TaxTMI 
TaxTMI 
2026 (6) TMI 359
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....4,878/-. The case of the assessee was selected for scrutiny wherein both; (i) cost/indexed cost of acquisition and (ii) consideration for sale/transfer adopted by the assessee for computing long term capital gain on sale/transfer of two immovable properties were rejected by the Ld. AO. Adopting the valuations ascertained/determined by District Valuation Officer ['DVO'] when referred to it, the Ld. AO recomputed the LTCG at Rs.14,60,27,824/- and restricting the exemption u/s 54 of the Act towards purchase of flat to Rs.60,78,000/-, the balance LTCG of Rs.13,99,49,824/- was added to the total income & was brought to tax accordingly vide an assessment order dt. 02/08/2018 framed u/s 143(3) of the Act 2.2 Aggrieved by the addition and assessment as such the assessee filed first appeal before the Ld. CIT(A) u/s 246A r.w.s. 249 of the Act. The said first appeal was partly allowed by the Ld. CIT(A) wherein; (i) the cost/indexed cost of acquisition of properties were averaged out [X/2] taking into consideration the cost/indexed cost of acquisition of twin properties adopted by the assessee as well as the Ld. AO in terms of DVO's valuation report and (ii) insofar as the amount of sale co....
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....ed agreement itself took place during the period relevant for A. Yr. 2011-12. 2. The Ld. CIT(A)-1, Jabalpur erred on facts and in law in preferring the agreement over the registered sale deed and directing for adoption of the fair market value at Rs. 16,00,00,000 for A.Yr. 2011-12 as against the FMV adopted by the Assessing Officer for AYr. 2015-16 at Rs. 19,83,02,000/- without considering the fact that the proviso below sec. 50C(1) of the Act inserted under section 50C by the finance Act, 2016 w.e.f. 01.04.2017, i.e. for and from A. Yr. 2017-18 only. 3. The Ld. CIT(A)-1, Jabalpur erred on facts in law in rejecting cost of acquisition of the plot of land as on 01.04.1981 as per the DVO's report without examining its merit and without giving any opportunity to the Assessing Officer/DVO. 4. That, in any case, the Ld. CIT(A)-1, erred in adopting the cost of acquisition as on 01.04.1981 at Rs. 1,90,46,912/- by taking average of the value adopted by the DVO/AO at Rs. 51,04,900/- and the assessee at Rs. 3,29,88,925/-. 5. That the order of the Ld. CIT(A) is contrary to the facts and law. 4. During physical hearing, after taking us through the imp....
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....of cost of acquisition/indexed cost/indexed of acquisition adopted by the Ld. CIT(A) over the cost/indexed cost of acquisition adopted by the Ld. AO, and validity of cost of value of sale consideration adopted by the Ld. CIT(A) over sales consideration noted in the registered agreement, (C) exemption entitlement u/s 54 of the Act for investment made by way of incurring construction of into 2nd house property. 7. We note that, 7.1 the assessee vide registered Gift Deed dt. 24/10/1962 was in receipt of gift of certain piece/parcel of land/immovable properties from his father. During the year under consideration, the assessee sold two immovable properties for sum of Rs.1600 Lakhs viz; (1) House No 2682 to 2685 at Napier Town admeasuring an area of 52747sq.ft. with 4270.50sq.ft built-up ['P1'] was vide registered agreement dt. 31/03/2015 sold for a consideration of Rs.1,000Lakhs. The stamp duty value ['SDV'] of the property P1 as adopted for such register transfer by the Sub-registrar and for computing capital gain by the assessee was Rs.2,260.81Lakhs (2) House No 2682 to 2685 at Napier Town admeasuring area of 28428sq.ft. with 1765sq.ft built-up ['P2'] was vide registered agreem....
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....luer of the assessee and the valuation informed by the Ld. SRJ, on the concern of the assessee, the Ld. AO referred the matter u/s 142A of the Act to District Valuation Officer ['DVO'] to ascertain fair market value ['FMV'] of twin properties as on 01/04/1981. The valuation estimated by the DVO vide letter dt. 20/02/2018 was forwarded to the assessee and objections were called thereagainst. In the event of no objection forthcoming from the assessee, the Ld. DVO finalised the valuation and forwarded his report dt 12/03/2018 whereby FMV of the twin properties as on 01/04/1981 was ascertained & determined as; P1 at Rs.33,81,850/- & P2 at Rs.17,23,050/-. The Ld. AO forwarded the copies of said valuation report to the assessee through speed post vide letter dt. 19/03/2018 and by email as well by making available a copy thereof to the authorised counsel. The assessee objected the DVO's FMV valuation as the cost/indexed cost of acquisition. The Ld. AO commented but gave no credit or consideration to the assessee's belated objection so raised on 02/07/2018, and proceeded to compute indexed cost of acquisition of twin properties out on the basis of Ld. DVO's FMV to Rs.5,22,74,176/- (Rs.51,0....
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....t purchased and (ii) construction of house on an open plot. Both the Ld. tax authorities allowed the exemption in relation to re-investment into flat as being invested within a period of one year before or two years of sale date. Insofar as the investment into 2nd house property claimed to have been re-invested by the assessee by construction is concerned, it is observed that the both the Ld. Tax authorities denied the exemption holding that, re-investment was beyond the time limit as the construction of said house was completed beyond the period of three years after the plot was purchased. 9. Now coming to the adjudication as to year of chargeability; we note that, vide agreement to sell executed on 29/03/2011 non-judicial stamp paper of Rs.100/- the assessee claimed to have accepted a part consideration and transferred the possession [Pg 15 to 19 of PB]. A bare reading of clause 3 thereof, clearly reveals that, the assessee agreed to part with vacant possession of contracted property at the time of execution & registration of final sale deed. We also note that the clause 4 prematurely confirms the execution of sale deed on or before 48 months from such agreement. The assessee ....
