ITO Vs Ramesh Shankarlal Bhandari (ITAT Pune)
The appeal before the Tribunal arose from the Revenue’s challenge to the order of the Commissioner of Income Tax (Appeals) [CIT(A)]/NFAC for Assessment Year 2023-24, which had deleted an addition of ₹20,28,10,757 made by the Assessing Officer (AO) while computing the assessee’s long-term capital gains. The assessee had filed a return declaring total income of ₹98,53,380. The case was selected for scrutiny because the sale consideration of an immovable property reported in the income tax return differed from the amount reported in the Statement of Financial Transactions (SFT).
During assessment, the AO noted that the assessee had received ₹33 crore in connection with an immovable property transaction. The assessee claimed indexed cost of acquisition of ₹32.44 crore, based on a cost of acquisition of ₹9.80 crore, and also claimed deduction under Section 54F, ultimately declaring long-term capital gains of ₹41.22 lakh. The AO examined the conveyance deed and observed that land measuring 13,967.50 square metres had been transferred for a total consideration of ₹83.36 crore, of which ₹33 crore was received by the assessee as a confirming party under Consent Terms dated 3 August 2021. According to the AO, the assessee could not claim indexed cost of acquisition for the entire larger land because only rights relating to the transferred portion had been relinquished. The AO proportionately restricted the indexed cost of acquisition by applying a coefficient of 0.396 and recomputed the long-term capital gains at ₹20.28 crore, thereby substantially increasing the assessed income.
