TaxTMI 
TaxTMI 
2022 (1) TMI 655
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....e assessee entered into a Joint Development Agreement i.e., JDA with M/s Mohtisham Complexes 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 Tr....
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...." 8. Learned counsel appearing for the Revenue argued that the Tribunal has grossly erred in holding that 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....
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....sing from the transfer of a capital asset with the exception as saved in Sections 54, 54B, 54D, 54E, 54EA, 54EB, 54F, 54G and 54H shall be chargeable to income tax under the head 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 i....
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....lue of the consideration" because it was dealing not merely with sale but with other types of transfer, such as exchange, where the consideration would be other than money. If it is therefore held in the present case that 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 r....
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....it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic 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 me....
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.... 115 taxmann.com 5 (SC)] while considering the provision of Section 53 of the TP Act in the context of capital gains under the Income Tax Act, it has been held thus: "11. In order that the provisions of Section 53A of the T.P. Act be attracted, first and foremost, the transferee 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 t....