9911796707
TMI Blog2003 (11) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... essee. In our considered opinion, what was transferred under the collaboration agreement by the assessee to the builder was only 44 per cent of land owned by them in consideration of 56 per cent of the built-up area and not entire land as contended by the learned counsel for the assessee. Consequently, it has also to be held that in year under consideration, the assessees not only transferred the flats but also the proportionate land. Point of time and consideration for the transfer of land - We have been informed that possession of flats was given in financial year 1991-92 though no material is placed before us. Assuming the same to be correct, it is held that there was simultaneous transfer of possession of 44 per cent of land by the assessees to the builders and possession of 56 per cent of built-up area by the builder to the assessees in financial year 1991-92 in terms of section 2(47) of the Income-tax Act, 1961 read with section 53A of Transfer of Property Act. Hence, the contention of the assessee s counsel that land was transferred on the date of collaboration agreement is rejected. As far as consideration part is concerned, we are of the considered opinion that considerati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... concerned, admittedly, it is long term capital asset and consequently, cost of acquisition which may be determined by the Assessing Officer as per our direction would further be enhanced as per the rule of indexation. However, there is some confusion regarding the date of acquisition of 56 per cent built up area. As pointed out earlier, we are informed by the learned counsel for the assessee that possession of flats were taken in financial year 1991-92 but there is no material before us in support of the same. This will be verified by the Assessing Officer and then determining the period of holding. If it is found that it is long-term capital asset then indexed cost would also be determined otherwise no indexation would be allowed. Thus, the orders of the CIT(A) are modified and the matter is restored to the file of Assessing Officer for determination of the cost of acquisition/indexed cost of acquisition and also the capital gain assessable to tax in accordance with the directions given by us. In the result, both the appeals are partly allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... . 18,631 sq.ft. Cost of built up area sold during the year (as per last year @ ₹ 1450.60 per sq.ft.) ₹ 1456.60 × 18,631 ₹ 2,70,26,128.60 Amount received from prospective buyers for 18631 sq. ft. ₹ 4,72,98,075.00 Less: Cost of 18631 sq.ft. as above ₹ 2,70,26,128.60 Index inflation in A.Y. 85-86 125 Index inflation in A.Y. 95-96 259 Indexed cost of Area Transferred 2,70,26,129 × 259 - 5,59,98,139 125 Brokerage paid 6,92,925 ₹ 5,66,90,064.00 93,91,989.00 1/3rd share to each ₹ 31,30,663 5. In the original assessment proceedings, the Assessing Officer was of the view that development of plot, construction of flats and sale thereof amounted to an adventure in the nature of trade. It was also held by him that capital gain was leviable under section 45(2) as investment in land was converted into stock in trade on 2-5-1984 by virtue of collaboration agreement. The Assessing Officer noted that as per L&DO rate list, the value of land as on 31-3-1987 was ₹ 1450 per sq.ft. By adopting the escalation method, he worked out the value of land @ ₹ 1160 per sq.ft. as on 2-5-1984 by discounting @ 20 per cent. Sim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould only be equated with 44 per cent of ₹ 6,10,000 which was the value declared by the assessee under the Wealth- tax Act. This was worked out by him at ₹ 3.01 per sq. ft. as against ₹ 6.84 per sq. ft. worked out by the Assessing Officer. Hence, after giving notice of enhancement, he directed the Assessing Officer to re-work out the capital gain by taking cost of acquisition @ ₹ 3.01 per sq.ft. Aggrieved by the same, both the assessees are in appeal before the Tribunal. The learned counsel for the assessee Mr. Sharma has seriously assailed the orders of CIT(A) by raising various contentions. The main contention is that it was the cost of acquisition of flats should have been determined since what were sold by the assessees were the flats and not the land. According to him, the land had already been sold when the assessees entered into collaboration with the builders on 2-5-1984. Hence, the cost of acquisition of flats was equal to the value of the entire land as the assessees had surrendered all their rights in such land under the said agreement. It was pleaded that department could levy the tax on the capital gain arising from the sale of such land in ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the names of nominees of the assessees or the builder. As per clause 4 read with clause 1 of this agreement, the assessees will get 56 per cent of the built-up area after the construction of flats is completed at the cost of the builder. The built-up area will not only include the flat portion but also the common areas, parking place etc. The combined reading of these clauses, in our opinion, clearly shows that 56 per cent of the built-up area including land will be retained by the assessee and 44 per cent shall be retained by the builder. As per clause 21, the ultimate effect of the transfer of land would be that each flat owner would own his respective right in the land whether it is transferred to each flat owner or to the cooperative society or in other status of the flat owners. This conclusion is also fortified by the agreement to sell of the flats by the assessee. A part of the preamble agreement reads as under : "AND WHEREAS the Vendors have represented to the Vendee that the said plot of land and their respective share, right, title and interest in the said building including said premises being the said flat, the said lawn, the said terrace (hereinafter collectiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of construction of 56 per cent built up area. The sale consideration to the seller and cost of acquisition to the buyer are two sides of the same coin. Both the parties to the agreement knew as to what was being transferred and what was being received. In the case of exchange, the price of both the assets would be the same. So when the assessees had agreed to transfer 44 per cent of land, it must have kept in mind the value of construction of 56 per cent of built-up area. Therefore, we are of the considered opinion that consideration for the transfer of 44 per cent land was the cost of construction of 56 per cent built-up area which was to be incurred by the builder. This very sum would also amount to investment by assessee in the construction of flats and, therefore, the cost of construction of the flats by the builder would also amount to the cost of acquisition of the flats by assessees. 10. In view of the above discussion, it is clear that in the year under consideration, there was transfer of not only the flats as superstructure but also the proportionate land inasmuch as 56 per cent of the land was retained by the assessee under the collaboration agreement. So we are in agre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was also erroneous. Once the orders of lower authorities were set aside by the Tribunal, the original order was erased and, therefore, neither party is bound by the observations/findings recorded in such order. In this connection, reference can be made to a recent judgment of the Hon'ble Supreme Court in the case of M.A. Murthy v. State of Karnataka [2003] 264 ITR 1 where it has been observed "where a subsequent judgment of Supreme Court is by way of review of the first judgment, the subsequent Judgment rendered on a review petition is the only judgment rendered effectively and for all purposes the earlier decision is erased by entertaining the review petition". Further, the theory of escalation can be applied only where the nature and character of the property at both the points remain the same as rightly contended by ld. counsel for the assessee. As on 1-4-1981, the land was subject to the provisions ULCA while on the date of transfer, the land was outside such provisions. Therefore, the procedure adopted by the Assessing Officer by invoking the theory of escalation, going backward, was not proper and, therefore, rightly rejected by the CIT(A). Under section 55 of Incom ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
