Mr. Vivekanand Padegal, Bengaluru V. Assistant Commissioner of Income Tax, Circle-7(2)(1), Bengaluru

ITA 923/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7139 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-09-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUNDAR R AJAN CIT BENGALURU
• Assessee Lawyers: S RAMASUBRAMANIAN
• Keywords: Capital asset; Fair market value; Capital Gains
• Section: 133(6); 2; 92

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI , JUDICIAL MEMBER ITA NO S . 9 2 3 /BANG/20 1 8 ASSESSMENT YEAR : 2013-14 SHRI. VIVEKANAND PADEGAL, #163/25, 37 TH CROSS, 7 TH MAIN, 5 TH BLOCK, JAYANAGAR, BENGALURU 560 041. PAN : A AU P P 559 9 F VS. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE 7(2)(1) BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SHRI. S. RAMASUBRAMANIAN, CA REVENUE BY : SHRI. SUNDAR RAJAN, ADDL. CIT (DR)(ITAT), BENGALURU DATE OF HEARING : 03 .0 9 .2020 DATE OF PRONOUNCEMENT : 03 .0 9 .2020 O R D E R PER A. K. GARODIA, ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME IS DIRECTED AGAINST ORDER OF LEARNED CIT(A)-7, BENGALURU, DATED 25.10.2017, FOR ASSESSMENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER: 1. THAT THE ORDER PASSED BY THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) IN SO FAR IT IS PREJUDICIAL TO THE INTERESTS OF THE APPELLANT IS BAD AND ERRONEOUS IN LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN HOLDING THAT THE COST OF CONSTRUCTION INCURRED BY THE ITA NO. 923/BANG/2018 PAGE 2 OF 5 DEVELOPER SHOULD BE TAKEN AS THE FULL VALUE OF CONSIDERATION ACCRUED OR ARISING AS A RESULT OF TRANSFER OF THE LAND. 3. THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN LAW AND ON FACTS IN NOT ADOPTING THE GUIDANCE VALUE FOR THE LAND TRANSFER TO THE DEVELOPER AS THE FULL VALUE OF CONSIDERATION AS PER S.50D OF THE ACT. 4. WITHOUT PREJUDICE TO GROUNDS NO. 2 AND 3 ABOVE, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE DISCOUNTED THE COST OF CONSTRUCTION TO THE PRESENT VALUE AS ON DATE OF ENTERING INTO JDA AND SUCH A VALUE HAS TO BE ADOPTED AS FULL VALUE OF CONSIDERATION. EACH OF THE ABOVE GROUNDS IS WITHOUT PREJUDICE TO ONE ANOTHER AND THE APPELLANT CRAVES LEAVE OF THE HON'BLE INCOME TAX APPELLATE TRIBUNAL TO ADD, DELETE, AMEND OR OTHERWISE MODIFY ONE OR MORE OF THE ABOVE GROUNDS EITHER BEFORE OR AT THE TIME OF HEARING OF THIS APPEAL. 3. IN THE COURSE OF HEARING, IT WAS SUBMITTED BY LEARNED AR OF THE ASSESSEE THAT IN THE PRESENT CASE, IT IS THE CASE OF THE ASSESSEE THAT FOR COMPUTING LONG TERM CAPITAL GAIN (LTCG) IN RESPECT OF THE SALE OF LAND GIVEN FOR JOINT DEVELOPMENT, GUIDANCE VALUE OF THE LAND @ RS.3,200/- PER SQ. FT. ON THE DATE OF JOINT DEVELOPMENT AGREEMENT SHOULD BE ADOPTED AND THE ASSESSEE HAS FILED THE RETURN OF INCOME BY DECLARING LTCG OF RS.35,85,121/- ON THIS BASIS BUT THE AO HAS OBTAINED INFORMATION UNDER SECTION 133(6) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED THE ACT) FROM THE DEVELOPERS REGARDING COST OF CONSTRUCTION BY THE DEVELOPER AND AS PER LETTER DATED 08.03.2015, THE DEVELOPER INTIMATED TO THE AO THAT COST OF RS.1575/- PER SQ. FT. WAS INCURRED BY THE DEVELOPER AND THE AO COMPUTED THE CAPITAL GAIN ON THIS BASIS. HE PLACED RELIANCE ON THE FOLLOWING TRIBUNAL ORDERS IN SUPPORT OF HIS CONTENTION THAT GUIDANCE VALUE OF LAND SHOULD BE ADOPTED: ITA NO. 923/BANG/2018 PAGE 3 OF 5 (A) ACIT VS. SHANKAR VITTAL MOTOR CO. [ TS - 5405 -ITAT- 2016 ( BANGALORE ), COPY AVAILABLE ON PAGES 26 TO 31 OF THE PAPER BOOK. (B) ACIT