9911796707
TMI Blog2014 (9) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... cted with each other in both the years. In this ground of appeal, assessee has disputed computation of short term capital gain and denial of exemption u/s 54EC of the I.T. Act. The facts and circumstacnes for this ground are common in both the years, therefore, we take these grounds together. 5. The brief facts of the case are that the assessee is an HUF consisted of Shri S.R. Madhavan, as kartha, Smt. Chitra Madhavan, wife of the Karta and member of the joint family, Kum. Meera Madhavan, minor daughter of the Karta as the other members thereof. The assessee HUF came into existence on 09.05.2002 pursuant to the partition of the larger HUF on 09.05.2002. The larger HUF was consisted of Sri S.R. Madhavan and Sri S. Rangachari, the Karta and father of Sri S.R. Madhavan and Smt. Kanaka Rangachari, mother, Smt. Malin I Anantachari, sister and Sri Sridharan, brother. A building on a plot of land comprised in survey No.56, 1st main Road, Raja Annamalaipuram, Chennai belonged to Sri S. Rangachari who purchased it on 11.7.1968. The assessee had entered into a joint development agreement (JDA) with M/s Sumanth & Co. Chennai on 08.04.2004 for jointly developing the said property by demolishi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee, his brother and sister would get 57% of the sahres in built up area. Towards the cost of these shares, they have to forego their rights in the undivided plot of land to the extent of 43% of the total land, meaning thereby the movement they have relinquished their rights in the land, for a consideration of 7763 sft built up area, they had earned LTCG. This LTCG is taxable in assessment year 2005-06. To this extent, there is no dispute between the parties. The dispute relates to computation of STCG in assessment year 2006-07. As per the agreement, the assessee was to receive 65% shares of 57% shares which fallen to the three members of HUF i.e. the total area meant for the assessee, his brother and sister was 7763 sft. The share of the assessee was 5046 sft. The assessee could receive 2759 sft. Rest of the shares i.e. 2278 sft was given up by the assessee in favour of the builder as well as his sister. In lieu of this, the assessee got Rs. 27,79,570/-. The dispute remains taxability of this amount as a STCG. 9. The learned Counsel for the assessee submitted that from his sister he has received Rs. 10.00 lakhs only, whereas from the builder, he received Rs. 17,79,570. He could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns' shall be computed by deducting from the full value of consideration received or accruing as a result of transfer of the capital asset the following amounts namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer. (ii) The cost of acquisition of the asset and the cost of any improvement thereto". In the case of the appellant "full value of consideration" accrued works out to Rs. 56,95,000/- on the basis of Rs. 2,500/- per sft for the surendered constructed area of 2278 sft, including undivided interest in the land, which makes it clear that the working submtited by the appellant during the appellate proceedings in which the gross consideration shown at Rs. 27,79,570/- is not correct. The Assessing Officer also committed a mistake in considering the above amount as full value of consideration instead of Rs. 56,95,000/-. However, full value of consideration of Rs. 56,95,000/- on the surrender of constructed area includes the two elements i.e. the consideration for the constructed area surrendered and also the consideration for the undivided interest in the land related to the surrendered built up area, which is also evident from the fact th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer is directed to assess the short term capital gains at Rs. 9,10,249 instead of Rs. 27,79,570/-.". 11. On an analysis of the record, we find that as far as the sale of a property to M/s. Sumanth & Co. under the agreement dated 8.4.2004 is concerned, it was completed in the accounting year relevant to assessment year 2004-05, because the assessee has surrendered all its rights and entitlements in the undivided share of land to the extent of 43% in favour of the builder. The consideration was in terms of kind i.e. 57% share of the built up area. The consideration was estimated at Rs. 70.00 lakhs. This transaction was complete in the accounting year relevant to assessment year 2005-06. Neither party has disputed it. Once a right to receive built up area accrued to the assessee and it was surrendered in a subsequent period for a consideration, it is a separate transaction. On this transaction the investment was less then 3 years and therefore, STCG would arise. The dispute remains between the parties regarding computation of STCG. The CIT (A) has observed that as per clause iv(b) of the agreement, it was agreed between the parties that on surrender of any built up area, the own ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had made investment eligible for deduction u/s 54EC. This investment was made, though in a period related to assessment year 2006-07 and not within six months from the handing over of the possession to the developer by virtue of joint development agreement. Bu if it is considered a single transaction, then the assessee had made investment on 27.7.2005 in REC Board and it is entitled for the deduction. 13. On the other hand, the learned DR relied upon the order of the learned CIT (A). 14. We have duly considered the rival contentions and perused the record carefully. As observed earlier, the transactions for sale of land was completed in the accounting year relevant to assessment year 2005-06. The assessee has handed over the possession to the builder on 15.06.2004. The assessee itself has disclosed the LTCG in assessment year 2005-06. The investment in REC Board was not made in six months. It was made only on 27.7.2005 i.e. beyond the period of six months. Therefore, the learned CIT (A) has rightly observed that the assessee is not eligible for deduction u/s 54EC. 15. The next ground relates to charging of interest, which is consequential in nature. 16. In view of the above di ..... X X X X Extracts X X X X X X X X Extracts X X X X
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