TaxTMI 
TaxTMI 
2025 (8) TMI 1493
X X X X Extracts X X X X
X X X X Extracts X X X X
....te Limited was simply to bypass H. P. Tenancy and Land Reforms Act, 1972 and as per terms of agreement all the rights effectively lay with M/s Homeland Buildwell Private Limited and thus, the actual sale was held in FY 2006-07? 3. Whether on facts and circumstances of the case and in law, Id. CIT(A) erred in holding that the transaction of sale of land is eligible for Capital Gains without any evidence on sale of land during the AY 2017-18? 4. Whether on facts and circumstances of the case and in law, Id. CIT(A) erred in holding that the transaction of sale of land is eligible for Capital Gains ignoring the fact that as per the compromise agreement dated 17.04.2018 (AY 2019-20) the land was to be sold by M/s Homeland Buildwell Private Limited and sale proceeds handed over to the assessee as per terms of collaboration agreement dated 11.06.2006 and thus, the land had not been sold during the AY 2017-18? 2. The brief facts of the case are that assessee has filed his return of income on 30.01.2018 declaring total income of Rs. 14,44,431/-, capital gain Rs. 91,738/- and 'income from other sources' Rs. 12,981/-. The case of the assessee was selected for scru....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... and litigation went to the Hon'ble Delhi High Court which was referred to arbitration. Ultimately, an arbitration award was received and it was implemented. On execution of this decree, this remaining land of 16.5 bighas was transferred to M/s Homeland Buildwell Pvt. Ltd. in lieu of the outstanding loan received by the assessee before 31.01.2006. Since it was disclosed as a fixed capital asset in the accounts of the assessee, therefore, he computed a Long Term Capital Gain on this. The computation made by the assessee read as under : Sale consideration Rs. 4,32,59,600/- Less indexed cost of acquisition (19070602 x 497/112) Rs. 4,31,67,862/- LTCG Rs. 91,738/- Less brought forward Long Term Capital Loss (-)Rs. 91,738/- Taxable LTCG NIL (c) As this original amount was appearing in his books of account as liability, he passed accounting entry as under: Homeland Buildwell Pvt. Ltd. 4,32,59,600 To Land Account (Kalyanpur) 1,90,70,602 To surplus on sale of land 2,41,88,998 3. The AO did not accept this computation. He was of the opinion that since possession was transferred to M/s Homeland Buildwell Pvt. Ltd. in the Financi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... As per appellant, the amount of Rs. 4,32,50,600/- was sought as a financial assistance from a company known as Homeland Buildwell Pvt. Ltd in the financial year 2005-2006 for development and construction of a commercial project situated at Village Kalyanpur in the state of Himachal Pradesh in terms of Collaboration Agreement dated 11.06.2006 As per the Collaboration Agreement dated 11.08.2006, Para 10 i.e. Sharing of Areas, the clause No 10 1 is reproduced as under: That in consideration of the contribution/ obligation of the Owner, in the said project it has been mutually decided and agreed upon between the parties to this Collaboration Agreement that out of the entire super built up areas to be developed/ constructed by the Developers in the said Complex 10% built-up area would be provided and given free of cost by the Developers to the owner The copy of the Collaboration Agreement dated 11.08.2006, was submitted during assessment proceedings The possession of the land in terms of Collaboration Agreement was given to the Developer for the purpose of carrying out development and construction in terms of the Clause No 14 of the Collaboration Agreement dat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....land is not allowable to the Assessee during the AY 2017-18, in spite of the fact that sale was completed in FY 2016-17 and possession of land was also offered in FY 2016-17 Further, if the allegation of the Ld. Assessing officer is to be relied, though not admitted in any way, then any capital gain tax should have been charged in AY 2006-07 The Ld Assessing officer has tried to disallow indexing of the cost of land sold, during the year on surmises and conjectures just to levy more capital gain tax during the year under consideration. DECISION 5.2.3 I have considered the reasoning given by the AO in assessment order, submissions & documents submitted by the appellant, facts of the case and legal position. Brief Facts : (i) The brief facts that the appellant has bought agricultural land of 37 bigha in village Kalyanpur, Baddi, Himachal Pradesh for a consideration of Rs. 4,32,59,600/-. This amount was provided by M/s Homeland Buildwell Pvt Ltd. A collaboration agreement was entered into between the appellant and M/s Homeland Buildwell Pvt. Ltd. on 11 08 2006 (paper book no 105-125) As per this agreement, this land was to be developed into a commer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FY 2006-07, the capital gain on the same was accrued to the assessee in the that year and the amount of liability has only been reversed by the assessee in the relevant assessment year Thus, the AO added the surplus amount of Rs. 2,41,88,998/- (Rs. 4,32,59,600/- - Rs. 1,90,70,602/-) as income of the assessee and penalty u/s 270A has been initiated. Decision: (a) Only issue is whether there is some capital gain or not. If yes, then what would be the year of taxability. The AO has held that the possession was handed over in the FY 2006-07 to M/s Homeland Buidwell Pvt Ltd and therefore, capital gain would have arisen in that year only, Therefore, the AO added the surplus amount of Rs. 2,41,88,998/- IRs. 4,32,59,600-1,90,70,602) as Income of the assessee in current year (b) The appellant has disclosed this transaction as LTCG Cost of acquisition was taken as proportionate cost of 16-05 bigha which worked out to Rs. 1,9070,602/- . Sate consideration was taken as amount originally given by Homeland Buldwell Pvt Ltd and was directed to be returned to it by the order of the Hon'ble Court/Arbitration award Therefore, the appellant in his return, worked out Cap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts, it is evident that ownership is with appellant. The AO has read only one part of the clause and agreement that possession has been handed over and did not take cognizance of further part which elaborated the purpose of possession. The ownership of the property was also substantiated by the way of following documents/facts i. The construction of building was undertaken by the assessee and recorded in his books of accounts for 20-15 bigha and the land measuring 16-05 Bighas was kept vacant with the assessee himself for further development and construction. ii. The Building Plan Approval Registration Certificate with HIMUDA NOC to use the road, NOC for setting up the commercial complex and Hotel License for shopping cum Multiplex on the impugned land NOC for setting up commercial complex, consent to Establish a shopping cum Multiplex. NOC to operate Homeland City Mall and Power release certificate to M/s Homeland City Mall has been issued in the name of the assesses only and not in the name of the Builder/Company. iii. The units sold by the assessee has been declared in the books of accounts- the assessee has accounted for the sale of the units under the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... accounts can not change the nature of transaction and its taxability. Therefore, the addition made by the AO is deleted. Accordingly, these grounds of appeal are allowed." 4. With the assistance of ld. Representative, we have gone through the record carefully. It is pertinent to note that as per Section 118 of Himachal Pradesh Tenancy Land Reforms Act, 1972, a non Himachali cannot purchase agriculture land. Therefore, this land was purchased only in the name of the assessee, though financial assistance must have been given by M/s Homeland Buildwell Pvt. Ltd. but this loan taken by the assessee from M/s Homeland Buildwell Pvt. Ltd. has been recognized as an unsecured loan in the accounts. This stand of the assessee has been accepted by the Revenue from assessment year 2007-08 till 2016-17. It was never doubted nor disputed. It is pertinent to note that out of the total land measuring 37 bighas, AO is not disputing the facts narrated by the assessee to the extent of 20.15 bighas which has been used by the assessee for the development of Shopping Mall. This part of the land was always considered as exclusive land of the assessee. We fail to understand as to how he can mak....