Narsing Rao Kunchum, Hyderabad, Hyderabad V. ACIT,Circle-11(1) Hyderabad, Hyderabad

ITA 1300/HYD/2016

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2495 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 07-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: P V SUBBA RAJU
• Assessee Lawyers: V SIVA KUMAR
• Keywords: Reopening of assessment; Capital asset
• Section: 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 1300/HYD/2016 ASSESSMENT YEAR: 2009-10 DR. K. NARSING RAO, HYDERABAD [PAN: ADFPK1195E] VS ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI V. SIVA KUMAR, AR FOR REVENUE : SHRI P.V. SUBBARAJU, DR DATE OF HEARING : 01-02-2018 DATE OF PRONOUNCEMENT : 28-02-2018 O R D E R THIS IS AN APPEAL BY ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, HYDERABAD, DATED 27-07-2016 FOR THE AY. 2009-10. 2. BRIEFLY STATED, ASSESSEE IS A DOCTOR BY PROFESSIO N. HE FILED RETURN OF INCOME FOR THE AY. 2009-10 ON 28-0 7-2009 ADMITTING TOTAL INCOME AT RS. 2,71,569/-. HE DID NOT DE CLARE ANY INCOME UNDER THE HEAD CAPITAL GAINS THEREIN. SUBSEQUENTLY, A NOTICE U/S. 148 OF THE INCOME TAX ACT [ACT] DT. 17-12-2013 WAS ISSUED TO ASSESSEE. HE RESPONDED BY REQUESTING TO TREAT THE ORIGINAL RETURN AS FILED IN RESP ONSE TO THE NOTICE U/S. 148. ASSESSMENT WAS COMPLETED U/S. 14 3(3) R.W.S. 147 OF THE ACT ON 09-03-2015. I.T.A. NO. 1300/HYD/2016 :- 2 -: BACKGROUND OF THE CASE: 3. ASSESSEE PURCHASED A PLOT OF LAND MEASURING 266.67 SQ. YDS., SITUATED IN SY.NO.145, HYDERNAGAR V ILLAGE, BALANAGAR MANDAL, RANGAREDDY DISTRICT, ON 03-08-2005 FOR A CONSIDERATION OF RS.5,87,000/-. HE PAID ADVANCE OF R S. 2,00,000/- BY CHEQUE NO.593269 DT. 19-02-2001, ANOT HER RS. 2,00,000 BY CHEQUE NO.583942 DT. 26-02-2001, A FURT HER SUM OF RS.93,750/- BY CHEQUE NO.593942 DT. 21-3-2001 AN D BALANCE RS. 93,650/- BY CHEQUE NO.655068 DATED 29-07 -2005. TOTAL AMOUNT INCURRED ON PURCHASE OF THE PLOT WAS RS.6,42,765/- WHICH INCLUDED REGISTRATION FEE, STAMP D UTY AND USER CHARGES. 4. ASSESSEE ENTERED INTO A REGISTERED DEVELOPMENT AGREEMENT, ALONG WITH 17 OTHER PERSONS, ON 12-05-2008 , WITH M/S. DIAMOND INFRA, A FIRM OF DEVELOPERS AND BUILDE RS. AS PER THE DEVELOPMENT AGREEMENT, THE PLOT OWNERS WERE TO RECEIV E 50% OUT OF THE TOTAL BUILT UP AREA, INCLUDING COMMON ARE AS. THE SPADE WORK FOR PREPARATION OF PLANS AND GETTING AP PROVALS FROM MUNICIPAL AUTHORITIES WAS TO BE UNDERTAKEN BY THE DEVELOPER/BUILDER. THE DEVELOPER/BUILDER UNDERTOOK TO HAND OVER THE BUILT UP AREA