9911796707
TMI Blog2017 (8) TMI 1191X X X X Extracts X X X X X X X X Extracts X X X X ..... o investment in the construction of built up area. Hence, the same will be taken as cost of acquisition of flats after examining the record of the builder" - Decided in favour of the Revenue and against the Assessee. However, ITAT did commit an error by not reducing the land and development charges from the sale consideration received by the Assessee while working out the capital gains. - This issue decided in favor of assessee. - ITA No. 159/2005, ITA No. 205/2005, ITA No. 786/2005, & ITA No. 806/2005 - - - Dated:- 23-8-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Appellant Through: Mr. Zoheb Hossain, Sr. Standing Counsel Respondent Through: Mr. S. Krishnan, Advocate with Mr. Anoop Sharma, Advocate. O R D E R Dr. S. Muralidhar, J.: 1. These are four appeals under Section 260A of the Income Tax Act, 1961 ( Act ) directed against the common order dated 25th November 2003 passed by the Income Tax Appellate Tribunal ( ITAT ) in ITA Nos. 4962 and 4967/Del/2002 for the Assessment Years ( AYs ) 1995-96. ITA Nos.159 and 205 of 2005 are by the Revenue and ITA Nos. 786 and 806 of 2005, are by the Assessee. Questions of law 2. In ITA Nos.159 and 205 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roperty in the status of HUF. 6. To overcome the restrictions applicable to the property under the Urban Land Ceiling Act, 1976 ( ULCA ), the three co-owners entered into an agreement with Ansal Properties Industries Ltd. ( Ansals ) on 2nd May 1984. In terms of said agreement, the building on the land was to be demolished and an apartment complex was to be constructed thereon. It was agreed that the co-owners would get built-up area of 89,136 sq. ft. which constituted 56% of total built up area. 44% of the built up area would belong to Ansals. The entire cost of construction was to be met by Ansals. According to the Assessees, and as noted by the ITAT in its order dated 5th June 2000, the prominent features of the agreement entered into with Ansals were as under: a) the assessee and the other co-owners did not part with their ownership right in the land; b) they however permitted the Builder to demolish the main building and construct dwelling units at its cost; c) they permitted the builder to comply with the formalities towards construction of dwelling units by subscribing as owner of the land; d) the co-owners did not have any concern with the constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... velopment Office ( L DO ) rate list as on 31st March 1987] 10. The AO held such a method of calculation of the cost of acquisition of the asset as put forth by the Assessees was not correct. The AO further noted that the asset, as on 1st April 1981, was a residential property. It was only several years after the collaboration agreement entered into with Ansals that the property had value of ₹ 12,93,30,000/-. The AO noted that Mr. Sidharth Pratap Chand had filed an appeal in this Court under the Wealth Tax Act, 1996 ( WTA ) challenging the assessment order under the WTA valuing the property at ₹ 12,93,30,000/-. Further, it was an accepted fact that the three co-owners of the property had indicated the value of their share in the property as ₹ 2,03,000/- in their wealth-tax returns (and accepted by the Department). 11. The AO, accordingly, held that the cost of acquisition of property (one third share) would be only ₹ 2,03,334/-. In other words, the AO adopted the computation of cost of acquisition in the manner indicated in Section 49(1)(i) of the WTA. It was held that the cost of acquisition of the asset cannot be arrived at on the basis of its value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion agreement was entered into. Regarding cost of acquisition of 56% of land, it was submitted that one should assess the market value as on 10th December 1984 when it was released from the ambit of ULCA since the character of the land would remain the same. 14. The Assessees contended that the value of the land assessed under Section 7 (4) of the WTA did not represent the market value as on 1st April 1981. It was the frozen value . Impugned order of the ITAT 15. In the impugned order, the ITAT noted that Clause 21 of the collaboration agreement stipulated that after the building was ready for occupation, the co-owners would transfer the land, as and when required, in favour of the co-operative society or a limited company or association of persons or firm of the flat-buyers or in the name of nominees or successors of either the co-owners or the builders, as the case may be. It further noted that, as per Clause 4 read with Clause 1 of the agreement, the Assessee would receive 56% of the built up area after the construction of flats was completed at the cost of the builder. The built up area would not only include the flat portion but also the common area, parking pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6% of the land was retained by the assessee under the collaboration agreement. So we are in agreement with the alternate contention of the assessee's counsel that it was a sale of improved asset and consequently, cost of acquisition would include the cost of flats as well as cost of land. As far as cost of flat is concerned, we have already observed that it would be equal to the cost of construction of 56% of the built up area. The reason is obvious. The sale consideration of 44% land was in kind and, therefore, it also amounted to investment in the construction of built up area. Hence, the same will be taken as cost of acquisition of flats after examining the record of the builder. 20. The ITAT further held that, as far as the cost of acquisition of land is concerned, it had to be its market value as on 1st April 1981. Further, the ITAT disagreed with the CIT(A) that, the value of the land as declared under Section 7(4) of Wealth-tax Act should be adopted since, in its opinion, such value is a frozen value for the purpose of Section 7(4) of the WTA and did not represent the market value as on 1st April 1981. 21. Reference was made by the ITAT to the decision of the S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operties Industries Ltd. and the assessee was liable to the W.T. Act, 1957? 25. The said questions pertained to AYs 1987-88 to 1992-93. After noting the facts and the submissions made by learned counsel, it was held that there was no transfer of title as far as land was concerned and the Assessee continued to be the one-third co-owner of the property. Accordingly, the questions (a) and (b)(i) were answered against the Assessee and in favour of the Revenue. It is further held that Section 7(4) of the WTA was not applicable since, although the Assessee had transferred the possession of the property, he had not transferred the title in the property in terms of the collaboration agreement dated 2nd October 1984 entered into with Ansal. It is further noted that clause 21 of the letter dated 2nd May 1984 reads as under: 21. That after the building is ready for occupation, you will transfer the land, as and when required, in favour of the cooperative society or a limited company or Association of persons or firm of the flat-buyers or in the name of our/your nominees or successors as the case may be, or, alternatively, if desired by you, you may transfer the land in favour of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
