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TMI Blog2018 (10) TMI 58X X X X Extracts X X X X X X X X Extracts X X X X ..... cult to estimate and consider the cost of construction to the builder as the consideration for the land. When the assessee is offering the capital gains, it can only do so, on the basis of material available before it at that point of time and cannot presume about the events in future. Therefore, the assessee had adopted the SRO value, but as rightly pointed out by the AO and the CIT (A), the same cannot be relied upon in the case as the description of the nature of the building in the SRO certificate did not match with the description of assessee’s building. The quality of construction would also differ between building-to-building. SRO value can at best be a guiding factor but cannot be a substitute. Therefore, we reject the assessee’s contention that the SRO value should be accepted as the value of the property receivable by the assessee - the cost of construction of the building alone is the right choice, as at the time of assessment proceedings, the cost of construction was available. AO has taken into consideration certain expenditure incurred by the builder which is not part of the cost of construction of the building. The assessee’s contention that certain part of consid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the adoption of ₹ 21,38,39,466 as consideration received under development agreement for calculating capital gains. 7. The CIT (A) has erred in upholding the amount not paid by the developer to M/s Kohli constructions as part of cost of construction ignoring the fact that the amount payable to M/s Kohli Construction was offered to capital gains tax in Udai Health Care Private Limited as their share of consideration received under development agreement. 8. The CIT (A) has erred in upholding the amount of development rights of ₹ 4,24,08,889 as part of cost of construction ignoring the fact that the development rights was offered to capital gains tax in Udai Health Care Private Limited as their share of consideration received under development agreement. 9. Any other ground that may be urged at the time of hearing . 2. Brief facts of the case are that the assessee had purchased a piece of land on 19.08.2008 for a consideration of ₹ 1,60,05,000 plus registration charges. Its sister concern M/s. Udai Healthcare Private Limited was also the owner of the adjoining property. Both the parties had initially entered into a development agreement with a b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 76,00,000 to the builder Kohli Constructions, but, in effect only ₹ 60.00 lakhs was paid. The AO, therefore, took the entire amount agreed to be paid as part of cost of construction and arrived at a sum of ₹ 21,38,39,466 as the total cost of construction for 63235 sq.ft and worked out the per sq.ft cost at ₹ 3,381.65. Taking the same into consideration, the AO worked out the long term capital gain falling to the share of the assessee at ₹ 2,47,88,420 and since the assessee has reported long term capital loss of Rs.(-) 78,22,123/-, the AO brought the difference of ₹ 3,26,10,543 to tax. Aggrieved, the assessee preferred an appeal before the CIT (A), who confirmed the order of the AO, and the assessee is in second appeal before us. 5. The learned Counsel for the assessee, Shri Ajay Gandhi, while reiterating the submissions made by the assessee before the authorities below submitted that the development agreement is not an agreement of sale, but is a transaction of exchange. He submitted that the assessee is exchanging its land with the built-up area and therefore, there is no sale and there cannot be any capital gains arising out of such transaction. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter should be remanded to the file of the AO for taking only the relevant factors constituting the cost of construction, such as the payment made to Kohli Construction, (the actual payment and not the agreed amount) and by reducing the finance and other costs incurred by the Developer. He submitted that as far as the assessee is concerned, the value of the property received by the assessee alone should be considered and that should be the actual cost of construction excluding any other expenditure which may be business expenditure for the builder but does not constitute the cost of construction. He referred to the SRO value which is placed at page 52 of the Paper Book filed by the assessee. 8. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the SRO certificate submitted by the assessee does not mention the purpose for which it has been obtained. He also brought out the distinction between the nature of the building i.e. building of the assessee and the building mentioned in SRO certificate. He pointed out that the building of the assessee consisted of cellar and 5 floors above, whereas the building in the SRO certificate ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for transfer of the shares in the instant case is not only cash, but also shares. In a case where the value of a share is not specified in terms of cash, necessarily the same has to be fixed in terms of the market value [Motors General Stores (P) Ltd. v. CIT (1967] 66 ITR 701 (A.P).. 7. We find that Essar in the offer has clearly stated that as on 28th Feb., 1991, the closing market price of Essar equity shares was ₹ 38.50 at Madras Stock Exchange and ₹ 37.50 at Bombay Stock Exchange and Essar has clearly stated that. Based on these prices, the offer price is more than the highest market price of the equity shares of SISCO during the six months immediately preceding to this date. 10. Thus, it can be seen that there is no finding by any of the Courts that vide JDA, there is no transfer of property u/s 2(47)(v) of the Act. In fact, in lieu of parting of a portion of its land, the assessee is receiving the consideration in kind (i.e. by way of superstructure on the land retained by it) in future and is therefore, a transfer within the meaning of section 2(47)(v) of the Act. 11. As regards the quantification of the consideration received by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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