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2014 (6) TMI 495 - AT - Income TaxInvocation of section 50C of the Act – Verification of sale deeds - Understated sale consideration – Cost of acquisition – Held that:- The AO and the CIT(A) has brought to tax the capital gains arising from both the transaction viz., the development as well sale of the developed areas handed over to the Assessee - capital gains arising out of the development of the land on the basis of an agreement in 2001 and 2002 cannot be taxed in the year - The Assessee had given possession of the land and the developer has also commenced construction on the same from those years – Following Potla Nageswara Rao [2014 (6) TMI 494 - ITAT HYDERABAD] - in case of development agreement which were executed the capital gains cannot be postponed - the profits/ capital gains arising from development of the land cannot be brought to tax this year, except to the extent the Assessee himself has offered for Tax in his return. Only the profits accrued on the sale of the built up area during the year shall be subject to tax - The AO is directed to compute the profit arising from sale of the built up area, together with undivided interest in land if any, made during the year - The addition made by the AO in respect of unsold area cannot be sustained as only profits arising from land and building transferred can be brought to tax - As regards the addition of Rs. 18,55,000/- the explanation of the Assessee is not clear - As the other issues have been set asided to the file of the AO this issue is also remitted back to the AO for fresh adjudication - The AO will consider the applicability of sec 50C and if he feels that the provisions are applicable, he may refer to the Valuation officer for determining the market value- as required in that section – Decided in favour of Assessee.
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