TMI Blog2016 (4) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase or it falls within the definition of the capital asset because of subsequent legislative notifications as in the instant case where due to the a specific notification, the agriculture land falls within the specified limits of a municipality and it came within the ambit of a capital asset under section 2(14) of the Act. Accordingly, once an asset becomes “capital asset” and it is transferred thereafter, the capital gains has to be computed in the manner laid down in section 48, and 55(2) of the Act as has been rightly done by the AO in the instant case.- Decided against assessee Deduction claimed u/s 54F - Held that:- Where the assessee has demonstrated the withdrawal of ₹ 15,40,000/- towards construction of residential house from his bank account and cost of construction being supported by the valuer’s report, the AO is directed to give necessary relief by way of deduction under section 54F of the Act.- Decided in favour of assessee Addition on unexplained cash deposit in Bank account - Held that:- AO made the addition simply on the ground that the assessee could not explain the source of deposit. It is pertinent to note that neither the question of deposit of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r capital gains tax. On the basis of registered sale document dated 01.07.1981, made available by the DIG (Stamps), since the land was initially purchased prior to 1.4.1981, the AO determined the cost of acquisition of the said land as on 01.04.1981 @ ₹ 97.63 per bigha and the indexed cost of acquisition of ₹ 1,031/-and the long term capital gains was accordingly computed at ₹ 37,98,969/-. 2.1 The ld. AR argued the matter at length and submitted that the AO has adopted the cost of acquisition of agriculture land as on 01.04.1981 at ₹ 97.63/- per bigha without appreciating the situation of land and circumstances that land was sold on 20.09.2008. In case capital gains from the sale of agricultural land is brought to tax, the assessee should have an option to substitute its cost on the date from which agricultural land, due to amendment made in Municipal Corporation area, became capital assets within the meaning of Sec. 2(14)(iii) of the Income Tax Act, 1961. It is only after notification, the land in question became the capital assets, in the hands of the appellant/assessee and as such, cost of acquisition should be taken as FMV on the date of notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year in which the asset is transferred bears to the cost inflation index for the first year in which the asset was held by the assessee or for the year beginning on the 1ST Day of April, 1981, whichever is later. Further, Section 55(2) defines the expression cost of acquisition specifically for the purpose of sections 48 and 49 in the following terms: (2) For the purposes of sections 48 49, cost of acquisition , in relation to any other capital asset (i) where the capital asset became the property of the assessee before the 1st day of April 1981, means the cost of acquisition of the asset to the assessee or the fair market value of the asset on the 1st day of April 1981, at the option of the assessee. 3.2 A reading of the above provisions makes it clear that what is relevant is the actual cost of acquisition of the asset in the hands of the assessee and not the FMV on the date on which the asset became a capital asset for the purpose of levy of capital gains tax. The only exception is where the asset was purchased prior to 1.4.1981, the legislation has provided a specific relaxation by virtue of which the actual cost can be substituted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h at the date of acquisition was noncapital asset, becomes a capital asset, it is deemed to be acquired by the assessee as capital asset on that date and, furthermore, though there can be no cost of such acquisition, the market value of the property on that date should be deemed to be the cost of such acquisition. There is no warrant for imposing such legal fiction on the plain language at section 48, clause (ii) . The contention of the assessee also stands refuted by the language of section 55(2), clause (i). The property which is transferred could become the property of the assessee only at one point of time. It would not become the property of the assessee as a non-capital asset at one point of time and as a capital asset at another point of time. The argument of the assessee would require us to introduce a legal fiction also in section 55(2), clause (i). We would have to assume that when a property which was a non-capital asset becomes a capital set, it is deemed to become the property of the assessee for the purpose of section 55(2), clause (i). Such a construction would do violence to the language of section 55(2) clause (i) and would be clearly impermissible on any rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st be determined by deducting from the sale proceeds the market value at the date of their conversion into stock- in- trade (since this would be the cost to the business) and not the original cost to the assessee. According to the facts arising in the above said two decisions of the Hon ble Supreme court, the capital assets were converted into stock in trade and for the purpose of computation of business income, the Supreme Court held that the taxable profit on the sale must be determined by deducting from the sale price the market value as on the date of conversion of the capital asset into stock in trade. The facts in the instant case are clearly distinguishable. In the instant case, agricultural land was sold and its character changed from a non-capital asset to a capital asset by virtue of a statutory notification whereby the agricultural land came within the specified limits of a municipality. The issue in the present case is also not for ascertaining the business income of the assessee. The issue involved in the present case is to ascertain the capital gains as per the provisions contained in section 45, 48 and 55 of the Act. Under such circumstances, it is not possible t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the addition of ₹ 19 lacs made by AO under the head unexplained cash deposit in Bank account, the AO noticed that cash of ₹ 9,50,000/- was deposited on 03.10.2008 and another cash of ₹ 9,50,000/- was deposited on 10.10.2008 in the bank account of the assessee. Since the assessee could not explain the source of these cash deposits, the same were treated as undisclosed income of the assessee. As per Ld CIT(A), in the absence of any explanation filed by the assessee regarding the source of aforesaid cash deposit in his bank account, the same was rightly taxed as his undisclosed income. The addition made by AO is confirmed by ld. CIT(A). 5.1 During the course of hearing, the ld. AR submitted that the AO made an addition of ₹ 19,00,000/- on account of cash deposit of ₹ 9,50,000/- on 03.10.2010 and ₹ 9,50,000/- on 10.10.2008 as unexplained cash deposit. The AO made the addition simply on the ground that the assessee could not explain the source of deposit. It is pertinent to note that neither the question of deposit of cash was made in query letter dated 29.02.2011. The compliance of query letter was made and copy of same is placed in paper Book ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
