Decided on May 11,1994



R.N. Singhal, Accountant Member - (1.) ASSESSEE's this appeal is directed against the refusal of the Departmental authorities to rectify under Section 154 an adjustment made under Section 143(1)(a).
(2.) Assessee is an individual. She had sold a self-occupied flat at Usha Kiran in Bombay, for a sum of Rs. 1,01,64,884. After deduction of brokerage and transfer charges totalling Rs. 1,60,400, the net sale proceeds came to Rs. 1,00,04,484. Cost of acquisition deductible came to Rs. 2,24,000 leaving a balance of Rs. 97,80,484. In the return of income, assessee dealt with the abovementioned sum of Rs. 97,80,484 as follows : JUDGEMENT_11189_TLIT0_19940.htm The Assessing Officer made adjustment under Section 143(1)(a) in the context of that figure of Rs. 97,80,484 in the following manner: JUDGEMENT_11189_TLIT0_19941.htm The assessee vide letter dated 22-1-1992 sought the rectification of adjustments made under Section 143(1)(a) and claimed that the Assessing Officer was not entitled to vary the quantification of long-term capital gains as he did. The Assessing Officer rejected that request vide his letter dated 11th February, 1992. On further appeal to the CIT(A), the latter noted inter alia the Explanation below Section 53 inserted by the Finance Act, 1987 w.e.f. 1-4-1988 and ultimately dismissed the assessee's appeal.
(3.) BEFORE us, the learned Advocate for the assessee explained the background of the case and submitted that according to the assessee deduction available under Sections 53 and 54 would be allowed after deduction under Section 48(2) while according to the Department, deductions under Sections 53 and 54 have to be allowed first and thereafter only deduction under Section 48(2) has to be quantified. He emphasised that the dispute between the assessee and the Department was regarding the sequence of these two types of deductions - namely those under Sections 53 and 54 on the one hand and under Section 48(2) on the other hand. He very strongly urged that, to say the least, it was a highly debatable issue and hence not permitted for adjustment under Section 143(1)(a). He relied very heavily on the Hon'ble Bombay High Court decision in the case of Khatau Junkar Ltd. v. K.S. Pathania [1992] 196 ITR 55 and specifically pointed out the relevant portion of the Head notes on pages 56 to 59. He submitted that such a change in a computation of taxable part of long-term capital gains was not envisaged in the adjustments to be made under Section 143(1)(a). He cited two subsequent decisions of the Hon'ble High Court of Bombay in Bank of America N.T. & S.A. v. Du. CIT [1993] 200 ITR 739 and Mahalakshmi Glass Works Ltd. v. Sunil Gupta, Assistant CIT [1993] 203 ITR 658 to say that the principles laid down in the case of Khatau Junkar Ltd. [supra) had been reiterated and followed. He further emphasised that since adjustments under Section 143(1)(a) do not envisage any opportunity of being heard to the assessee, it was imperative that debatable adjustments should not be made at all. He wound up by saying that even on merits, the assessee had a good case, but at any rate, there was no question of such adjustments being permitted under section;

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