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TMI Blog2015 (9) TMI 432X X X X Extracts X X X X X X X X Extracts X X X X ..... n the market value while calculating the differential premium. Since the leasehold rights were transferred to the purchaser at ₹ 7.20 crores, the learned CIT(A) had correctly taken into consideration the fact that the purchaser would have paid the amount essentially based on the land cost and the chance of constructing a new building for new I.T. based industries with adjoining infrastructural facilities and hence it is improper to segregate a large chunk of consideration towards cost of building since the dominant object was to acquire the leasehold rights on the land. Under these circumstances we are of the view that the order passed by the learned CIT(A) on this aspect does not call for any interference - Decided against revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that there is no basis and justification to allocate ₹ 5,28,12,000/- towards the building. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in holding that the cost of building is to be taken at ₹ 87,12,170/- instead of ₹ 5,28,12,000/- as workout by Assessing Officer in a scientific way. 3. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in directing the Assessing Officer to work out short term capital gain on building as per Section 50 of the Act of ₹ 87,12,170/- instead of ₹ 5,28, 12,000/- as work out by Assessing Officer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2 together with the building constructed on it in the year 1966, situated in Thane Industrial area. This lease of land had been obtained from the Maharashtra Industrial Development Corporation (MIDC). Since it was an assignment of tenancy rights, the AO was of the view that there is no sale of land involved and as per the provisions of section 55(2)(a) of the I.T. Act the purchase price is to be taken as the cost of acquisition. Since tenancy rights is covered by the provisions of section 55(2)(a), the market value as on 01.04.1981 need not be allowed to be substituted in the computation of long term capital gains. The AO also called upon the assessee to furnish the cost of acquisition of the building and its year of acquisition along with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... espite the objection of the assessee he proceeded to compute the long term capital gains at ₹ 1,84,41,306/- and short term capital gains of ₹ 5,37,54,656/-. 6. Assessee submitted before the CIT(A) that the AO bifurcated the total consideration of ₹ 7.20 crores by taking the value of land at ₹ 1.91 crores and the balance amount of ₹ 5.28 crores as sale price of building. It was also pointed out that the land valuation taken by the AO is on the basis of differential premium payable to MIDC on the basis of a letter from MIDC to the AO, which specifically stated that the Corporation has not considered the market value in the above calculation of differential premium. It was also brought to the notice of the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e acquired the leasehold rights for an amount of ₹ 44,772/- and this should be treated as cost of acquisition. 9. As regards computation of capital gains the learned CIT(A) noticed that the AO had taken the value of leasehold rights at ₹ 1,91,88,000/- whereas the fact remains that the purchaser, M/s. Meyer Organic P. Ltd., vide assignment deed dated 18.06.2007, got the lease on the above land and building by paying ₹ 7.2 crores in addition to payment of a sum of ₹ 19,14,400/- towards differential premium to MIDC. In fact the AO called for information in respect of differential premium from MIDC wherein it was clarified that the Corporation has not considered the market value in above calculation of differential pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submissions and carefully perused the record. In our considered opinion the appeal filed by the Revenue has no merits. The AO has arbitrarily allocated the cost of land by taking into consideration the cost of the building overlooking the claim of the assessee that even if new construction has to be made in the same plinth area it cannot be more than ₹ 87,00,000/-. The learned CIT(A) has correctly taken into consideration the fact that the MIDC has not taken into consideration the market value while calculating the differential premium. Since the leasehold rights were transferred to the purchaser at ₹ 7.20 crores, the learned CIT(A) had correctly taken into consideration the fact that the purchaser would have paid the amount ess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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