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TMI Blog2016 (12) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... s to note that the assessee has sold the land in the year 2001. It was only when the assessee himself disclosed the sale in the assessment year 2010-11 on execution of the sale deed that the matter came to the knowledge of the Revenue Authorities. The assessee himself has shown the capital gain/loss treating that the transfer has taken place in the assessment year 2010-11. Now the assessee is estopped from his own act and conduct to say that the transfer has taken place in the year 2001 relevant to assessment year 2002-03. Moreover, no one can be allowed to take the benefit of his own wrong. It is not the case of the Revenue that the assessee has received any amount over and above the said amount of ₹ 45,50,000/-. Hence, we do not find any merit in the findings of the Ld. CIT(A) that the sale consideration of the land should be taken as market value of the said land under section 50C of the Act. Indexation benefit - Held that:- If the transfer is to be treated as dated back to year 2001, no tax can be levied on the assessee for the year under consideration neither on account of capital gains nor under the head ‘Income from other sources’. As observed above, if we treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 1.a) On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the addition to the extent of ₹ 38,14,560/- made by the AO to the income of Appellant on account of Income from other sources in respect of consideration received on sale of development rights in the piece of lands on 29-6- 2001. b) The Id. CIT(A) failed to appreciate that:- (i) the Appellant had sold development rights in the piece of lands to M/s. Darshan Builders on 29-6-2001 and thereby permitted the developers to develop residential buildings at their own cost, risk and expenses; (ii) the transfer of the piece of lands was completed during the previous year relevant to A.Y. 2002-03 since the possession was given in part performance of contract in the nature of development agreement dated 29-6-2001; (iii) the Appellant has passed domain and control of the immovable property by grant of an irrevocable authority and licence and as such the date of agreement of development dated 29-6-2001 would be constitute the date of transfer of the capital asset; and (iv) no consideration was received by the Appellant from Tulsi Gruh Nirman Associates during the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment agreement on 29.06.2001 with M/s. Darshan Developers for a total consideration of ₹ 45,50,000/-. The AO further observed that in the A.Y. 2010-11 under consideration in which the assessee had entered into Deed of Conveyance dated 27.10.2009, the assessee had fully set off the receipt of ₹ 45,50,000/- against the indexed cost of ₹ 46,47,981/- for A.Y. 2010-11 resulting in capital loss of ₹ 97,981/-. The assessee explained that the development rights in the land were sold by the assessee to M/s. Darshan Builders in the year 2001 itself against consideration of ₹ 45,50,000/-. However, in the F.Y. 2009-10, the said M/s. Darshan Builders has sold the land to M/s. Tulsi Gruh Nirman for ₹ 1.71 crores and the said M/s. Darshan Builders has offered the capital gains on the entire amount of ₹ 1.71 crores. The AO, however, stated that since the assessee had transferred the entire rights in the property by virtue of development agreement dated 29.06.2001, the Long Term Capital Gain should have been offered to tax in A.Y.2002-03, calculated at ₹ 14,17,026/- Alternately, in case the capital gain was to be offered to tax in A.Y. 2010-11 on exec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be entitled to indexation after assessment year 2002-03 and further that the deemed sale consideration should be considered as per the market value of the said land in the assessment year 2010-11 at ₹ 1,39,74,500/- under section 50C of the Act. The relevant part of the observations made by the Ld. CIT(A) for the sake of reference is reproduced as under: 6.1 The appellant has admitted that since the development rights in the property were transferred to the developer vide Development Agreement dated 29-06-2001, capital gain arising from such transfer was taxable in A.Y. 2002-03, relying upon the judgment of Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia v. CIT 260 ITR 491 (Bom) wherein it was held that in case of passing of domain and control of the immovable property by grant of an irrevocable authority or licence, the date of agreement of development will constitute the date of transfer of the capital asset. I find that the AO is also not averse to said contention of the appellant since he himself has stated that ideally the assessee should have returned the capital gain during the A.Y. 2002-03 only. However, it is a fact that the appellant f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indexation benefit up to A.Y. 2010-11, even though clearly admitting itself that the land was held by it only for the name sake. 6.3 It is proved by the aforesaid discussions that the stand taken by the appellant cannot be accepted under any circumstances. Now, the question arises whether the treatment given by the AO to tax the said receipt of ₹ 45,50,000/- as Income from Other Sources without granting any deduction of cost there from was justified. In this regard, I am of the opinion that firstly the appellant should get deduction of the deemed cost of ₹ 7,35,440/-, as it would be an allowable expenditure even u/s 57(iii) of the Act. Secondly, as regards the Indexation of said cost and treatment of net consideration as Long Term Capital Gain (instead of Income from Other Sources), I am of an opinion that in view of the appellant's act of trying to conceal its income on several counts as stated above, and also to recoup the loss of revenue for late offering of the assessable income to tax for 8(eight) long years, the appellant should not be granted any such benefit. Therefore, the appellant is entitled to get a relief of ₹ 7,35,440/-. 6.4 Without preju ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uted under the head Capital Gains or as Income from other sources . Admittedly, the amount in question was received by the assessee on account of sale of land and further that the assessee is not in the business of sale and purchase of lands. Hence, under the circumstances the income of the assessee is to be computed under the head Capital gains . 7. So far as the question of year of taxability is concerned, though the lower authorities have themselves held that in fact such an income was required to be taxed in the assessment year 2002-03 itself, yet, the fact remains that the transfer of the land was not affected in the records. The ownership of the land was standing in the name of the assessee up to the assessment year 2010-11. There was no means or ways for the Revenue Authorities to note that the assessee has sold the land in the year 2001. It was only when the assessee himself disclosed the sale in the assessment year 2010-11 on execution of the sale deed that the matter came to the knowledge of the Revenue Authorities. The assessee himself has shown the capital gain/loss treating that the transfer has taken place in the assessment year 2010-11. Now the assessee is est ..... X X X X Extracts X X X X X X X X Extracts X X X X
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