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Facts
The assessee filed her income return for AY 2017-18, declaring a total income of Rs. 26,14,320, including long-term capital gains from the sale of two land parcels. The assessee calculated the capital gains based on a market value of Rs. 8,00,000 per acre as the cost of acquisition on 01.04.1981. The Assessing Officer (AO) determined a lower cost of acquisition at Rs. 10,000 per acre. The CIT(A) upheld the AO's order.
Held
The Tribunal held that the sole issue is the cost of acquisition of land as on 01.04.1981. Considering the significant variance between the assessee's valuation and the AO's valuation, and accepting the assessee's limited prayer, the case was remitted to the AO. The AO is directed to ascertain the cost of acquisition by referring the matter to the District Valuation Officer (DVO) and re-adjudicate the issue after providing an opportunity of being heard to the assessee.
Key Issues
The primary issue is the determination of the cost of acquisition of land as on 01.04.1981 for calculating long-term capital gains. The assessee disputes the valuation adopted by the Assessing Officer and the CIT(A), considering it to be unreasonably low.
Sections Cited
143(3), 142(1), 54B, 54F
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM & HON’BLE SHRI MANU KUMAR GIRI, JM
(िनधा�रणवष� / Assessment Year: 2017-2018) Suppana Gounder Karuppanasamy, Vs. The Assistant Commissioner of 37, Mariamman Kovil Street, Income Tax, Kalapatti, Non Corporate Circle 2, Coimbatore 641 048. Coimbatore. [PAN: BWCPK 9001L] (अपीलाथ�/Appellant) (��यथ�/Respondent) अपीलाथ� क� ओर से/ Appellant by : Shri. N.V. Krishnan, Advocate ��यथ� क� ओर से /Respondent by : Ms. Gouthami Manivasagam, IRS, JCIT सुनवाई क� तार�ख/Date of Hearing : 12.08.2024 घोषणा क� तार�ख /Date of Pronouncement : 14.08.2024 आदेश / O R D E R PER MANU KUMAR GIRI (Judicial Member)
This appeal by the assessee is directed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi in order No.ITBA/NFAC/S/250/2023-24/1060230328 (1) dated 29.01.2024. The assessment was framed by the Assistant Commissioner of Income Tax, Non Corp Circle-2, CBE for the assessment year 2017-18 u/s.143(3) of the Income Tax Act, 1961 (hereinafter the ‘Act’), vide order dated 30.12.2019.
2. The following grounds of appeal are raised by the appellant: ’1. The order of the Hon'ble CIT(A) is opposed to the law, facts and circumstances of the case and against the principles of natural justice.
2. Re: FMV of land as at 01.04.1981: a. The Hon'ble CIT(A) erred in confirming the order of the learned assessing officer, without appreciating the fact that the FMV computed by the learned assessing officer as at 01.04.1981 was unreasonably low as compared to the actual market value. b. The Hon'ble CIT(A) failed to appreciate that the markat value determined by the Registered Valuer was based on various essential factors and explainable upon affording sufficient opportunity. c. Without prejudice to the above, the assessment order passed by the leamed assessing officer without referring the case to the DVO to determine the FMV as at 01.04.1981 is invalid and not in accordance with law. In view of the above grounds and such other additional grounds as may be adduced at time of hearing. it is prayed before the Hon'ble Income Tax Appellate Tribunal, i) to annul the order of assessment passed by the learned assessing officer, ii) alternatively, to direct the learned assessing officer to adopt the market value determined by the Registered Valuer as cost of asset as at 01.04.1981, and iii) to pass such other consequential orders as the Hon'ble Income Tax Appellate Tribunal may deem fit to render justice’’. The ld.Counsel in substance confined his argument on the ground No.2(c) only.
3. Brief facts of the case are that the assessee filed her Return of income for the assessment year 2017-18 on 09.09.2017 declaring a total income of Rs.26,14,320/-(LTCG Rs.2559435/- and Other Sources Rs.74882/-), after allowing deduction under Chapter VIA of Income Tax Act. The return was selected for scrutiny under CASS. Notice u/s 143(2) of the Act was issued on 09.08.2018 and duly served on the assessee. Notice u/s 142(1) of the Act was issued on the assessee and in response, the assessee filed Profit & Loss account, Balance Sheet, Statement of Income, Details of investments in property, Form 26AS and other details called for. In the relevant financial year, the assessee has sold her Sheha Asiana Pvt. Ltd. and returned Capital Gains Rs.25,59,435/-. The assessee has also reinvested a part of the sale proceedings in a house construction and claimed 54F deductions. Also a portion of the proceeds were reinvested in lands and claimed deduction u/s 54B also. The details were verified by the Assessing Officer. The assessee explained her Capital Gain income as from below transactions: I Sale of 45 cents land to Sneha Asiana The capital gains computations were as below, as retuned by the assessee: Sale Value [02.11.2016] 1,44,69,700 Less Indexed cost of property sold Cost of Acquisition- (01.04.1981 value) 8,00,000 x 1.83 = 14,64,000 (a) Indexed Cost of this Value: 40,50,000 (1464000 x 1125/100) (b) Indexed cost of of improvement: 11,25,000 (c) Brokerage 4,34,100 56,09,100 Gross Capital Gain (1,44,69,700-56,09,100) 88,60,600 Deduction u/s 54B 69,76,640 (Cost of Reinvestment in Agricultural Land) Long Term Capital Gain 18,83,960 ii Sale of 89 Cents to Sneha Asiana- Sale Value [02.11.2016] 2,69,69,700 Sale of land sold 800000/x0.89 = 7,12,000 (Value as on 01.04.1981) (a) Indexed cost: (712000 x 1125/100) =80,10,000 (b) Indexed cost of improvement: =12,37,500 (100000 X 1125/100) (c ) Brokerage = 8,09,090 ----------- 1,0056,590 Gross Capital Gain (26969700-10056590) Deduction u/s 54F 2,21,77,308 Cost of reinvestment x Capital Gains/Sale Value
The AO after having consideration to the guideline value of the SRO and the cost of acquisition mentioned in the subject property documents arrived at a reasonable value of Rs.10,000 per acre as cost of acquisition before indexation and another Rs.10,000/- towards the cost of improvement of the property. On the aforesaid basis, the AO computed the LTCG from sale of two lands (45 cents of land + 89 cents of land) as Rs.1,74,98,506/-.
Aggrieved, assessee challenged the order of AO before the ld.CIT(A). Before the ld.CIT(A), the assessee pleaded that the Assessing Officer (‘AO’ in short) has taken the market price of land as on 01.04.1981 at unreasonably low price of Rs.10,000/- whereas assessee has taken Rs.8,00,000/- per acre hence assessee approached approved valuer to assess the market value of the land as on 01.04.1981. The assessee filed the Valuation Report of the approved valuer before the ld.CIT(A) and submitted that as per Valuation Report market value of land as on 01.04.1981 is certified as Rs.5,50,000/-. The ld.CIT(A), after considering the submissions and Valuation Report has rejected the prayer of the assessee and upheld the order of AO. Aggrieved, the assessee is in appeal before us.
The ld.Counsel submitted that the assessee is only disputing the cost of acquisition of land and not any other adjustment made by ld. Assessing Officer. His limited prayer was that the matter may set aside to AO for referring the