TMI Blog2016 (8) TMI 1039X X X X Extracts X X X X X X X X Extracts X X X X ..... rent facts and material on record and evidence, we found the Commissioner of Income Tax (Appeals) based on examination of the facts of existence of building and Income Tax Returns was of the opinion that the building was in existence and the assessee was offering income from house property in the income tax return. Hence, we are not inclined to interfere with the order of Commissioner of Income Tax (Appeals) and dismiss the Revenue appeal. Determination of sale consideration - Commissioner of Income Tax (Appeals) has adopted the value determined by the DVO - Held that:- We found that the ld. Assessing Officer has adopted the Sub-Registrar value as per provisions of Sec. 50C of the Act.Rs. 1,81,87,296/-. The ld. Commissioner of Income Tax (Appeals) on the basis of the submissions of the assessee referred to the valuation cell and District Valuation Officer has estimated the value of the property of ₹ 1,63,69,000/-. This valuation report was communicated to the assessee and the assessee filed submissions on 04.03.2013 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 capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ained that the order of Sec. 263 on appeal was dismissed and the appeal has been admitted in the High Court and the ld. Assessing Officer has passed the consequential revisionary order on 31.03.2013 giving effect to the direction excluding deduction u/s.54F of the Act and the disputed Revisionary 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. Penalty 271(1)(c) - whether the assessee is guilty or submitted inaccurate particulars in the assessment proceedings - Held that:- It was explained that the assessee is the owner of the land and building before 01.04.1981 and subsequently undertook construction works as extension of Building and as per terms of sale with purchaser, the building was demolished and sale deed was executed by the assessee. The fact that the penalty order arised out of the assessment order passed u/s.143(3) r.w.s. 147 of the Act dated 31.12.2009 and the ld. Commissioner of Income Tax (Appeals) in the quantum proceedings having satisfied that there is existence of Building and allowed index cost a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income and filed Return of income on 31.07.2005 admitting total income of ₹ 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 issued notice u/s.142(1) of the Act and the ld. Authorised Representative of assessee appeared from time to time and filed information. The assessee sold house property by executing eight separate sale deed on 26.04.2004, each sale deed value being ₹ 18,00,000/-. The ld. Assessing Officer found the market value of the property as per Sub Registrar Office, record ₹ 22,73,412/- which is higher than sale consideration and applied the deeming provisions u/s.50C of the Act and worked out deemed sale consideration of eight sale deeds at ₹ 1,81,87,296/-, whereas assessee has admitted actual sale consideration of ₹ 1,44,00,000/- (being ₹ 18,00,000/- X 8 sale deeds) and the ld. Assessing Officer has made an addition u/sec. 50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 ₹ 1,15,67,790/- was rejected and assessee filed an appeal before Commissioner of Income Tax (Appeals). 4. As against the order u/se. 143(3) r.w.s147 of the act, in the appellate proceedings, the ld. Authorised Representative of the assessee argued the grounds and reiterated the submissions of the assessment proceedings and alleged that the assessee was deprived for claim of cost of construction on property and challenged the applicability of provisions of Sec. 50C of the Act. The ld. Commissioner of Income Tax (Appeals) considered the grounds of appeal and found that the ld. Assessing Officer has adopted guideline value as per Sec. 50C of the Act for property at ₹ 1,81,87,296/- against sale consideration of ₹ 1,44,00,000/-. Further, the ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 000/- and in 1996-1997 ₹ 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 ₹ 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 four grounds and 28 sq.ft with building 8000 sq.ft being ₹ 14,00,000/- and the addition of new building area of 4000 sq.ft in financial year 1995-96 being ₹ 20,00,000/- and in the financial year 1996-1997 2000sq.ft with cost of ₹ 10,00,000/-. The residential building was sold in the financial year 2004-05 and prior to sale the building was let out continuously by the assessee and was receiving Rental income and offered to tax under income from House property and filed return of income. The ld. Authorised Representative further submitted that the building is located in the prime area and the buyer wanted to put structure as per thei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim 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:- Full value of consideration as per DVO s report r.w.s. 50C : 1,63,69,000/- Less: indexed cost of land + buildings as discussed above : 65,023,943/- Long term capital gains : 98,66,057/- Less: Deduction u/s.54F of the Act. Actual investment in new property : ₹ 1,15,67,970/-* Deduction available u/s.54F on Proportionate basis 1,15,67,970 X 98,66,057/- 1,63,69,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee 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 ₹ 65,02,943/-. The ld. Authorised Representative argued that the assessee is in possession of the building prior to 01.04.1981 and extension of the building are made in the financial year 1995-96 and 1996-97 and were let out. The rental income from Building was offered for income tax and produced copy of income tax return for assessment year 2004-05 and copy of Residential Electricity bill and Drew our attention to the copy of Income Tax Return of asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss 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 Officer to adopt value as per DVO for calculation. Therefore, we do not find any infirmity and dismiss the ground in Cross Objection filed by the assessee. 5.4 The third and fourth ground raised by the assessee is that the Commissioner of Income Tax (Appeals) erred in not accepting the plea of the cost of building and estimated cost of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9/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 same was disallowed in the assessment proceedings. The ld. Assessing Officer has allowed deduction u/s.54F instead of Sec. 54 of the Act. Further, the assessee was claiming property alongwith existence of building from 01.04.1981 and also incurred additional construction cost in the financial years 1995-96 and 1996-97. The ld. Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate 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 being whether the assessee is guilty or submitted inaccurate particulars in the assessment proceedings. It was explained that the assessee is the owner of the land and building before 01.04.1981 and subsequently undertook construction works as extension of Building and as per terms of sale with purchaser, the building was demolis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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