WITHIN 30 MONTHS FROM THE DATE OF OBTAINING PERMISSION FOR CONSTRUCTION. GRACE PERIOD O F SIX MONTHS WAS PROVIDED FOR IN THE AGREEMENT. ASSESSEE DID NOT RECEIVE ANY ADVANCE MONEY OR DEPOSIT FROM THE DEVELO PER. HENCE IT WAS THE CONTENTION THAT NO CAPITAL GAINS AROSE IN THIS YEAR. I.T.A. NO. 1300/HYD/2016 :- 3 -: 5. THE AO DID NOT CONSIDER THE CONTENTIONS OF ASSESS EE AND HELD THAT THE DEVELOPER WAS WILLING TO PERFORM THE OBLIGATIONS CAST ON HIM CONSEQUENT TO ENTERING INTO THE DEVELOPMENT AGREEMENT. AO TOOK SUPPORT FROM THE DECISIO N OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT [365 ITR 249] (AP). AO ALSO OPINED THAT THE DECISION OF THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. VED PRAKASH RAKHRA [26 TAXMANN.COM 166] (KAR) SUPPORTS THE VIEW THAT THE COST ARRIVED AT AND MENTIO NED IN THE DEVELOPMENT AGREEMENT CONSTITUTES THE EXCHANGE VA LUE AND HE ADOPTED THE SAME AS THE FULL VALUE OF CONSIDER ATION. THE COST OF THE PLOT OF 266.67 SQ.YDS WORKED OUT TO RS.6,42 ,765/-. AO DEDUCTED THE ENTIRE COST THOUGH ONLY 50% OF THE COST OF THE SAID PROPERTY FALLS FOR CONSIDERATION AS COST IN COMP UTATION OF CAPITAL GAIN. HE DETERMINED SHORT TERM CAPITAL GAINS A T RS. 25,41,380/- AND ADDED THE SAME TO THE INCOME DECLARED BY THE ASSESSEE. TAX DEMAND OF RS.15,24,223/- WAS RAISED. 6. AGGRIEVED BY THE ASSESSMENT, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (APPEALS), WHO DISMISSED THE AP PEAL HOLDING THAT THE DATE OF DEVELOPMENT AGREEMENT IS THE DA TE OF INCIDENCE OF CAPITAL GAIN. LD.CIT(A) RELIED UPON THE DECISION OF THE HON'BLE HIGH COURT OF A.P IN THE CASE OF POTLA NAG ESWARA RAO VS. DCIT (SUPRA) AND ALSO ON THE DECISIONS IN T HE CASES OF CHATURBHUJ DWARAKADAS KAPADIA VS. CIT [260 ITR 491] BOM HC AND JASBIR SINGH SARKARIA IN RE [294 ITR 491] (A AR). 7. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE FI LED APPEAL IT WAS SUBMITTED THAT ASSESSEE ENTERED INTO A I.T.A. NO. 1300/HYD/2016 :- 4 -: DEVELOPMENT AGREEMENT AS PER WHICH THE PROPERTY WHICH WAS THE SUBJECT MATTER OF DEVELOPMENT WAS NOT HANDED OVER TO THE DEVELOPER/BUILDER. HE DID NOT RECEIVE EITHER ANY ADVA NCE MONEY OR PART CONSIDERATION EITHER AT THE TIME OF DEVELOP MENT AGREEMENT OR THEREAFTER. THE DEVELOPER/BUILDER DID NO T HONOUR THE TERMS OF THE DEVELOPMENT IN THAT THE PROJECT WAS NOT COMPLETED EVEN MORE THAN SIX YEARS AFTER THE DATE OF DEVELOPMENT AGREEMENT AS IS ACKNOWLEDGED BY THE DEVELO PER /BUILDER. 