9911796707
TMI Blog2012 (9) TMI 539X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, being 50% arising out of the Joint Development Agreement (JDA) dt.2.6.2006 entered into by and between the assessee and the Developers M/s. S.V. Developers in respect of land bearing Survey No.115/2, B. Narayana Pura Village, K.R. Hobli, Bangalore East Taluk measuring 10 guntas, equivalent to 10,890 sq. ft. According to the terms of the JDA, the assessee was entitled to 12 flats with corresponding 12 car parking slots, being 45% of the built up area in lieu of transfer of 55% of the undivided portion of the vacant land in favour of the developers for construction of 16 flats with an equal number of parking slots. Thus the total number of flats agreed to be constructed were 28 out of which the assessee was entitled to get 12 flats with equal number of parking slots and the developer was entitled to the remaining 16 flats with equal number of parking slots. The assessee received a non-refundable deposit of Rs. 15 lakhs. Apart from this deposit, the assessee had not received any other consideration in the relevant period. The Assessing Officer held that the transfer of 55% of the land in favour of the developer was a deemed transfer under section 53A of the Transfer of Prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration by invoking the provisions of section 50C of the Act in the facts and circumstances of his case. 2.3 The learned CIT(A) did not accept the contentions of the assessee and held that the Capital Gains arising out of the Joint Development Agreement are chargeable to tax in view of the decision of the Hon'ble High Court of Bombay in the case of Chaturbhuj Dwaraka Das Kapadia (supra). The learned CIT(A) also held that the non-refundable deposit of Rs. 15 lakhs is chargeable to tax for the reason that the cost of 12 flats and 12 parking slots constructed on 45% of the land by the developer is not commensurate with 16 flats and 16 parking slots constructed on 55% of the land of the Joint Developer and that it may therefore indirectly be said that Rs. 15 lakhs represented the cost of sale of 4 flats with 4 parking slots by the assessee to the developer/builder. The assessee's appeal was disposed off allowing the assessee marginal relief of Rs. 5,21,433 on account of recomputation of capital gains by taking the cost of acquisition of the property at Rs. 13,62,800 as per the purchase deed in place of Rs. 4,33,614 estimated by the Assessing Officer. 3.1 Aggrieved by the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und of appeal raised at S.No.5 has not been pressed in this appeal by the learned counsel for the assessee and is therefore dismissed as infructuous. 5.3 In respect of Grounds raised at S.Nos.2 to 4, the learned counsel for the assessee contended that the findings of the learned CIT(A) are not acceptable as they are factually incorrect and are based on surmises and baseless assumptions. It was pointed out by the learned counsel for the assessee that the learned CIT(A) was not justified in holding that the non-refundable deposit of Rs. 15 lakhs represented the cost of sale of 4 flats with 4 parking slots when there was no factual or evidentiary basis to hold so and also which was not the subject matter of assessment or in respect of any issue in appeal before the learned CIT(A). It is further pointed out by the learned counsel for the assessee that while the assessee was entitled to only 12 out of the proposed 28 flats and the developer to the remaining 16 flats, the learned CIT(A) was factually incorrect in holding that the assessee was entitled to 16 flats. It was contended by the learned counsel for the assessee that the non-refundable deposit of Rs. 15 lakhs was the only actual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not adopted or assessed any value in respect of the transfer of undivided portion of the land measuring 5990 sq.ft. The Provisions of Section 50C of the Act are enforceable only in a circumstance were the consideration received or accruing as a result of the transfer of any Capital Asset is less than the value adopted or assessed by any Authorities of State Government (referred to as the Stamp Valuation Authority). It is a fact on record that the Stamp Valuation Authorities have not either adopted or assessed any value in respect of the transfer of 5990 sq.ft of undivided portion of land. The Appellant for the sake of convenience and immediate reference reproduced herewith the Provisions of Section 50C of the Act which leads as under :- "50C. Special provision for full value of consideration in certain cases. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t arises only in a circumstance where a Property has been registered as a document under the Registration Act, wherein the Market Value of the Property was determined by the Stamp Valuation Authorities or otherwise, Section 50C of the Act is not applicable in computing the Deemed Consideration. It is a fact on record that the Property was neither sold for any ascertainable consideration nor any value has been determined by Stamp Valuation Authorities. Under such circumstances application of Section 50C of the Act absolutely not maintainable under the law. The Learned Assessing Officer in the Remand Report has admitted the violation of the procedure prescribed u/s. 50C(2) of the Act and therefore, the issue was left to the consideration of your Hon'ble Authority. Admittedly the Deemed Consideration obtained from the Sub- Registrar has vitiated the Assessment in view of the violation of the Procedure laid down under the Act. Therefore, the 23,96,000/- adopted by the Learned Assessing Officer is against to the Provisions of Act and therefore, the Appellant prays that your Hon'ble Authority be pleased to delete the Deemed Consideration in the interest of equity and justice" The Learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 40 of the Appellate Order as under :- " I see justification in the argument of the AO Rs. 23,96,000/- is the value of the consideration of the entire property. The Learned CIT(A)-I, Bangalore was not justified to confirm the addition of Rs. 23,96,000/- being the deemed consideration quantified the Learned AO without giving any finding as to the applicability of Section of 50C of the Act. Therefore, the order of the Learned CIT(A)-I, Bangalore on this issue is not in accordance with law and hence the same is liable to be set aside." 5.5 The other issue agitated by the assessee is that the non-refundable deposit of Rs. 15 lakhs is not chargeable to tax separately as the same is subsumed in the deemed consideration quantified by the Assessing Officer. The written submissions of the learned counsel for the assessee dt.5.6.2012 on this issue are as under : " Non-refundable deposit :- Without prejudice to the contention as to the applicability of Section 50C of the Act, the Appellant submits that the Learned Assessing Officer has held the non-refundable deposit of Rs. 15,00,000/- as income of the Appellant in addition to the deemed consideration of Rs. 23,96,000/- quantified u/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of flats with 12 parking slots built on 45% of the land retained by the appellant. I see justification in the argument of the AO. Rs. 23,96,000/- is the full value of consideration of the entire property. The cost of 12 flats and 12 parking slots constructed on 45% of the land by the builder is not in commensurate with 16 flats with 16 parking slots constructed on 55% of the land of the builder. It may therefore indirectly be said that Rs. 15 Lakhs represented the cost of sale of 4 flats with 4 parking slots by the appellant to the builder. Hence I uphold such addition to the STCG gains determined at Rs. 15,73,450/- vide page 29 of this order. The addition of Rs. 15,00,000/- is upheld". In this regard, the Appellant submits that the Learned CIT(A)-I, Bangalore was not justified to hold that the non-refundable deposit of Rs. 15,00,000/- was a consideration for 4 flats with the corresponding car parking slots. In fact, the construction of 4 flats with corresponding car parking slot was not a subject matter of the Assessment Order and therefore, the non-refundable deposit of Rs. 15,00,000/- was not related to the construction cost of 4 flats with car parking slots. The Learned AO ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deration of Rs. 23,96,000 quantified by the Assessing Officer under section 50C of the Act. The learned counsel for the assessee has contended that when the deemed consideration is exigible to tax, the non-refundable deposit having been subsummed therein cannot be once again separately charged to tax. In fact, the learned counsel for the assessee further contended that as per the scheme of the JDA, the assessee has received only an amount of Rs. 15 lakhs as non-refundable deposit. On careful perusal and consideration of the records, the submission made and the orders of the authorities below, we find that the Assessing Officer was of the view that the consideration of Rs. 15 lakhs being the nonrefundable deposit, received was found to be inadequate consideration and therefore appears to have invoked the provision of section 50C of the Act to quantify the deemed consideration amounting to Rs. 23,96,000. In this view of the matter, we are of the opinion that when the Assessing Officer has quantified the deemed consideration at Rs. 23,96,000, it is but natural that the non-refundable deposit of Rs. 15 lakhs is subsumed therein and therefore we hold that the non-refundable deposit of R ..... X X X X Extracts X X X X X X X X Extracts X X X X
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