SUSHIL MOHAN,CHENNAI vs. ITO, CHENNAI

Let’s first take the case of Smt. Sushil Mohan in .

Ms. Rema Smrithi V.K., the Ld.counsel for the assessee, submitted that the assessee claimed deduction under Section 54F of the Income-tax Act, 1961 (in short 'the Act') before the CIT(Appeals) by raising a specific ground as ground No.5. According to the Ld. counsel, the assessee has claimed the cost of improvement towards interior and wood work to the extent of ₹13,92,300/- while claiming deduction under Section 54F of the Act. According to the Ld. counsel, this ground was not disposed of by the CIT(Appeals).

We heard Smt. E. Pavuna Sundari, the Ld. Departmental Representative also. According to the Ld. D.R., the issue of cost of improvement to the extent of ₹13,92,300/- was specifically raised by the assessee before the CIT(Appeals) as ground No.5. The CIT(Appeals) found that no evidence was produced towards expenditure of ₹13,92,300/-. Therefore, according to the Ld. D.R., it is not a case of non-disposal of specific ground but a case of failure of the assessee to substantiate the claim made before the CIT(Appeals).

We have considered the rival submissions on either side and perused the relevant material available on record. The assessee has raised a ground with regard to improvement said to be made to the property to the extent of ₹13,92,300/- for the purpose of computation of deduction under Section 54F of the Act. As rightly submitted by the Ld. D.R., the CIT(Appeals) found that there was no evidence for the expenditure of ₹13,92,300/-. Therefore, it is not a case of non-disposal of specific ground raised by the assessee before the CIT(Appeals), but a case of failure to substantiate the claim made. Therefore, this Tribunal is of the considered opinion that an opportunity can be given to the assessee to substantiate the claim of cost of improvement. Giving one more opportunity to the assessee may not be prejudicial to the interests of Revenue in any way. This Tribunal is of the considered opinion that giving an opportunity to the assessee to produce necessary material to substantiate her claim of cost of improvement to the extent of ₹13,92,300/- would definitely promote the cause of justice. Accordingly, orders of both the authorities below are set aside and the issue of cost of ₹13,92,300/- towards improvement for the purpose of computation of deduction under Section 54F of the Act is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.

Now coming to the case of Shri N.S. Mohan in the first ground of the appeal is with regard to addition of ₹10,80,265/- and ₹10,65,909/- to the income returned.

Ms. Rema Smrithi V.K. the Ld.counsel for the assessee, very fairly submitted that the assessee is not pressing this ground and she has also made an endorsement to that effect in the appeal folder. Accordingly, the ground raised by the assessee with regard to addition of ₹10,80,265/- and ₹10,65,909/- is dismissed as not pressed.

The next ground of appeal is with regard to computation of capital gain.

Ms. Rema Smrithi V.K. the Ld.counsel for the assessee, submitted that the Assessing Officer computed the entire capital gain in the property in the hands of the assessee ignoring the submission of the assessee that he owns only 25.21% in the property. According to the Ld. counsel, only to that extent of ownership of the assessee, the capital gain can be assessed.

We heard Smt. E. Pavuna Sundari, the Ld. Departmental Representative also. It is not in dispute that the capital gain is to be assessed only in the hands of the owner of the asset to the extent of the ownership. Since the assessee claims that he owns only 25.21% of the property sold, this Tribunal is of the considered opinion that the matter needs to be re-examined by the Assessing Officer. Accordingly, orders of both the authorities below are set aside and the issue of capital gain is remitted back to the file of the Assessing Officer. The Assessing Officer shall re-examine the matter in the light of the material that may be filed by the assessee and thereafter decide the issue afresh in accordance with law, after giving a reasonable opportunity to the assessee.