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2016 (8) TMI 1039 - ITAT CHENNAI

2016 (8) TMI 1039 - ITAT CHENNAI - TMI - Deduction of cost indexation value of building allowability - CIT(Appeals) directing AO for allowing deduction - Held that:- 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 assessment year 2004-05 were the assessee has offered rental income under the house property and disclosed p .....

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ty bill of residential to support that the building was in Habitation and rental income was derived. So, considering the apparent 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 .....

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as 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 capital gains which is not disputed, so considering the apparent facts, we confirm the order of Commissioner of Income Tax (Appeals) on this issue. - Cost adjustment made b .....

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ed 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. - Non accepting the plea of the cost of building and estimated cost of allowance at 5% towards cost adjustment by CIT(A) - Held that:- We on perusal of the Commissioner of Income Tax ( .....

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curred for the financial year 1995-96 and 1996-1997 nor assessee was able to file any details of method on methodology in arriving at fair market value of land and building ₹ 14,00,000/-. We are of the opinion that the ld. Commissioner of Income Tax (Appeals) has rightly considered the facts with basic reasons in respect of cost of construction of old building and we dismiss the ground of the assessee. - Proceedings of u/s.263 - Held that:- We on perusal of the calculation of Long Term .....

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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 undert .....

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gs under Sec. 263 of the Act are being contested at higher forums and has not attained finality. The Revenue before us argued on the basis of Revision order passed u/s.263 of the Act which is not appropriate. The facts of the assessment proceedings have been considered by the ld. Commissioner of Income Tax (Appeals) and satisfied with evidence and also there is no concealment or furnishing of inaccurate particulars as the assessee has claimed exemption u/s.54Fof the Act and also disclosed Rental .....

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I, Chennai dated 14.03.2013 for the assessment year 2005-206 passed u/s.143(3) and 271(1) (c) and 250 of the Income Tax Act, 1961 (herein after referred to as the Act ). Since the issue in these appeals are common in nature, these appeals are clubbed, heard together, and disposed of by this common order for the sake of convenience. First, we take up ITA No.1418/Mds/2013, assessment year 2005-2006 for adjudication. 2. The Revenue has raised the following grounds:- 2.1 The Id. CIT(A) erred in dire .....

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ce available for extension of building during the financial years 1995-96 & 1996-97 to prove that improvement was actually carried out on the existing property . 3. The Brief facts of the case are that the assessee is an individual having income from Capital Gains and Interest 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 t .....

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d. 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. 50C of the Act ₹ .....

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. 54 of the Act and is not eligible for index cost of construction of sold property. On perusal of computation of total income, the assessee has claimed exemption u/s.54 of the Act on purchase of a new Residential flat on 25.10.2004 at Bangalore and the ld. Assessing Officer on perusal of the sale deed of Bangalore flat found that the Bangalore Development Authority (BDA) has development comprehensive flats at Bangalore city and marked schedule of property were the assessee flat come within comm .....

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sessing Officer having considered the facts and provisions of Sec. 50C of the Act calculated sale consideration at market value ₹ 1,81,87,296/- and has denied the index cost of construction but allowed the value of ₹ 2,00,000/- for 4 grounds and 64 sq.ft as on 01.04.1981 and with cost indexation has worked out ₹ 5,60,000/- and calculated Long Term Capital Gains at ₹ 1,76,27,296/- and allowed exemption u/s.54F of the Act on investment in residential flat at Bangalore ͅ .....

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ct 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 procee .....

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87,296/- against sale consideration of ₹ 1,44,00,000/-. Further, the ld. Assessing Officer has allowed fair market value of land to the extent of 2,00,000/- as on 01.04.1981 and allowed deduction u/s.54F of the Act. The assessee has objected to the action of the ld. Assessing Office on invoking provisions of Sec. 50C of the Act and rejected the cost inflation indexation on building and the assessee filed also additional grounds before Commissioner of Income Tax (Appeals) on 25.01.2011 chal .....

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tion of property and the assessee is also entitled for cost of improvement of building construction after 01.04.1981. The ld. Commissioner of Income Tax (Appeals) considering the facts and the assessee submissions and the objections on invoking provisions of Sec. 50C of the Act directed the ld. Assessing Officer to refer to valuation cell on 16.02.2012. In response, the District Valuation Officer (DVO) filed report dated 13.12.2012 estimating the value of property as on 26.04.2004 at ₹ 1,6 .....

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irected the ld. Assessing Officer to adopt the value declared by the District Valuation Officer (DVO) ₹ 1,63,69,000/- as sale consideration for calculation of capital gains. 4.1 On the next ground of claim of cost acquisition of land and building the assessee in the Income Tax return claimed fair market value of cost of land, as on 01.04.1981 at ₹ 14,00,000/- and addition/cost of construction/ improvements to building in financial years 1995-96 ₹ 20,00,000/- and in 1996-1997 &# .....

