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2008 (10) TMI 262 - AT - Income TaxLong-term and short-term capital gains - Transfer Of Land - Joint development agreement - exemption u/s. 54F - Liability to pay capital gains - Capital gain arise in the year of entering into development agreement or not - AO hold that the assessee had entered into two different transactions resulting into two kinds of capital gains-long-term capital gains on transfer of ownership rights over 55 per cent of the undivided share of land and short-term capital gains on sale of flat - CIT(A) upheld the computation of short-term capital gains on the sale of flat (part) except for correcting certain computational errors. Thus, the assessee got partial relief from the CIT(A). HELD THAT:- It is well established that it is enough if the assessee has received the right to receive the consideration. The assessment so made may be liable to modification when the actual consideration is determined. Therefore, we have no hesitation in holding that in the instant case, capital gains accrued in the previous year relevant to AY 2000-01. May be, the AO might have had to resort to estimating the consideration but the same would have been subject to modification later. Thus, we hold that the capital gain arising on the transfer of land is not chargeable to tax in the year under consideration. It is not in dispute that the land held by the assessee was her capital asset. It cannot also be disputed that the flats acquired by her were also her capital assets. As per the development agreement she has no claim over the land which has been given to the developer and she may not sell any of the flats coming to her share. In that case, despite there being transfer of land as per s. 2(47), the assessee could escape the liability of capital gains tax. Therefore, the stand of the assessee to treat the two transactions as one is too fallacious. It does not merit acceptance. Accordingly, we hold that transfer of land in consideration of the flats constitute one transaction giving rise to capital gains and the sale of flats by the assessee constitute another transaction giving rise to capital gains. Year of Taxability of capital Gain - Transfer of land - HELD THAT:- It is well established that it is enough if the assessee has received the right to receive the consideration. It may be quantified later or it may be received later, but these factors do not retard or stall the accrual and hence the gain has to be taxed in the year of its accrual only. - in the instant case, capital gains accrued in the previous year relevant to asst. yr. 2000-01. - the capital gain arising on the transfer of land is not chargeable to tax in the year under consideration. Exemption u/s. 54F - It has been rightly allowed by the CIT(A) as the provision is very clear to the effect that if the assessee is having one residential house as on the date of transfer of the asset, then the assessee would be entitled to exemption u/s. 54F. Therefore, on this issue we uphold the order of the CIT(A) and reject the ground raised by the Revenue. Computation of Capital Gain - Allowability of the cost of the old superstructure demolished by the assessee - HELD THAT:- the building being attached to the earth will pass on to the transferee along with the land. It is immaterial that the said building was demolished by the assessee. It was merely taking upon oneself a responsibility. Further, it also makes no difference if the sale proceeds of the scrap are taken by the owner, i.e., the transferor. This fact does not necessarily lead us to the inference that the building is not transferred along with the land. Thus, unless there is a specific agreement to the contrary, when land is transferred, things attached to it or fastened to anything attached to the earth will also get automatically transferred. At the most, if the owner receives the sale proceeds of the scrap, then while computing capital gains on transfer of land, the proceeds so received may be added to the overall consideration received by the assessee. Computation of Capital Gain - Matter restored before the AO to compute the capital gain in view of the various issued decided in this matter.
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