TMI Blog2016 (7) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ot disputed. Since the sale occurred during the year, assessee has offered Long Term Capital Gain and business profits on the total project including the portions which are acquired to fulfill the sale and the assessee has reduced the values correspondingly to arrive at the market value on the day of offering the gains. As seen from the agreement of sale and the amounts paid by assessee which are not disputed by the Revenue for the purpose of determination of capital gains, we are of the opinion that the rates adopted by assessee are reasonable. Moreover, in determining the value at ₹ 550/-, the AO adopted only the value of cost of construction on the structure, ignoring the corresponding land value. Therefore, the very premise on which AO has restricted the amount is not correct. As seen from the order of the CIT(A) also, he has determined the amount of ₹ 625/- without any justification which the Revenue is also contending in its appeal. After considering the evidences placed on record and the working as adopted by assessee, we are of the opinion that the rate 2,000/- and 1100/- adopted by assessee in arriving at the cost of acquisition for the purpose of capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... involved, these are heard together and decided by this common order. ITA No. 190/Hyd/2012 305/Hyd/2012 are cross appeals on the order u/s. 143(3) of the Assessing Officer (AO) dt. 13-12-2010 on which Ld. CIT(A) partly allowed the relief. ITA No. 1218/Hyd/2013 is an appeal by assessee against the order of Ld. CIT u/s. 263 revising the assessment order dt. 31-12- 2010. ITA No. 1602/Hyd/2014 is the appeal filed by Revenue against the order of the Commissioner of Income Tax (Appeals)-V, Hyderabad giving relief to assessee on the consequential order u/s. 263 of the Act. 2. Briefly stated, assessee is engaged in the business of real estate constructing flats etc., For the AY. 2008-09, assessee filed its return of income declaring total income of ₹ 2,20,88,896/- on 30-09-2008. In the return, assessee admitted capital gains on the conversion of property from capital asset to stock-in-trade as on 01-01-2008 and business income on subsequent sale of the said property on the basis of sale document which however, was subsequently registered in December, 2009. AO while completing the assessment u/s. 143(3) vide order dt. 31-12-2010, redetermined the cost of construction in respect o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd held that the difference is negligible by all standards. Thus, CIT(A) deleted the additions/disallowances made by the AO under head business income . 3. Coming to the issue of re-determination of Long Term Capital Gains, Ld. CIT(A) after considering the detailed submissions of assessee, however, summarily directed the AO to adopt the value of ₹ 625/- per Sq. ft as against 550 per Sq. ft. Thus, both the parties are aggrieved and preferred the respective appeals in ITA No. 190/Hyd/2012 by the assessee and ITA No. 305/Hyd/2012 by the Revenue. ITA No. 305/Hyd/2012: 4. There are three grounds raised by the Revenue in this appeal which are on the deletion of ₹ 25,27,561/- value of Himayathnagar Project and Chirag Ali Lane Project and addition u/s. 69C of ₹ 30,03,740/- in respect of Himayathnagar Project. 5. The other ground is with reference to determination of value at ₹ 625 per Sq. ft., as against ₹ 550/- per Sq. ft., which Revenue contends that the Ld. CIT(A) does not have any basis for calculations. 6. After considering the rival submissions, we are of the opinion that there is no merit in Revenue s appeal. In fact while computing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted area to Mohd. Kazam Ali Khan his family members and 2100 sq. ft of the constructed area to Mrs.Qaisarunnisa Begum. As already submitted the matter was pending before Hon'ble Supreme Court in between the above mentioned owners of the land and M/s.Shasan Finance Ltd. Originally there were some other claimants known as Mr.Mustafa Ali Khan Others in respect of the same property. They already entered into a development agreement with M/s.Shasan Finance Ltd. As per that document Mis Shasan Finance Ltd should allot 11000 sq ft to Mr.Mustafa Ali Khan Others in exchange of their right in the above mentioned site. Therefore, the assessee company entered into an agreement of sale cum irrecoverable GPA (Registered document) dated 14.09.2008 with M/s.Shasan Finance Ltd also. As per the said document it was agreed that the matter has to be settled outside the court and as per the terms and conditions the assessee company has to pay ₹ 6.5 crores to M/s.Shasan Finance Ltd to give up and settle all the matters irrespective of the fact that Mr. Mustafa Ali Khan Others have a right in the site. Thus, the litigation as far as M/s.Shasan Finance Ltd is concerned came to a fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see was correct in adopting ₹ 2000 per sft for 4000 sft constructed area and rate of ₹ 1100 per sft towards the settlement with the vendors of M/s.Sashan Finance. Thus, the assessee adopted these rates in the process of buying back the constructed areas from the respective title holders which the assessee ultimately sold to M/s.MMVL Hotels Ltd. However, the assessing officer did not agree with the rates adopted as mentioned above for the purpose of computation long term capital gain and ultimately adopted the rates at ₹ 550 per sft for constructed area and reworked out the taxable long term capital gain. In the light of above facts the issue now for adjudication before the Hon'ble CIT(A) is whether the assessing officer was correct in adopting the rate at ₹ 550 per sft in the process of buy back of the relevant properties instead of rates ₹ 2000 per sft as well as ₹ 1100 per sft adopted by the assessee company . 9. Ld. CIT(A) adopted value of ₹ 625 per sft. After considering the rival considerations, we do not see any reason in the action of the AO and CIT(A) in restricting the amounts claimed by assessee. First of all, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fair market value at ₹ 50,000/- per Sq. Yd., as certified by the stamp authority was considered the value was taken at ₹ 12,02,50,000/-. It was further submitted that assessee has sold the property as business transaction on 31-03-2008 but the document was registered much later in December, 2009 and the valuation of ₹ 14,15,60,000/- pertaining to date of actual registration was subsequent to the closure of assessment year. Ld. CIT however, did not accept and directed the AO to examine and adopt the value after giving due opportunity to assessee. 12. Reiterating the facts stated before the CIT, it was submitted that Ld. CIT failed to notice that assessee has offered capital gains on conversion from fixed assets to work-in-progress and provisions of Section 50C are not applicable. It was also submitted that the transaction of sale on 31-03-2008 cannot be considered u/s. 50C. Further, the valuation also does not pertain to year under consideration but to a subsequent registration of the property. 13. After considering the rival contentions, we are of the view that there is no justification for the CIT to invoke the powers u/s. 263. As noticed in the appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X
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