ACIT, Cirlce-15(1), Hyd, Hyderabad V. Y.Mohan Rao, Hyderabad

CO 11/HYD/2016

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 3083 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-07-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-06-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 07-03-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B RAJARAM
• Keywords: Capital asset; Tangible material; Difference of opinion; Change of opinion
• Section: 143(3); 147; 148

Judgement Text

ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 1 OF 13 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1306/HYD/2015 (ASSESSMENT YEAR: 2009-10) ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 15(1) HYDERABAD VS SHRI Y. MOHAN RAO HYDERABAD PAN: AADPY9768 L (APPELLANT) (RESPONDENT) C.O. NO.11/HYD/2016 (ARISING OUT OF ITA NO.1306/HYD/2015) (ASSESSMENT YEAR: 2009-10) SHRI Y. MOHAN RAO HYDERABAD PAN: AADPY9768 L VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 15(1) HYDERABAD (CROSS OBJECTOR) (RESPONDENT) FOR REVENUE : SHRI B. RAJA RAM, DR FOR ASSESSEE : SHRI K.C. DEVDAS O R D E R PER SMT. P. MADHAVI DEVI, J.M. THE APPEAL IS FILED BY THE REVENUE, WHILE THE CROSS OBJECTION IS FILED BY THE ASSESSEE FOR THE A.Y 2009- 10. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: (1) THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS IN LAW AND ON FACTS. (A) THE LEARNED CIT(A) ERRED IN HOLDING THAT THE REOPENING OF PROCEEDINGS U/S.148 IS BAD IN LAW DATE OF HEARING : 06.07.2017 DATE OF PRONOUNCEMENT : 31.07.2017 ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 2 OF 13 AND VOID BY RELYING ON THE SUPREME COURT DECISION IN THE CASE OF KELVINATOR INDIA LTD. (CIVIL APPEAL NO. 2009-2011 OF 2003). (B) THE LEARNED CIT(A) ERRED IN HOLDING THAT NO NEW TANGIBLE MATERIAL WAS WITH THE ASSESSING OFFICER FOR REOPENING OF ORIGINAL ASSESSMENT. (C) THE LEARNED CIT(A) FAILED TO APPRECIATE THAT THERE HAS BEEN ESCAPEMENT OF CAPITAL GAINS IN THE PRESENT CASE BY VIRTUE OF THE FACT THAT CAPITAL GAINS HAVE TO BE BROUGHT TO TAX IN THEIR ENTIRETY IN THE YEAR OF 'TRANSFER' AS WAS HELD BY THE JURISDICTIONAL HIGH COURT IN THE CASE OF SRI POTLA NAGESWARA RAO. (D) THE LEARNED CIT(A) OUGHT TO HAVE CONFIRMED THE REASSESSMENT THROUGH WHICH THE CAPITAL GAINS THAT HAVE ESCAPED ORIGINAL ASSESSMENT WERE BROUGHT TO TAX. 2. FURTHER, VIDE LETTER DATED 27.1.2017, THE REVENUE FILED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: ADDITIONAL GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN HOLDING THAT TRANSFER OF PROPERTY HAD ACTUALLY TAKEN PLACE BETWEEN THE OWNER AND THE DEVELOPER BY VIRTUE OF THE DEVELOPMENT AGREEMENT DATED 12.03.2007 ITSELF AS IT HAD BEEN ACTED UPON AND IF AT ALL ANY CAPITAL GAINS ARISE AS A RESULT THEREOF, THEY HAVE TO BE BROUGHT TO TAX DURING THE FINANCIAL YEAR RELEVANT TO THE ASST. YEAR 2007 -08 AND NOT IN THE ASST. YEAR 2009-10 AS WAS DONE BY THE ASSESSING OFFICER. 