TMI Blog2014 (6) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... during the AY - the CIT (A) has not at all dealt with the issue of addition of Rs.18,55,000/- made on account of understated sale consideration and an amount of Rs.9,28,951/- u/s 50C being the difference between the valuation made by the registering authority for stamp duty purposes and sale consideration mentioned in the sale deed - thus, the matter is required to be remitted back to the AO for fresh adjudication – any advance received by the assessee towards sale of built up area should not be considered for capital gain - Decided in favour of Revenue. - ITA No. 95/Hyd/ 2014 - - - Dated:- 4-6-2014 - Shri Chandra Poojari And Shri Saktijit Dey,JJ. For the Appellant : Shri Solgy Jose T. Kottaram For the Respondent : Shri S. Rama Rao ORDER Per Saktijit Dey, J.M: This appeal of the department is directed against the order dated 30-9-2013 of CIT (A) V, Hyderabad pertaining to assessment year 2006-07. 2. It appears from the grounds raised, the department is aggrieved by the order passed by the CIT (A) deleting the additions made by the Assessing Officer and computing long term capital gain of Rs.50,34,452/-. 3. Briefly the facts are, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which roughly case to 19136 sq.ft. Out of which the assessee sold 9443 sq.ft in the financial year 2004-05 but the receipts from sale of such built up area was admitted as income in the assessment year under dispute. He further found that the assessee had another property bearing No.6-3-866/A, Greenland Road, Begumpet, Hyderabad admeasuring 1156 sq. yards which was given for development of a multi-storied commercial complex by name Mayank Plaza to M/s Maheswari Plaza Resorts (P) Ltd., vide development agreement dated 16-3-2001 and supplementary agreement dated 23-2-2002. As per the terms of the development agreement, the assessee received 50% of the built-up area and parking space of the developed property i.e., 9650sft., which has been sold by the assessee during the assessment year under consideration. 5. In response to the query made by the Assessing Officer as the assessee has admitted income in the present year when the property was sold in the preceding year, it was submitted that the two properties given for development was mortgaged to Exim Bank of India as 1st charge holder and Punjab National Bank as second charge holder. In 2002 assessee s account with PNB became NP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration, the assessee has sold 7 Numbers of flats in Mayank Towers and total sale consideration received was to the tune of Rs.1,23,02,000/-.It was submitted, the built up area received in Mayank Plaza having been sold in the earlier years the gain arsing on sale of the constructed areas cannot be taxable in the assessment year under consideration. Accordingly, the assessee computed the capital gain at Rs.50,34,452/- after deducting the cost of constructed area of Rs.66,75,000/-. The CIT (A) after considering the submission of the assessee accepted the same by holding that the Assessing Officer has not correctly framed the assessment order as the Income-tax Appellate Tribunal had directed to exclude the capital gains arising on entering into development agreement. He held that only capital gains arising on sale of constructed area during the previous year alone would become taxable. He further ob served that while in the original assessment order, the Assessing Officer computed long term capital gains in respect of sale consideration received but in the consequential order he has treated it as short term capital gains. 7. The learned DR submitted before us that as per the P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Potla Nageswara Rao, where the JM was the Author of the order, we are of the opinion that in case of development agreement which were executed the capital gains cannot be postponed. In these circumstances the profits/ capital gains arising from development of the land cannot be brought to tax this year, except to the extent the assessee himself has offered for tax in his return. Only the profits accrued on the sale of the built up area during theeyar shall be subject to tax. The Assessing Officer is directed to compute the profit arising from sale of the built up area, together with undivided interest in and if any, made during the year under appeal. The addition made by the Assessing Officer in respect of unsold area cannot be sustained as only profits arising from land and building transferred can be brought to tax. As regards the addition of Rs.18,55,000/- the explanation of the assessee is not clear. As the other issues have been set aside to the file of the Assessing Officer this issue is also set aside to the file of the Assessing Officer redoing it de novo after giving reasonable opportunity to the assessee. The Assessing Officer will consider the applicability of sec. 50C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the consideration received from sale of floor space and not the amounts received from developer. However, as it appears from the order of the CIT (A), the assessee has stated that so far as Mayank Plaza is concerned, there is no sale of constructed area during the year under consideration so as to compute capital gains in the impugned asst. year. However, what are the evidences to substantiate such claim has not been brought out in the order of the CIT (A). The assessee has also not produced any material before us to show the actual date of sale of the constructed area in Mayank Plaza or for that matter the actual built up area sold during the asst. year under consideration. In these circumstances, we are unable to record a finding of fact as to whether the assessee has only received of Rs.1,23,02,000/- towards sale of constructed area, as claimed by the assessee. Similarly, on a perusal of the order of the CIT (A) , we find that the CIT (A) has not at all dealt with the issue of addition of Rs.18,55,000/- made on account of understated sale consideration and an amount of Rs.9,28,951/- u/s 50C being the difference between the valuation made by the registering authority for stam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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