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2021 (4) TMI 1005
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.... Sai Gokul Builders was liable for capi tal gains at the rate of Rs. 800/- per sq.ft as against Rs. 500/- per sq.ft as per the Guidance Value notified by Government of Karnataka. 4. The Appellant craves leave to add, alter, amend and delete any of the grounds at the time of hearing. 2. The facts of the case are that the Assessee had filed the original return of income for the Asst Year 2008-09 on 30-10-2008. declaring income of Rs. 55,81,323/- without claiming the cost of Construction of the 7 Flats sold. The return of income so filed was processed u/s. 143(1) of the act. dated 18-02-2010. Subsequently, the AO initiated re-assessment proceedings by issue of a notice u/s. 148 of the Act. dated 11-02-2013 and called for the return of income. The Re-Assessment Proceedings were initiated on the ground that the Capital Gains chargeable to tax was escaped Assessment in respect of the Land transferred in favour of M/s. Sai Gokul Builders in the scheme of JDA dtd: 28-01-2008. In response to the said notice the Assessee has filed a return of income on 26-12- 2013 declaring income of Rs. 15.49.445/- as under:- a) Short Term Capital Gains on sale of 7 flats as reduced by ....
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....,22,000/- 2 A-02 Ground Floor 1190 sq.ft Rs. 16,71,000/- 3 A-03 Ground Floor 1190 sq.ft Rs. 16 71 000/- 4 A-04 Ground Floor 1203 sq.ft Rs. 16,88,000/- 5 A-05 Ground Floor 1162 sq.ft Rs. 16,34,000/- 6 A-06 Ground Floor 1332 sq.ft Rs. 18,59,000/- 7 A-07 Ground Floor 1380 sq.ft Rs. 19,22,000/- TOTAL 8610 sq.ft Rs. 1,20,67,000/- 5. The Assessee has declared the Capital Gains in the original return of income amounting to Rs. 55,33,159/- without claiming the cost of construction of the flats so sold. But in the return of income filed in response to notice u/s. 148 of the Act, the Capital Gains arising out of the sale of the said 7 flats were declared as under :- Sale Consideration for 7 Flats Rs. 1,20,67,000/- Less : 1.Proportionate cost of Land 45% of land Rs. 3,90,250 2.Cost of construction of Super Built area at 1000 per sq.ft (Rs. 1000X8610sft) Rs. 86,10,000 Rs. 90,00,250/- Balance Rs. 30,66,750/- Less: Incidental Expenses &....
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.... said consideration received amounts to cost of flats sold subsequently. The consideration in the form of built-up area for transfer of land represents the cost of flats in the first stage and the sale of flats was a subsequent event in the second stage. The Assessee submits that at the time of sale of flats in the second stage, the Capital Gains are to be quantified as reduced by the cost and other incidental expenses as per Section 48 of the Act. However, the Ld. Assessing Officer has not allowed the cost of construction claimed by the Assessee and therefore, the Capital Gains amounting to Rs. 58,29,375/ determined by the AO without providing deduction towards the cost of acquisition as required u/s. 48 of the Act are not in accordance with law and are not justifiable and consequently, the addition so made without providing the cost of construction is liable to be deleted and the capital gains offered by the Assessee amounting to Rs. 13,27,915/-after claiming the cost of flats, proportionate land cost and incidental expenses requires to be restored. 8. The Assessee having been aggrieved with the Assessment order regarding the disallowance of cost of construction of the flats h....
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....s if any as to why the Capital Gains arising out of the JDA dated 28-01-2008 should not be chargeable to tax for the Asst Year 2008-09 adopting the guidance value of Rs. 800/- per sq.ft., as certified by the Sub-registered, Mahadevapura, Bangalore as against Rs. 500/- per sq.ft. adopted by the Assessee. The Assessee has filed a detailed objection vide letter dated 27-03-2014. However, the Ld. AO has not appreciated the objections filed by the Assessee and quantified the Capital Gains chargeable to tax arising out of the JDA dated 28-01-2008 at Rs. 10,08,500/- adopting the guidance value at Rs. 800/- per sq.ft., provided by the Sub-registrar. Mahadevapura, Bangalore. The Assessee submits that the rate of Rs. 800/- adopted by the AO is not justifiable, since the rate applicable was of Rs. 500/- sq.ft., as per the guidance value prescribed by the Government of Karnataka. The Assessee submits that the capital gains so determined at Rs. 10,08,500/- are arbitrary, unreasonable and opposed to the law and facts of the case and therefore an Appeal against the adoption of value at Rs. 800/- per sq.ft as against Rs. 500/- per sq.ft was filed before the Ld. CIT(A) and provided a copy of the Gu....
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....Sale Consideration for 7 Flats Rs. 1,20,67,000/- Less : 1.Proportionate cost of Land 45% of land Rs. 3,90,250 2.Cost of construction of Super Built area at 1000 per sq.ft (Rs. 1000X8610sft) Rs. 86,10,000 Rs. 90,00,250/- Balance Rs. 30,66,750/- Less: Incidental expenses 1. Commission paid Rs. 1,46,919 2. Customers flat visit expenses Rs. 1,20,000 3. Legal and documentation charges Rs. 18,000 4. Security charges of the flats Rs. 1,26,000 Rs. 4,10,919/- Net Sale consideration from Sale of 7 flats Rs. 26,55,831/- Assessee's 50% share of the sale proceeds Rs. 13,27,915/- However the Ld. AO has computed the Capital Gains at Rs. 58,29,375/-as against admitted capital gains of Rs. 13,27,915/-. The Ld. AO has held that the cost of construction of Rs. 86,10,000/- relating to 7 flats was not allowable since the cost of construction was not actually incurred by the Appellant and the same was incurred by the Builder. 12.2 The Appellant submits that the AO has di....
