TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 1671
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....ration being 26% of the newly constructed building. Out of the said four flats the assessee had sold two flats and while filing the return of income had claimed deduction u/s.54F of the Act out of the capital gains computed on the transfer of the land and capital gain of Rs.3,00,480/- was declared on the sale of two flats out of the four flats allotted to her towards sale consideration. The case of the assessee was taken up for limited scrutiny for two reasons, such as, (i) capital gain/loss on sale of property and (ii) cash deposit during demonetization period and the assessment was completed wherein the AO allowed the deduction u/s.54F of the Act on one flat and also computed short-term capital loss on sale of two flats against the capital gain declared by the assessee and not allowed the set off of such loss against the capital gains. In the first appeal, the ld. CIT(A) allowed part relief in the appeal of the assessee, therefore, the present appeal has been filed by the assessee before us. 3. During the course of hearing, the ld.AR of the assessee has taken one additional ground as Ground No.4 and requested to admit the same being legal ground, which reads as under :- Ground....
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....our for further formalities in this regard. He, therefore, contended that capital gain, if any, has to be calculated and subject to tax in the assessment year 2012-2013 and not in the year under appeal, as the transfer was taken place at the time of execution of the development agreement when the assessee had handed over the physical possession of the property to the builder. He further submitted that against such transfer the assessee is entitled for 26% of the constructed area comprising of four flats, which was received in the impugned year, therefore, he is eligible for deduction u/s.54F of the Act for all the four flats received by her and the AO has wrongly disallowed deduction claimed u/s.54F of the Act with respect to three flats. 7. He also placed reliance on the judgment of Hon'ble Supreme Court in the case of Seshasayee Steels (P.) Ltd. Vs. ACIT, Chennai, reported in [2020] 115 taxmann.com 5 (SC) and in the case of CIT Vs. Balbir Singh Maini, reported in [2017] 86 taxmann.com 94 (SC), in support of the contention that where the Joint Development Agreement was executed, for the purpose of capital gain, incidence of tax arisen in the same year thus in the present case....
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....ts to two different parties vide sale deed in the year under appeal. It is clear that these four flats are four different independent units and also treated by the assessee as four independent houses out of which two are sold by her in the year under appeal. The claim of the assessee that against the transfer of the land to the builder in terms of development agreement the capital gain, if any, is to be charged to tax in the assessment year 2012-2013 when the Joint Development Agreement got executed is not acceptable for the reason first that no capital gain was declared by the assessee herself in the assessment year 2012-2013 as a result of the development agreement. Secondly, the contentions for completion of transfer in terms of Section 53A of the Transfer of Property Act, all the conditions for transfer were not met out since the assessee had not received the sale consideration in the shape of her share of 26% area in constructed building. The Hon'ble Supreme Court in the case of Balbir Singh (supra), has held that the incidence of tax for capital gain on the transfer of capital asset has arisen when Joint Development Agreement is executed between the parties. However, the ....
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....bed by the Hon'ble Apex Court in the cases cited supra. Thus, we left with no option but to examine the taxability of capital gain based on the return of income filed by the assessee and as assessed/decided by lower authorities. Since the assessee herself has declared capital gains from the transfer of land in the impugned year, the capital gains is charged to tax in AY 2017-18 only. 12. With regard to deduction u/s.54F of the Act, we first examine the provision of Section 54F(1) of the Act, which reads as under :- Section 54F. [ Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. (1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family] [ Substituted by Act 18 of 2005, Section 18, for sub-Section (3) (w.e.f. 1.4.2006).], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] [ Inserted by Act 11 of 1987, Section 23 (w.e.f. 1.4.1988).] after the date on which t....