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TMI Blog2012 (10) TMI 286X X X X Extracts X X X X X X X X Extracts X X X X ..... id site was jointly held by the assessee along with his two brothers. The long term capital gain has been calculated at Rs.8,26,500/- taking into consideration the fair market value as on 01-04-1981. However, the appellant got the ownership over the property on 11-11-1987. The Assessing Officer found that adopting fair market value as on 01-04-1981 for calculating the capital gain is contrary to law and assessed the said property arriving at the long term capital income of the assessee at Rs.18,88,736/-. Further, insofar as the property situated at Aga Abba Ali Road, the assessse claimed that he was a co-owner of the said property along with his two brothers. The said property was sought to be jointly developed with M/s.Embassy Investment. As per the development agreement the land was handed over to the Developer in the year 1995 and superstructure was built in the year 2000 consisting of multistoried building. As per the agreement, 50% of the flats, 50% of the car parking space and 50% of saleable terrace were given to the assessee and two of his brothers. In that, the assessee is entitled for 1/3 share. The property value has been fixed at Rs.66,00,000/- taking into consideration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cost element should be as on 1-4-1981 by ignoring the law declared by this Hon'ble Court in the case of CIT v/s Dr.V.D.Modi? (ii) Whether the Tribunal was right in holding that the estimated cost of construction of Rs.66 lakhs shown in the Joint Development Agreement for development of the property situated at Aga Abba Ali Road, Bangalore should be taken into account and not 50% (1.43 crores) of Rs.2.86 Crores actually spent by the building in working out the sale consideration for the purpose of Section 45 of the Act? (iii) Whether the Tribunal was correct in holding that the assessee is exempted to exemption u/s.54 of the Act in respect of capital gains arising out of transfer of vacant land and also to consider the assessment's alternative claim of being entitled to exemption u/s. 54F of the Act? 4. Sri.M.Thirumalesh, learned counsel appearing for the revenue contended that the order passed by the Income Tax Appellate Tribunal is contrary to law. Though the erstwhile CITB allotted the land on 05-11-1975 absolute sale deed was executed on 08-08-1987. In view of the judgment of this Court in the case of COMMISSIONER OF INCOME, TAX v/s D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith M/s.Embassy Investments and the said property was handed, over to the Developer on 06-05-1995 itself for construction of the residential apartment. As per the Development Agreement, 50% of the apartment shall be handed over to the owners of the property. In that the assessee is entitled to 1/3 share. Hence, the fair market value as on 01-04-1981 has to be adopted though the construction of the apartment was completed in the year 2000. As per the Development Agreement, the value of the apartment was fixed at Rs.66,00,000/-. Taking into consideration 50% of the cost of construction, the Assessing Authority has arrived at the capital gain, which is totally incorrect. Further after demolishing the residential house, new residential apartment has been constructed. Hence, the assessee is entitled for exemption under Section 54 of the Act and sought for dismissal of the appeal confirming the order passed by the Appellate Authority. 6. We have carefully considered the arguments addressed by the learned counsel for the parties and perused the orders impugned passed by the authorities below. 7. It is not in dispute that the property situated at J.P.Nagar was originally allotted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson who is in possession in such capacity has to be treated as a owner from the date on which he was put in possession. If the same is taken into account, when the BDA has allotted the site and put the possession of the property, if the property is sold on 8-5-1997 it has to be treated as a long term capital gains as he was enjoying for more than 36 months as contemplated under Section 2(42) of the Income Tax Act." 8. Further under Section 2(47), the term 'transfer' has undergone change w.e.f. 01-04-1988 by insertion of sub-clause (v) to Section 2(47) which provides that any transaction involving allowing of the possession of any immoveable property to be taken or retained in part performance of a contract of the nature referred to in Section 53A of Transfer of Property Act, will also come within the ambit of transfer relevant. When the possession of the immoveable property in pursuance to the said agreement is given in part performance of the said agreement, it is to be considered that there is a transfer for the purpose of computing capital gain. Hence, we find that the assessee is entitled to adopt fair market value of the property as on 01-04-1981 and accordingly, entitled t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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