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TMI Blog2008 (1) TMI 645X X X X Extracts X X X X X X X X Extracts X X X X ..... to demolish the existing structure and build a new residential- cum -non-residential complex. As a consideration, the pro-moter was to give 43 per cent of the built-up area to the assessee in the new complex and 57 per cent of the built-up area was to be owned by the promoter. The cost of construction of the 43 per cent of the built-up area was to be the consideration for the assessee for transferring the land and the existing structure thereon. 3450 sq.ft. constituted 43 per cent of the built-up area allotted to the assessee. The cost of construction was determined at Rs. 340 per sq.ft. Thus, the assessee computed the capital gains as follows: Sale Consideration Rs. 11,73,000 (3450 sq. ft. Rs. 340) Less: Indexed cost of acquisition ( a )Market value of land as on 1-4-1981 for 354 sq.yds) Rs. 35,931 ( b )Cost of construction of Building in 1987-88 Rs. 12,18,000 Rs. 12,53,931 Long-term Loss Rs.(-) 80,931 3. However, the Assessing Officer did not agree with the above computation on four counts. Firstly, he t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer with regard to the denial of the exemption under section 54F. 6. The learned counsel for the assessee submitted that along with the land, the old house also got transferred. The cost of construction of the said house is nothing but the cost of improvement of the land which has to be reduced from the total consideration. It was also contended that as the building was in existence on the date of agreement and hence that also got transferred. With regard to the addition made on account of parking lots, it was contended that proportionate cost of construction was taken as the consideration for transferring the old asset which is deemed to be including the parking area and hence, separate addition is not justified. With regard to exemption under section 54/54F, the assessee has made a petition for admission of additional ground contending that exemption under either provision i.e. section 54 or section 54F be considered. As it is a legal ground and goes towards ascertaining the correct capital gains, we admit the same. Further, the assessee has also made a petition for admission of additional evidence which are in the form of three receipts from municipal corporation evidenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wed as deduction. On the other hand, the stand of the assessee is that as per the agreement, both were to be transferred and in any case, the building of the house on the land amounts to improvement of land and hence the cost thereof should be allowed as deduction. In order to appreciate the rival contentions, it would be necessary to refer to the agreement entered into by the assessee with the promoter. 10. the assessee owns a piece of land admeasuring 500 sq. yds. at Sri Krishnanagar, Hyderabad. The assessee is the absolute owner and possessor of the impugned land. It further mentions that the assessee is desirous of developing the said property and for the purpose has approached the promoter. In the preamble itself it is declared that the promoter shall demolish the existing structure and construct thereon a new complex. This will be at the cost of the promoter only. This clearly indicates that unless the superstructure is also transferred, the promoter cannot take possession and demolish the same. The view of the CIT(A) that it is not an asset but a liability for the promoter has no basis. In fact, it is more a rhetoric than an argument. He may demolish the same but the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnected by a common passage in a building owned by them and bearing municipal door numbers 92 and 92A, Darbhanga Castle. A part of that building was constructed in the year 1960. The building was extended in 1963. The assessee owned another building in another locality bearing municipal door number 17/33, Mahatma Gandhi Marg, in the occupation of the assessee s family and exemption was claimed for that building also. The Wealth-tax Officer exempted only the portion of the house bearing door No. 92 and declined to exempt the other portion bearing door No. 92A and the building in Mahatma Gandhi Marg. The Allahabad High Court held that a house may consist of more than one self-contained dwelling units and that if there is unity of structure, the mere fact that such self-contained dwelling units are occupied by different persons, will not make that house into several houses. Thus, the court granted exemption in respect of house properties bearing numbers 92 and 92A occupied as residences by different members of the family as one house belonging to it but exemption was not granted in respect of the house in Mahatma Gandhi Marg, In the case of B.B. Sarkar v. CIT [1981] 132 ITR 150 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned by the assessee for his personal purposes, and since the construction of the new building was completed within the statutory period the conditions for grant of exemption were fulfilled and the assessee was entitled to pro rata exemption under section 54 of the Act in respect of the portion of the property in his occupation. To the same effect are the decisions of the Bangalore and Hyderabad Benches of the Tribunal in the case of D. Anand Basappa v. ITO [2004] 91 ITD 53 and in the case of Smt. Hansa Bai Sanghi v. ITO [2004] 89 ITD 239 . 13. From the above decisions, it is clear that even if several self-contained independent dwelling units constitutes one house, it will be treated as one house only and not as several houses. Further, where several flats are purchased in the same building and are contiguous to each other, they would be treated as one house and not as several houses. Whether one or more municipal numbers are given, it is of no consequence. The purpose is to see whether the assessee and his family are using those several dwelling units for their residence or not. However, where the assessee, after acquiring the new property has not put to use for his ..... X X X X Extracts X X X X X X X X Extracts X X X X
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