Tribunal affirms CIT(A)'s tax ruling on capital gains computation, rejects revenue's appeal.

The Tribunal upheld the CIT(A)'s decision in a tax case, determining the cost of acquisition for capital gains computation at Rs. 4,60,197 and dismissing the revenue's appeal regarding the addition made under section 69 of the Income Tax Act. The Tribunal found the appellant's contentions credible, emphasizing the significance of evidence and submissions in verifying the legitimacy of investments and funding sources.

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Issues:
1. Determination of cost of acquisition for computing capital gains.
2. Addition made under section 69 of the Income Tax Act.

Issue 1: Determination of cost of acquisition for computing capital gains:
The appellant filed her return of income for AY 2007-08 declaring total income, including long-term capital gain. The AO determined the taxable income by disallowing the cost of acquisition of land area sold during the year and cost of improvement for the sale of flats. The appellant entered into an MoU for property development, and the AO disallowed the claimed cost of acquisition, leading to a dispute regarding the fair market value as on 01/04/1981. The CIT(A) observed evidence of building existence on the land, directing the AO to consider the cost of acquisition at Rs. 4,60,197 for capital gains computation.

Issue 2: Addition made under section 69 of the Income Tax Act:
The AO disallowed an investment of Rs. 33,12,500 as unexplained for construction of residential flats. The CIT(A) deleted this addition after considering the appellant's submissions and evidence, noting that only two flats were completed and sold in the relevant year. The remaining flats were under construction, with sale deeds executed in the subsequent year. The CIT(A) found the appellant's contentions acceptable, especially regarding the sources of investment. The revenue appealed, arguing that the building was complete based on the joint developer's statement. However, the Tribunal found no evidence to support this claim and relied on the appellant's submissions. The sources of funds for the investment were analyzed, and it was concluded that the appellant had sufficient funds to finance the building investment.

In conclusion, the Tribunal dismissed the revenue's appeal, upholding the CIT(A)'s decision on both issues. The judgment clarified the determination of cost of acquisition for capital gains computation and the addition made under section 69 of the Income Tax Act, emphasizing the importance of evidence and submissions in establishing the legitimacy of investments and sources of funds.

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