Jagjeeth Singh Sethi Vs ITO (ITAT Bangalore)
Sale Deed Not Final Word: ITAT Accepts Higher Actual Purchase Cost and Restores Full Indexation Benefit
Actual Cost, Not Sale Deed Value, Determines Capital Gains: Bangalore ITAT Grants Full Relief
he Bangalore ITAT held that for computing capital gains, the actual cost of acquisition paid by the assessee must prevail over the lower value mentioned in the sale deed, provided the assessee is able to substantiate the higher payment with credible evidence.
In this case, the assessee had purchased a plot from the Telecom Employees’ Co-operative Housing Society and claimed a cost of acquisition of about ₹11.93 lakh based on payments actually made to the society. However, the sale deed reflected a much lower figure corresponding to the guideline value. The assessee produced a certificate issued by the housing society along with receipts evidencing payment of ₹11.53 lakh towards the site. Despite these documents, the Assessing Officer adopted the lower value mentioned in the sale deed and recomputed the capital gains.
The Tribunal observed that once the assessee had successfully demonstrated through independent evidence that the actual consideration paid was higher than the amount recorded in the sale deed, the Revenue could not insist on adopting the sale deed value as the cost of acquisition. The Tribunal accepted the certificate and receipts issued by the cooperative society as reliable evidence of the actual purchase price and directed that the indexed cost of acquisition be computed accordingly.
The Tribunal also struck down the Assessing Officer’s action of restricting the cost of improvement to 30%. It noted that in the earlier round of litigation the Tribunal had remanded only the issue relating to verification of the cost of acquisition. Since the cost of improvement was never a disputed issue in the original remand proceedings, the Assessing Officer exceeded the scope of the remand by making a fresh disallowance on that count. The Tribunal therefore directed the AO to allow 100% of the cost of improvement claimed by the assessee.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
