Balaji Finance Vs ITO (ITAT Hyderabad)
Indexed Cost of Land Cannot Be Denied on Presumption: ITAT Hyderabad Restores LTCG Issue for Fresh Verification
The Hyderabad Bench of the ITAT condoned an 89-day delay in filing the appeal on medical grounds and set aside the disallowance of indexed cost of acquisition of land while computing long-term capital gains, restoring the matter to the Assessing Officer for fresh verification.
The assessee, a partnership firm, had sold an immovable property and claimed indexed cost of land of ₹23.01 lakh (based on FMV as on 01.04.2001) along with cost of construction. The Assessing Officer disallowed the indexed cost of land on the assumption that the land cost was already included in the capital work-in-progress of ₹1.50 crore, thereby enhancing LTCG.
Before the Tribunal, the assessee demonstrated through the balance sheet, asset schedules and ITR for AY 2021-22 that the cost of land (₹5.42 lakh) was separately reflected under fixed assets and was not included in capital work-in-progress, which represented only construction cost. The Tribunal noted that prima facie the land cost appeared separately recorded, but since verification of underlying records was required, the matter was remanded.
Accordingly, the ITAT directed the Assessing Officer to verify whether land cost formed part of the construction figure and, if not, to allow indexed cost of acquisition in accordance with law while recomputing LTCG. The appeal was allowed for statistical purposes.
FULL TEXT OF THE ORDER OF ITAT HYDERABAD
