In the instant case, one Mr. Ramachandra Naik expired on 09-07-1994. He has four members in his family and the same group entered into an agreement with M/s. Shri Sampada Constructions & other and has given 8,365 Sq. Yds., of land for development. The developer constructed 30 flats in block-A which is fully owned by land owners and 100 flats in block-B. Out of which the owners got twenty-one flats towards their share from this they sold twenty-four flats before March, 2003.

There was inordinate delay in execution of work and handover the constructed area to the land owner. But the owner had already sold some of their flats and declared nil income capital gains after claiming certain deductions u/s. 54F/54. The solitary issue before the Accountant Member B. Ramakotaiah, was about the computation of capital gains and claim of deduction u/s. 54F. Regarding the capital gain arise out of the sale of flats in Block-B.  Counsel for the Assessee A.V Raghu Ram stated that only five flats in Block-B are sold in financial year relevant to the impugned assessment year.

Hence, any long term capital gain arising from the sale of five flats which are situated in undivided land and on the sale of super structure/flat can only be brought to tax in the year under consideration. Another contention of Assessee regarding the claim of 54F/54was that he has sold his entire flat allotted to him. Therefore, at the time of investing in the new house, he has no other house except this house. The court observation regarding the claim was “As seen from the agreements and the principles of law involved, all the apartments received in the development agreement would become one house technically, even though they are of independent units. But, when the claim is made, it was the contention of assessee that all those flats were sold.