2022 (9) TMI 100

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....(A) erred in holding that the land comprised in the project "RMT Phase II (Rani Meiyyammal Towers)" is a capital asset and the gain out of the sale of the same should be treated as capital gains. 2.1 The Ld. CIT(A) ought to have appreciated that the assessee's treatment of bifurcating the sale proceeds of Project RMT-I (Profits on sale of land offered under LTCG and the profits on sale of flats offered as business profits) were accepted since the land comprised in Project RMT-I were inherited by the assessee. 2.3 The Ld. CIT(A) failed to appreciate that unlike project RMT-I, in respect of RMT-II, the land and semi-finished building was acquired and though the scheme of arrangement is titled as partition, going by the facts of the case, the channel by which categorized as partition. 2.4 The Ld. CIT(A) ought to have appreciated the fact that as per the final accounts of the assessee, the land together with the building acquired in semi-finished state were included in the value of closing stock and the assessee did not exhibit the land as a capital asset and only the building stock as stock in trade. 2.5 The Ld. CIT(A) ought to have appreciated ....

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....ase I & II have been put up devolved on me and on my brother's family. My brother Kumararajah M.A. Muthiah Chettiar died on 24.01.1970 and therefore his interest devolved on his wife Kumararani Smt. Dr. Meena Muthiah and his adopted son Mr. M.A.M.M. Annamalai. A partition deed dated 15.11.2006 was entered into between us for the said land, by virtue of this partition deed, on the portion of the land allotted on partition, Rani Meyyammai Towers-Phase I and Phase II were put up by me in the form of flats and sold them to third parties. By virtue of this partition of ancestral properties viz. land in RS No. 4288/2 in which Rani Meyyammai Towers Phase I & II have been put up, I completed the project and sold the undivided share of land to the flat owners and also entered construction agreements for the flats, and after completing the flats, I sold the constructed portion also. The claim in this assessment is that the gain on sale of undivided share of land attributable to each flat sold by registered deed should be considered as long term capital gain and the profits attributable to construction of the flats should be treated as business profit thus bifurcating the profits....

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....ibunal has observed and held as under: "5. In the assessments made for assessment years 2009-10, 2010-11 & 2011-12, the AO continued to assess income derived from the land of project RMT-II as business income, as he has done in for assessment year 2008-09. Aggrieved against those orders, the assessee filed appeals before the CIT(A). The CIT(A) following his decision made in assessment year 2008-09, allowed the assessee's appeals. Aggrieved against those orders, the Revenue filed appeals for all these assessment years on the common grounds and hence the common grounds filed for ITA 425/2014 is extracted as under: "1. The order of the learned CIT(A) is contrary to law and facts and circumstances of the case. 2.1 The CIT(A) erred in holding that the land comprised in the project 'RMT Phase II' is a capital asset and the gain out of the sale of the same should be treated as capital gains. 2.2. The CIT(A) ought to have appreciated that the assessee's treatment of bifurcating the sale proceeds of project RMT I, (profits of sale of land offered under LTCG and the profits on sale of flats offered as business profits) were accepted since t....

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.... authorities. However, both of them have agreed that this issue can be remitted back to the AO for a fresh examination. In the facts and circumstances, we deem it fit to remit this issue back to the AO for a fresh examination. The assessee shall place all the materials in its support before the AO and comply to the AO's requirements as per law. The AO is free to conduct appropriate enquiry as deemed fit, but he shall furnish adequate opportunity to the assessee on the material etc to be used against it and decide the matter in accordance with law for assessment years 2008-09 to 2011-12." 4.1. As has been done in the assessment year 2008-09, the Assessing Officer continued to assess the income derived from the land of project RMT-II as business income in the assessment years 2009-10 to 2011-12 including the assessment year 2012-13 under consideration. As the Coordinate Benches of the Tribunal has remitted the matter back to the file of the Assessing Officer, we also remit the matter back to the file of the Assessing Officer for fresh consideration for the assessment year 2012-13. Thus, the ground raised by the Revenue is allowed for statistical purposes. 5. Coming to asses....

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....n of 4 flats   5,15,95,297 However, the cost of construction of flats sold as worked out by the assessee was Rs. 5,80,99,021/-. The difference of cost of construction adopted by the assessee (Rs. 5,80,99,021) and the cost of construction calculated as above (Rs. 5,15,95,297) is Rs. 65,03,724/-. Hence the excess expenditure claimed by the assessee was disallowed and brought to tax. On appeal, the Ld. CIT(A) has confirmed the disallowance made by the Assessing Officer. 5.2. On being aggrieved, the assessee is in appeal before the Tribunal. 5.3. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. The difference of cost of construction adopted by the assessee (Rs. 5,80,99,021) and the cost of construction calculated by the Assessing Officer (Rs. 5,15,95,297) was Rs. 65,03,724/-. On appeal, after considering the submissions of the assessee, the Ld. CIT(A) has observed that the calculation carried out by the Assessing officer in the impugned assessment order, the expenditure incurred towards construction of flats has been rightly considered on proportionate basis at Rs. 49,23,891/-, whereas, the ass....