TMI Blog2013 (6) TMI 724X X X X Extracts X X X X X X X X Extracts X X X X ..... gain arising out sale of two flats as capital gains instead of business income as correctly assessed by the A.O. without appreciating the fact that there was neither transfer of land to the developer nor any amount was paid to the assessee by the developer. (2) Without prejudice to the above, whether the Ld. CIT(A) was justified in allowing the benefit of indexation to the cost of land while arriving at short term capital gains on the asset, sold without appreciating the fact that land is appurtenant to the building. 2. The cross objections filed by the assessee are reproduced as under:- 1. The learned CIT(A) has erred in law and on facts in not holding that the order passed by the Assessing Officer u/s 143(3) of the Income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eu thereof, the developer would get right to sell the 50% of the constructed area/flats in the said building. The TDR rights of the assessee were to be loaded on the same plot of land as per agreement. As per the agreement, the developer had deposited an interest free security amount of ₹ 1,00,00,000/- with the assessee. On completion of the building, the same was to be refunded by the assessee to the developer. The construction was accordingly made. The total constructed area, thus, came out to be 2166.2 Sq. mt., out of which the assessee got his share of constructed area to the extent of 1082.7 sq. mt. in the form of flats. Out of his share of constructed area, the assessee sold two flats for ₹ 1,20,00,000/- to refund the secu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e TDR rights to the developer at ₹ 1,11,92,147/-. He further observed that having incurred this amount, when the assessee sold the flats, the income from the same was 'capital gains' and was not a business income. The learned CIT(A) further allowed the benefit of indexation at the cost of acquisition proportionately of land. However, he observed that the flats were not retained by the assessee for three years, thus he treated the income thereof as 'Short Term Capital Gains.' With this background, the revenue has come with two alternate grounds of appeal, as reproduced above, i.e. either the income from the sale of two flats is required to be treated as 'Business Income' or if the same is to be treated as 'S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade by the assessee. The assessee being a retired person intended to have a good house for his family plus certain rental income for the day-to-day living of the family. 9. The learned D.R. could not satisfy us on the point that the income earned by the assessee was a business income. It is an admitted fact that the assessee has not sold any part of the property till date, except the above said two flats. The assessee has rented out his share of the property to have constant rental income. In view of law laid down in the authorities relied upon by the assessee and also in view of the peculiar facts of this case, We have no doubt that the income earned by the assessee was Capital Gains and not income from business or trade. So far the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... means that the assessee has parted with his rights in the land to the extent of 50%. Under such circumstances, the cost of construction of the area which fell into the share of the assessee will be equal to the 50% of the market value of the land plus value of additional FSI, if any, available to the assessee and utilized by the developer as on the date of agreement with the developer. Thus the 50% of the total market value of the land plus additional FSI, if any, as on the date of agreement for which the assessee had to receive constructed area of his share was the consideration for transfer of 50% rights in the land, which was required to be taxed as capital gains in the hands of assessee deemed to be received by the assessee on the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
