Shivkumar Lakshman Vs ITO (ITAT Chennai)
Cost of Improvement on Farm Land Allowable; Section 54F Exemption to Be Computed on Actual Sale Consideration, Not Section 50C Value: ITAT Chennai
The assessee appealed against the order of the Commissioner of Income Tax (Appeals)-16, Chennai, for Assessment Year 2010-11 challenging the disallowance of indexed cost of improvement, computation of capital gains, and levy of interest under Sections 234B and 234C. The assessee had sold an immovable property for ₹90 lakhs, claimed indexed cost of acquisition of ₹23,70,190 and indexed cost of improvement of ₹23,07,946, disclosed long-term capital gains of ₹83,62,888, and claimed exemption under Section 54F on investment in a residential property purchased from M/s Appasamy Real Estates Ltd. The Assessing Officer adopted the guideline value of ₹1,06,17,750 under Section 50C instead of the actual sale consideration and disallowed the claim of cost of improvement on the ground that no evidence had been produced and that the property sold was described as farm land without any building.
The assessee submitted that evidence regarding the improvements, including a letter from the person who carried out the work, had been produced. The Tribunal noted that copies of the letter, bills and vouchers had been filed before the Commissioner (Appeals), who forwarded them to the Assessing Officer for examination. It observed that improvements could be made even to farm land and were not confined to buildings. The Tribunal stated that expenditure may be required, for example, to improve low-lying land or provide fencing to make it marketable. Although the Tribunal observed that such matters are ordinarily remitted for verification, it considered remand unnecessary in view of the amount involved and accepted that the assessee had incurred the claimed expenditure of ₹23,07,946. Accordingly, it set aside the orders of the lower authorities and directed the Assessing Officer to allow the claim towards cost of improvement.
