TaxTMI 
TaxTMI 
2016 (8) TMI 1039
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.... allow deduction on account of indexed value of buildings at _65,02,943/- when no building existed at the time of sale of property. 2.2 The Id. CIT(A) ought to have noted that the sale deed clearly mentioned that the property sold as 'land' and no buildings are mentioned in the sale deed to give effect for indexation. 2.3 The Id.CIT(A) erred in adoption of P W D rates for extension of building during the F.Y. 1995-96 and F.Y. 1996-97 when there was no evidence available for extension of building during the financial years 1995-96 & 1996-97 to prove that improvement was actually carried out on the existing property''. 3. The Brief facts of the case are that the assessee is an individual having income from Capital Gains and Interest income and filed Return of income on 31.07.2005 admitting total income of Rs. 1,11,107/- and Return of income was processed u/s.143(1) of the Act. Subsequently, the ld. Assessing Officer having reasons to believe that the income has escapement assessment issued notice u/s.148 of the Act. In compliance to notice, the assessee filed a letter to consider the return filed earlier for the purpose of re-assessment. The ld. Assessing Officer iss....
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....s denied the index cost of construction but allowed the value of Rs. 2,00,000/- for 4 grounds and 64 sq.ft as on 01.04.1981 and with cost indexation has worked out Rs. 5,60,000/- and calculated Long Term Capital Gains at Rs. 1,76,27,296/- and allowed exemption u/s.54F of the Act on investment in residential flat at Bangalore Rs. 1,15,67,790/- and worked out adjusted Long term capital gain at Rs. 60,59,506/- and assessed total income and passed order u/s.143 r.w.s. 147 of the Act dated 31.12.2009. Aggrieved by the order, the assessee filed an appeal before Commissioner of Income Tax (Appeals). Subsequently, under provisions of Sec. 263 of the Act, the Commissioner of Income Tax- 10, Chennai has set aside the order passed u/s.143 of the Act r.w.s. 147 dated 31.12.2009 and Revision order dated 31.03.2013 giving effect to Sec. 263 directions was passed by declining exemption u/s.54F as the assessee has purchased commercial property and converted into residential and assessee has not discharged his burden cast to prove that reinvestment qualify for deduction u/s.54F of the Act and the assessee claim u/s.54F of the Act of Rs. 1,15,67,790/- was rejected and assessee filed an appeal before....
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....t adjustment for deficiencies attached to the property @5% as against @ 25% and same was rejected. The ld. Commissioner of Income Tax (Appeals) on the ground of applicability of Sec.50C of the Act. directed the ld. Assessing Officer to adopt the value declared by the District Valuation Officer (DVO) Rs. 1,63,69,000/- as sale consideration for calculation of capital gains. 4.1 On the next ground of claim of cost acquisition of land and building the assessee in the Income Tax return claimed fair market value of cost of land, as on 01.04.1981 at Rs. 14,00,000/- and addition/cost of construction/ improvements to building in financial years 1995-96 Rs. 20,00,000/- and in 1996-1997 Rs. 10,00,000/-. The ld. Assessing Officer rejected the claim of the assessee of cost of building as the property sold was vacant land as described in the Registered sale deed and considered only fair market value of land as on 01.04.1981 at Rs. 2,00,000/-. The ld. Authorised Representative explained that the property alongwith residential Building was owned by the assessee prior to 01.04.1981 and subsequently, assessee made extension of the building and the value of the building as on 01.04.1981 including ....
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....ed deduction in return of income investment in residential house u/s.54 of the Act Rs. 1,15,67,970/- and the same was rejected by the ld. Assessing Officer but alternatively allowed investment in new Residential property u/s.54F of the Act. The ld. Commissioner of Income Tax (Appeals) considered the facts of vacant land and judicial decisions and highlighted the claim of deduction u/s.54F of the Act that the (ld. CITX, Chennai vide his revision order u/s.263 of the Act dated 14.03.2012, set aside the assessment to the extent to allowing deduction u/s.54 of the Act and directed the ld. Assessing Officer to examine the assessee's claim of deduction u/s. 54F of the Act whether new property purchased is a residential property or not, and the assessment was set aside and is pending before ld. Assessing Officer. Since the subject matter of deduction of u/sec. 54F of the Act is pending before ld. Assessing Officer as per order of the ld.CIT-X, u/s.263, the ld. Commissioner of Income Tax (Appeals) has concluded that the ld. Assessing Officer shall calculate exemption u/s.54F of the Act on proportionate basis and allow Long Term Capital Gains as referred in his order at page 9 as under:- ....