8. LD. COUNSEL FOR ASSESSEE RELIED UPON THE DECISIO N OF THE CO-ORDINATE BENCH DECISION OF ITAT, HYDERABAD IN THE CASE OF ABVS PRAKASH VS. ACIT CEN-1 IN ITA NO. 462/HYD/2 013 DATED 27-02-2014 WHEREIN, ACKNOWLEDGING THE FACT THAT POSSESSION WAS NOT HANDED OVER TO THE DEVELOPER BY TH E SAID ASSESSEE AND RELYING UPON THE DECISION IN THE CASE OF MRS. K. RADHIKA VS. DCIT [47 SOT 180] HYD, IT WAS HELD THAT T RANSFER DID NOT TAKE PLACE IN THE YEAR OF DEVELOPMENT AGREEMEN T. FINALLY, LD. COUNSEL FOR ASSESSEE PRAYED FOR DELETIO N OF THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD.CIT(A). 8.1. LD. COUNSEL ALSO CONTENDED THAT JUDGMENT OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT (SUPRA) IS DISTINGUISHABLE. HE ARGUED THAT THE FACTS OF THE CASE OF THE ASSESSEE ARE COMPLETELY DIFFERENT THAN THAT OF THE FACTS OF CASE OF SRI POTLA NAGE SWARA RAO VS. DCIT (SUPRA). IN THE CASE OF SRI POTLA NAGES WARA RAO VS. DCIT (SUPRA), THE HON'BLE HIGH COURT WAS ONLY D EALING WITH THE QUESTION IN RESPECT OF INCIDENCE OF CAPITAL GAINS B ASING ON I.T.A. NO. 1300/HYD/2016 :- 5 -: PASSING OF CONSIDERATION. IN THE CASE OF SRI POTLA NAG ESWARA RAO VS. DCIT (SUPRA), ON THE ISSUE OF TRANSFER OF POS SESSION OF LAND AND PERFORMANCE OF CONTRACT THERE WERE NO DISPUTE S. THE JUDGMENT OF THE HON'BLE HIGH COURT WAS ONLY RESTRICTED I N RESPECT OF CONSIDERATION IN CASE OF JDA. HOWEVER, IN THE PRESENT CASE, THE DISPUTE IS WITH RESPECT TO TRANSFER OF POSSESSION OF PROPERTY AND PERFORMANCE OF THE CONTRAC T. THEREFORE, THE RELIANCE PLACED BY THE AUTHORITIES ON TH E JUDGMENT OF HON'BLE HIGH COURT IS COMPLETELY MISPLACE D . 8.2. LD. COUNSEL FURTHER CONTENDED REFERRING TO THE ADDITIONAL GROUND RAISED, THAT IN VIEW OF THE AMENDED PROVISIONS OF SECTION 45(5A) BY THE FINANCE ACT, 2017 , THE TAXATION OF CAPITAL GAIN IN CASE OF JOINT DEVELOPMENT AG REEMENT ARISES IN THE YEAR IN WHICH THE LAND OWNER RECEIVES H IS SHARE OF PROPERTY FROM THE BUILDER AND SAME IS APPLICABLE RETROSPECTIVELY. HENCE, THERE IS NO CAPITAL GAIN ARISE TO ASSESSEE IN THE YEAR UNDER CONSIDERATION AS THERE IS NOTHING REC EIVED FROM THE BUILDER. IN THIS REGARD LD. COUNSEL PLACED RELIANCE ON THE CASE LAW OF ANSAL LAND MARK TOWNSHIP (P.) LTD VID E [2015] 61 TAXMANN.COM 45 (DELHI). 