2. THE ABOVE REFERRED DECISION OF THE CIT(A) IS ERRONEOUS ON FACTS AS THE CIT(A) OBSERVED THAT IT WAS ONLY APPROVAL OF PLANS, PERMISSIONS, ETC., THAT ACTUALLY HAD TAKEN PLACE AS A CONSEQUENCE OF THE DEVELOPMENT AGREEMENT DATED 12.03.2007 ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 3 OF 13 AND THAT NO OTHER DEVELOPMENT ACTIVITY ON THE SUBJECT LAND HAD TAKEN PLACE THEREBY INVOLVING ANY 'TRANSFER OF OWNERSHIP BY VIRTUE OF THE SAID AGREEMENT. 3. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 3. AT THE OUTSET IT IS SEEN THAT THERE IS A DELAY O F 4 DAYS IN FILING OF THE APPEAL BEFORE US. THE REVENUE HAS FILED AN AFFIDAVIT OF THE ACIT STATING THE REASON FOR THE DELAY AND SE EKING CONDONATION OF THE SAME. BEING SATISFIED WITH THE R EASON GIVEN IN THE PETITION, WE CONDONE THE DELAY AND PROCEED TO D ISPOSE OF THE APPEAL ON MERITS. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y 2 009-10 ON 30.09.2009 ADMITTING TOTAL INCOME OF RS.48,77,000. THE ASSESSMENT U/S 143(3) OF THE ACT WAS COMPLETED ON 3 0.11.2011 DETERMINING THE TOTAL INCOME AT RS.48,77,000 AND TA X PAYABLE AT RS.75,910 RESPECTIVELY. SUBSEQUENTLY, IT CAME TO TH E KNOWLEDGE OF THE AO THAT THE ASSESSEE HAS NOT ADMITTED CAPITAL G AIN ARISING OUT OF THE DEVELOPMENT AGREEMENT ENTERED INTO WITH M/S. JMR PROMOTERS AND BUILDERS ON 9.5.2008 IN THE RETURN OF INCOME FOR THE A.Y 2009-10. BELIEVING THAT THE INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT, THE AO ISSUED NOTICE U/S 148 OF THE ACT ON 28.03.2014. THE ASSESSEE, VIDE LETTER DATED 4.4.201 4, REQUESTED THE AO TO TREAT THE RETURN FILED ON 30-09-2009 AS T HE RETURN FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT. ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 4 OF 13 5. THEREAFTER, DURING THE RE-ASSESSMENT PROCEEDINGS , THE AO OBSERVED THAT THE ASSESSEE ALONG WITH HIS WIFE & SON, OWNED A PIECE OF LAND IN SURVEY NO.357/1 AND 357/3 SITUATED AT MALKAJGIRI MUNICIPALITY, R.R. DISTRICT AND THAT THEY HAVE ENTE RED INTO A DEVELOPMENT AGREEMENT WITH M/S. JMR PROMOTERS & BUI LDERS ON 12.03.2007 FOR CONSTRUCTION OF A RESIDENTIAL BUILDI NG COMPLEX. HE FURTHER OBSERVED THAT ON 17.4.2008, THE ASSESSEE AN D HIS WIFE ENTERED INTO A DEVELOPMENT AGREEMENT CUM GPA WITH T HE SAME BUILDERS IN RESPECT OF THE SAME LAND VIDE REGISTERE D DOCUMENT NO.1760/2008 FOR CONSTRUCTION OF A RESIDENTIAL BUIL DING COMPLEX AND A SUPPLEMENTAL AGREEMENT DATED 9.5.2008 WAS ALS O ENTERED INTO FOR THE SAID PURPOSE. HE OBSERVED THAT AS PER THE DOCUMENTS DATED 17.4.2008 AND 9.5.2008, THE ALLOCATION OF BUI LT UP FLATS BETWEEN THE OWNERS AND DEVELOPER WAS IN THE RAT IO OF 40:60. OBSERVING THAT THE DEVELOPMENT AGREEMENT DATED 17.4 .2008 AND SUPPLEMENTAL AGREEMENT HAVE BEEN REGISTERED ON 9.5. 