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Income Tax Appellate Tribunal, “A’’ BENCH : BANGALORE
Before: SHRI B.R BASKARAN & SMT. BEENA PILLAI
O R D E R Per B.R Baskaran, Accountant Member :
The assessee has filed this appeal challenging the order dated 3/1/2019 passed by ld CIT(A), Bengaluru and it relates to the asst. year 2015-16.
The grounds of appeal and additional grounds of appeal urged by the assessee relate to following issue. a) Disallowance of deduction us/ 54 of the Act in respect of 1 flat. b) Restricting the cost of acquisition to Rs.4.64 lakhs as against 21.18 lakhs claimed by the assessee.
3. The above said 2 issues relate to deduction claimed by the assessee while computing long term capital gain on sale of building. The assessee is an individual and during the year under consideration the assessee sold a house property and purchased 2 flats in ground floor and first floor of apartment. The assessee claimed cost of both the flats as deduction us/ 54 of the Act. While computing the cost of original house the assessee decaled that the construction of the house took place in financial year 1983-84 and accordingly computed indexed cost of acquisition at Rs.21.18 lakhs.
4. Since the assesee did not furnish any evidence to prove the cost of construction of the original house, the AO computed the cost of by adopting the guidance value of residential land at Basavanagudi area for the year 1982 which was found to be Rs.45/sft. Accordingly the AO restricted the indexed cost of acquisition to Rs.4,64,772/-. The AO also took the view that the assessee is entitled for deduction of cost of 1 plot only u/s 54 of the Act. The assessee had claimed before AO that both the plots should be considered as one house. The AO deputed its Inspector to undertake physical verification of the flats who reported that both the flats are independent had are not connected. Accordingly the AO allowed deduction u/s 54 of the Act in respect of one plot only. The ld CIT(A) confirmed the same.
5. Before us the ld AR furnished photo copies of the flats as additional evidence and submitted that both the flats have been internally connected and the said factum was not considered by the tax authorities. Accordingly he submitted that both the flats should be considered as one house and hence the cost of both the flats should be allowed as deduction us/ 54 of the Act.
6. With regard to cost of acquisition the ld AR submitted that that the assessee had constructed the house in the year 1983-84 but the AO has given deduction only in respect of cost of land and he did not allow deduction for cost of construction. Accordingly the ld AR prayed that both the issues may be restored to the file of the AO for examining them afresh.
7. We heard the ld DR and perused the record. Having regard to the fact that the assessee has furnished copies of photographs evidencing joining of both the flats as additional evidence and also considering the fact that the AO has not considered the cost of construction while computing cost of acquisition, we are of the view that there is merit in the prayer of the ld AR. Accordingly we set aside the order passed by ld CIT(A) and restore both the issues to the file of the AO for examining them afresh by duly considering additional evidences, any other information and explanations that may be furnished by the assessee. After affording adequate opportunity of being heard to the AO may take appropriate decision in accordance with the law.
In the result, the appeal of the assessee is treated as allowed and the appeal of the revenue is dismissed.
Order pronounced in the Open Court on 19th December, 2019.