The assessee claimed the deduction towards cost of improvement while computing long term capital gains chargeable to tax.
The assessee submitted before Pr. CIT during the course of revisionary proceedings that the reassessment order passed by AO was neither erroneous nor prejudicial to the interest of Revenue and hence revisionary proceedings initiated by ld. Pr. CIT within provisions of Section 263 of the 1961 Act, be dropped .
The assessee also relied upon certain judicial precedents to support his contentions passed by Pr. CIT under section 263 of the 1961 Act. The assessee made prayers before Pr. CIT during revisionary proceedings not to exercise revisionary jurisdiction against reassessment order passed by AO under section 147 read with Section 143(3) of the 1961 Act.
The assessee contended that the freehold conversion charges are improvement of property for better title of property and was rightly claimed as deductions towards cost of improvement of the property while computing long term capital gains chargeable to tax.
The coram consisting of Vijay Pal Rao and Ramit Kochar held that the assessee has rightly claimed the deduction on account of improvement in the property being improvement in title of the property on being converted from leasehold Nazul land to freehold property, as property is bundle of rights and getting property converted from leasehold to freehold will certainly improve the title and marketability of the property and also it is a Nazul land , getting the property freehold will grant perfect ownership rights/title in favour of the existing lessee’s, who will then be in a position to transfer/sell the property.Subscribe Taxscan Premium to view the Judgment