INCOME TAX ACT, 1961

Section 45

Capital gains - Computation - Effect of arbitration award and year of assessability of capital assets -

The fault was of the assessee vendor in not executing the balance sale deeds and still, the assessee vendor wants benefit out of its own fault by postponing the payment of tax on capital gain on sale of 50 Acres of land from assessment year 2010-11 to assessment year 2016-17. This was not justified as full effect was given to Arbitration Award dated 2-9-2015 and consequent upon cancellation of four sale deeds executed in financial year 2009-10, three new sale deeds were executed in financial year 2015-16. Out of the 50 Acres of Land, land equal to 26 Acres 10 Guntas was deemed to be bought back by the assessee on 2-9-2015 for same consideration Rs. 2 Crores per Acre because same lands to the extent of 23 Acres 30 Guntas were sold by various sale deeds executed in financial year 2015-16 also and in fact, sale of only 26 Acres 10 Guntas of land was not ultimately made as per various sale deeds executed in financial year 2015-16 and for such deemed buy back of 26 Acres 10 Guntas of land, Cost of acquisition should be considered at Rs. 2 Crores per Acre. Held: If one holds that sale of 50 Acres of land for Rs. 100 Crores was complete in financial year 2009-10 relevant to assessment year 2010-11 and therefore, resultant capital gain on this entire sale was liable to tax in assessment year 2010-11 and on account of cancellation of those four sale deeds as per the Arbitration Award dated 2-9-2015, it should be held that out of the 50 Acres of Land, land equal to 26 Acres 10 Guntas was deemed to be Bought Back by assessee on 2-9-2015 for same consideration of Rs. 2 Crores per Acre because same land to the extent of 2 Acres 30 Guntas were sold by various sale deeds executed in financial year 2015-16 also and in fact, sale of only 26 Acres 10 Guntas of land was not ultimately made as per various sale deeds executed in financial year 2015-16 and for such deemed buy back of 26 Acres 10 Guntas of land, Cost of acquisition should be considered at Rs. 2 Crores per Acre (Total Cost Rs. 52.50 Crores) with date of acquisition as 2-9-2015 for computing capital gain. When any land out of this 26 Acres 10 Guntas Land was sold by the assessee in future, this will give full effect to cancellation of four sale deeds executed in financial year 2009-10 and execution of three new sale deeds executed in financial year 2015-16 as per which, 23 Acres 30 Guntas of the same lands were transferred by assessee vendor to the buyer M/s. Manipal University and 55 Acres 31.89 Guntas of new lands (Out of Total 79 Acres 21.89 Guntas of contiguous land for Rs. 150 Crores as per three Sale Deeds executed in financial year 2015-16 were transferred at the balance consideration of Rs. 102.50 Crores being Total sale consideration of Rs. 150 Crores minus sale consideration of 23 Acres 30 Gunta Land @ Rs. 2 Crores per Acre being Rs. 47.50 Crores because this much land was not deemed to be bought back by assessee as these were part of sale deeds executed in financial year 2015-16 also. Tribunal ordered accordingly.

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2010-11 & 2016-17

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