9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (1) TMI 861 - AT - Income TaxAddition on account of long term capital gain on transfer of development rights of undivided share in a property - Held that - We observe that the authorities below have erred in holding that the assessee was the absolute owner of the property acquired by her through WILL. As stated earlier the assessee had only lifetime interest in the property with no right of alienation. It was only through a family arrangement that the assessee got absolute right over 1/4th share in the property. The Ld. AR of the assessee has stated at the Bar that the other 3 co-owners of the property have declared the long term capital gains in their respective return of income and the said amount has already been assessed to tax in the hands of respective co-owners. This fact has not been controverted by the Ld. DR. In the light of the facts discussed above, we are of the considered view that the assessee was only liable for long term capital gains on the considered received, i.e. ₹ 17.50 lakhs on transfer of her 1/4th share in the property. Thus, the second ground of appeal raised by the assessee is allowed in the aforesaid terms. Disallowance of the claim of exemption u/s.54F - Held that - Transfer of any rights in the capital asset would constitute transfer within the meaning of section 2(47) of the Act and the assessee is eligible to claim benefit u/s. 54 on such transfer. In view of our above findings, we hold that the assessee is eligible to claim exemption u/s.54F of the Act. - Decided in favour of assessee.
Issues Involved:
1. Assumption of jurisdiction under Section 148. 2. Addition of Rs. 70,00,000 on account of long-term capital gain on transfer of development rights. 3. Disallowance of the claim of exemption under Section 54F of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Assumption of Jurisdiction under Section 148: The assessee contended that the jurisdiction under Section 148 was improperly assumed as no reasons were mentioned in the notice and no separate speaking order was passed on the objections filed by the assessee. The Tribunal observed that the Assessing Officer (AO) was duty-bound to decide the objections before proceeding with the assessment, citing the Supreme Court decision in GKN Drive Shafts (India) Ltd. vs. ITO. However, since the appeal was accepted on merits, the issue of jurisdiction under Section 148 was not decided. 2. Addition of Rs. 70,00,000 on Account of Long-term Capital Gain: The assessee, a doctor, had acquired a property through a WILL, which was subdivided among her and her three children. The AO held that the assessee was the absolute owner and added Rs. 70,00,000 as long-term capital gain. However, the Tribunal found that the assessee had only a lifetime interest in the property with no right of alienation, as per the WILL. The property was later divided equally among the assessee and her children through a family settlement. The assessee received Rs. 17.50 lakhs for her 1/4th share and declared this amount as long-term capital gain. The Tribunal concluded that the assessee was liable for long-term capital gain only on Rs. 17.50 lakhs, not Rs. 70,00,000, as the remaining amount was assessed in the hands of her children. 3. Disallowance of the Claim of Exemption under Section 54F: The AO and CIT(A) disallowed the exemption under Section 54F, stating that the flats were acquired more than one year before the transfer of development rights. The Tribunal noted that the assessee had made the investment within one year before the transfer of development rights, considering the date of the development agreement (28-07-2001) and the purchase date of flats (28-08-2000). The Tribunal held that the assessee was eligible for exemption under Section 54F, as the development rights transfer constituted a "transfer" under Section 2(47) of the Act. However, since the assessee sold one of the flats within three years, the exemption was restricted to the investment in one flat only. Conclusion: The Tribunal partly accepted the appeal, allowing the assessee's contentions on the merits of the case regarding the addition of long-term capital gain and the claim of exemption under Section 54F, while not deciding on the jurisdictional issue under Section 148. The order was pronounced on 06th November 2015.
|
