Tribunal directs AO to re-compute capital gains, rejects plea for jantri value, allows section 54F exemption.

The Tribunal partly allowed the appeal, directing the AO to re-compute the capital gains by taking the assessee's share as 1/12th and allowing the exemption under section 54F. The plea for adopting the jantri value on the date of the agreement to sell was rejected.

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Issues Involved:
1. Legality of the addition of Rs. 65,39,434/- as long-term capital gains.
2. Determination of the assessee's share in the property sold.
3. Adoption of stamp duty value as per section 50C of the Income Tax Act.
4. Denial of exemption under section 54F of the Income Tax Act.

Issue-wise Detailed Analysis:

1. Legality of the Addition of Rs. 65,39,434/- as Long-term Capital Gains:
The assessee contested the addition of Rs. 65,39,434/- as long-term capital gains made by the Assessing Officer (AO) and upheld by the Commissioner of Income Tax (Appeals) [CIT(A)]. The assessee argued that the CIT(A) erred in confirming the addition without considering the submissions and evidence provided. The Tribunal found that the CIT(A) had not properly considered the assessee's contentions and evidence, leading to an unjustified addition.

2. Determination of the Assessee's Share in the Property Sold:
The assessee claimed his share in the property was 1/12th, not 1/9th as taken by the AO. The Tribunal noted that the AO presumed an equal share among the nine co-owners without considering the specific shares pointed out by the assessee, supported by a family tree and other evidence. The CIT(A) also dismissed this claim without proper consideration. The Tribunal found merit in the assessee's contention and directed the AO to re-compute the capital gains by taking the assessee's share as 1/12th.

3. Adoption of Stamp Duty Value as per Section 50C of the Income Tax Act:
The assessee argued that the stamp duty value/jantri value on the date of entering into the agreement to sell should be adopted instead of the value on the date of registration of the sale deed. The Tribunal found that the agreement to sell had several infirmities, such as being on a stamp paper dated earlier than the agreement date, overwriting on the date, lack of registration, and the fact that a partnership firm could not purchase agricultural land as per Gujarat law. The Tribunal agreed with the CIT(A) that the agreement to sell was an afterthought and denied the benefit of substituting the sale consideration with the jantri value on the date of the agreement to sell.

4. Denial of Exemption under Section 54F of the Income Tax Act:
The assessee claimed exemption under section 54F for investment in a new residential property. The CIT(A) denied the exemption, stating that the investment was not made within the stipulated period. The Tribunal noted that the assessee had made the complete investment within the stipulated time, and the delay in the execution of the sale deed was due to the builder's delay in completing the construction. Citing the Karnataka High Court's decision in CIT Vs. Smt. Shantha Kumari, the Tribunal held that the assessee had substantially complied with the provisions of section 54F and allowed the exemption.

Conclusion:
The Tribunal partly allowed the appeal, directing the AO to re-compute the capital gains by taking the assessee's share as 1/12th and allowing the exemption under section 54F. The plea for adopting the jantri value on the date of the agreement to sell was rejected. The order was pronounced on 24th February 2023 at Ahmedabad.

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