Nirmal Kumar Seth vs Commissioner of Income Tax Lucknow

Hon''ble Satish Chandra, J

This appeal u/s 260-A of the Income Tax Act, 1961 has been preferred by the Assessee against the judgment and order dated 22.09.2006 passed by the Income Tax Appellate Tribunal in I.T.A. No. 280/Luc/2006 for the assessment year 2002-03.

On 02.02.2007, a Coordinate Bench of this Court has admitted the present appeal on the following substantial questions of law:

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal is correct in Law in holding that it is the actual amount paid from time to time after the date of issuance of allotment letter which is to be considered for the purposes of indexation with respect to the date of payment within the meaning of Section proviso of Section 48 of the Income Tax Act, 1961 read with Clause-II and IV of explanation thereof.

Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in Law for making the actual payment as the basis for indexation rather than the cost on the date of purchase of the land.

The brief facts of the case are that the Assessee is an advocate and derives the income from legal profession as well as income from other sources. For the assessment year under consideration, the Assessee has filed its return on 16.10.2002 and declared the total income of Rs. 3,45,517/- which comprises a sum of Rs. 99,331/- as income from other sources. During the scrutiny, it was noticed by the A.O. that the Assessee owned a plot of land having total area of 260 sq. mtr. at 1/4 Vikrant Khand, Gomti Nagar, Lucknow and the same was sold for a consideration of Rs. 5 lacs as per the sale deed dated 27.03.2002. On the sale consideration, the A.O. has charged the short term capital gain by observing that the Assessee has purchased the plot in question in the financial year 1982-83 initially by making a payment of Rs. 3000/- only under the scheme and remaining payments were made in installments. Though the Assessee has claimed the capital loss of Rs. 14,815/- but the A.O. has levied the short term capital gain of Rs. 3,68,275/- by considering the CBDT circular No. 471 dated 15.10.1986. The same was upheld by the CIT(A). However, the Tribunal has observed that the long term capital gain will have to charged in the instant case. Still not being satisfied with the reliefs given by the Tribunal, the Assessee has filed the present appeal.

With this background, Sri Mudit Agarwal, learned Counsel for the Appellant - Assessee submits that the long term capital gain has already been paid but the full benefit of price indexation has not been given. He submits that the Tribunal has not given the complete benefit considering the transactions as long term capital gain. The benefit of price indexation is to be given with reference to the date of payment. According to him, the proviso of Section 48 was misinterpreted by the Tribunal and, as such, the Assessee is entitled for full benefit of long term capital gain u/s 45 of the Income Tax Act.

On the other hand, Sri D.D. Chopra, learned Counsel for the department has relied on the order of the lower authorities.

We have heard both the parties at length and gone through the material available on record.

From the record, it appears that the land in question was purchased from the Lucknow Development Authority on installments basis for which registration was made on 01.12.1982 by paying a sum of Rs. 3000/- only. The remaining payment was made in installments to Lucknow Development Authority, as per the chart given in the AO''s order. As per the agreement, the right to get the sale deed registered in favour of the Assessee was acquired, though subject to the full and final payment. After making the full and final payment, the Assessee got the allotment letter in his favour in the year 1985. On getting the allotment letter, the Assessee also obtained the valuable right to have a sale deed in his favour. Thus, the Assessee has acquired the capital asset.

In the instant case, the plot was sold during the assessment year under consideration. The period is more than 3 years. So, we are in agreement with the observations made by the Tribunal that long term capital gain will have to apply in the Assessee''s case as per the payment chart.

It may be mentioned that the expression "cost of acquisition" is defined in Section 55(2) of the Act. The date of acquisition will have a relevance in determining the cost of acquisition. As per the ratio laid down in the case of Commissioner of Income Tax Vs. T. Srinivasa Rao, T. Pushpamma, T. Satyanarayana, T. Pandaiah and T. Padma Rao, the expression of "cost of acquisition" is exhaustive and the language employed is peremptory. It is not open to the Court to introduce any other facts of meaning to the expression "cost of acquisition".

From the record, it also appears that the actual amount was paid from time to time after the date of issuance of allotment letter, which has to be considered for the purpose of indexation with reference to the date of payments. The Tribunal has rightly asked to compute the long term capital gain as per the payment schedule. There is nothing wrong in the Tribunal''s order, which is based on the well established legal position as well as the CBDT Circular, which have already been mentioned in the impugned order passed by the Tribunal.

During the course of arguments, we were told that the long term capital gain has already been deposited as per the computation made by the A.O. in the manner claimed by the Assessee. When it is so then nothing survives in the appeal.

Hence, we decline to interfere with the impugned order passed by the Tribunal, which is hereby sustained along with the reasons mentioned therein.

The answer to the substantial questions of law is in favour of the revenue and against the Assessee.

The appeal is dismissed. No. cost.