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2015 (4) TMI 433 - ITAT DELHI

2015 (4) TMI 433 - ITAT DELHI - TMI - Computation of capital gain - actual cost incurred by the assessee for the acquisition of the property has to be taken for computing capital gain and part of it cannot be disallowed on the basis that construction is demolished before sale as held by CIT(A) - Held that:- Considerable cogency in the finding of the CIT(A) wherein held that the demolition of building was a part of the process of land transaction and, hence, the cost of property was the actual co .....

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mated and accordingly, estimated the said consideration at ₹ 2.75 lacs which should be added to the consideration disclosed ₹ 24 lacs.

We find force in the Ld. CIT(A)’s computation which read Total sale consideration [As per registered deed dated 3.2.07 + sale consideration of ‘Malwa’ (Rs. 24,00,000 + ₹ 2,75,000/-) ₹ 26,75,000/- LESS Cost of acquisition as per registered deed dated 17.5.06 ₹ 23,70,020/- = SHORT TERM CAPITAL GAIN ₹ 3,04,980/- Decided .....

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in not appreciating that the cost of land and building have been mentioned separately in the registered purchase deed and accordingly the AO has rightly computed the Capital Gain. 2. In the facts and circumstances of the case, the Ld. CIT(A) has erred in not appreciating that the benefit of capital gain, especially when cost of acquisition of land and building have been mentioned separately in the purchase deed. 3. In the facts and circumstances of the case, whether the Ld. CIT(A) was justified .....

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IT(A) are that in this case Return of income in this case was filed on 24.09.2007 declaring income of ₹ 7,72,060/- from salary, STCG and income from other sources. The case was picked up for scrutiny and notice u/s. 143(2) of the Income Tax, 1961 (herein after the Act ) was issued to the assessee on 26.9.2008. In response to the notices issues u/s. 143(2)/142(1), assessee s counsel attended the proceedings from time to time and filed details. The assessee during the year under consideratio .....

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3) of the Act, vide his order dated 14.09.2009 on an income of ₹ 22,00,241/-. 3. Being aggrieved with the assessment order dated 14.9.2009, assessee appealed before the Ld. CIT(A), who vide impugned order dated 4.9.2012 has partly allowed the appeal of the assessee. 4. Now the Revenue is aggrieved against the impugned order dated 14.9.2009 and filed the present appeal before the Tribunal. 5. At the time of hearing Ld. DR relied upon the order of the AO and reiterated the contentions raised .....

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Pvt. Ltd. and also sold residential property i.e. Plot No. III, E/92, Nehru Nagar-II, Ghaziabad for ₹ 24,00,000/- which was acquired by the assessee in the year 2006. The assessee has claimed the cost of acquisition at ₹ 23,70,020/-. Thus, net short term capital gain has been declared at ₹ 29,980/-. AO completed the assessment u/s. 143(3) of the Act. Vide his order dated 14.9.2009 and income of the assessee was computed as under:-Salary as per computation ₹ 8,39,651/-Inco .....

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ons of the Ld. Counsel of the assessee and observed that assessee is an employee who has purchased and sold an immovable property situated at III-E/92 Nehru Nagar, Ghaziabad and declared short term capital gain ₹ 29,980/- from the said property. In the computation, assessee has taken cost of acquisition of ₹ 23,70,020/- as per the sale deed dated 17.5.06 against the sale consideration of ₹ 24 lacs. But the construction was demolished as the same was in bad condition for constru .....

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ual cost incurred by the assessee for the acquisition of the property has to be taken for computing capital gain and part of it cannot be disallowed on the basis that construction is demolished before sale. The ld CIT(A) has considered the possibility that if part of construction had fallen down on its own i.e, Act of God; then also the result would have been the same and it would not have been possible to disallow value of such demolished part out of actual cost of acquisition incurred. It is t .....

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e consideration. Thus, we concur with the observation of the ld. CIT(A) that there is no reason to tax the sale of Malwa under different head, income from other sources, when it is intricately connected to sale of same property. And even if it is to be taxed under the said Head, then also associated cost of construction is be deducted and, thus, consequential loss is to be allowed against gain arriving, which ultimately would yield the same result. 7.2 We also find that the Ld. CIT(A) has also r .....

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favor of Revenue] Dr. May Shenoy v. ACIT [2009] 124 TTJ (Hud.) 692 The assessee had purchased a property consisting of land with a double storied building standing on it. The assessee entered into a development agreement with one A.S.R. on 9-3-1995 for construction of flats. As per the agreement, the developer was to be handed over the possession of the said land and in turn had to give 45 per cent of the constructed area to the owner i.e., the assessee, and the assessee was to demolish the exis .....

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inal property at ₹ 5 lacs as on 1-4-1981. It was suitably indexed and the long-term capital gain was worked out at ₹ 11,14,290. The Assessing Officer was of the view that the working shown by the assessee was not in order. According to him, the land given for development in consideration of 4-1/2 flats constituted one transaction liable for long-term capital gain and the flats sold by the assessee constituted a separate transaction liable to long-term/short-term capital gain. He work .....

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consideration in kind which was in the nature of 4-1/2 flats to be given to her by the developer: Thus, it was a case of exchange as understood in clause (i) of section 2(47). There was no force in the argument that the handing over of the possession was not in pursuance of part performance of the contract. Possession of the land being one of the interest in property had been transferred to the developer who also would be enjoying the usufruct of the land. If the shield of section 53A was availa .....

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eceived in future. Therefore, the development agreement in the present case had the effect of transfer as contemplated in section 2(47). Having held that the execution of the development agreement resulted into the transfer of land from the assessee to the developer, the next issue which fell for consideration was as to what was the effective date of transfer. The possession of the vacant land was handed over to the developer. The agreement was merely an executory agreement and not acted upon. T .....

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transactions as one was too fallacious. It did not merit acceptance. Accordingly, transfer of land in consideration of the flats constituted one transaction giving rise to capital gains and the sale of flats by the assessee constituted another transaction giving rise to capital gains. The long-term capital gain arising on transfer of land was not taxable during the year under consideration as it had accrued in the previous year relevant to assessment year 2000-01. Therefore, the Assessing Office .....

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