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2015 (6) TMI 92 - ITAT MUMBAI

2015 (6) TMI 92 - ITAT MUMBAI - TMI - Capital gain in respect of the development right of property - AO held that since the property was acquired from her late parents, therefore, the cost of acquisition would be taken at ‘Nil’ - Held that:- The consideration as stipulated in the development agreement was passed to the assessee only in the A.Y. 2006-07. The amount of ₹ 80,000/- was mainly to allow the developer to develop the said plot. As per the express terms of the agreement with the de .....

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taken at ‘Nil’, because the previous owner, that is, father of the assessee had acquired the property much before 01.04.1981. Thus the market value as on 01.04.1981 has to be adopted and accordingly the fair market value has to be adopted as on 01.04.1981. Since the department has not adopted any fair market value as on 01.04.1981, the fare market value as determined by the registered valuer as on 01.04.1981 appears to be correct. However, the AO shall examine the said value as determined by th .....

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n determine the long term capital gain.

Claim of benefit u/s 54F has not been taken either before the AO or before the Ld. CIT(A). Therefore, being a legal claim, the additional ground raised by the assessee is admitted and the matter is restored back to the file of the AO, who shall examine the same and allow the claim of deduction/benefit in accordance with law - Decided partly in favour of assesse for statistical purpose. - ITA No. 6543/Mum/2011 - Dated:- 25-3-2015 - Shri D. Karuna .....

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pellant in respect of the development right of property in the year under appeal. 2. On The facts and circumstance of the case in law, the commissioner of Income Tax (Appeal) erred in confirming that the cost of acquisition of the subject property as nil. 3. Without prejudice the above and on The facts and circumstance of the case in law, the commissioner of Income Tax (Appeal) has erred in confirming the assessment of capital gain of property even though cost of acquisition of property has been .....

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er grounds in appeal, the learned Assessing Officer erred in fact and in law in not allowing exemption u/s 54F of the Income Tax Act, 1961. 2. Assessee is an individual who has been assessed to tax on capital gains arising on transfer of her 1/4th share in the land given to developer for development rights. The facts arising from the material placed on record are that assessee had acquired her share in the property at Amboli, Andheri (W), owned by her father, who had expired on 19.08.1975. There .....

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ction of flats. In view of the said surrender of right, a sum of ₹ 80,000/- (Rs. 20,000/- each) was to be paid on the date of execution of the agreement. In addition to above, the developer was also required to provide the co-owners, four flats admeasuring 700 sq. ft. each, free of cost and four garages of 100 sq. ft each. Thus, assessee was entitled for ₹ 20,000/- cash and one flat of 700 sq. ft and one garage of 100 sq. ft. Pursuant to the said agreement, the assessee was allotted .....

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eted on 03.12.2005 and hence the long term capital gain will arise in the relevant assessment year. After relying upon the decisions of CIT Vs. Siremal Nawalakha (2001) 251 ITR 108 (SC) and Thulasimani Amnal Vs. CIT (2000) 158 CTR 5 (MAD) he held that the capital gain would be taxable in this year only. He further held that provisions of section 50C are not attracted in this case as the assessee has not sold the property. While computing the long term capital gain, the assessing officer further .....

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father of the assessee. The asset has been received by the assessee by way of inheritance from her mother viz, Lydiaz Crasto on 17.03.1989. The cost of acquisition of the assetto the previous owner is Nil, hence, applying the provisions of section 49(1)(iii)(a). NIL Capital Gains-Sale Consideration (i) Market value of flat having 636 sqft and garage 100 sft @ ₹ 3020/- per sft. as per Ready Reckoner @ 32,500 per sq. mts (copy enclosed for reference) Rs.22,22,720 Rs.22,22,720 (ii) Compensati .....

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and the power of attorney was also executed in the favour of the developers to develop the said property. Thus, the transfer itself has taken place in the A.Y. 2000-01 and therefore, same cannot taxed in the A.Y. 2006-07. Reliance was placed on the provisions of section 2 (47)(v) and section 53A of the Transfer of Property Act, 1883. Regarding cost of acquisition that it cannot be taken at Nil , because the property was acquired by the previous owner before 01.04.1981 and therefore, the cost of .....

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o the possession to the developer in pursuance of development agreement which was executed on 08.03.2000. Under the said agreement, the rights were transferred to the developer for development of the property. In lieu of that, assessee has also received ₹ 80,000/- (along with all the four co-owners). Thus, the capital gain if at all, would be chargeable to tax in the A.Y. 2000-01. Merely because consideration in the form of flat has passed to the assessee in the A.Y. 2006-07, the same cann .....

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capital gain would arise on the execution of the development agreement. Catena of other decisions of various Tribunals were also relied upon. 5. Regarding cost of acquisition taken at Nil by the AO, he submitted that the property was devolved upon the assessee in succession from her parents. The property originally belonged to her father who had died in the year 1975. Therefore, by virtue of provisions of section 49(1), the cost of acquisition to the assessee shall be considered to be the cost o .....

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tention, he relied upon the decision of Hon ble Bombay High Court in the case of Manjula J. Shah reported in (2013) 355 ITR 474 (Mum). Lastly he submitted that the assessee should be granted the benefit u/s 54 F, because, the entire consideration was invested by the assessee in the residential house and if it is held that capital gain has arisen in A.Y. 2006-07, then the benefit of section 54F should be given as the entire consideration has been utilized in acquiring the residential flat. 6. On .....

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). Lastly regarding claim of section 54F, he submitted that the matter should be restored back to the file of the AO to examine the said issue afresh. 7. We have heard the rival submissions and perused the relevant material placed on record. It is an undisputed fact that the assessee had acquired a share in the property at Amboli, Andheri (W) along with other 3 co-owners from her father. The property was owned by the father who had expired on 19.08.1975 and thereafter, the said property was devo .....

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measuring 100 sq. ft. The said flat was allotted to assessee vide registered deed dated 03.12.2005. Thus, the consideration as stipulated in the development agreement was passed to the assessee only in the A.Y. 2006-07. The amount of ₹ 80,000/- was mainly to allow the developer to develop the said plot. As per the express terms of the agreement with the developer, the assessee in lieu of surrendering the rights to the developer was entitled for flat admeasuring 700 sq. ft free of cost . Th .....

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