TaxTMI 
TaxTMI 
2012 (6) TMI 379
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.... has rightly upheld the grounds of appeal by application of Section 50 but factually erred in considering the Financial year 2001-02 as the year of completion of construction instead of 10.06.1999 when the tenant assessee become owner (As per the agreement)." 2. The main issue arising in this appeal as culled out of the grounds of appeal and by the orders of the authorities below are as follows: Firstly, whether the sale of office (situated at 303, Mantri mansion, 3rd floor, 17 Raghunath Dadaji Lane, Fort, Mumbai-400 001) on 17.09.2004 amounts to Long Term Capital Gain or Short Term Capital Gain; Secondly, whether the cost of acquisition of the said property should be taken at Rs. 4,75,000/- which was the cost incurred for acquiring the property vide agreement dated 10.06.1999 or the market value of the property which as per the appellant on the basis of value given by approved valuer at Rs. 10,04,475/-; and Lastly, the sale value of the property should be taken as per the value adopted by the Stamp Valuation Authorities u/s.50C at Rs. 24,48,128/- or Rs. 16,00,000/- which was the actual sale value for the purpose of the deduction u/s. 54EC. 3. The facts as elaborated....
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....rm Capital Gain and the taxability there on, vide letter dated 04.10.2007 (the copy of which is placed at page 9 of the paper book) : Market value as per stamp duty Rs. 24,48,128 Cost of Premises as on 10.06.99 10,04,475 As per Valuation Report Indexed Cost 480 x 10,04,475 12,39,455 389 Cost of reconstruction 4,75,000 17,14,455 Net Gain 7,33,673 Investment into Capital gain bond 16,00,000 Taxable Capital Gain NIL 4.1 The Assessing Officer rejected the contention of the appellant by concluding firstly, that by virtue of section 50 it is a Short Term Capital Gain and secondly, the cost of acquisition is Rs. 4,75,000/- which was the cost incurred for acquiring the property. After giving deduction u/s.54EC, he calculated the Short Term Capital Gain as under :- Sale value u/s. 50C Rs. 24,48,128/- Less : Cost Rs. 4,75,0....
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....erm Capital Gain. Lastly, he held that the sale consideration would be taken as per the value determined by the Stamp Valuation Authority i.e. Rs. 24,48,128/- instead of Rs. 16,00,000/- and since the appellant has only invested Rs. 16,00,000/- in prescribed bond u/s. 54EC, the deduction would be allowable to the extent of Rs. 16,00,000/-. He, accordingly, taxed the Short Term Capital Gain of Rs. 3,23,128/-. 5.3 On the issue of applicability of section 50, the CIT (Appeals) categorically held that the same would not be applicable in the case of the appellant and, therefore, the view taken by the Assessing Officer for the purpose of determining the Short Term Capital Gain is not correct, even though on the facts that it was a Short Term Capital Gain only. 6. The learned Sr. Counsel on behalf of the appellant submitted that once the CIT (Appeals) has held that the provisions of section 50 are not applicable, then the issue of Short Term Capital Gain does not arise at all. He contented that the date of agreement i.e. 10.06.1999 by which there was a conversion from a tenancy to ownership was the date from which the issue of acquisition and the cost of acquisition should be determi....
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....alji Temple Trust'. The trust desired to sell the property and after getting due permission from the Charity Commissioner, the said property was sold to all the tenants with one Shri Geharilal Harkalal Ranka, who was the confirmed party. All the tenants entered into an agreement on 10.06.1999, by which all the tenants formed cooperative society and purchased the property on the same space. The said building was demolished and new building was constructed thereafter. The total cost of purchase and consideration for the new property in the hands of the appellant was determined at Rs. 4,75,000/-. The possession was given to all the tenants in the Assessment Year 2002-03 when the building was completed with the same space as was existing with the tenants in the old building. From a perusal of agreement dated 10.06.1999 (a copy of which is appearing at page no. 26 and 43 of the paper book), it is seen that, all the tenants themselves were the promoters and also proposed a Co-operating Housing Society in the name of Maruti Co-operating Housing Ltd., wherein all the tenants become the members and were promoted as purchasers. Thus, this agreement (dated 10.06.1999) itself gave interest and....
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....f the CIT (Appeals) are correct. As already stated above, the appellant had purchased the said property for a sum of Rs. 4,75,000/- which included the proportionate cost of new building. In such a situation, the cost of tenancy right cannot be taken into consideration, firstly, there was no surrender of tenancy rights and secondly, as per the sub section 2 of section 55, the cost of acquisition of tenancy right has to be taken at Nil. Even from the plain reading of the agreement dated 10.06.1999, it is evident that the appellant had bought the property and not the ownership right and once this is a factual position, then it cannot be held that the some cost should be assigned on the tenancy right also. The judgment of Hon'ble Jurisdictional High Court in the case of Dr. D.A. Irani (supra) also gets squarely applicable, wherein it has been held that even if the assessee was tenant before its purchase, it becomes wholly irrelevant because at the time of purchase, tenancy gets extinguished and hence the value has to be assessed from the date of acquisition of the property. Therefore, the cost of acquisition for the purpose of indexation has to be taken at Rs. 4,75,000/- and not Rs. 10....