TaxTMI 
TaxTMI 
2024 (4) TMI 1110
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....) 2016-17 as against the appellant contending that the long-term capital gain is assessable in the AY 2013-14. C. The learned CIT(A) failed to appreciate that in view of the satisfaction of the conditions prescribed in section 2(47)(v) r.w.s.53A of the Transfer of Property Act, 1882, particularly, handing over of possession to the purchaser developer or his nominees during the previous year relevant to the AY 2013-14 the transfer of the impugned property took place in the previous year relevant to the AY 2013-14. D. The learned CIT(A) erred in holding that the agreement for sale was substantially modified on 30.09.2013 without appreciating that the Supplementary Agreement only related to changes in allotments of Flats between the appellant and the developer, with no change in the substantive part of the agreement. Thus, the learned CIT(A) failed to appreciate that the Supplementary Agreement did not make any change in the substantial part of the deed which conferred respective rights to the developer and the appellant. E. The learned CIT(A) ought to have appreciated that the capital gains is assessable only in the AY 2013-14, on account of satisfaction of....
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....he Income Tax Act, 1961 ["Act"] vide assessment order dated 30.12.2018 wherein the assessing officer disallowed part of the indexed cost of land and building claimed by the petitioner in calculating the capital gains and also disallowed part of the deduction claimed by the petitioner u/s 54 of the Act. The said capital gain and deduction arose out of a Joint Development Agreement with one M/s. Fourcee Housing ["Builder"]. During the course of assessment, the petitioner was represented by one Shri. R. Sundar, FCA and the petitioner had provided him with a confirmation provided by the Builder wherein they confirmed the date on which possession of the property was given to them by the petitioner, the date on which the demolition of existing buildings were completed and the date on which the new flats after completion of construction were handed over to the petitioner. The petitioner believes that the said confirmation was produced before the learned assessing officer during the course of assessment but he is not absolutely sure. Since the Authorised representative has also changed subsequently, the Petitioner wishes to submit the said confirmation before this Hon'ble Tribunal as a....
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....e sale deeds, the assessee conveyed undivided share (UDS) of 2137 square feets each to different parties. It was stated that in lieu of joint venture agreement (JVA), the assessee got his share of apartments constructed and handed over in compensation for the UDS area foregone to the builder. Through two sale deeds, the assessee conveyed UDS of 4274 square feets. The assessee computed long-term capital gain (LTCG) of Rs. 551.39 Lacs. Against the same, the assessee claimed deduction u/s 54 for Rs. 520.71 Lacs and the remaining long-term capital gain (LTCG) of Rs. 30.67 Lacs was offered to taxation. The sale consideration was found acceptable by Ld. AO. 2.2 It was noted by Ld. AO that the assessee acquired the property on 27-08-1966 and the property consisted of 15 grounds and 558 square feets including the bungalows, out-house, cattle shed, garage and garden. Subsequently, by deed of trust dated 01-02-1971, the assessee transferred a portion of the property thereby retaining 9 grounds and 425 square feets. 2.3 Subsequently, the assessee entered into 'agreement for development' on 30-11-2011 with M/s Fourcee Housing for development of the said property. A copy of the same is on....
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....s of flats as proposed to be constructed have also been enumerated therein. The assessee was to get 10 flats (UDS 80.60%) whereas the developer was to get 2 flats (UDS 19.4%) in the proposed structure. 2.5 In the above background, Ld. AO proceeded to verify the cost of acquisition. The assessee computed indexed cost of land as Rs. 22.44 Lacs and indexed cost of building as Rs. 326.16 Lacs. It transpired that the assessee adopted Fair Market Value (FMV) of the land as on 01-04- 1981 at Rs. 23,000/- per ground and worked out the value of 21666 Square feets at Rs. 2.07 Lacs as on 01-04-1981. The Ld. AO thus observed that the assessee has taken the entire cost, applied indexation from 1981-82 and claimed the same as indexed cost of acquisition against the sale consideration. Since the extent of property conveyed was 4274 square feets only and the balance being retained by the assessee himself, only the proportionate cost attributable to the extent of land conveyed could be claimed towards cost of construction. The proportionate indexed cost was worked out by Ld. AO as Rs. 4.42 Lacs and accordingly, the differential of Rs. 18.01 Lacs was added back as Long-Term Capital Gains (LTCG). ....
