TMI Blog2017 (12) TMI 873X X X X Extracts X X X X X X X X Extracts X X X X ..... . 4501/MUM/2015 - - - Dated:- 12-12-2017 - SHRI D.T. GARASIA (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) For The Revenue : Mr. Purushottam Kumar, DR For The Assessee : Mr. R. Murlidhar, AR ORDER PER N.K. PRADHAN, A.M. This is an appeal filed by the Revenue. The relevant assessment year is 2011-12. The appeal is directed against the order of the Commissioner of Income Tax (Appeals)-30, Mumbai and arises out of the assessment completed u/s 143(3) of the Income Tax Act 1961, (the Act ). 2. The grounds of appeal filed by the Revenue read as under: 1. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in holding that the same proportionate for the cost of construction for the FY 2008-09, 2009-10 and 2010-11 be maintained and the entire gains on the cost of land and building be taxed as Long Term Capital Gain instead of Short Term Capital Gain. 2. Whether, on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in not holding that the construction of new structure (new asset) after demolition of the old structure (old asset) can be treated as improvement of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ah. By Deed of Assignment dated 25/02/1993, Vipul Harkant Mehta assigned his 1/4th undivided share in the Plot No. 13 together with the old buildings standing thereon for the residue of the unexpired term of lease to the assessee Shri Dinesh C Shah By Deed of Assignment dated 25/02/1993, Shobhana Shailesh Mehta assigned her 1/4th undivided share in the Plot No 13 together with the old buildings standing thereon for the residue of the unexpired term of lease to the Smt. Hemlata Dinesh Shah, wife of the assessee Shri Dinesh C Shah. By the above Deeds of Assignment Shri Dinesh C Shah was assigned 3/4th undivided share in the Plot No 13 together with the old buildings standing thereon or the residue of the unexpired term of lease, while Smt. Hemlata Dinesh Shah was assigned 1/4th undivided share. 18/03/1993 The transfer of shares (earlier held by the transferors)in the Hatkesh CHS Ltd. was approved in favour of the assessee, Shri Dinesh C Shah and his wife, Smt. Hemlata Dinesh Shah Tenants surrender their tenancy rights and vacate the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lus value of undivided share in old buildings. Since the old bungalow was already demolished during the FY 2007-08, there is no longer any old asset in existence for making such claim of improvement. Therefore, the AO disallowed the claim of indexation on cost of demolished property and also on construction expenditure incurred in respect of newly constructed property. The AO thus treated Raj Rahul Building separately as a new asset, construction of which was completed as per Architect s Certificate dated 05.04.2010. Therefore, the AO considered only the cost of construction of the new asset while computing the gains (which in this case has to be computed as short term capital gains) arising on assignment on Flat No. 201, 301 and 401. Accordingly, the AO computed the Short Term Capital Gain (STCG) on assignment of Flat No. 201, 301 and 401 (three flats out of eight flats constructed) in Raj Rahul Building at ₹ 10,72,86,351/- against the LTCG of ₹ 9,62,06,609/- as claimed by the assessee. 4. Aggrieved by the order of the AO, the assessee filed an appeal before the Ld. CIT(A). The Ld. CIT(A) held that land cannot be alienated from a building and if there is a sale of f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r FY 2004-05 and FY 2005-06 but for FY 2008-09 and FY 2009-10, he shall only be allowed the benefit of proportionate cost of construction without indexation and (ii) as far as FY 2010-11 is concerned, only the proportionate cost has been claimed which is legally permissible. 5. Before us, the Ld. DR submits that since the old bungalow was already demolished during FY 2007-08, there is no longer any old asset in existence for making such claim of improvement. The claim of indexation on cost of demolished property and also on construction expenditure incurred in respect of newly constructed property is thus not allowable. Since the asset was incapable of being transferred after demolition, the value of the assessee s undivided share in old buildings is not includable in the computation of capital gains. The Ld. DR further submits that the asset i.e. Raj Rahul Building (consisting of ground and podium with eight floors, each floor with one residential flat) is to be treated separately as a new asset, construction of which was completed as per Architect s Certificate dated 05.04.2010. Accordingly, the period of holding of the new asset is held as commencing within the financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