2008, HE HELD THAT THE SALE CONSIDERATION OF 5 FLATS ATTRACT S THE LIABILITY TO TAX UNDER THE HEAD LONG TERM CAPITAL GAINS ON REC EIPT BASIS FOR THE A.Y 2009-10 AND THAT THE OFFERING OF CAPITAL GAI N TO TAX IN THE A.Y 2013-14 WAS NOT IN ORDER AND THEREFORE, NOT ACCE PTABLE. A SHOW-CAUSE NOTICE WAS ACCORDINGLY ISSUED TO THE ASS ESSEE. THE ASSESSEE, VIDE LETTER DATED 6.2.2015, SUBMITTED THA T THE DEVELOPMENT AGREEMENT WAS ENTERED INTO ON 12.03.200 7 BY VIRTUE OF WHICH, THE ASSESSEE HAS HANDED OVER THE PHYSICAL POSSESSION OF THE PROPERTY. IT WAS SUBMITTED THAT THE SUBSEQUENT REGISTERED AGREEMENT CUM GPA WAS IN ACCORDANCE WITH THE AGREEM ENT DATED 12.03.2007 AND THAT THERE WAS NO FURTHER TRANSFER O F PROPERTY DURING THE RELEVANT A.YS. ACCORDING TO THE ASSESSEE, THE CAPITAL GAIN ARISES ONLY WHEN THE ASSESSEE HAS RECEIVED CON STRUCTED FLATS ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 5 OF 13 AND ALSO SUBMITTED THAT THE ASSESSEE HAS OFFERED TH E ENTIRE CAPITAL GAIN IN THE YEAR OF SALE OF FLATS. AO HOWEVER, HELD THAT THERE IS A TRANSFER OF RIGHTS TO THE DEVELOPERS BY VIRTUE OF R EGISTERED AGREEMENTS DATED 17.04.2008 AND 9.5.2008 BY FOLLOWI NG THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CA SE OF CHATURBHUJ DWARKADAS KAPADIA VS COMMISSIONER OF INC OME-TAX REPORTED IN 2003 (260 ITR 491 (BOM.) DATED 13 FEBRU ARY, 2003. 6. FURTHER, THE ASSESSEE HAD ALSO CLAIMED AN AMOUNT OF RS.15,79,000 AS DISCOUNT TO THE CUSTOMERS. OBSERVIN G THAT THE ASSESSEE DID NOT PRODUCE ANY EVIDENCE IN SUPPORT OF HIS CLAIM, THE AO REJECTED THE SAME AND BROUGHT THE SUM TO TAX. AG GRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) BOT H ON MERITS OF THE ADDITION AND ALSO AGAINST THE VALIDITY OF THE R EOPENING OF THE ASSESSMENT. THE CIT (A) ALLOWED THE ASSESSEES APPE AL IN PART BY HOLDING THAT AS THERE IS A TRANSFER OF RIGHTS IN FA VOUR OF THE DEVELOPER BY VIRTUE OF THE AGREEMENT DATED 12.03.20 07 AND ACCORDINGLY TAXABLE CAPITAL GAIN HAS ARISEN DURING THE RELEVANT PREVIOUS YEAR. AS REGARDS THE VALIDITY OF THE REOPE NING OF THE ASSESSMENT ALSO, THE CIT (A) HELD THAT THE AO, DURI NG THE ORIGINAL SCRUTINY PROCEEDINGS, HAS CONSIDERED THE AGREEMENT AND CONCLUDED THE ASSESSMENT BY ACCEPTING THE INCOME IN CLUDING THE CAPITAL GAINS RETURNED BY THE ASSESSEE AND THEREFOR E, REOPENING OF THE ASSESSMENT WITHOUT ANY FRESH TANGIBLE MATERIAL WOULD AMOUNT TO CHANGE OF OPINION. FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF M/S. KELVINATOR INDIA LTD, HE HELD THE REOPENING OF THE ASSESSMENT TO BE BAD IN LAW AN D AS SUCH VOID. AGGRIEVED BY THE RELIEF GRANTED BY THE CIT (A ), THE REVENUE IS IN APPEAL BEFORE US. ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 6 OF 13 7. THE LEARNED DR SUBMITTED THAT THE AO HAS ACCEPTE D THE CAPITAL GAIN OFFERED BY THE ASSESSEE WITHOUT VE RIFYING ANY OF THE DETAILS FILED BY THE ASSESSEE AND THEREFORE, IT WAS NOT A CHANGE OF OPINION BUT ESCAPEMENT OF INCOME DUE TO WHICH TH E ASSESSMENT HAS BEEN VALIDLY REOPENED. HE SUBMITTED THAT THE RE OPENING WAS WITHIN 4 YEARS FROM THE END OF THE RELEVANT A.Y AND THEREFORE, VALIDLY INITIATED. AS REGARDS THE MERITS OF THE ISS UE IS CONCERNED, HE SUBMITTED THAT THE DEVELOPER HAS NOT STARTED CON STRUCTION BY VIRTUE OF THE DEVELOPMENT AGREEMENT DATED 12.03.200 7 BUT HAS ONLY OBTAINED PERMISSION FOR THE CONSTRUCTION AND T HE CONSTRUCTION WAS STARTED ONLY AFTER THE REGISTRATIO N OF THE DEVELOPMENT AGREEMENT CUM GPA. THEREFORE, ACCORDING TO HIM, FOLLOWING THE DECISION OF THE HON'BLE ANDHRA PRADES H HIGH COURT IN THE CASE OF HON'BLE ANDHRA PRADESH HIGH COURT IN THE CASE OF POTLA NAGESWARA RAO VS. DCIT IN ITTA NO.254 OF 2014 , THE CAPITAL GAIN WOULD ARISE IN THE YEAR OF TRANSFER I.E. A.Y 20 09-10. 8. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTH ER HAND, SUBMITTED THAT IF THE DECISION OF THE HON'BLE A.P. HIGH COURT IN THE CASE OF POTLA NAGESHWARA RAO IS TO BE CONSIDERED AS APPLICABLE, EVEN THEN, THE CAPITAL GAIN WOULD ARISE IN THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO I. E ON 12.03.2007 RELEVANT TO A.Y 2007-08 AS THE AGREEMENT WAS ENTERED INTO ALONG WITH HANDING OVER OF PHYSICAL POSSESSION AS IS EVIDENT FROM CLAUSE-1 OF THE DEVELOPMENT AGREEMENT. THEREFO RE, ACCORDING TO HIM, THE CAPITAL GAIN WOULD NOT ARISE IN THE REL EVANT A.Y. BEFORE US. HE FURTHER DREW OUR ATTENTION TO THE COMPUTATIO N OF INCOME AND THE RETURN FILED BY THE ASSESSEE FOR THE A.Y 200 9-10 AND IN THE SUBSEQUENT ASSESSMENT YEARS TO DEMONSTRATE THAT THE ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 7 OF 13 ASSESSEE HAS ERRONEOUSLY OFFERED THE ENTIRE SALE CO NSIDERATION TO TAX AND NOT ONLY THE CAPITAL GAIN THAT HAS ARISEN O N SALE OF FLATS. THEREFORE, ACCORDING TO HIM, THERE WAS NO LOSS TO R EVENUE OR ESCAPEMENT OF INCOME AS FAR AS THE ASSESSEE IS CONC ERNED. 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, THE UNDISPUTED FACTS ARE THAT THE ASSESS EE HAD FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 30.09.2009 A DMITTING AN INCOME OF RS.48,77,000 WHICH COMPRISES OF CAPITAL G AINS OF RS.34,12,000 ON SALE OF FLATS AS IS RECORDED BY THE AO IN THE ASSESSMENT ORDER DATED 30.11.2011 COMPLETED U/S 143 (3) OF THE I.T. ACT. THE AO HAS ALSO RECORDED THAT IN RESPONSE TO THE NOTICE ISSUED U/S 143(2) OF THE ACT, THE AUTHORISED REPRES ENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FILED THE I NFORMATION CALLED FOR AND THAT AFTER GOING THROUGH THE INFORMA TION, THE ASSESSMENT WAS COMPLETED ACCEPTING THE RETURNED INC OME. THE RELEVANT A.Y IS 2009-10 AND THE PREVIOUS YEAR ENDED ON 31.03.2009. THE NOTICE U/S 148 WAS ISSUED ON 28.3.2 014 WHICH IS WITHIN THE PERIOD OF 4 YEARS FROM THE END OF THE RE LEVANT A.Y. THE CASE OF THE ASSESSEE IS THAT THE AO HAS CONSIDERED ALL THE MATERIAL AVAILABLE BEFORE HIM BEFORE ACCEPTING THE RETURNED INCOME AND THEREFORE, THE REOPENING OF THE ASSESSMENT IS ON A CHANGE OF OPINION. HAVING GONE THROUGH THE ASSESSMENT ORDER, WE FIND THAT THE AO, HAS ACCEPTED THE ASSESSEES