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....llant in respect of the cost of construction. 12.5 The Ld. D.R. submitted that this was a new claim on account of cost of construction for a total amount of Rs. 86,10,000/-. This is not the cost incurred by the assessee. At any point of time the cost of construction is incurred by the builder to equalize the land holding of the land lord. It is a claim of expenditure to be made by builder to determine his profitability and the cost which is never incurred by the assessee cannot be claimed as an exemption except the proportionate cost of land. Since this is an expenditure not actually incurred by the assessee, the exemption claimed on the cost of construction cannot be allowed. Further, assessee could not produce any documentary proof in the nature of vouchers or bills for various expenditure incurred by the assessee. Hence, the A.O. allowed proportionate cost of land at 45% worked out at Rs. 3,90,250/- and legal & documentation charges Rs. 18,000/- total cost of acquisition Rs. 4,08,250/- was deducted from total sale consideration of 7 flats at Rs. 1,20,67,000/- and computed the total capital gain at Rs. 1,16,58,750/- and assessee's shares at 50% i.e. Rs. 58,29,375/- was brought....
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....iring these 5 flats. The Assessing Officer in the order of assessment has not given any cost to these flats. In our view, therefore the cost of 5 flats has to be worked out and for this purpose of working out the cost of acquisition of 5 flats, the matter is remanded to the Assessing Officer. The AO will verify the cost from the developer, who developed the properties and arrive at the cost of 8664 sq.ft. This cost should be debited to the trading account. The assessee has retained 3 flats out of 8 flats and we direct the cost of these 3 flats lying in the stock with the assessee has to be added as part of the closing stock in the trading account. Similarly, 30% of the value of the land (retained by the Assessee) should also be shown as cost in the debit side of the profit and loss account. The value for this purpose will be 30% of the value for which the Assessee purchased the entire property which was given for joint development. Out of the 30% undivided share of land retained by the Assessee, the value attributable to the extent of undivided share of land sold by the assessee (along with the 5 flats) should be shown as receipt on the credit side of the profit and loss a....
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....n lieu of the said deemed transfer of land measuring 5567 sq.ft., the Developer has incurred the entire cost of construction of the flats constructed and delivered to the Appellant and his Co-owner. The deemed consideration arising out of the transfer of 62% of the land in favour of the Developer was utilized towards the cost of construction of the 10(ten) flats and therefore, the Appellant and his Co-owner were lawfully entitled towards the cost of construction of the two flats (G2 and G5) sold during the previous year ending 31-03-2010 relevant to the Asst Year 2010-11. The cost of construction of the two flats sold was claimed to an extent of Rs. 18,92,000/-. In support of his contention the appellant relied on the Hon'ble jurisdictional ITAT order in the case of Smt Jeeva Vadivelu wherein it was held that the assessee should be allowed the benefit of cost of construction for the flat sold for the purpose of working out the cost of acquisition while computing the CG. Further relied on Sri K Rajanna wherein the Hon'ble jurisdictional ITAT followed the ruling given in the case of 5mt. Jeeva Vadivelu. Respectfully following the above stated jurisdictional ITAT orde....
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.... transferred to Sai Gokul Builders under JDA at Rs. 800/- p. sq.ft. instead of Rs. 500/- p.sq.ft. as guidance value notified by the Government of Karnataka. 20. The Ld. A.R. submitted that the a Joint Development Agreement dated 28-01-2008 was entered into with M/s. Sai Gokul Builders in respect of the property situated at Hoodi Village, K.R Puram. Bangalore East Taluk, Bangalore. According to a JDA, 62% undivided portion of the land was deemed to have been transferred in favour of the Developer against which the Assessee has not offered any Capital Gains for the Asst Year 2008-09. Therefore. the Ld. AO has issued a notice u/s. 148 of the Act to levy tax on the Capital Gains arising out of the JDA dated 28-01-2008 relating to the transfer of 62% of the undivided portion of the land. The Ld. AO in the re-assessment Order has held that the Capital Gains arising out of a JDA dated 28-01-2008 are chargeable to tax for the Asst Year 2008-09 as per Section 2(47)(v) of the Act r.w.s 53A of the Act and accordingly, the consideration was determined on the basis of the provisions of Section 50C of the Act by obtaining the guidance value at Rs. 800/- per sq.ft., from the Sub-registrar. ....
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....T(A) has rejected the contention of the Assessee as regards rate to be adopted at Rs. 500/- per sq.ft and held that the Guidance Value of Rs. 800/- per sq.ft adopted by the AO was in order. The Assessee is aggrieved with the order of the Ld. CIT(A) in upholding the value of Rs. 800/- per sq.ft adopted by the AO and hence this Appeal. 22. The Ld. D.R. submitted that as per Government notification value of the impugned land is at Rs. 800/- and the same was adopted by the A.O. 23. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. We have carefully gone through the market guidance value published by the Government of Karnataka w.e.f. 19.4.2017 as per which, the impugned property bearing No.40B/3 & 40B Sai Gokula Builders situated at Hoodi's village, Bengaluru, East Taluk (erstwhile South Taluk), Mahadevapura, CMC Limits, Ward No.12, K.R. Puram Main Road, Hubli, Bengaluru and it is also noted that the property was converted for non-agricultural residential purposes vide sanction order ALN-SR-1175/1981-82 issued by the Tahsildar, South Taluk, situated at Hoodi's village, Bengaluru, East Taluk (erstwh....