TMI Blog2013 (8) TMI 182X X X X Extracts X X X X X X X X Extracts X X X X ..... e hands of the M/s. Lumbini Constructions alone and proportionate share of the assessee therein, will have to be considered as price for surrendering the land. As informed that no action has been taken in the hands of M/s. Lumbini Constructions no merit in the Revenue's appeal. Capital gains - assessment arise in the year in which the assessee entered into agreement or in which the assessee took possession of the developed property - Held that:- CIT(A) considered the term 'transfer' with respect to capital asset under S.2(47) and also provisions of S.53A of Transfer of Property Act, held that there is only one transaction which took place with reference to the capital gains and that is the sale of 40% of the land in the financial year relevant to assessment year 2007-08 and the sale consideration in respect thereof was worked out at Rs.6.30 crores at Rs.997 per sq. ft. towards 63226 sq. ft. of built up area surrendered in the building constructed. Therefore, the CIT(A) held that there is no transfer which took place in assessment year 2004-05 and capital gains arose only in assessment year 2007-08. This order of the CIT(A) was accepted by the Revenue, and there is no second appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its land amounting to Rs.6,30,36,322. On this amount, the assessee offered long term capital gains. This was done for the assessment year 2007-08. 4. The Assessing Officer vide his original assessment order for assessment year 2007-08 brought to tax this capital gain holding the year of taxation to be the previous year pertaining to the assessment year 2004-05 also. On appeal, vide order in ITA No 0315/Addl.CIT-5/CIT(A)-V/2009-10 dated 22.10.2010 for 2007-08, the CIT(A) held that the capital gains arose only at one stage, i.e. when the 40% of the land was formally transferred in lieu of having received 60% of the built up area in that year only. The second stage of capital gain had not materialized because until this time the built up building had not been sold. 5. Thereafter, the Assessing Officer obtained a report of valuation from the DVO which held that the estimated cost of construction was Rs.6,72,47,194 as against Rs.6,30,36,322 offered by the assessee. Thereupon, the Assessing Officer re-opened the assessment and ultimately made an addition of Rs. Rs.42,10,872 to the long term capital gains disclosed by the assessee of Rs.6,17,42,895, and accordingly completed the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, when the assessee has not supervised the construction and hence is not eligible for the same. 9. After considering the rival submissions, we are of the opinion that there is no merit in the revenue's appeal. First of all, the building is constructed by a builder and the assessee obtained 60% share in the said building constructed, in lieu of surrender of the land for development. Therefore, whatever is cost incurred by the builder can only be the basis for arriving at the capital gains. Further, whenever the matter was referred to the DVO, the DVO being a specialised person for this kind of estimation, allowed 7.5% towards self-supervision to the builder and arrived at the entire value of the building. There is no dispute with reference to the estimation made by the DVO, which is more or less the same as the cost incurred by the builder, as returned by the assessee. In view of these facts, there is no merit in the Revenue's contention that CIT(A) erred in allowing deduction towards self- supervision in the hands of the assessee., when the assessee has not supervised the construction. It is not the assessee's building which is being valued, but the building constructed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Since the order of the CIT(A) became final for assessment year 2007-08, respectfully following the same, the learned CIT(A) deleted the addition made in this year. The findings of the CIT(A) in paras 5.1, 5.2 and 5.3 are as under- "5.1 In the curr4ent assessment year, I find that the Assessing Officer has once again brought to tax the same capital gain. He has stated that the capital gain arises in 3 stages (1)at the time of transfer of 40% of land (2) at the time of handing over possession of constructed area and (3) at the time of sale of constructed area. The specific portion of the assessment order is as below- .................. 5.2 I find that the Assessing Officer has made a factual error. Firstly, by holding that the 40% of land was transferred in the previous year relevant to AY 2004-05. This is incorrect because not transfer took place during that period and the builder never obtained any rights to enjoy 40% of the land. He was only allowed to construct on the 60% of the land, as a contractor. This is not a transaction of "transfer". However, if the version of the Assessing Officer is believed, then there was not taxable transaction pertaining to AY 2007-08. Pay ..... X X X X Extracts X X X X X X X X Extracts X X X X
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