In a recent ruling, the Kolkata bench Income Tax Appellate Tribunal ( ITAT ) deleted the capital gain addition made by the Assessing Officer (AO) as the tribunal was convinced that the assessee as a prudent seller to get rid of the long time and continuous harassment due to interruption and obstacles of miscreants in peaceful use and enjoyment of the property at a lower price.

The computation of capital gains and the tax thereupon relating to the sale of property made by the assessee in the F.Y 2004-05. The matter was referred by the Assessing Officer to the Departmental Valuation Officer who estimated the cost of the market price of the property at the time of sale transaction at Rs.73,26,350/-. However, the assessee had sold the property at Rs.30,00,000/- only. On being asked to explain in this respect, the assessee had submitted that the property, in question, was a cinema hall and certain members of political party were preventing the assessee from peaceful use and enjoyment of the said property Mr. Souvik Guha representing the assessee has produced on record a paper-book containing several documents which show that the assessee was prevented from peaceful use and enjoyment of his property by certain persons/members of political party.

In this respect, the assessee has placed many copies of complaints made to various authorities including Police Authorities and District Administration. The assessee has also placed on file the copies of the newspaper clippings, whereby, it is demonstrated that the assessee was prevented from peaceful use and enjoyment of his cinema hall. Even the employees of the cinema hall were hand in glove with the agitators and the assessee faced several problems. The problems of the assessee continued over the years and the assessee during the period has made sincere efforts by approaching the different authorities and requested them to stop the agitators from preventing the assessee from peaceful enjoyment of his property and running the cinema hall. After making entire efforts, when the administration failed to help the assessee, the assessee, under the circumstances, to get rid of the problem, sold the property at a lower rate.

The tribunal was convinced that the assessee as a prudent seller to get rid of the long time and continuous harassment due to interruption and obstacles of miscreants in peaceful use and enjoyment of the property, has made a distress sale of the property at Rs.30,00,000/-. The two member bench of the tribunal comprising Girish Agarwal ( Accountant member) and Sanjay Garg ( Judicial member)  did not find justification on the part of the Income Tax Authorities in computing the capital gains by adopting the sale value as per the value estimated by the Departmental Valuation Officer. The appeal of the assessee was , therefore, allowed on this issue and the addition made by the Assessing Officer in respect of capital gains by adopting the value of the property as per the DVO report is ordered to be deleted. To Read the full text of the Order CLICK HERE