9911796707
TMI Blog2022 (12) TMI 1312X X X X Extracts X X X X X X X X Extracts X X X X ..... that the development agreement was originally entered into by the assessee on 14/3/2016 in the ratio of 46:54 with the Developer. Consequently, additional 209 sq yds acquired subsequent to execution of the development agreement by way of revocation deed dated 18/5/2016 and added in the supplementary deed dt 18/5/2016 during the AY 2017-18. We find that the supplementary deed is an extension of the original development agreement with the same terms and conditions only with an addition of 209 sq yds. Therefore, in our considered view since the possession of the land has already been granted to the Developer vide the original development agreement entered into on 14/3/2016, the year of chargeability of capital gains in the hands of the assessee shall be AY 2016-17 and not AY 2017-18. We are therefore inclined to uphold the order of the Ld. CIT(A) on this ground and needs no interference. Accordingly, the Grounds No. 3 and 4 raised by the assessee are dismissed. Consideration received for the relinquishment of 54% of the land to the Developer - HELD THAT:- Admittedly the assessee has conveyed 54% of the land admeasuring 2579.04 sq yds to the Developer for the purpose of constructi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the capital gains for the assessee. Accordingly, this ground No.6 raised by the assessee is partly allowed. Exemption claimed U/s. 54F - DR submitted that the assessee is having two houses and hence exemption U/s. 54F cannot be allowed in this scenario - HELD THAT:- The assessee has claimed exemption U/s. 54F considering the entire built up area as one residential unit. In our view it cannot be considered as a single residential unit. AO is therefore directed to verify whether the assessee is owning more than one house to claim deduction u/s. 54F of the Act. Accordingly, we direct the Ld. AO to verify these facts and afford a reasonable opportunity of being heard to the assessee and the deduction U/s. 54F shall be allowed in accordance with law. Accordingly, this ground No.7 raised by the assessee is allowed for statistical purposes. - I.T.A. No.506/Viz/2019 - - - Dated:- 15-12-2022 - Shri Duvvuru Rl Reddy, Hon ble Judicial Member And Shri S Balakrishnan, Hon ble Accountant Member For the Appellant : Sri GVN Hari, Advocate For the Respondent : Sri MN Murthy Naik, CIT-DR ORDER PER S. BALAKRISHNAN, ACCOUNTANT MEMBER : This appeal filed by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on 19/11/2018 and served on the assessee on 19/11/2018. The assessee did not respond to this notice also. Considering these circumstances, the Ld. AO issued one more notice U/s. 142(1) dated 5/12/2018 for which also the assessee did not respond. The Ld. AO therefore proceeded to compute the capital gains based on the materials available with him. The Ld. AO worked out the capital gains at Rs. 6,20,13,020/- while framing the assessment U/s. 144 r.w.s 147 of the Act. Aggrieved by the order of the Ld. AO, the assessee filed an appeal before the Ld. CIT(A). The assessee s Representative filed written submissions before the Ld. CIT(A) challenging the reopening of assessment and also chargeability of the capital gains in the AY 2016-17. The Ld. AR also further submitted before the Ld. CIT(A) regarding the expenses claimed towards NALA tax of Rs. 22,43,340/-, property tax of Rs. 1,88,965/- and deviation charges amounting to Rs. 31,36,000/- as per the terms of the development agreement. The Ld. CIT(A) considering these as additional evidences submitted U/s. 46A of the IT Rules, 1962 sought a remand report from the Ld. AO. The Ld. AO submitted his reply stating that the assessee has not f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of the development agreement: NALA Charges (conversion charges) : Rs. 22,43,340 Property Taxes : Rs. 1,88,965 Deviation Charges : Rs. 31,36,000 7. The Ld. CIT(A) ought to have allowed the exemption of capital gains /s. 54F of the Act towards the built up area received by the appellant. 8. The Ld. CIT(A) ought to have held that the Assessing Officer is not justified in charging interests of Rs. 41,32,499/- U/s. 234A and Rs. 52,25,779/- u/s. 234B of the Act. 9. Any other grounds may be urged at the time of hearing. 5. Grounds No.1 and 9 are general in nature and need no adjudication. 6. In Ground No.2 the assessee raised objection for the issuance of notice U/s. 148 of the Act and pleaded that the reassessment proceedings are liable to be quashed as void ab initio. We find from the records that the assessee has failed to respond to the notices and the Ld. AO has rightly after seeking permission from the Additional Commissioner of Income Tax, Guntur found that the income has escaped assessment and hence notice U/s. 148 was issued to the assessee. The Ld. AO further observed that the assessee has failed to furnish the return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since the land is owned by the assessee, cost of land shall not be included in the sale consideration received while computing the capital gains. The Ld. AR pleaded that only the cost of the construction shall be included as consideration or the value of the land conveyed to the Developer shall be considered as sale consideration for the purpose of computing the capital gains. The Ld. AR therefore pleaded that the cost of land as computed by the Ld. AO at Rs. 1,09,84,800/- including the value of parking area at Rs.61,28,396/-, aggregating to Rs. 1,71,13,196/- shall be considered as deemed sale consideration for the purpose of computing the capital gains. The Ld.AR relied on the decision of the Coordinate Bench in the case of Yandrapu Joseph Ratna Kumar vs. ACIT in ITA No. 84 85/Viz/2021, dated 24/09/2021. Per contra, the Ld. DR pleaded that the cost of built up area shall be considered as deemed sale consideration while computing the capital gains. The Ld. DR relied on the order of the Ld. AO with respect to the cost of computation. 9. We have heard both the sides and perused the material available on record and the orders of the Ld. Revenue Authorities. Admittedly the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld entitle the Developer to construct the multistoried residential building and which was part of the development agreement. We therefore direct the Ld. AO to allow these expenses towards the cost of construction. Further, it is also noticed from the remand report of the Ld. AO that the AO has not objected to the property tax paid by the assessee for Rs. 1,88,965/- and hence these expenses incurred by the assessee shall be allowed while computing the cost of construction. However, with respect to deviation charges, the Ld. AR has submitted in page 53 of the paper book the fine paid of Rs. 31,36,000/- is with respect to set back as per the sanctioned plan in comparison with the completed building plan. These expenses are incurred for the entire building and the claim made by the Ld. AR that they should be allowed in the hands of the assessee could not be accepted. We find the deviation has occurred in the construction of the entire building and does not belong exclusively to the assessee. In these circumstances, the cost of deviation charges pertaining to the assessee shall be in proportion to the ratio of the land agreed between the Developer and the assessee as per the development ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne year after such date, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset. Explanation.-For the purposes of this section,- (i) long-term capital asset means a capital asset which is not a shortterm capital asset; (ii) net consideration , in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. (2) Where the assessee purchases, within the period of one year after the date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head Income from house property , other than the new asset, the amount of capital gain arising from the transfer of the original asset not changed under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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