9911796707
TMI Blog2022 (10) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... of the land and that portion allotted as builder s share and the balance 26.67% was retained by the assessee. In our view, the entire above transaction is purely sale of plot to the builder and in turn received monetary consideration and balance 4 Flats valued - Hence, according to us, this is a transaction of capital gains and assessee s transaction is that of Long Term Capital Gain. Hence, we direct the A.O to treat the transaction as LTCG and assess the same accordingly. Whether the assessee is entitled to claim of deduction u/s. 54 or 54F? - Because the assessee has been allotted 4 residential Flats against the sale of her ancestral land or in lieu of development of her ancestral land. We noted that this issue has been considered by the Hon ble Madras High Court in the case of Tilokchand Sons [ 2019 (4) TMI 713 - MADRAS HIGH COURT] wherein a residential house as occurring in s. 54(1) of the Act can include more than one or plural residential house. The Hon ble High court has considered even the amendment which is effective from 01.04.2015 and applicable far and from assessment year 2015-16 and the relevant assessment year before us 2014-15. Hence, the amendment will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed to sale the concern land of 14805 Sq.ft. by agreement to sale dated 11.02.2013 to Mrs. Sangeethaa Sree. B, W/o Shri S.P. Babuvijay, Managing Director of Indu Housing Development (Chennai) Pvt. Ltd. The A.O on perusal of the GPA was of the view that out of the total 14800 Sq.ft., the assessee has entrusted 10832 Sq. ft. to the builder to sale on her behalf and the share of land withheld by the assessee works out to 3973 Sq.ft. Post this, an agreement for construction was entered into between the assessee and Indu Housing Development (Chennai) Pvt. Ltd. on 12.08.2013. As per the sale agreement and supplementary agreement dated 10.07.2013, the builder agreed to carry out construction work for a total consideration of Rs. 1,43,97,600/- for construction of four flats in the first and second floors at Block C-1 of the above land. The A.O noted that in a nutsheel at para 10 as under: 10. In a nutshell, the following events unfolded :- The assessee entered in to a Joint Development Agreement with the builder to construct residential homes on his vacant plot of land, However,, as an afterthought, to make use of section 54F deduction for the purpose of avoiding tax payments ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed the claim of deduction u/s. 54F of the Act. Aggrieved, the assessee preferred appeal before CIT(A). 6. The CIT(A) confirmed the action of the A.O by observing as under: In view of the above discussion, facts of circumstances of the case, the income earned by the assessee from sale of land and further conversion into four different flats by collaborating with the builder, is treated as income from business by way of adventure in the nature of trade. Accordingly on the issue whether the transaction is in the nature of trade the AO's action is confirmed and ground of appeal is therefore dismissed. 7. The CIT(A) also dismissed the claim of deduction by observing as under: I have carefully considered the appellant's above contentions since the appeal authority has upheld the action of the assessing officer that income from the joint development agreement is in nature of adventure and therefore it is a business income and as claim of deduction u/s 54F is not available to the business income. Therefore the AO's action to disallow the claim of deduction u/s 54F of the Act is hereby confirmed. Alternatively, the assessee has not complied the elig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B 4,29,31,642 Difference-Marginal A-B 36,932 9. The Ld. Counsel for the assessee stated that the ancestral land held by the assessee through attorney and now this is sold to the builder, but in turn received monetary consideration of Rs. 2.85 Crores and four flats for her residence valued at Rs. 1,44,31,642/-. Therefore, the Ld. counsel stated that the consideration and income of the assessee was frozen at the time of entering into agreement for sale and even before construction and hence, assessee s income is only in the nature of capital gains arising out of sale of 26.67% of her ancestral land. He also countered the order of the A.O and that of the CIT(A) that they have unnecessarily relied on the terms of GPA rather, he argued that the terms of GPA as highlighted in the assessment order or standard terms of GPA and are applicable only to 73.33% of the land and super build up area. According to assessee, the ancestral land is assessable only as a capital gain and not as business income for the following reasons: i. The appellant sold her ancestral l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of money. According to us, as per records assessee neither had any knowledge or capability about the business or property development nor had any intention to do so as the assessee gave a general power of attorney in favour of the builder accordingly. All the activities were done by builder through GPA dated 10.07.2013, whereby builder was authorized to do all such things as is necessary to enable construction of flats and also to sell the same. The GPA was restricted to the extent of builder s right at 73.33% of the land and that portion allotted as builder s share and the balance 26.67% was retained by the assessee. In our view, the entire above transaction is purely sale of plot to the builder and in turn received monetary consideration of Rs.2.85 Crore and balance 4 Flats valued at Rs. 1,44,31,642/-. Hence, according to us, this is a transaction of capital gains and assessee s transaction is that of Long Term Capital Gain. Hence, we direct the A.O to treat the transaction as LTCG and assess the same accordingly. 12. Coming to the next interconnected issue whether the assessee is entitled to claim of deduction u/s. 54 or 54F of the Act as the case may be, because the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2015 which the Legislature specifically made it clear to operate only prospectively from A.Y.2015-2016. Once we can hold that the word 'a' employed can include plural residential houses also in Section 54 prior to its amendment such interpretations will not change merely because the purchase of new assets in the form of residential houses is at different addresses which would depend upon the facts and circumstances of each case. So long as the same Assessee (HUF) purchased one or more residential houses out of the sale consideration for which the capital gain tax liability is in question in its own name, the same Assessee should be held entitled to the benefit of deduction under Section 54 of the Act, subject to the purchase or construction being within the stipulated time limit in respect of the plural number of residential houses also. The said provision also envisages an investment in the prescribed securities which to some extent the present Assessee also made and even that was held entitled to deduction from Capital Gains tax liability by the authorities below. If that be so, the Assessee-HUF in the present case, in our opinion, complied with the conditions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
