Question 1

What are the key legal issues in Shri Vadagur Narayanappa Premachandra Vs. The Assistant Commissioner of Income Tax, International Taxation, Circle – 2(1), Bangalore?

Accepted Answer

1. What is the share of the assessee in order to compute the Long-Term Capital Gains (LTCG)? 2. Whether the assessee is entitled for deduction u/s 54 of the Act on the ground that the entire sale consideration received was invested in the construction of the new property?

Question 2

What are the facts of Shri Vadagur Narayanappa Premachandra Vs. The Assistant Commissioner of Income Tax, International Taxation, Circle – 2(1), Bangalore?

Accepted Answer

The assessee, along with other co-owners, entered into a Joint Development Agreement (JDA) on 11/03/2011 with the builder M/s. Balaji Constructions, handing over land measuring 1,35,461 sq.ft. for development and construction of flats. The owners' share is 39% and the builder's share is 61%. The builder was to hand over approximately 56 flats to the owners. The Assessing Officer (AO) reopened the assessment for A.Y. 2011-12 as the assessee had entered into the JDA but did not file any return of income declaring long-term capital gains. The assessee filed his return and computed the long-term capital gain based on the value of the land given to the builder at Rs. 800/- per sq.ft., but took a lesser area of 74,628 Sq.ft. instead of 82,631 Sq.ft. The AO computed the long-term capital gains at Rs. 2,19,75,275/- against the assessee's computation of Rs. 1,55,72,725/-. The AO rejected the assessee's claim based on the JDA and doubted the validity of a settlement deed executed after six years from the JDA.

Shri Vadagur Narayanappa Premachandra Vs. The Assistant Commissioner of Income Tax, International Taxation, Circle – 2(1), Bangalore

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