TMI Blog2017 (4) TMI 1550X X X X Extracts X X X X X X X X Extracts X X X X ..... o determine the consideration received towards transfer of property in pursuance of development agreement - assessee contended that cost of constructed apartments has to be considered for determination of consideration by transfer of property but not the guidance value of the land - HELD THAT:- We find that once the issue has been decided that the assessee is eligible for exemption u/s 54F of the Act and in respect of all the flats, the other issues raised by the assessee with regard to the computation of capital gain and determination of consideration for the purpose of computation of capital gain becomes academic, as the assessee is eligible for exemption towards all the flats received in pursuance of a joint development agreement and this does not matter whatever is the value of flat or land to determine the consideration received for transfer of land. Therefore, we are of the view that determination of sale consideration and computation of capital gain has no impact on the total income, once exemption is allowed towards all flats received in pursuance of development agreement. - I.T.A.No.231/Vizag/2014 - - - Dated:- 7-4-2017 - SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI G. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee with the developer amounts to transfer of property within the meaning of section 2(47)(v) of the Act r.w.s. 53A of the Transfer of property Act, 1882 and hence liable for capital gains u/s 45 of the Act. Accordingly, issued a show cause notice and asked to explain as to why capital gain shall not be charged in respect of transfer of property in pursuance of development agreement. In response to show cause notice, the assessee submitted that mere entering into a development agreement does not part with her from ownership of the said land and the ownership rest with her till the agreed built up area is handed over by the developer. The assessee further stated that she has permitted the developer to enter into premises only for the purpose of construction and the title of the property remains vest with them. The assessee further submitted that the builder has handed over the constructed apartment in the financial year relevant to assessment year 2009-10 2010-11 and accordingly, the liability for capital gain arises in the assessment year 2009-10 2010-11, but not for the assessment year 2007-08. 4. The A.O. after considering the explanations of the assessee and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt, in the case of CIT Vs. D. Ananda Basappa (2009) 309 ITR 329 as well as CIT Vs. K.G. Rukminiamma (2011) 331 ITR 211. The assessee also relied upon the decision of Hon ble A.P. High Court, in the case of CIT Vs. Syed Ali Adil (2013) 352 ITR 418 and submitted that section 54F requires that the property should be of residential nature and the fact that residential house consist of several independent units cannot be an impediment to grant relief u/s 54 of the Act, even if such independent units were on different floors. 6. The CIT(A) after considering the relevant submissions of the assessee, held that consideration received by the land owner in case of a development agreement is the value of the flats and not the value of the land foregone. Thus, in the case of the assessee her share is 3 flats measuring 5100 sq.ft., therefore, the A.O. ought to have determined sale consideration by taking into account the cost of constructed flats on total value of flats received by the assessee. With these observations, CIT(A) directed the A.O. to re-work capital gain by adopting the value of constructed apartments received by the assessee in pursuance of development agreement. In so far as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts received in pursuance of joint development agreement, as the legal position prior to the amendment to section 54F of the Act, by the Finance Act, 2014 w.e.f. 1.4.2015 is very clear about eligibility of exemption towards all flats received in pursuance of development agreement. The A.R. referring to the plethora of judicial decisions, including the decision of Hon ble High Court of Madras, in the case of CIT Vs. Gumanmal Jain (2017) 98 CCH 93 (Chennai HC), submitted that when the assessee received his share of flats in pursuance of joint development agreement, the assessee is eligible for all the flats even if flats/apartments are in different blocks and different towers as long as they are in same address/location and it does not disentitle the assessee from getting the benefit of section 54F of the Act. The A.R. further submitted that once the assessee is eligible for exemption u/s 54F of the Act in respect of all the flats, the other issues challenged by the revenue in respect of computation of long term capital gain and adoption of market value of the land for the purpose of determination of sale consideration are merely academic in nature and has no impact on computation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT Vs. Syed Ali Adil (supra), has considered the issue and after analyzing the provisions of section 54F of the Act, observed that the expression a residential house in section 54F of the Act has to be understood in a sense that building should be of residential nature and a should not be understood to indicate a single number and where an assessee had purchased two residential flats, is entitled to exemption u/s 54F of the Act, in respect of capital gains on sale of its property on purchase of both flats. The High Court further observed that deduction u/s 54F of the Act, is allowable with respect to the residential house consisting of several independent units. A similar view has been expressed by the Hon ble High Court of Madras, in the case of CIT Vs. Gumanmal Jain (supra), wherein the Hon ble High Court observed that all the flats are a product of one development agreement of the same piece of land being said land, hence even if flats are in different blocks and different towers, as long as they are in same address/location, it does not disentitle the assessee from getting the benefit of section 54F of the Act. In yet another case, the Hon ble High Court of Madras in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to upheld the CIT(A) order and dismiss ground raised by the revenue. 11. The next ground raised by the revenue is with regard to the computation of long term capital gain in pursuance of development agreement and adoption of consideration for transfer of property. The A.O. has adopted guidance value of the land to determine the consideration received towards transfer of property in pursuance of development agreement. The assessee contended that cost of constructed apartments has to be considered for determination of consideration by transfer of property but not the guidance value of the land. Having heard both the sides, we find that once the issue has been decided that the assessee is eligible for exemption u/s 54F of the Act and in respect of all the flats, the other issues raised by the assessee with regard to the computation of capital gain and determination of consideration for the purpose of computation of capital gain becomes academic, as the assessee is eligible for exemption towards all the flats received in pursuance of a joint development agreement and this does not matter whatever is the value of flat or land to determine the consideration received for transfer of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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