TaxTMI 
TaxTMI 
2015 (1) TMI 732
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....d his son Sri Mahindra Vaddineni & daguther-in- law Smt. Devasena) promoted a venture by the name of 'Fabel County' with an intention to develop the land into plots and towards this end they made suitable applications before the concerned Urban Development Authority. Land use conversion fee as well as lay-out fee, for conversion of the land from agricultural to residential use and also for getting the layout plan approved, was paid. Out of the total land holding of ac.85.28 guntas the total land developed was ac.63.10 guntas and 112. Sq. yards equivalent to 306242 sq. yds. As per the HUDA approved plan, the net plot area was 167802 sq. yds and the same was sold/ agreed to sale and the details are as under : Land in Sq. yds Whom the land was sold to Sale consideration 60743 Victory Avenue P. Ltd., @ Rs. 1800 per sq. yd Rs. 10,93,55,600 67563 (i) Sri V. Brahmananda Reddy (20706 sq.yds). (ii) M/s. Lakshmi Venkateswara Estates P. Ltd., (26,879 sq. yds) (iii) Sri P. Srinivasa Sarma (19978 sq. yds) (iv) Other customers (834 sq. yds) Rs. 5,35,00,000 39496 Mortgaged to HUDA 2.1. Survey operation under section 133A were conducted in the business premises of M/s. Victory Tra....
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....79.211/-, the cost per square yard is around Rs. 75/-. The land was developed into plots totally admeasuring to 18000 sq. yds. The assessee along with Shri Manoj Vaddineni sold the above lands during the period 2004-05 to 2007-08 and admitted long term capital gains from such sale. In computing the long term capital gains chargeable to tax, the assessee claimed cost of improvements u/s.48(ii). However, the assessee furnished no supporting evidence in respect of the claim of cost of improvements. Therefore, the assessee's claim of cost of improvements cannot be considered for allowance u/s.48(ii) and the long term capital gains chargeable to tax are recomputed as under:- F.Yr. during which sold Extent of land sold Sale consideration Cost of acquisition Long term capital gain (without indexation) Assessee's share of capital gains. 2004-05 900 2,70,000 67,500 2,02,500 1,06,900 2005-06 12184 35,93,000 9,13,800 26,79,200 14,14,350 2006-07 3585 19,12,500 2,68,800 16,43,700 8,67,709 2007-08 0 0 0 0 0 Unsold Land 1331 0 0 0 0 Total 57,75,500 12,50,100 45,25,400 23,88,959 3. Ld. CIT, having noticed the assessment orders and documents, has issued notices unde....
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....nce. If the assessee was intending to trade in the plots of land proposed to be developed by VAPL, the assessee and his group would then have either kept the sales consideration flexible to take benefit of the natural appreciation in the price of land over the period of sale or in the alternate would receive part or whole consideration in the form of developed plots of land. However, the assessee as stated earlier, has on the date of agreement decided the consideration to be received which is Rs. 1800 per sq. yd end hence the assessee has transferred his capital asset being his share in 60742 sq. yds of [end to VAPL. The assessee and his group has however offered surplus from sale of only 19574 sq. yds of land instead of the entire sales consideration for 60742 sq. yds of lend, The' Assessing Officer has accepted this computation of capital gains and hence his order is held to be erroneous in as much as it is prejudicial to the interests. of revenue. The assessment order dt.29.11.201O is hence set-aside with a direction to the Assessing Officer to compute the capital gains arising from sale of 60743 sq. yds of land to VAPL by holding that the capital gains on the entire parcel ....
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....apur Mandal, Ranga Reddy District amounting to Rs. 8,67,709, as business income." 4. Assessees are aggrieved and raised grounds. For the sake of record grounds raised by Mr. Mahindra are extracted hereunder : 1. "The order of the learned Commissioner of Income-Tax is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax erred in holding that there is any error in the order of assessment passed u/s 143(3) r.w.s. 147 of the I.T. Act by the Deputy Commissioner of Income- Tax, Circ1e-3(3), Hyderabad. The learned Commissioner of Income-Tax ought to have seen that there is neither an error nor any prejudice caused to the department so as to enable him to invoke the provisions of Sec.263 of the I.T. Act. 3. The learned Commissioner of Income-Tax erred in holding that there was under assessment of the sale consideration received during the year under consideration and further erred in directing the Assessing Officer to determine the sale consideration at Rs. 10,93,55,600/-. 4. The learned Commissioner of Income-Tax erred in holding that the gain on sale of land at Dommara Pochampally Village, Quthbullapur Mandal, Ranga Reddy Dist., is assessable under the head ....
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..... Counsel referred to the order of Ld. CIT(A) in A.Y. 2007-08 on cost of improvement and statements recorded in the course of survey to submit that the matters are examined thoroughly and so the order of CIT on merits is not correct. Coming to the issue of gains on Dommara Pochampally lands in the case of Mahindra, it was submitted that the stand of CIT is contradictory. It was submitted that the Ld. CIT accepted the gain under the head "Capital Gains" and such Medchal lands as capital assets but took a different stand on these lands that too only in this year, whereas, as can be seen from the order of A.O. the gains arose in earlier years also and no gain in later year. Lastly, it was submitted that the gains having been offered at 20% in later year, CIT has not justified how the order of A.O. is prejudicial to the interest of Revenue, a condition to be satisfied along with erroneous in nature. 6. Ld. D.R. supported the order of Ld. CIT on this issue. 7. We have considered the rival contentions and perused the documents on record. As seen from the order of A.O. and statements recorded during the survey, the aspect of gains on sale of lands was thoroughly examined by A.O. Therefo....