TMI Blog2020 (10) TMI 354X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee would be receiving 2.64% of the sale consideration of flats that are going to be constructed. Hence the assessee would be receiving amounts as and when the flats are sold. As rightly observed by Ld CIT(A), the receipt of consideration over a period on sale of a capital asset does not change the true nature of transactions from capital gains to business. Irrespective of timing of receipt of sale consideration, the transfer of a capital asset would give rise to capital gains only. CIT(A) was justified in holding that the amounts received by the assessee is assessable as long term capital gains. Amounts received by the assessee is assessable as long term capital gains. We also notice that the there was no occasion for the AO to examine the claim for deduction u/s 54 of the Act, since he had assessed the receipts as business income. Accordingly, we find merit in the contentions of the Ld D.R. Accordingly, we restore the issue of claim for deduction u/s 54 - Appeals of the revenue are treated as partly allowed for statistical purposes. - ITA Nos.1853 to 1855/Bang/2018 - - - Dated:- 5-10-2020 - Shri N.V. Vasudevan, Vice President And Shri B.R. Baskaran, Accountant Member ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ential project is assessable as Capital gains and not as business income. 6. The facts relating to the issue are set out in brief. The assessee s father named Shri Kodandarama Reddy had owned certain lands in Bidaraguppe Village, Attibele Hobli, Anekal Taluk, Bangalore district. M/s Shriram Properties Ltd entered into a development agreement on 21.08.2008 with the father of the assessee and also with other persons, who owned adjacent lands. As per the development agreement, residential villas were proposed to the constructed. In the mean time, Shri Kodandarama Reddy died intestate on 05-01-2011 leaving behind his wife, two daughters and two sons as his legal heirs. Two daughters of late Shri Kodandarama Reddy executed a release deed in favour of their mother and brothers. Accordingly, the wife and two sons of Shri Kodandarama Reddy became owners of the land, referred above. The assessee herein is one of the sons and one of the legal heirs of Shri Kodandarama Reddy. 7. Subsequent to the death of Shri Kodandarama Reddy, the assessee and other co-owners entered into another development agreement on 17.03.2011, which superseded the earlier agreement entered on 21.08.2008. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 itself, when the developer had started his project. Further, the AO noticed that the assessee has been received amounts year after year upon sale of apartments, as his share. Hence the AO took the view that the assessee is doing business in the nature of adventure in the nature of trade. Accordingly he assessed the receipts as business income in AY 2013-14 to 2015-16. 12. The Ld D.R submitted that the AO had reopened the assessment of AY 2009-10 by issuing notice u/s 148 of the Act in order to assess the capital gains in that year, since he has taken the view that the possession of land was given in FY 2008-09. However, the succeeding AO has taken the view that the land was actually transferred to the developer on 26.6.2012 and it is relevant for AY 2013-14 only. 13. The Ld D.R submitted that there is some confusion in this matter and accordingly prayed that the matter may be restored to the file of AO for examining it afresh. 14. On the contrary, the Ld A.R submitted that the grounds urged by the revenue do not relate to the year of taxation of income. He submitted that the case of the revenue is that the amounts received by the assessee is assessable as business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions saying that initially 25% super built up area was agreed to be given to the land owners by the developer in lieu of the transfer of their rights in the land to the buyers of the flats. The same 25% was proportionately shared by all the co-owners in the ratio of the land owned by them. However, as some of the land owners were not happy with this arrangement, the same was subsequently modified after negotiations with the developer in respect of some of the property owners to translate the 25% share in the super built up space (proportionate) into a fixed percentage of share in the gross revenue of the project as compensation for towards the land. The appellant along with few other owners have opted for this method of compensation. All other terms and conditions remaining the same, this change from fixed percentage of super built up space to a fixed percentage of gross revenue, does not change the essential character of the transaction. Further, it is stated that, as he had no intention to retain the super built up area offered by the developer initially, the appellant has chosen to opt for the fixed percentage compensation essentially to avoid getting stuck with super bui ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the identical circumstances (receiving certain percentage of gross receipts) held the gain from the sale of land transaction as long term capital gain. It is submitted that in the case of brother of the Appellant, namely Sri N. Vishnu Swaroop Reddy, the Hon ble Commissioner of Income Tax (Appeas)-7, Hyderabad, has passed a favourable order directing the Assessing Officer to give exemption u/s 54F of the Income Tax Act, wherein the gain was assumed to be a Long Term capital gain. Copy of the CIT(A) order was also produced. 9.5.8 In view of the above, I am of the view that the fact of receipt of consideration spread over several years does not change the true nature of the transaction from capital gains to business. Even in the case of receipt of sale consideration by way of super built up space also, it may happen that the seller of land may receive the possession of the flats at various intervals falling in different financial years, depending on the completion of various stages of the project, necessitating taxing the said capital gains spread over several years. There is no other fact/argument put forth by the AO for considering the said gain returned as long term ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mounts received by the assessee is assessable as long term capital gains. 19. At the time of hearing, the Ld A.R submitted that the assessee has claimed deduction u/s 54 of the Act and AO did not examine the same, since he had assessed the receipts as business income. Accordingly he prayed that the assessing officer may be directed to allow the deduction. On the contrary, the ld D.R submitted that there was no occasion for the AO to examine the claim of deduction u/s 54 of the Act. Accordingly the ld D.R submitted that, if the Tribunal holds that the amounts received by the assessee is assessable as long term capital gains, then the question of deduction u/s 54 should be restored to the file of the AO. 20. We have agreed with the view taken by the Ld CIT(A) that the amounts received by the assessee is assessable as long term capital gains. We also notice that the there was no occasion for the AO to examine the claim for deduction u/s 54 of the Act, since he had assessed the receipts as business income. Accordingly, we find merit in the contentions of the Ld D.R. Accordingly, we restore the issue of claim for deduction u/s 54 of the Act to the file of the AO. 21. In the res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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