TMI Blog2003 (11) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... as ever made till date by anyone of them. When Sidharth Pratap Chand became adult in 1969-70, a partial partition was done thereby dividing this property equally among the three and was accordingly shown in the income-tax returns. Shri Sidharth Pratap Chand after his marriage in 1977 started showing the property in his return in the HUF capacity. The total value of the property (in which both the assessees had 1/3rd share) was shown at Rs. 6 lakhs approximately in all. 3. The three co-owners made a collaboration agreement with Ansal Properties and Industries Ltd. for saving the land from Urban Land Ceiling Act (ULCA) and for developing the land and getting flats built on it. As per the agreement, the assessee along with other co-owners got built up area of 89136 sq.ft. which was 56 per cent of the total built up area as their share. Thereafter, the three co-owners entered into agreements with various buyers and sold the flats during the previous years relevant to assessment years 1993-94 to 1995-96. 4. During the year in question, the three co-owners sold 18631 sq.ft. of built up area against total consideration of Rs. 4,72,98,075. The capital loss was declared by both the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cquisition @ Rs. 1450 per sq.ft. adopted by assessee as, according to him, such cost was to be determined with reference to the date of 1 st April, 1981 and not with reference to31-3-1987adopted by the assessee. The Assessing Officer also noticed that assessees had declared the value of 1/3rd share in the property at Rs. 2,03,000 in the wealth-tax returns which had been accepted by the department. Therefore, he adopted the cost of acquisition of the entire property at Rs. 6,10,000 as per the wealth tax record and worked out the cost of acquisition for 18631 sq.ft. at Rs. 1,27,436 and consequently, the indexed cost of acquisition was worked out to Rs. 3,30,060. Since the sale consideration was Rs. 4,72,98,075, the capital gain was worked out at Rs. 4,69,68,015. The 1/3rd share of both the assessees was accordingly worked out at Rs. 1,56,56,005 each. 6. The matter was carried in appeal before the CIT(A), who held as under: (i) That in the fresh assessment proceedings, the Assessing Officer was not bound by the cost of acquisition as on 1-4-1981 determining the original assessment proceedings since the Tribunal had restored the entire matter and specifically directed the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt was entered into. Regarding cost of acquisition of 56 per cent of land, it is submitted that one should assess the market value as on10-12-1984when it was released from the ambit of ULCA since the character of the land should remain the same. According to him, the theory of escalation cannot be applied to such a situation. Alternatively, it is submitted that value of land assessed under section 7(4) of Wealth tax Act does not represent the market value as on1-4-1981since by virtue of such provisions, the assessed value was the frozen value and not the market value. On the other hand, the learned DR has completely relied on the orders of CIT(A) and, therefore, need not be repeated. 7. Rival submissions of the parties have been considered carefully. After examining the material placed before us, we are unable to uphold the contention of the learned counsel for the assessee that the entire land was sold on2-5-1984under the collaboration agreement against the consideration of 56 per cent of share in the built up area. In a situation before us, an immovable property can be said to be sold or transferred either when the deed of conveyance is executed as per the general law under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sferred by the assessee. In our considered opinion, what was transferred under the collaboration agreement by the assessee to the builder was only 44 per cent of land owned by them in consideration of 56 per cent of the built up area and not entire land as contended by the learned counsel for the assessee. Consequently, it has also to be held that in year under consideration, the assessees not only transferred the flats but also the proportionate land. 8. The next question is as to at what point of time the land was transferred and at what consideration since the same would be relevant for determining the cost of acquisition of 56 per cent of built-up area. Admittedly, no conveyance deed has been executed by the assessee. From the nature of the agreement, it is clear that assessee was bound to transfer the land after the possession of built-up flats was given by the builder to the assessees. We have been informed that possession of flats was given in financial year 1991-92 though no material is placed before us. Assuming the same to be correct, it is held that there was simultaneous transfer of possession of 44 per cent of land by the assessees to the builders and possession of 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly, this property was purchased by the ancestors of the co-owners in 1947 and the co-owners inherited the same. Therefore, the value of land has to be taken as on1-4-1981. No exercise has been made for determining the cost of acquisition of land as on1-4-1981. While computing such value, the provisions of ULCA would also had to be taken into consideration as such provisions were in force on that date. However, on this aspect, we are not in agreement with the finding of the CIT(A) that the value of the land as declared under section 7(4) of the Wealth-tax Act should be adopted since, in our opinion, such value is a frozen value for the purpose of section 7(4) and does not represent the market value as on 1-4,1981. The Hon'ble Supreme Court in the case of Shekhawati General Traders Ltd. v. ITO [1971] 82 ITR 788 [as noted by CIT(A)] has clearly observed "The High Court completely overlooked the fact that for the ascertainment of the fair market value of the shares in question on January 1, 1954, any event prior or subsequent to the said date was wholly extraneous and irrelevant and could not be taken into consideration". In view of these observations, the frozen value of land under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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