Renee Josephine Jaganathan Vs ITO (ITAT Chennai)
The assessee, a non-resident, faced substantial capital gains additions after the AO rejected the declared cost of construction and adopted State PWD rates, also splitting the transaction into LTCG (land) and STCG (building).
Before the Tribunal, it was highlighted that the AO made a reference to the DVO under section 142A, while simultaneously invoking section 55A in the order—showing clear inconsistency and non-application of mind.
The ITAT held that section 55A (specific provision for capital gains valuation) overrides section 142A (general provision), and therefore, reference under section 142A in a capital gains case is legally invalid. It also noted that the AO completed the assessment without even waiting for the DVO report and arbitrarily adopted PWD rates despite evidence of actual cost.
Further, the Tribunal rejected the artificial bifurcation of a composite transaction into land and building and observed that legitimate deductions like brokerage, stamp duty, and improvement costs were not properly considered.
On limitation, ITAT held that since the DVO reference itself was invalid, extended limitation could not be invoked rendering the assessment defective.
Accordingly, the ITAT set aside the entire assessment and deleted the additions, allowing the appeal in full.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This captioned Appeal filed by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals), Chennai-16, [CIT(A)] dated 30.06.2025 for Assessment Year 2017-18.
