The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has directed to consider valuation report for giving the benefit of cost of acquisition in construction of roof rights in property.
The assessee Manoj Mediratta’s case was selected for limited scrutiny for the reason of low closing stock shown in the P&L as compared to the preceding year. During the course of assessment proceedings, the Assessing Officer noticed that the assessee sold an immovable property during the year under consideration.
However, the assessee had purchased roof of the first floor up to sky in the said property, therefore, the AO computed long term capital gain and assessed income.
The Commissioner of Income Tax-Appeals (CIT(A)), made the average value towards cost of acquisition divided into three, whereas the assessee had taken it as divided into two.
P.K. Chadda, on behalf of the assessee submitted that AO had failed to give set off of cost of acquisition and the CIT(Appeals) grossly erred in directing division into three. He also submitted that both the authorities had admitted the fact that there was construction of two floors and out of two floors one floor was sold.
OM Parkash, on behalf of the revenue opposed the submissions and supported the orders of the authorities below.
The two-member Bench of Kul Bharat, (Judicial Member) and Pradip Kumar Kedia, (Accountant Member) allowed the appeal and set aside the impugned order directing fresh adjudication observing that, “it is an admitted that that the assessee had sold a floor which was constructed based on construction of the roof rights in property. In our considered view the authorities below ought to have given the benefit of cost of acquisition to’ the assessee. During the course of hearing the assessee has also filed a technical report by the approved valuer.”
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