INCOME TAX OFFICER Vs. N.S. NAGARAJ
INCOME TAX APPELLATE TRIBUNAL
INCOME TAX OFFICER
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Rajpal Yadav, Member (J) -
(1.) THE Revenue is in appeal before us against the order of the learned CIT(A) dated 2nd February, 2011 passed for assessment year 2007 -08. On receipt of the notice in the Revenue's appeal, the assessee has filed cross objection bearing No. 45/Bang/2013. The grounds of appeal taken by the Revenue are not in consonance with Rule 8 of the ITAT Rules, they are descriptive and argumentative in nature. Similarly, the assessee has incorporated the statement of facts and grounds together in the grounds of cross objections.
(2.) IN brief the common question involved in the appeal as well as cross objection is, whether on execution of joint development agreement by the assessee along with his brother Mr. Nandish Reddy on 9.8.2006 with M/s. Akme Projects Ltd., the land comprising 2 acres and 48 guntas was transferred to the developer or not?, if yes, then capital gain ought to be computed at Rs. 5,95,23,974/ - computed by the Assessing Officer or some other figures is to be computed. The brief facts of the case are that the assessee has filed his return of income on 31.12.2007 declaring an income of Rs. 3,54,480/ -. The case of the assessee was selected for scrutiny assessment and notices u/s. 143(2), 142(1) were issued and served upon the assessee. On scrutiny of the accounts, it revealed to the Assessing Officer that the assessee along with his brother Mr. Nandish Reddy were the owner and in possession of 2 acres and 14 guntas of land comprised at Survey No. 36/5, Doddanekundi Village, KR Puram Hobli, Bangalore East Taluk. They entered into a joint development agreement on 9.8.2006 with M/s. Akme Project Ltd. As per the agreement, the assessee and his brother jointly received refundable deposit of Rs. 1.00 crore for allowing the development on their land. The developer would construct a saleable area of 3.00 lakh square feet at its own cost, the assessee and his brother are entitled for 50% of the built up area i.e. 1.50 lakh sft minimum. The assessee and his brother had given an irrevocable license to the developer to enter and develop the property. They have also executed a power of attorney in favour of the developer to enable the developer to gets sanction site plans, license and other approvals for the development of entire scheduled property. The developer was authorised to avail loans and financial facilities from the financial institutions. The Assessing Officer was of the view that the assessees have surrendered their rights to the extent of 50% in the land in lieu of 50% constructed area i.e. 1.50 lakh sft, whose cost was to be borne by the builder. Thus, in the opinion of the Assessing Officer, transfer of the land has taken place within the meaning of section 2(47)(v) of the Income Tax Act and the assessees are assessable for long term capital gain. The Assessing Officer has computed the Long Term Capital Gain in the case of assessee as under:
(3.) THE Assessing Officer has adopted the consideration of the land at Rs. 800/ - per sft, because this was the expenditure which the builder will incur for constructing the area. In lieu of this the assessee's have relinquished their rights in the land in favour of the builder who will get 50% of the land as well as 1.50 lakhs sft. constructed area.;
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