ITO, BANGALORE vs. SRI. C.D. MEDAPPA, BANGALORE

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ITA 120/BANG/2016Status: DisposedITAT Bangalore17 January 2018AY 2010-116 pages
AI SummaryAllowed

What did the Tribunal hold?

The CIT(A) allowed the assessee's appeal, holding that the Assessing Officer erred in recomputing the indexed cost of acquisition. The Tribunal upheld the CIT(A)'s order.

What were the facts?

The assessee initially claimed exemption under Section 54F for capital gains. Later, the assessee withdrew this claim. The Assessing Officer reopened the assessment and made an addition to capital gains by adopting a different cost of acquisition for a property sold.

What were the issues?

The primary issue was the correct method for computing the indexed cost of acquisition of a property for capital gains tax purposes, specifically the valuation as of April 1, 1981.

Which sections of the Income-tax Act were involved?

Section 54F,Section 143(3),Section 147

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH, BENGALURU

Before: SHRI INTURI RAMA RAO & SHRI LALIT KUMARShri C.D.Medappa,

For Appellant: Shri M.K.Biju, JCIT(DR)
For Respondent: Shri V.Srinivasan, Advocate
Hearing: 07/11/2017Pronounced: 17/01/2018

Date of hearing : 07/11/2017 Date of pronouncement : 17/01/2018 O R D E R Per INTURI RAMA RAO, AM :

This is an appeal filed by the revenue directed against the order of the ld. Commissioner of Income Tax (Appeals)-1, Bangalore, [CIT(A)] dated 14/10/ 2015 for the assessment year 2010-11.

2.

The revenue raised the following grounds of appeal:

3.

Brief facts of the case are as under:

The assessee is an individual deriving income under the head ‘other sources’ and ‘capital gains. ‘The return of income for the assessment year 2010-11 was filed on 07/10/2010 declaring total income of Rs.6,82,440/- after claiming exemption under section 54F of the Income Tax Act 1961[hereinafter referred to as 'the Act' for short]. Subsequently the assessee filed a letter dated 12/06/2014 before the Assessing Officer withdrawing the exemption claimed under section 54F. Based on this information, the Assessing Officer issued notice under section 148 on 20/06/2014 calling for the return of income for the assessment year 2010-11 in order to assess the escaped income. The assessee has e-filed return of income. Against said return of income, the assessment was completed by the Income Tax Officer, Ward-1(2)(1), Bangalore vide order dated 24/12/2014 passed under section 143(3) read with section 147 of the Act at total income of Rs. 3,78,06,090/-. The variation between the returned income and the assessed income is only on account of addition made under the head

Page 3 of 6 ‘capital gains’ on sale of property bearing No.21/41, MG Road Bangalore. The addition was made by the Assessing Officer by computing indexed cost of acquisition of the property sold by adopting the rate of Rs.510 per square meter as on 01/04/1981 as against the rate adopted by the assessee of Rs.350/- per sq.ft.

4.

The facts set out by the Assessing Officer leading to the addition are as under:

5.

Aggrieved by the assessment order an appeal was preferred before the ld.CIT(A) who, vide impugned order, allowed the appeal holding as under:

Page 5 of 6 6. Being aggrieved by this order of the ld.CIT(A), the revenue is in appeal before us.

7.

The learned DR contended that the fair market value of the property as on 01/04/1981 for the purpose of computing cost of acquisition of the property should be based on the guidance value of the Sub Registrar. The ld.CIT(A) ought not to have accepted the methodology of backward working.

On the other hand the learned counsel for the assessee supported the order of the CIT(A).

8.

We heard rival submissions and perused material on record. The only issue in the present appeal is whether the CIT(A) was justified in adopting backward working of sale price for the purpose of working out FMV as on 1/4/1981. When the market value of the property is known, working backward for a passage of time based on inflation rate is one of the accepted methods of valuation of the property. The CIT(A) has accepted this method of backward working out of FMV and this principle is also recognized in the following decisions:

i. Shantadevi Gaekwad (72 DTR 241) ii. Jahanganj Cold Storage vs. ACIT (133 TTJ 278)(Agra)(TM) iii. Mizar Anita Pai & another in & 199/Bang/2011 dated 30/08/2012 Further, the guidelines value adopted for registration was not found to be relevant for determination of value of property for gift tax purpose, as it does not reflect value of a particular property but the value of a particular area in which property is situated. (CGT vs. R.Jawahar (1996) 217 ITR 59 (Mad) and CGT vs. R.Damodaran (247 ITR 698). Therefore, We don't find any fallacy in the order of the CIT(A). Therefore grounds of appeal filed by the revenue are dismissed..

Page 6 of 6 9. In the result, the appeal filed by the revenue is dismissed.

Order pronounced in the open court on 17th January, 2018.

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