9. LD.DR, HOWEVER, SUBMITTED THAT ASSESSEE HAS GIVEN POSSESSION OF THE PROPERTY ALSO DURING THE YEAR AND B Y WHICH, THE DEVELOPER HAS TAKEN POSSESSION, OBTAINED PERMISSIO NS AND CONSTRUCTED THE FLATS ALSO, THEREFORE, THERE IS NO MERIT IN THE CONTENTIONS NOW RAISED. I.T.A. NO. 1300/HYD/2016 :- 6 -: 9.1. LD.DR, HOWEVER, OBJECTED THE CONTENTIONS OF LD.A R AND PLACED RELIANCE ON THE FOLLOWING CASE LAW: I. JUDGMENT OF THE HON'BLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF POTLA NAGESWARA RAO VS. DY.CIT [365 IT R 249] (AP); II. JUDGMENT OF THE HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF PARAMJIT SINGH VS. ITO [323 ITR 588] (PUNJAB & HARYANA); 9.2. WITH REFERENCE TO NEW PROVISIONS INTRODUCED IN SECTION 45(5A), IT WAS THE SUBMISSION THAT THE PROVISION IS APPLICABLE W.E.F. 01-04-2018. THEREFORE, THE SAME CA NNOT BE MADE APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR AS I T WAS NOT CLARIFICATORY PROVISION BUT A SUBSTANTIVE PROVIS ION INTRODUCED FOR THE FIRST TIME. 9.3. QUESTION WAS RAISED WITH REFERENCE TO PERIOD OF HOLDING IT WAS THE SUBMISSION THAT ASSESSEE HAS ORI GINALLY ENTERED INTO AGREEMENT AND PAID ADVANCES TO SRI BALASW AMI. BUT DUE TO INTERNAL ADJUSTMENTS BETWEEN THE FAMILY, THE PROPERTY WAS ULTIMATELY SOLD BY ANOTHER PERSON AND THE RECITALS CLEARLY INDICATE THE ABOVE NATURE. IT WAS SUBMITTED THAT ADVANCES WERE PAID MUCH EARLIER TO REGISTRATION AND TH EREFORE, AO WAS NOT CORRECT IN HOLDING THE PERIOD FROM THE DATE OF ACTUAL REGISTRATION, WHEREAS ASSESSEE WAS IN POSSESSIO N OF THE PROPERTY MUCH BEFORE. IT WAS FAIRLY ADMITTED THAT THESE ASPECTS WERE NOT EXAMINED BY THE AO. FURTHER, IT WAS ALSO CONT ENDED THAT THE VALUATION ADOPTED ON THE BASIS OF THE DEVELOPME NT AT I.T.A. NO. 1300/HYD/2016 :- 7 -: THE TIME OF COMPLETION CANNOT BE CONSIDERED AS VALUE F OR BRINGING TO TAX THE CAPITAL GAIN AT THE TIME OF ENTERIN G JDA AND ON TRANSFER OF 50% OF LAND, IT WAS ALSO CONTENDED THAT AO WRONGLY CONSIDERED THE ENTIRE VALUE RATHER THAN 50% SHA RE OF THE LAND. 10. I HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUS ED THE MATERIAL PLACED ON RECORD AND CASE LAW RELIED ON . WHILE COMPLETING THE ASSESSMENT, AO CONSIDERED THE PERIOD OF HOLDING OF THE PROPERTY TO BE LESS THAN 36 MONTHS AND THE GAINS AROSE IN THIS TRANSACTION WAS CONSIDERED AS S HORT TERM ONLY. FURTHER, WHILE VALUING THE PROPERTY TRANSFERRED , THE AO HAS CONSIDERED THE ENTIRE 267 SQ. YDS., ENTERED INTO A GREEMENT BY ASSESSEE, IGNORING THE FACT THAT ONLY 50% OF THE AB OVE WAS TRANSFERRED, WHEREAS ASSESSEE RETAINED THE BALANCE OF 50%. TO THAT EXTENT, THE ORDER OF AO IS TO BE MODIFIED. 