Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2017 (11) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (11) TMI 1005 - AT - Income TaxCapital gain computation - Adoption of sale value of land transfer - Held that:- As far as the value of sale consideration is concerned, the AO made a mistake in adopting the guide line value as at the time of sale of Flat No. 202, which was subsequent to the date of agreement i.e., 19-06-2001 which happens to be in AY. 2002-03 and not in the impugned year. Assessee offered capital gains on completion of super structure during the year and obtained 8 flats. Therefore, there is nothing wrong in adopting the cost of super structure as full value of consideration. AO is directed accordingly. Cost of acquisition - Held that:- The value of transferred land and cost of building demolished. As far as the cost of land is concerned, the value as on 01-04-1981 has to be adopted. However, as the guidelines values are not revised upto 1995, the AO adopted ₹ 70/- after allowing 5% increase in the value as fixed in 1975. This is not correct. The value of ₹ 1,000/- claimed by assessee is also without basis. Moreover, the cost of building demolished would also become cost, as the building would reduce the freehold land value. Demolition of existing building could result in developing the land. Therefore, the cost of building will be allowable as cost of improvement. The AO’s hyper technical view that assessee transferred only ‘land’ is not correct as the demolition of existing building for developing a new structure is part of the ‘transfer’ and the cost has to be allowed while computing ‘capital gains’. The AO is therefore directed to consider the cost of building demolished at ₹ 100/- per sq. ft., as claimed. The value of land can be determined approximately at ₹ 300/- keeping in mind the claim of assessee and AO’s determination on guideline values. AO is directed to adopt cost of acquisition accordingly. Benefit of Section 54/54F - Held that:- AO’s contention that assessee owns more than two residences was not correct. Assessee got eight apartments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere the AO contends that assessee had more than one building as on the date of transfer i.e., on 19-06-2001. Subsequent acquisition of any number of houses will not prevent assessee claiming the deduction for transfer as on 19-06-2001. Therefore, the AO’s view can not be upheld. Assessee is entitled for deduction u/s. 54/54F. The decision in Suseela M.Jhaveri's case [2007 (4) TMI 289 - ITAT BOMBAY-I ] holding that only one residential house should be given the relief under Section 54 does not appear to be correct and we disapprove of it. Assessee is entitled for claim u/s. 54/54F on all the flats. AO is directed to allow the deduction as claimed. Compensation received for vacating the building - This is a capital receipt. AO has to adopt the same as part of the transfer. ₹ 1 Lakh cannot be brought to tax as ‘income from other sources’. AO is directed to include the same as cost of sale consideration. However, the facts indicate that assessee has offered capital gain in the return of income. The assessment has been reopened u/s. 147 on the reason of escapement of income. Assessee also filed the same return in response to the notice u/s. 148. Consequently, the claims settled cannot be reagitated and only that part of the income which has escaped assessment has to be considered. Following the principles laid down by the Hon'ble Supreme Court in the case of CIT Vs. Sun Engineering Works (P) Ltd., [1992 (9) TMI 1 - SUPREME Court], direct the AO to compute the capital gains as directed above and in case the same falls below the returned income, accept the returned income as such.
|