Actual purchase consideration governs capital gains, and a second-round remand cannot narrow unremanded improvement claims.
Documentary evidence showing the actual purchase consideration, including society records and receipts, governed computation of long-term capital gains, so the lower amount stated in the sale deed could not be used to reduce the cost of acquisition. The assessee's proved payment was accepted as the real acquisition cost. The cost of improvement also could not be restricted to 30% in the second round because that issue was outside the scope of the earlier remand. The restriction was set aside and full allowance directed, with the recomputation by the lower authorities not sustained.
Issues: (i) whether the cost of acquisition for computing long-term capital gains had to be taken at the amount actually paid and proved by the assessee, instead of the lesser amount mentioned in the sale deed; and (ii) whether the cost of improvement could be restricted to 30% in the second round when that issue was not part of the earlier remand.
Issue (i): whether the cost of acquisition for computing long-term capital gains had to be taken at the amount actually paid and proved by the assessee, instead of the lesser amount mentioned in the sale deed.
Analysis: The assessee produced the housing society certificate and receipts showing payment of the higher consideration, along with registration and stamp duty charges. The lesser value shown in the sale deed was explained as having been adopted to avoid higher stamp duty. The materials on record demonstrated that the amount actually paid was the real cost of acquisition, and the authorities below had not properly appreciated the documentary evidence.
Conclusion: The actual cost of acquisition was accepted as claimed by the assessee and not the lower amount mentioned in the sale deed.
Issue (ii): whether the cost of improvement could be restricted to 30% in the second round when that issue was not part of the earlier remand.
Analysis: The earlier remand was confined to verification of the difference between the sale deed value and the actual cost of acquisition shown by the society certificate. The estimation of cost of improvement had not been the subject of dispute in the earlier round, and no finding on that issue had been returned then. In the second round, the restriction of improvement expenses to 30% was therefore unwarranted.
Conclusion: The restriction of cost of improvement to 30% was set aside and full allowance was directed.
Final Conclusion: The assessee succeeded on both contested issues, and the recomputation made by the lower authorities could not be sustained.
Ratio Decidendi: Where documentary evidence establishes the actual purchase consideration, that amount governs computation of capital gains despite a lower value shown in the sale deed, and issues outside the scope of an earlier remand cannot be newly curtailed in the second round.
TaxTMI 
AI Drafter ✕
TaxTMI 