RETURNED INCOME . FOR REOPENING OF AN ASSESSMENT EVEN WITHIN A PERIOD OF 4 YEARS, THERE NEED TO BE FRESH MATERIAL FOR THE AO TO ISSUE A NOT ICE U/S 148. IT IS NOT SUFFICIENT IF THE AO BELIEVES THAT THERE IS ESCAPEMENT OF INCOME AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF KELVINATOR INDIA LTD REPORTED IN 320 ITR 561 (S.C). IN THE CASE ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 8 OF 13 BEFORE US, THE ISSUE OF CAPITAL GAIN WAS VERY MUCH BEFORE THE AO AND THE CAPITAL GAIN HAS ARISEN ON ACCOUNT OF SALE OF FLATS COMING TO ASSESSEES SHARE BY VIRTUE OF THE DEVELOPMENT AG REEMENT ENTERED INTO BY THE ASSESSEE WITH M/S. JMR PROMOTER S AND BUILDERS. THUS, IT IS CLEAR THAT THE AO WHILE PASSI NG THE ORDER U/S 147 OF THE ACT HAD ALL THE MATERIAL BEFORE HIM TO C OMPUTE THE CAPITAL GAIN. THE DECISION OF THE HON'BLE SUPREME C OURT IN THE CASE OF KELVINATOR INDIA LTD IS, IN OUR OPINION, AP PLICABLE TO THE FACTS OF THE CASE BEFORE US. THEREFORE, IN OUR OPIN ION, THE REOPENING OF THE ASSESSMENT IS VOID AS RIGHTLY HELD BY THE CIT (A). THUS, GROUNDS OF APPEAL NO.1 (A) & (B) ARE REJECTED . 10. AS REGARDS GROUNDS 1(C) AND (D), WE FIND THAT T HE REVENUE HAS FILED A PAPER BOOK IN WHICH THE DEVELOP MENT AGREEMENT DATED 12.03.2007, 17.04.2008 AND THE SUBS EQUENT AGREEMENT DATED 9.5.2008 ARE PLACED ON RECORD AT PA GES 25 TO 52 OF THE PAPER BOOK. IN ORDER TO COME TO A SUBJECTIVE CONCLUSION AS TO WHEN THE DEVELOPMENT AGREEMENT HAS BEEN ENTERED INTO BY THE ASSESSEE WITH THE DEVELOPERS, WE HAVE PERUSED AND E XAMINED THE CONTENTS OF THE DEVELOPMENT AGREEMENT DATED 12.03.2 007 AND ALSO THE REGISTERED DEVELOPMENT AGREEMENT-CUM-GPA D ATED 17.04.2008. WE FIND THAT IN THE DEVELOPMENT AGREEME NT DATED 12.03.2007, IT IS CLEARLY STATED THAT THE POSSESSIO N OF THE PROPERTY HAS BEEN HANDED OVER ON THE DATE OF THE AGREEMENT W HILE IN THE AGREEMENT DATED 17.04.2008, IT IS STATED THAT THE O WNERS JOINTLY AND SEVERALLY GRANTED THE DEVELOPMENT RIGHTS OVER A SCHEDULED PROPERTY TO THE DEVELOPER AND ENTRUSTED THE SCHEDUL ED PROPERTY FOR CONSTRUCTION OF A MODERN RESIDENTIAL BUILDING. EXCEPT FOR THESE TWO VARIATIONS AND ALSO THE FACT THAT THE AGREEMENT DATED ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 9 OF 13 17.04.2008 IS ALSO A GPA, THE TERMS AND CONDITIONS OF BOTH THE AGREEMENT ARE ONE AND THE SAME. THE SHARING RATIO O F 40:60 IS ALSO EMBEDDED IN BOTH THE AGREEMENTS. THE SUPPLEMEN TARY AGREEMENT ONLY HAD MARKED THE FLATS TO BE SHARED BY THE ASSESSEE AND THE OTHER OWNERS AND THE DEVELOPER. THEREFORE, THE UNREGISTERED DEVELOPMENT AGREEMENT DATED 12.03.2007 IS THE FIRST AGREEMENT BY VIRTUE OF WHICH THE ASSESSEE HAS ENTER ED INTO AN AGREEMENT AND ALSO HANDED OVER THE PHYSICAL POSSESS ION OF THE PROPERTY. THEREFORE, IN OUR OPINION, THIS AGREEMENT IS TO BE CONSIDERED AS THE ACTUAL DEVELOPMENT AGREEMENT BY V IRTUE OF WHICH THERE IS A TRANSFER OF THE RIGHTS IN THE PROP