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The Assistant Commissioner of Income-tax, Central Circle-2, Thiruvananthapuram Versus Shri G. Raju and Vica-Versa

2016 (9) TMI 1180 - ITAT COCHIN

Capital gain on inherited land sold - indexed cost of improvements - Held that:- It is a fact that the assessee has filed a detailed cash flow shown different sources from which the money has been brought in. The assessee also has explained that during those days bank accounts were not so common and large families use to keep cash with themselves as most of the receipts were from agriculture and other allied sources. The fact that without improvements the assessee would not have received this am .....

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l improvements to the land which is supported by year wise cash flow. The Assessing Officer has simply ignored the cash flow stating various other reasons. The Ld. CIT(A) has considered the cash flow and in order to compensate any probable defects and omissions has made an estimated disallowance of 40% which the learned DR during the course of hearing has accepted as correct except for the size of the amount. However, to meet the interest of justice, the disallowance of cost of improvement is di .....

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of the learned CIT(A) Thiruvananthapuram dated 28/12/2011. This appeal is decided by this bench confirming the findings of the CIT(Appeals), Thiruvananthapuram vide order dated 31/07/2013 in I.T.A. No. 76/Coch/2012. 2. The Revenue has challenged the order of the tribunal by filing appeal before the Hon ble High court of Kerala. The High Court in its order dated 20/07/2015 has confirmed the findings of the CIT(Appeals) with respect to fair market value of the land as on 1.04.1981 and has set asid .....

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d cost of improvements and recomputed the capital gain and levied tax on it. The assessee filed an appeal before the CIT(Appeals) who disposed off the appeal by fixing the fair market value at ₹ 11,000/- per cent. So far as indexed value of improvements are considered, referring to the judgment of the Madras High court in Sarojini Ramaswami vs. Assistant Commissioner of Income Tax (2007) 291 ITR 308 (Mad.), the Commissioner of (Appeals) ordered that 60% of the amount claimed be allowed. Th .....

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e to the materials on record and after affording an opportunity of hearing to the assessee. 4. The Revenue has raised the following grounds of appeal. 1. The order of the Commissioner of Income Tax(Appeals)-I, Kochi is opposed to law, weight of evidence and fact of the case. 2. The learned CIT(Appeals) ought to have noted that the fair market value of the property was adopted at ₹ 2,300/- per cent on the basis of the value of the property lying adjacent to the assessee s in the same survey .....

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00/- per are, i.e., ₹ 2024 per cent as on 01/04/1981 vide his order in LAR 111/87 dated 22/01/1993. The Assessing Officer adopted the fair market value at ₹ 2,300/- after applying 5% increase for every year to the value fixed by the Addl. Sub Judge. 3. The learned CIT(Appeals) erred in deciding to grant 60% of the cost of improvement claimed by the assessee in the absence of any evidence in support of the same. The CIT(Appeals) ought to have noted that out of the nine sources of inco .....

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een made during the period claimed by the assessee. 5. For these and other grounds that may be urged at the time of hearing it is requested that the order of the CIT(Appeals) may be set aside and that of the Assessing Officer restored. Out of the above five grounds only Ground Nos. 3 & 4 are set aside by the Hon ble High Court of Kerala for deciding afresh by this Bench based on the materials on record. 5. The assessee has claimed a total of ₹ 62,05,000/- towards improvements over a pe .....

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properly explained. The main contention of the learned DR was that the assessee or his family members were not income tax assesses and the expenses for improvements were not made from bank accounts. He also reiterated that the land was subjected to satellite survey and the images obtained during the survey does not show any improvements in the particular land. The learned DR during the course of argument also submitted that the 60% allowance given for improvements is correct and he oppose this a .....

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ucted after the sale and has arrived at preconceived notion that no improvements were made. He further submitted that the satellite survey documents are not acceptable to the assessee as nothing is discernable from it. Regarding the opening cash the learned counsel has submitted that the ownership of the property has been bestowed on the assessee by family partition prior to 1.4.1981 and the accumulated savings as on 1.4.1981 is taken as the opening cash. Even if there is some defects or discrep .....

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e. Once the percentage is accepted it is unfair on the part of the ld. DR to plea for more disallowance for the simple reason that the amount involved is high. The Counsel also pointed out that wealth tax assessment was carried out in respect of the said land by taking the sale value of ₹ 3,75,00,000/- in AY 2008-09 and depleting at 2% each year and arriving at ₹ 3,45,88,806/- as on 31.03.2003 and this itself shows that substantial improvements were made to the land in question. 8. W .....

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