TMI Blog2019 (2) TMI 1055X X X X Extracts X X X X X X X X Extracts X X X X ..... returned income. Payment of consideration to M/s Perfect Associates, it is irrelevant for the purpose of computation of long term capital gain, because the assessee has failed to prove the testimony of the documents including agreements entered into between M/s Perfect Associates so as to show that it is genuine document and also the said consideration had been paid for rendering services in connection with transfer of property. Further, when total enhanced compensation is exempt, related expenses need to be ignored for computation. Accordingly, we set aside the issue to the file of the AO for the purpose of re-computation of long term capital gain in terms of our discussions given in the preceding paragraphs hereinabove - Appeal filed by the assessee is allowed, for statistical purpose. - ITA No 2387/Mum/2017 - - - Dated:- 21-12-2018 - Shri G Manjunatha (ACCOUNTANT MEMBER) For The Appellant : Shri J.C. Lala For The Respondent : Shri Abi Rama Kartikeyan ORDER Per G Manjunatha, AM : This appeal filed by the assessee is directed against the order of the CIT(A)-32, Mumbai dated 25-01-2017 and it pertains to AY 2007-08. The assessee has raised t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e property by inheritance and computed long term capital gain at ₹ 3,84,83,700. The assessee also has taken the benefit of exemption provided u/s 54EC by purchasing REC bonds for ₹ 50 lakhs and declared net taxable capital gain of ₹ 3,34,83,700. 3. The case has been selected for scrutiny and notices u/s 143(2) and 142(1) of the Act, were issued. In response to notices, the authorised representative of the assessee appeared and filed various details, as called for. During the course of assessment proceedings, the AO called upon the assessee to file complete details of sale of land including copy of sale deed in order to ascertain correctness of long term capital gain computed by the assessee. Inspite of repeated notices, the assessee did not file copies of registered sale deed. Therefore, the AO has issued notices us 133(6) to the jurisdictional Sub Registrar to ascertain and obtain copy of registered deed. The AO further observed that the tripartite agreement between the parties dated 03-11-2006 does not specify the value of the land; however, for the purpose of payment of stamp duty, the value has been fixed at ₹ 9,14,40,000. Since there was a difference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee was extinguished by receiving leasehold right on 18-10-2006 from CIDCO and it amounted to transfer within the meaning of section 2(47)(ii). Accordingly, he computed long term capital gain by applying the provisions of section 50C by taking into account full value of consideration of ₹ 9,14,40,000. The AO further observed that inspite of repeated requests, the assessee failed to file necessary details in respec6t of expenses of transfer and also indexed cost of acquisition. Hence, rejected expenses of transfer and indexed cost of acquisition claimed by the assessee. The AO further observed that the assessee has transferred her leasehold rights in the property to M/s Metro Developers on 03-11-2006. Since the holding period of the leasehold rights is less than 36 months, the AO has computed short term capital gain by taking into account full value of consideration as per MOU dated 20-10-2006 and from that allowed cost of acquisition as per stamp duty value fixed u/s 50C of the Act for ₹ 9,14,40,000 and computed short term capital gain of ₹ 55,97,500. 6. Aggrieved by the assessment order, assessee preferred appeal before the CIT(A). Before the CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of A.R. Dahiya (supra), the Ld.CIT(A) observed that the case law relied upon by the assessee is distinguishable on facts as in that case, it was held that once the nature of land transferred was accepted as agricultural land in the year of receipt of original compensation, the nature of such land again cannot be questioned in the year of enhanced compensation. Therefore, she opined that what was transferred by the assessee is a leasehold right received in lieu of right inherited from her father, therefore, consideration received on account of transfer of land is assessable to tax under the head capital gain and accordingly recomputed long term capital gain by adopting the value fixed for the purpose of stamp duty under the provisions of section 50C of the Act at ₹ 9,14,40,000 and after allowing cost of acquisition of ₹ 79,375, determined long term capital gain of ₹ 9,13,60,625. The relevant observations of the Ld.CIT(A) are extracted below:- 4.2 I have gone through the decision of Hon ble ITAT. Mumbai A Bench in the case of Atul G Puranik (supra) reported in [2011] 11 taxmann.com 92 (Mumbai) as relied upon by the assessee, and find that the facts of sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of rights in the Plot. 4.3 The highlighted portion of above decision indicates that it was a right in Plot against which the above assessee was allotted the leasehold plot, which could not be considered as agriculture land transferred during the year. This is exactly the contention of revenue in present appeal. The decision of jurisdictional tribunal on identical facts being binding in nature, there remains hardly any ground not to follow the same. 4.4 As regards assessee's reliance on the case of A.R. Dahiya (supra), I find the said case distinguishable. In said case, it was held that once the nature of land