P. Pratap Reddy, representative assessee P. Rama Devi, Hyd, Hyderabad V. ITO, Ward-5(2), Hyd, Hyderabad

ITA 106/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2702 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 02-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 04-02-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition; Competent authority
• Section: 50C; 142(1); 5(2); 147; 148

Judgement Text

ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.106/HYD/2016 (ASSESSMENT YEAR: 2007-08) SHRI P. PRATAP REDDY REP. ASSESSEE SMT. P. RAMA DEVI, (L/R SRI P. RUKMINI- KANTH REDDY) HYDERABAD PAN: AEJPP 6272 J VS INCOME TAX OFFICER WARD 5(2) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C. DEVDAS FOR REVENUE : SMT. N. SWAPNA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2007-08 AGAIN ST THE ORDER OF THE CIT (A), DATED 13.11.2015 . THE AS SESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE HON'BLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS ON FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT NOT TO HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER IN INITIATION OF PROCEEDINGS U/S.147 OF THE I.T ACT AS THE SAME WAS WITHOUT JURISDICTION AND THEREFORE THE SAME IS INVALID. 3. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THERE WAS NO ESCAPEMENT OF INCOME AS ALLEGED AND THEREFORE OUGHT TO HAVE QUASHED THE PROCEEDINGS U/S 147 OF THE IT ACT. DATE OF HEARING : 02.08.2017 DATE OF PRONOUNCEMENT : 09.08.2017 ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 2 OF 14 4. THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT THE SALE TRANSACTION WAS EFFECTED IN THE STATUS OF HUF AND THEREFORE THERE WAS NO ESCAPEMENT OF INCOME IN THE STATUS OF INDIVIDUAL AND HENCE QUASHED THE ASSESSMENT ORDER. 5. THE HON'BLE CIT(A) ERRED IN SUSTAINING THE DECISION OF THE ASSESSING OFFICER TO TREAT THE SALE TRANSACTION PERTAINING TO [HUF] AS THAT OF INDIVIDUAL AND THEREFORE THE ADDITION OUGHT TO HAVE BEEN DELETED. 6. IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE, THE HON'BLE CIT(A) OUGHT TO HAVE OBSERVED THAT PROVISIONS OF 50C WOULD NOT HAVE ANY APPLICATION AND THEREFORE THE ACTION OF THE ASSESSING OFFICER IN MAKING ASSESSMENT BY INVOKING PROVISIONS OF SECTION 50C OF THE IT ACT IS NOT SUSTAINABLE. 7. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF HEARING. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DID NOT FILE ANY RETURN OF INCOME FOR T HE A.Y 2007-08, THOUGH HE HAD TAXABLE INCOME. THEREFORE, A NOTICE U /S 148 WAS ISSUED ON 2.8.2013, IN RESPONSE TO WHICH ASSESSEES SON SHRI RUKMINIKANTH REDDY STATED THAT HIS FATHER EXPIRED O N 19.9.2013 AND THAT HE IS HIS LEGAL HEIR. HE SUBMITTED THAT HE IS STAYING IN USA AS HE IS DOING A JOB THERE. THEREAFTER, SMT. P. RAMA DEVI, W/O OF THE ASSESSEE AND THE MOTHER OF SRI P. RUKMIN IKANTH REDDY FILED THE RETURN OF INCOME (IN THE CAPACITY OF REPR ESENTATIVE ASSESSEE) ON 9.1.2014 AND RETURNED AN INCOME OF RS. 32,00,000. THE ASSESSMENT WAS COMPLETED U/S 143 (3) RWS 147 OF THE ACT ON 19.3.2014 AND ASSESSED THE INCOME AT RS.64,50,000. AGGRIEVED BY ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 3 OF 14 THE ADDITION, THE ASSESSEE APPEALED BEFORE THE CIT (A) WHO ALLOWED THE SAME AND THE CONSEQUENTIAL ORDER WAS PASSED ON 28.8.2014 REVISING THE TOTAL INCOME TO RS.32,50,000. 3. THEREAFTER, THE AO RECEIVED INFORMATION FROM THE SUB REGISTRARS OFFICE THAT THE ASSESSEE HAS SOLD A PRO PERTY AT MOOSAPET, HYDERABAD DURING THE FINANCIAL YEAR 2006- 07 RELEVANT TO THE A.Y 2007-08 FOR A CONSIDERATION OF RS.15,00,0 00, THOUGH THE GOVT. VALUE WAS RS.36,22,500. OBSERVING THAT TH E ASSESSEE HAS NOT DISCLOSED THE CAPITAL GAINS ON THIS TRANSAC TION IN HIS RETURN OF INCOME, THE AO ISSUED ANOTHER NOTICE U/S 148 DATED 27.3.2014 FOR RE-ASSESSMENT U/S 147 OF THE ACT. THE ASSESSEE DID NOT RESPOND TO THE SAID NOTICE AND THEREFORE, FURTH ER NOTICES WERE ISSUED. IN RESPONSE TO THE SHOW CAUSE NOTICE DATED 16.12.2014 U/S 142(1) OF THE ACT, THE REPRESENTATIVE ASSESSEE FILED A REPLY ON 13.12.2015 STATING THAT THE PROPERTY SOLD WAS HELD BY THE ASSESSEE IN THE STATUS OF THE KARTA OF HUF ALONG WI TH HIS SON SHRI RUKMINIKANTH REDDY AS IS EVIDENT FROM THE RECITALS IN THE SALE DEED AND NOT IN HIS INDIVIDUAL CAPACITY AND THEREFO RE, CANNOT BE TAXED IN HIS HANDS. THE AO WAS, HOWEVER, NOT CONVIN CED WITH THE ASSESSEES CONTENTIONS AND HELD THAT THE ASSESSEE H AD ACQUIRED THE SAID LAND IN HIS INDIVIDUAL STATUS AND NOT IN T HE STATUS OF HUF AND THE RECITALS IN THE SALE DEED ABOUT THE HUF STA TUS IS ONLY FOR THE PURPOSES OF URBAN LAND CEILING ACT. HE ALSO OBS ERVED THAT THE ASSESSEE FILED HUF RETURN ON 18.11.2006 BUT HE HAD N OT DECLARED THE CAPITAL GAIN ARISING OUT OF THE ABOVE TRANSACTI ON. HE THEREFORE, HELD THAT THE PROPERTY SOLD BELONGS TO THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AND NOT TO THE HUF. ACCORDINGLY , HE COMPUTED ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 4 OF 14 THE LONG TERM CAPITAL GAIN AND BROUGHT IT TO TAX IN THE HANDS OF THE ASSESSEE. 4. THE AO FURTHER OBSERVED THAT THE SALE CONSIDERAT ION MENTIONED IN THE SALE DEED WAS RS.15.00 LAKHS ONLY WHILE AS PER THE SUB-REGISTRARS OFFICE, THE VALUE OF THE PROPER TY WAS RS.36,22,500 AND THE STAMP DUTY WAS ALSO PAID ACCOR DINGLY. HE THEREFORE, ASKED THE ASSESSEE TO EXPLAIN AS TO WHY SECTION 50C SHOULD NOT BE APPLIED. THE ASSESSEE SUBMITTED THAT DUE TO CERTAIN COMPLICATED CIRCUMSTANCES, THE ASSESSEE WAS FORCED TO SELL THE LAND FOR A SUM OF RS.15.00 LAKHS ONLY, THOUGH FOR T HE STAMP DUTY PURPOSES IT WAS VALUED AT RS.36,22,500. THE AO HOWE VER, OBSERVED THAT THE PROVISIONS OF SECTION 50C ARE APP LICABLE TO THE CASE OF THE ASSESSEE AND THEREFORE, ADOPTED THE SAL E CONSIDERATION AT RS.36,22,500 AND BROUGHT THE ENTIRE AMOUNT TO TA X BY TAKING THE COST OF ACQUISITION OF THE LAND AT NIL BECAUS E IT WAS INAM LAND. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL B EFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSES SEE IS IN SECOND APPEAL BEFORE US. 5. GROUND NO.1 IS GENERAL IN NATURE AND HENCE NEEDS NO ADJUDICATION. AS FAR AS GROUNDS 2 TO 4 ARE CONCERNE D, IT IS THE CASE OF THE ASSESSEE THAT THE REOPENING IS DUE TO THE IN FORMATION RECEIVED FROM SRO OFFICE AND EVEN AS PER THE SALE D EED, THE PROPERTY BELONGED TO THE HUF AND THEREFORE, THE AO HAS ERRED IN ISSUANCE OF NOTICE U/S 148 OF THE ACT TO THE ASSESS EE IN HIS INDIVIDUAL CAPACITY. THEREFORE, ACCORDING TO HIM, I NITIATION OF THE RE-ASSESSMENT PROCEEDINGS IS ITSELF INVALID. HE SUB MITTED THAT ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 5 OF 14 THOUGH THE LAND WAS ACQUIRED BY THE ASSESSEE IN HIS INDIVIDUAL CAPACITY AS INAM LAND AND HAS BEEN RECORDED AS OCCU PANT BY THE REVENUE AUTHORITIES AFTER DUE INQUIRIES IN THE YEAR 1993, THE ASSESSEE HAD FORMED THE HUF ALONG WITH HIS SON AND T HIS PROPERTY BELONGED TO THE HUF. HE DREW OUR ATTENTION TO THE RECITALS IN THE SALE DEED TO DEMONSTRATE THAT THE A SSESSEE AND HIS SON DECLARED THE PROPERTY AS A JOINT PROPERTY BEFOR E THE URBAN LAND CEILING AUTHORITIES AND THE AUTHORITIES HAVE P ASSED THE FINAL ORDER IN THE YEAR 2005 AFTER DUE INQUIRY. THEREFORE , ACCORDING TO HIM, THE PROPERTY BELONGED TO THE HUF AND THE RE-ASS ESSMENT PROCEEDINGS IN THE HANDS OF THE INDIVIDUAL TO BRING TO TAX THE LONG TERM CAPITAL GAIN ON ACCOUNT OF THE SALE OF THE PRO PERTY BY THE HUF IS NOT SUSTAINABLE. 6. FURTHER, THE LEARNED COUNSEL FOR THE ASSESSEE HAS ALSO DRAWN OUR ATTENTION TO THE FACT THAT THE 1 ST AND 2 ND PROVISOS OF SECTION 50C ARE APPLICABLE TO THE CASE BEFORE US SI NCE THERE WAS AN ORAL AGREEMENT FOR SALE IN JUNE, 2005 PURSUANT T O WHICH THE VENDEE HAD OBTAINED BANKERS CHEQUE NO.968901 DATED 30.06.2005 FROM THE SBI, OLD MLA QUARTERS BRANCH, H YDERABAD IN FAVOUR OF THE SPECIAL OFFICER COMPETENT AUTHORIT Y, URBAN LAND CEILING, HYDERABAD TO ENABLE THE VENDORS TO MAKE PA YMENT TO THE GOVT. TO SEEK EXEMPTION IN TERMS OF G.O MS NO.456 D ATED 29.07.2002 AND THE SAID BANKERS CHEQUE WAS DELIVER ED TO THE VENDORS TOWARDS FULL PAYMENT OF SALE CONSIDERATION WHEREAS THE SALE DEED HAS BEEN EXECUTED ON 18.11.2006. THEREFOR E, ACCORDING TO HIM, THE VALUE ASSESSABLE BY THE STAMP VALUATION AUTHORITIES ON THE DATE OF THE AGREEMENT IS TO BE CONSIDERED SI NCE THE AGREEMENT OF SALE AND THE SALE DEED ARE NOT IN THE SAME YEAR. ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 6 OF 14 THUS, ACCORDING TO HIM, THE PROVISOS TO SECTION 50C ARE APPLICABLE. HE SUBMITTED THAT SECTION 50C HAVE BEEN AMENDED W.E.F. 1.4.2017 TO THE ABOVE EFFECT AND IT BEING A BENEFICIARY PROVISION, HAS TO BE HELD TO BE CLARIFICATORY IN NA TURE AND APPLICABLE RETROSPECTIVELY. IN SUPPORT OF THIS CONT ENTION, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: A) CIT VS. VATIKA TOWNSHIP P LTD, 367 ITR 466 (S.C) B) CIT VS. SARKAR BUILDERS, 375 ITR 392 (S.C) 7. HE ALSO PLACED RELIANCE ON THE DECISION OF THE H ON'BLE JURISDICTIONAL HIGH COURT REPORTED IN 84 ITR 685 (A .P) FOR THE PROPOSITION THAT THE PROPERTY BELONGS TO THE HUF THO UGH, IT NEVER ACQUIRED THE PROPERTY. 8. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AO AND SUBMITTED THAT THE UNDISPUTEDL Y THE PROPERTY WAS ACQUIRED BY THE ASSESSEE IN HIS INDIVI DUAL STATUS AND IT HAS ALSO BEEN HELD IN HIS INDIVIDUAL STATUS AS IS EVIDENT FROM THE RETURN OF INCOME FILED BY THE HUF WHEREIN T HE TRANSACTION HAS NOT BEEN REFLECTED. IN SUPPORT OF H ER CONTENTION THAT THE PROVISOS TO SECTION 50C ARE APPLICABLE ON LY PROSPECTIVELY, THE LEARNED DR PLACED RELIANCE UPON THE FOLLOWING D ECISIONS: I) GEM GRANITES VS. CIT, 271 ITR 322 S.C II) CIT VS. VATIKA TOWNSHIP (P) LTD, 367 ITR 466 S .C 9. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE BASIC QUESTION BEFORE U S IS AS TO WHETHER THE PROPERTY WAS HELD BY THE ASSESSEE IN HI S INDIVIDUAL CAPACITY OR AS A KARTA OF THE HUF IN WHICH HE AND HI S SON ARE ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 7 OF 14 ALLEGEDLY THE CO-PARCENERS. THERE IS NO DISPUTE THA T THE ASSESSEE HAS ACQUIRED THE PROPERTY AS INAM LAND IN HIS INDIV IDUAL CAPACITY. BY VIRTUE OF THE OCCUPANCY RIGHTS GRANTED IN HIS FAVOUR VIDE CERTIFICATES DATED 12.4.1993, THE ASSESSEE BEC AME THE ABSOLUTE OWNER OF THE PROPERTY. IT IS ONLY THEREAF TER THAT THE PROPERTY IS VESTED IN HUF. THE FOLLOWING RECITALS IN THE SALE DEED ARE IMPORTANT TO CLINCH THE ISSUE: WHEREAS THE LANDS BEARING S.NOS.472,473(P), 535, 544, 545,5 46, 548, 549, 550 AND 466 TO 471 AND 547 ALL ARE SITUATED AT KUKATPALLY(V), KUKATPALLY MUNICIPALITY, BALANAGAR REVENUE MANDAL, RANGA REDDY DIST, ARE THE JOINT FAMILY PROPERTIES OF THE VENDORS NO.1 & 2 HEREIN AND HAVE BEEN IN CONTINUOUS AND UNINTERRUPTED POSSESSION AND ENJOYMENT OF THE SAID LANDS AS ABSOLUTE OWNERS HAVING UNDIVIDED HALF SHARE EACH, AND THE PATTA OF THE SAID LANDS STANDS IN THE NAME OF THE VENDOR NO.1 HEREIN, IN THE REVENUE RECORDS; AND WHEREAS, THE SAID LANDS WERE EARLIER INAM LANDS, AND VENDOR NO.1 HAS BEEN IN LAWFUL POSSESSION AND ENJOYMENT OF THE SAID LANDS, SINCE FEW DECADES; AND WHEREAS THE REVENUE DIVISIONAL OFFICER, CHEVELLA DIVISION, R.R.DIST-CUM INAM ABOLITION TRIBUNAL AFTER NECESSARY ENQUIRY, ISSUED OCCUPANCY CERTIFICATE BEARING R. DIS. NO- 1/2770/901 L3197/90 DATED 12.04.1993 IN THE NAME OF VENDOR NO I HEREIN. REGISTERING HIM AS OCCUPANT IN RESPECT OF AGRICULTURAL LANDS BEARING S NO. 466,467,468. 469.470. 471, 472, 473(P), 535, 534, 544 TO 546,547.548,549 AND 550 TOTALLY ADMEASURING AC. 20-20 GTS, SITUATED AT KUKATPALLY (V) AND MUNICIPALITY, BALANAGAR MANDAI, R.R DISTRICT. AND WHEREAS, PURSUANT TO THE AFOREMENTIONED CERTIFICATE ISSUED UNDER AP.(TELANGANA AREA) ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 8 OF 14 LNAM ABOLITION ACT 1955, THE NAME OF THE VENDOR NO. I HAS BEEN RECORDED IN THE REVENUE RECORDS, I.E. PAHANIES ETC. OF KUKATPALLY (V) AS PATTEDAR OF THE AFOREMENTIONED LANDS, AND SINCE THEN, IN THE PAHANIS (ADANGALS) OF KUKATPALLY (V) THE NAME OF THE VENDOR NO. I HEREIN IS REFLECTED AS PATTEDAR/OWNER IN RESPECT OF THE AFOREMENTIONED AGRICULTURAL LANDS; AND WHEREAS, THE VENDOR NO.1 IS THE KARTA AND MANAGER OF THE HINDU UNDIVIDED FAMILY COMPRISING HIMSELF AND VENDOR NO.2, AND THE SAID LAND HAS BEEN DEVELOPED AND ENJOYED BY BOTH THE VENDORS NO I AND 2 HEREIN. AND THE SAID LAND IS THE PROPERTY OF THE HINDU UNDIVIDED FAMILY OF VENDORS NO.1 AND 2 HEREIN, IN WHICH EACH OF THEM HAVING UNDIVIDED EQUAL SHARES; AND WHEREAS, THE VENDOR NO.1. ON BEHALF OF HIS HUF COMPRISING HIMSELF AND VENDOR NO.2, FILED STATEMENT U/S 6{ 1) OF THE URBAN LAND (CEILING AND REGULATION) ACT, 1976 BEARING C.C.NO.F/2492/2005 BEFORE THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, DISCLOSING THE PROPERTIES HELD BY THE VENDORS NO.1 AND VENDOR NO.2, AND THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD U.A. AFTER EXCLUDING THE NON VACANT LAND, AND AS WELL AS OF THE AGRICULTURAL LANDS AS DEFINED U/S 2(0) OF THE SAID ACT, FROM THE COMPUTATION OF THE HOLDING ALLOWED 1000 SQR.MTS. EACH TO THE VENDORS NO. 1 AND 2 HEREIN, AGGREGATING TO 2000 SQR.MTS. TOWARDS CEILING AREA FROM AND OUT OF S.NO. 548 (PART) KUKATPALLY VILLAGE, AND DECLARED AN EXTENT OF42517.69 SQR.MTS. EQUIVALENT TO AC. 10-20.25 GTS. AS SURPLUS LAND FROM AND OUT OR S.NOS. 472, 473(P), 535, 544, 545, 546, 548 (PART), 549 AND 550 OF KUKATPALLY (V) VIDE PROCEEDINGS U/S 8(4) AND FINAL STATEMENT U/S 9 OF THE U.L.C.ACT, BEARING NO. FLI2492/6(1)/2005 DT. 3.10.2005; ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 9 OF 14 AND WHEREAS, THE VENDOR NO. I ON HIS BEHALF AND WELL AS ON BEHALF OF RUKRNINIKANTH REDDY THE VENDOR NO.2 HEREIN, FILED APPLICATION BEFORE THE GOVERNMENT OF ANDHRA PRADESH, REVENUE DEPARTMENT, ON 30.6.2005 BEING THE LAST DATE OF PAYMENT SEEKING EXEMPTION OF EXCESS VACANT LAND I.E. SURPLUS LAND THAT WAS TO BE DECLARED BY THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD. FROM AND OUT OF S.NO 472, 473(P), 535, 544, 548 (PART),549 AND 550 SITUATED AT KUKATPALLY (V) BALANAGAR MANDAL, R.R. DISTRICT. AND AFTER DECLARING THE SURPLUS LAND BY SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, BY ORDER DT. 3.10.2005, THE GOVERNMENT OF ANDHRA PRADESH, IN TERMS OF G.O.MS NO. 456 REVENUE (UC.1) DEPARTMENT DATED 29.7.2002, EXERCISING POWERS CONFERRED U/S 20( I )(A) OF THE URBAN LAND ( CEILING AND REGULATION )ACT 1976, BY G.O.MS.NO 2080 REVENUE ( UC.II ) DEPARTMENT DATED 30.11.2005 READ WITH G.O.MS.NO. 37 REVENUE (UC.IV) DEPARTMENT DATED 12 I 2006 EXEMPTED THE EXCESS VACANT LAND MEASURING 42517.69 SQR.MTRS. OR AC. 10-20.25 GTS, IN S.NOS. 472,473(P),535,544,545,546,548(PART) 549 AND 550 SITUATED AT KUKATPALLY (V) FROM THE PROVISIONS OF CHAPTER IN OF THE URBAN LAND (CEILING AND REGULATION) ACT 1976. AND THE SAID G.O.MS NOS 2080 DT 30.11.2005 AND G.O MS.NO 37 DATED 12.12006 HAVE BEEN COMMUNICATED TO THE VENDOR NO I BY THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, VIDE ENDORSEMENT BEARING NO.F1/456/166/2005 DT 13.12.2005 ENCLOSING THERETO A COPY OF THE G.O.MS.NO 2080 DT 30.L1.2005 AND SKETCH DEMARCATING THE SURPLUS LAND THAT WAS EXEMPTED. AND REVISED ENDORSEMENT NO. F1/ 456/66/2005 / C.C.NO.F 1 /2492/2005 DT 31.12006 ENCLOSING THERETO A COPY OF G.O.MS NO 37 REVENUE (U.C.IV) DEPARTMENT DATED 12.1.2006 BY WHICH ERRATA WAS ISSUED. ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 10 OF 14 AND WHEREAS, THE VENDORS ARE THE ABSOLUTE OWNERS AND POSSESSORS OF LAND BEARING SNO 472, 473(P), 535,544, 545, 546. 548,549 AND 550 ALONG WITH OTHER ADJOINING AGRICULTURAL LANDS AS DEFINED U/S 2(O) OF THE U.L.C. ACT, SITUATED AT KUKATPALLY VILLAGE AND KUKATPALLY MUNICIPALITY BALANAGAR REVENUE MANDAI, R.R.DISTRICT, HAVING UNDIVIDED HALF SHARE EACH IN THE SAID LANDS; AND WHEREAS, FROM AND OUT OF THE AFOREMENTIONED SURVEY NUMBERS, CONSIDERABLE EXTENT OF LAND WAS TO BE DECLARED AS SURPLUS VACANT LAND IN EXCESS OF THE CEILING AREA, AND IN ORDER TO SAVE THE SAID SURPLUS LAND BEING TAKEN OVER BY THE STATE GOVERNMENT, UNDER THE PROVISIONS OR URBAN LAND ( CEILING AND REGULATION ) ACT J 976 AND WITH A VIEW TO SEEK EXEMPTION OF THE SURPLUS LAND FROM THE PROVISIONS OF URBAN LAND (CEILING AND REGULATION) ACT 1976, BY MAKING PAYMENT IN TERMS OF G.O.MS.NO. 456 REVENUE ( U.C.I ) DEPARTMENT DT. 29.7.2002, BEFORE THE EXPIRY OF THE PERIOD FIXED I.E. 30.6.2005, IN ORDER TO SAVE SUBSTANTIAL AMOUNT DUE TO INCREASE IN RATE BY 100% VIDE G.O.MS NO.L222 REVENUE DT.18.6.2005 AND PROTECT THE SURPLUS LAND FROM THE PROVISIONS 'OF U L.C ACT, ' THE VENDORS IN ORDER TO RAISE FUNDS IMMEDIATELY, FOR MAKING PAYMENT TO GOVERNMENT IN ' TERMS OF G.O.MS. NO. 456, WITHIN TIME, I.E. ON OR BEFORE 30.6.2005, BEING DESIROUS OF SELLING LAND ADMEASURING AC. 0-08.6 GUNTAS. EQUIVALENT TO 1035 SQR.YDS. FROM AND OUT OF S.NOS. 548 SITUATED AT KUKATPALLY (V) BALANAGAR MANDAL. R.R.DISTRICT; AND KEEPING IN VIEW, THE SAID LAND BEING NOT A DEVELOPED ONE, AND IN IRREGULAR SHAPE IN ONE CORNER, HAS OFFERED TO SELL FOR A LUMP SUM AMOUNT OF RS, 15,OO,OOO/-(RUPEES FIFTEEN LAKHS ONLY) AND EXECUTE THE SALE DEED AFTER THE DISPOSAL OF THE CASE BEARING C.C.NO.FI12492/6(1)/2005 AND RECEIPT OF EXEMPTION ORDER, OR PERMISSION FROM THE SPECIAL ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 11 OF 14 OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, AS THE CASE MAY BE AND THE VENDEE HAVING REALIZED THAT THE SALE DEED WOULD BE EXECUTED BY THE VENDORS, ONLY AFTER DISPOSAL OF THE CASE, AND GRANT OF EXEMPTION BY THE GOVERNMENT. OR THE PERMISSION FROM THE COMPETENT AUTHORITY AS THE CASE MAY BE, AND IT MIGHT TAKE CONSIDERABLE PERIOD FOR DISPOSAL OF THE CASE, AND RECEIPT OF EXEMPTION OR PERMISSION, HAS AGREED TO PURCHASE THE SAID LAND MORE PARTICULARLY DESCRIBED IN THE SCHEDULE BELOW, FOR THE SAID SUM OF RS.15,OO,OOO/- (RUPEES FIFTEEN LAKHS ONLY ) AND VACANT AND PHYSICAL POSSESSION OF THE SAID LAND TO BE DELIVERED ON THE DATE OF REGISTRATION OF THE SALE DEED; AND WHEREAS, ON THE REQUEST OF THE VENDORS, THE VENDEE HAD OBTAINED BANKER'S CHEQUE BEARING NO.968901 DE 3062005 FROM STATE BANK OF INDIA, OLD MLA QUARTERS BRANCH, HYDERABAD, IN FAVOUR OF SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, TO ENABLE THE VENDORS TO MAKE PAYMENT TO THE GOVERNMENT TO SEEK EXEMPTION IN TERMS OF G.O.MS NO 456 DT. 297.2002, AND DELIVERED THE SAID BANKER'S CHEQUE 10 THE VENDORS, TOWARDS FUN PAYMENT OF SALE CONSIDERATION THE RECEIPT OF WHICH THE VENDORS HEREBY ADMIT AND ACKNOWLEDGE. AND WHEREAS, THE VENDORS RECEIVED THE ORDER EXEMPTING THE SURPLUS LAND, FROM THE GOVERNMENT OF ANDHRA PRADESH VIDE G.O MS.NO 2080 REVENUE ( U.C.II) DEPARTMENT DATED 30.11.2005 AND G.O.MS.NO. 37 REVENUE (UC.IV) DEPARTMENT DT 12.1.2006. AND WHEREAS, AN EXTENT OF 2000 SQR.MTS, WAS ALLOWED TOWARDS RETAINABLE AREA U/S 4(1)(B) OF THE ULC.ACT FROM AND OUT OF S.NO. 548 KUKATPALLY(V) VIDE PROCEEDINGS BEARING NO.FI/249216(1}1200S DT. 3.10.2005 ISSUED ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 12 OF 14 VIS 8(4) OF THE U.L.C ACT, BY THE SPECIAL OFFICER AND COMPETENT AUTHORITY, URBAN LAND CEILING, HYDERABAD, AND THE LAND HEREBY CONVEYED NOW FANS WITHIN THE CEILING AREA OF VENDORS NO.1 AND 2. 10. AFTER GOING THROUGH THE ABOVE RECITALS AND THE SEQUENCE OF EVENTS, WE FIND THAT THE PROCEEDINGS BE FORE THE AUTHORITIES I.E. AUTHORITIES UNDER THE URBAN LAND C EILINGS ACT WERE INITIATED BY BOTH THE ASSESSEE AND HIS SON TOG ETHER AS OWNERS OF THE LAND AND THIS ACT CANNOT BE SAID TO B E AN AFTERTHOUGHT OR A PLOY TO AVOID THE INCOME TAX PROV ISIONS. THE PROCEEDINGS BEFORE THE U.L.C WERE INITIATED IN THE YEAR 2005 AND THE EXEMPTION HAS BEEN GRANTED FOR 2000 SQ. METERS OF LAND BY THE ULC IN RESPECT OF THE ASSESSEE AND HIS SON. THU S, BOTH THE PARTIES REPRESENTED AS THE OWNERS AND CO-PARCENERS. AS THE ASSESSEE HAD PUT THE PROPERTY INTO THE COMMON STOCK , THOUGH MAY BE FOR THE PURPOSES OF PROTECTING THE SURPLUS L ANDS AND ALSO ESCAPING THE PROVISIONS OF THE ULC ACT. THE HON'BLE SUPREME COURT IN THE CASE OF BHAGWAN DAYAL VS. MST. REOTI D EVI, REPORTED IN (1962) AIR 287, (S.C) HAS HELD THAT EVERY HINDU FAMILY IS PRESUMED