TMI Blog2010 (11) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... ifiable capital asset and it continues to remain so, even after construction of building thereon - It was further held that land held by the assessee for a period exceeding 36 months - building constructed later and held by the assessee for a shorter period, land cannot be treated as short term capital assets - Hence, do not find any infirmity in the Ld. Commissioner of Income Tax (Appeals)'s order accepting long term capital gain arising out of the sale of land. Hence, there is also no infirmity in Ld. Commissioner of Income Tax (Appeals)'s directions to allow exemption u/s 54EC - Thus, the appeal of the revenue is dismissed. - ITA. No. 3375/Del/2010 - - - Dated:- 12-11-2010 - C.L. Sethi, Shamim Yahya, JJ. RIS Gill CIT(DR) for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount of property at S-7 and S-8, Green Park, New Delhi. Assessee also submitted photocopy of purchase and sale deed. It was further submitted that assessee had purchased the property at S-7 and S-8, Green Park, New Delhi for Rs.2,16,00,000 including stamp duty of Rs.16,00,000 on 30.03.2001, 25.04.2001 and 03.07.2001 shown under the head 'fixed assets land Rs.1,48,00,000 and Building Rs.68,00,000. It was further submitted that assessee has made construction/alteration during the year as per requirement and charged depreciation accordingly year to year. It was further submitted that assessee had never charged depreciation on land. The property was sold for Rs.5,75,00,100 under the bifurcation land Rs.4,72,00,000 and building Rs.1,03,00,000. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there are additions up to 31.3.2003. Since the building along with furniture and fixtures has been sold on 19.8.2005 i.e. within a period of three years. Hence Assessing Officer held that assessee's claim of long term capital gain is not correct and, therefore, the claim of deduction under sec.54EC of the Act is not allowable. 5. Upon assessee's appeal, Learned CIT(Appeals) considered that arguments and submissions filed in this regard. He observed that assessee had purchased property situated at S-7 and S-8, Green Park, New Delhi comprising of land and two and half storied building purchased vide sale deed executed on 30.3.2001 and 25.4.2001 relevant to the assessment year 2001-02 and 2002-03 for a consideration of Rs.2,16,00,000 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls) held that he was of the opinion that Assessing Officer was not justified in saying that valuation report now submitted by the assessee are not admissible evidence under Rule 46A of the Income-tax Rules. Learned CIT(Appeals) gave a finding that on perusal of the extract of order sheet entry filed by the assessee he found that during the course of assessment proceedings, Assessing Officer never asked the assessee to produce the valuation reports which were available with the assessee. He noted that in fact no notice to explain the valuation basis of the property or the intent composite sale was given to the assessee hence Learned CIT(Appeals) held that additional evidence was admissible under Rule 46A of the IT Rules. The assessee further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) has admitted the same as additional evidence under Rule 46A holding that assessee was prevented by sufficient cause for filing the valuation reports. We find that as per assessee's submissions, the total purchase value was Rs.2,16,00,000 on which cost of improvement completed on 24.11.2001, amounting to Rs.24,64,243 was added and the total cost of the property was Rs.2,40,64,243. Further in the books of account, the land and building was said to have been separately shown as under: Property Description Property Year of Capitalization Land Building Total A S-7, Green Park, New Delhi. F.Y. 2000-01 90,00,000 49,32,000 1,39,32,000 B S-8, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding constructed later and held by the assessee for a shorter period, land cannot be treated as short term capital assets. This case law clearly applies to the facts of the present case. Other case law referred by the Ld. Commissioner of Income Tax (Appeals) also supports the assessee's proposition. 9.1 Thus, when the value of the land and building has been bifurcated at the time of purchase and so reflected in the books of accounts, any construction in building cannot link to the land at the time of sale also. Assessee has submitted a Valuation Report bifurcated the sale value between land and building. No infirmity in this bifurcation has also been pointed out. In such circumstances, revenue's plea that sale of land cannot be bifurca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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