ERTY TO THE DEVELOPERS FOR CONSTRUCTION OF THE RESIDENTIAL PROP ERTY. THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PO TLA NAGESHWARA RAO VS. CIT IN ITTA NO.245/2014 DATED 9.4.2014 WHIC H PLACED AT PAGES 98 TO 101 HAS HELD AS UNDER: IN THE CONTEXT OF THE ABOVE SUBMISSION, WE HAVE TO SEE WHETHER IN THIS CASE ANY SUBSTANTIAL QUESTION OF LA W IS INVOLVED OR NOT. THE LEARNED TRIBUNAL ON FACT FOUND AS FOLLOWS: IN THE INSTANT CASE, ON 07.03.2003 AN AGREEMENT WAS ENTERED INTO BY THE ASSESSEE WITH M/S. BHAVYA CONSTRUCTIONS PVT., LTD., AND THE PLAN OF THE BUILD ING WAS APPROVED ON 31.03.2003. THESE DATES FALL IN THE PREVIOUS YEAR 2002-03, RELEVANT TO ASSESSMENT YEAR 2003-04. THUS, IN THIS CASE, THE LAND BEING CAPITAL ASSET WAS TRANSFERRED BY THE ASSESSEE TO THE DEVELO PER DURING THE ASSESSMENT YEAR UNDER CONSIDERATION, VIZ ., 2003-04, FOR CONSTRUCTION AND IT IS ENOUGH IF THE ASSESSEE HAS RECEIVED THE RIGHT TO RECEIVE CONSIDERATION ON A LATER DATE, SO AS TO ATTRACT ELIGIBILITY TO TAX ON CAPITAL GAINS DURING THE YEAR UNDER APPEAL. ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 10 OF 13 THE DEFINITION OF TRANSFER UNDER SECTION 2(47) OF THE INCOME TAX ACT, 1961, READS AS FOLLOWS: TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUDES, - (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK- IN- TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERS ION OR TREATMENT; OR (IVA) THE MATURITY OR REDEMPTION O F A ZERO COUPON BOND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A COOPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. WHILE DEALING WITH THE SUBMISSION OF MR. VASANT KUMAR TRANSFER IS DEEMED TO HAVE TAKEN PLACE IN THE YEAR WHEN THE CONSIDERATION HAS BEEN ACTUALLY PAID, WE ARE OF THE VIEW THAT THE LANGUAGE OF SECTION 53- A OF THE TRANSFER OF PROPERTY ACT, 1882, WHICH HAS BEEN ENGRAFTED IN THE AFORESAID DEFINITION OF SECTION 2(47) OF THE INCOME TAX ACT, 1961, DOES NOT CONTEMPLATE ANY PAYMENT OF CONSIDERATION. WE SET OUT SECTION 53-A , WHICH READS AS UNDER: PART PERFORMANCE WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY B Y WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH T HE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 11 OF 13 ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT , TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREO F, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF TH E CONTRACT, AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT WHERE THERE IS AN INSTRUMENT O F TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE T IME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMI NG UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANS FEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONTRA CT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. THEREFORE, WE ARE OF THE VIEW, WHILE UPHOLDING THE LEARNED TRIBUNALS APPLICATION OF LAW ON THIS FACT, THAT PAYMENT