10.1. COMING TO THE VALUATION ALSO, THE VALUATION TAKE N BY THE AO AT THE DATE OF HIS SURVEY AND AT THE TIME OF COMPLETION OF PROJECT CANNOT BE BASIS FOR CONSIDERING THE SALE CONSIDERATION ON THE DATE OF DEVELOPMENT AGREEMENT. TH ESE ASPECTS WILL BE CONSIDERED AT A LATER POINT OF TIME. 10.2. AS FAR AS THE ISSUE OF BRINGING TO TAX THE CA PITAL GAINS DURING THE YEAR, IT WAS THE CONTENTION OF ASSESSE E THAT POSSESSION WAS NOT GIVEN AND ASSESSEE RETAINED POSSES SION OF THE PROPERTY THEREBY THE CAPITAL GAINS ARISES IN THE YE AR IN WHICH THE NEW FLATS WERE HANDED OVER. LD. COUNSEL I N HIS ARGUMENTS, ELABORATELY READ OUT VARIOUS PORTIONS OF THE I.T.A. NO. 1300/HYD/2016 :- 8 -: AGREEMENT TO SUBSTANTIATE ASSESSEES CLAIM, WHEREAS THE L D.DR RELIED ON VARIOUS OTHER CLAUSES TO STATE THAT POSSESSION WAS HANDED OVER. AS FAR AS THE DEVELOPMENT AGREEMENT IS CONCERNED, IT IS NOTICED THAT ASSESSEE DID PERMIT M/S. DIAMOND INFRA TO ENTER INTO THE PREMISES, DO ALL THE NECESSARY THINGS FOR CONSTRUCTION OF APARTMENTS. IT IS THE COMMON AGREEMENT BY MANY PEOPLE, WHO HAS PURCHASED LANDS/PLOTS IN THE DE VELOPED AREA. IT IS ALSO NOTICED THAT THE SAID ASSESSEE WENT TO CONSTRUCT THE APARTMENTS AND HAND OVER THE FLATS AS PER THE SCHEDUL E TO THE RESPECTIVE PERSONS, INCLUDING ASSESSEE. SOME OF TH E AGREEMENT HOLDERS ALSO SOLD THE FLATS IN SEMI-FINISHE D CONDITION OR IN FULLY DEVELOPED CONDITION, WHEREAS FEW LIKE AS SESSEE RETAINED THE FLATS AS SUCH. THEREFORE, I AM OF THE OPI NION THAT ASSESSEE DID HAND OVER THE POSSESSION AND PROVISIONS OF SECTION 2(47) REGARDING TRANSFER CERTAINLY GET ATTRACTED. SINCE THERE IS PART PERFORMANCE OF THE CONTRACT IN THE NATURE RE FERRED TO IN SECTION 53 OF TRANSFER OF PROPERTY ACT, 1882, CL AUSE(V) OF SECTION 2(47) IS CLEARLY ATTRACTED. THEREFORE, I AGREE WITH THE STAND OF AO THAT THE CAPITAL GAINS DID ARISE DURING THE YEAR UNDER CONSIDERATION AS THE AGREEMENT WAS ENTERED ON 12 -05- 2008. ACCORDINGLY, THE ISSUE OF BRINGING TO TAX THE CA PITAL GAINS DURING THE YEAR IS TO BE UPHELD. EVEN THOUGH L D. COUNSEL TRIED TO DISTINGUISH THE JURISDICTIONAL HIGH COU RT JUDGMENT IN THE CASE OF SRI POTLA NAGESWARA RAO VS. DC IT (SUPRA) THAT IT APPLIES TO A CASE, WHERE THERE IS NO SAL E CONSIDERATION AND THE ISSUE IS ON NON-RECEIPT OF SALE CONSIDERATION. I DO NOT AGREE WITH THAT AS THE ISSUE OF TRANSFER IN THE CASE OF DEVELOPMENT AGREEMENT AND CONSEQUENT LE VY OF CAPITAL GAIN IN THE YEAR OF ENTERING INTO DEVELOPMENT AGREEMENT I.T.A. NO. 1300/HYD/2016 :- 9 -: HAS BEEN CRYSTALISED BY THE SAID JUDGMENT OF THE JURISD ICTIONAL HIGH COURT IN THE CASE OF SRI POTLA NAGESWARA RAO VS. DCIT (SUPRA). ACCORDINGLY, I