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2022 (7) TMI 1146 - AT - Income TaxLTCG OR STCG - assessee had entered into joint development agreement with the builder M/s.Siddharth Finance Housing Ltd. on 19.08.2011 and admitted capital gain on transfer of 73% undivided share of the land in exchange of 27% built up area - HELD THAT - In this case, there is no doubt with regard to fact that for the impugned assessment year only a sum of Rs.60,17,104/- is received by the assessee from sale of flats. Therefore, we are of the considered view that the Assessing Officer ought to have taxed consideration received during the assessment year 2015-16 only instead of taxing entire consideration received by the assessee, including consideration received for earlier financial years. Therefore, we are of the considered view that the Assessing Officer as well as learned CIT(A) were erred in taxing total consideration received by the assessee amounting to Rs.4,89,35,461/- for the assessment year 2015-16 on the basis of admission of the assessee. Hence, we direct the Assessing Officer to consider amount received for the assessment year 2015-16 alone and compute capital gain from transfer and determine whether it is short term or long term depending upon period of holding of asset by the assessee. Computation of capital gain on sale of shares of M/s.Akshaya JMB Properties Pvt.Ltd - assessee has sold 41,325 shares for consideration of Rs.4,46,69,825/-. - capital gain on sale of shares - HELD THAT - Evidences placed by the assessee clearly shows that the assessee has transferred 41,325 equity shares on three dates to different persons and different rates and also received consideration through cheque. The evidences filed by the assessee further strengthened fact that entire consideration has been received through cheque and purchasers have confirmed transactions. The parties have entered into MoU to set out terms conditions of sale of shares, but nowhere specified manner in which share price is to be determined. Therefore, we are of the considered view that the Assessing Officer has completely erred in replacing full value of consideration of Rs.13,63,10,512/- as against actual consideration received by the assessee at Rs.4,46,69,825/- and computed long term capital gain and hence, we direct the Assessing Officer to adopt consideration as received by the assessee for transfer of 41,325 equity shares of M/s.Akshaya JMB Properties Pvt.Ltd. for consideration of Rs.,4,46,69,825/- and compute long term capital gain in accordance with law. Cost of acquisition of shares of M/s.Akshaya JMB Properties - According to the assessee, actual cost of equity shares acquired by the assessee works out to Rs.53.87/- per share, whereas the Assessing Officer has adopted face value of equity shares @ Rs.10/- per share - HELD THAT - The matter needs further examination from the Assessing Officer. Hence, we set aside the issue to file of the Assessing Officer and direct the A.O to reconsider the issue after considering relevant materials and decide correct amount of cost of acquisition of shares sold by the assessee. Addition u/s.56(2)(vii)(b)(ii) - AO has made addition towards difference in sale consideration for transfer of UDS in 11 flats devolved to the share of assessee as per MOU and observed that there is difference between sale price and market value of flats - HELD THAT - We are of the considered view that issue of application of section 56(2)(vii)(b)(ii) of the Act, needs to go back to the file of the Assessing Officer to give one more opportunity of hearing to the assessee to ascertain correct facts with regard to market value of flats sold by the assessee and sale consideration received for transfer of property and thus, we set aside issue to the file of the Assessing Officer and direct the Assessing Officer to re-examine claim of the assessee in accordance with law. Addition u/s.50C - Addition made towards UDS involved in flats sold by the assessee - as per AO the assessee has registered 440 sq.ft of UDS for consideration of Rs.3,30,000/-, whereas guideline value of 440 sq.ft was at Rs.6,60,000/-.- HELD THAT - Assessee pleaded for one more opportunity of being heard before the Assessing Officer to justify her case with reference to guideline value of the property and consideration for transfer of UDS. Hence, we set aside the issue to the file of the Assessing Officer and direct the Assessing Officer to reconsider the issue in accordance with law. Disallowance of exemption claimed u/s.54 54F - AO has disallowed exemption claimed u/s.54 on the ground that the assessee does not qualify for exemption u/s.54 however, allowed deduction for only one flat - HELD THAT - As assessee pleaded for one more opportunity of being heard before the Assessing Officer to justify her case to verify eligibility of the assessee for claim of exemption u/s.54 54F. Therefore, we are of the considered view that the issue needs to go back to the file of the Assessing Officer for further examination of claim of the assessee. Hence, we set aside the issue to file of the Assessing Officer and direct the A.O. to reexamine claim of the assessee in accordance with law and decide the issue.
