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2013 (11) TMI 1714 - AT - Income TaxTaxability of the capital gains - Absence of Cost of Acquistion - The assessee entered into a development agreement - The developer agreed to construct a building and hand over few premises to the assessee. Further, the developer was entitled to sell the remaining flats. The contention of the assessee was that he had sold right to load TDR and though it being a capital asset, which is not taxable since no cost of acquisition for right to load TDR was involved. - HELD THAT - Assessee falls within the purview of section 50C of the Act and it was a clear case where capital gain arose on account of grant of development rights by the assessee which is evidenced by the development agreement. - Decided against assessee. Exemption claimed by the assessee u/s 54 - The Revenue challenged the Ld. CIT(A)'s decision to allow exemption u/s 54 for the cost of construction of certain floors. - HELD THAT - Ld.CIT(A) has allowed the claim of the assessee for exemption u/s 54 of the Act by relying on the decision of the 2010 (8) TMI 482 - KARNATAKA HIGH COURT wherein it has been held that residential flats constitute a residential house for the purpose of section 54 and further held that four residential flats cannot be construed as four residential houses for the purpose of section 54. It has to be construed only as a residential house and the assessee is entitled to the benefit accordingly. The fact that residential house consisted of several independent units cannot be an impediment for granting relief under said section, even if such independent units are situated side by side, on different floors or are purchased under separate sale deeds. Assessee is entitled for exemption under section 54 of the Act in respect of all the flats.
Issues involved:
The judgment involves issues related to taxability of capital gains and exemption claimed u/s 54 of the Income Tax Act for the Assessment Year 2005-06. Taxability of Capital Gains: The assessee, an individual, inherited a property and entered into a development agreement for construction. The AO held that capital gains arose from the grant of development rights, leading to a transfer attracting capital gain provisions. The Ld.CIT(A) upheld this decision but allowed exemption u/s 54 for the cost of construction of certain floors. The ITAT concurred with the Ld.CIT(A) that the transfer of property occurred when the developer sold flats on the land, and upheld the decision against the assessee. Exemption u/s 54 of the Act: The Revenue challenged the Ld.CIT(A)'s decision to allow exemption u/s 54 for the cost of construction of certain floors. The Ld.CIT(A) relied on precedents to support the assessee's claim that multiple flats in the same building can be considered as one residential house for exemption purposes. The ITAT upheld the Ld.CIT(A)'s decision, citing consistent views of different High Courts, and dismissed both the assessee's and Revenue's appeals. In conclusion, the ITAT Mumbai upheld the Ld.CIT(A)'s decision on both issues, dismissing the appeals filed by the assessee and the Revenue.
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