|The Tax Publishers2021 TaxPub(DT) 0659 (All-Trib)
INCOME TAX ACT, 1961
Where the error crept in while indexing the cost of acquisition of the property by applying cost inflation index of 852, instead of 785, during re-assessment proceedings thus, to this extent the reassessment passed by AO was erroneous so far as prejudicial to the interest of Revenue which requires to be revised by AO.
Revision under section 263 - Erroneous and prejudicial order - Computation of capital gains - Application of mind before passing reassessment order
Assessee filed appeal against revisionary proceedings conducted under section 263 on the ground that it had duly complied with all the queries of AO during re-assessment proceedings and it was only after detailed enquiry/scrutiny and after due application of mind that AO allowed the claim of the assessee towards cost of improvement of property by way of conversion charges from leasehold to freehold of the land. Held: Tribunal having gone through the reassessment order passed by AO, was a considered view that AO had applied his mind before passing reassessment order. It was also in an agreement that mistake had crept in reassessment order as cost of improvement was indexed by taking cost inflation index base of financial year 2012-13, while the entire payments were made for freehold charges/stamp duty, etc. in financial year 2011-12. Thus, the cost inflation index base for financial year 2012-13 to be 852 was adopted while computing income from long-term capital gains, while the cost inflation index for financial year 2011-12 (assessment year 2012-13) was 785 which ought to have been applied to cost of improvement being freehold conversion charges, stamp duty, etc. Since the payment for freehold conversion charges, stamp duty, etc., was made in the previous year relevant to impugned assessment year, there was no necessity of applying cost inflation index and actual payment made towards freehold conversion charges, stamp duty, etc., ought to had been claimed/deducted while computing income chargeable to tax under the head income from long-term capital gains. Similar, error crept in while indexing the cost of acquisition of the property by applying cost inflation index of 852, instead of 785. Thus, to this extent the reassessment passed by AO was erroneous so far as prejudicial to the interest of Revenue which requires to be revised by AO.
FAVOUR : Partly in favour of assessee
IN THE ITAT, ALLAHABAD BENCH
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