TaxTMI 
TaxTMI 
2026 (8) TMI 263
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....idated order for the sake of convenience and brevity. 2. The brief facts of the case are that the assessee filed her return of income for A.Y. 2014-15 on 23.03.2016, admitting the total income of Rs. 11,44,163/-, which consists of income from capital gain derived from transfer of property. The assessee had entered into Joint Development Agreement on 30.10.2013 along with her son, Shri P. Sai Kumar Reddy, for development of land to an extent of 1,139.80 Sq. Yd., which was in the name of assessee and her son. The land on the name of assessee is 489.80 Sq. Yd. and the extent of land on the name of her son was 650 Sq. Yd. The above land was originally acquired by the father-in-law of the assessee late P. Narayana Reddy on 05.04.1956. The land was gifted by a valid gift deed to the assessee from her husband, late P. Keshava Reddy, on 12.11.1998. After demise of Shri P. Keshava Reddy, the assessee and her son dwelling upon the land in the ratio of 43% and 57%, i.e., 489.80 Sq. Yd. and 650 Sq. Yd., respectively. The assessee had entered into a Joint Development Agreement with M/s. Sri Radha Madhav Developers, Tirupati on 30.10.2013 and as per the Joint Development Agreement, the market....
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....apital gain. Therefore, the difference amount of Rs. 16,80,300/- has been added under the head of "Long-term capital gains". The A.O. further noted that the assessee had claimed deduction u/s. 54F of the Act, to the tune of Rs. 22,52,751/-, however, for claiming exemption, the assessee is required to file complete details. Since the assessee had not filed any evidence as called for and only given an explanation, the A.O. disallowed exemption u/s. 54F of the Act, for Rs. 22,52,751/-. 5. Aggrieved by the assessment order, the assessee preferred appeal before the learned CIT(A). Before the learned CIT(A), the assessee submitted that the assessee is having 43% share in the property as per gift deed, which confers the right to the assessee and accordingly computed long-term capital gain by taking into account 43% share in the super built-up area received from the builder. The assessee further submitted that the A.O. had wrongly considered sale consideration of Rs. 1,100/- per Sq. Ft. on the basis of Joint Development Agreement, whereas the actual fair market value of property was at Rs. 760/- per Sq. Ft., which is supported by the Sub-Registrar's Office on the basis of circle rat....
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....ablish that the flat was constructed within three years from the date of sale of property. The purchase/construction of new property was not completed within the prescribed period after the transfer of the original asset, and the assessee has failed to deposit the amount of the capital gains in Capital Gain Deposit Scheme within the time prescribed. Hence, the A.O. has rightly disallowed exemption u/s. 54F and therefore, rejected the explanation of the assessee and upheld the action of the A.O. 8. Aggrieved by the order of the learned CIT(A), the assessee is now in appeal before the Tribunal. 9. The learned counsel for the assessee, Shri Pawan Kumar Chakrapani, C.A. and Ms. Santi Pavan Kumar, Advocate, submitted that, the learned CIT(A) erred in sustaining addition of Rs. 9,01,334/- by considering the deemed sale consideration at Rs. 1,100/- per Sq. Ft., even though the assessee had justified the fair market value of the property as on the date of transfer at Rs. 760/- per Sq. Ft. and in support of her contention, filed relevant certificate from the Sub-Registrar, which is based on the circle rate prescribed by the Government for payment of stamp duty. The learned counsel for....
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....he addition made by the A.O. should be upheld. 12. We have heard both parties, perused the material available on record and had gone through the orders of the authorities below. There is no dispute with regard to the fact that the assessee along with her son entered into a Joint Development Agreement on 30.10.2013 for development of 1,139.80 Sq. Yd. of land and received a super built-up area of 9,340 Sq. Ft.. It is also not in dispute that the land in question was initially purchased by the father-in-law of the assessee, Late P. Narayana Reddy on 05.04.1956 and the same has been gifted to her husband, late Sri P. Keshava Reddy, on 12.11.1998 and after demise of her husband, the property in question was devolved upon the assessee and her son in the ratio of 43% and 57%, respectively. The assessee computed long-term capital gains by taking into account 43% share of super built-up area received from the builder and adopted Rs. 760/- per Sq. Ft. to arrive at deemed value of consideration, which is based on the certificate issued by the Sub-Registrar as per the circle rate prevailing at the relevant point of time. The A.O. computed the deemed consideration by taking into account Rs. ....
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....nt Development Agreement, even though the assessee has not received any consideration, then the A.O. also need to allow exemption u/s. 54F as claimed by the assessee on the basis of two flats to be constructed by the builder, received by the assessee and also retained for the purpose of residential use without going into verifying the other conditions, including the condition of construction of building within three years from the transfer of property, because the construction of building on or before the due date is not in the hands of the assessee. Further, it was the claim of the assessee that the construction of building was completed within two years from the date of transfer of original asset and after receipt of physical possession of the constructed portion of building, she had filed the return of income for the year under consideration. Since the assessee claimed that the construction of building was completed when she had filed the return of income for the year under consideration and further, the assessee cannot be asked to perform the impossibility of performance, in our considered view, the exemption claimed u/s. 54F should be allowed as claimed by the assessee. Howeve....
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....ation at Rs. 1,100/- per Sq. Ft. as against Rs. 760/- per Sq. Ft. considered by the assessee. The A.O. made addition of Rs. 19,40,234/- towards long-term capital gains computed by the assessee in pursuant to the Development Agreement by taking into account Rs. 1,100/- per Sq. Ft. on the basis of cost of construction agreed by both the parties in the Joint Development Agreement, dated 30.10.2013 as against Rs. 760/- per Sq. Ft. as considered by the assessee as per the certificate issued by the Sub-Registrar, Renigunta. The learned CIT(A) allowed partial relief to the assessee, where the learned CIT(A) restricted the addition made by the A.O. to Rs. 16,75,681/- by taking into account 50% share for the assessee. 19. The learned counsel for the assessee submitted that the long-term capital gains computed by the A.O. and upheld by the learned CIT(A) is consequential to the appeal filed by the assessee for A.Y. 2014-15, because if the assessee succeeds for A.Y. 2014-15 on the issue of exemption u/s. 54F of the Act, then the assessee will get deduction towards cost of acquisition of property while computing the capital gains an amount equal to exemption u/s. 54F and therefore, the matt....
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....rd to computation of capital gain is dependent upon the outcome of the appeal filed by the assessee for A.Y. 2014-15 and further, the issue challenged by the assessee for A.Y. 2014-15 has been set aside to the file of the A.O., in our considered view, the issue involved in the present appeal needs to be set aside to the file of the A.O. for further verification. The A.O. is directed to verify the claim of the assessee after giving effect to the appellate order passed for A.Y. 2014-15 and then compute the capital gain for the year under consideration by taking into account the sale consideration and allow relevant cost of acquisition as per law. The A.O. is also directed to verify the other conditions, including the condition of selling the property within the prescribed period as per Section 54F of the Act. 23. In the result, the appeal filed by the assessee for A.Y. 2017-18 is allowed for statistical purposes. ITA No. 136/Hyd/2025 24. This appeal relates to penalty levied u/s. 271(1)(c) of the Act, on addition made by the A.O. towards computation of long-term capital gains arising out of sale of two flats received pursuant to the Joint Development Agreement and consequent....