Shivkumar Lakshman, Chennai vs Assessee

This appeal of the assessee is directed against the order of

the Commissioner of Income Tax (Appeals)-16, Chennai, dated

23.01.2015, and pertains to assessment year 2010-11. 2 I.T.A. No.402/Mds/15

2. The first issue arises for consideration is with regard to

disallowance of indexed cost of improvement to the extent of

`3,07,946/-.

3. Ms. Hemalatha.K, the Ld. representative for the assessee,

submitted that the assessee sold an immovable property for a total

consideration of ` 90 lakhs and claimed indexed cost of acquisition

of `3,70,190/-. The assessee also claimed cost of improvement to

the extent of `3,07,946/-. According to the Ld. representative, the

assessee has disclosed long term capital gain to the extent of

`83,62,888/- and also claimed exemption under Section 54F of the

Income-tax Act, 1961 (in short 'the Act') on the investment made in

the immovable property by him, which was purchased from M/s

Appasamy Real Estates Ltd. However, the Assessing Officer re-

fixed the sale value at `1,06,17,750/- as per the guideline value

adopted by the Sub-Registrar, by applying the provisions of Section

50C of the Act. The Ld. representative further submitted that the

assessee claimed that an amount of `2,25,600/- having spent in

improvement of the property. However, the same was disallowed

by the Assessing Officer on the ground that the assessee has not

filed any evidence. According to the Ld. representative, the

assessee has produced letter from the person who actually made 3 I.T.A. No.402/Mds/15

the improvements. Therefore, it may not be correct to say that the

assessee had not produced any evidence. Thus, according to the

Ld. representative, the disallowance made by the Assessing Officer

with regard to the indexed cost of improvement to the extent of

`3,07,946/- is not justified.

4. On the contrary, Shri N. Madhavan, the Ld. Departmental

Representative, submitted that the assessee claimed improvements

to the extent of `3,07,946/-. However, the Assessing Officer

disallowed the same. The assessee had not produced any

evidence before the lower authorities. The bills, vouchers, etc. for

the improvement said to be made to the landed property were not

produced before the Assessing Officer. The Ld. D.R. further

submitted that a statement from Shri T. Karthik was recorded and

he could not throw any light with regard to improvements said to be

made by the assessee. The Ld. D.R. further submitted that what

was sold by the assessee was a vacant land. Therefore, there is no

question of any improvement.

5. We have considered the rival submissions on either side and

perused the relevant material on record. The assessee claimed a

sum of `3,07,946/- towards cost of improvement. However, the

same was disallowed by the Assessing Officer. The Assessing 4 I.T.A. No.402/Mds/15

Officer disallowed the claim of the assessee on the ground that the

immovable property was described as "Farm Land" in the sale deed.

The Assessing Officer further found that there was no building on

the said property. Hence, there could not have been any

improvement. Accordingly, he disallowed the claim. From the

material available on the record it appears that the assessee had

filed a copy of the letter along with certain bills and vouchers before

the CIT(Appeals) and the CIT(Appeals) also forwarded the same to

the Assessing Officer. The Assessing Officer, after examining the

bills and vouchers and other documents, came to a conclusion that

the claim could not be accepted. The fact remains that the bills and

vouchers were produced before the CIT(Appeals) and the same

were sent to the Assessing Officer. The assessee's claim was only

a sum of `3,07,946/- as cost of improvement. Improvement can be

made even to the farm land. It is not necessary that the

improvements should be made only to the building. Suppose, the

vacant land is low lying and it requires fencing, the assessee has to

necessarily incur expenditure to keep the land to a marketable

condition. Under normal circumstances, this Tribunal would have

remitted back the matter to the file of the Assessing Officer for

verification. Since what was claimed was only `3,07,946/-, this

Tribunal is of the considered opinion that it may not be necessary to 5 I.T.A. No.402/Mds/15

remit back the matter in view of the smallness of the amount

claimed by the assessee. Accordingly, this Tribunal is of the

considered opinion that the assessee would have spent `3,07,946/-

as per the letter filed before the lower authorities with regard to

improvements. Therefore, there is no justification in disallowing the

claim of the assessee. Accordingly, the orders of the lower

authorities are set aside and the Assessing Officer is directed to

allow the claim of the assessee towards cost of improvements to the

extent of `3,07,946/-.

