G.S.SATHYANARAYANA GUPTA,BANGALORE vs. INCOME-TAX OFFICER, BANGALORE

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ITA 1323/BANG/2016Status: DisposedITAT Bangalore17 October 2016AY 2012-135 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal held that capital gains should be computed based on the guidance value of the land at the time of signing the JDA, not the future built-up area. The matter was restored to the AO for re-computation.

What were the facts?

The assessee transferred land to a developer under a Joint Development Agreement (JDA). The Assessing Officer (AO) adopted the guidance value of the constructed flats, which did not exist at the time of the JDA, as consideration for capital gains. The CIT(A) upheld the AO's view.

What were the issues?

Whether the guidance value of future constructed property can be considered as sale consideration for capital gains at the time of a Joint Development Agreement.

Which sections of the Income-tax Act were involved?

Section 50D

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Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’, BANGALORE

Before: SHRI S.K.YADAV & SHRI A. K. GARODIA

For Appellant: Shri C. Sandeep, CA
For Respondent: Shri AR Sreenivasan, JCIT

O R D E R PER SHRI A.K.GARODIA, AM This is an assessee’s appeal directed against the order of the ld. CIT(A)-6, dated 25-04-2016 for the assessment year 2012-13.

2.

The grounds raised by the assessee are as under;

2 IT(TP)A No.1323(B)2016

“1. That the order of the ld.CIT(A) in so far is prejudicial to the interest of the appellant is bad and erroneous in law and against the facts and circumstances of the case.

2. That the ld.CIT(A) erred in law and on facts in holding that the value of consideration received by the appellant is Rs.2,91,98,930/- instead of Rs.2 crore.

3. That the ld. CIT(A) ought to have held that the market value of the land transferred to the developer should not be taken as consideration applying the principles lad down in S.50D of the Act.

4. That the ld. CIT(A) erred in law and on facts in considering the guidance value of the built up area received as part of the sale consideration even though it does not exist on the date entering into agreement.

5. That the ld. CIT(A) erred in law and on facts in computing 20% in excess of guidance value of the built up area received as sale consideration on the ground that it is a commercial property.

Each of the above ground is prejudice to one another, the appellant craves the leave of the Hon’ble Income Tax Appellate Tribunal, Bangalore o add, delete, amend or modify otherwise either before or at the time of hearing of the appeal”.

3.

It was submitted by the ld.AR of the assessee that the issue in dispute is covered in favour of the assessee by the Tribunal order rendered in the case of ACIT Vs Smt Sarojini M Kushe in dated 27-04-2016, copy available on page 1 to 5 of 3 IT(TP)A No.1323(B)2016 the paper book. He also placed reliance on the Tribunal order rendered in the case of ACIT Vs Shankar Vital Motor Co. Ltd in dated 18-03-2016, copy available on pages 6-15 of the paper book. Reliance was also placed on the judgment of the Hon’ble Karnataka High Court rendered in the case of CKIT Vs T. K. Dayalu reported in 60 DTR 403(Kar.) and copy available on pages 16-18 of the paper book.

4.

The ld. Dr of the revenue supported the orders of the authorities below.

5.

We have considered the rival submissions. In the present case, the AO has adopted the guidance value fixed by the State Government for (to be constructed flats) or (to be acquired flats) which were not in existence on the date of joint development agreement (JDA). In the case of ACIT Vs Smt. Sarojini M Kushe (Supra), the Tribunal decided the issue in favour of the assessee by following another Tribunal order rendered in the case of ACIT Vs Shankar Vittal Motor Co. Ltd. (Supra) and observed that it was held in that case that at the time of signing the JDA, the capital gain has to be computed only on the guidance value of the land and therefore, the action of the AO in adopting the guidance value for the built up area to be received by the assessee is not proper and this cannot be approved. However, since the guidance value of the land being transferred by the assessee on the date of signing of the JDA is not available on record., we feel it proper to restore the matter back to the file

4 IT(TP)A No.1323(B)2016 of the AO with a direction that the AO should re-compute the amount of capital gain by adopting the guidance value of the land in question at the time of signing of the JDA after providing adequate opportunity of being heard to the assessee. We order accordingly.

6.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced in the open court on the date mentioned on the caption page.

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