TMI Blog2017 (12) TMI 1261X X X X Extracts X X X X X X X X Extracts X X X X ..... d. A transfer can be said to have taken place in the year when the possession was handed over by the assessee. Thus, capital gains tax, if any, is attracted in the year of agreement and not in the later years. Since the developer has agreed to pay the assessee at the rate of ₹ 1,083/- per sft it is not appropriate to claim that only SRO value has to be adopted. If the assessee, purchased a land and the purchase consideration is not provided clearly, SRO value as per the Act as on specified date could have been taken into consideration whereas in the instant case the rate is specified by both the parties. Moreover we are not concerned with purchase cost. Under these circumstances, the concurrent findings of the A.O. as well as the Ld. CIT(A) do not call for any interference. - Decided against assessee. - ITA.No.1379/Hyd/2016 And ITA.No.1544/Hyd/2016 - - - Dated:- 20-12-2017 - SHRI D. MANMOHAN, VICE PRESIDENT For The Assessee : Shri A.V. Raghuram For The Revenue : Shri V. Sreekar, DR ORDER PER D. MANMOHAN, VP. Since the issue involved in both these appeals is identical, I proceed to dispose of these appeals by a combined order, for the sake ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. A.O. observed that adoption of the sale price is not commensurate with the value of developed area adoptable and hence it is a duty of the assessee to substantiate the method adopted for arriving at the capital gains. In response thereto, the assessee submitted that the market value of land, as certified by the SRO, was adopted. A.O. observed that the cost of super-structure / developed area, coming to the share of the assessee, was not considered at all in arriving at the capital gains. It is the claim of the assessee that no super-structure was given to the assessee till date and hence there is no incidence of capital gains. 8. According to A.O. the issue for consideration is whether there arose any capital gains consequent to the development agreement entered into on 12.05.2008. The case of the assessee was that the developer has not handed over any developed area / flats in the year under consideration and hence no capital gains arose. However, the A.O. observed that consequent to entering into development agreement with various land owners of Diamond Hills area (about 20 people) the firm started construction of the project and incurred expenditure running into crores of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court also rendered a judgment, in the case of CIT vs. Ved Prakash Rakhra, wherein the Court observed that the exchange value as specified in the project development agreement can be taken as the basis for computation of capital gains. Following the aforesaid ratios, the A.O. has computed the capital gains at ₹ 23,71,328/- in the case of Smt. Usha Rani and ₹ 24,33,897/- in the case of Smt. Parvathi Devi. 10. Aggrieved by the orders passed by the Assessing Officer, assessees preferred an appeal before the Ld. CIT(A) by contending that though the development agreement was entered into on 12.05.2008, constructed flats were handed over much later, that too in a semi-furnished condition. For about six years, even though the flats are in semi-furnished condition, the flats could not be sold by the assessees and thus capital gains cannot be said to arise in this year though the assessees agreed to offer capital gains to avoid litigation. 11. It was also submitted that the cost incurred by the developer over a period of time cannot be considered for assessment; Since assessees have adopted the SRO rate and arrived at sale consideration the same value ought to have been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property income and agricultural income, on 06.07.2009. Thereafter, on 17.12.2013 notice was issued u/s 148 of the Act. On 25.02.2015 assessee filed revised return of income admitting short term capital gains of ₹ 4,10,550/- wherein the cost of acquisition was taken as ₹ 3,23,700/- which, according to assessee, is the SRO value of land. Ld Counsel for the assessee submits that by virtue of development agreement she is entitled to 50% share of the land developed i.e., 2,845.15 sft and hence the SRO value of the land ought to have been adopted by the A.O. instead of adopting the sale consideration at ₹ 1,450/- per sft for the purpose of computing capital gains. In this regard he placed reliance upon the decision of Hon ble Karnataka High Court in the case of CIT vs. Ved Prakash Rakhra (370 ITR 762) which according to him is applicable to the case on hand. Ld Counsel for the assessee submits that in the aforementioned decision the SRO rate for super structure was directed to be adopted by the Department. A careful perusal of the aforementioned decision shows that the decision is merely rendered upon the issue of date of transfer of property and the indexation value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said plan, obtaining licenses, permissions as well as execution of work and thereafter the parties / land owners are entitled to 50% of the built up area; This shows that the assessees are merely entitled to a specified constructed space and not 50% of the land. The builders have taken over the possession of the entire land and in lieu thereof assessee was entitled to get only 2845.15 sft. It is also not in dispute that as per the developer, vide letter dated 06.01.2015, cost of construction was ₹ 1,450/- per sft but as per the registered document, for the purpose of allotting the constructed place, the cost of construction is mentioned at ₹ 1,083/- per sft (1,108/- in the case of Smt. Usha Rani) and therefore, A.O. as well as Ld. CIT(A) have taken that figure as the value obtained by the assessee in lieu of transfer of the land. A transfer can be said to have taken place in the year when the possession was handed over by the assessee, as per the decision of Hon ble jurisdictional High Court (supra). Thus, capital gains tax, if any, is attracted in the year of agreement and not in the later years. Since the developer has agreed to pay the assessee at the rate of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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