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....to Rs. 16.40 Lacs. 2.9 The assessee claimed deduction u/s 54 for Rs. 520.81 Lacs the working of which has been given in para 8.1 as under. Cost of construction as per builder is Rs. 7,56,00,000/- for 31518 sqft is Rs. 2399/- sqft Built up area of 6300 sqft @ 2399 sqft (cost price of builder) Rs. 1,51,13,700 Cash outflow for 1682 sqft included in built up-area of 6300 sq.ft Rs. 2,95,55,000 Cost of service tax paid (for 9 flats) Rs. 53,21,820 Alteration and other cost paid (for 9 flats) Rs. 21,02,660 Deduction u/s. 54 Rs. 5,20,71,180 The assessee submitted that out of 10 flats allotted to the assessee, two flats were combined into one contiguous unit. The assessee furnished copy of EB card and property tax assessment to support the same. Accordingly, the deduction u/s 54 was worked out by the assessee. 2.10 The Ld. AO faulted the working of the assessee on the ground that entire costs attributable to all the flats allotted to the assessee were considered by the assessee towards the cost of the new asset meant for deduction u/s 54. Upon perusal of supplementary agreement, Ld. AO held as under: - 8.2 It could be seen here that the c....
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....built up area of 33200 sq.ft. entitled to the assessee by virtue of the revised agreement dt.30-09-2013. The sale consideration of the UDS parted to the developer being fixed at Rs. 9,00,00,000/-, the balance of Rs. 1,51,33,000/- has to be paid by the assessee to the developer towards Construction cost post supplementary agreement. Further, the amount of Rs. 1,44,00,000/- already paid by the developer to the assessee in terms of original agreement was adjusted against the above sale consideration of Rs. 9 crore. By Summing up, an amount of Rs. 2,95,33,000/- was payable by the assessee to the developer as a result of revised equation arising out of the terms of Supplementary Agreement. 8.3 In this regard, the Statement of Account dt.11-03-2017 issued to the assessee by the developer is captured here for clarity. From the above, it could be clearly seen that the developer has charged a total amount of Rs. 11,25,57,480/- as cost of construction of 33,200 sq.ft. of building plus Service Tax, TNEB and other incidentals. This was also confirmed by the Managing Partner of M/s. Fourcee Housing Ms. Rama Chandiramani, from whom a statement u/s. 131 was recorded on 20-12-201....
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....ms of original agreement was adjusted against the sale consideration of Rs. 900 Lacs. In other words, the assessee paid amount of Rs. 295.33 Lacs towards construction in terms of supplementary agreement. 2.11 Finally, deduction u/s Sec.54 was worked out by taking cost of Rs. 1125.57 Lacs for 33200 square feets. The proportionate deduction u/s 54 was worked out at Rs. 213.58 Lacs. 2.12 The working of Ld. AO resulted into addition of Rs. 474.02 Lacs in the hands of the assessee which was subjected to assessee's further challenge before Ld. first appellate authority. 3. Appellate Proceedings 3.1 The assessee assailed the assessment, inter-alia, by submitting that the gains were assessable in AY 2013-14 in accordance with Sec. 2(47) on the date of handing over the possession and not in this year during which the sale deed was executed. The assessee also assailed computation made by Ld. AO. It was submitted that JDA was entered on 30-11-2011 and possession of the property was given in April, 2012. The assessee received the consideration as per terms of JDA. The assessee submitted that it filed objection before Ld. AO on 24-12-2018 who ignored the submission of the assessee. ....
