Tribunal directs reassessment of capital gain based on original cost & acquisition period by father.

The Tribunal allowed the Assessee's appeal, directing the Assessing Officer to recompute the capital gain based on the original cost and acquisition period by the Assessee's father in 2007. The Tribunal emphasized the relevance of the original cost and acquisition period in determining the capital gain. The order was pronounced on 28/07/2022.

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Issues:
1. Disallowance of claimed cost of acquisition by the Assessing Officer.
2. Enhancement of income by the Commissioner based on the Memorandum of Settlement.
3. Appeal against the affirmation of adhoc addition and enhancement of income.

Issue 1: Disallowance of claimed cost of acquisition by the Assessing Officer

The Assessee's father acquired a plot/property in 2007, which was later divided among the Assessee and his brothers in 2013. The Assessee sold the plot in 2015 and claimed the benefit of cost and indexation. The Assessing Officer disallowed a portion of the claimed cost of acquisition due to lack of supporting documents and made an adhoc disallowance of Rs. 8,37,106 along with complete brokerage amount, adding it back to the Assessee's income.

Issue 2: Enhancement of income by the Commissioner based on the Memorandum of Settlement

The Commissioner confirmed the adhoc addition and further enhanced the income by revising the disallowance to Rs. 12,74,512. The Commissioner noted that the Memorandum of Settlement did not mention the plot in question, leading to the conclusion that the Assessee was liable for short-term capital gain. The Assessee challenged this decision, claiming it was against the facts of the case.

Issue 3: Appeal against the affirmation of adhoc addition and enhancement of income

The Assessee appealed against the affirmation of the adhoc addition and the enhancement of income. The Assessee argued that the order was improper and against the facts of the case. The DR supported the Commissioner's order, stating that no interference was warranted as the order was not perverse, improper, or illegal.

The Tribunal considered the Assessee's claim that the cost of acquisition and indexation should be based on the original cost and the period of acquisition by the Assessee's father. The Tribunal noted that the conveyance deed executed in 2013 was an offshoot of the original allotment to the Assessee's father, making the rejection of the claim and enhancement of income unsustainable. The Tribunal directed the Assessing Officer to recompute the capital gain based on the original cost and acquisition period by the Assessee's father in 2007.

In conclusion, the Tribunal allowed the Assessee's appeal, emphasizing the relevance of the original cost and acquisition period in determining the capital gain. The order was pronounced on 28/07/2022.

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