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2020 (5) TMI 19 - AT - Income TaxLong Term Capital Gain - sale of property - diversion of income due to overriding title - whether the sale of the property has been made directly by the SBI and the sale consideration was appropriated to the loan amount? - whether the assessee has got the property sold and the buyer has deposited it directly to the SBI and thereafter the SBI appropriated it to the loan amount? - HELD THAT:- It is observed that a vide letter dated 26.05.2007, SBI has written to the buyer of the property M/s. Svarna Infrastructure & Builders Pvt. Ltd (supra) to deposit the full value of the consideration with SBI, SSI Branch, Bhowanipore before signing the conveyance deed. However, the Facts are not clear. It is not clear from the document as to whether the SBI conducted the sale by Public Auction and then consideration money was deposited by the buyer directly with the bank; or the sale of property was carried out by the assessee and the sale consideration was deposited by the buyer in assessee's account as per the SBI’s instruction or in the account of M/s. PPPL. From the discussion supra, it is needless to say that if the assessee has got the sale of property and consequently, if the money was routed through the bank account of the assessee before being finally appropriated towards the dues of M/s. PPPL, there cannot be diversion of income by overriding title and in that fact situation, capital gains tax liability would arise in assessee's hands. In the interest of justice, we, therefore, remand this issue back to the file of the A.O. for the limited purpose to verify the correct facts on the lines stated by us in the preceding para. In case after due enquiry, he finds that the assessee’s case falls in the first category as discussed in para 22 supra, he shall delete the addition. The A.O. shall also afford reasonable opportunity of hearing to the assessee to explain/ substantiate the correct facts and pass a speaking order. Computation of capital gain - computation of indexed cost of acquisition - cost of acquisition of the land to the assessee or the fair market value of the land as on 01.04.1981 - HELD THAT:- Since the land was acquired before 01.04.1981, as per the provisions of the section 55(2) clause (b), the cost of acquisition of the land to the assessee or the fair market value of the land as on 01.04.1981, at the option of the assessee, could be taken to be the cost of acquisition of the land. We note that the Fair market value of the land was determined by the Certified Valuer ₹ 8,30,000/- , which was taken to be the cost of acquisition by the assessee in his revised computation of income. It is noted that the valuation report received from such Valuer was furnished before the AO and is attached herewith in pg. nos. 136-144 of paper book. Thus, we are of the opinion that the computation of indexed cost of acquisition by the AO, taking the cost of acquisition at the cost price of 15.04.1976 without considering the provisions of section 55(2) clause (b) and taking the base cost inflation index at 406 is bad in law and we direct that ₹ 8,30,000/- must be taken as the cost of acquisition instead of ₹ 1,122/-.. So we order accordingly.
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