2024 (5) TMI 906 - AT - Income Tax

LTCG deduction u/s 54F remanded for fresh examination despite original return omission

Venkata Reddy Challa Versus The Income Tax Officer, Ward 4 (4), Hyderabad

ITAT Hyderabad ruled on LTCG deduction u/s 54F and capital gains computation. The assessee's appeal was partially allowed for statistical purposes. The ... LTCG - Deduction u/s 54F - Assessment of cost of construction for computing capital gain - valuation mentioned in the registered JDA adopted - AO had calculated the share of the assessee based on the receivable share of the assessee in the built-up area for an amount after reducing the prorate land value - HELD THAT:- AO was required to compute the capital gains on the date of transfer based on the registered JDA, which is in accordance with the decision in the case of Potla Nageswara Rao [2014 (8) TMI 636 - ANDHRA PRADESH HIGH COURT] - The Hon’ble Supreme Court in the case of CIT Vs. Balbir Singh Maini [2017 (10) TMI 323 - SUPREME COURT] had also mentioned that in case the JDA is registered, the date of transfer would be the date of registration of the JDA and the capital gain would arise on the said date of registration. In the present case, the registered JDA had not only provided the share of the assessee in the built-up area but also provided the estimate value of the property for Rs. 1,80,99,000/-. Therefore, the order passed by the Assessing Officer taking the value mentioned in the registered JDA is in accordance with law. The law is fairly settled that the contents of registered documents are required to be given precedence over the oral evidence unless the contents of the registered documents are rebutted by other contemporaneous evidence. In the present case, no evidence has been brought to my notice showing that the value mentioned in the registered JDA was incorrect. Decided against assessee. Power of the Tribunal u/s 254 to entertain for the first time a point of law - Assessee not claimed deduction u/s 54F at the time of filing return of income - assessee has raised the claim before the CIT(A) and mentioned that he was entitled to claim deduction u/s 54F - CIT(A) had rejected the claim of the assessee as relying on GOETZE (INDIA) LIMITED [2006 (3) TMI 75 - SUPREME COURT] - HELD THAT:- The impediment to entertain the claim of the assessee is on the power of the Assessing Officer and there is no such impediment on the power of the Tribunal u/s 254 - We deem it appropriate to remand back the issue of entitlement of the claim u/s 54F to the file of AO with a direction to examine the claim of the assessee within the four corners of section 54F and if the Assessing Officer found that the assessee has fulfilled all the conditions, then grant the claim of deduction u/s 54F of the Act to the assessee. Appeal of the assessee is allowed for statistical purposes. Issues Involved:1. Condonation of delay in filing the appeal.2. Erroneous order by the Commissioner of Income Tax (Appeals).3. Consideration of sale consideration for the property.4. Exclusion of land value in the sale consideration.5. Reduction in indexed cost of acquisition.6. Rejection of deduction claim under Section 54F of the Income Tax Act.Detailed Analysis:Issue 1: Condonation of Delay in Filing the AppealThe appeal filed by the assessee was barred by a limitation of 24 days. The assessee moved a condonation petition explaining the reasons for the delay. After hearing both parties, the Tribunal condoned the delay and admitted the appeal for hearing.Issue 2: Erroneous Order by the Commissioner of Income Tax (Appeals)The assessee contended that the order of the Commissioner of Income Tax (Appeals) was erroneous both on facts and in law. The Commissioner did not consider various submissions made by the appellant during the appellate proceedings. The Tribunal reviewed the submissions and the facts of the case.Issue 3: Consideration of Sale Consideration for the PropertyThe Commissioner of Income Tax (Appeals) confirmed the action of the Assessing Officer in adopting the sale consideration of the property at Rs. 1,53,00,000/- and the share of the appellant at Rs. 29,07,000/-. The Tribunal noted that the Assessing Officer computed the capital gains based on the registered Joint Development Agreement (JDA), which was in accordance with the decision of the jurisdictional High Court and the Supreme Court.Issue 4: Exclusion of Land Value in the Sale ConsiderationThe assessee argued that the value fixed by the Sub Registrar included the value of the land, which should be excluded, and only the cost of the constructed area should be considered. The Tribunal found that the Assessing Officer had already excluded the cost of land from the project value and had apportioned the value accruing to the assessee correctly. Therefore, the Tribunal dismissed this ground as incorrect and without factual basis.Issue 5: Reduction in Indexed Cost of AcquisitionThe Commissioner of Income Tax (Appeals) reduced the indexed cost of acquisition to Rs. 42,633/-. The Tribunal upheld the Assessing Officer's computation, which was based on the details of construction and its valuation mentioned in the registered JDA. The Tribunal found no merit in the grounds raised by the assessee and dismissed this ground.Issue 6: Rejection of Deduction Claim under Section 54FThe assessee claimed that he was entitled to a deduction under Section 54F of the Income Tax Act, as the transaction was an exchange of land for a residential house. The Tribunal noted that the assessee had not claimed this deduction at the time of filing the return of income or during the appellate proceedings. The Commissioner of Income Tax (Appeals) rejected the claim based on the decision in Goetze (India) Ltd. Vs CIT. However, the Tribunal held that while the Assessing Officer's power to entertain such a claim is limited, the Tribunal itself has the power under Section 254 of the Act to consider it. The Tribunal remanded the issue back to the Assessing Officer to examine the claim under Section 54F and decide accordingly, after giving the assessee an opportunity to present evidence.Conclusion:The Tribunal condoned the delay in filing the appeal and admitted it for hearing. It upheld the Assessing Officer's computation of capital gains and the exclusion of land value from the project value. The Tribunal dismissed the grounds related to the erroneous order, consideration of sale consideration, and reduction in indexed cost of acquisition. However, it remanded the issue of the deduction claim under Section 54F back to the Assessing Officer for fresh examination and decision. The appeal of the assessee was allowed for statistical purposes.