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....ships upheld the decision of Tribunal by holding that; 'the date when the consideration for transfer was received or accrued is not relevant for the purpose of determining the year of chargeability on account of the fiction introduced by section 45 of the Act. Whatever may be the date of receipt or accrual of consideration as a result of the transfer of a capital asset, the accrual or receipt of consideration would have to be attributed, by statutory mandate, to the year of transfer. Hence, an enquiry into the question as to when the right to receive the compensation amount accrues to a person, in the case of compulsory acquisition of his property under the provisions of the M.P. Town Improvement Trust Act, 1961, though interesting, would not be relevant for the purpose of determining the year of chargeability of the capital gains because the relevant year is, by virtue of the deeming provisions of section 45 of the (Income-tax) Act, 1961, the year when the transfer took place.' (Emphasis supplied) 13. The assessee in the present case however pressed into service the provision of clause (v) to section 2(24) of the Act and claimed that the agreement to sell entered, p....
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....Agreement should be considered as date of transfer, the date of receipt of entire consideration for passing over physical possession was considered was date of transfer. It was held therein by the Hon'ble Lordships that, since the physical possession of the property was passed on to the Developer only upon receipt of entire consideration, hence, the date of transfer was taken as handing over of possession. 17. The assessee could hardly bring to our notice any decision warranting deviation from aforestated judicial precedents. Faced with the situation, in view of the aforestated discussion and judicial precedents(supra), we find no merits in the contention of the assessee and any merit in ground number 3 raised in his appeal, as the assessee parted possession through registered sale-deed. In consequence, the Revenue's contentions stands accepted and the ground number 3 of assessee's appeal stands dismissed. 18. Next comes to cost of acquisition and sale consideration for the purpose of computing capital gains u/s 45 of the Act; 18.1 First this first, the cost of acquisition of transfer a. The cost of acquisition for inherited property is generally deemed to be the ....
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....irect evidence from both the Sub-Registrar's Office regarding actual sale instances of similar properties and valuation from the Ld. DVO. e. Having noted forestated fact, the Ld. CIT(A) ceased the dispute or the assailed issue simply by adopting average valuation wherein both the valuations were aggregated and dividing by two. This adjudication in our considered view lacked the rationale and thus merits. Therefore, such determination & adjudication is hereby set-aside. f. Insofar as Ld. the DVO's valuation is concerned, we note that, endorsing the copy of NS-6 to the assessee the Ld. DVO vide letter dt. 20/02/2018 called for objection by 27/02/2018. The period provided for raising objection suggests to have to ensure paper compliance and not in true sense, as it allowed less than a reasonable period of fifteen days. The assessee however raised the objection on 02/07/2018 for the reasons that, effective communication of such letter was received from his authorised representative to him a copy thereof was physically handed over on 13/06/2018 by the Ld. AO. Thus, the objection raised against DVO's FMV valuation not been dealt with. g. We are mindful to a fac....
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....d by the assessee on 29/03/2011 was for the purpose of section 53A of TPA, was treated as invalid. In view of thereof, FMV determined by the Ld. DVO was adopted as 'sale consideration' in computing the LTCG and the assessment in terms of direction as per the provisions of section 50C(3) r.w.s. 142A(7) was completed u/s 143(3) of the Act. c. In first appeal, the assessee challenged the of FMV as the full value of sale-consideration in computing the LTCG, which was allowed in tandem. The Ld. CIT(A) in view of the unregistered agreement to sell entered by the assessee held that the property/capital asset by virtue of section 2(47) r.w.s. 53A of TRA stands transferred in the AY 1996-97, hence the provisions of section 50C which came into statute in AY 2003-04 are inapplicable. d. At the outset, we note that, agreement to sell was entered on 29/03/2011 whereas the registered sale-deed executed in the year under consideration. Thus, both these agreements came into existence after the provisions of section 50C came into statute. Therefore, the basis founded in adjudicating the first ground raised in Form 35 in first appellate proceedings was devoid of factual position, s....
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....provision. The Revenue on the other hand hardly agitate the respective applicability of amended proviso to section 50C(1) of the Act. h. In the present case, although the genuineness of the agreement to sell entered was doubted by the Ld. AO for various defects and for registered sale-deed making no mentioning prior existence of such agreement to sell, it however remained undisputed that, the part consideration as documented in said agreement was received through account payee cheques. The fact was reverified from SBI, Bargi Branch SB a/c 31124676761 statement (Pg 365 to 368 of PB) wherefrom it is clearly evident that, the part consideration paid through a/c payee cheques/draft amounting to Rs.25Lakhs on 07/08/2010, Rs.50Lakhs on 14/01/2011 and Rs.50Lakhs on 23/04/2011 were encashed by the assessee. These details of payment has been travelled to the registered sale-deed executed in relation to transfer of property/capital asset. In view thereof, the said agreement to sell transaction entered to transfer both the properties P1 & P2 is to be considered to have complied fully with the first & second proviso to section 50C(1) of the Act, therefore their applicability. In view ....