OF CONSIDERATION ON THE DATE OF AGREEMENT O F SALE IS NOT REQUIRED, IT MAY BE DEFERRED FOR FUTURE DATE. THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT ARE CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN THE TRANSFER IS COMPLETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREEMENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATI ON FOR THE PURPOSE OF ASSESSMENT OF INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FACTUALLY IT WAS FOUND THAT BOTH THE AFORESAID ASPECTS TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003- 04. HENCE, THE LEARNED TRIBUNAL HAS RIGHTLY HELD TH AT THE APPELLANT IS LIABLE TO PAY TAX ON THE CAPITAL G AIN FOR THE ASSESSMENT YEAR. ACCORDINGLY, WE DO NOT FIN D ANY ELEMENT OF LAW TO ADMIT THIS APPEAL ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 12 OF 13 GOING BY THE ABOVE RATIONALE, WE FIND THAT THE CAPI TAL GAINS WOULD NOT ARISE IN THE A.Y 2009-10 AS IN THE PRESENT CASE ALSO THE DEVELOPMENT AGREEMENT IS DATED 12.03.2007 AND THE H UDA BUILDING PERMISSIONS WERE OBTAINED IN THE FINANCIAL YEAR 2007-08 RELEVANT TO THE A.Y 2008-09. IN VIEW OF THE SAME, TH E REVENUES GROUNDS OF APPEAL 1(C) AND (D) ARE REJECTED. 11. THE ADDITIONAL GROUND OF APPEAL RAISED BY THE R EVENUE THAT IN THE ALTERNATIVE, THE CAPITAL GAIN SHOULD BE BROUGHT TO TAX IN THE A.Y 2007-08 IS CONCERNED, WE ARE OF THE OPINI ON THAT THIS TRIBUNAL CANNOT GIVE A DIRECTION TO THE AO TO BRING TO TAX ANY INCOME IN THE A.Y WHICH IS NOT BEFORE US. IT IS LEF T OPEN TO THE AO TO TAKE REMEDIAL ACTION, IF ANY, IF THE LAW SO PERM ITS. THE ADDITIONAL GROUNDS OF APPEAL ARE ALSO THUS REJECTED . C.O. NO.11/HYD/2016 12. AS REGARDS THE CROSS OBJECTION OF THE ASSESSEE, WE FIND THAT THE ASSESSEE WHILE OFFERING THE CAPITAL GAINS TO TAX HAS CLAIMED THAT IT HAS GIVEN DISCOUNT OF RS.15,79,000 TO THE CUSTOMERS OVER THE PERIOD OF 2008-09 TO 2011-12. TH E AO WHILE BRINGING THE ENTIRE CAPITAL GAINS TO TAX IN THE A.Y 2009-10 HAS DISALLOWED THE DISCOUNT HOLDING THAT THE ASSESSEE H AS NOT BEEN ABLE TO FILE ANY EVIDENCE TO SUBSTANTIATE THE CLAIM AND THE CIT (A) HAS ALSO CONFIRMED THE SAID DISALLOWANCE. HOWEVER, WE HAVE ALREADY HELD THAT THE REOPENING IS NOT VALID AND TH AT THE CAPITAL GAIN DID NOT ARISE DURING THE RELEVANT A.Y 2009-10. THEREFORE, WE DO NOT SEE ANY REASON TO ADJUDICATE THIS GROUND AT THIS STAGE. THEREFORE, THE CROSS OBJECTION OF THE ASSESSEE IS R EJECTED. ITA 1306 OF 2015 AND CO 11 OF 2016 Y MOHA N RAO HYDERABAD PAGE 13 OF 13 13. IN THE RESULT, THE REVENUES APPEAL AND THE C.O . OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST JULY, 2017. VINODAN/SPS COPY TO: 1 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 15(1), 1 ST FLOOR, I.T. TOWERS, AC GUARDS, HYDERABAD 2 SHRI Y. MOHAN RAO, H.NO.12-13-333 STREET NO.10, TA RNAKA, SECUNDERABAD 500017 3 CIT (A)-7 HYDERABAD 4 PR. CIT 7 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER