K.Prabhakar Rao, V. ACIT,

CO 5/RAN/2014

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1544 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 4 month(s) 7 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 03-11-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 26-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: CHOUDHARY ORAON
• Assessee Lawyers: K N PRASAD
• Section: 144

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL: CIRCUIT BENCH : RANCHI [BEFORE HONBLE S/SHRI N. S. SAINI, AM AND GEORGE M ATHAN, JM] ITA NO.210/RAN/2014 ASSESSMENT YEAR: 2010-11 THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, 2, BAGMATI ROAD, NORTHERN TOWN, JAMSHEDPUR 831 001 VS SHRI K. PRABHAKAR RAO, G-15, NARGISH, ASHIANA GARDEN, SONARI, JAMSHEDPUR PAN: AEIPP0279E (APPELLANT) (RESPONDENT) C. O. NO.05/RAN/2014 (IN ITA NO.210/RAN/2014 -AY: 2010-11) SHRI K. PRABHAKAR RAO, G-15, NARGISH,ASHIANA GARDEN, SONARI, JAMSHEDPUR PAN: AEIPP0279E VS THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE-2, 2, BAGMATI ROAD, NORTHERN TOWN, JAMSHEDPUR 831 001 (APPELLANT) (RESPONDENT) REVENUE BY SHRI CHOUDHARY ORAON, DR ASSESSEE BY SHRI K. N. PRASAD, ADVOCATE DATE OF HEARING: 03-11-2015 DATE OF PRONOUNCEMENT: 03-11-2015 O R D E R PER GEORGE MATHAN, JM: ITA NO.210/RAN/2014 IS AN APPEAL FILED BY THE REV ENUE AND C. O. NO.05/RAN/2014 IS A CROSS OBJECTION FILED BY THE ASSESSEE IN R E V E N U E S A P P E A L N O . 2 1 0 / R A N / 2 0 1 4 . ITA NO.210 & CO NO.04/R/2014 2 2. SHRI CHAUDHARY ORAON, LEARNED DR REPRESENTED ON BEHALF OF THE REVENUE AND SHRI K. N. PRASAD, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE. 3. IT WAS SUBMITTED BY THE LEARNED DR THAT THE IN T HE COURSE OF ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD SOL D AN IMMOVABLE PROPERTY AT A VALUE OF RS.70,62,000/- ON 28 TH MAY,2009. NOTICES ISSUED TO THE ASSESSEE REMAINED UN-REPRESENTED. IT WAS SUBMITTED THAT CONSEQUENTLY, THE AO WAS COMPELLED TO COMPLETE THE ASSESSMENT U/S 144 OF THE ACT BRINGING TO TAX THE SAID CONSIDE RATION OF THE IMMOVABLE PROPERTY. IT WAS A SUBMISSION THAT ON APP EAL, THE LEARNED CIT(A) HAS DELETED THE ADDITION BY HOLDING THAT THE PROPERTY STOOD TRANSFERRED DURING THE FINANCIAL YEAR 2006-07 RELEV ANT TO THE ASSESSMENT YEAR 2007-08 AND THEREFORE, THE CAPITAL GAINS IF ANY, WAS LIABLE TO BE ASSESSED ONLY DURING THE ASSESSMENT YE AR 2007-08 AND NOT IN 2009-10. IT WAS A SUBMISSION THAT REGISTRATI ON OF THE DEED OF TRANSFER HAS BEEN TAKEN PLACE ONLY ON 28 TH OF MAY,2009, BUT THE CAPITAL GAIN WAS LIABLE TO BE ASSESSED DURING THE A SSESSMENT YEAR 2010-11. IT WAS A SUBMISSION THAT THE ORDER OF THE LEARNED CIT(A) WAS LIABLE TO BE UPHELD. 4. IN REPLY, THE LEARNED AR SUBMITTED THAT THE ASSE SSEE OWNED 0.300 ACRES OF LAND. THE ASSESSEE HAD ENTERED INTO A DEVELOPMENT AGREEMENT ON 20 TH DECEMBER, 2000 WITH ONE SHRI BISWANATH RUNGTA FOR DEVELOPMENT OF THE SAID PROPERTY. IT WAS A SUBM ISSION THAT AS PER THE SAID DEVELOPMENT AGREEMENT, THE ASSESSEE WAS TO RECEIVE HALF PORTION OF THE LAND MEASURING AN AREA OF 1200 SQ. M TRS. APPROXIMATELY CONSISTING OF BASEMENT, GROUND FLOOR, FIRST FLOOR A ND SECOND STORIED OF THE BUILDING OF OWNERSHIP/RESIDENTIAL FLAT, COMMERC IAL SHOPS WITH ALL FITTINGS AND FIXTURES. IT WAS A SUBMISSION THAT AS PER CLAUSE 2 AND 3 OF ITA NO.210 & CO NO.04/R/2014 3 THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAD HANDED OVER POSSESSION OF THE SAID IMMOVABLE PROPERTY TO THE DE VELOPER WHEN HE SIGNED THE DEVELOPMENT AGREEMENT. IT WAS A SUBMISSI ON THAT AFTER THE DEED OF TRANSFER, SUBSEQUENTLY HAD ALSO BEEN GIVEN POWER OF ATTORNEY ON 30-01-2008 TO THE SAID DEVELOPER, SHRI BISWANATH RUNGTA IN RESPECT OF THE PROPERTY. IT WAS A SUBMISSION THAT S UBSEQUENTLY, ON 28 TH MAY, 2009, THE ASSESSEE ENTERED INTO A DEED OF TRAN SFER WITH SHRI BISWANATH RUNGTA, THE DEVELOPER WHEREIN THE ASSESSE E HAD TRANSFERRED A PUCCA MULTISTORIED COMMERCIAL BUILDING WHICH CONS ISTING OF BASEMENT, GROUND FLOOR, FIRST FLOOR AND HAVING BUIL T-UP AREA OF 28FT.4.5 X 42FT.6 IN EACH FLOOR HAVING TOTAL BUIL T-UP AREA OF ALL THE FLOORS 4844 SQ. FT. STANDING ON THE LAND MEASURING 28FT.4.5 X 47FT.6 BEING PORTION OF HOLDING NO. NIL, SITUATED AT K. RO AD, SOUTHERN TOWN AREA, BISTUPUR, WITHIN P. S. BISTUPUR, TOWN JAMSHED PUR, DIST EAST SINGHBHUM, DISTRICT SUB-REGISTRY OFFICE, JAMSHEDPUR . IT WAS A SUBMISSION THAT THE ASSESSEE HAS NOT SOLD ANY RIGHT S AS THE TRANSFER HAS ALREADY TAKEN PLACE WHEN THE DEVELOPMENT AGREEM ENT WAS ENTERED INTO IN 2000 AND AS THE ASSESSEE HAS NOT RE CEIVED ANY CONSIDERATION, NO CAPITAL GAINS IS LIABLE TO BE TAX ED IN THE ASSESSEES HANDS FOR THE ASSESSMENT YEAR 2010-11. IT WAS A FUR THER SUBMISSION THAT IN THE CROSS OBJECTION, THE ASSESSEE HAS SUPPO RTED THE ORDER OF THE LEARNED CIT(A) AND HAS ALSO CHALLENGED THAT TH E CAPITAL GAINS WAS TO BE TAXED IN THE ASSESSMENT YEAR 2007-08. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. TO MAK E THE THINGS CLEAR, WE NEED TO DETERMINE WHAT WAS TRANSFERRED AN D WHAT WAS THE NATURE OF TRANSACTION. THE FACTS WHICH REMAINED UND ISPUTED ARE AS FOLLOWS:- ITA NO.210 & CO NO.04/R/2014 4 (I) THE ASSESSEE OWNED IMMOVABLE PROPERTY TO AN EXT ENT OF 0.300 ACRES IN JAMSHEDPUR. THIS IS AS PER SCHEDULE A TO THE DEVELOPMENT AGREEMENT DATED 20-12-2000. IT IS EXTRA CTED AS FOLLOWS:- ALL THAT PIECE AND PARCEL OF LAND MEASURING 619 X 526 EQUIVALENT TO 0.300 ACRE MORE OR LESS SITUATED AN T ISCOS HOLDING NO.NIL, K. ROAD, SOUTHERN TOWN AREA, BISTUPUR, P. S . BISTUPUR, JAMSHEDPUR, DIST. SINGHBHUM EAST, JHARKHAND STATE, WHICH IS BOUNDED ON NORTH: COMPANYS ALLEY SOUTH: PORTION OF SRI S. N. RUNGTA EAST: COMPANYS ROAD KNOWN AS 6 TH AVENUE. WEST: COMPANYS QUARTERS. AS PER THE DEVELOPMENT AGREEMENT, THE ASSESSEE WAS TO GET THE VALUE AS PER SCHEDULE B OF THE DEVELOPMENT AGREEMENT WH ICH IS AS UNDER:- HALF PORTION OF SCHEDULE A BEING PORTION MEASUR ING AN AREA OF 1621 SQ. FT. APPROX. CONSISTING OF BASEMENT, GROUND FLOOR, 1 ST FLOOR & 2 ND STORIED BUILDING OF OWNERSHIP, RESIDENTIAL FLATS, COMMERCIAL/SHOPS WITH ALL FITTINGS AND FIXTURES WHI CH IS BOUNDED BY:- NORTH: FIRST PARTYS PORTION (HALF OF SCHEDULE A ) SOUTH: PORTION OF SRI S. N. RUNGTA EAST: COMPANYS ROAD KNOWN AS 6 TH AVENUE WEST: COMPANYS QUARTERS. NOW, THE CLAIM OF THE ASSESSEE IS (I) THAT THE ASSE SSEE HAD HANDED OVER THE POSSESSION OF THE SAID IMMOVABLE PR OPERTY TO THE DEVELOPER AT THE TIME OF SIGNING THE DEVELOPMENT AG REEMENT ITSELF. HOWEVER, A PERUSAL OF THE DEVELOPMENT AGREEMENT CLE ARLY SHOWS THAT ITA NO.210 & CO NO.04/R/2014 5 IT IS ONLY THE RIGHTS OF DEVELOPMENT OF THE SAID LA ND WHICH HAS BEEN GIVEN TO THE DEVELOPER; THE POSSESSION OF THE SAID LAND HAS NOT BEEN GIVEN TO THE DEVELOPER IN THE DEVELOPMENT AGREEMENT . CLAUSE 3 OF THE SAID AGREEMENT ALSO GIVES ONLY LICENSE AND PERMISSI ON TO ENTER UPON THE LAND. IN FACT, CLAUSE 14 OF THE SAID DEVELOPMEN T AGREEMENT SPECIFIES THAT ONLY AFTER COMPLETION OF THE MULTIST ORIED BUILDING IN THE SCHEDULE A LAND, THE DEVELOPER WOULD BE ENTITLED TO ONE-HALF PORTION OF HE SAID LAND AND IF, THE ASSESSEE DOES NOT TRANS FER THE SAID HALF PORTION, THE DEVELOPER WOULD BE ENTITLED TO GO TO C OURT FOR THE SAID HALF SHARE. NOW, WHAT SHOULD BE SPECIFICALLY UNDERSTOOD IN THIS CONTEXT IS THAT BY THE DEVELOPMENT AGREEMENT THE PARTIES THERE TO HAVE RECOGNIZED EXISTENCE OF THE LAND AND HOW THE LAND S HOULD BE DIVIDED AFTER THE CONSTRUCTION IS COMPLETED. THERE IS NO DI SCUSSION AS TO THE AREA OF THE SUPER STRUCTURES OR THE SPECIFICATION T HERETO. THERE IS NO MENTION OF THE LAND BEING HANDED OVER BY THE ASSESS EE TO THE DEVELOPER. IN FACT, THE DEVELOPMENT AGREEMENT SPECI FICALLY PERMITS THE DEVELOPER TO GET THE SHARE OF HIS LAND ONLY ON COMP LETION OF THE SUPER STRUCTURE AND HANDING OVER THE HALF SHARE TO THE AS SESSEE. THE ASSESSEE HAS ALSO SUBSEQUENTLY ON 30-01-2008 ENTERE D INTO A POWER OF ATTORNEY GIVING THE RIGHTS TO ADVERTISE, NEGOTIA TE FOR SALE OF THE SAID IMMOVABLE PROPERTY TO THE DEVELOPER. NOW, THE SCHED ULE MENTIONED IN THE SAID POWER OF ATTORNEY IS AS FOLLOWS:- ALL THAT PIECE AND PARCEL OF THE LAND MEASURING 61 FT.9 X 52FT.6 INCHES, EQUIVALENT TO 3177 SQ. FT. SITUATE D ON TISCOS HOLDING NO. NIL, K ROAD, SOUTHERN AREA, BISTUPUR, P. S. BISTUPUR, JAMSHEDPUR, DISTRICT SINGHBHUM EAST, JHAR KHAND STATE, WHICH IS BOUNDED BY:- NORTH: - COMPANYS ALLEY ITA NO.210 & CO NO.04/R/2014 6 SOUTH: - PORTION OF S. N. RUNGTA & EAST: - COMPANYS ROAD, KNOWN AS 6 TH AVENUE; WEST: - PORTION OF DORIS ANDREWS. THEREFORE, THE POWER OF ATTORNEY HAD BEEN GRANTED B Y THE ASSESSEE TO THE DEVELOPER IN RESPECT OF THE COMPLETE PORTION OF THE LAND. WHETHER THIS IS THE VALID POWER ATTORNEY OR NOT, IS NOT THE ISSUE BEFORE THE TRIBUNAL TO DECIDE ESPECIALLY IN VIEW OF THE DECISI ON OF THE HONBLE SUPREME COURT WHEREIN IT HAS BEEN HELD THAT SALE TH ROUGH THE GENERAL POWER OF ATTORNEY WILL NOT BE VALID SALE. THE LEARN ED CIT (A) HAS DRAWN THE CONCLUSION THAT THE TRANSFER TOOK PLACE DURING THE ASSESSMENT YEAR 2007-08 ON THE GROUND THAT ON 01-04-2006, THE MULTI STORY BUILDING WAS DISTRIBUTED AMONGST THE OWNER AND THE DEVELOPER . IN ANY CASE, IT CANNOT BE SUPPORTED INSOFAR AS THERE ARE NO DOCUMEN TS EVIDENCING DISTRIBUTION OF THE MULTI STORIED BUILDING AMONGST THE OWNER AND THE DEVELOPER. THOUGH, THE DEVELOPMENT AGREEMENT TALKS OF THE SUPER STRUCTURE BEING AVAILABLE TO THE ASSESSEE AND TO TH E DEVELOPER AS MENTIONED EARLIER, NO DETAILS OF AREA OR SPECIFICAT ION IS AVAILABLE. WHAT IS TO BE NOW UNDERSTOOD IS THAT BY THE DEVELOPMENT AGREEMENT, THE ASSESSEE HAS PERMITTED THE DEVELOPER TO ENTER THE L AND FOR THE PURPOSE OF DEVELOPMENT OF THE LAND, POSSESSION HAS NOT BEEN HANDED OVER. ON 30-01-2008, THE ASSESSEE HAS GRANTED THE DEVELOPER A POWER OF ATTORNEY TO SELL THE IMMOVABLE PROPERTY BEING THE L AND. THERE IS NO DISCUSSION OF THE SUPER STRUCTURE OR BUILDING ON TH E SAID LAND IN THE POWER OF ATTORNEY. NOW, COMING TO THE DEED OF TRANS FER, THE ASSESSEE HAS TRANSFERRED HALF THE LAND BEING 1352 SQ. FT. OF THE LAND ALONG WITH 4844 SQ. FT. OF THE TOTAL BUILT-UP AREA OF THE MULT ISTORIED COMMERCIAL BUILDING AS HAS BEEN MENTIONED AS UNDER:- ITA NO.210 & CO NO.04/R/2014 7 A PUCCA MULTISTORED COMMERCIAL BUILDING WHICH CON SISTS OF BASEMENT, GROUND FLOOR, FIRST FLOOR AND SECOND FLOO R HAVING BUILT-UP AREA 28FT.4.5 X 42FT.6 IN EACH FLOOR HAVING TOT AL BUILT UP AREA OF ALL THE FLOORS 4844 SQ. FT. STANDING ON LAND MEASURING 28.4.5 X 476 BEING PORTION OF HOLDING NO. NIL, SITUATED AT K. RO AD, SOUTHERN TOWN AREA, BISTUPUR, WITHIN P. S. BISTUPUR, TOWN JAMSHED PUR, DISTRICT EAST SINGHBHUM, DISTRICT SUB-REGISTRY OFFICE, JAMSHEDPUR WHICH IS BOUNDED AS FOLLOWS:- NORTH: TRANSFEROR SOUTH : TRANSFEREE IN OCCUPATION OF PORTION OF HOL DING NO. NIL EAST: COMPANYS ROAD KNOWN AS 6 TH AVENUE WEST: MICHAEL JOHN TOWER. 