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Tax Publishers Gift of agricultural land converted into residential land and subsequent illegal construction made with a builder via a JDA and later on regularized by corporation - issue of indexation period when does it commence? Does assessee get right of deduction of indexed cost of acquisition on the illegally constructed pent house arising out of the JDA. *Facts:* Assessee was gifted a land by the donor which was originally acquired in 1960. It was originally an agricultural land which was converted into residential land in FY 1988-89 and then gifted to assessee in FY 2022-03. Assessee entered into a Joint Development Agreement (JDA) to develop the land where in 6 flats were earmarked for assessee and 12 to the builder and subsequently a 19th flat was also constructed illegally as a penthouse.The penthouse was then regularized by the corporation authorities with property tax etc. also being levied on the same. The builder admitted having spent Rs. 750 per sq. ft for the said penthouse as well. This penthouse was sold by the assessee in FY 2013-14 and the case was reopened by the AO denying the assessee indexation benefit from 01-04-1981 citing that at that point of time the land was not even a capital asset as per law since being agricultural land. Secondly the cost of construction on the penthouse was also denied by the AO in a reassessment alleging that it was an illegal construction. On appeal to the ITAT - Assessee's facts were as under - 1 Conversion of agricultural land to residential land - 1988-89 2 Gift of property 2002-03 3 Entering into JDA 27-12-2003 4 Date of completion of construction 2006-07 5 Completion of project & handing over possession Oct-07 6 Property tax assessment for each individual flats in project 11-10-2007 7 Property tax paid & Khatha has been issued by BBMP in favour of Vasishta Jayanti 03-01-2008 8 Date of sale 05-07-2013 Plea of the assessee was that since the property was gifted the cost of acquisition ought to be the FMV as on 01-04-1981, indexation would be from 01-04-1981 until date of sale besides the claim of cost of construction and its indexation wef FY 2006-07 (year of completion). Held in favour of the assessee that they were entitled to the cost of acquisition wef 01-04-1981 and the indexed cost of construction from 2006-07. *Case:* Jayanti Vasishta v. ITO 2024 TaxPub(DT) 424 (Bang-Trib)

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Gift of agricultural land converted into residential land and subsequent illegal construction made with a builder via a JDA and later on regularized by corporation - issue of indexation period when does it commence? Does assessee get right of deduction of indexed cost of acquisition on the illegally constructed pent house arising out of the JDA.

Facts:

Assessee was gifted a land by the donor which was originally acquired in 1960. It was originally an agricultural land which was converted into residential land in FY 1988-89 and then gifted to assessee in FY 2022-03. Assessee entered into a Joint Development Agreement (JDA) to develop the land where in 6 flats were earmarked for assessee and 12 to the builder and subsequently a 19th flat was also constructed illegally as a penthouse.The penthouse was then regularized by the corporation authorities with property tax etc. also being levied on the same. The builder admitted having spent Rs. 750 per sq. ft for the said penthouse as well. This penthouse was sold by the assessee in FY 2013-14 and the case was reopened by the AO denying the assessee indexation benefit from 01-04-1981 citing that at that point of time the land was not even a capital asset as per law since being agricultural land. Secondly the cost of construction on the penthouse was also denied by the AO in a reassessment alleging that it was an illegal construction. On appeal to the ITAT -

Assessee's facts were as under -

1 Conversion of agricultural land to residential land - 1988-89
2 Gift of property 2002-03
3 Entering into JDA 27-12-2003
4 Date of completion of construction 2006-07
5 Completion of project & handing over possession Oct-07
6 Property tax assessment for each individual flats in project 11-10-2007
7 Property tax paid & Khatha has been issued by BBMP in favour of Vasishta Jayanti 03-01-2008
8 Date of sale 05-07-2013

Plea of the assessee was that since the property was gifted the cost of acquisition ought to be the FMV as on 01-04-1981, indexation would be from 01-04-1981 until date of sale besides the claim of cost of construction and its indexation wef FY 2006-07 (year of completion).

Held in favour of the assessee that they were entitled to the cost of acquisition wef 01-04-1981 and the indexed cost of construction from 2006-07.

Case: Jayanti Vasishta v. ITO 2024 TaxPub(DT) 424 (Bang-Trib)