ITO, CHENNAI V. Smt. R.Lakshmi Devi, CHENNAI

ITA 1078/CHNY/2010

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4702 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 12-07-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 01-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR
• Section: 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BENCH C CHENNAI (BEFORE SHRI U.B.S. BEDI, JUDICIAL MEMBER AND SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER) .. I.T.A. NO. 1078/MDS/2010 ASSESSMENT YEAR : 2004-05 THE INCOME TAX OFFICER, SALARY WARD V(1), CHENNAI 600 034. (APPELLANT) V. SMT. R. LAKSHMI DEVI, VISRAM, G-1, AC-74, PLOT NO.4961, ANNA NAGAR, CHENNAI 600 040. PAN : AAKPL6883A (RESPONDENT) APPELLANT BY : SHRI CLEMENT RAMESH KUMAR RESPONDENT BY : SHRI G. BA SKAR O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER : IN THIS APPEAL FILED BY THE REVENUE, IT HAS RAISED FOUR GROUNDS OF WHICH GROUND NOS.1 AND 4 ARE GENERAL NEEDING NO ADJUDICATION. GROUND NO.2 ASSAILS THE ORDER OF LD. CIT(APPEALS) H OLDING THE REOPENING DONE FOR THE IMPUGNED ASSESSMENT YEAR TO BE INVALID, WHEREAS, GROUND NO.3 ASSAILS THE ORDER OF LD. CIT(A PPEALS) DIRECTING THE A.O. TO DELETE THE ADDITIONS MADE UNDER THE HEA D CAPITAL GAINS FOR THE IMPUGNED ASSESSMENT YEAR. I.T.A. NO. 1078/MDS/10 2 2. SHORT FACTS APROPOS ARE THAT ASSESSEE HAD ENTERE D INTO DEVELOPMENT AGREEMENT ON 5.9.2003, AS PER WHICH, AS SESSEE WAS TO HAND OVER THE VACANT POSSESSION OF A PROPERTY ON 5. 11.2003 FOR CONSIDERATION OF ` 33 LAKHS AND 1581 SQ.FT. OF BUILT-UP AREA. WHEN RETURN WAS FILED FOR THE IMPUGNED ASSESSMENT YEAR, THERE WAS NO ADMISSION OF ANY CAPITAL GAINS AND THEREFORE, THE A SSESSMENT WAS REOPENED UNDER SECTION 147 OF INCOME-TAX ACT, 1961 (IN SHORT THE ACT). IT IS TO BE MENTIONED THAT THE ORIGINAL RET URN WAS PROCESSED UNDER SECTION 143(1) OF THE ACT. REPLY OF THE ASS ESSEE WHEN PUT ON NOTICE WAS THAT THE IMPUGNED TRANSFER WAS THE SUBJE CT MATTER OF CAPITAL GAINS TAX ASSESSMENT FOR ASSESSMENT YEAR 20 05-06 AND THE CAPITAL GAIN ARISING OUT OF SUCH TRANSFER WAS ALREA DY TAXED BY THE DEPARTMENT FOR THAT ASSESSMENT YEAR. ASSESSEE ALSO BROUGHT TO THE ATTENTION OF THE A.O. THAT HER CLAIM FOR DEDUCTION UNDER SECTION 54EC MADE AGAINST SUCH CAPITAL GAINS WAS DENIED IN ASSES SMENT YEAR 2005-06 AND ITAT, ON ASSESSEES APPEAL, HAD HELD TH AT SHE COULD BE GIVEN SUCH DEDUCTION UNDER SECTION 54EC OF THE ACT SINCE THE INVESTMENTS WERE MADE WITHIN A SPECIFIED PERIOD OF SIX MONTHS. AS PER THE ASSESSEE, JUST BY HANDING OVER POSSESSION O F THE PROPERTY FOR CONSTRUCTION ON 5.11.2003, TRANSFER COULD NOT BE CO NSIDERED AS I.T.A. NO. 1078/MDS/10 3 COMPLETE. LAST INSTALMENT OF THE AGREED CONSIDERAT ION WAS RECEIVED ONLY ON 5.6.2004 AND FLATS WERE HANDED OVER TO THE ASSESSEE ONLY IN OCTOBER, 2004. THEREFORE, ASSESSEE SUBMITTED THAT THE TRANSFER WAS COMPLETED ONLY IN PREVIOUS YEAR RELEVANT TO ASSESSM ENT YEAR 2005- 06. THE A.O. WAS, HOWEVER, NOT IMPRESSED. ACCORDI NG TO HER, SECTION 2(47) OF THE ACT WHICH DEFINED TRANSFER C LEARLY BROUGHT WITHIN ITS AMBIT ANY PART PERFORMANCE OF A CONTRACT UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. FURTHER, AS PER THE A.O. , ASSESSEE HAD HANDED OVER VACANT POSSESSION ON 5.11.2003 AND THER EFORE, THERE WAS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT IN THE RELEVANT PREVIOUS YEAR. SHE THEREFORE HELD THAT TH E CAPITAL GAIN ON ACCOUNT OF SUCH TRANSFER AROSE TO THE ASSESSEE IN T HE RELEVANT PREVIOUS YEAR. SHE ALSO DENIED ASSESSEE DEDUCTION UNDER SECTION 54EC OF THE ACT SINCE SPECIFIED BONDS WERE ACQUIRED BY THE ASSESSEE AFTER A PERIOD OF SIX MONTHS FROM THE DATE OF THE TRANSFER. 