TO BE JOINT UNLESS THE CONTRARY IS PROVED . IN THE CASE OF SURJIT LAL CHHABRA, 101 ITR 776 (SC), THE HON'BLE S UPREME COURT HAS OBSERVED THAT THE JOINT HINDU FAMILY, WITH ALL ITS INCIDENTS, IS THUS A CREATION OF LAW AND CANNOT BE CREATED BY ACT OF PARTIES, EXCEPT TO THE EXTENT TO WHICH A STRANGER MAY BE AFF ILIATED TO THE FAMILY BY ADOPTION. THUS, THE HUF IS PRESUMED TO HA VE BEEN CREATED ON THE BIRTH OF THE ASSESSEES SON AND THE PROPERTY IS ALLEGEDLY VESTED IN THE HUF AFTER THE ASSESSEE IS GR ANTED THE OCCUPANCY RIGHTS IN THE YEAR 1993. THE CONDUCT OF T HE PARTIES ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 13 OF 14 THEREAFTER PROVES THE CONTINUATION OF THE HUF AND T HE RECITALS IN THE SALE DEED REFLECT THIS POSITION. 11. FURTHER, AT PAGE 22 OF THE PAPER BOOK IS A STATE MENT REGARDING THE MARKET VALUE OF THE PROPERTY, ACCORD ING TO WHICH THE ASSESSEE AND HIS SON HAVE JOINTLY DECLARED THE MARKET VALUE OF THE PROPERTY AT RS.15.00 LAKHS AND THE SAID DOCUMEN T IS DATED 18.11.2006 WHEREAS THE RE-ASSESSMENT PROCEEDINGS WE RE INITIATED IN THE YEAR 2014 AND THEREFORE, IT CANNOT BE SAID T O BE AN AFTERTHOUGHT. THEREFORE, WE ARE IN AGREEMENT WITH T HE CONTENTION OF THE ASSESSEE THAT THE PROPERTY BELONGED TO THE H UF AND NOT TO THE ASSESSEE IN HIS INDIVIDUAL CAPACITY. 12. IN VIEW OF OUR HOLDING THAT THE PROPERTY BELONG ED TO THE HUF, THE INITIATION OF PROCEEDINGS U/S 147 OF TH E ACT BY ISSUANCE OF THE NOTICE U/S 148 OF THE ACT TO THE AS SESSEE IN HIS INDIVIDUAL CAPACITY IS INVALID. THEREFORE, THE RE-A SSESSMENT PROCEEDINGS ARE HELD TO BE INVALID. 13. IN VIEW OF OUR FINDING THAT THE RE-ASSESSMENT PROCEEDINGS ARE INVALID, GROUNDS 5 & 6 NEED NO ADJU DICATION AT THIS STAGE AND PARTICULARLY THE RETROSPECTIVE APPLI CABILITY OF THE AMENDED PROVISIONS OF SECTION 50C OF THE ACT WHERE IT IS PROVIDED THAT WHERE THE DATE OF THE AGREEMENT TO SELL AND TH E REGISTERED SALE DEED ARE DIFFERENT, THE VALUE ASSESSABLE BY TH E STAMP VALUATION OFFICER ON THE DATE OF THE AGREEMENT OF S ALE, IS TO BE TAKEN INTO CONSIDERATION AND NOT THE VALUE AS ON TH E EXECUTION OF SALE DEED IN THE SRO OFFICE. IN VIEW OF THE ABOVE, THE OTHER ITA NO 106 OF 2016 P PRATAP REDDY HYDERABAD PAGE 14 OF 14 CONTENTIONS OF THE ASSESSEE THAT SINCE THE LANDS WE RE INAM LANDS AND NO COST OF ACQUISITION CAN BE ATTACHED TO SUCH LAND, THERE CANNOT BE ANY CAPITAL GAIN ALSO IS NOT ADJUDICATED AT THIS STAGE. 14. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLO WED. ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH AUGUST, 2017. SD/- SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 9 TH AUGUST, 2017. VINODAN/SPS COPY TO: 1 B. NARSINGH RAO & CO. CAS, PLOT NO.554, ROAD NO.9 2, JUBILEE HILLS, HYDERABAD 500096 2 INCOME TAX OFFICER WARD 5(2) HYDERABAD 3 CIT (A)-4 HYDERABAD 4 PR. CIT 4 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER