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TMI Blog2021 (1) TMI 407X X X X Extracts X X X X X X X X Extracts X X X X ..... filed her return of income on 16/04/2018 admitting the same income which was admitted originally i.e. Rs. 5,99,350/- The case was taken up for scrutiny and the information was called for from the assessee. During the course of assessment proceedings, the AO had observed that assessee offered long term capital gain on sale of land of 212 sq.yds. at Rs. 3,53,271/- as under:- Schedule-1 (Asset - Building) Schedule-2 (Site 212 sq. yds) Date of transfer 04/04/2012 Date of transfer 04/04/2012 Sale of scrap Less: Demolition charges Net consideration received Rs. 3,00,000 Rs. 3,00,000 Rs. NIL Sale of consideration Rs. 76,32,000/- Less: Indexed Cost of construction (1994-95) Rs. 22,00,000 * 852/259 Rs. 72,37,066 Less: Indexed cost of acquisition (1981-82) Rs. 4890 * 852/100 Rs. 41,663 Taxable capital gain (-)Rs. 72,37,066 Taxable capital gain Rs. 75,90,337 Total capital gain offered to tax : Rs. 3,53,271/- [Rs. 75,90,337 - 72,37,066] 3.1 The AO disbelieved the demolition charges stated to have been incurred by the assessee and disallowed the expenditure incurred on demolition. However, the AO taxed the sale of scrap generated out of demolition of the said building ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee is obliged to keep construction accounts for such a long time. The ld.AR further submitted that the AO having taxed the sale of scrap of the building ought not to have disallowed the demolition charges and the indexed cost of construction of the same building. Accordingly, ld.AR requested to allow the expenses claimed for demolition of the building as well as the indexed cost of acquisition from the computation of capital gains. 6. On the other hand, ld.DR vehemently supported the orders of the lower authorities. 7. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has demolished building which was existing prior to the sale of the land. The assessee entered into an agreement of sale coupled with GPA dated 04/04/2012 with M/s. Balaji Construction Company Ltd. along with 4 others. The assessee has received the sum of Rs. 76,32,000/- towards the sale proceeds of her share of 212 sq.yds of site and therefrom claimed the indexed cost of acquisition of land and building which was constructed in the F.Y. 1994-95. Similarly, she also has admitted the sale proceeds of scrap of Rs. 3.00 lakhs and also claimed demolition c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and and flats. The assessee claimed the entire sale consideration under the long term capital gain and thus the AO taxed the sale of land under long term capital gain and the flats under short term capital gain. The issue in dispute is apportionment of sale consideration towards the long term capital gain and short term capital gain. The assessee is an individual receiving interest income and capital gains. In the A.Y. 2015-16, the assessee filed her return of income admitting total income of Rs. 2,66,33,460/-. Subsequently, the return was processed u/sec. 143(1) and the case was selected for scrutiny and the assessment was completed u/sec. 143(3) by an order dated 14/12/2018. During the year under consideration, the assessee along with other persons entered into construction agreement on 12/02/2013 with M/s. Balaji Construction Company Ltd. to construct apartment in the larger extent of 2137 sq.yds.in plot Nos. HIG-24 &25 situated in Survey No.6 of Resapuvanipalem village, Seethammadhara North Extension Layout, Visakhapatnam. Out of the total site of 2137 sq.yds., the assessee's share of land was 801.5sq.yds. which was in possession of her as per the registered document No.6235/1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allenged the order of the AO stating that the entire sale consideration to be taxed as long term capital gain and also the land cost required to be taken at fair market value but not as per the SRO value. The Ld.AR argued that the AO erred in taxing the sale consideration at Rs. 4,51,95,000/- for 7 flats under short term capital gains and the same is unjustified. 11. Ld. CIT(A) after considering the objections of the assessee confirmed the order of the AO and held that AO rightly taxed the sale of land as long term capital gain and the sale of flats as short term capital gain. With regard to application of SRO value as sale consideration of land, the ld. CIT(A) did not find favour with the argument of the assessee and accordingly confirmed the order of the AO and dismissed the appeal of the assessee. 12. Aggrieved by the order of the ld. CIT(A), the assessee is in appeal before this Tribunal. 13. During appeal hearing, ld.AR argued that the assessee has constructed the flats during the year 2012-13 & 2013-14 for consideration of Rs. 3,25,80,000/- for total 9 flats. The AO adopted the sale consideration of flats at Rs. 4,51,95,000/- which worked out to Rs. 2,265/- per sq. ft. and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the guideline value. Since the cost of construction of the building works out to Rs. 1270/- per sq.ft., estimation of sale price @ Rs. 2,265/- appears to be highly excessive. In this case assessee has objected for adoption of SRO value as sale consideration. Once the assessee has objected the adoption of SRO value as sale consideration of the land, the AO need to refer the issue to the Departmental valuer for expert opinion. In the instant case, no such exercise was made by the AO. The registered valuer of the Income tax has valued the land at Rs. 60,000/- per sq.yard. and the department did not bring any evidence to controvert the valuation made by the registered valuer. The department also did not find any defect in the report of Registered Valuer. Registered Valuer is qualified engineer and approved by the Income Tax Department for valuing the properties and giving expert opinion. Since the department did not bring any material to show that the Registered Valuer's report is defective, we do not find any reason to not to accept the valuation made by the Registered Valuer. Therefore, we direct the AO to consider the land cost as determined by the registered valuer for sale of l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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