2011 (9) TMI 256

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....uring the assessment proceedings, the Assessing Officer noticed that the assessee had purchased the ground floor of an old building constructed on a plot of land measuring 500 sq. yds. At that time, first and second floor of the said property was also constructed and they were owned by some other persons. For the purchase of ground floor, the assessee had paid a consideration of Rs.97,20,000/- which included stamp duty of Rs.7,20,000/-. After purchase of the ground floor, the assessee entered into 'Property Development Agreement' with the owners of first and second floor. This agreement, inter alia, stipulated that the old construction existing on the said plot shall be demolished entirely and new building would be constructed which would c....

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....the relevant time, the construction of basement as well as third floor was illegal; those floors had not been sold till date; as per municipal by-laws, the third floor is extension of second floor i.e. no dwelling unit or kitchen is allowed on the third floor; basement is allowed only for the purpose of godown for storage purpose or for parking. On this basis, it was submitted that the value of the basement as well as third floor had to be comparatively much less and could not be compared with other floors. It was also submitted that as per the Circle rates of Category-B colonies, cost of plot comes to Rs.14,30,000/- and even if the construction cost of entire supe structure is taken into consideration, valuation of 'closing work in progres....

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....t be the basis to compare the realizable sale value of basement and third floor with many deficiencies in the properties, inasmuch as, the basement could not be used for other purposes than a storage and third floor was illegal. It was also argued that the assessing Officer had adopted the value of each floor by dividing the total cost by 3 instead of 5 since the building consisted of 5 floors and not 3 floors. The CIT (A) accepted both these pleas and held that basement and third floor could not be sold out as an independent dwelling unit and, therefore, realizable sale value of these floors was much lesser than the sale value of the second floor. He further held that the cost incurred by the assessee in the construction of the said buildi....