TaxTMI 
TaxTMI 
TaxTMI 
2022 (1) TMI 655
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....exes Pvt. Ltd., for construction of residential apartment (Ivory Towers) and commercial complexes (Ivory Enclave) on the said plot of land. The assessee was entitled to receive 26% of the constructed area as per the terms of the JDA. An addendum to this JDA was made on 11.5.2009. 3. The assessing officer completed the assessment by computing the long term capital gains, quantifying the sale consideration as the cost of construction of 26% of constructed area and allotted to the assessee as per the JDA dated 11.5.2009 treating the cost of construction as the full value of consideration. Being aggrieved, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), which came to be allowed considering the guidance value as the full value of consideration and on further appeal before the Tribunal by the Revenue, the same was confirmed dismissing the appeal. Hence, this appeal by the Revenue. 4. ITA No.653/2016 is filed by the Revenue under Section 260A of the Income Tax Act, 1961 ('Act' for short) challenging the order dated 19.08.2016 passed by the Income Tax Appellate Tribunal, Bangalore Bench "C", Bengaluru ('Tribunal' for short) in ITA No.1428/Bang/2014 relat....
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....t the guidance value has to be adopted for computing the capital gain when the terms and conditions of the agreement specify the value of consideration. Referring to Section 48 of the Act, it was argued that "full value of consideration" has to be interpreted with reference to cost of construction. Section 50C was also referred to. It was agued that Section 50D of the Act, which has come into effect from 1.4.2013 is not applicable to the facts of the present case. 9. Learned Senior counsel representing the respondent - assessee submitted that for the assessment year under consideration, there is no provision in the Act which contemplates as to how full value of consideration has to be determined when an assessee entered into a JDA. Placing reliance on CIT v. B.C.Srinivasa Setty, reported in (1981) 128 ITR 294 (SC) submitted that there can be no capital gains arising on entering into JDA during the assessment year under consideration, as the Act does not contemplates the method of computation of capital gains. Alternatively, learned Senior Counsel submitted that the guidance value of the extent of land which is transferred to the developer, prevailing as on the date of transfer wou....
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.... capital gains and by legal fiction it is deemed to be the income of the previous year in which the transfer took place. The mode of computation as prescribed under Section 48 would indicate that the income chargeable under the head capital gains shall be computed by deducting the following amounts from the full value of consideration received or accrued as a result of the transfer of the capital asset. [1] expenditure incurred wholly or exclusively in connection with such transfer [2] cost of acquisition of the asset and the cost of any improvement thereto. Special provision for full value of consideration in certain cases is dealt by Section 50C which reads as under: "Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for t....
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....the actual price received by the respondent was at the rate of Rs. 136 per share the full value of the consideration must be taken at the rate of Rs. 136 per share. The view that we have expressed as to the interpretation of the main part of section 12B(2) is borne out by the fact that in the first proviso to section 12B(2) the expression "full value of the consideration" is used in contradistinction with "fair market value of the capital asset" and there is an express power granted to the Income-tax Officer to "take the fair market value of the capital asset transferred" as "the full value of the consideration" and "fair market value of the capital asset transferred" and it is provided that if certain conditions are satisfied as mentioned in the first proviso to section 12B(2), the market value of the asset transferred, though not equivalent to the full value of the consideration for the transfer, may be deemed to be the full value of the consideration. To give rise to this fiction the two conditions of the first proviso are : (1) that the transferor was directly or indirectly connected with the transferee, and (2) that the transfer was effected with the object of avoidance o....
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.... or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers." Similarly, in the case of Commissioner of Income-tax V/s. Bilahari Investment [P.]. Ltd., [(2008) 215 CTR 201 (SC)], the Hon'ble Apex Court has observed thus: "20. As stated above, we are concerned with assessment years 1991-1992 to 1997-1998. In the past, the Department had accepted the completed contract method and because of such acceptance, the assessees, in these cases, have followed the same method of accounting, particularly in the context of chit discount. Every assessee is entitled to arrange its affairs and follow the method of accounting, which the Department has earlier accepted. It is only in those cases where the Department records a finding that the method adopted by the assessee results in distortion of profits, the Department can insist on substitution of the existing method. Further, in the present cases, we find from the various statements produced before us, that the entire exercise, arising out of....
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....ree must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of Section 53A can be said to be attracted on the facts of a given case. 12. On a reading of the agreement to sell dated 15.05.1998, what is clear is that both the parties are entitled to specific performance. (See Clause 14) 13. Clause 16 is crucial, and the expression used in Clause 16 is that the party of the first part hereby gives 'permission' to the party of the second part to start construction on the land. 14. Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of developing the land into flats and selling the same. Such license cannot be said to be 'possession' within the meaning of Section 53A, which is a legal concept, and which denotes control over the land and not actual physical occupation of the land. This being the case, Section 53A of the T.P. Act cannot possibly be attracted to the facts of this case for ....