the facts and circumstances of the case. Admitted facts are that the assessee along with other co-owners sold an immovable property for a total consideration of `1.70 crores. Admittedly, the assessee became owner of the said property before 1981. Admitted facts are that the registered valuer’s report determining the fair market value of the property as on 1.4.1981, which is determined at `23.62 lakhs was filed before him. Admittedly, the assessee incurred an amount of `3.40 lakhs towards expenses on sale of this property i.e., dalali expenses and assessee, in regard to above details and as per law, computed the capital gain on sale of the property. During assessment proceedings, all the details as desired by the Assessing Officer were furnished from time to time and Assessing Officer, vide his order dated 4th February, 2015 u/s 143(3) read with Section 147 of the Act, enhanced the Long Term Capital Gain to the assessee to `18,33,495/- thereby making an addition of `15,41,716/-. This addition is under challenge before CIT(A) as informed by the learned counsel for the assessee. It was explained before us and we have also gone through the records and noticed that the CIT’s first observation that the assessee has claimed indexed cost of improvement of `24,18,619/- is totally wrong because the Assessing Officer has taken cost of improvement at `15,11,000/- and not `24,18,619/- as alleged by the CIT. However, another observation of CIT that the valuation report neither contained any such value of `15,11,000/-, learned counsel for the assessee drew our attention to

In view of the above facts and circumstances, we find that first with respect to the indexed cost of acquisition of `24,18,619/-, we are of the view that the Assessing Officer has not allowed the above stated claim, rather the Assessing Officer has taken the cost of improvement at `15,11,000/- in the year 1998-99 as supported by the valuation report of the registered valuer. With respect to grant of indexed cost of improvement, considering the amount of `15,11,000/- pertaining to construction of shops in 1998-99, the Assessing Officer himself has recorded this fact in the assessment record and the relevant computation we have already reproduced above. With respect to the amount of `3.40 lakhs towards expenses on transfer i.e., dalali expenses, Assessing Officer has allowed the said claim after going through the documents and after being satisfied about the claim. In such circumstances, we are of the view that the assessee’s issue is squarely covered in his favour by the decision of Hon'ble Supreme Court in the case of CIT Vs. Max India Ltd. – (2007) 213 CTR 266 (SC). Accordingly, we are of the considered view that this is not a fit case for revision as the assessment order is neither erroneous nor prejudicial to the interest of the Revenue.

In the result, the appeal of the assessee is allowed. Decision pronounced in the open Court on 05.03.2018.

The Appellant 2. The Respondent 3. Concerned CIT 4. The CIT(A) 5. D.R. Assistant Registrar