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TMI Blog2014 (10) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... ensation received by the assessee from the developer under the head 'capital gains'. The second ground is raised agitating the taxing of the monitory value of the additional area of 210 sq. ft. amounting to Rs. 16,05,515/- under the head 'capital gains'. The ground No. 3 taken by the assessee is an alternative ground to the effect that if the additional area of 210 sq. ft. is liable for tax under the head 'capital gains', then the assessee is also entitled to claim deduction under section 54F of the Income Tax Act (hereinafter referred to as the Act). 3. The brief facts of the case are that the assessee had been owner of a residential flat admeasuring 450 sq. ft. carpet area in a building called Sunil Niwas CHS Ltd. During the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arpet area in lieu of surrendering development rights and utilization of the FSI of the old flat. Thus, the assessee would be getting additional area of 210 sq. ft., the equivalent value of which in monitory terms was calculated by him at Rs. 16,05,515/-. He therefore taxed the said amount along with compensation received by the assessee under the head 'Income from other sources'. 4. In appeal before the ld. CIT(A), the ld. CIT (A) held that the compensation of Rs. 11,00,000/- as well as the monitory value of the additional area of the flat was taxable as capital gains. He also rejected the contention of the assessee that the additional FSI rights acquired by the assessee were embedded in the cost of land and were not a separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red in the case of Jetha Lal D Mehta (2 SOT 422) and other decisions rendered by the co-ordinate benches. 6. However, a perusal of the agreement entered by the assessee with the developer, which is titled as "AGREEMENT (individual member agreement) FOR PERMANENT ALTERNATE AGREEMENT" would show that the Society, in which the flat owned by the assessee was located, has obtained the land from the Government and the said Society has become lessee of the Government in respect of the said land. This fact is in total contradiction to the submissions made by the assessee, i.e., it is the society which is the lessee of land and not the assessee and other members. Hence, it cannot be said that the assessee and other members have got the right of add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... new flat and the compensation received is to be considered as the sale consideration received on giving of old flat. Against the same, the assessee is entitled to deduct the indexed cost of acquisition of old flat and the indexed cost of improvement, if any, incurred in respect of that flat in order to arrive at the Capital gain. Since the new flat is obtained on transfer of old flat, the assessee's claim for deduction u/s 54 of the Act is also justified, i.e., the assessee is entitled to avail deduction u/s 54 of the Act in respect of the cost of the new flat. 10. Accordingly, we modify the order passed by Ld CIT (A) and restore the matters to the file of the assessing officer with the direction to compute the capital gain in terms of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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