SRI NALIN RANJAN,JAMSHEDPUR vs. ITO WD-1(3), JSR

per sq.ft and the same has been accepted by the department. He also

submitted that the registry rate of flat in the month of November, 2013 was

Rs.2502/-sq.ft and as such by no means the cost of acquisition at Rs.750/-

per sq.ft should be taken for just two months back.

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case. It is an undisputed fact that assessee alongwith Smt. Brinda Devi

(now deceased) entered into a Development agreement with M/s. Swastik

Gautam Developers measuring 4.5 katha of land on 4.2.2010. In lieu of

such agreement, the assessee was allotted some flats. The assessee sold

(Flat 1C) on 9.11.2013 for a consideration of Rs.9,10,000/- but the stamp

duty authority has assessed the value for the purpose of stamp duty at

Rs.24,40,000/-. Therefore, the Assessing Officer worked out the short term

capital gains on sale of flat at Rs.17,08,750/-. On appeal, the CIT(A)

directed the Assessing Officer to recalculate the capital gains by observing

as under:

‘ I have gone through the order of the AO as well as the written submission made by the appellant. I have gone through the section 45(2) of the I.T.Act, which reads as under:

‘(2) Notwithstanding anything contained in sub-section (1), the profits or gains arising from the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock-in-trade of a business carried on by him shall be chargeable to income-tax as his income of the previous year in which such stock-in-trade is sold or otherwise transferred by him and, for the purposes of section 48, the fair market value of the asset on the date of such conversion or treatment shall be deemed to be the full value of the consideration received or accruing as a result of the transfer of the capital asset.]

From the plain reading of the section, it is clear that capital gain is chargeable in the year in which such conversion took place and capital gain is charged u/s.48 accordingly. In the instant case the conversion took place on 4.2.2010 as per the agreement entered into by and between developer and the assessee. Accordingly, the capital gain whether short term or long term depending upon period of holding is chargeable in A.Y. 2010-2011, which has not been taken either by the assessee or charged by the revenue. Hence, the AO

P a g e 5 | 7 resorted to charge the same in the year 2014-15 i.e. the relevant period on which flat was actually acquired and sold giving rise to capital gain. The AO adopted value as per applicable for A.Y. 2010- 2011 taking only cost of construction. Had it not been taken, the assessee’s cost is only cost of land which when adopted, there would be higher capital gain. Then value adopted by the AO is justified as on 4.2.2010. The flat has been sold on 19.11.2013 whereas the date of agreement for development is 4.2.2010. Thus, the period of holding is more than 36 months. Hence, the AO is directed to calculate long term capital gain on such transaction after giving cost inflation index to the assessee. The addition made by the AO is to be recalculated as long term capital gain.’

consideration in the year 2010 at the time of development agreement at

Rs.750/- but the flat was sold in the year 2013. Another point raised by the

ld A.R. of the assessee is that in the assessment year 2016-17, the

assessee has sold the flat at a price of Rs.2450/- per sq.ft and the same

has been duly accepted by the department is not a ground to consider to

calculate the indexed cost at Rs.2235/- in the year 2013. The findings of the

CIT(A) that the flat has been sold on 19.11.2013 whereas the date of

agreement for development is 4.2.2010 and thus, the period of holding is

more than 36 months. Hence, he directed the AO to calculate long term

capital gain on such transaction after giving cost inflation index to the

assessee. The addition made by the AO is to be recalculated as long term

capital gain. This findings of the CIT(A) is not controverted by ld A.R. of the

assessee. Since, the CIT(A) has directed the AO to calculate the capital

gains after giving cost inflation index to the assessee, we do not find any

infirmity in the order of the CIT(A), which is hereby confirmed. Accordingly,

grounds of appeal of the assessee are rejected.

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Order pronounced on 29/08/2019. Sd/- sd/- (Chandra Mohan Garg) (Laxmi Prasad Sahu JUDICIALMEMBER ACCOUNTANT MEMBER

Ranchi; Dated 29 /08/209 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Sri Nalin Ranjan, D-41, Phase-V, Vijaya Heritage, Uliyan, Kadma, Jamshedpur

Sr. Pvt. Secretary, ITAT, Cuttack camp at Ranchi

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