AGREE WITH THE ORDER OF THE CI T(A), CONFIRMING THE CAPITAL GAINS DURING THE YEAR. 10.3. ONE OF THE ARGUMENTS RAISED BY THE LD. COUNSEL IS THAT NEW SECTION 45(5A) HAS BEEN INTRODUCED WHICH DEFE RS THE CAPITAL GAINS TO THE YEAR OF COMPLETION OF THE PROJEC T BY THE FINANCE ACT, 2017. THIS BEING SUBSTANTIVE PROVISION, I AM OF THE OPINION THAT THIS CANNOT BE APPLIED TO THE DEVELOPMEN T AGREEMENT ENTERED INTO EARLIER, IN WHICH 2(47)(V) WO ULD CERTAINLY GET ATTRACTED. IN VIEW OF THAT, I REJECT THE CONTEN TION AND UPHOLD THE TAXABILITY OF THE CAPITAL GAINS IN THE YE AR UNDER CONSIDERATION. 10.4. HOWEVER, THE MATTER DOES NOT END THERE. THERE A RE TWO ISSUES WHICH REQUIRE FURTHER CONSIDERATION. ONE I S THAT WHETHER PROPERTY IS HELD FOR SUFFICIENT PERIOD SO AS TO ATTRACT SHORT TERM CAPITAL GAIN OR LONG TERM CAPITAL GAIN. THE OTHER IS THE VALUATION OF THE FULL VALUE OF CONSIDERATION. A S FAR AS THE HOLDING PERIOD OF THE IMPUGNED PROPERTY IS CONCERNE D, IT IS THE CONTENTION OF ASSESSEE THAT THEY HAVE PAID ADVANCES MUCH EARLIER AND TOOK POSSESSION ALSO WHEREAS REGISTRATION WAS COMPLETED ON 03-08-2005. IT IS NOT CORRECT ON THE PART OF AO TO CONSIDER THE DATE OF REGISTRATION ALONE AS THE DATE OF O BTAINING THE PROPERTY. THERE ARE VARIOUS JUDICIAL PRINCIPLES SUPPORTING THE CONTENTIONS THAT REGISTRATION IS ONLY A CONCLUSIVE EVI DENCE BUT OWNERSHIP CAN BE OBTAINED MUCH EARLIER ALSO. AS SEEN FROM THE PURCHASE DEED ALSO, THERE ARE RECITALS THAT SH RI BALA I.T.A. NO. 1300/HYD/2016 :- 10 -: SWAMY, FATHER OF VENDOR HAS HIMSELF DEVELOPED THE PRO PERTY AND THEN OBTAINED PERMISSIONS BUT LATER ON MADE FOUR GI FT SETTLEMENTS TO HIS SON AND AFTER OBTAINING HUDA PERMISSIO NS, HAS REGISTERED THE PROPERTY ON THAT DATE. EVEN THOUGH T HE RECEIPT OF SALE CONSIDERATION DATE-WISE HAS NOT MENTIONE D, IT IS THE CONTENTION THAT ASSESSEES HAVE PAID THE AMOUNTS MUCH EARLIER ALSO. THIS ASPECT HAS NOT BEEN EXAMINED BY TH E AO AT ALL. THEREFORE, IN THE INTEREST OF JUSTICE, I AM OF THE OPINION THAT THE ISSUE OF HAVING POSSESSION OF THE PROPERTY AT THE TIME OF PURCHASE OF PROPERTY BY ASSESSEE, BEFORE REGISTRA TION IS TO BE EXAMINED IN THE LIGHT OF THE PAYMENTS MADE BY ASSESSEE, PERMISSIONS OBTAINED FROM HUDA ETC., SO THAT THE ISSUE C AN BE FINALLY CONCLUDED ON FACTS WHETHER THE PROPERTY HAS TO BE CONSIDERED AS LONG TERM CAPITAL ASSET OR SHORT TERM CAP ITAL ASSET. THEREFORE, THIS ISSUE IS RESTORED TO THE FILE O F AO TO EXAMINE, AFTER GIVING DUE OPPORTUNITY TO ASSESSEE. 10.5. NEXT ISSUE TO BE CONSIDERED IS THE FULL VALUE O F CONSIDERATION, FOR COMPUTATION OF CAPITAL GAINS. AS PE R THE AGREEMENT, ASSESSEE HAS PARTED WITH ONLY 50% OF THE IM PUGNED PROPERTY. HOWEVER, AO HAS TAKEN THE COST OF CONSTRUCTIO N OF THE PROPERTIES WHICH ARE GIVEN IN LIEU AT THE TIME OF CO MPLETION OF THE PROJECT AND GAVE CERTAIN DISCOUNT SO THAT THE VALUE IS FIXED AT RS.1054/ PER SFT. THIS IS NOT A CORRECT METHOD . SINCE THE AGREEMENT WAS ENTERED INTO IN MAY, 2008 EITHER THE C OST OF THE LAND [AT 50% OF 266.66 SQ. YDS.,] SHOULD HAVE BEE N CONSIDERED FOR FULL VALUE OF CONSIDERATION OR THE PR OBABLE VALUE OF THE COST OF CONSTRUCTION ON THAT DATE HAS TO BE CONSI DERED. IT IS NOT PROPER ON THE PART OF THE AO TO CONSIDER THE SUBSE QUENT I.T.A. NO. 1300/HYD/2016 :- 11 -: COST WHICH MAY INVOLVE ESCALATION OF COST FROM 2008 TO 2013. THEREFORE, I DIRECT THE AO TO CONSIDER THE PROBABLE CO ST OF CONSTRUCTION AS ON MAY 2008 OR THE SRO VALUE OF THE LAN D-IN- QUESTION ON THE DATE OF AGREEMENT SHOULD BE CONSIDERED AS FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS ON THE TRANSFER OF 50% OF THE LAND HOLDING FOR DEVELOPMENT. THEREFORE, WHILE UPHOLDING THE REOPENING OF ASSESSMENT AND ALSO BRINGING TO TAX THE CAPITAL GAINS IN THE IMPUGNED YEAR, THE ISSUE WHETHER THE LAND IS SHORT TER M CAPITAL ASSET OR LONG TERM CAPITAL ASSET AND THE VALUE FO R CONSIDERING THE CAPITAL GAINS COMPUTATION IS RESTORED TO THE FILE OF AO FOR FRESH EXAMINATION. NEEDLESS TO SAY THAT ASSE SSEE SHOULD BE GIVEN DUE OPPORTUNITY. FOR THIS PURPOSE, THE ORDER OF AO AND CIT(A) ON THE ABOVE ISSUES ARE SET ASIDE TO THE RE-DONE AS PER THE FACTS AND LAW. IN CASE THE PROPERTY WAS HE LD TO BE LONG TERM CAPITAL ASSET, ASSESSEE MAY BE ELIGIBLE FOR CONSEQUENT BENEFIT U/S. 54/54F OF THE ACT, WHICH SHOULD BE CONSID ERED ON THE FACTS OF THE CASE. ASSESSEE IS FREE TO RAISE NECES SARY ARGUMENTS IN THIS REGARD BEFORE THE AO. GROUNDS OF ASS ESSEE ARE CONSIDERED PARTLY ALLOWED FOR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL OF ASSESSEE IS CONSIDER ED PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH FEBRUARY, 2018 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 28 TH FEBRUARY, 2018 TNMM I.T.A. NO. 1300/HYD/2016 :- 12 -: COPY TO : 1. DR. K. NARSING RAO, C/O. PLOT NO. A-30, 8-3-222/ C/134, MADURA NAGAR, HYDERABAD. 2. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-11( 1) , HYDERABAD. 3. CIT (APPEALS)-5, HYDERABAD. 4. PR.CIT-5, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.