K.NARAYANA DAS,CHENNAI vs. DCIT NON CORPORATE CIRCLE 10(1), CHENNAI

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ITA 1015/CHNY/2018Status: DisposedITAT Chennai21 October 2019AY 2012-136 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issues of allowability of expenses and determination of fair market value as on 01.04.1981 to the Assessing Officer for re-adjudication, following a co-ordinate bench's order. The issue of Section 54F exemption was also restored due to new evidence.

What were the facts?

The assessee claimed long-term capital gains on the sale of a property, including expenses and exemption under Section 54F. The Assessing Officer and CIT(A) disallowed certain expenses and the Section 54F exemption.

What were the issues?

The key issues were the allowability of expenses related to property sale, the determination of the cost of acquisition, and the eligibility for exemption under Section 54F.

Which sections of the Income-tax Act were involved?

Section 54F

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘ C’ BENCH : CHENNAI

Before: SHRI GEORGE MATHAN & SHRI RAMIT KOCHAR

आदेश / O R D E R

PER GEORGE MATHAN, JUDICIAL MEMBER

1.

This is an appeal filed by the assessee against the order of the Commissioner of Income-tax (Appeals)-12, Chennai in I.T.A No.78/C.I.T(A)-12/2015-16 dated 20.02.2018 for the assessment year 2012-13.

Mr.S.Sridhar represented on behalf of the Assessee, and 2.

Mr.J.Pavitran Kumar represented on behalf of the Revenue.

3.

It was submitted by the ld.AR that the issues raised in this appeal were in respect of computation of long term capital gains in respect of sale of property known as “Dasaprakash” Poonamallee High Road, Chennai 600 006 along with staff quarters. It was submitted that the said property was sold during the financial year 2011-12 relevant to assessment year 2012-13 for a total consideration of Rs.165/- crores by a group of family members consisting of 14 persons. It was further submitted that the assessee had a share of 30% in the property, and consequently, received 30% of the sale consideration. It was further submitted that as against the said consideration received, the assessee had claimed 30% of total expenditure of Rs.10,81,70,554/-, as also certain other expenses.

It was submitted that the Assessing Officer and the ld.CIT(A) had not allowed the said expenditure in its entirety. It was further submitted that the assessee had also claimed exemption u/s.54F of the Act.

However, the Assessing Officer did not allow the assessee’s claim of deduction u/s.54F of the Act on ground that the assessee had not submitted the details to prove that the construction was completed.

It was submitted that the assessee had also paid legal fees to fight the case in court pertaining to transfer of the property, which had also not been allowed. The ld.AR placed before us a copy of the order of Co-ordinate Bench of this Tribunal in the case of two of the other co-owners being Shri Shashabindu Das and Shri Bhagawan Das Dhananjaya Das in & 1284/Chny/2018 wherein the Tribunal at para Nos.4 to 5 held as follows:-

“4. We heard the rival submissions. It is clear from the orders of the lower authorities that they have not examined as to whether the impugned expenditure claimed by the assessees, arose out of a over-riding title there under. If the assessees’ full ownership of a unqualified right to enjoy the property gets restricted in the parental deed, then it would create a over-riding title on the beneficiaries. These aspects require detailed examination and hence we deem it fit to remit this issue back to the AO for a fresh examination. The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. The AO shall furnish adequate opportunity to the assesssee and decide the matter in accordance with aw.

5. With regard to the cost of acquisition as on 01.04.1981, various factors have to be evaluated for determining the fair market value as on a particular date viz., location of land, its potentiality, surroundings, rate of the adjacent land determined by the courts, if any, the condition of the lands, the expenditure required to develop the land, the limitations, if any viz., legal disputes as has happened in this case, eviction of unauthorized persons etc. In the very nature of things, the prices are bound to vary according to the contemporaneous economic environment, from land to land,

depends upon buyer to buyer and seller to seller which includes even the reasons for which the sellers are selling the lands, the guideline value etc. Thus, the AO cannot determine the fair market value as on 01.04.1981 solely based on the guideline value. In the facts and circumstances, we deem it fit to remit this issue back to the AO for a fresh examination. The assessee shall lay relevant materials in support of its contention before the AO and comply with the requirements of the AO in accordance with law. The AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assesssee on the material etc to be used against it and decide the matter in accordance with law.”

Ld.AR submitted that the Tribunal restored the issues to the file of Assessing Officer for re-adjudication in respect of certain expenditure relating to transfer of property claimed by those assessees, as also in regard to cost of acquisition as on 01.04.1981. It was submitted that the issues of the expenditures relating to sale the property, as also the issue of determination of the fair market value as on 01.04.1981 having been restored to the file of Assessing Officer for re-adjudication in the case of other two co-owners, it would be appropriate that in the assessee’s case also, it may be remitted back to the file of Assessing Officer for re-adjudication. It was a prayer that the assessee had not been afforded adequate opportunity to produce all the evidences to prove the completion of the construction of the residential house for the purpose of deduction u/s.54F of the Act in the course of original assessment proceedings. It was a prayer that in the interest of justice, this issue could also be restored to the file of Assessing Officer for re-adjudication and the assessee would be able to produce all the evidences required.

4.

On the other hand, ld.DR vehemently supported the orders of the Assessing Officer and the ld.CIT(A).

5.

We have heard the rival contentions and perused the material available on record. As it is noticed that the issue of the allowability of the expenses in the case of two of the other co-owners referred to supra has been restored to file of Assessing Officer, along with the issue of determination of the fair market value of the property sold as on 01.04.1981, in the interest of justice, the identical issues raised in the assessee’s appeal are restored to file of Assessing Officer for re-adjudication, in line with the decision of Co-ordinate Bench of the Tribunal in the case of two of the other co-owners being Shri Shashabindu Das and Shri Bhagawan Das Dhananjaya Das dated 29.11.2018 for assessment year 2012-13 referred to surpa. As also it is also noticed that the assessee has now produced the evidence in the form of the tax paid challan for Corporation Tax dated 03.03.2017 in the name of assessee to prove the claim of construction of the residential house, this issue is also restored to the file of Assessing Officer for re-adjudication in respect of the claim of deduction u/s.54F of the Act.

6.

In the result, the appeal of assessee is partly allowed for statistical purposes.

Order pronounced in the open court after conclusion of hearing on 21st October, 2019, at Chennai.

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