The Bangalore bench of the Income Tax Appellate Tribunal(ITAT) has held that the Actual flow towards property acquisition while computing capital gain can’tignore merely the fact that the assignment agreement was not registered.
Ravikumar Tirupati Parthasarathy, the assessee is a non-resident individual working in the Netherlands. The assessee filed the return of income for the AY 201920 admitting a total income of Rs.2,95,600. The AO completed the assessment u/s. 143(3) r.w.s. 144C by issuing a draft assessment order in which an addition of Rs.52,89,346 was made towards capital gains.
The assessee filed its objections before the DRP, who confirmed the said addition. The AO in the final assessment order considered the correct indexation value of the year of acquisition and revised the addition to Rs.64,60,469.
It was submitted by the assessee that the actual amount of consideration paid by the assessee to the agreement holders is a sum of Rs.49,44,000 and the reason quoted by the AO for not considering the agreement of assignment is that the agreement is not registered.
The assessee argued that merely for the reason that the assignment agreement is not registered, the actual cost of acquisition paid by the assessee cannot be denied. The assessee further submitted that the genuineness of the amount of consideration paid by the assessee to the assignment holders is not disputed.
The bench noticed that the assessee has considered a sum of Rs.49,44,000 paid to the assignment holders as per the assignment agreement as the cost of acquisition. It is also noticed that the assessee has paid Rs.5,98,160 towards covered car park charges, corpus deposit, etc. and also a sum of Rs.1,54,500 as an assignment fee to L&T.
A Coram comprising of Shri N.V. Vasudevan, Vice President and Ms Padmavathy S, Accountant Member observed that “merely for the reason that the assignment agreement is not registered, the actual outflow from the hands of the assessee towards the acquisition of the property cannot be ignored for computing the capital gains.”
The ITAT remitted the issue back to the AO for arriving at the cost of acquisition with the proper breakup and directed the AO to consider the actual amount paid by the assessee as per the Assignment Agreement including amounts paid to L&T and stamp duty based on evidence / supporting documents submitted in this regard.
The Tribunal directed the AO to verify the bills and documents about the cost incurred towards brokerage of Rs.1,55,000, interiors, painting etc., and consider these amounts to arrive at the capital gains by law. The appeal was allowed for statistical purposes.
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