SRI M. KASI VISWESWARA RAO,VIZIANAGARAM vs. ITO, WARD-1, VIZIANAGARAM

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ITA 448/VIZ/2017Status: DisposedITAT Visakhapatnam28 February 2018AY 2009-20107 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessee failed to provide evidence of a building existing and being sold along with the vacant land. The sale deeds only mentioned the transfer of vacant land, and an unregistered sale agreement was not considered sufficient proof.

What were the facts?

The assessee claimed indexation for both land and building cost while selling a property. The Assessing Officer (AO) rejected the claim for building cost, stating only vacant land was transferred as per the sale deed. The CIT(A) upheld the AO's order.

What were the issues?

Whether the assessee is eligible for indexation on the cost of the building when only vacant land was transferred as per the sale deed, and if an unregistered sale agreement can be considered as evidence.

Which sections of the Income-tax Act were involved?

Section 54

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM

Before: SHRI V. DURGA RAO& SHRI D.S. SUNDER SINGH

For Appellant: Shri Y.A.Rao, AR
Hearing: 26.02.2018Pronounced: 28.02.2018

आदेश /O R D E R

PER D.S. SUNDER SINGH, Accountant Member: This appeal is filed by the assessee against the order of the Commissioner of Income-Tax (Appeals) [CIT(A)]-1, Visakhapatnam vide ITA No.349/2011-12 dated 27.04.2017 for the assessment year 2009-10.

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2.

The assessee filed return of income on 30.10.2006, declaring total income of Rs.11,85,317/- including capital gains income. The case was selected for scrutiny and during the assessment proceedings, the assessing officer (AO) found that assessee along with four others sold the vacant land in Door No.8-1-105, Santhapeta, Vizianagaram admeasuring 716.97 sq.yds. The assessee claimed the cost of land as well as building as on 1.4.1981, along with the increased cost of acquisition for the purpose of indexation for the year under consideration. The sale consideration of property was Rs.88,98,000/-, claimed the deduction for cost of land and building along with indexation @ Rs.9,80,466/- and the indexed cost of indexation worked out to Rs.57,06,312/-, admitted capital gains at Rs.31,91,688/- and the assessee’s 1/4th share was Rs.7,97,922/- which was offered to tax. The AO examined the sale deeds and found that as per the sale deed, the assessee had transferred the vacant land but not the building, hence rejected the assessee’s claim for cost of indexation for the building. In the assessment, the AO allowed indexed cost of acquisition of land as per the fair market value as on 1.4.1981 at Rs.12,51,840/- and assessed the long term capital gains at Rs.76,46,160/-, out of which 1/4th share of the assessee was Rs.19,11,540/- which is brought to tax.

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3.

Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal of the assessee.

4.

Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR argued that the assessee has constructed the building which was demolished after entering in to the agreement of sale and later on transferred the property, hence the existence of the building was supported by the agreement entered into by the assessee with the buyers on 11.09.2008. Therefore, requested to allow the value of the land along with cost of the building for computing the capital gains. The Ld.AR also submitted that the CIT(A) decided the issue u/s 54, but not with regard to the indexation of the capital gains.

5.

On the other hand, the Ld.DR supported the orders of the AO and argued that as per the paper book furnished by the assessee, the Ld.AR placed the copy of agreement dated 11.09.2008 which was unregistered and the same should not be taken into cognizance since it is mandatory for registering the document for immovable property as per the stamps and Registration Act. Ld.DR further submitted that as per page No.7 of the

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paper book filed by the assessee, the stamp paper for agreement was purchased on 4.7.2005 and used for the purpose of writing the agreement on 11.09.2008 i.e after 3 years 2 months of the purchase of the stamp paper which indicates that the agreement is an after thought to claim the exemption. The Ld.DR argued that the assessee failed to furnish any evidence to establish that there was a structure existing in the said land. Therefore argued that the AO has rightly assessed the capital gains which was confirmed by the Ld.CIT(A). With respect to assessee’s argument that the Ld.CIT(A) decided the issue u/s 54 of I.T.Act, the Ld.DR argued that the plain reading of the Ld.CIT(A)’s order established that the Ld.CIT(A) agreed with the findings of the AO. The Ld.CIT(A) has taken only the case law in respect of Section 54 to fortify his decision. Therefore, the Ld.DR argued that there is no ambiguity or mistake in the order of the Ld.CIT(A).

6.

We have heard both the parties and perused the material placed on record. During the assessment year, the assessee along with four others jointly sold the immovable property of 716.97 sq.yds. for a consideration of Rs.88,98,000/- on 6.11.2008. While computing the capital gains, the assessee had claimed the deduction of Rs.57,06,312/-, the indexation of cost of acquiring the property inclusive of building. During the assessment

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proceedings, the AO noted from the sale deed that the assessee had not transferred the land and building, but only the vacant land was transferred and the sale consideration also was in respect of the land, but not the building. The assessee placed the sale agreement, but the sale agreement was unregistered, and the rate of agreement was different. Since the agreement is unregistered and the sale proceeds received by the assessee were only in respect of the vacant land and the assessee failed to establish the existence of building in the said land we are unable to accept the contention of the assessee with regard to the sale of land. On going through the sale deeds, we find that as per the sale deed, the assessee transferred only the vacant land, but not the building. The assessee has not furnished any evidence to establish that there was a building which was sold by the assessee . The vacant site was sold in six sale deeds dated 6.11.2008 do not whisper regarding the building, thus in the absence of any evidence to establish that the assessee had sold the vacant land along with building, we are unable to accept the contention of the Ld.AR that there is building which was sold along with vacant land and accordingly the assessee’s appeal on this ground is dismissed. 6.1. The assessee’s argument with regard to the order of the Ld.CIT(A) in relation to section 54, we find that the CIT(A) upheld the capital gains

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computed by the AO and agreed with the findings of the AO, hence there is no ambiguity in the order of the Ld.CIT(A). In view of the above, we do not find any reason to interfere with the orders of the Ld.CIT(A) and the same is upheld.

7.

In the result, appeal of the assessee is dismissed.

The above order was pronounced in the open court on 28th Feb 2018.

Sd/- Sd/- (िी.दुगााराि) (डड.एस. सुन्दरससंह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याययक सदस्य/JUDICIAL MEMBER ऱेखा सदस्य/ACCOUNTANT MEMBER ववशधखधऩटणम /Visakhapatnam ददनधंक /Dated : 28.02.2018 L.Rama, SPS

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आदेश की प्रनतलऱवऩ अग्रेवषत/Copy of the order forwarded to:- 1. अपीलाथी / The Appellant- Sri M.Kasi Visweswara Rao, D.No.6-7-25, Chinna Veedhi, Vizianagaram 2. प्रत्यधथी / The Respondent–The Income Tax Officer, Ward-1, Vizianagaram 3. The Pr. Commissioner of Income Tax-1, Visakhapatnam 4.The Commissioner of Income Tax(Appeals)-2, Guntur, Camp, Visakhapatnam 5. ववभधगीयप्रनतननधध, आयकरअऩीऱीयअधधकरण, ववशधखधऩटणम /DR, ITAT, Visakhapatnam 6. गधर्ाफ़धईऱ / Guard file आदेशधनुसधर / BY ORDER // True Copy //

Sr. Private Secretary ITAT, VISAKHAPATNAM

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