UDAYABANU TANUKULA,MUMBAI vs. CIT 34, MUMBAI

The brief facts of the case are that assessment in the first instance was finalized u/s. 143(3) on 02.7.2007, assessing Long Term Capital Gain (LTCG) on the sale of (A.Y. 2005-06) Udayabanu Tanukula vs. ITO three plots of land (bearing numbers 154, 155 and 156) at Rs.96,852/-. The transfer consideration was adopted u/s.50C of the Act at Rs.17,59,300/-, allowing the indexed cost of acquisition at Rs.16,62,448/-. Reassessment proceedings were subsequently initiated in view of the difference in the capital gain assessed and that arising on the basis of purchase and sale agreements. The same was, accordingly, determined at Rs.5,32,501/-, computing the sale consideration and indexed cost of acquisition at Rs.19,59,260/- and Rs.14,26,759/- respectively, thereby enhancing the LTCG by Rs.4,35,649/- (Rs.5,32,501 – Rs.96,852). The original and the revised figures are as under: (Amount in Rs.)

Purchase consideration Sale consideration LTCG Plot OA RA OA RA OA RA (1) (2) (3) (4) (3) – (1) (4) – (2) 154 4,72,971 2,88,828 4,22,300 4,22,300 155 4,72,971 5,23,034 5,56,200 5,56,200 156 7,16,506 6,14,897 7,80,800 9,80,760 16,62,448 14,26,759 17,59,300 19,59,260 96,852 5,32,501 The assessee objected vide application u/s. 154 dated 09.2.2012 (filed on 13.2.2012/copy on record), stating that though the sale price of Plot No. 156 had been since (i.e., vide rectification order dated 29.12.2011) rectified by taking it at Rs.7,80,800/- instead of Rs.9,80,760/-, the basis for the computation of the revised indexed cost at Rs.14.27 lacs, i.e., as against the original value of Rs.16.62 lacs, had not been indicated in the assessment order. The said application was disposed of by the Assessing Officer (A.O.) vide his order dated 11.5.2012, stating that there was no mistake apparent from the record. In appeal, the assessee explained that the difference in the indexed cost of acquisition had occurred as stamp duty and registration charges had not been included while computing the purchase cost, and which was apparent from the purchase deeds on record. The ld. CIT(A), mentioning the different figures as stated in the assessment and reassessment orders (as above), held that there was, in (A.Y. 2005-06) Udayabanu Tanukula vs. ITO view thereof, no mistake apparent from the record. Aggrieved, the assessee is in second appeal.

The parties have been heard, and the material on record perused. The assessee had already been allowed indexed cost of acquisition at Rs.16.62 lacs vide regular assessment dated 02.7.2007. The same stood revised to Rs.14.26 lacs in the reassessment order. No reason for the same is stated in the reassessment order. It is this that led the assessee to question the basis of the same, even as the other figure modified in the reassessment order, i.e., the sale price of plot no. 156, was rectified, bringing it to the same figure as assumed earlier. The A.O., instead of explaining the difference, i.e., the reason there-for, merely stated that no rectification is called for. In appeal, where-at the assessee (on his own) found the difference as on account of exclusion of stamp duty and registration charges, the ld. CIT(A), rather than verifying the same on the basis of the material on record or causing it by the A.O., and settling the matter by issuing definite findings of fact based on the material on record, merely reiterated that there was no mistake apparent from the record. The reduction in the (indexed) purchase cost by the A.O. could only be on the basis of the material on record or the difference in the calculation, both mistakes apparent. The Revenue’s stance and attitude is inexplicable, and neither could the ld. DR justify it before me in any manner. This is all the more unfortunate considering that the revision in the purchase cost in the reassessment proceedings was without the assessee being show caused in the matter. Stamp duty and registration charges incurred on purchase are definitely a part of the cost, deductible u/s. 48(ii) in computing the capital gains chargeable u/s. 45 of the Act. The law in the matter is patently clear. Be that as it may, the A.O. is directed to compute the capital gain on each of the plots under reference by including the stamp duty and registration charges (i.e., as per the purchase deeds on record – the basis on which the purchase cost has been determined) as a part of their purchase cost. I decide accordingly.