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TMI Blog2014 (12) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... area would accrue to the owners - it is a consideration in kind, which has a value, which can be worked out. Assessee contended that the market value of the land to be transferred to the developer as on the date of the joint development agreement should be adopted as a consideration - full consideration is the cost of construction incurred by the builder on the assessee's share of constructed area, because the assessee would receive constructed area in lieu of the land share - whatever is the expenditure incurred for constructing that area is a consideration in kind to the assessee - there cannot be any fault in the computation of capital gain made by the AO – thus, CIT (A) was not justified in holding that no capital gain has accrued to the assessee on account of transfer of land in this year – thus, the order of the CIT (A) is set aside and that of the AO is restored – decided in favour of revenue. X X X X Extracts X X X X X X X X Extracts X X X X ..... lieu of 50% constructed area i.e. 1.50 lakh sft, whose cost was to be borne by the builder. Thus, in the opinion of the Assessing Officer, transfer of the land has taken place within the meaning of section 2(47)(v) of the Income Tax Act and the assessees are assessable for long term capital gain. The Assessing Officer has computed the Long Term Capital Gain in the case of assessee as under: "By adopting the value of cost of construction At ₹ 800/- per sft Sale consideration received/receivable = 150000/2x800 =6,00,000,00 Less" indexed cost of land (cost of land as on 16.04.2003) ₹ 4,00,000) = 4,76,026 Long Term Capital Gain = ₹ 5,95,23,974/-" 4. The Assessing Officer has adopted the consideration of the land at ₹ 800/- per sft, because this was the expenditure which the builder will incur for constructing the area. In lieu of this the assessee's have relinquished their rights in the land in favour of the builder who will get 50% of the land as well as 1.50 lakhs sft constructed area. 5. The assessee was not satisfied with the computation of LTCG, hence he challenged the assessment order in appeal before the CIT (A). The contentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xman.com 531. He placed on record a copy of the Hon'ble High Court decision. He also relied upon the decision of the ITAT Hyderabad Bench in the case of ACIT vs. A. Ram Reddy. He pointed out that in this case the Tribunal has considered the definition of transfer provided in section 2(47). He also relied upon the judgment of the Hon'ble Madras High Court in the case of T.V. Sundaram Iyengar & Sons reported in 37 ITR 26. 8. On the other hand the learned Counsel for the assessee relied upon the order of the CIT (A) and contended that the assessee has given conditional possession to the developer. The developer could not use the possession according to his choice. In a way, a license was given to enter into land and construct the building, more than that no rights were transferred to the builder. He relied upon the judgment of the AAR in the case of Jasbir Singh Sarkaria, 294 ITR 196. He also relied upon the judgment of the Karnataka High Court in the case of CIT vs. Ved Prakash Rakhar reported in 210 taxman 605. 9. In support of the cross objection, the learned Counsel for the assessee contended that while computing the capital gain, cost of the land transferred to the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 possession by way of an irrevocable license, clause 5 power of attorney. The reading of the agreement would suggest that the owners i.e. the assessee and his brother have executed an irrevocable license in favour of the builder to enter into the scheduled property and develop the same by putting up the construction. They have also executed the power of attorney. The owner has further authorized the builders to sell, transfer its constructed area to their clients sub clause 5.2 and 5.3 are worth to refer in this respect which read as under: "5.2 Further the OWNERS shall expressly, empower the DEVELOPER to sell/transfer, the DEVELOPER'S CONSTRUCTED AREA to their clients/nominees or their successors along with undivided share of land, on completion of the project. 5.3 The OWNERS agree to execute such other papers and documents required for the purpose of plan sanctions from the requisite statutory authorities, statutory bodies and/or departments including CMC, Bangalore Development Authority, Bangalore Mahanagara Palike, Karnataka Power Transmission Corporation Ltd, Bangalore Electric Supply Company (BESCOM), Bangalore Watr Supply and Sewerage Board, Pollution Control Boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Alapati Venkataramiah vs. CIT (1965) 57 ITR 185 (SC). The Hon'ble Court has observed that to attract the liability to tax under s. 45, it is sufficient if in the accounting year, profits have arisen out of the transfer of capital assets, in other words, the assessee had a right to receive the profit. Actual receipt of profit is not a relevant consideration. Once profit have arisen in the accounting year out of the transfer of the capital assets, that would be sufficient to attract liability under s. 45 of the Act. 13. The contention of the assessee that it is exchange of asset and transfer would materialize when the assessee would receive the constructed portion. In this situation, the assessee and his brother would agree to develop the property jointly with the developer, they would contribute the capital in the shape of land and the builder would contribute the capital in the shape of cost of construction. In such situation, it would be a business income in the hands of AOP. But that is not the case here. They have not agreed for jointly doing the business, neither builder shown such an intention. The assessee had relinquished his rights in the land upo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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