Issues Involved:
1. Conversion of limited scrutiny to complete scrutiny without prior approval. 2. Assessment order barred by limitation. 3. Insufficient opportunity given by the Assessing Officer. 4. Taxation of capital gains arising from Joint Development Agreement (JDA). 5. Capital gains on the sale of shares of M/s. Akshaya JMB Properties Private Limited. 6. Addition under section 56(2)(vii)(b)(ii). 7. Addition under section 50C. 8. Disallowance of exemption claimed under sections 54 and 54F. Detailed Analysis: 1. Conversion of Limited Scrutiny to Complete Scrutiny: The assessee argued that the conversion of the case from limited scrutiny to complete scrutiny was done without the prior approval of the Principal Commissioner of Income Tax (PCIT). The Tribunal noted that the Assessing Officer (AO) and the Commissioner of Income Tax (Appeals) [CIT(A)] erred in this conversion process. The Tribunal directed the AO to adhere to the proper procedure for converting limited scrutiny to complete scrutiny and to re-examine the issues accordingly. 2. Assessment Order Barred by Limitation: The assessee contended that the assessment order dated 31.12.2017 was barred by limitation. The Tribunal did not provide a specific ruling on this issue, focusing instead on the substantive tax matters raised in the appeal. 3. Insufficient Opportunity Given by the Assessing Officer: The assessee claimed that sufficient opportunity was not provided to explain the case on merits. The Tribunal acknowledged this contention and directed the AO to provide a fair opportunity for the assessee to present their case in subsequent proceedings. 4. Taxation of Capital Gains Arising from JDA: The AO had re-computed the capital gains from the sale of constructed flats under a Joint Development Agreement (JDA), treating them as short-term capital gains. The Tribunal found that the AO and CIT(A) erred in taxing the entire consideration received from the sale of flats over multiple assessment years as short-term capital gains for the assessment year 2015-16. The Tribunal directed the AO to tax only the consideration received during the assessment year 2015-16 and determine whether it constitutes short-term or long-term capital gains based on the holding period of the asset. 5. Capital Gains on Sale of Shares of M/s. Akshaya JMB Properties Private Limited: The AO had replaced the actual consideration received for the sale of shares with a higher hypothetical value, alleging tax avoidance. The Tribunal found that the AO's valuation was erroneous and not based on evidence. The Tribunal directed the AO to adopt the actual consideration received by the assessee for the sale of shares and compute the long-term capital gains accordingly. The Tribunal also directed the AO to re-examine the cost of acquisition of the shares, as the assessee claimed a higher cost than what the AO had considered. 6. Addition under Section 56(2)(vii)(b)(ii): The AO made an addition of Rs. 40,50,100/- for the difference in sale consideration for transfer of Undivided Share (UDS) in flats. The Tribunal directed the AO to re-examine this issue, providing the assessee an opportunity to present evidence regarding the market value of the flats and the sale consideration received. 7. Addition under Section 50C: The AO made an addition of Rs. 6,74,527/- under section 50C for the difference between the sale consideration and the guideline value of the property. The Tribunal directed the AO to reconsider this issue, providing the assessee an opportunity to justify the sale consideration with reference to the guideline value. 8. Disallowance of Exemption Claimed under Sections 54 and 54F: The AO disallowed the exemption claimed under section 54 and restricted the exemption under section 54F. The Tribunal directed the AO to re-examine the eligibility of the assessee for these exemptions, providing an opportunity for the assessee to justify their claims. Conclusion: The Tribunal partly allowed the appeal for statistical purposes, directing the AO to re-examine multiple issues in accordance with the law and providing the assessee a fair opportunity to present their case. The Tribunal emphasized adherence to proper procedures and the need for accurate determination of taxable income based on evidence.
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