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2018 (6) TMI 1753 - AT - Income TaxGain on sale of plot - LTCG or STCG - date of acquisition of asset - period of holding of asset - ownership rights in an asset like leasehold rights - HELD THAT - In the present case by obtaining the orders of the Noida Authority of transfer memorandum on 17.09.2002, the assessee got a right to get the lease hold right for 90 years from that date. It conferred the right upon the assessee to hold that particular property from that date. Such is also the view taken in case of Madhu Kaul Vs. CIT 2014 (2) TMI 1117 - PUNJAB HARYANA HIGH COURT . Therefore, the view taken by the ld AO that the assessee held property only from 05.06.2006 is devoid of any merit. In fact assessee got the right over the property on 17.09.2002. Therefore, the property was held by the assessee for more than 36 months and its transfer resulted into long term capital gain to the assessee. Therefore respectfully following the above decisions, we hold that the assets sold by the assessee is a long term assets‟. Deduction as cost of improvement paid by the assessee for leveling of the land etc. - CIT(A) has made a detailed finding vide para No. 5.6 which shows that the assessee has failed to prove incurring of such cost by documentary evidence. The assessee has just supported it by evaluation report merely on information. Therefore, in absence of any information of incurring any cost of improvement deduction cannot be allowed to the assessee. No merit in the argument of the assessee that cost of improvement of ₹ 925000/- should be allowed to the assessee as deduction from the sale consideration. Applicability of section 50C - In the present case as the consideration has been passed on the same date on which the agreement of sale has been entered into, therefore, stamp duty rate as on the date of agreement shall be applied. We draw support from the order of DHARAMSHIBHAI SONANI 2016 (9) TMI 1259 - ITAT AHMEDABAD wherein, it has been held that the proviso to section 50C inserted by Finance Act 2016 w.e.f 01.04.2017 applies retrospectively. Therefore, we direct ld AO to take stamp value of the property as on the date of the agreement. In view of this ground NO. 1 and 2 of the appeal of the assessee are partly allowed by holding that assets sold by the assessee is a long term capital asset‟ and the circle rate if any for the purpose of computing the capital gain in accordance with section 50C, shall be taken as on the date of the agreement entered into by the assessee. However, the claim of the assessee for deduction of cost of improvement is rejected in absence of any evidence of incurring of those expenses. Accordingly, ground No. 1 and 2 of the appeal are partly allowed. Ground No. 3 is consequential in nature and hence, dismissed.
Issues:
1. Determination of short term capital gain on the sale of a plot by the assessee. 2. Allowability of expenses incurred by the assessee on improvement of the land. 3. Charging of interest under section 234B of the Income Tax Act, 1961. Analysis: Issue 1: Determination of short term capital gain The appeal was filed against the order confirming the addition of short term capital gain by the ld CIT(A). The main contention was whether the property should be considered a short term or long term capital asset. The assessee argued that the property was held for more than 36 months, qualifying it as a long term capital asset. The Tribunal analyzed the acquisition date, possession, and transfer details to conclude that the property was indeed a long term asset. The decision was supported by legal precedents and broader interpretations of the term "held." Thus, the Tribunal held in favor of the assessee on this issue. Issue 2: Allowability of expenses on improvement The assessee claimed expenses of &8377; 9.25 lacs for land improvement, but the authorities found insufficient evidence to support this claim. The Tribunal noted that the assessee failed to provide documentary evidence of the expenses, relying only on an evaluation report. Consequently, the claim for deduction of improvement costs was denied due to lack of substantiating evidence. Issue 3: Charging of interest under section 234B The Tribunal did not reverse the charging of interest under section 234B, as the grounds for doing so were not found to be substantial. The appeal was partly allowed, with the Tribunal ruling in favor of the assessee on the classification of the property as a long term asset and the application of section 50C based on the agreement date. However, the claim for deduction of improvement costs was rejected due to insufficient evidence. In conclusion, the Tribunal partially allowed the assessee's appeal, determining the property as a long term asset and directing the application of section 50C based on the agreement date, while rejecting the claim for deduction of improvement costs.
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