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TMI Blog2017 (11) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... e cost, as the building would reduce the freehold land value. Demolition of existing building could result in developing the land. Therefore, the cost of building will be allowable as cost of improvement. The AO’s hyper technical view that assessee transferred only ‘land’ is not correct as the demolition of existing building for developing a new structure is part of the ‘transfer’ and the cost has to be allowed while computing ‘capital gains’. The AO is therefore directed to consider the cost of building demolished at ₹ 100/- per sq. ft., as claimed. The value of land can be determined approximately at ₹ 300/- keeping in mind the claim of assessee and AO’s determination on guideline values. AO is directed to adopt cost of acquisition accordingly. Benefit of Section 54/54F - Held that:- AO’s contention that assessee owns more than two residences was not correct. Assessee got eight apartments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere the AO contends that assessee had more than one building as on the date of transfer i.e., on 19-06-2001. Subsequent acquisition of any number of houses will not prevent assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .4.1981 at ₹ 7 per sq. yard. 4. The learned Commissioner of Income-Tax (Appeals) erred in not considering the fact that the indexed cost of the value of the building on the said land also should have been taken into consideration for determining the capital gain. 5. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing officer in treating the amount of ₹ 1 lakhs received from the developer as a part of the consideration. 6. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in holding that the appellant is not entitled for deduction u/s 54/54F of the I.T. Act. 7. The learned Commissioner of Income-Tax (Appeals) erred in dismissing the appeal filed by the appellant without considering various written submissions filed before him. 8. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in charging interest u/s 234A, u/s 234B and u/s 234C of the I.T. Act . 3. Briefly stated facts are that assessee, an individual, deriving income from pension, property, capital gains and other sources, filed h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cupied by him, the assessee is not entitled to any exemption u/s. 54F of the Act. 3.2. AO also observed that during the year under consideration, assessee received a sum of ₹ 1,00,000/- from the developer towards residential accommodation of assessee during the period of construction as per clause No.16 of the developer's agreement dated 19-06-2001. Assessee has admitted this receipt under the head 'income from house property' and claimed statutory deduction @ 30% towards repairs. The AO stated that the income received is not in the nature of rent from any property owned by assessee but only a compensation received from the developer during the period under consideration and treated the same as 'income from other sources' thus, rejecting the claim of deduction of 30% toward statutory repairs. The AO concluded the assessment by calculating the long term capital gains at ₹ 37,83,759/-, short term capital gains at ₹ 36,470/-, income from other sources at ₹ 1,25,000/ - and determined the total taxable income at ₹ 40,06,273/-. 4. Before the Ld.CIT(A), assessee has raised various contentions. Assessee submitted that he has entered i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by the authorities can not be upheld as such. The AO himself in the remand report has expressed his difficulty in calculating the correct long term capital gain stating as under: 4. In the grounds of appeal, the assessee has raised an objection stating that the Assessing Officer has wrongly adopted the market value of land as sale proceeds instead of cost of construction of super structure received by the assessee. The issue raised by the assessee is correct to a certain extent in view of judgement of ITAT, Hyderabad in the case of Dr. Maya Chenoy. However, it is submitted that there are various conflicting judgements on the mode of computation of capital gains arising out of development agreements and the issue has not yet reached finality. The method pointed out by the assessee is not practical in determination of quantum of capital gains, as in the year of transfer of capital asset and by the time of filing of return the assessee would not be in a position to know the actual cost of construction to the developer. Further, there is no clarity regarding the year in which capital gains arise if the method suggested by the assessee is followed. In view of this, the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nces was not correct. Assessee got eight apartments subsequently, on transfer of one residential house property, by way of development agreement. Nowhere the AO contends that assessee had more than one building as on the date of transfer i.e., on 19-06-2001. Subsequent acquisition of any number of houses will not prevent assessee claiming the deduction for transfer as on 19-06-2001. Therefore, the AO s view can not be upheld. Assessee is entitled for deduction u/s. 54/54F. With reference to the claim of deduction, assessee has claimed only for contiguous flats. But law on this as propounded by the Hon'ble High Court of AP in the case of CIT Vs. Syed Ali Adil in ITA No. 410 of 2012, dt. 20-12-2012 is as under: 10. We see no force in the said contention. As held in D.Ananda Basappa's case (1 supra) by the Kamataka High Court, the expression a residential house in Section 54 (1) of the Act has to be understood in a sense that the building should be of residential nature and a should not be understood to indicate a singular number and where an assessee had purchased two residential flats, he is entitled to exemption under Section 54 in respect of capital gains on sale ..... X X X X Extracts X X X X X X X X Extracts X X X X
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