TaxTMI 
TaxTMI 
2020 (3) TMI 216
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....s computation of total income, the assessee had shown long term capital gain of Rs. 73,01,087/- and claimed exemption u/s 54F of the Act for Rs. 71,76,700/- and, therefore, the net long term capital offered for taxation was Rs. 1,24,387/-. 2.1. During the course of assessment proceedings, the assessee was requested to furnish details of properties sold on which capital gain was offered to tax. In response to the same, the assessee filed the copy of the sale deed according to which, in the Previous Year relevant to the A.Y. 2009-10, the assessee had transferred plot nos. 199 and 200 (admeasuring 1500 sq. yards) situated at Survey No.5/3, Raidurg Panmaktha Village, Serilingampally Mandal, R.R. District. The assessee was also requested to furnish all the relevant details with regard to acquisition of above property, cost of improvement, full value of consideration received and entitlement of assessee with regard to exemption claimed u/s 54F of the Act. 2.2. The A.O. observed that on 17.09.2008, the assessee as a GP Holder of Sri M. Suresh Reddy has sold the above plot admeasuring 1500 sq.yds to Sri CM Rajesh for a consideration of Rs. 1,65,00,000/- and the entire consideration w....
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....e, Sri G. Ramchander Rao being tenant of the above land filed a suit in 1980 for perpetual injection. During the pendency of the above suit, Sri G.Ramchander Rao expired. Subsequently, the legal heirs of late Khaja Moinuddin and the legal heirs of G. Ramachander Rao entered into a compromise and agreed for possession of 37 acres 20 guntas each under the compromise decree passed on 2.4.84. 2. Sri G.Ramachander Rao entered into an agreement with Sri K.Anjalah for sale of the above land and received sale consideration also. Sri K.Anjaiah in turn entered into an agreement of sale with BNR Developers (P) Ltd and received advances. Sri G.Ramachander Rao and Sri K.Anjaiah entered into a sale agreement with BNR Developers (P) Ltd and registered irrevocable GPA on 15.09.1986 vide regd. document no.660/86 in favour of assessee who is managing director of BNR Developers (P) Ltd. 3. The assessee had all along been in continuous possession of 12 acres 20 guntas of land situated in Sy No.5/3, Raidurg Panmakhta village as GPA holder of Sri G.Ramachander Rao and his nominees since 15.09.1986 till the developed plots were sold out in the above lay-out. 4. Sri M.Suresh Red....
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....aim that he is only 50% owner of the property and computed long term capital gain on the whole of the receipt. 2.5. Thereafter, he proceeded to consider the claim of exemption u/s 54F of the Act. He observed from computation of income and Form 26 AS for the A.Y. 2008-09 and 2009-10 that the assessee is the owner of 3 residential properties as on the date of transfer of the plot. Therefore, he asked the assessee to explain as to why the exemption claimed u/s 54F of the Act should not be denied. The assessee vide letter dated 15.05.2009 submitted as under: "Ownership of more than one property on date of sale Assessee has been asked to show cause why deduction u/s 54F should be allowed at all given that he has shown rent from more than one property on date of transfer. The other 3 residential properties do not belong to him. B C Reddy and B N R Developers (P) Ltd developed and sold apartment blocks in Kantisikhara Complex, Punjagutta and B N Reddy Towers, Basheerbagh. After all other space was sold in these blocks, there was some space left which was not/could not be sold. As the space remained unsold, the assessee let these premises on rent and ....
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....ate of transfer of above plots situated at Raidurg Panmakhta village. f) Without prejudice to the above, it is further found that the assessee invested his capital gain in commercial property. For the above reason also, the assessee is not entitled to exemption u/s 54F of IT Act, 1961. However, during the course of assessment proceedings, the assessee made a fresh claim of investment in a residential property which was not considered for the simple reason that the assessee failed to comply with the provisions of section 54F( 4) of the IT Act, 1961. Since exemption is being denied for violation of the threshold condition of owning more than one residential house, the fresh claim of the assessee became academic and hence not considered: 3.3. In view of the foregoing, exemption claimed u/s 54F of the I.T.Act, 1961 is denied and entire long-term capital gain of Rs.l,64,00,436/- as discussed at para 2 above is assessed to tax. The assessee offered net long term capital gains of Rs. 1,24,387/- only and hence the difference of Rs. 1,62,76,049/- is added to the income returned under the head capital gains. 3.4. Penalty proceedings u/s. 271(1) (c) are initiated se....
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....the Ld.CIT(A) and argued extensively that the assessee is only 50% shareholder of the land and accordingly has rightly considered 50% of the capital receipt for computing the Long Term Capital Gain. He submitted that to bring the capital gain on the entire plot to tax in the hands of the assessee, the assessee should have a right to receive the entire sale consideration in his own right and not as a GPA holder of the land owners. With regard to the claim of deduction u/s S.54F of the Act, he relied upon the contentions of assessee before the CIT(A). He argued at length to convince the Bench that the assessee is not the sole owner of the property. 5. The Ld.DR however, supported the orders of CIT(A) and drew our attention to relevant paras of CIT(A)'s order wherein the CIT(A) has brought out the factual position for denying the claim of assessee. 6. Having regard to the rival contentions and material placed on record, we find that : (1) The landed property of 75 acres in Sy.No.5/3, at Raidurg Panmaktha Village, Serilingampally, R.R.Dist. originally belonged to one Khaja Moinuddin and after his dealth, it was mutated in the names of his legal heirs. (2) One....
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....din Khan and others under registered sale deed no.10164 of 1989, dt. 28.8.89 and that the land was registered in the name of the first party i.e. Sri M. Suresh Reddy, S/o Siva Reddy, who held the same on his behalf as well as on behalf of the other parties and that the 5 parties of the agreement proposed to alienate 50% of the land in favour of the 6th party i.e. the assessee herein, and the assessee agreed to pay Rs. 40,000/- as his share of cost of the land. This agreement is also not registered. (11) On 5.9.1989, a Regd. GPA No.1224 of 1989, was executed in favour of the assessee before us, to act on their behalf for development of their land of 12-20 acres of land in Sy.No. 5/3, Raidurg, Panmaktha Village. (12) Subsequently, on 17th September, 2008, Shri M.Suresh Reddy represented by his GPA holder i.e. the assessee herein sold 1500 sq.yds of the developed layout to one Mr.C.M.Rajesh and the assessee has received total consideration of Rs. 1,65,00,000/-. 6.1. The AO and the CIT(A) both held that the agreements relied upon by the assessee to say that he is only a 50% shareholder of 2.20 acres of land are both unregistered documents, and, therefore, cannot be....