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....981 both land and building and also Building extensions in the financial year 1995-96 and 1996-1997. The ld. Commissioner of Income Tax (Appeals) has adopted PWD rates as the standard rates available in the state of Tamil Nadu and also the genuine facts being that the assessee is a owner of the building prior to 01.04.1981 and was in possession. The assessee on the request of the builder demolished building including improvements and in support of existence of building, the ld. Commissioner of Income Tax (Appeals) has perused the Income Tax returns of the assessee for the assessment year 2003-04 and 2004-05 in respect of rental income from the building and produced copies of Income Tax return to substantiate the claim and prayed for dismissing the appeal. 4.6 We heard the rival submissions, perused the material on record and material evidence filed. The crux of the disputed issue argued by the ld. Departmental Representative that the Commissioner of Income Tax (Appeals) erred in directing the ld. Assessing Officer for allowing deduction of cost indexation value of building Rs. 65,02,943/-. The ld. Authorised Representative argued that the assessee is in possession of the buildin....
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....013 in respect of cost adjustment for the deficiencies attached to the property allowed at 5% and the ld. Commissioner of Income Tax (Appeals) has calculated capital gains which is not disputed, so considering the apparent facts, we confirm the order of Commissioner of Income Tax (Appeals) on this issue. The ground of the assessee in Cross Objection is dismissed. 5.2. The next ground raised by the assessee with respect to cost adjustment made by the DVO at 5% and the claim of the assessee being 25%. 5.3 The ld. Authorised Representative submitted copy of the valuation report issued to the assessee. We found that the DVO has calculated the value of property based on the information and details submitted. The contention of the assessee for claim of 25% adopted was argued. The ld. Commissioner of Income Tax (Appeals) could not understand the reasons envisaged by the assessee how such deficiencies attached to the property will adversely affect the value of the property. The ld. Commissioner of Income Tax (Appeals) has rejected the cost adjustment of 25% and we found the ld. Commissioner of Income Tax (Appeals) considered these fact and DVO report and directed the ld. Assessing Of....
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....visionary proceedings are pending before High Court. Therefore, we are of the opinion that the ld. Commissioner of Income Tax (Appeals) was correct in his order to make observations and we dismiss the ground of the assessee. 5.6 In the result, the Cross-Objection filed by the assessee is dismissed. 6. Now, we take up ITA No.1419/Mds/2013 for adjudication. The ld. Assessing Officer has initiated penalty proceedings on the basis of assessment order passed u/s.147 r.w.s. 143(3) of the Act dated 31.12.2009. In the penalty proceedings, the ld. Authorised Representative of the assessee appeared and filed details and explained the fact of computation of capital gains and exemption claimed by the assessee and the disputed issue being the assessee before the sale of property as per terms with Builder, the assessee has demolished the building existing prior to 01.04.1981 and subsequent construction works. The ld. Assessing Officer relied on the sale deed and found mentioned as vacant land and the assessee has sold vacant land and therefore declined the claim of Sec. 54F of the Act. Further, the assessee has purchased property as disclosed in the return of income on 25.10.2004 and the s....
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.... fact that the assessee demolished building before registration shall not be a reason that vacant land was sold for levy of penalty though ld. Assessing Officer allowed exemption u/s.54F of the Act. The ld. Assessing Officer was under bonafide belief and not considered the factual aspects that the Building was existed before to date of sale. With this findings, ld. Commissioner of Income Tax (Appeals) has deleted the penalty. Against the order of Commissioner of Income Tax (Appeals), the Revenue has assailed an appeal before us. 6.2 Before us, the ld. Departmental Representative argued that the ld. Commissioner of Income Tax (Appeals) has erred in deleting the penalty and the ld. Assessing Officer had disallowed claim u/s.54 and 54F of the Act in the revision proceedings and assessee is not eligible for exemption as the property purchased is in the nature of commercial property and prayed for allowing the appeal. 6.3 Contra, the ld. Authorised Representative relied on the orders of the ld. Commissioner of Income Tax (Appeals) and vehemently opposed the grounds. 6.4 We heard the rival submissions, perused the material on record and judicial decisions. The crux of the issue ....