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TMI Blog2012 (3) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "1. The ld CIT(A)-II, Pune erred in law and on facts in sustaining the ld AO's action of adopting stamp duty value of Mohammadwai property at ₹ 89.66 lacs as the sales consideration of Dhanori property exchanged by the assessee. 2. The ld CIT(A)-II, Pune erred in not appreciating that the said exchange transaction was leading to business income for the appellant and not capital gains. 3. Alternatively, the ld CIT(A)-II, Pune erred in not appreciating that the alleged differential consideration of ₹ 33.80 lacs (i.e. ₹ 89.66 lacs less ₹ 55.86 lacs) represents a business loss allowable as a deduction to the appellant ipso facto. 4. The ld CIT(A)-II, Pune erred on facts n ot dealing with the addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of the property located at Dhanori, Pune. However, no income on account of the transfer of Dhanori property was declared by the assessee in his return of income. On being show-caused, assessee explained that the development rights in respect of Dhanori land owned by him was exchanged against the rights of Mohammedwadi land and, there was no monetary consideration received and thus no income accrued to the assessee in this transaction. The assessee also explained before the Assessing Officer that the property at village Mohammedwadi was also transferred by the assessee in the subsequent assessment year and the surplus on such transfer was declared as business income in the subsequent assessment year of 2007-08. The Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... maintained, then assessee be permitted to substitute the cost of ₹ 89,66,200/- in order to compute the surplus on sale of Mohammedwadi land in the assessment year 2007-08. 5. The aforesaid submissions of the assessee have not found favour with the Commissioner of Income-tax (Appeals). As per the Commissioner of Income-tax (Appeals), on the sale of Dhanori land, the assessee had received the sale consideration in the shape of development rights of land at Mohammedwadi of which the fair market value determined by the stamp duty authorities was ₹ 89,90,000/-, and that the same was liable to be treated as the consideration received for the purposes of computing the surplus on transfer of the Dhanori land. According to the Commissio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as applicable to the computation of capital gain on transfer of a capital asset unlike the case of the assessee wherein the transfer relates to a business asset. It is further pointed out that even if the profit is to be quantified on the transfer of Dhanori land, it should be done in relation to the market value of the property received in exchange and not with reference to the value assessed for the stamp duty purposes. Notwithstanding the aforesaid, it is submitted that since the profit on sale of the land at village Mohammedwadi has been offered to tax in the subsequent year as business income after treating the cost of acquisition at ₹ 55,86,660/- (which is the cost of acquiring the Dhanori land), the assessee be allowed to subst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion 'transfer' includes an exchange also and in that view of the matter, the impugned exchange of land has resulted in a taxable event. Further, it is equally well understood that consideration in lieu of a transfer can be in money or money's worth. In this case, the consideration has been received in money's worth, inasmuch as the consideration is in the form of the development rights in the land situated at Mohammedwadi, Pune. Under these circumstances, we therefore find no merit in the assertions of the assessee that no income accrues as a result of the transfer of Dhanori land in this year. 9. Further, there is no dispute to the position that the assessee is in the business of promoting and developing lands and theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer, there is no contrary value or basis putforth to determine the fair market value of the Mohammedwadi land. Under these circumstances, we hereby affirm the action of the Assessing Officer in adopting the value of Mohammedwadi land at ₹ 89,90,000/- in order to compute the surplus accruing on transfer of Dhanori land. Therefore, the action of the Commissioner of Income-tax (Appeals) in sustaining the addition of ₹ 34,04,340/- as profit on sale of Dhanori land is hereby affirmed. Thus on this aspect, assessee fails. 10. Now we may make an observation with regard to the alternative plea of the assessee. The alternative plea was that in the subsequent assessment year of 2007-08 the profit declared on sale of Moha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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