2020 (12) TMI 541 - AT - Income Tax

Determining the long-term capital gain chargeable to tax in the hands of the assessee - trasfer of land consequent to development agreement - HELD THAT - As observed that the assessee herself had declared long-term capital loss in her return of income for the year under consideration as arising as a result of the execution of the development agreement with M/s. Radiant Nirman Pvt. Limited on 16.12.2015 and even during the course of assessment proceedings, no such case was made out by the assessee that there being no transfer of her land as a result of the said development agreement within the meaning of section 2(47)(v) of the Act, there was no capital gain arising from the said transaction, which was chargeable to tax in her hands for the year under consideration. It appears that this claim was made by the assessee for the first time during the course of appellate proceedings before the ld. CIT(Appeals) but the same was not specifically considered by the ld. CIT(Appeals), inasmuch as, there was no finding or decision whatsoever given by the ld. CIT(Appeals) on this aspect of the matter in his impugned order. As rightly contended by the ld. D.R., this issue thus has not been considered and decided either by the Assessing Officer or by the ld. CIT(Appeals) on merit by examining/verifying the terms and conditions of the relevant development agreement. Since the same goes to the root of the matter, we consider it fair and proper and in the interest of justice to send it back to the Assessing Officer for such examination/verification. The impugned order of the ld. CIT(Appeals) is accordingly set aside and this matter is restored to the file of the Assessing Officer for deciding the same on merit as relying on INFINITY INFOTECH PARKS LIMITED 2018 (9) TMI 111 - CALCUTTA HIGH COURT Valuation report prepared by the DVO u/s 55A - Assessing Officer is accordingly directed to re-compute the long-term capital gain chargeable to tax in the hands of the assessee after taking into consideration the valuation report of the DVO dated 20.05.2019 and after giving the assessee proper and sufficient opportunity of being heard.

Summary

Issues:
1. Determination of long-term capital gain in the hands of the assessee.
2. Whether the development agreement resulted in the transfer of immovable property.

Analysis:
1. The appeal was against the order confirming the Assessing Officer's determination of long-term capital gain at ?2,16,48,185, contrary to the assessee's claim of long-term capital loss. The assessee received land through a gift deed and entered into a development agreement. The Assessing Officer disputed the valuation of the land and relied on data from the Additional District Sub-Registrar (ADSR) to determine the indexed cost of acquisition. The assessee objected to the valuation method used by the Assessing Officer, but the objections were deemed unsustainable. The long-term capital gain was computed based on the revised indexed cost of acquisition.

2. The assessee contended that the development agreement did not result in a transfer of immovable property within the meaning of the Income Tax Act. The assessee cited a High Court judgment and argued that no capital gain arose from the agreement. However, the CIT(A) confirmed the Assessing Officer's decision without specifically addressing this contention. The Tribunal found that this issue was not adequately considered and directed the Assessing Officer to examine the matter in light of the relevant facts and evidence, providing the assessee with a proper opportunity to present their case.

3. The Tribunal set aside the CIT(A)'s order regarding the first issue and remanded it to the Assessing Officer for a detailed examination. In case the assessee fails on the first issue, the computation of long-term capital gain becomes relevant. The Tribunal directed the Assessing Officer to consider a valuation report prepared by the District Valuation Officer (DVO) post the assessment completion and to re-compute the capital gain accordingly, ensuring the assessee's right to be heard.

In conclusion, the Tribunal allowed the appeal for statistical purposes, remanding the matter to the Assessing Officer for a fresh determination based on a comprehensive review of the valuation and transfer aspects involved in the case.