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2018 (1) TMI 1 - AT - Income TaxLong term capital gain or short term capital gain - exemption u/s 54F - Assessment of long term capital gains in exchange of land for row houses - Held that:- Bombay High Court in the case of Chaturbhuj Dwarakadas Kapadia [2003 (2) TMI 62 - BOMBAY High Court] held that the year of chargeability of capital gain is assessable in the assessment year in which it was entered into the development agreement. The ITAT held that the development agreement results into transfer of capital asset and the year of chargeability is the year in which the said contract was executed. In the instant case, the development agreement was executed on 24.12.2000 and given possession of land to the developer and allowed the developer to take up the construction and enter into all the contracts for obtaining the permission for civil authorities. The developer was also permitted to mortgage, transfer, create charge in respect of the 50% of the constructed area relating to the developer. Hence, the capital gains for transfer of land in respect of the developer’s share cannot be assessed in the assessment year 2006-07 and relates back to the assessment year 2001-02. Hence, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. The revenue’ appeal on this ground is dismissed. Sale consideration of 3 row houses - AO taxed the market value of the four row houses as long term capital gains for transfer of land in A.Y.2006-07 - Held that:- The sale value of the three row houses involve the long term capital gains in respect of transfer of land and short term capital gains in respect of the row houses. The assessee has sold the land which was acquired in the year 1999 in the year 2005-06. Therefore, the consideration received for transfer of land would be taxed as long term capital gains and the consideration received for sale of row houses would be taxed as the short term capital gains. Ld.CIT(A) also has taken the same view. Since there was a difference in actual sale consideration the valuation as per 50C of I.T.Act, the full value of consideration should be adopted as per the stamp valuation authority which was ₹ 89,51,843/-. Accordingly, we uphold the order of the Ld.CIT(A) and is dismiss the revenue’s appeal on this ground. Cost of construction - Held that:- The assessee had acquired the his share of built up area in exchange of transfer of 50% of land. The transfer of land attract capital gains in the year of transfer as held by us. The assessee did not get the constructed area free of cost. Therefore the constructed area received by the assessee in exchange of land required to ascertained as per the cost incurred by the builder or the stamp valuation authorities and the same required to be allowed as deduction. Hence, we hold that CIT(A) has rightly held that assessee is entitled for deduction of cost of construction from the sale consideration. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld. In the result, appeal of the revenue on this ground is dismissed. Sale of three row houses as short term capital gain instead of long term capital gains - Held that:- the actual delivery of the row houses to the assessee took place in 2005-06. i.e. the construction, completion and handing over of the constructed houses was in 2005-06 and the assessee has sold the row houses immediately on receipt of the same. The assessee did not retain the row houses for more than 36 months as required u/s 2(29A) and 2(29B) to hold the same as a long term capital asset . Since the assessee was holding the asset for less than 36 months, the CIT(A) rightly held that the transfer of land should be assessed as long term capital gains and the transfer of row houses to be assessed as short term capital gains. Therefore, we do not find any infirmity in the order of the Ld.CIT(A) and the same is upheld Deduction u/s 54F - Held that:- In the instant case, the assessee owns two residential houses, one is plot No. HIG-1B-102, Seethammadhara and the four row houses received in exchange of transfer of land. Therefore, the assessee has not satisfied the conditions for allowing deduction u/s 54F. Accordingly,we hold that the CIT(A) has rightly rejected the claim of deduction u/s 54F of I.T.Act and we uphold the same. The assessee’s appeal on this ground is dismissed. Entitlement to deduction u/s 54 - Held that:- In the instant case, the land is the long term capital asset and the residential house is a short term capital asset. The right in constructed area was acquired by the assessee in the year 1999-2000 by transfer of land. Though for the purpose of taxing the capital gains, the taxing authority is right in his approach for the purpose of taxing capital gains of residential house as short term capital gains and the land as long term capital gains, when assessee has sold both in a single transaction, the assessee is entitled for deduction u/s 54(1)
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