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TMI Blog2021 (8) TMI 925X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly the Appellant is eligible for the exemption u/s 54 of the Act. Rs. 39,975,318 4. Without prejudice the addition is excessive arbitrary and excessive and ought to be reduced substantially. General 5. The learned CIT(A) erred in upholding the interest under sec 234B of the Act Interest 6. For these and such other grounds that may be urged at the time of hearing the Appellant prays that the appeal may be allowed. General 3. The revenue has raised the following grounds:- "1. CIT(A) has erred on law and facts in adopting the value of land as on 1.4.1981 at Rs. 250 per Sq ft without providing a single instance of comparable sale whereas the Assessing Officer had taken the value of Rs. 100 per sq ft after considering three comparable sale instances obtained from the sub-registrar as per the assessment order. 2. (i) CIT(A) has erred on law and facts in determining the value for the surrender of land to the developer by the assessee and the co-owner, for the development of a housing project, because he considered a part (11475 sq ft) of the corresponding built up area of 23,409 sq ft at only Rs. 2,86,87,500!-, when the almost equal remaining part of 11934 sq ft wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see computed the capital gain as follows:- Computation of Long Term Capital Gain Sale consideration for 6 flats agreed to be sold with net super built up area of 11934 sq.ft. 13,30,00,000 Built up area of flats retained by owners. 11475 sq ft @ Rs. 2500/- per sq.ft. 2,86,87,500 Total consideration 16,16,87,500 50% for each owner 8,08,43,750 Less: Indexed Cost of Acquisition on proposition of land area disposed off: 1. 6872.19 sq.ft. land area @ Rs. 500 per sq.ft. as on 01.04.1981 3,51,85,612 2. 2500 sq.ft. proportionate built up area @ Rs. 200 per sq.ft. as on 01.04.1981 51,20,000 3. Proportionate Built up area of additions made in F.Y. 2007-08 = Rs. 10,00,000 x 1024/51 18,58,439 4. Total expenses & cost of acquisition & improvement 4,21,64,052 Long Term Capital Gain 3,86,79,698 Less: Deduction u/s. 54 (i) Investment in New House property 3,99,75,318 (ii) Capital gain account scheme 1,25,00,000 Long term capital loss 1,37,95,620 6. The AO has computed the capital gains as under:- Area of the land sq.ft. 18150 Area exchanged with Developer sq.ft 9552.63 Area retained by the owners sq.ft. Sujaya Sheshadri Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... partments (built up area): Gross sale value received from developer on 11,934 sq.ft built up area as accepted by Assessee, on sale of built up area treated as ST capital assets R 133,000,000 Value of land 4191.75 Sq.ft treated as LT asset I 32,695,650 Sale value of apartments with built up area 11,934 sq.ft considered for STCG S = R-I 1,00,304,350 Assessee's share T = S/2 50,152,175 Cost of apartment @ Rs. 2500 per sq.ft for 11934 adopted for LTCG U 29,835,000 Assessee's share V = U/2 14,917,500 Short term capital gain subject to tax W = T-V 35,234,675 7. The AO while concluding the assessment did not accept the capital gains as computed by the assessee. He estimated the value as on 1.4.81 at Rs. 100 per sq ft. However he did not accept the cost of improvement alleging that there was lack of evidence. The AO held that the buyback agreement was an independent transaction and worked out short term capital gains in respect of super structure to be constructed and to be transferred. Thus, the long term capital gains was computed excessively. With regard to the superstructure of the apartments the capital gains was determined as short term capital gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s inappropriate, instead of taking the AO's valuation made @ Rs. 100 / sq.ft. The AO had considered 3 comparable sale instances obtained from Sub-Registrar. 11. The ld. AR strongly relied on the order of CIT(Appeals) and submitted that the Sub-Registrar's guidance value as on date is Rs. 8,500 / sq.ft. and going by reverse indexation method, the value of the same property would be Rs. 781.25 / sq.ft. as on 1.4.1981. Being so, the value adopted by the CIT(Appeals) @ Rs. 250 / sq.ft. is very reasonable and same is to be upheld. 12. We have heard both the parties and perused the material on record. The AO in this case brought on record comparable instances obtained from Sub-Registrar's Office, Rajajinagar, Bangalore and ascertained the market guidance value of the property as on 1.4.1981 @ Rs. 85/sq.ft. On that basis, he considered cost of acquisition of land @ Rs. 100/sq.ft. But the AO failed to mention the exact nature and address of the property considered for determining the value of property as on 1.4.1981. The CIT(Appeals) after considering the submissions of the assessee that on reverse indexation method, the value of land as on 1.4.1981 is @ Rs. 781.25 / sq.ft., considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of undivided interest in land [11475 sq.ft. of constructed area]. Being so, the value of 11475 sq.ft. undivided share in land to be valued at the cost incurred by the Developer. The same was followed by the CIT(Appeals) and there is no error in the computation. 17. We have heard both the parties and perused the material on record. In this case, the undivided share in land between the landlord and developer as per first JDA dated 30.10.2014 was 51.85% and 48.15% respectively. This was revised vide supplementary agreement dated 19.8.2015 i.e., developer 75.72% and landlord 24.28% and the assessee also received extra consideration of Rs. 13.30 crores vide agreement dated 19.8.2015 for giving up the right in 11934 sq.ft. of constructed area in favour of the developer. Being so, when we read JDA dated 13.10.2014 along with supplementary agreement dated 9.8.2015 it shows that assessee transferred only 24.28% of undivided interest in land to the developer for a consideration of Rs. 13.30 crores and 11475 sq.ft. of constructed area. Further, the 6 flats agreed to be surrendered by the landlord by the revised JDA agreement comprises of two components i.e., land and building. The value of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the new asset, on the date of transfer of the original asset. In the present case under consideration the appellant has got four individual flats which have separate municipal receipts, separate tenants, and they are situated on different floors. Though the words 'constructed a residential' house have been substituted as constructed one residential house in India by Finance(No.2) Act, 2014 w.e.f.01/04/2015, prior to this amendment since there was an ambiguity as to whether a means many or,a,4ingle house and invested in India or elsewhere. However, in the appellant's case the claim of deduction u/s 54 of the Act stating that the investment is nothing but the cost of the flats received is therefore denied on two counts. As on the date of transfer of the flats the appellant was having in possession of more than two flats and the cost of construction of the flats cannot be treated as investment of the sale proceeds. The computation of the LTCG and STCG are worked out as under based on the submissions made by the appellant and also the AO's findings by denying the claim of deduction u/s 54 of the Act. A show cause notice dated 20.03.2019 was issued to the appellant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the transfer took place, it shall be dealt with in accordance with the following provisions of this section, that is to say,- (i) if the amount of the capital gain is greater than the cost of the residential house so purchased or constructed (hereafter in this section referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be nil; or (ii) if the amount of the capital gain is equal to or less than the cost of the new asset, the capital gain shall not be charged under section 45; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase or construction, as the case may be, the cost shall be reduced by the amount of the capital gain. (2) The amount of the capital gain which is not appropriated by the assessee towards the purchase of the new asset made within o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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