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Income Tax Appellate Tribunal, “B”, BENCH KOLKATA
Before: SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM
आदेश / O R D E R
Per Dr. A. L. Saini:
The captioned appeal filed by the Assessee pertaining to assessment year 2003-04, is directed against an order passed by the learned Commissioner of Income Tax (Appeals)-XXXII, Kolkata (in short the ‘ld. CIT(A)’], which in turn arises out of an assessment order passed by the Assessing Officer u/s 144 / 147 of the Income Tax Act, 1961 ( in short the Act) dated 30.12.2009.
However in this appeal, the assessee has raised a multiple grounds of appeal but at the time of hearing, the main grievance of the assessee has been confined to the
Banabir Dasgupta ITA No.2579/Kol/2013 Assessment Year:2003-04 issue of computation of long term capital gain in the hands of the assessee. The solitary grievance of the assessee is that the ld. CIT(A) has taken the indexed cost of acquisition of Rs. 1,68,570/- instead of Rs. 14,40,000/- being the valuation report filed by the assessee.
Brief facts qua the issue are that owing to the demise of Smt. Nilima Dasgupta and the fact that Shri Banabir Dasgupta did not submit relevant details at any stage and due to the fact that the matter is very old, the actual facts of the case are not collated anywhere. Therefore, the relevant facts are culled out from the assessment records, Court proceedings, bank inquiries and also from information gathered u/s 131 of the Act etc. by the Assessing Officer. The assessee is this case was Late Smt. Nilima Dasgupta, wife of Late Sachindra Mohan Dasgupta. In the reassessment proceedings as well as in the appellate proceedings, her estate is being represented by her son Sh. Banabir Dasgupta. The facts detailed above make it clear that late Smt. Nilima Dasgupta had sold her property and there was an element of Long term capital gains involved. As she has not disclosed this transaction in her income tax returns, reassessment proceedings were duly initiated and the Capital Gains were required to be taxed. Since Smt Nilima Dasgupta has expired, her son and the inheritor to the estate Sh. Banabir Dasgupta was rightly substituted as the Legal Heir/representative. However the A.O. committed an error of judgment in holding the reassessment order as protective. The Capital Gains are not required to be taxed in the hands of any other person. Therefore it is held and directed that the A. O. should consider the reassessment order as having passed in the hands of Sh Banabir Dasgupta as Legal heir/representative of Late Smt. Nilima Dasgupta in substantive capacity only.
Computation of Long Term Capital Gains by Assessing Officer. The Assessing Officer noted that the fact that Smt Nilima Dasgupta entered into an Agreement to Sale on 13.7.1971 is not relevant to the computation of Capital Gains as no transfer of property took place even under Section 53A of the Transfer of Property Act, 1882. On this date only an inchoate right was available to the buyer to either force specific performance or claim compensation or even cancel the agreement. Page | 2
Banabir Dasgupta ITA No.2579/Kol/2013 Assessment Year:2003-04 Later on, Court reverses and success in appeal led to registration of the said property in the hands of Smt Nilima Dasgupta only on 21.9.1981 which is the day when Smt. Nilima Dasgupta became the legal owner of an immovable property in the real sense and as per the Indian Registration Act, 1908. Here it is necessary to mention that Smt Nilima Dasgupta had filed a Money Appeal no. 1 of 1991 before the 12th Court of the Additional District Judge at Alipore arising out of a Money Suit No 22 of 1982 dated 8.9.1990. The Money Suit was filed by Smt Nilima Dasgupta to get mesne profits in the shape of, rent from the property's tenants from 2.8.1979 to August 1982. On appeal, Court has held that Smt Nilima Dasgupta acquired perfect right, title and interest in the suit property from the date of execution of the three sale deeds on 16.9.1981 and the Late Smt Nilima Dasgupta was granted mesne profits for the period running from 16.9.1981 to 3.6.1982 i.e. date of filing of the money suit. Therefore the Appeal Suit also confirms that Smt Nilima Dasgupta became the owner of the Jodhpur Park property only after the three sale deeds were executed by the Court and not earlier. The cost of the Jodhpur Park property is computed as under: Purchase consideration: Rs. 1,52,000/- Cost of Stamp Rs. 16,570/- Total Rs.1,68,570/-
Since the Late Smt. Nilima Dasgupta became the owner of the property only after the cut off date of 1.4.1981 she was not entitled to any benefit of substituting the Fair market value as provided by Section 55(2)(b) of the Act. For this reason, the claim of the assessee that the valuation of the property be taken as per the Valuation Report filed by the assessee declaring the Fair Market value of the Jodhpur Park property at Rs. 14,40,000/- on 1.4.1981 cannot be accepted. The Indexed Cost of acquisition as per' section 48 of the Act comes to Rs. 1,68,570/- * 406/100 i.e. Rs. 684394/-. The Sale consideration of the property is Rs. 43,50,000/- as detailed above.
