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V.V.V. Satyanarayana Versus Income Tax Officer, Ward-13 (1) , Hyderabad

2017 (11) TMI 1005 - ITAT HYDERABAD

Capital gain computation - Adoption of sale value of land transfer - Held that:- As far as the value of sale consideration is concerned, the AO made a mistake in adopting the guide line value as at the time of sale of Flat No. 202, which was subsequent to the date of agreement i.e., 19-06-2001 which happens to be in AY. 2002-03 and not in the impugned year. Assessee offered capital gains on completion of super structure during the year and obtained 8 flats. Therefore, there is nothing wrong in a .....

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ee is also without basis. Moreover, the cost of building demolished would also become cost, as the building would reduce the freehold land value. Demolition of existing building could result in developing the land. Therefore, the cost of building will be allowable as cost of improvement. The AO’s hyper technical view that assessee transferred only ‘land’ is not correct as the demolition of existing building for developing a new structure is part of the ‘transfer’ and the cost has to be allowed w .....

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ments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere the AO contends that assessee had more than one building as on the date of transfer i.e., on 19-06-2001. Subsequent acquisition of any number of houses will not prevent assessee claiming the deduction for transfer as on 19-06-2001. Therefore, the AO’s view can not be upheld. Assessee is entitled for deduction u/s. 54/54F. The decision in Suseela M.Jhaveri's case [2007 (4) TMI 289 - ITAT BO .....

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s cost of sale consideration. - However, the facts indicate that assessee has offered capital gain in the return of income. The assessment has been reopened u/s. 147 on the reason of escapement of income. Assessee also filed the same return in response to the notice u/s. 148. Consequently, the claims settled cannot be reagitated and only that part of the income which has escaped assessment has to be considered. Following the principles laid down by the Hon'ble Supreme Court in the case of CI .....

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rabad, dated 29-06-2016, for the AY. 2003-04. 2. The grounds raised by assessee are as under: 1. The order of the learned Commissioner of Income-Tax (Appeals) is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in adopting the market value of the land transferred as the consideration instead of adopting the cost of construction of the area allotted to the appellant as the sale consideration. 3. The lea .....

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f the Assessing officer in treating the amount of ₹ 1 lakhs received from the developer as a part of the consideration. 6. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in holding that the appellant is not entitled for deduction u/s 54/54F of the I.T. Act. 7. The learned Commissioner of Income-Tax (Appeals) erred in dismissing the appeal filed by the appellant without considering various written submissions filed before him. 8. The .....

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sessing Officer (AO) on observation that there is a mistake in calculation of capital gains, issued notice u/s. 148 in response to which assessee requested the AO to treat the return of income already filed as return filed in response to notice u/s. 148. 3.1. During the course of assessment proceedings the AO observed that assessee has entered into a development agreement with Ganesh Builders for development of the site into 15 apartments in 5 floors (excluding stilt for parking and common area) .....

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transfer of undivided share of land in respect of flats allotted to builder's share and undivided share of land and short term capital gains arising out of sale of flat allotted to land owner's share are chargeable to tax. The AO observed that in the return of income the assessee admitted the cost of 778 sq. yds., of land at ₹ 2,386/- being the cost of acquisition by assessee, but during the course of assessment proceedings, assessee revised the working of capital gains adopting t .....

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new asset as on the date of transfer of the original asset and since the assessee owns five residential units as on the date of transfer of capital asset(undivided) share of land, other than the two flats occupied by him, the assessee is not entitled to any exemption u/s. 54F of the Act. 3.2. AO also observed that during the year under consideration, assessee received a sum of ₹ 1,00,000/- from the developer towards residential accommodation of assessee during the period of construction a .....

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tion of 30% toward statutory repairs. The AO concluded the assessment by calculating the long term capital gains at ₹ 37,83,759/-, short term capital gains at ₹ 36,470/-, income from other sources at ₹ 1,25,000/ - and determined the total taxable income at ₹ 40,06,273/-. 4. Before the Ld.CIT(A), assessee has raised various contentions. Assessee submitted that he has entered into development agreement with Ganesh Builders for development of the property consisting of 778 s .....

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espect of the existing structure the cost has to be taken at ₹ 100/- per sq. ft. Assessee also argued that the cost of construction to the developer has to be considered as consideration for the development agreement and not consideration for the land. Assessee also claimed exemption u/s 54/54F of the I.T. Act as he owns only that property when agreement was entered. Assessee also claimed that the amount of ₹ 1 Lakh paid by the developer due to the delay in construction towards rent .....

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llant or his authorized representative. Therefore, it is treated that there were no submissions to be made by the appellant. Hence, considering the assessment order, remand report of the Assessing Officer and facts of the case, the additions made by the Assessing Officer are confirmed . 5. The present appeal is filed with a delay of five days. The reason was that assessee is 93 year old and had to depend on his nephew, who was out of station and so the delay in filing the appeal. Considering tha .....

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peal, the assessee has raised an objection stating that the Assessing Officer has wrongly adopted the market value of land as sale proceeds instead of cost of construction of super structure received by the assessee. The issue raised by the assessee is correct to a certain extent in view of judgement of ITAT, Hyderabad in the case of Dr. Maya Chenoy. However, it is submitted that there are various conflicting judgements on the mode of computation of capital gains arising out of development agree .....

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r SRO office on date of sale and as on 01.04.1981 would be more realistic and appropriate. Since the value of land as on the date of sale as per SRO's records is not available on record, the correct long term capital gains could not be worked out." The issues for consideration can be summarized as under: i. Adoption of sale value of land transfer; ii. Cost of acquisition; iii. Benefit of Section 54/54F; iv. Compensation received at ₹ 1 Lakh; 6.1. As far as the value of sale consid .....

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to cost of acquisition, the value of transferred land and cost of building demolished. As far as the cost of land is concerned, the value as on 01-04-1981 has to be adopted. However, as the guidelines values are not revised upto 1995, the AO adopted ₹ 70/- after allowing 5% increase in the value as fixed in 1975. This is not correct. The value of ₹ 1,000/- claimed by assessee is also without basis. Moreover, the cost of building demolished would also become cost, as the building wou .....

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100/- per sq. ft., as claimed. The value of land can be determined approximately at ₹ 300/- keeping in mind the claim of assessee and AO s determination on guideline values. AO is directed to adopt cost of acquisition accordingly. 6.3. With reference to the deduction u/s. 54/54F, the AO s contention that assessee owns more than two residences was not correct. Assessee got eight apartments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere .....

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s. Syed Ali Adil in ITA No. 410 of 2012, dt. 20-12-2012 is as under: 10. We see no force in the said contention. As held in D.Ananda Basappa's case (1 supra) by the Kamataka High Court, the expression "a residential house" in Section 54 (1) of the Act has to be understood in a sense that the building should be of residential nature and "a" should not be understood to indicate a singular number and where an assessee had purchased two residential flats, he is entitled to ex .....

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by the assessee, it was held that all four residential flats constituted "a residential house" for the purpose of Section 54 and that the four residential flats cannot be construed as four residential houses for the purpose of Section 54. Admittedly the two flats purchased by the assessee are adjacent to one another and have a common meeting point. In the impugned order, the Tribunal has also relied upon the decisions in K.G.Vyas's case (2 supra), P.C.Ramakrishna, HUF's case (3 .....

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