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Income Tax Appellate Tribunal, ‘A’ BENCH : BANGALORE
Before: SHRI. B.R. BASKARAN & SMT. BEENA PILLAI
ORDER
PER BEENA PILLAI, JUDICIAL MEMBER Present appeal is filed by assessee against order dated 18/10/2019 passed by the Ld. CIT(A)-7 , Bangalore on following grounds of appeal: Tax Effect relating Grounds of Appeal to each Ground of appeal
1. The learned CIT(A) erred in passing General the order in the manner he did. The learned CIT(A) ought to have appreciated the fact that the Appellant has agricultural land converted for residential use and given under the JDA agreement for Rs.73,93,008/- 2. development of residential sites. For purposes of calculating long term capital gain on the land transferred to the developer, the rate to be adopted was Rs.202/- per sq.ft. and not Rs.600/-which was the rate for Page fully developed residential site adopted by the assessing officer in the assessment order. This is bad in law and therefore the rate adopted has to be reduced as per the guideline rate fixed. The learned CIT(A) ought to have appreciated that the guidance value where agricultural land converted for developing residential sites in Bengaluru Rural District has been fixed at guidance
3. Rs.73,93,008/ - value of agricultural land per acre plus 60% for conversion charges, the rate which was worked out by the Appellant is Rs.202/ - per sq.ft. and accordingly the said rate has to be allowed for calculation of LTCG. The learned CIT(A) ought to have appreciated that the Appellant's value was fully supported by a 4. Rs.73,93,008/ - comparable case and accordingly the value as declared ought to have been allowed. Without prejudice, the addition 5. confirmed is excessive, arbitrary Rs.73,93,008/- and ought to be deleted. The learned CIT(A) erred in confirming the levy of interest under 6. -- Sections 234A, 234B 86234C of the Act. For these and such other grounds that may be urged at the time of 7. hearing of the appeal, the Appellant General prays that the appeal may be allowed. TOTAL TAX EFFECT Rs.73,93,008/-
2. Brief cats of the case are as under: Assessee is an individual and filed his return of income for year under consideration on 19/02/2016 declaring total income of Rs.8,55,800/-.The return was selected under CASS for scrutiny and notice under section 143(2) along with 143(1) of the Act were issued to assessee. In response to the statutory notices, the Page Ld.AO and filed requisite details as called for.
The Ld.AO observed that assessee derives income from business and had leased a Bar and restaurant. During the year assessee shown income from business of Rs.10,05,800/-. The Ld.AO also noted that assessee deposited cash of Rs.1,03,02,000/- in the savings bank account. The Ld.AO called on assessee to furnish details of the cash deposits.
The Ld.AO also noted that assessee entered into an agreement to sell his property situated at No.86,Cholappanahalli Village Kasaba Hobli, Hoskote, Taluk for Rs.1,00,00,000/-. It was noted that Rs.60,00,000/- was sold by way of cheque and Rs.40,00,000/- was received by cash as per sale deed. It was also noted that the sale agreement was then cancelled on 18/11/2014 and assessee refunded the entire amount to the purchaser by cheque.
Subsequently, assessee entered into JDA with M/s. Artha Real estate Corp.Ltd on 18/11/2014. The said document was rehistered and assessee received Rs.1,50,00,000/- as refundable advance from the purchaser. The Ld.AO noted that as per the JDA, shate of assessee was 55% and that of the developer was 45%. The Ld.AO also noted that assessee agreed to transfer his 55% share in the land and the developer agreed to develop residential layout in lieu of the land. The Ld.AO was of the opinion that transaction was in the nature of transfer of land and capital gain accrued to the assessee in the year under consideration.
The Ld.AO noted that assessee purchased an apartment situated at No.274 , II Main Road, Jayanagar 7th Block Bengaluru. The assessee also claimed deduction under section 54 F. The Ld.TPO recomputed the Capital gain at Rs.2,46,43,360/- after aallowing the exemption under section 54F at Rs.1,82,84,840/- as under: The computation of long term capital gains: Total Sq.ft area of 3 acres and 24 guntas 158994 sq.ft. 45% transferred to the developer 71547 sq.ft 55% owner"s share 87447 sq.ft Date of transfer of 45% of property to developer (Date on which the developer was permitted to develop/start 18-11-2014 development on the property which is subject matter of JDA Sale consideration as on date of transfer as per guidance value on 18-11-2014 Rs,4,29,28,200/- (71547 x Rs.600/-sq.ft Less cost of acquisition - Cost of improvement - Less cost of conversion - Total capital Gains — assessee's share Rs.4,29,28,200 Less exemption u/s 54F Es.1,82,84,840/- TAXABLE LONG TERM CAPITAL GAINS Rs.2,46,43,360/- Aggrieved by the assessment order, the assessee preferred appeal before the Ld.CIT(A).
It was contended by the aseesee that the area considered by the assessing officer adopted wrong area attributable to the share of assessee and the total area on conversion. The Ld CIT(A) on considering various documents accepted the ple of assessee in this issue.
Page However the value of the land at R.600 as against Rs.200/- that was agreed between the assessee and the developer was upheld by the Ld.CIT(A). Aggrieved by the order of the Ld.CIT(A) assessee is in appeal before this Tribunal. 8. It is the submission of the Ld.AR all the grounds raised are against the value adopted by the revenue. The Ld.AR submitted that the agricultural land was converted for residential use and given under the JDA. It was a site for development and the comparables provided by assessee was also of the same nature. The Ld.AR submitted that such underdeveloped sites could not fetch such high cost of Rs.600/- per sq.ft during the relevant period. It is also submitted that even the guidance value of the plot is not as much as considered by the revenue and therefore it is bad in law. The Ld.DR at this juncture submitted that the issue may be remanded to the Ld.AO for verification. We have perused the submissions advanced by both sides based on the records placed before us.
9. The only dispute that arises is regarding the value adopted by the revenue to compute the capital gains in the hands of assessee. It is the contention of the assessee that the value considered by the revenue is applicable for fully developed plots and not for under developed plots. It is also submitted that the rate as per guidance value is much less that what was adopted by the assessee. And the comparables of nearby plots provided by the assessee was also matching with what was considered by assessee.
We note that the revenue did not verify the value with the stamp value authorities before adopting the rate to be at Rs.600/-. In the interest of justice we remand the issue back to the Ld.AO to carry out necessary verification to ascertain the correct value of the land during the relevant period. Assessee is directed to file all requisite details in order to assist the Ld.AO to verify the details. Needless to say that proper opportunity of being heard must be granted to assessee in accordance with law Accordingly, the grounds raised by assessee stands allowed for statistical purposes. In the result the appeal filed by assessee stands allowed for statistical purposes. Order pronounced in the open court on 28th February, 2022.