6. The next ground of appeal is with regard to computation of

capital gain.

7. Ms. Hemalatha.K, the Ld. representative for the assessee,

submitted that the assessee sold the property for ` 90 lakhs. The

Assessing Officer by provisions of Section 50C of the Act has taken

the sale consideration at `1,06,17,750/- and computed excess

capital gain. According to the Ld. representative, for the purpose of

the considering exemption under Section 54F of the Act, the sale

consideration has to be taken as reflected in the sale deed and not

by applying the provisions of Section 50C of the Act. 6 I.T.A. No.402/Mds/15

8. On the contrary, Shri N. Madhavan, the Ld. Departmental

Representative, submitted that Section 50C provides for adopting

the value determined by the Sub-Registrar for registering document

in case the value claimed by the assessee is lower. In this case,

the sale consideration claimed by the assessee was only `90 lakhs.

However, the Sub-Registrar adopted the value at `1,06,17,750/-.

Therefore, the Ld. D.R. submitted that the Assessing Officer has

rightly adopted the provisions of Section 50C of the Act.

9. We have considered the rival submissions on either side and

perused the relevant material on record. The question arises for

consideration is that for the purpose of granting deduction under

Section 54F of the Act, whether the sale consideration disclosed in

the sale deed has to be taken or the value adopted by the Sub-

Registrar for registering the document has to be taken. This

Tribunal is of the considered opinion that for the purpose of granting

deduction under Section 54F of the Act, the value disclosed in the

sale deed has to be adopted rather than the value determined by

the Sub-Registrar on the basis of guideline value. Actual sale

consideration as reflected in the sale deed has to be adopted in the

absence of any other material to indicate that the assessee has

received any on-money over and above the amount disclosed in the 7 I.T.A. No.402/Mds/15

sale deed. In this case, it is nobody's case that the assessee

received on-money over and above the sale consideration disclosed

in the sale deed. Therefore, this Tribunal is of the considered

opinion that the Assessing Officer has to adopt the actual sale

consideration of `90 lakhs for the purpose of considering the claim

of exemption under Section 54F of the Act.

10. In view of the above, the orders of the lower authorities are

set aside and the Assessing Officer is directed to adopt the actual

sale consideration for the purpose of considering exemption under

Section 54F of the Act.

11. The next ground of appeal is with regard to levy of interest

under Section 234B and 234C of the Act.

12. We have heard both Ld. representative for the assessee and

the Ld. D.R. Levy of interest under Section 234B and 234C is

mandatory and consequential. Therefore, while giving effect to the

order of this Tribunal, the Assessing Officer shall re-compute the

interest under Section 234B and 234C of the Act.

13. In the result, the appeal of the assessee is allowed. 8 I.T.A. No.402/Mds/15

Order pronounced on 29th May, 2015 at Chennai.

Sd/- sd/- (A.Mohan Alankamony) (N.R.S. Ganesan) (ए. मोहन अलंकामणी) (एन.आर.एस. गणेशन) लेखा सद य/Accountant Member या यक सद य/Judicial Member

चे नई/Chennai, th 5दनांक/Dated, the 29 May, 2015.

Kri.

आदे श क/ - त6ल7प अ8े7षत/Copy to: 1. अपीलाथ,/Appellant 2. -.यथ,/Respondent 3. आयकर आयु9त (अपील)/CIT(A)-16, Chennai-34

4. आयकर आयु9त/CIT (International Taxation), Chennai

5. 7वभागीय - त न ध/DR

6. गाड( फाईल/GF.