Rasilaben Yogeshbhai Patel Vs I.T.O (ITAT Ahmedabad)
ITAT Ahmedabad held that once similar Long Term Capital Gain offered and exemption claimed by the co-owner is already accepted by the revenue, another co-owner (assessee) entitled for similar relief.
Facts-
The assessee during the year sold “Municipal Tenant” situated at Sharda Sahakari Gruh Mandal Ltd. for Rs. 1.9 crore in which assessee’s share was 50% only. The assessee worked out the long term capital gain of Rs. 35,14,071/- and same was claimed as exempted on account of purchase of new property for Rs. 36,96,525/-(being 50%).
AO found that the cost of acquisition for sold out property claimed by the assessee include cost of purchase of furniture for Rs. 17.5 lakh (100%) in addition to cost of construction. Similarly cost of acquisition for new property purchased includes cost of construction of Rs. 17 lakh and other misc. expenses of Rs. 8,93,050/- only. As per the AO the cost of purchase of furniture cannot be made part of cost of acquisition of sold out property. Similarly, cost of construction for new property cannot be included in the amount of exemption under section 54 of the Act as the same is incurred for purchase of the new property. Likewise certain misc. expenses incurred for purchase of new property was not supported by documentary evidences. Thus the AO, re-worked the value of capital gain and exemption under section 54 of the Act and made addition of Rs. 29,27,396/-
CIT(A) confirmed the same. Being aggrieved, the present appeal is filed.
Conclusion-
In view of the above elaborated factual and legal discussion, and respectfully following the finding of coordinate bench of this tribunal in aforesaid case. We accept the contention of ld. AR for the assessee that once, the similar LTCG offered and exemption claimed by the co-owner has been accepted by the Revenue, then the assessee is also entitled for similar relief. We find convincing force in the submissions of the learned AR for the assessee. Hence, the appeal of the assessee is allowed. So far as the objection of learned DR that in the case of co-owner, no scrutiny assessment was initiated, is concern, we find that this fact was brought by assessee at the earliest possible action. The Revenue has not taken any action for reopening the case of co-owner and thereby accepted the capital gain and exemption on same transaction, therefore, in our view, the assessee cannot be treated indifferently for similar transaction. Thus, the objection raised by the learned DR for the revenue is not acceptable to us. Hence, the ground of appeal of the assessee is hereby allowed.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
The captioned appeal has been filed at the instance of the Assessee against the order of the Learned Commissioner of Income Tax (Appeals)-5, Ahmedabad, dated 26/02/2019 arising in the matter of assessment order passed under s. 143(3) of the Income Tax Act, 1961 (here-in-after referred to as “the Act”) relevant to the Assessment Year 2014-15.
2. The assessee has raised following grounds of appeal:
1. CIT(A) erred in law and on facts in confirming addition of Rs.29,27,396/- on account o f reworking of calculation of cost of acquisition for sold property as well as for property for which exemption u/s.54 of the Act has been claimed. Ld.CIT(A) ought to have considered the submission of the appellant and delete the disallowance. It be so held now.
2. CIT(A) ought to have allowed cost of fixed furniture of Rs.17,50,000/- and documentation charges of Rs.1,90,000/- as cost of improvement as same is allowable expenses. It be so held now.
3. CIT(A) ought to have allowed all cost incurred by appellant for purchase of new property while determining exemption u/s.54 of the Act as section prescribes purchase or construction of new assets and appellant purchased independent bungalows and incurred construction and other expenses which is considered as purchase of assets as mentioned in the section. Ld.CIT(A) ought to have considered the submission of the appellant and ought to have allow the claim of the appellant. It be so held now.
4. The order passed by AO and confirmed by CIT(A) is illegal and bad in law and required to quashed.
5. Charging of Interest u/s.234B is unjustifiable.
6. Initiation of penalty proceedings u/s.271(1)(c) is unjustifiable.
3. The interconnected issue raised by the assessee is that the learned CIT-A erred in confirming the addition of Rs. 29,27,396/- on account of re-computation of capital gain.
4. The assessee is an individual and engaged in the business of job work and commission and also deriving income from capital gain and other sources. The assessee during the year sold “Municipal Tenant” for the property bearing final plot No. 2,4,5 & 6 situated at Sharda Sahakari Gruh Mandal Ltd. for Rs. 1.9 crore in which assessee’s share was 50% only. The assessee worked out the long term capital gain of Rs. 35,14,071/- and same was claimed as exempted on account of purchase of new property for Rs. 36,96,525/-(being 50%).
5. The AO found that the cost of acquisition for sold out property claimed by the assessee include cost of purchase of furniture for Rs. 17.5 lakh (100%) in addition to cost of construction. Similarly cost of acquisition for new property purchased includes cost of construction of Rs. 17 lakh and other misc. expenses of Rs. 8,93,050/- only. As per the AO the cost of purchase of furniture cannot be made part of cost of acquisition of sold out property. Similarly, cost of construction for new property cannot be included in the amount of exemption under section 54 of the Act as the same is incurred for purchase of the new property. Likewise certain misc. expenses incurred for purchase of new property was not supported by documentary evidences. Thus the AO, re-worked the value of capital gain and exemption under section 54 of the Act and made addition of Rs. 29,27,396/- in the following manner:
