Case Law Details
PCIT Vs Smt. Sarojini M. Kushe (Karnataka High Court)
In the present case, Assessing Officer has adopted the rate of Rs. 1600/- per square feet merely based on the letter given by the developer which is not supported with any particulars. It cannot be ruled out the possibility of the developer giving an inflated figure to suit his requirements in order to gain minimum tax on his profits by inflating his costs. As such, the basis for determination of full value of consideration by the Assessing Officer based on the letter of the developer cannot be appropriate. No doubt at the relevant period, no provision was available in cases where the consideration received or accruing as a result of transfer of a capital asset by an assessee is not ascertainable. Section 50D inserted by Finance Act, 2012 with effect from 01.04.2013 would throw some light on the said issue.
It was argued by the learned counsel for the assessee that when the scheme of the Act does not contemplate the method of computation, no capital gains could be computed, placing reliance on B.C.Srinivasa Setty supra. It appears to overcome this aspect, a machinery provision has been introduced by way of Section 50D of the Act. Though the said provision has come into effect from 1.4.2013, it certainly throws some light on the mode of computation under Section 48 of the Act. In the circumstances, we are of the considered opinion that the guidance value of the land or the guidance value of the building would be appropriate mode to determine the full value of consideration in the case of a transfer where consideration for the transfer of a capital asset is not attributable or determinable. Hence, guidance value adopted by the Tribunal cannot be faulted with.
Though the Tribunal in ITO, Ward-7(2), Bangalore V/s. N.S.Nagaraj [(2014) 52 Taxman 211], has held that full consideration would be the cost of construction incurred by the builder on the assessee’s share of constructed area, because the assessee would receive the constructed area in view of the land share, the same not having been challenged, we are not inclined to subscribe to the same, for the reasons stated in the preceding paragraphs. Moreover, in that case, Commissioner of Income Tax [Appeals] has held that no capital gains accrues to the assessee on account of transfer of the asset. Having regard to the facts and circumstances of the case, the Tribunal having exercised its discretionary power adopted the guidance value of the land as the mode for determination of full value of consideration, the same being not perverse or arbitrary, we are not inclined to interfere with the impugned order.
FULL TEXT OF THE JUDGMENT/ORDER OF KARNATAKA HIGH COURT
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