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2018 (10) TMI 58 - ITAT HYDERABADCalculation of capital gain - CIT(A) rejection of the market value rate adopted by the Sub-Registrar relatable to the superstructure as consideration for calculating Long term capital gains - JDA - Held that:- There is no finding by any of the Courts that vide JDA, there is no transfer of property u/s 2(47)(v). In fact, in lieu of parting of a portion of its land, the assessee is receiving the consideration in kind (i.e. by way of superstructure on the land retained by it) in future and is therefore, a transfer within the meaning of section 2(47)(v) of the Act. As regards the quantification of the consideration received by the assessee, we find that the capital gains has arisen to the assessee on account of the execution of the joint development agreement. The cost of construction should include only the amount of ₹ 60.00 lakhs which was actually paid and not the entire amount which was agreed to be paid. Further, cost of construction also varies due to duration of construction and also other circumstances. Therefore, at the time of filing of the ROI it is difficult to estimate and consider the cost of construction to the builder as the consideration for the land. When the assessee is offering the capital gains, it can only do so, on the basis of material available before it at that point of time and cannot presume about the events in future. Therefore, the assessee had adopted the SRO value, but as rightly pointed out by the AO and the CIT (A), the same cannot be relied upon in the case as the description of the nature of the building in the SRO certificate did not match with the description of assessee’s building. The quality of construction would also differ between building-to-building. SRO value can at best be a guiding factor but cannot be a substitute. Therefore, we reject the assessee’s contention that the SRO value should be accepted as the value of the property receivable by the assessee - the cost of construction of the building alone is the right choice, as at the time of assessment proceedings, the cost of construction was available. AO has taken into consideration certain expenditure incurred by the builder which is not part of the cost of construction of the building. The assessee’s contention that certain part of consideration has already been offered to tax in the hands of its sister concern also has not been verified by the AO/CIT (A) - remand the issue to the file of the AO with a direction to re-compute the capital gain again by considering only elements which are necessary for the construction of the building as the cost of construction, and not the entire expenditure of the builder, including the compensation agreed to be paid to Kohli Constructions and also the finance charges etc., which are not relevant for computing the cost of the construction - assessee’s appeal is partly allowed for statistical purposes.
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