Ramatas Revathi Vs ITO (ITAT Chennai)
The Income Tax Appellate Tribunal (ITAT), Chennai, allowed the appeal of the assessee for Assessment Year 2015-16 and held that the indexed cost of construction must be considered while computing capital gains where the details of the building form part of the registered sale deed and its annexures.
The assessee had sold an immovable property situated at Karaikudi during the financial year 2014-15 for a consideration of Rs.1,05,00,000 under a registered sale deed dated 05.05.2014. Based on information regarding the sale transaction, proceedings were initiated under Sections 148A and 148 of the Income-tax Act, 1961. Since the assessee was unaware of the proceedings, no response was filed to the notice issued under Section 148A(b). Subsequently, the assessee filed a return of income declaring a Long-Term Capital Loss (LTCL) of Rs.40,91,872 after claiming indexed cost of acquisition of land and indexed cost of construction of the building situated on the land.
During reassessment proceedings, the Assessing Officer (AO) observed that the assessee had not furnished the sale deed or documentary evidence supporting the claimed cost of acquisition and cost of construction. Consequently, the AO rejected the computation of long-term capital loss and treated the entire sale consideration of Rs.1,05,00,000 as Short-Term Capital Gain (STCG), making an addition of the same amount.