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....saction in question could not fall within the scope of deemed transfer u/s 2(47). Since the transferee neither performed nor was it willing to perform its obligation under JDA in FY 2004-05, the arguments of the assessee were not tenable. The municipal sanction was obtained subsequently. Therefore, it could not be held that the transfer took place in AY 2005-06. 3.4 The Ld. CIT(A) held that in the present case also, the original plan was not approved and the new plan was approved subsequently. The supplementary agreement incorporating the changes was signed only on 30.09.2013. Therefore, it could not be said that the income arose in AY 2013-14. Therefore, the year of JDA could not be treated as the year of transfer for purpose of taxation of capital gains considering the facts of the case. 3.5 The Ld. CIT(A) also noted that amendment carried out by the Finance Act to Section 45(5A), though applicable from A.Y. 2018-19, lays down that in cases of specified agreement for development of real estate project, capital gain shall be chargeable to tax in the year in which completion certificate is given by the competent authority. This will put at rest many disputes arising in cases ....
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....ct. The AO had taken proportionate share of assessee's 6300 sq ft of combined two flats as cost of acquisition of new property for deduction u/s 54 of the Act. Hence, the decision of the AO needs no interference. In view of the above, ground No. 7 is dismissed. Aggrieved as aforesaid, the assessee is in further appeal before us. Our findings and Adjudication 4. From the fact, it emerges that the assessee has sold two properties vide sale deeds dated 07-03-2016 and 14-03-2016. Through the sale deeds, the assessee has conveyed undivided share (UDS) of 2137 square feets each to different parties. It could also be seen that the assessee entered into a joint venture agreement (JVA) on 30-11-2011 under which the assessee got his share of apartments constructed in lieu of transfer of UDS foregone to the builder. Considering the sale transactions which have fructified in this year, the assessee has computed Long-Term Capital Gains and after claiming deduction u/s 54, offered the taxable gains to tax in his return of income for this year. 5. It also emerges that the property under consideration is land with certain building which was acquired by the assessee in the year 1966....
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....de under this head including ascertainment of cost of acquisition / improvement and examination of deduction as claimed by the assessee. This being so, the additional ground raised by the assessee do not find our favor. The Ld. AO could very well examine the computation of cost of acquisition / improvement. The said ground stand rejected. 7. The Ld. AR has filed additional evidences in support of the submissions that the Joint Venture Agreement giving rise to impugned capital gains was entered into by the assessee on 30-11-2011. It has also been submitted that the possession of the land was offered during AY 2013-14. Therefore, the impugned gains would be assessable in AY 2013-14. The Ld. AR, in the alternative, submitted that the assessee has provided the confirmation given by the builder vide letter dated 14.12.2018 wherein they confirmed that the possession of old house was handed over to them in April, 2012, the demolition was completed in July, 2012 and the possession of the completed flats Nos. A-1 to A-8 was handed over to the assessee on 30-03-2015. The Ld. AR also relies on completion certificate issue by Chennai Metropolitan Development Authority on 25-02-2015 in suppo....
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....d not find our acceptance and hence, rejected. The Ld. CIT(A), in our considered opinion, has clinched the issue in correct perspective by relying upon the decision of a Tribunal. We concur with the same. Ground Nos. A to H, additional grounds of appeal as well as alternative grounds including admission of additional evidences as urged by Ld. AR stand dismissed. 11. Coming to the merits of the case, so far as the computation of cost of land is concerned, we find that the assessee has parted with only a part of the land. Therefore, he is not correct in considering entire cost of land while computing the gains. Only proportionate cost could be allowed to the assessee. We confirm the stand of Ld.AO to that extent. 12. So far as the cost of building is concerned, it could be seen that the assessee has claimed to have spent an amount of Rs. 35 Lacs towards cost of construction in the year 1983-84 and worked out indexed cost of Rs. 326.16 Lacs. The above cost has been claimed towards 20000 sq. feets of building. However, the said claim has remained unsubstantiated. The assessee has only produced copy of demolition plan as evidence for existence of building and online status of prop....