TMI Blog2012 (10) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... The exchange value in consideration of 50% of the land was agreed to be conveyed to the Developer and/or his nominee/s valued at ₹ 1,16,70,000/-. The fair market value as on 01-04-1981 as per the Sub-Registrar valuation has to be taken into consideration. However, the Assessing Authority has not taken into consideration this aspect of the matter. Taking into consideration the project cost incurred by the developer on the basis of their letter dated 01-02-2004, which includes all expenditure connected with the construction of the Residential Apartment. The exchange value as specified in the project development agreement can be taken as the basis for computation of the construction in joint development. The consideration specified in the said document represents the market value on the date of entering into the agreement. The assessment made by assessing authority is contrary to law - against the Revenue. Claim benefit under section 54 - Held that:- As per the Development Agreement entered into between the parties, the assessee and his brothers have demolished this existing residential building and handed over the vacant space to an extent of 16800 sq.ft. to the Developer fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee and two of his brothers. In that, the assessee is entitled for 1/3 share. The property value has been fixed at Rs.66,00,000/- taking into consideration the fair market value as on 01-04-1981. The long term capital gain has been shown as NIL. However, the Assessing Authority not accepting the long term capital gain shown by the assessee, worked out the capital gain based on the actual cost of construction reported by the Developer vide letter dated 01-02-2004 as Rs.2,86,22,931/- and 50% has to be reckoned as the value of site received by the assessee and his brothers would comes about Rs.1,43,11,465/-. The share of the assessee is 1/3. Taking into consideration the said value, the Assessing Officer assessed the capital gain in respect of the property situated at Aga Abba Ali Road at Rs.47,64,821/- and assessed the income for the assessment year 2001- 2002 as Rs.20,96,614/- including the interest and surcharge, issued demand notice as per the Assessment Order dated 26-3-2004. The assessee being aggrieved by the Assessment Order dated 26-3-2004 preferred an appeal before the CIT (Appeals), Bangalore contending that the order passed by the Assessing Authority is contrary to law. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed was executed on 08-08-1987. In view of the judgment of this Court in the case of COMMISSIONER OF INCOME, TAX v/s Dr.V.V.MODY reported in 218 ITR page 1 (KAR), the fair market value as on 01-04-1981 cannot be adopted since the assessee gets the ownership only on 08-08-1987. The capital gain assessed by the Assessing Authority and confirmed by the CIT (appeal) is in accordance with law. Further insofar as the property situated at Aga Abba Ali Road is concerned, the assessee along with his brothers entered into a development agreement and pursuant to the same, the building situated in the said property was demolished and vacant site was handed over to the developer. As per the Development Agreement, 50% of the flats have to be given, to the owners of the property along with car parking space and saleable terrace. The, remaining 50% would go to the Developer. The joint development agreement was entered into between the parties in the year 1995 and construction of the residential apartment was completed in the year 2000. Hence, the property value of the year 2000 has to be taken into consideration and not the property value as on the date of agreement. Further, 50% of the total cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authorities below. 7. It is not in dispute that the property situated at J.P.Nagar was originally allotted by the then CITB (Now known as 'BDA') on 05-11-1975 in favour of the father of the assessee Sri.B.L.Rakhra on lease-cum-sale basis and put the allottee in possession of the property. In the meantime, the father of the. appellant died. In view of that, the BDA executed the registered sale deed in favour of the assessee and his two brothers as per the sale deed dated 08-08-1987. Further, the assessee has put up construction and compound wall to the said property. While computing the capital gain from the said property, the assessee claimed indexation benefit in respect of the cost of acquisition right from the date of original allotment by the BDA. The allotment has been made and put the allottee in possession in the year 1977 itself. The fair market value has been taken as on 01-04-1981. The assessee is entitled for 1/3 share in the said property. Since the allotment has been made and put the allottee in possession prior to 01-04-1981, the fair market value as on 01-04-1981 has been taken into consideration for, arriving at capital gain of Rs.8,53,000/-. The issue No.1 ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee is entitled to adopt fair market value of the property as on 01-04-1981 and accordingly, entitled to indexation while computing the capital gain in respect of J.P.Nagar property. Hence, issue No. 1 is answered against the Revenue. 9. Insofar as the property situated at Aga Abba Ali road is concerned, as per the Development agreement of the year 1994, the Developer was put in possession of the property on 6-3-1995 for construction of the Apartment and construction of the apartment was completed in the year 2000. Clause 1.1 of the agreement reads as under: "The owner shall sell 50% of undivided right and interest in the schedule-A property to developer and/or their nominee/s in all equivalent to 8,250 sq.ft. approximately (hereinafter called the 'saleable undivided right and interest in the schedule property in consideration of the development). A. Paying non-refundable deposit of Rs.21,00,000/- (Rupees twenty one lakhs only) as set out in para 11.3; B. The construction and handing over to the owners 50% of the super built area to be constructed on the scheduled property; C. Construction and handing over to the owners 50% basement, car parking units; ..... X X X X Extracts X X X X X X X X Extracts X X X X
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