Therefore the Calculation of Long Term Capital Gains was made by Assessing Officer as under: Page | 3
Banabir Dasgupta ITA No.2579/Kol/2013 Assessment Year:2003-04
Sale Consideration Rs.43,50,000/- Less: Indexed cost of acquisition Rs. 6,84,394/- Long term capital gains Rs. 36,65,606/-
The Assessing Officer then computed deduction u/s 54 of the Act.As the assessee had within one year from the date of transfer of the Jodhpur Park property on 19.10.2001 bought/acquired a Flat No. 2 alongwith the undivided impartible proportionate share of land measuring 1 cottah 12 chittaks at SE, Raipur Road East, Kolkata 700 032 for a total consideration of Rs. 6,30,000/- as per the registered Deed of Conveyance dated 29.1.2002, the deduction u/s 54 is computed as under: Purchase consideration of the Raipur Road (East) Flat Rs.6,30,000/- Stamp duty paid as per the Registered deed Rs. 44,160/- Total Rs. 6,74,160/-
The benefit of other registration expenses are not given in the absence of evidence thereof. (In the reassessment order the A.O. had take an estimated cost of acquisition of Rs. 10,22,500/- which was rectified based on actual figures by Assessing Officer in reassessment proceedings.) The Assessing Officer then computed long term capital gain as follows: Capital gain computed in para 6 of this order Rs. 36,65,606/- Less: Deduction u/s 54 Rs. 6,74,160/- LTCG Rs. 29,91,446/-
On appeal, the ld. CIT(A) confirmed the findings of Assessing Officer, with some modification. Aggrieved the assessee is in appeal before us.
The ld. The ld. DR has primarily reiterated the stands taken by the Assessing Officer which we have discussed in our earlier para and the same is not being Page | 4
Banabir Dasgupta ITA No.2579/Kol/2013 Assessment Year:2003-04 repeated for the sake of brevity and on the other hand the ld. AR has defended the order of the Assessing Officer.
We have heard both the parties and perused the material available on record. We note that as per the computation filed before the Bench and taking into account the cost of acquisition of Rs. 14,40,000/- the assessee has submitted the following computation of long term capital gain which reads as follows: Sale consideration Rs. 43,50,000/- Less: Indexed cost of acquisition 14,40,000/100x406 = Rs. 58,46,400/- Restricted to Rs. 43,50,000/- Long term capital gain NIL
We note that the assessee has submitted the indexed cost of acquisition at Rs. 14,40,000/- which has been disputed by the Assessing Officer without bringing any cogent evidence on record. The Assessing Officer has failed to bring any evidence on record to show that the fair value of the property for indexed cost of acquisition at Rs. 14,40,000/- submitted by the assessee was not correct. Per contra, the ld. DR for the revenue submitted that the assessee had died and the assessment was being made in the hands of the legal heir therefore the indexed cost of acquisition should be taken, after taking into account all the circumstances, therefore ld. DR fairly agreed that the cost of acquisition should be Rs. 14,40,000/- and hence the indexed cost of acquisition should be worked out based on Rs. 14,40,000/- which comes to the tune of Rs. 58,46,400/- . We note that the Assessing Officer has failed to bring any cogent evidence on record to prove that the cost of acquisition submitted by the assessee is false and not based on the evidence therefore to meet the end of justice we take into account the cost of acquisition of Rs. 14,40,000/- for computation of long term capital gain. The indexed cost of acquisition taking into account the cost of acquisition of Rs. 14,40,000/- comes to Rs. 58,46,400/- however the sale consideration of Rs. 43,50,000/- is less than indexed cost of acquisition therefore the indexed cost of acquisition will be restricted to Rs. 43,50,000/- and as a result there would not be Page | 5
Banabir Dasgupta ITA No.2579/Kol/2013 Assessment Year:2003-04 any long term capital gain. Hence we delete the addition made by the Assessing Officer and sustained by the ld. CIT(A) on account of long term capital gain.
In the result, the appeal of the assessee is allowed as per the discussion made (supra). Order pronounced in the Court on 29.03.2019
Sd/- Sd/- (A.T.VARKEY) (A.L.SAINI) �या�यकसद�य / JUDICIAL MEMBER लेखासद�य / ACCOUNTANT MEMBER कोलकाता /Kolkata; �दनांक/ Date: 29/03/2019 (SB, Sr.PS) Copy of the order forwarded to: 1. Banabir Dasgupta 2. ITO, Ward-50(4), Kolkata 3. C.I.T(A)- 4. C.I.T.- Kolkata. 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File.