VS. SAROJINI M KUSHE [TS-5660-ITAT-2016(BANGALORE)], COPY AVAILABLE ON PAGES 32 TO 36 OF THE PAPER BOOK. (C) G.S. SATHYANARAYAN GUPTA VS. ITO IN ITA NO.1323/BANG/2016 DATED 17.10.2016, COPY AVAILABLE FROM PAGES 37 TO 41 OF THE PAPER BOOK. 4. THEREAFTER HE POINTED OUT THAT IN PARA 5.1 OF HIS ORDER, LEARNED CIT(A) HAS DECIDED THE ISSUE BY FOLLOWING ANOTHER TRIBUNAL ORDER RENDERED IN THE CASE OF ITO VS. N. S. NAGARAJ AS REPORTED IN 52 TAXMANN.COM 511 (BANG), COPY AVAILABLE ON PAGES 42-48 OF THE PAPER BOOK. HE POINTED OUT THAT IN THIS CASE, THE ASSESSMENT YEAR INVOLVED WAS ASSESSMENT YEAR 2007-08 BUT IN THE PRESENT CASE, THE ASSESSMENT YEAR INVOLVED IS ASSESSMENT YEAR 2013-14 AND THERE IS AN AMENDMENT IN THE INCOME TAX ACT W.E.F. 01.04.2013 I.E. RELEVANT TO A. Y. 2013-14 BY WAY OF INSERTION OF A NEW SECTION I.E., SECTION 50D BY FINANCE ACT, 2012, AS PER WHICH IT IS PROVIDED THAT IF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF A CAPITAL ASSET BY AN ASSESSEE IS NOT ASCERTAINABLE OR CANNOT BE DETERMINED, THEN, FOR THE PURPOSE OF COMPUTING INCOME CHARGEABLE TO TAX AS CAPITAL GAINS, THE FAIR MARKET VALUE OF THE SAID ASSET ON THE DATE OF TRANSFER SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. HE FURTHER SUBMITTED THAT IN THE PRESENT CASE, THE JDA WAS ENTERED ON 05.12.2012 AND THEREFORE, THE TRANSFER HAS TAKEN PLACED ON THIS DATE AND THE CONSIDERATION TO BE RECEIVED BY THE ASSESSEE IS 50% OF THE SUPER BUILT UP AREA OF COMMERCIAL COMPLEX, ETC., TO BE CONSTRUCTED BY THE BUILDER AND THEREFORE, IN THE YEAR OF TRANSFER OF THE ASSET, SUCH COST OF CONSTRUCTION CANNOT BE DETERMINED BECAUSE ITA NO. 923/BANG/2018 PAGE 4 OF 5 THE CONSTRUCTION WILL TAKE PLACE IN FUTURE AND THEREFORE, SECTION 50D OF THE ACT BECOMES APPLICABLE. ACCORDINGLY, THE STAND OF THE ASSESSEE THAT GUIDANCE VALUE OF THE LAND TRANSFERRED BY THE ASSESSEE TO BE ADOPTED AS CONSIDERATION RECEIVED BY THE ASSESSEE SHOULD BE ACCEPTED. 5. AS AGAINST THIS, LEARNED DR OF THE REVENUE SUPPORTED THE ORDERS OF CIT(A) AND AO AND HE POINTED OUT THAT THE ASSESSMENT ORDER IS DATED 28.03.2016 AND IT IS NOTED BY THE AO ON PAGE 2 OF THE ASSESSMENT ORDER THAT REPLY IS RECEIVED FROM THE BUILDER AS PER LETTER DATED 08.03.2016 AS PER WHICH COST OF CONSTRUCTION WAS INTIMATED BY THE BUILDER AT RS.1575/- PER SQ. FT. AND THEREFORE, THE COST OF CONSTRUCTION IS AVAILABLE AND HENCE, SECTION 50D OF THE ACT IS NOT APPLICABLE. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND WE FIND THAT IN THE FACTS OF THE PRESENT CASE, SECTION 50D OF THE ACT IS APPLICABLE BECAUSE THE CONSIDERATION TO BE RECEIVED BY THE ASSESSEE IS 50% OF SUPER BUILT UP AREA IN THE FORM OF COMMERCIAL COMPLEX ETC. TO BE CONSTRUCTED BY THE BUILDER AND THEREFORE, SUCH COST OF CONSTRUCTION TO BE CONSTRUCTED IN FUTURE CANNOT BE DETERMINED IN THE YEAR OF TRANSFER AND HENCE, UNDER THESE FACTS, SECTION 50D OF THE ACT IS APPLICABLE AND THEREFORE, THE STAND OF THE ASSESSEE DESERVES TO BE ACCEPTED AS PER WHICH THE ASSESSEE HAS COMPUTED THE LONG TERM CAPITAL GAIN BY ADOPTING GUIDANCE VALUE OF THE LAND AT RS.3,200/- PER SQ. FT. TRANSFERRED BY THE ASSESSEE TO THE BUILDER AND THE STAND OF THE AO IS NOT ACCEPTABLE. HENCE, WE DECIDE THE ISSUE IN FAVOUR OF THE ASSESSEE. 7. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE. SD/- SD/- ( BEENA PILLAI ) (A.K. GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED: 04 TH SEPTEMBER, 2020. /NS/* ITA NO. 923/BANG/2018 PAGE 5 OF 5 COPY TO: 1. APPELLANTS 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.