TaxTMI 
TaxTMI 
2012 (7) TMI 334
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.... to facilitate family of the assessee to stay during the period of construction. There was also provision for sharing of TDR @ 55% if available in future. Subsequently, as per supplementary agreement dated 9.10.2002, the assessee got a sum of Rs. 2.5 lacs in lieu of 55% share in constructed basement. The supplementary agreement also provided that in case assessee was able to get property released from C.R.Z, assessee will have share in the additional FSI including TDR FSI @ 55%. Subsequently the property was released from C.R.Z in 2004, and C.R.Z notification was made effective from 2001. The construction of the building was complete during financial year 2004-05. Due to release of property from C.R.Z control, the total permissible FSI had increased to 26040 sq.ft. and consequently 55% share of the assessee had also increased from 6477.35 sq.ft. to 14322 sq.ft. Out of his share in the constructed property, the assessee sold two flats on 10.4.2006 and 2.5.2006 of 2850 sq.ft. each on 2nd floor and 4th floor respectively for consideration of Rs. 2.72 crores and Rs. 2.66 crores respectively. The total sale consideration thus received by the assessee during the year from sale of flats w....
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....s asset and which was available to the assessee since 21.2.2001. The assessee argued that he was not claiming flats as an asset. The asset in the hands of the assessee was right of claim in immovable property which he held since 1962. It was also submitted that expenditure incurred between 2002-05 for construction of building and 55% share of the assessee in the said construction was merely cost of improvement of the property. There was no new asset created. It was also pointed out that right of the assessee in the additional FSI consequent to release of property from C.R.Z was also available since 2001 as C.R.Z notification was effective from the year 2001. The assessee referred to the judgment of Hon'ble High Court of Bombay in case of CIT v. Vijay Flexible Containers (186 ITR 693) in support of the proposition. Assessee also distinguished the decision of the Tribunal in the case of Kishore Kanungo (102 ITD 437) referred to by the AO on the ground that the said decision was relevant, only for adopting fair market value as on 1.4.1981. The AO however did not accept the contentions raised. It was observed by him that the construction had been completed only during financial yea....
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....ts which was a property within the meaning of section 2(14). In pursuance of the said rights, the builder had delivered flats and, therefore, the assessee was holding the flats since the day of the agreement. The assessee placed reliance on the judgment of Hon'ble High Court of Bombay in the case of H.H. Acharya Swami Ganeshdasji vs. DCIT (119 Taxman 146) and the judgment in case of Hilla J. B. Wadia (216 ITR 376) in support of the proposition. In these cases, it was held that in case allotment letter was issued to an allottee under a scheme for allotment of flat, the allottee gets title to the property on the issuance of allotment letter which has to be treated as date of possession of the property. 3.1 After considering the submissions of the assessee, CIT(A) observed that on signing of the agreement on 21.2.2001 the assessee had acquired right for acquisition of the flats which was a property under section 2(14). The cost of the flats acquired was sale proceeds in respect of the land which had been offered by the assessee in the assessment year 2002-03. The CIT(A) has also held that in view of the judgment relied upon by the ld. A.R, the date of booking of the flat had to....
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....thorities and strongly supported the findings given by the CIT(A). The ld. AR placed reliance on the following judgments in support of the case of the assessee. i) 9(I) ITCL 134 (Guj.-HC) CIT vs. Jindas Panchand Gandhi ii) 262 ITR 675 (Guj.) CIT vs. Anilaben Upendra Shah iii) 11 SOT 594 (Del.) Jitendra Mohan vs. ITO iv) Vinod Kumar Jain vs. CIT 46 DTR (P&H)185 v) 84 TTJ (Mum.)862 ACIT vs. Smt. Hansaben B. Mehta vi) 44 TTJ (Ahd.) 68 ITO vs. Smt. Kashmira M. Parikh vii) 15(II) ITCL 62(Luck "B"Trib.) Astt.CIT vs. Sharad Thadani 4.2 The ld. AR argued that the judgments relied upon by the ld. Departmental Representative were distinguishable and were not applicable to the present case. Alternatively, it was argued that, in case, claim of long term capital gain was not accepted, the land and building has to be bifurcated for the purpose of computation of capital gain. For this purpose, he placed reliance on the judgment of Hon'ble High Court of Bombay in case of CIT vs. Hindustan Hotels Ltd. (335 ITR 60) and the judgment in the case of CIT vs. Citibank N.A. (261 ITR 570). The ld. AR also submitted that the assessee had ....
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....egate consideration of Rs. 5.38 crores on 10.4.2006 and 2.5.2006 with each flat having built up area of 2850 sq.ft. 5.1 The assessee computed the gain from sale of flats as long term capital gain taking holding period from the date of development cum sale agreement. The AO has not accepted the claim of the assessee and has computed capital gain as short term capital gain as the assessee had taken possession of the flats only on 24.2.2005 and therefore, in his view the flats were held only from that date. The case of the assessee is that it had right of claim in the flats since the date of agreement in the year 2001 which was an asset and therefore, it was right of claim in the flats which was sold by the assessee. It has also been submitted that the expenditure incurred during 2002-05 for construction of building and 55% share of the assessee in the said construction was merely cost of improvement of the asset held by the assessee since 2001. Thus, in the opinion of the assessee the asset had been held for more than 3 years and, therefore, the gain has to be computed as long term capital gain. The assessee has relied on several decisions of the Tribunal and High Courts in suppor....
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.... to the file of AO for fresh consideration. The assessee filed appeal against the order of the Tribunal. The Hon'ble High Court observed that the right of occupation or lease hold right did not subsist on the purchase of the flat and was extinguished on that date. In such a case, there was complete union of lessor and lessee which has also been recognized in section 111(d) of the Transfer of Property Act. The Hon'ble High Court accordingly held that the Tribunal was not correct in holding that right of occupation still subsisted after purchase of flat and accordingly it was held that the capital gain had to be computed as short term capital gain. The case of the assessee is similar. The assessee had earlier right to acquire flats which no longer subsisted after flats were acquired by the assessee. The assessee had sold the flats and not its rights to acquire the flat and, therefore, the capital gain in the present case has to be computed in respect of assets being flats. 5.3 The ld. AR for the assessee has placed reliance on several decisions as mentioned in para 4.1 earlier which are distinguishable. In the case of CIT vs. Anilaben Upendra Shah (supra), the assessee had....
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....herefore, as held earlier, the capital gain has to be computed in respect of sale of assets being the flats and not the right to acquire the flats. The argument based on the claim being allowed by the AO in the earlier year cannot be accepted. Each assessment year is independent and the doctrine of res-judicata does not apply in income tax proceedings. Merely because similar claim has been allowed wrongly in the earlier year can not be the sole basis to claim benefits in the subsequent year. 5.4 However, we find substance in the alternate plea of the assessee that the right of the assessee in the flats also included the right in the proportionate part of the land as the assessee had transferred only 45% of right/ interest in the land to the builder and 55% of the right/interest was retained by the assessee. Therefore, sale consideration also included price paid in respect of right in the land in addition to price for super structure. We do not find any merit in the argument of the ld. DR that this being a fresh plea should not be entertained. The entire issue of computation of capital gain is in dispute before the Tribunal and, therefore, all aspects relating thereto have to be ....