transferred was accepted as agricultural land in the year of receipt of original compensation, the nature of such land again cannot be questioned in the year of enhanced compensation. In present case of assessee, the nature of asset transferred in year of original compensation i.e, 1964 as agricultural land is not being questioned. What is being questioned is that the land allotted by CIDCO during the year is not against the said agriculture land per se, but against the right in said land. The Government has not given any direct enhanced compensation for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated on par with the nature of land when it was acquired. In this case, there is no dispute with regard to the fact that the land in question when it was acquired in 1965 was agricultural land and additional compensation received on account of compulsory acquisition of land will also be treated as agricultural income; consequently, the said compensation is exempt from tax. The Ld.AR further submitted that the Ld.CIT(A) was erred in not appreciating Explanation to section 45(5) where it is stated that where by any reason of the death of the person, who made the transfer, the enhanced compensation received by another person, the amount referred to in clause (b) shall be deemed to be the income chargeable to tax under the head capital gains of such other person. The Ld.CIT(A) conveniently ignored the ownership means a bundle of rights and if the ownership is acquired by the government, no other right remained with the owner. The owner is inherited to only compensation / additional compensation. The Ld.AR further submitted that this aspect has been examined by the ITAT, Mumbai in the case of Atul G Puranik (supra) where it was held that the cost of plot allotted has to be taken at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... admitted capital gain in her return of income and hence, held that the assessee s income could not go below the returned income, directed the AO to reconsider the assessment of income to the extent of income declared by the assessee in her return of income. 10. The assessee has transferred leasehold right in land allotted by CIDCO in pursuance of compulsory acquisition of land in the year1965. The assessee has transferred said leasehold rights to M/s Metro Builders on 03-11-2006 for a consideration of ₹ 4,60,37,500. The assessee has computed long term capital gain on transfer of land by adopting full value of consideration as per sale deed by reducing indexed cost of acquisition by taking into account fair market value of the land as on 01-04-1981. These are undisputed facts. Neither the assessee nor the revenue are disputing these facts. The assessee has taken an alternative plea during the course of assessment proceedings to the effect that she had admitted capital gain on transfer of land by mistaken facts, but her admission cannot be taken as sacrosanct in view of the fact that additional compensation received on account of compulsory acquisition of agricultural land ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Once, a particular asset is a capital asset liable to capital gain on transfer, then the next question for determination is what is the full value of consideration. In this case, as per the agreement entered into between the parties, the sale value has been fixed at ₹ 4,60,37,500, but market value of the land for purpose of payment of stamp duty was fixed at ₹ 9,14,40,000. The AO has applied provisions of section 50C to replace full value of consideration claimed by the assessee in her return of income with guidance value fixed by the stamp duty authority for payment of stamp duty. When the AO has replaced full value of consideration, the assessee claimed to have paid a sum of ₹ 5.1 crores to M/s Perfect Associates for rendering services in connection with re-allotment of transfer of leasehold rights in the land and sought for deduction from full value of consideration being expenses of transfer. The AO has doubted the testimony of documents furnished by the assessee and rejected the claim of deduction of expenses and re-computed long term capital gain of ₹ 9,14,40,000 for additional compensation received by the assessee from CIDCO by rejecting expenses of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of ITAT, Mumbai Bench in the case of Atul G Puranik (supra). We find that in the case, the co-ordinate bench held that cost of plot allotted was to be taken at the market value as on date of receipt of leasehold rights. Further, when additional compensation received by the assessee is treated as not taxable because of nature of land acquired in the year of acquisition, and also fact that the said additional compensation partakes the nature of agricultural income, the cost of land when it was subsequently transferred shall be determined as on the date of receipt of additional compensation. In this case, the stamp duty authorities have fixed the market value as on the date of re-allotment of land to the assessee is at ₹ 9,14,40,000. Since the authorities fixed the cost of land as on the date of allotment is ₹ 9,14,40,000, obviously cost of acquisition for the assessee, when the land has been subsequently sold, will have to be taken at ₹ 9,14,40,000. Therefore, we are of the considered view that the AO is incorrect in not allowing the cost of acquisition to the assessee while computing long term capital gain on transfer of leasehold rights in land. Accordingly, ..... 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