TMI Blog2021 (2) TMI 21X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed/assessable at the time of entering the JDA, sale consideration has to be determined by taking Fair market value of the constructed area that will be received by the assessees. Since the fair market value so determined is liable for capital gains taxation, the said Fair Market Value shall become cost of the constructed area. When the constructed area in the form of flats are sold subsequently, the cost of acquisition/indexed cost of acquisition of flats are required to be deducted in order to ascertain the capital gain, which shall be the Fair market value. AO did not allow the deduction of cost of acquisition of flats solely for the reason that the assessees have not declared capital gains in the year in which JDA was entered. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n nature, all these appeals were heard together and are being disposed of by this common order, for the sake of convenience. 2. The grounds urged by the assessees give rise to a single issue, viz., what will the cost of acquisition of flats sold by these assessees? 3. The facts relating to the issue are stated in brief. During the financial year 2005-06, the assessees herein along with another brother and 2 sisters entered into a Joint development agreement (JDA) with M/s. Kuteer Builders to develop the land at Sy. No.14/A, Nobonagar, Bannerghatta Road, Bangalore 560 076 and the project was named Kuteer Bliss . The JDA was registered on 6.1.2006. As per JDA, the assessee along with his brothers and sisters are entitled for 52,784 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared capital gains on sale of flats. During the course of hearing, the assessees filed a Statement of total income declaring capital gain on sale of flats. The A.O. noticed that the assessees have claimed deduction of cost of acquisition of flats ranging from ₹ 13,67,100/- to ₹ 15,90,300/- and also claimed cost of improvement of ₹ 6.5 lakhs in respect of each of the flats. 8. The A.O. asked the assessees to furnish copies of Agreement to sale and also copies of sale deed executed in respect of flats sold by them. The A.O. noticed that sale consideration mentioned in the sale agreement was more than the sale consideration stated in the sale deed. Accordingly, for the purpose of computation of capital gain, the A.O. a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ann.com 120 and (b) Next at the time of sale of constructed property. Accordingly, it was contended that the cost of acquisition of the flat sold by the assessee during the year under consideration would be the value of consideration adopted for the flats while computing capital gain at the time of entering into Joint development agreement. The assessees also contended that merely because the assessee did not disclose capital gains at the time of entering joint development agreement due to their ignorance, the assessees should not be deprived of claiming right amount of cost of acquisition as deduction against sale consideration of flats. 12. The Ld. CIT(A) did not agree with the contentions of the assessee. He referred to the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us, we notice that the Ld CIT(A) has not correctly interpreted the decision rendered by co-ordinate bench in the above said case. 14. In the instant cases, the assessees herein have sold part of the constructed area received by them in the form of flats. When the capital gain is assessed/assessable at the time of entering the JDA, sale consideration has to be determined by taking Fair market value of the constructed area that will be received by the assessees. Since the fair market value so determined is liable for capital gains taxation, the said Fair Market Value shall become cost of the constructed area. When the constructed area in the form of flats are sold subsequently, the cost of acquisition/indexed cost of acquisition of flat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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