TaxTMI 
TaxTMI 
2026 (7) TMI 1795
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....e said property, and his share of consideration received by the assessee is Rs. 2,20,97,250/-. The assessee filed his Return of Income for the assessment year 2016-17 on 02.01.2017 returning an income of Rs. 13,32,490/-. 3. As per the computation of capital gains adopted by the assessee against the full value of consideration, indexed cost of acquisition of Rs. 36,03,489/-, deduction u/s. 54 of Rs. 1,62,86,270/- and deduction u/s. 54EC of Rs. 10,00,000/- were claimed, resulting in a taxable Long-term Capital Gains (LTCG) of Rs. 12,07,491/-. After adding income from other sources of Rs. 1,25,000/- the taxable income disclosed in the Return of Income filed before the time limit u/s. 139(4) was Rs. 13,32,490/-. 4. To examine the correctness of deduction u/s. 54, the Return of Income was selected for limited scrutiny under CASS and subsequently the order u/s. 143(3) was passed by the AO on 10.12.2018, arriving at a taxable income of Rs. 1,08,39,936/- in which the taxable LTCG recomputed as Rs. 1,07,14,936/-. Except for the claim of deduction u/s. 54EC of the Act, all other values involving Indexed Cost of Acquisition and quantum of eligible deduction u/s. 54 of the Act were modif....
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..... 54 of the Act to the extent of Rs. 55,66,270/- was denied while restricting the eligible quantum to Rs. 97,20,000/-. 9. The computation of income as adopted by the assessee and that of the assessing officer is provided in a comparable chart below: Particulars As per assessee As per AO Amt. in Rs. Amt. in Rs. Amt. in Rs. Amt. in Rs. Full value of Consideration 2,20,97,250 2,20,97,250 Less: Cost of Acquisition (land) 1,80,000 41,000 Indexed Cost of Acquisition (land) Cost x 1081 / 100 19,45,800 4,43,210 Cost of Improvement (Building) 7,10,000 93,834 Indexed Cost of Improvement Cost x 1081 / 463 16,57,689 2,19,104 Less: Indexed Cost of Acquistion & Improvement 36,03,489 6,62,314 Long-term Capital Gain 1,84,93,761 2,14,34,936 Less: Deduction u/s. 54 (direct investment) 1,52,86,270 97,20,000 Less: Deduction u/s. 54 (through CGAS-88) 10,00,000 Nil Les....
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....s on 01.04.1981 should alone be adopted, the ld.AR prayed for giving direction to AO to adopt the cost of acquisition of the assessee's share of property to be Rs. 1,80,000/- which is found to be reasonable and modify the computation accordingly. 15. On the second issue of indexed cost of improvement, the contention of the ld.AR that the value adopted by the AO is highly unreasonable is accepted. The value of the building as per the deed of settlement is in the order of Rs. 2.50 crores and obviously the expenditure incurred during the year 2003-04 should be substantial and cannot be a paltry sum of Rs. 1,87,688/-. Moreover, the AO had failed to refer the case for evaluation in terms of Section 55A and therefore the estimated value adopted by the AO is based on mere surmise and thus not favoured by law. Therefore, the ld.AR prayed for accepting the value of cost of improvement of the assessee's share as Rs. 7,10,000/- for the year 2003-04 and direct the Assessing Officer to modify the computation accordingly. 16. The ld.AR contended that in respect of the cost of acquisition of the new residential property, it could be deciphered from the contents of the orders passed by the l....
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....reported as 339 ITR 610 (P&H). (ii) Fathima Bai Vs. ITO, reported as 32 DTR (Kar) 243 (iii) CIT vs. Rajesh Kumar Jalan, reported as 286 ITR 274 (Gauhati) The decisions relied upon squarely applies to the fact of the present case and consequently, the question of law is answered in favour of the assessee. 20. In light of the above arguments the ld.AR prayed for allowing the appeal of the assessee. 21. Per contra, the ld.DR for the revenue supported the orders of the AO as well as the ld.CIT(A) and submitted that the ld.CIT(A) has already given the relief of deduction claimed u/s. 54EC and hence prayed for confirming the order of the ld.CIT(A) by dismissing the appeal of the assessee. 22. We have carefully considered the rival submissions, perused the material available on record and gone through the orders of the authorities along with the case laws relied upon. The issues arising for adjudication in the present appeal relate to (i) determination of indexed cost of acquisition, (ii) determination of indexed cost of improvement, and (iii) eligibility of deduction u/s. 54 of the Act, in respect of investment made beyond the due date prescribed u/s. 139(1)....