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2021 (2) TMI 29 - AT - Income TaxRevision u/s 263 - revisionary jurisdiction u/s 263 against reassessment order passed by AO u/s 147 read with Section 143(3) - Computation of LTCG - assessee has claimed cost of conversion of land from leasehold to freehold and indexation by applying cost inflation index towards such freehold charges was also claimed which is not correct - HELD THAT:- AO has made proper enquiries in the instant case. There was assessment proceedings going on for ay: 2013-14 and during the assessment proceedings for ay: 2013-14, two references were made by ITO Allahabad to ACIT both u/s 144A in connection with sale/transfer of this property , which references were disposed of by Addl. CIT which ultimately led to reopening of the assessment u/s 147/148 for the impugned ay: 2012-13. As gone through the reassessment order passed by AO we are of the considered view that the AO has applied his mind before passing reassessment order. Also we are in agreement with ld. CIT-DR that mistake has crept in reassessment order as cost of improvement is indexed by taking cost inflation index base of financial year 2012- 13, while the entire payments were made for freehold charges / stamp duty etc in fy:2011-12. Thus, the cost inflation index base for fy: 2012-13 to be 852 was adopted while computing income from long term capital gains, while the cost inflation index for fy: 2011-12(ay:2012-13) was 785 which ought to have been applied to cost of improvement being freehold conversion charges, stamp duty etc. Since the payment for freehold conversion charges, stamp duty etc. is made in the previous year relevant to impugned AY , there is no necessity of applying cost inflation index and actual payment made towards freehold conversion charges, stamp duty etc. ought to had been claimed/deducted while computing income chargeable to tax under the head income from long term capital gains. Similar , error crept in while indexing the cost of acquisition of the property by applying cost inflation index of 852 instead of 785 . Thus, to this extent the reassessment passed by AO was erroneous so far as prejudicial to the interest of Revenue which requires to be revised by AO and proceedings u/s 263 - Decided partly in favour of assessee.
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