TMI Blog2014 (9) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... fter debiting the value of land, the sale consideration accrued to the assessee is ₹ 29,67,283 - He debited the cost of acquisition of the land from this amount @ ₹ 903/- sft which was valued as cost of construction and in this way worked to ₹ 9,10,249/- is the STCG - The working made by the learned first appellate authority is scientific and based on logic - The rate adopted is the rate accrued between the builder and the assessee for surrender of the constructed area - the assessee cannot dispute that he has not received the amount as worked out by the CIT (A) - there is no error in the order of the CIT (A) in computing the STCG – Decided against assessee. 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. - Decided against the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 sft of the super built up area. The estimated cost of the construction was ₹ 70.00 lakhs. As per this agreement, the property was redeveloped and each stakeholder in the joint development agreement got their shares. 6. The assessee has filed its return of income for assessment year 2005-06 on 29.10.2005 declaring a total income of ₹ 2317/-. It has declared long term capital gain (LTCG) of ₹ 38,33,570/- on sale of house property in the alleged JDA and claimed exemption u/s 54 and 54EC of ₹ 28,41,770/- and ₹ 27.00 lakhs respectively. The assessee has submitted the following computation: Sale consideration received: Assessee per joint venture agreement By way of cheques ₹ 70,00,000 ₹ 27,37,800 ₹ 97,37,800 Assessee's share as per Partition agreement 65% of ₹ 97,37,800 = ₹ 62,29,570 Less: Cost of acquisition: 1981 value: 8,00,000 Indexed cost 8,00,000 x 480 ₹ 38,40,000 Long Term Capital Gain ₹ 38,33,570 Less: Exemption u/s 54: Investment in flat 28,41,770 Exemption u/s 54EC: Investment 27,00,000 in REC Bonds 55,41,770 Restricted to capital gains ₹ 38,33,570 Taxable capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The learned Counsel for the assessee submitted that from his sister he has received ₹ 10.00 lakhs only, whereas from the builder, he received ₹ 17,79,570. He could not have earned any amount from his sister, it was sold at the cost. As far as the money received from the builder is concerned, the value of undivided share in the land is also embedded. Therefore, the computation made by the assessee submited before the CIT (A) ought to have been accepted. The learned DR on the other hand submitted that the learned first appellate authority has considered all these aspects and thereafter worked out the STCG of ₹ 9,10,249/- instead of ₹ 27,79,570/- worked out by the Assessing Officer. He relied upon the order of the CIT (A). 10. On perusal of the order of the CIT (A) we find that the CIT (A) has made a lucid enunciation of the facts and of law on the issue in dispute. It is worth to take note of her finding: 2.3.3.......................... However, the Assessing Officer held that the surrender of the constructed area is a separate transaction which is liable to be taxed under the head short term capital gains for the assessment year 2006-07. The Asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 that the long term capital gain worked out by the Assessing Officer for the preceding assessment year was in regard to the transfer of 43% interest in the land in respect of 3 co- owners, 65% of which was owned by the appellant. There was no transfer of the right in the undivided interest in the land in respect of the remaining 57% which is undivided interest in the land in respect of the constructed area to be allotted to the 3 co-owners and thererore, in view of the judicial pronouncements on which the reliance has been placed by the appellant, the capital gains for the undivided interest in the land has to be computed separately and for the transfer of the constructed area excluding the land has to be computed separately. For computing the short term capital gain, the cost of the acquisition of the constructed area has to be taken at ₹ 20,57,543/- @ ₹ 903/- per sft as worked out by the appellant. Similarly, on the consideration of ₹ 56,95,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 owner would receive a sum of ₹ 2500/per sft. Thus according to the learned Commissioner, the full value of the consideration accrued to the assessee on the basis of ₹ 2500/per sft rate is ₹ 56,95,000/-. In this consideration, value of undivided interest in the land is also embedded. The learned Commissioner had worked out the value of such undivided share in the land at ₹ 27, 27,770/-. This working has been made on the basis, that 43% share of the land is of ₹ 70.00 lakhs. Remaining 57% land belongs to 3 persons namely, the assessee, his brother and sister which worked out to ₹ 92,79,069/- and the assessee had a share of 65% out of this 57%. Thus the land value in assessee's share would come to ₹ 60,31,394/-. This value was meant for built up area of 5037 sft. He worked out the land value of per sft and then multiplied with surrendered area of 2278 sft ..... X X X X Extracts X X X X X X X X Extracts X X X X
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