6. THIS DEED OF TRANSFER IS DATED 28-05-2009 AND TH E CONSIDERATION HAS BEEN VALUED AT RS.70,62,000/-. THUS, IT IS ONLY WHEN THE DEED OF TRANSFER WAS EXECUTED BY THE ASSESSEE IN FAVOUR OF SHRI BISWANATH RUNGTA, THE DEVELOPER THAT THE DEVELOPER GOT HIS RI GHTS OVER THE LAND. NOW, IN THE TRANSFER DEED, THE LAND HAS BEEN MARKED BY MEETS AND BOUNDS AND IT IS NOT THE UNDIVIDED INTEREST IN THE LAND THAT HAS BEEN TRANSFERRED. WHAT IS THE INVESTMENT OF THE ASSESSEE IN THE MULTISTORIED COMMERCIAL BUILDING IS NOT KNOWN. HOW, HE IS ENTITL ED TO TRANSFER 4884 SQ. FT. OF THE BUILDING IS NOT UNDERSTANDABLE, WHEN HE SAYS HE HAS NOT INVESTED ANY MONEY IN THE SAME. BUT, CLAUSE 4 OF TH E TRANSFER DEED AT PAGE 11 AND 12 SPECIFICALLY RECOGNIZES THAT THE ASS ESSEE IS THE OWNER OF THE PREMISES. IN ANY CASE, THIS IS NOT THE ISSUE BEFORE US. THE ISSUE IS ONLY AS TO WHETHER THE CAPITAL GAINS IS LIABLE T O BE TAXED IN THE ASSESSMENT YEAR 2010-11 OR 2007-08 OR 2001-02. IN T HE PRESENT CASE, THE TRANSFER OF THE IMMOVABLE PROPERTY SPECIF ICALLY BY MEETS AND BOUNDS HAD TAKEN PLACE ONLY ON 28-05-2009 BY A REGI STERED DEED OF ITA NO.210 & CO NO.04/R/2014 8 TRANSFER WHEREBY THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE ON 20-12-2000 WITH SHRI BISWANATH RUNGTA H AS BEEN GIVEN EFFECT TO. THIS BEING SO, WE ARE OF THE VIEW THAT T HE CAPITAL GAINS IS LIABLE TO BE TAXED ONLY DURING THE ASSESSMENT YEAR 2010-11. THE ISSUE AS TO WHETHER IT IS LONG TERM CAPITAL GAINS OR SHOR T TERM CAPITAL GAINS IS NOT BEFORE US. THIS BEING SO, WE ARE OF THE VIEW TH AT THE ORDER OF THE LEARNED CIT(A) IS ERRONEOUS ON THE BASIS OF THE UND ISPUTED FACTS AS EXTRACTED ABOVE. CONSEQUENTLY, THE ORDER OF THE LEA RNED CIT(A) STANDS REVERSED AND THAT OF THE AO IS RESTORED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED. 8. IN RESPECT OF THE CROSS OBJECTION FILED BY THE A SSESSEE, AS WE HAVE ALREADY HELD THAT THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS ON THE BASIS OF THE FACTS AND AS WE HAVE ALREADY REVER SED THE ORDER OF THE LEARNED CIT(A) AND RESTORED THE ORDER OF THE AO, TH E CROSS OBJECTION FILED BY THE ASSESSEE IS DISMISSED. 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS ALLO WED AND THE CROSS OBJECTION OF THE ASSESSEE IS DISMISSED. THE ORDER PRONOUN CED IN THE OPEN COURT AT THE CLOSE OF HEARING ON 03-11-2015. SD/- SD/- ( N .S. SAINI ) ACCOUNTANT MEMBER (GEORGE MATHAN ) JUDICIAL MEMBER DATE : 03 - 11 - 2015 L LL LK DEKA/SR.PS K DEKA/SR.PS K DEKA/SR.PS K DEKA/SR.PS ITA NO.210 & CO NO.04/R/2014 9 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) - 5. THE DR, ITAT, RANCHI 6. GUARD FILE BY ORDER DATE INITIAL ORIGINAL DICTATION PAD & DRAFT S ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 03.11.15 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 03.11.15 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 03.11.15 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER 03.11. 15 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 03.11.15 S R.PS 6. DATE OF PRONOUNCEMENT 03.11.15 SR.PS 7. FILE SENT TO THE BENCH CLERK ` 03 .11.15 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER