Tax on Conversion of Capital Asset into Stock

IN THE ITAT MUMBAI BENCH ‘D’

Ramesh Abaji Walavalkar

v/s.

Additional Commissioner of Income-tax

IT Appeal Nos. 852 (Mum.) of 2009

And 1534 (Mum.) of 2010

[Assessment Years 2003-04 & 2005-06]

JUNE 22, 2012

ORDER

P.M. Jagtap, Accountant Member

These two appeals filed by the assessee against two separate orders passed by the ld. CIT(A)-I, Thane, dated 27-11-2008 and 30-10-2009 for assessment years 2005-06 and 2003-04 respectively involve common issues relating to determination of capital gains arising to the assessee from transfer of plot of land at Sanpada, Vashi, and the same, therefore, have been heard together and are being disposed by this single composite order.

2. The relevant facts of the case giving rise to these appeals are as follows. The assessee is a retired army officer who filed his return of income for assessment year 2005-06 on 30-10-2005 declaring total income of Rs. 1,51,08,110/-. For the meritorious service rendered by him in 1965 war with Pakistan, he was awarded 16 acres of agricultural land at Sahabaj Village. The said land was subsequently acquired by the Government and the assessee was compensated in monetary terms for the said acquisition. On further requests and applications made by the assessee, he was given on lease by CIDCO two plots of land – one at Sanpada, Vashi, and the other at Nerul, Navi Mumbai – as additional compensation for the acquisition of his agricultural land. The plot of land at Sanpada, Vashi, admeasuring 4000 sq. metres was claimed to be converted by the assessee into stock into trade on 15-05-2002 for the purpose of his real estate business and the fact of this conversion was recorded by him in a Declaration-cum-Affidavit made on that day before the Notary. As per the stand taken by the assessee, the land at Sanpada, Vashi, was big and the same not being required for personal use, he decided to exploit the same for business by developing and constructing a building thereon. After the conversion of land into stock in trade, the assessee claimed to have started looking for a reputed Developer who could take up the work of development and construction as he did not possess the expertise in building construction as well as the capital required for the entire development. Meanwhile, the assessee obtained the commencement certificate and received approval for the building plan from Navi Mumbai Municipal Corporation on 03-08-2002 and thereafter entered into Development Agreement with one reputed Developer i.e. M/s. Sai Developers on 16-09-2002 whereby he agreed to grant development rights to the Developer for a consideration of Rs.1.40 crores and constructed area of 20,700 sq. ft. This constructed area in the form of residential flats and commercial shops was stated to be sold by the assessee in the subsequent year on piecemeal basis at increasing rates. According to the assessee, he thus accepted all the risks and rewards connected with the development work and it was not a case of simply passing on the entire risks and rewards to the Developer.

3. On the basis of the above facts, the assessee claimed that even though capital gain was accrued to him during the previous year relevant to assessment year 2002-03 on conversion of capital asset into stock in trade, the same was not chargeable to tax till the time the stock in trade was ultimately sold as per the provisions of sec. 45(2). According to him, the plot of land now held as stock in trade was finally sold on transfer by the assessee to the Developer only when the Developer had fulfilled its obligations under the Development Agreement i.e. on payment of monetary consideration and on handing over the constructed area to the assessee. Since the same was done in the previous year relevant to assessment year 2005-06, the assessee offered the short-term capital gain arising from transfer of Sanpada plot in assessment year 2005-06. While computing the said capital gain, the sale consideration was taken by the assessee at Rs. 2,49,00,000/- being the Fair Market Value (FMV) of the land at Rs. 3,00,00,000/- on the date of conversion to the extent of 83% being FSI transferred after retaining 17% FSI attributable to the constructed area of 20,700 sq. ft. allotted to him. The cost of acquisition of Sanpada land was taken by the assessee at Rs. 1,07,90,000/- being 83% of Rs. 1,30,00,000/- being the market value of said land on the date of allotment as valued by the Registered Valuer and after deducting the same from the sale consideration, the short-term capital gain of Rs. 1,41,10,000/- was offered to tax by the assessee in his return filed for assessment year 2005-06.

4. During the course of assessment proceedings for assessment year 2005-06, the capital gain offered by the assessee was verified by the AO. On such verification, he found that the assessee was not having any prior business exposure or expertise or financial resources to develop the Sanpada land. He also analysed the Development Agreement entered into by the assessee with M/s. Sai Developers and held on such analysis that the land was to be developed by the Developer at his own cost and responsibility. According to the AO, the assessee did not share any responsibility or risk in the development of land and also did not have any concern over the development work. He also noted that there was no nexus between the profits or losses of the development of land and the affairs of the assessee. He, therefore, held that the assessee had ever started or conducted any business of real estate development and there was no conversion of land as capital asset into stock in trade for the purpose of the said business. He held that merely executing an affidavit before the Notary was not sufficient to support and substantiate the claim of the assessee of having converted the capital asset of land into stock in trade for the purpose of business of real estate development and rejecting the said claim of the assessee, the AO proceeded to determine the taxability of capital gain arising from transfer of Sanpada land by the assessee treating the same as a transfer of capital asset.

5. While determining the taxability of capital gain arising from transfer of land as a capital asset, the AO first dealt with the issue of the year in which the said capital gain was chargeable to tax. In this regard, he considered the relevant terms of Development Agreement entered into by the assessee with M/s. Sai Developers on 16-09-2002 in the light of the provisions of sec. 2(47)(v) and the doctrine of part performance as envisaged in sec. 53A of the Transfer of Property Act. He held that all the four conditions required to invoke the said doctrine were fulfilled in the case of the assessee and relying on the decision of Hon’ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay v. CIT [2003] 260 ITR 491 , he held that there was a transfer of land as a result of Development Agreement entered into by the assessee in the previous year relevant to assessment year 2003-04. Accordingly, he held that the capital gain arising from the said transfer was chargeable to tax in that year and not in assessment year 2005-06 as claimed by the assessee. While computing the said capital gains, the sale consideration was taken by the AO at Rs.3,84,11,600/-being the monetary consideration of Rs.1,40,00,000/- received by the assessee and the fair market value of 13,200 sq. ft. of residential area taken at Rs. 1,17,21,600/- and the fair market value of 7,500 sq. ft. of commercial area taken at Rs. 1,26,90,000/-. As regards the cost of acquisition of the said land, the AO held that the Sanpada land having been received by the assessee as additional compensation for compulsory acquisition of agricultural land, the same was to be taken at Nil. For this conclusion, he drew analogy from the provisions of sec. 45(5) which provided that the cost of acquisition for additional compensation received upon compulsory acquisition under any law is Nil. Accordingly, capital gain arising from transfer of Sanpada land chargeable to tax in the hands of the assessee was worked out by the AO at Rs. 3,84,11,600/-and the same was assessed on substantive basis in the hands of the assessee in the assessment for assessment year 2003-04 completed u/s. 143(3) read with sec. 147 vide an order dated 05-12-2008. The said capital gain was also added by the AO on protective basis in the hands of the assessee in the assessment for assessment year 2005-06 completed u/s. 143(3) vide an order dated 28-12-2007.

6. Against the orders passed by the AO u/s. 143(3) read with sec. 147 for assessment year 2003-04 and u/s. 143(3) for assessment year 2005-06, the assessee preferred appeals before the ld. CIT(A). After taking into consideration the elaborate submissions made on behalf of the assessee in writing as well as the material available on record including the orders of the AO, the ld. CIT(A) agreed with the AO that there was no business of real estate development actually commenced and carried on by the assessee and there was thus no conversion of the capital asset of land into stock in trade for the purpose of real estate business as claimed by the assessee. He accordingly upheld the decision of the AO that the said land retained its character as a capital asset and profit arising from transfer thereof was chargeable to tax as capital gains in the assessment year 2003-04 since there was a transfer of the said capital asset as a result of Development Agreement entered into by the assessee with M/s. Sai Developers within the meaning of sec. 2(47)(v) read with sec. 53A of Transfer of Property Act as held by the Hon’ble Bombay High court in the case of Chaturbhuj Dwarkadas Kapadia of Bombay (supra). As regards the consideration for the said transfer, the ld. CIT(A) agreed with the AO that the same was to be taken at Rs. 3,84,11,600/- being the monetary consideration of Rs.1,40,00,000/- received by the assessee and the fair market value of constructed residential and commercial area to be received by the assessee from the Developer as per the Development Agreement. As regards the cost of acquisition of the assessee’s land, the ld. CIT(A) found that a premium of Rs. 52,000/- was paid by the assessee for obtaining the said land and accordingly he directed the AO to take the cost of acquisition of land at Rs. 52,000/- for the purpose of computing capital gains. Accordingly, the addition made by the AO on account of short-term capital gains to the total income of the assessee on substantive basis at Rs. 3,84,11,600/- in assessment year 2003-04 was sustained by the ld. CIT(A) to the extent of Rs. 3,83,59,600/- and the appeals filed by the assessee were dismissed to a substantial extent by the ld. CIT(A). Aggrieved by the orders of the ld. CIT(A), the assessee has preferred these appeals before the Tribunal.

7. In his appeal for assessment year 2003-04, the assessee has raised a preliminary issue by way of additional ground challenging the validity of re-assessment year made by the AO u/s. 143(3) read with sec. 147 on various counts. The additional ground so raised has been admitted by us keeping in view that the same involved a legal issue and all the relevant facts necessary for adjudication of the said issue are available on record.

8. We have heard the arguments of both the sides on this preliminary issue involved in assessment year 2003-04 and also perused the relevant material on record. One of the grounds on which the validity of re-assessment made by the AO for assessment year 2003-04 has been challenged by the assessee is that there was no notice issue by the AO u/s. 143(2) during the course of re-assessment proceedings. The ld. DR has not brought anything on record to dispute or controvert the stand of the assessee that there was no notice u/s. 143(2) issued by the AO during the course of re-assessment. He, however, has relied on some Tribunal decisions in support of the Revenue’s case that non-compliance of the provisions of sec. 143(2) would not render the re-assessment made by the AO as null and void where jurisdiction was vested in the AO by virtue of the clear provisions of sec. 147/148 itself. The ld. counsel for the assessee, on the other hand, has relied, inter alia, on the decision of Hon’ble Bombay High court in the case of CIT v. Ms. Malavika Arun Somaiya on 09-09-2008 in I.T. Appeal No.994/2008 wherein the assessment made by the AO u/s. 143(3) read with sec. 147 was held to be invalid by the Tribunal on the ground that there was no notice issued u/s. 143(2) during the course of re-assessment proceedings. The decision of the Tribunal was challenged by the Revenue by way of an appeal preferred before the Hon’ble High Court on the ground that the assessee having not filed any fresh return in response to the notice issued u/s. 148, there was no requirement of issue of notice u/s. 143(2). This contention of the Revenue, however, was not found acceptable by the Hon’ble Bombay High Court and the decision of the Tribunal was upheld by Their Lordships relying, inter alia, on their decision rendered earlier in the case of CWT v. HUF of H.H. Late J.M. Scindia [2008] 174 Taxman 1 (Bom.). The decision of Hon’ble Bombay High Court in the case of Ms. Malavika Arun Somaiya (supra) thus is directly on the issue involved in the present case and respectfully following the said decision of Hon’ble jurisdictional High Court, we hold that the re-assessment made by the AO u/s. 143(3) read with sec. 147 without issuing notice u/s. 143(2) is invalid. We, therefore, cancel the said assessment and allow the additional ground raised by the assessee.

9. Keeping in view our decision rendered on the preliminary issue cancelling the assessment made by the AO u/s. 143(3) read with sec. 147, the other grounds raised by the assessee in his appeal for assessment year 2003-04 disputing the addition made by the AO in the said assessment on merit have become infructuous and we do not consider it necessary or expedient to adjudicate upon the same.

10. Now, we shall take up the appeal of the assessee for assessment year 2005-06 being I.T.A. No.852/Mum/2009.

11. The issue raised in ground no. 1 of the appeal is whether there was conversion of capital asset of land into stock in trade by the assessee as envisaged in sec. 45(2).

12. We have heard the arguments of both the sides on this issue and perused the relevant material on record. It is observed that the claim of the assessee of having converted the capital asset of land into stock in trade for the purpose of his business as envisaged in sec. 45(2) was not accepted by the AO as well as by the ld. CIT(A) mainly for the reason that there was no business of real estate development actually commenced or carried on by the assessee and it was a case of transfer of land as capital asset simpliciter as per the Development Agreement. In this regard, the ld. counsel for the assessee has explained before us the steps taken by the assessee before entering into Development Agreement by making correspondence with CIDCO for getting approval for the proposed development of the property. He has invited our attention to the said correspondence dated 13-05-2002, 20-05-2002 and 12-06-2002 to show the efforts taken by the assessee much prior to the Development Agreement entered into on 16-09-2002 to obtain the necessary approval of CIDCO for the proposed development of the property. He has also invited our attention to the NOC issued by CIDCO on 21-05-2002 as well as commencement certificate issued by NMMC on 03-08-2002 to show that even prior to the date of Development Agreement, the assessee had taken different steps in the matter of development of his land which, according to him, are sufficient to show that the business of real estate development had not only been commenced by the assessee but the same was also carried on prior to the date of Development Agreement. He has also relied, inter alia, on the decision of Co-ordinate Bench of the Tribunal in the case of Vidhyavihar Containers Ltd. v. Dy. CIT [2011] 133 ITD 363  wherein a similar issue involving identical facts was considered by the Tribunal. In its order passed in the said case, the Tribunal took note of the different steps taken by the assessee in paragraph 15 and held keeping in view the said steps, which are similar to the steps taken by the assessee in the present case, that the real estate business was duly commenced and carried on by the assessee. The relevant observations recorded by the assessee in this context in paragraphs 16 & 17 are reproduced hereunder :

“16. The different steps taken by the assessee in the matter of development of its land as enumerated above clearly show that the business of real estate development had not only been just commenced by the assessee by taking the first step of passing the special resolution in the shareholders meeting authorizing it to commence the said business, but even the same was carried on by it by taking further steps to make the said land fit for redevelopment which involved obtaining the permissions from the concerned authorities. The said permissions were required for the redevelopment of the land owned by the assessee company and the said steps, in our opinion, therefore were taken by the assessee company for redevelopment of its property as a part of its new business activity of real estate development. It is no doubt true that after taking all the steps to make the property fit for redevelopment, the assessee company later on entered into a development agreement thereby entrusting the remaining development work to another party and getting consideration in the form of constructed area in the proposed building. However, it cannot be said on the basis of this step taken by the assessee that real estate development business was never carried on by the assessee. In our opinion, this steps was only one of the steps involved in the real estate development business carried on by the assessee and since the earlier steps involved in the said business were taken by the assessee company on its own during the period spanning over 7 to 8 years, there was a business of real estate development carried on by the assessee. In our opinion, all the steps taken by the assessee which were very much part of the business activities involved in real estate development are sufficient to show that the business of real estate development was commenced and carried on by the assessee and even the step finally taken by it to entrust the remaining development work to a third party was a part of that business which was done as a matter of commercial expediency.

17. The AO has treated all these steps taken by the assessee to make its property fit for redevelopment as nothing but steps taken by the assessee for disposal of its property. We find it difficult to accept this stand of the revenue authorities. In our opinion, it cannot be lost sight of that a special resolution was passed by the shareholders of the assessee company authorizing commencement of new business, namely, real estate development business in the year 1996 itself and in furtherance to the same, various steps were taken by the assessee company to make its property fit for redevelopment. The user of the land was got converted initially from industrial to commercial and then commercial to residential. Other permissions required for redevelopment of property were also sought and obtained by complying with the necessary requirements and only after taking all these steps the property was converted into stock in trade. The first phase of real estate development thus was completed by the assessee which had started from the special resolution passed by the shareholders authorizing the company to carry on the real estate development and ended with conversion of the land into stock in trade after making it fit for redevelopment. Taking into consideration all the steps taken by the assessee company in this phase spanning over the period of 6 to 8 years which very much formed part of the activity of real estate development, we are of the view that the real estate business was dully commenced and carried on by the assessee.”

13. In the case of Vidhyavihar Containers Ltd.’s (supra), a similar Development Agreement as entered into by the assessee in the present case was executed and keeping in view the terms & conditions of the said Agreement, it was held by the authorities below that it was a case of transfer of capital asset simpliciter by the assessee without taking or sharing any risk or responsibility of the real estate development business. The Tribunal, however, did not accept the stand of the Revenue authorities for the following reasons given in paragraph 18 of its order:

“18. The Revenue authorities have laid great emphasis on the fact that as per the development agreement, the assessee company had entrusted the development work to a third party for fixed consideration in the form of constructed area in the proposed building. According to them, the assessee has not taken any risk which a person carrying on the real estate development business would normally take. They, however, have ignored a vital fact that the major risk involved in the real estate development is the sale of tenements of the project and completion of the said project. The assessee having received consideration in the form of constructed area, the risk of sale of the said area was undertaken by the assessee itself. Moreover, the said sale was always subject to completion of the project and it, therefore, cannot be said that there was no risk undertaken by the assessee company. In any case, as already held by us, the various activities forming part of the initial phase of development of property having been undertaken by the assessee company itself, the real estate business was already carried on by the assessee and merely because the subsequent work of development of property was entrusted by it to a third party, it cannot be said that the real estate business was never carried on by the assessee.”

14. After having held that the business of real estate development was actually commenced and carried on by the assessee, the Tribunal accepted the claim of the assessee that there was conversion of capital asset of land into stock in trade for the purpose of said business within the meaning of sec. 45(2) for the following reasons given in paragraph 19 of its order :

“19. Having held that the business of real estate development was duly carried on by the assessee, the next question that arises for consideration is whether there was a conversion of its property by the assessee company into stock in trade within the meaning of section 45(2). As already noted, what section 45(2) envisages the transfer by way of conversion by the owner of a capital asset into, or its treatment by him as stock in trade of a business carried on by him. In the present case, as demonstrated by the learned counsel for the assessee, the land was treated by the assessee company as stock in trade in its books of account for the year ended 31-3-2005 and going by this treatment itself, there was a transfer of the land by way of conversion by the assessee into stock in trade. Besides this, a resolution was also passed by the Board of Directors of the assessee company on 29th May, 2004 converting the land into stock in trade. The Revenue authorities, however, have not accepted this contention on the ground that the final order granting approval to the redevelopment of assessee’s property was issued by the Collector only on 16-05-2005. One of the contentions raised by the learned DR in this regard is that the assessee was having only occupancy and leasehold rights in the land and conversion of such rights into stock in trade was not possible. However, as rightly contended by the learned counsel for the assessee, the property is a bundle of right and whatever rights the assessee company had in the property constituted its capital assets and conversion thereof into stock in trade was possible and permissible. The rights being capital assets which could be commercially exploited in the business of real estate development, in our opinion, could be converted into stock in trade by the assessee as owner thereof notwithstanding the fact that the permissions required for further development or redevelopment thereof were awaited at that stage. It is quite usual in the real estate development business that a developer purchases even an agricultural land for developing the residential projects thereon and the same is treated as stock in trade subject to obtaining of the required permissions.”

15. A comparative analysis of the present case and the case of Vidhyavihar Containers Ltd. (supra) decided by the Tribunal clearly shows that the material facts relating to the issue under consideration as involved in both these cases are similar in which both the sides had taken similar position. The Tribunal finally accepted the stand of the assessee for the elaborate reasons given in its order in the case of Vidhyavihar Containers Ltd. (supra) which have already been reproduced by us hereinabove. It may be worthwhile to note here that in the case of Vidhyavihar Containers Ltd. (supra) being the case of a company, a resolution was passed by the Board of directors evidencing the conversion of land into stock in trade, while in the present case involving an individual, an Affidavit-cum-Declaration was made by the assessee before a Notary evidencing the conversion of land into stock in trade. In our opinion, the ratio of the decision of the Co-ordinate Bench of the Tribunal in the case of Vidhyavihar Containers Ltd. (supra) thus is squarely applicable to the issue involved in the present case and respectfully following the said decision, we hold that there was a conversion of land by the assessee into stock in trade on 15-05-2002 within the meaning of sec. 45(2) and as per the said provision, the profits or gains arising from the transfer by way of such conversion were chargeable to tax as the income of the assessee under the head “capital gains” in the year in which the stock in trade was sold by the assessee. We, therefore, decide this issue in favour of the assessee and allow ground no. 1 of the assessee’s appeal.

16. The next issue raised in ground no. 2 of assessee’s appeal relates to the determination of the year in which capital gain arising from the transfer of land by way of conversion into stock in trade is chargeable to tax.

17. We have heard the arguments of both the sides on this issue and also perused the relevant material on record. As already held by us, the profit or gain arising from the transfer of capital asset i.e. land by way of conversion is chargeable to tax as the income of the assessee under the head “capital gains” of the year in which the said land now held as stock in trade was sold by the assessee. It is observed a similar issue had come up for consideration before the Co-ordinate Bench of the Tribunal in the case of Dy. CIT v. Crest Hotels Ltd. [2001] 78 ITD 213 (Mum.) wherein the capital asset comprising of land and building of the hotel business was converted by the assessee into stock in trade of the construction business. The said stock in trade was sold by the assessee in the later year and capital gain on conversion was offered to tax by the assessee in the year which the stock in trade was sold. This action of the assessee was upheld by the Tribunal holding that tax on capital gain would be levied in the same year in which business profit on sale of stock in trade accrued to the assessee as per the provisions of sec. 45(2). It was held that all the arguments relating to conveyance, possession etc., which were generally related to transfer of capital asset, were rendered meaningless in such a case and the assessee having recognized business profit on sale of converted asset in the relevant year, tax on capital gain on conversion would also be levied in that year. In the present case, the sale of stock in trade was recognized by the assessee in the previous year relevant to assessment year 2005-06 when the consideration in the form of constructed area was actually received by him and this being so, we hold, respectfully following the decision of the Co-ordinate Bench of the Tribunal in the case of Crest Hotels Ltd. (supra), that the capital gain on transfer of capital asset by way of conversion is chargeable to tax in assessment year 2005-06 as per the provisions of sec. 45(2). We, therefore, decide this issue in favour of the assessee and allow ground no. 2 of the assessee.

18. The next issue raised in ground no. 3 of the assessee’s appeal relates to the determination of cost of acquisition of Sanpada plot for the purpose of computing long-term capital gains.

19. We have heard the arguments of both the sides and also perused the relevant material on record. It is observed that the cost of acquisition of Sanpada land was taken by the assessee at Rs. 1,07,90,000/- being 83% of the market value of Rs. 1,30,00,000/- of the entire land on the date of allotment as valued by the Registered Valuer. The AO, however, took the same as Nil relying on the provisions of sec. 45(5), while the ld. CIT(A) took the same at Rs.52,000/-, being the premium paid by the assessee for obtaining the said land. As rightly submitted by the ld. counsel for the assessee, a similar issue had come up for consideration before the Co-ordinate Bench of the Tribunal in the case of Atul G. Puranik v. ITO [2011] 132 ITD 499  wherein a similar plot of land was allotted to the assessee as compensation in lieu of agricultural land acquired by the Government under the same scheme called “12.5% scheme” and the issue was determination of cost of acquisition of the said plot of land for the purpose of computing capital gains. In this regard, the Tribunal noted that the market value of the plot of land as on the date of allotment is to be considered as full value of consideration at the time of computing capital gain on the first transaction. It was held that once a particular amount was considered as full value of consideration at the time of its purchase, the same shall automatically become the cost of acquisition at the time when such capital asset is subsequently transferred. It was held that the market value of the plot of land on the date of allotment thus shall constitute the cost of acquisition for the purpose of computing capital gain when it was subsequently sold or transferred. The ratio of the decision of the Tribunal in the case of Atul G. Puranik (supra) is thus squarely applicable to the issue involved in the present case and respectfully following the same, we direct the AO to take the cost of acquisition of the land of the assessee for the purpose of computing capital gain at Rs. 1,07,90,000/-, being the market value of the said land on the date of allotment. Ground no. 3 of the assessee’s appeal is accordingly allowed.

20. The issue raised in ground no. 4 of the assessee’s appeal relates to the determination of sale consideration of land to be taken for the purpose of computing capital gain.

21. We have heard the arguments of both the sides and perused the relevant material on record. As already held by us, there was a conversion of capital asset of land into stock in trade by the assessee for the business of real estate development and capital gain arising from the transfer of land by way of such conversion was chargeable to tax in the previous year relevant to assessment year 2005-06 as per the provisions of sec. 45(2). As provided in sec. 45(2), for the purpose of computing capital gain, the fair market value of the asset on the date of conversion shall be deemed to be the full value of consideration received or accruing as a result of transfer of the capital asset. In the present case, the fair market value of land on the date of conversion at Rs. 2,49,00,000/- was taken by the assessee as the full value of consideration for the purpose of computing capital gain and since the same was in accordance with the provisions of sec. 45(2), we are of the view that the same should be accepted. In that view of the matter, we direct the AO to adopt the fair market value of land at Rs. 2,49,00,000/- as the full value of consideration for the purpose of computing capital gain as claimed by the assessee. Ground no. 4 of the assessee’s appeal is accordingly allowed.

22. In the result, both the appeals of the assessee are allowed.