2022 (8) TMI 961 - AT - Income Tax

Tribunal modifies long-term capital gain computation, upholds disallowance of improvement cost claim.

The Tribunal partly allowed the appeal by the assessee, directing a fresh consideration of the computation of long term capital gain based on the ... LTCG - sale of premises (Godown) as the appellant could not show the evidence u/s. 50 - HELD THAT:- As per the assessee, the report from the aforesaid Department Valuation Officer, was sought by the learned CIT(A) during the pendency of its appeal. Since the impugned addition under the head “Long Term Capital Gain”, which was upheld by the learned CIT(A), has been made on the basis of value determined by the Registration Authority without taking into consideration the report of the Department Valuation Officer, we deem it fit and proper to restore this issue to the file of the AO for de novo adjudication. The Assessing Officer is directed to compute the capital gains after considering the value, as determined by the Department Valuation Officer. As a result, grounds no.1, 2 and 3, raised in assessee‟s appeal are allowed for statistical purpose. Disallowance of cost of improvement as claimed by the assessee - HELD THAT:- In the present case, we find that the claim of the assessee was denied by the lower authorities in the absence of proof with regard to cost of improvement claimed by the assessee. Even during the hearing before us, apart from showing certain photographs, the assessee has not produced any supporting bills, vouchers, source of funds, etc., in respect of its claim on account of cost of improvement and in the absence of these supporting details, we do not find any infirmity in the orders of the lower authorities denying the claim of the assessee on this issue. Accordingly, ground no.4, raised in assessee‟s appeal is dismissed. Issues involved:Computation of long term capital gain; Disallowance of cost of improvement claimed by the assessee.Computation of long term capital gain:The appeal filed by the assessee challenged the order passed under section 250 of the Income Tax Act, 1961 by the Commissioner of Income Tax (Appeals) for the assessment year 2006-07. The assessee raised grounds related to the confirmation of long term capital gain on the sale of premises and the addition of the cost of improvement to the godown sold during the year. The Assessing Officer determined the long term capital gains based on the market value estimated by the Registration Authority, which was contested by the assessee. The Department Valuation Officer's report was not considered by the Commissioner of Income Tax (Appeals) during the appeal proceedings. The Tribunal decided to restore the issue to the Assessing Officer for fresh consideration based on the Department Valuation Officer's report, allowing the grounds raised by the assessee for statistical purposes.Disallowance of cost of improvement:The issue pertained to the disallowance of the cost of improvement claimed by the assessee. The Assessing Officer disallowed the claimed amount due to lack of supporting details provided by the assessee. The Commissioner of Income Tax (Appeals) upheld the disallowance. During the appeal hearing, the assessee presented photographs of the construction site but failed to provide supporting bills, vouchers, or the source of funds for the claimed cost of improvement. The Tribunal found no infirmity in the lower authorities' decision to deny the claim, and accordingly, dismissed the ground raised by the assessee on this issue. The Tribunal also noted that a general ground raised by the assessee required no separate adjudication based on the findings in the order.In conclusion, the appeal by the assessee was partly allowed, with the Tribunal directing a fresh consideration of the computation of long term capital gain based on the Department Valuation Officer's report and dismissing the disallowance of the cost of improvement claimed by the assessee due to lack of supporting evidence.