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TMI Blog2021 (12) TMI 932X X X X Extracts X X X X X X X X Extracts X X X X ..... cer to consider all the residential flats received as consideration as part of reinvestment for the purpose of Section 54F, when the assessee received multiple flats located on different floors separated by different blocks of a gated community / apartment complex. 3. Whether in the facts and circumstances, the ld.CIT(A) is justified in directing the Assessing Officer to consider all the residential flats received as consideration relying on the decision of the Hon'ble AP High Court in the case of Sri Syed Ali Adil by not considering that the facts of the case are distinguishable and not applicable to the facts of the present case. 4. Whether in the facts and circumstances, the ld.CIT(A) is justified in not considering the intention of the legislature while amending Section 54F of the Income Tax Act vide Finance ka 2C:1.4 which clarifies that 'a residential house I means 'one residential house' means 'one residential house' even before the amendment to Section 54F." 3. Both the learned representatives invite our attention to the CIT(A)'s detailed discussion accepting the assessee's impugned section 54F deduction of the claim as under : "6. Decision: The app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of respective owners on the basis of their lineage and understanding which has been mentioned by the appellant in the submissions and the shares as identified in the agreement of these respective persons are not in dispute by the AO. Therefore the share is considered as determined by the AO and as submitted by the appellant in the working of capital gains. The agreement states that the Owners including the appellant, approached SD for development of the said land and the entire cost of development including approvals and subsequent costs etc. was to be borne by SD along with. all other responsibilities, henceforth of the execution of the said agreement. The Owners declared that they are the sole owners of the property and there is no encumbrance on the said property and they were in possession of the property. On the agreed consideration which was accepted at 55% of the total constructed area (having an identified market value of Rs. 1300/- per sq.ft) along with the cumulative sum of Rs. 60,00,000/ - taken by Owners in various quantum's (termed as refundable deposit, to be adjusted later), the Owners handed over the peaceful possession of the property to SD. From the above t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in monetary terms also, so that, the Owners cannot challenge this sale of land and can only now challenge regarding the delivery of the constructed area, which being the application of the identified consideration of Rs. 39,02,58,700/-. 10. To sum up, the Owners have transferred the land and given peaceful possession to the SD and received consideration in the form of constructed area valuing Rs. 39,02,58,700/ - (constructed area being the application of consideration) and also some quantums of cheque, which for convenience is called refundable deposit. The refundable deposit is eventually to subsume in the sale consideration and is not to be taxed separately. The above transaction of sale of land by Owners to SD is thus a "transfer" within the meaning of Sec. 2(47) of the IT Act for the year under consideration and is chargeable to Income Tax under the Capital Gains for the year under consideration. The land in question being more than 3 years old, which is not in dispute, will attract the Long Term Capital Gains Tax accordingly. The case of the appellant was reopened u/ s 148 of the IT Act, as the appellant had entered in to the agreement cited above and not disclosed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant is dismissed accordingly as per the conclusion drawn in the above paragraphs. The third ground of the appeal is dismissed as it has been already held that the transfer has taken place in the present year under consideration itself and therefore the taxability will arise in the present year itself. The fifth ground of appeal pertains to the cost of construction taken by the AO at Rs. 1300/- per sq.ft. The AO has taken the value as per the SRO value of the sale document and also during the course of assessment proceedings, the AO has taken this value on making the proper communication with the SRO for the value of constructed area for determining the respective sale consideration of the appellant and other owners. The appellant has not given any cogent evidence or reason for the same not to be considered for determining the quantum of sale consideration. Therefore, the fifth ground of appeal is dismissed accordingly. The sixth ground of appeal pertains to the allowance of exemption u/ s. 54F as the appellant has effectively invested in constructed residential units at the time of execution of the agreement itself. The appellant has claimed the exemption u/s 54F, on accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he reference to the valuation officer for the valuation of the property as on 01.04.81 is of no consequence as regards the determination of income from Capital Gains because the whole consideration has been effectively reinvested in the residential flats which are eligible for exemption u/ s 54F. Thus as the total sale consideration has been invested in the flats, therefore as per clause (a) to sub sec. (1) to sec 54F, as the cost of new asset is not less than the net consideration, therefore the capital gain will not be charged u/ s 45. Needless to state, that the cheque amount received will be adjusted against the cost of the flat received by the appellant and therefore, it subsumes in the consideration itself. However, the report from the DVO, would be relevant in computing the capital gains, if the new asset has been sold by the appellant, then the liability of capital gains will arise as per sec. 54(3) of the IT Act and the same has to be charged in the year of the transfer of new asset. Therefore, the report of the DVO and the valuation thereof can be used for the computation of capital gains as and when the trigger of Sec. 54(3) happens in the case of the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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