TMI Blog2021 (7) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... e builder M/s. SAS Infoetech P. Ltd. and as such we find no justification in the action of the assessing officer in disallowing the claim of cost of acquisition. In any case, merely because the land is continued to be reflected in the Balance Sheet of the assessee would not have any adverse implication on the computation of long term capital gain as the accounting treatment in the books of account cannot override the determination of real income under the provisions of Income Tax Act, 1961. In view of the above, we find no merit in the ground raised in the revenue s appeal and same is dismissed. A plain reading of section 45(2) makes it amply clear that it is the prerogative of the assessee to covert the capital asset to stock. Further, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PER SUDHANSHU SRIVASTAVA, JM: These cross appeals filed by the assessee and the revenue are against the order passed by the Ld. Commissioner of Income Tax (Appeals)-4, New Delhi {CIT (A)} vide order dated 22/05/2017 and are relating to Assessment Year (AY) 2011-12. The issue involved in these appeals is related to computation of long term capital gain arising from transaction of sale of rights as per Joint Development Agreement (JDA). 2.0 Brief facts of the case are that the assessee was the owner of 43 acres of land situated in sector 38, Gurgaon, Haryana allotted by HUDA. The assessee entered into a Joint Development Agreement dated 02/08/2007 with M/s. SAS Infoetech P. Ltd. for development of 5 acres of land of the aforesaid 43 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erted to stock-in-trade in AY 2008-09 at the market value of ₹ 33 crores as the Joint development agreement was adventure in the nature of business and, accordingly, the indexation was to be allowed only till AY 2008-09. 2.1 Now, both the assessee as well as the Department, are in appeal before this Tribunal and have raised the following grounds of appeal respectively: Grounds of appeal in ITA No.4237/Del/2017 (Assessee Appeal): The learned CIT (A) erred in fact and in law in allowing indexation cost of acquisition till A.Y.2008-09 instead of A.Y. 2011-12 as claimed in the return. Grounds of appeal in ITA No.4871/Del/2017 (Department s Appeal): 1. In the facts and circumstances of the case, the Ld. CIT (A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Ld. Counsel vehemently argued that the land was continued to be shown as capital asset under the Fixed Asset Schedule of the Balance Sheet and that there was no intent to enter into business or trade so as to invoke the provisions of section 45(2) of the Act. It was, accordingly, submitted that since the taxable event arose in AY 2011-12, the benefit of indexation was also to be made available till AY 2011-12, i.e. year under reference. 4.0 On the other hand, the Ld. CIT DR argued that benefit of cost of acquisition was not available as the assessee continued to be the owner of the land. Our attention was drawn to the Fixed Asset Schedule of the Balance Sheet and it was pointed out that there was no reduction in the value of the la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... crores by assigning rights over 5 acres land in favour of the builder M/s. SAS Infoetech P. Ltd. and as such we find no justification in the action of the assessing officer in disallowing the claim of cost of acquisition. In any case, merely because the land is continued to be reflected in the Balance Sheet of the assessee would not have any adverse implication on the computation of long term capital gain as the accounting treatment in the books of account cannot override the determination of real income under the provisions of Income Tax Act, 1961. In view of the above, we find no merit in the ground raised in the revenue s appeal and same is dismissed. 5.1 On the issue of indexation of cost, it is observed that the Ld. CIT (A) has res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or consideration, it would affect the principal nature of the transaction which was on capital account. Further, the option given to the assessee under the Joint Development Agreement was not subject to the market price of the final built-up area and as such, we are of the considered opinion that the Ld. CIT (A) was not justified in imputing a commercial angel to the whole transaction for the purpose of invoking section 45(2) of the Act. 5.2 At this juncture would be relevant to make a reference to the bare provision of section 45(2): Section 45 - Capital gains 2) Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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