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Income Tax Appellate Tribunal, “SMC-B” BENCH : BANGALORE
Before: SHRI ARUN KUMAR GARODIA
O R D E R
Per Shri A.K. Garodia, Accountant Member
This appeal is filed by the assessee and the same is directed against the order of ld. CIT(A), Mysore dated 13.07.2018 for Assessment Year 2012-13.
The grounds raised
by the assessee are as under. “1. The orders of the authorities below in so far as they are against the appellant, are opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The learned CIT[A] is not justified in upholding assessment of tax as capital gains, the entire amount received by the appellant as consideration without allowing any deduction for the cost of acquisition that was claimed in the computation of total income filed in course of assessment proceedings under the facts and in the circumstances of the appellant's case.
3. The learned CIT[A] is not justified in upholding the disallowance of a sum of Rs.42,24,528/- being the capital gains claimed as a deduction u/s.54F of the Act, under the facts and in the circumstances of the appellant's case.
4. Without prejudice to the right to seek waiver with the Hon'ble CCIT/DG, the appellant denies itself liable to be charged to interest u/s. 234-B, 234-C and 234-D of the Act, which under the facts and in the Page 2 of 4 circumstances of the appellant's case and the levy deserves to be cancelled.
5. For the above and other grounds that may be urged at the time of hearing of the appeal, your appellant humbly prays that the appeal may be allowed and Justice rendered and the appellant may be awarded costs in prosecuting the appeal and also order for the refund of the institution fees as part of the costs.”
It was submitted by ld. AR of assessee that in the return of income, the assessee offered entire sale proceeds of the property as capital gain and claimed deduction u/s. 54F of the IT Act. He submitted that copy of computation of income filed by the assessee along with return of income is available on pages 1 to 3 of the paper book. As per the same, it can be seen that there was sale consideration of Rs. 42,24,528/- and the entire amount was offered as capital gain and the entire amount was claimed as deduction u/s. 54F of the IT Act. He submitted that as per the proceedings u/s. 263 of the IT Act, the ld. CIT has held that assessee’s claim for deduction u/s. 54F is not allowable and the appeal filed by the assessee before the Tribunal against this order of ld. CIT u/s. 263 was dismissed by the Tribunal in dated 12.07.2019. He submitted that the copy of this Tribunal order is available on pages 7 to 9 of the paper book. He pointed out that in para no. 4 of the Tribunal order, it is held by the Tribunal that regarding second submission in respect of allowing deduction of indexed cost of acquisition for the purpose of computing long term capital gain, it was noted by the Tribunal that in the proceedings initiated by way of the order passed by ld. Pr.CIT u/s. 263, this aspect of the matter is not open before the Tribunal and hence, on this aspect, the Tribunal refused to give any observation but it was noted that separate appeal is pending before the Tribunal against the consequential order passed by the AO u/s. 143(3) r.w.s. 263 of the IT Act and it was held that this issue may be raised in those proceedings if so advised. He submitted that the present appeal is the appeal of the assessee in the proceedings initiated by the AO by passing the order u/s. 143(3) r.w.s. 263 of the IT Act. He submitted that even if assessee’s claim for deduction u/s. 54F is not allowable, the computation of capital gain should be as per law after deduction in respect of indexed cost of acquisition and since this was not done because no such claim was made by the assessee in the return of income, the order of ld. CIT(A)
Page 3 of 4 should be set aside and the matter should be restored back to the file of AO for fresh decision in this aspect. He pointed out that in the present proceedings, the AO has rejected this claim by following the judgment of Hon’ble Apex Court rendered in the case of Goetze (India) Ltd. v. CIT [284 ITR 323 (SC)]. He also pointed out that in the impugned order, ld. CIT(A) has also decided the issue by following the same judgment of Hon’ble Apex Court. He submitted that as per this judgment of Hon’ble Apex Court, appellate authority being ld. CIT(A) or Tribunal should decide the issue on merit even if no such claim was made in the return of income or even if no such claim was made by filing revised return of income. The ld. DR of revenue supported the order of authorities below and placed reliance on the judgment of Hon’ble Apex Court rendered in the case of Goetze (India) Ltd. v. CIT (supra).
I have considered the rival submissions. In view of the facts discussed above, I am of the considered opinion that the matter should go back to the file of AO for fresh decision in respect of the assessee’s claim for allowing of indexed cost of acquisition because as per the scheme of the Act, capital gain has to be computed after allowing deduction from sale proceeds in respect of cost of acquisition and cost of improvement after their indexing. Admittedly this claim was not made by assessee in the return of income filed by the assessee because the assessee claimed entire amount as deduction u/s. 54F of the IT Act. This issue has attained finality that the assessee is not eligible for deduction u/s. 54F but even then the computation of capital gain should be as per law and hence, I set aside the order of ld. CIT(A) and restore the matter back to the file of AO for fresh decision with the direction that he should quantify the amount of capital gain as per law after allowing the deduction as per law in respect of indexed cost of acquisition as being claimed now.
In the result, the appeal filed by the assessee is allowed for statistical purposes. Order pronounced in the open court on the date mentioned on the caption page.