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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI A.MOHAN ALANKAMONY & SHRI DUVVURU RL REDDY
आदेश / O R D E R
Per A. Mohan Alankamony, AM:-
The appeal by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals)-
16, Chennai dated 24.03.2017 in ITA No.43/CIT(A)-16/2016-17 for the assessment year 2013-14 passed U/s.250(6) r.w.s.
143(3) of the Act.
The assessee has raised several grounds in his appeal, and they are extracted herein below for adjudication:- 1) The orders of the assessing officer and that of the Commissioner of Income Tax (Appeals) are against the law, the facts and circumstances of the case and the principles of equity and natural justice.
2) The CIT(A) and the assessing officer erred in adding a sum of Rs.I0,00,000/- as full value of consideration, applying section 50C of the Act. The CIT (A) and the assessing officer ought to have considered the report of the DVO before making the addition.
3) The CIT (A) and the assessing officer have failed to appreciate that the transfer was made on 4.4.2012 and the guideline value was changed from 1.4.2012.
4) The CIT (A) and the assessing officer failed to appreciate that the appellant had received major portion of the consideration towards the sale in the earlier assessment year itself.
5) The assessing officer erred in disallowing the claim for deduction of cost of improvement of Rs.4,00,000/- incurred by the appellant. The CIT (A) erred in confirming the disallowance.
6) The assessing officer erred in restricting the deduction claimed under section 54F of the Act to 44,93,205/-. The CIT (A) erred in confirming the same.
7) The assessing officer and the CIT (A) failed to appreciate that the appellant had transferred only 75% of the undivided interest in the plot and accordingly the assessable consideration is only the cost of construction and the cash received. The authorities below failed to appreciate that value of the entire plot has been assessed as consideration in computing the capital gains.
8) The CIT (A) and the assessing officer have erred in holding that the sum of Rs.15,00,000/ - received by the appellant from his close relatives for meeting the expenditure towards college fees of his daughter in law is to be assessed as assessed as unexplained income of the appellant.
9) The CIT (A) and the assessing officer have erred in holding that the sum of Rs.9 lakhs given by the purchasers of the villa for incurring expenditure on their behalf towards stamp duty, registration etc is to be assessed as unexplained income of the appellant.
10) The CIT (A) and the assessing officer have failed to appreciate that the purchasers of the villa have confirmed the payment and therefore same ought not to have been added as appellant's income.
11) The CIT (A) failed to note that the assessing officer had gathered information by appointing commission under section 131 of the Act, but the information gathered in the said process was not provided to the appellant for his consideration and submissions. The assessing officer grossly violated the principles of natural justice, by relying on the information gathered by him without providing the same to the appellant and giving opportunity to examine the persons whose statements are relied on by the assessing officer.
12) The assessing officer erred in adding a sum of Rs.5,93,406/- being the discount received by the appellant for purchase of villa (a capital asset) as the income of the appellant. The CIT (A) erred in confirming the addition.
13) Your appellant prefers this appeal on these grounds and such other grounds that may be adduced before or at the time of hearing of this appeal.
The brief facts of the case are that the assessee is a non-
resident, filed his return of income for the assessment year 2013-
14 on 18.07.2013 admitting total income of Rs.15,57,700/-.
Initially the return was processed U/s.143(1) of the Act and subsequently the case was selected for scrutiny under CASS.
Finally assessment order was passed U/s.143(3) of the Act on 31.03.2016 wherein the Ld.AO made several additions.
At the outset the Ld.AR submitted before us that the Ld.AO
has erroneously worked out the long term capital gain as under which is confirmed by the Ld.CIT(A):-
Computation as per Assessment Order Sale Consideration for Plot No.178 & 179 1,59,00,000 Ashtalakshmi Nagar, Maduravoyal Add : Addition applying provisions of 50C 10,00,000 1,69,00,000 Less : Indexed COA (108530/-+81397)*852/244 6,63,191 1,62,36,809 Less : Deduction u/s 54F (Rs.1,62,36,809 x Rs.44,00,000) 44,93,205 (Rs.1,59,00,000) Long Term Capital Gains 1,17,43,604
In the above computation, the assessing officer has restricted the amount invested in the new property to the tune of Rs.44,00,000/-, since only 75% of the property is transferred in the Joint venture.
4.1 The Ld.AR further submitted before us that the following computation of long term capital gain is appropriate:-
Assessee’s Computation Sale Consideration for Plot No.178 & 179 1,28,00,000 Ashtalakshmi Nagar, Maduravoyal Rs.74,00,000 for Plot 178 and Rs.54,00,000 for Plot 179 (Rs. 30 lakhs in cash and Rs.2400000 as construction cost) Add: As per provisions of 50C 0 1,28,00,000 Less : Indexed COA (108530/-+81397)*852/244 6,63,191 Less : Indexed COI 12,22,131 1,09,14,678 Less : Deduction u/s 54F (Rs.10914678*( Rs.44,00,000/12800000)) 37,51,921 Long Term Capital Gains 71,62,758
The Appellant makes a submission that, the consideration for first property is Rs.74 lakhs and the second property where only 75% of UDS in land is transferred is Rs.54 Lakhs (Rs.30 received in cash and Rs.24 as cost of construction). Thus total consideration is Rs.1.28 crores. The assessing officer while allowing 54F has considered the transfer of UDS as only 75% but ignored that the consideration is incorrectly offered and assessed at 100% in respect of second property.
The reinvestment made by the assessee is only Rs.4400000/- and the same is to be considered.
4.2 He further argued before us that the Ld.AO has erroneously made addition of Rs.9,00,000/- with respect to the amount paid by Smt. Amsath Ajma which is nothing but the amount received for purchase of stamp paper, legal fees and other expenses in connection with the registration of property. It was further submitted that the addition of Rs.5,93,406/- made by the Ld.AO is nothing but the discount received by the assessee towards purchase of property. The Ld.AR therefore pleaded before us that the entire matter may be remitted back to the file of Ld.AO for fresh consideration so as to provide the assessee will one more opportunity to explain about the issues involved in the assessment with adequate evidence and the assessee has a fair chance to succeed in his appeal. He further pleaded by stating that the assessee was unable to do so on the earlier occasion because he was non-resident and therefore could not timely represent before the bench.
The Ld.DR vehemently opposed to the submission of the Ld.AR and prayed for confirming the order of the Ld.CIT(A).
We have heard the rival submissions and carefully perused the materials on record. On examining the facts of the case we find certain arguments of the Ld.AR to have merit. With respect to addition invoking the provisions of Section 50C of the Act, the valuation report was not available before the Ld.AO at the time of assessment. Therefore the assessee was not provided with an opportunity to dispute the valuation made by the Ld.DVO at the time of assessment. Further with respect to the joint venture agreement entered by the assessee, the assessee had retained 25% of the land and therefore there was no transfer of land to that extent. However it appears that the Ld.AO had not considered the same. With respect to the addition of Rs.9,00,000/- being amount received for purchase of stamp paper etc., the same cannot be added to the income of the assessee if the explanation offered by the assessee is genuine. Similarly additions cannot be made if the assessee has received discount on purchase of land for Rs.5,93,406/-. As regards to the cash deposits of Rs.15,00,000/-, a detailed examination is required before making such addition.
Needless to mention that the computation of capital gain worked out by the assessee also needs to be verified. Therefore in the interest of justice, we hereby remit back the appeal to the file of Ld.AO for de-nova consideration.
In the result the appeal of the assessee is allowed for statistical purpose.
Order pronounced on the 18th January, 2018 at Chennai.