2019 (5) TMI 949 - HC - Income Tax

Court affirms capital gains computation based on 1990 cost, rejects revaluation claim.

The court affirmed the decision to compute long-term capital gains based on the land's cost as on 07.08.1990, rejecting the appellant's revaluation claim. ... Long term capital gains Asset - date of acquisition of property for determining the cost of acquisition of the land - asset acquired by the partnership firm by succession from the proprietrix which was allotted to it in 1973 - conversion of the proprietary concern to a partnership firm - whether they became owners of the property by succession? - sale deed specifically stipulates that the property was sold by virtue of the sale deed dated 07.08.1990 to firm - content in sale deed - non furnishing of documents HELD THAT:- The sole basis, for the appellant’s claim that 01.04.1981 should be taken as the date for determining the cost of acquisition of the land, is that the proprietrix had paid a part of the consideration which was acknowledged in the sale deed, and she was put in possession of the subject land which was delivered to her pursuant thereto. It was incumbent on the assessee to produce a copy of the original allotment letter issued by the APIIC in the year 1973, and the agreement of sale dated 03.07.1990, to establish their claim that the APIIC had not merely allotted the land, but had sold the land to the original proprietrix and had delivered possession to her pursuant to such a sale. In the absence of either of these documents being produced before the Income-tax authorities concerned, and in as much as the sale deed specifically stipulates that the property was sold by virtue of the sale deed dated 07.08.1990, the Tribunal cannot be said to have erred in affirming the order passed by the CIT (Appeals), fixing the date of acquisition as 07.08.1990 i.e. when the sale deed was executed by the APIIC in favour of the appellant herein. It is only if a substantial question of law arises for consideration, from the order passed by the ITAT, would this Court be justified in exercising its jurisdiction, under Section 260-A, to entertain this appeal. We are satisfied that no such substantial question of law arises for consideration in the present proceedings. Issues:1. Determination of cost of acquisition for computing long-term capital gains.2. Interpretation of provisions under Section 55(2)(b)(ii) and Section 49(1)(iii)(a) of the Income Tax Act.3. Claim of succession by a partnership firm from a proprietrix.4. Admissibility of documentary evidence in tax proceedings.Analysis:1. Determination of cost of acquisition for computing long-term capital gains:- The appellant claimed a long-term capital loss based on the cost of acquisition revalued at &8377;31,68,080 for a piece of land sold. The assessing officer re-determined long-term capital gains at &8377;23,61,816, considering the land's cost as on 01.04.1986. The Commissioner of Income Tax (Appeals) directed the cost to be computed as on 07.08.1990, resulting in a potential increase in capital gains. The ITAT affirmed this decision, emphasizing the importance of the sale deed date for determining the cost of acquisition.2. Interpretation of provisions under Section 55(2)(b)(ii) and Section 49(1)(iii)(a) of the Income Tax Act:- The appellant argued that the cost of acquisition should be determined as of 01.04.1981 based on Section 55(2)(b)(ii) of the Act. Section 49(1)(iii)(a) was also referenced regarding the acquisition of assets by succession. The court scrutinized these provisions to assess the validity of the appellant's claim and the relevance of the specified dates for cost calculation.3. Claim of succession by a partnership firm from a proprietrix:- The key issue revolved around whether the partnership firm succeeded to the property from the proprietrix, thereby claiming ownership by succession. The court analyzed the historical allocation of the land, possession delivery dates, and legal documents to ascertain if succession indeed occurred, ultimately concluding that the partnership firm did not acquire ownership by succession.4. Admissibility of documentary evidence in tax proceedings:- The court highlighted the importance of presenting relevant documentary evidence, such as the original allotment letter and sale agreements, to support claims in tax proceedings. The absence of crucial documents, like the allotment letter and the 1990 agreement of sale, hindered the appellant's argument for determining the cost of acquisition based on earlier dates.In conclusion, the court dismissed the appeal as no substantial question of law arose for consideration. The judgment emphasized the significance of documentary evidence, the correct interpretation of statutory provisions, and the critical evaluation of succession claims in tax matters.