AO held right in not treating assessee's expenses as part of acquisition cost.

Facts in Brief:

1. Assessee had filed return of income declaring income and agricultural income.

2. Assessee had given his land to J.P. Karcham Hydro Corporation Ltd. on rent.

3. The assessee got compensation for carrying out changes in the topography and for removing fruit bearing trees.

4. Assessment was completed under section 143(3) (of Income Tax Act, 1961) considering the entire income from compensation i.e. Rs.67,46,129/- as income from 'other sources' as against the claim of the assessee as 'agriculture income.

5. On appeal, CIT (A) dismissed the appeal of the assessee holding that the method of NPV(Net Present Value) suggested by the assessee is not a proper method for computing cost of acquisition/improvement.

6. Further, the assessee has failed to furnish any evidence in support of suggested calculation of cost of acquisition. Further he held that the Assessing Officer has estimated the cost of acquisition and number of plants as based on copies of Jamabandi and based his calculation of number of plants as per unit land in consultation with Revenue or Horticulture Department. On appeal ITAT held,

7. We uphold the action of the Assessing Officer in not treating these expenses as part of cost of acquisition or cost of improvement. We further uphold the action of the Assessing Officer in not allowing the Net Present Value as computed by the assessee for the loss of likely earning. As we have earlier mentioned that this approach may be appropriate for estimating the amount of compensation, but for the purpose of computing the capital gains, this is not the right approach. In view of the above, we uphold the order of the Assessing Officer.

8. In the result, appeals of all the assessees are dismissed. 

News Reference: Tejwant Singh Negi, Kinnaur vs Assessee