Bangalore ITAT ruling wherein the tribunal held that merely because the assignment agreement is unregistered, the actual amount paid through proper banking channels by the Assessee cannot be ignored.

Brief background

• The assessee sold property for a consideration of Rs. 1.55 crores, computed long term capital gains as INR 1.51 lakh.
• Assessing officer (AO) selected for scrutiny – made additions of INR 52,89,346. Aggrieved assessee approached DRP & DRP confirmed the addition made.
• AO noticed that as per the sale deed for purchase of property by the Assessee, the fair value of property was adopted at Rs. 36,05,000 whereas the assessee has adopted a value of Rs.49,44,000 as the purchase cost for the purpose of computing capital gains.
• Assessee submitted that the property was originally booked by two assignment holders with the builder, Larsen & Toubro [L&T] and since the assessee was interested in the said property, he paid a sum of Rs.49,44,000 to the agreement holder. In response, AO reasoned that the agreement of assignment was not registered.

Tribunal Ruling

• ITAT observed that the amount was paid through proper banking channels as mentioned in the Assignment Agreement.
• Also, opines that merely for the reason that the assignment agreement is not registered, the actual outflow from the hands of the assessee towards acquisition of the property cannot be ignored for computing the capital gain.
• Remits the issue back to the AO for arriving at the cost of acquisition with proper breakup.