9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2012 (6) TMI 379 - AT - Income TaxSale of office - Long Term Capital Gain or Short Term Capital Gain Held that - the date of acquisition in the said property can safely be held to be on 10.06.1999 and the sale was made on 17.09.2004, which fell into Assessment Year 2005-06. Thus from the date of 10.06.1999 till 17.09.2004, the period is of more than 36 months, hence the transaction in question is clearly a Long Term Capital Gain - in the favour of the appellant Cost of acquisition of the property - cost incurred for acquiring the property vide agreement or the market value on the basis of value given by approved valuer Held that - the appellant had purchased the said property for a sum of Rs. 4,75,000/- which included the proportionate cost of new building, thus the cost of tenancy right cannot be taken into consideration as contested by appellant, firstly, there was no surrender of tenancy rights and secondly, as per the sub section 2 of section 55, the cost of acquisition of tenancy right has to be taken at Nil against assessee. Deduction u/s. 54EC - value adopted by the Stamp Valuation Authorities u/s.50C or which was the actual sale value for the purpose of the deduction u/s. 54EC Held that - Section 54EC speaks of the actual capital gain which arises out of transfer of Long Term Capital Gain and not deeming amount, whereas section 50C provides for deeming fiction where value of consideration is adopted as per the Stamp Valuation Authorities or any Authority of the State Government - the deemed value cannot be considered for the purpose of exemption u/s 54EC, thus the claim of the appellant u/s. 54EC would be only Rs. 16,00,000/- which is the actual investment in the specified bonds - for the working of the Long Term Capital Gain, the sale consideration will be taken up as per the value determined u/s. 50C which here in this case is at Rs. 24,48,128 as per the value adopted by the Stamp Valuation Authorities.
Issues Involved:
1. Classification of the sale as Long Term Capital Gain or Short Term Capital Gain. 2. Determination of the cost of acquisition of the property. 3. Appropriate sale value for the purpose of deduction under Section 54EC. Issue-wise Detailed Analysis: 1. Classification of the Sale as Long Term Capital Gain or Short Term Capital Gain: The primary issue was whether the sale of the office premises on 17.09.2004 should be classified as Long Term Capital Gain or Short Term Capital Gain. The appellant was a tenant for 30 years before purchasing the property through an agreement dated 10.06.1999. The property was subsequently demolished and reconstructed, with possession given in the Assessment Year 2002-03. The Assessing Officer classified the gain as Short Term Capital Gain under Section 50, considering the property as a depreciable asset. However, the Tribunal concluded that the transaction amounted to Long Term Capital Gain, as the date of acquisition was 10.06.1999, and the sale occurred on 17.09.2004, exceeding the 36-month period required for Long Term Capital Gain classification. 2. Determination of the Cost of Acquisition of the Property: The appellant contended that the cost of acquisition should be the market value as on 10.06.1999, determined by an approved valuer at Rs. 10,04,475/-. The Assessing Officer and CIT (Appeals) held that the cost of acquisition should be Rs. 4,75,000/-, which was the actual cost incurred for acquiring the property, including demolition and reconstruction costs. The Tribunal upheld the CIT (Appeals)'s decision, stating that the cost of acquisition should be Rs. 4,75,000/-, as the property was purchased through open bidding, and there was no surrender of tenancy rights. The Tribunal also referenced Section 55(2), which states that the cost of acquisition of tenancy rights should be taken as nil. 3. Appropriate Sale Value for the Purpose of Deduction under Section 54EC: The appellant argued that the sale value for the purpose of deduction under Section 54EC should be the actual sale value of Rs. 16,00,000/-, whereas the Assessing Officer adopted the value determined by the Stamp Valuation Authorities under Section 50C at Rs. 24,48,128/-. The Tribunal clarified that Section 54EC provides for exemption based on the actual capital gain invested in certain bonds and not on the deemed value under Section 50C. Therefore, the Tribunal held that the sale value for the purpose of deduction under Section 54EC should be Rs. 16,00,000/-, the actual sale consideration invested in the bonds. However, for the purpose of computing Long Term Capital Gain, the sale value would be taken as Rs. 24,48,128/- as per Section 50C. Summary of Findings: i. The transaction of sale will amount to Long Term Capital Gain and not Short Term Capital Gain. ii. The cost of acquisition of the said property would be taken at Rs. 4,75,000/-. iii. The sale value for the purpose of computation of Long Term Capital Gain would be taken at Rs. 24,48,128/-. iv. For the purpose of deduction under Section 54EC, the sale value would be taken at Rs. 16,00,000/-, the actual sale consideration invested in the bonds. Conclusion: The appeal filed by the appellant was partly allowed, with directions to the Assessing Officer to recompute the Long Term Capital Gain based on the Tribunal's findings.
|