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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 a .....

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rn prior to assessment year 2005-2006. The ld. Commissioner of Income Tax (Appeals) considering the facts and the identifiable evidence is of the opinion that there is a existence of building on land and the assessee has in earlier assessment years has offered rental income. Due to terms and prerequisite condition of Builder, the assessee has demolished the building prior to registration of sale deed. Since the facts are duly supported with evidence of residential building existing on the land a .....

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sioner of Income Tax (Appeals) in order to arrive at a probable value of cost of construction of the building relied on the PWD rates for calculating construction cost and calculated fair market value of the building at page 7 of his order and gave directions to the ld. Assessing Officer to consider index cost of acquisition of Building and calculated Long Term Capital Gains. 4.3. The last ground being the assessee has claimed deduction in return of income investment in residential house u/s.54 .....

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ct and directed the ld. Assessing Officer to examine the assessee s claim 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 ex .....

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- 69,72,341/- Net taxable long term capital gains 28,93,716/- Note* Subject to the outcome of the set aside assessment to be completed by the Assessing Officer, as per the directions of the CIT s order u/s.263 of the Act . Further gave a direction to the ld. Assessing Officer on the disputed issue to assesses the Long term capital gains on sale of the property at ₹ 28,93,716/- as against ₹ 60,59,506/- earlier determined u/s.143(3) r.w.s. 147of the Act dated 31.12.2009. Aggrieved by t .....

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ndexed value of building ₹ 65,02,943/-. The ld. Commissioner of Income Tax (Appeals) has ignored the findings and the information in sale deed of non existence of building and adoption of PWD rates for extension of building in the financial years 1995-96 and 1996-97 were no evidence was produced by the assessee on the improvement carried out in the existing Residential property and prayed for set aside of the order of Commissioner of Income Tax (Appeals). 4.5 Contra, the ld. Authorised Rep .....

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year 1995-96 and 1996-1997. The ld. Commissioner of Income Tax (Appeals) has adopted PWD rates as the standard rates available in the state of Tamil Nadu and also the genuine facts being that the assessee is a owner of the building prior to 01.04.1981 and was in possession. The assessee 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 fo .....

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alue 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 assessment year 2004-05 w .....

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The ld. Authorised Representative drew our attention to the copies of the Electricity bill of residential to support that the building was in Habitation and rental income was derived. So, considering the apparent 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 i .....

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ommissioner of Income Tax (Appeals) has adopted the value determined by the DVO. 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 .....

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% 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 valu .....

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ot accepting the plea of the cost of building and estimated cost of allowance at 5% towards cost adjustment without any reasons. We on perusal of the Commissioner of Income Tax (Appeals) order at page 6, found the probable value of cost of construction of building in financial year 1981-82, 1995-96 and 1996-1997 based on the PWD rates was applicable to the state of Tamil Nadu was calculated at 50% of probable cost of construction adopted for building existing as on 01.04.1981 falling in financia .....

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asic reasons in respect of cost of construction of old building and we dismiss the ground of the assessee. 5.5 The last ground raised by the assessee that the Commissioner of Income Tax (Appeals) mentioned about the proceedings of u/s.263 of the Act pending and the claim is subject to outcome of the set aside assessment to be completed by the ld. Assessing Officer in proceedings u/sec. 263 of the Act. The ld. Authorised Representative contention that the ld. Commissioner of Income Tax (Appeals) .....

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quential 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. 5.6 In the result, the Cross-Objection filed by the assessee is dismissed. 6. Now, we take up ITA No.1419/Mds/2013 for adjudication. The ld. Asse .....

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981 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 prop .....

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e Commissioner of Income Tax (Appeals). 6.1 In the appellate proceedings, the ld. Commissioner of Income Tax (Appeals) has considered the submissions, objections and findings of the ld. Assessing Officer and found that the assessee has disclosed actual sale consideration received as against Sub-Registrar value on application of deeming provisions of Sec. 50C of the Act and the ld. Assessing Officer has disallowed the deduction u/sec. 54 of the Act by treating property sold as vacant land. The co .....

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urate particulars and the penalty cannot be sustained based on the guideline value being fair market value which is a deeming provisions and therefore does not attract penalty and relied on the Co-ordinate Bench decision in the case of ACIT vs. Meenakshi (2009) 125 TTJ 856/319 ITR 262 and provisions of Sec. 271(1)(c) of the Act shall not attract were there are no particulars of concealment or submission of inaccurate particulars. The assessee has claimed exemption u/s.54 of the Act subsequent to .....

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actual aspects that the Building was existed before to date 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 proce .....

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ssment 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 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 havin .....

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