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Income Tax Appellate Tribunal, ‘A’ (SMC
Before: SHRI ABRAHAM P. GEORGE]
आदेश / O R D E R
In this appeal filed by the assessee, it is aggrieved on computation of capital gains in respect of a property sold by it.
Facts apropos are that assessee a non resident had filed his return of income for the impugned assessment year disclosing income of �2,24,400/-. Apart from income from house property, assessee also had income from capital gains and other sources. Income from capital . :- 2 -: gains arose out of sale of two properties one of a house site at Vengadamangalam village and other of a land at Madipakkam village.
Grounds raised by the assessee are in relation to computation of capital gains arising out of sale of land of Madipakkam village. This land was sold by the assessee on 17.08.2012 for a sale consideration of �1,00,00,000/-. Assessee had after setting-off indexed cost of land, worked out a long term capital gain of �84,55,732/-. On such capital gains assessee had claimed exemption both u/s.54EC and 54F of the Act. In so far as exemption u/s.54EC of the Act is concerned there is no dispute. Dispute is with regard to claim of exemption claimed u/s.54F of the Act. Assessee is also aggrieved that full value of sale consideration was taken at �1,00,00,000/- without deducting brokerage of �1,00,000/- paid. Further as per the assessee, while computing the exemption u/s.54F of the Act, investment made by the assessee in the new house property was considered at �70,89,580/- disregarding its claim of renovation expenditure of �3,72,500/-.
Ld. Counsel for the assessee submitted that ld. Assessing 3.
Officer had computed exemption u/s.54F of the Act after deducting claim of the assessee u/s.54EC of the Act from the long term capital gains. As per ld. Authorised Representative this methodology adopted by the ld. Assessing Officer was wrong. Deduction had to be worked out, in the opinion of the ld. Authorised Representative on the long . :- 3 -: term capital gains without reducing the claim u/s.54EC of the Act. As
per ld. Authorised Representative such a ground though pressed by the assessee before ld. Commissioner of Income Tax (Appeals), was not considered.
Continuing his submissions, ld. Authorised Representative 4. submitted that sale consideration was taken at �1,00,00,000/- without deducting brokerage of �1,00,000/- which was paid by cheque. In so far as, claim of exemption u/s.54F of the Act was concerned, ld. Authorised Representative submitted that cost of the new property should have been considered after taking into account the renovation expenditure of �3,25,000/-.
Per contra, ld. Departmental Representative strongly 5.
supported the orders of the authorities below.
I have considered the rival contentions and perused the orders of the authorities below. First dealing with the question whether brokerage of �1,00,000/- paid can be deducted from sale consideration while computing long term capital gains, I find that assessee has produced a receipt which show payment of �1,00,000/- by account payee cheque to one Shri. J. Suresh. It may be true that assessee might not have produced the receipt before lower authorities.
However, assessee had produced the bank account which reflected the above payment. In such a situation, in my opinion the net sale . :- 4 -: consideration on the sale of the land at Madipakkam village has to be at �99,00,000/-.
Coming to the aspect of investment in the residential house for which exemption u/s.54F of the Act has been claimed, I find that ld. Assessing Officer had considered the value of the investment at �70,89,580/-, rejecting assessee’s submission regarding renovation expenditure of �3,72,500/-. The claim now made before me is for renovation expenditure of �3,25,000/-. Apart from the indefinite nature of the claim, lower authorities have also given a clear finding that no evidence was furnished by the assessee in support such expenditure. Hence, I am of the opinion that, such claim was rightly disallowed by the lower authorities and cost of the new asset considered at �70,89,580/-.
Coming to the aspect of computation of exemption u/s.54F of the Act, the said section clearly indicate the formula through which exemption has to be calculated. This is reproduced hereunder:-
Long Term Capital Gain X Amount invested in residential house.
Net Consideration.
So, what is to be considered is the ‘’long term capital gains’’ apart from the amount invested in residential house, in the numerator and net consideration in denominator. In so far as investment in . :- 5 -: residential house is concerned, I am one with lower authorities that such investment had to be considered at �70,89,580/. However, long term capital gains, was taken by the Assessing Officer at �69,54,407/- viz after excluding assessee’s claim under Section 54EC of the Act, whereas actual sum should have been �83,55,733/- (net consideration of �99,00,000/- less indexed cost of acquisition �15,44,267/-). Similarly, the net consideration which comes in the denominator should be taken as �99,00,000/-. Hence, I set aside the orders of the lower authorities in so far as it relates to long term capital gains computation exemption u/s.54F of the Act and remit it back to the ld. Assessing Officer for correctly computing it, in accordance with law.
In the result, appeal of the assessee is partly allowed for 9.