TaxTMI 
TaxTMI 
TaxTMI 
2021 (4) TMI 1005
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.... 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 the cost of land, cost of construction and incidental expenses Rs. 13,27.915/-....
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....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 1. Commissioner 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/....
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....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 has filed an Appeal before the Ld. CIT(A) who in turn in para 5 of the Appellate order has held as under: "6. The Cost of construction of 7 flats sold: The assessee had claimed the cost of construction of 7 flats sold at Rs. 86,10,000 at the rate of Rs. 1000 per sq.ft on the build-up area of 8610 sq.ft, the Ld. AO has disallowed the cost of construction on the ground that the cost of construction was incurred by....
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....ns 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 Guidance Value Notification. However the Ld. CIT(A) has not appreciated the contention of the Assessee and held as under: ......... also the claim of Rs. 500/- per sq.ft cannot be accepted. The value at Rs. 800/- per sqft is in order and upheld." 11. The Assessee submits that the AO has relied upon the value of Rs. 800/- per sq.ft on the basis of the information obtained from the Sub-Registrar. Mahadevpura, Bangalore. As again....
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....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 disallowed the cost of construction of the 7 flats sold mainly on the ground that the Developer had incurred the expenditure and not the Appellant. In this regard the Appellant submits that the flats were received in lieu of transfer of 55% of the undivided portion of land in favour of the developer and therefore the Developer had incurred the expenditure. The Ld. CIT(A) has held that the claim of the Appellant in respect of cost of construction of the 7 flats was not allowable and accordingly the addition made by the AO was upheld....
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....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 to tax and the same to be confirmed. 13. We have heard the rival submissions, perused the materials available on record and gone through the orders of the authorities below. In this case, the A.O. denied the cost of construction incurred on 7 flats while computing the capital gain on the reason that assessee has not incurred this expenditure but it was incurred by developer. However, it has to be noted that the assessee has considered cost of these 7 flats as a consideration while computing the capital gain on entering into JDA. Once the assessee inc....
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....ssessee 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 account. The AO is directed to work out the trading account by following the aforesaid procedure and in accordance with law and the directions given earlier. Thus, issue (C) is decided accordingly. 14. Further, in the case of K. Ranjan in ITA No.928/Bang/2014, the Tribunal vide order dated 4.9.2015 held that 10.4.1 We have heard both parties and perused and carefully considered the material on record. As regards the allowability of the cost of acquisition of property to the assessee, we find that the co-ordinate bench of the Tribunal in the case of Smt. Jeeva Vadivelu (supra) at ....
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....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 orders, I hereby allow the grounds taken by the appellant." 16. Further, in our opinion as held by Hon'ble Supreme Court in the case of CIT Vs.V.MR.P.Firm, Muar 56 ITR 67 it was held as under: "The doctrine of "approbate and reprobate" is only a species of estoppel; it applies only to the conduct of parties. As in the case of estoppel, it cannot operate against the provisions of a statute. If a particular income is not taxable under the Income-tax Act, it cannot be taxed on the basis of estoppel or any other equitable doctrine. Equity is out of place in tax law; a particular income is either exigible to tax under ....
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....evy 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. Mahadevapura, Bangalore. Accordingly, the Ld AO has quantified the Assessee's 50% share of Capital Gains at Rs. 10,08,500/- arising out of the JDA dated 28-01-2008 with the Developers M/s. Sai Gokul Builders. The Ld. AO vide letter dated 24-03-2014 called upon the Assessee to file objections 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 date....