3. IN HER APPEAL BEFORE LD. CIT(APPEALS), ASSESSEE ONCE AGAIN SUBMITTED THAT THE SAME TRANSFER WAS CONSIDERED IN ASSESSMENT YEAR 2005-06. THEREFORE, AS PER THE ASSESSEE, THE REOPE NING DONE FOR TAXING CAPITAL GAINS ON THE SALE OF THE SAME ASSET COULD NOT BE SUSTAINED. ASSESSEE NOT ONLY ASSAILED THE REOPENIN G OF THE I.T.A. NO. 1078/MDS/10 4 ASSESSMENT BUT ALSO CONTENDED THAT THERE COULD HAVE NEVER BEEN A TRANSFER IN THE IMPUGNED ASSESSMENT YEAR SINCE THE TRIBUNAL HAD CLEARLY HELD THAT THE TRANSACTION COULD BE CONSIDER ED AS A TRANSFER ONLY IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YE AR 2005-06. LD. CIT(APPEALS) ACCEPTED THE CONTENTION OF THE ASSESSE E AND ALLOWED HER APPEAL. 4. NOW BEFORE US, LEARNED D.R., STRONGLY ASSAILING THE ORDER OF LD. CIT(APPEALS), SUBMITTED THAT BY VIRTUE OF SECTION 2 (47) OF THE ACT AND BY VIRTUE OF HANDING OVER OF POSSESSION DURING THE RELEVANT PREVIOUS YEAR, THE TRANSFER HAD TO BE CONSIDERED AS COMPLETE IN THE RELEVANT PREVIOUS YEAR AND ASSESSING OFFICER WAS RIGHT IN CO MPUTING THE CAPITAL GAIN ARISING THEREFROM IN THE IMPUGNED ASSE SSMENT YEAR. ACCORDING TO HIM, JUST BECAUSE THE TRANSFER WAS CON SIDERED FOR ASSESSMENT IN THE SUBSEQUENT ASSESSMENT YEAR, IT WO ULD NOT PRECLUDE THE ASSESSING OFFICER FROM TAKING A CORREC T VIEW OF LAW AND APPLYING THE CORRECT PROVISION OF THE ACT FOR COMPU TING INCOME OF THE IMPUGNED ASSESSMENT YEAR. 5. PER CONTRA, LEARNED A.R. SUPPORTED THE ORDER OF LD. CIT(APPEALS). I.T.A. NO. 1078/MDS/10 5 6. WE HAVE PERUSED THE ORDERS AND HEARD THE RIVAL C ONTENTIONS. THERE IS NO DISPUTE THAT ASSESSEE HAD ENTERED INTO DEVELOPMENT AGREEMENT ON 5.9.2003. THERE IS NO DISPUTE THAT PO SSESSION OF PROPERTY WAS HANDED OVER ON 5.11.2003. THERE IS NO DISPUTE THAT CAPITAL GAINS AROSE ON SUCH TRANSFER WAS CONSIDERED BY THE ASSESSEE AND RETURNED BY HER ONLY IN THE ASSESSMENT YEAR 200 5-06 SINCE, ACCORDING TO HER, TRANSFER COULD BE DEEMED AS COMPL ETE ONLY WHEN THE FLATS IN LIEU OF THE TRANSFER WAS RECEIVED BY H ER IN OCTOBER, 2004. WE FIND FROM THE ASSESSMENT ORDER FOR ASSESSMENT YE AR 2005-06 PLACED BEFORE US BY LEARNED A.R., THAT THE TRANSFER OF THE SUBJECT PROPERTY WAS CONSIDERED FOR THE PURPOSE OF LEVY OF CAPITAL GAINS FOR THAT YEAR. NOT ONLY THE TRANSFER WAS CONSIDERED BU T ALSO ASSESSEE WAS DENIED EXEMPTION CLAIMED BY HER UNDER SECTION 5 4EC OF THE ACT, FOR THE CAPITAL GAIN BONDS PURCHASED, FOR A REASON THAT THESE WERE PURCHASED MUCH AFTER THE TIME PERIOD SPECIFIED UNDE R THE ACT. THE COMPUTATION OF INCOME FOR ASSESSMENT YEAR 2005-06, APPEARING AT PARA 7 OF THE ASSESSMENT ORDER CLEARLY SHOW THAT TH E CAPITAL GAIN WAS CONSIDERED FOR LEVY OF TAX IN THAT YEAR. AGAINST T HE DENIAL OF EXEMPTION UNDER SECTION 54EC OF THE ACT, ASSESSEE H AD MOVED IN APPEAL FOR 2005-06 BEFORE THE CIT(APPEALS) AND LATE R BEFORE THIS I.T.A. NO. 1078/MDS/10 6 TRIBUNAL. THE TRIBUNAL IN ITS ORDER FOR ASSESSMENT YEAR 2005-06, A COPY OF WHICH WAS PLACED BEFORE US BY LEARNED A.R., HELD AT PARA 5, AS UNDER:- THE ASSESSEE HAD NOT RECEIVED THE CONSIDERATION AT THE TIME OF EXECUTION OF THE AGREEMENT AND THE CASH CONSIDERATI ON WAS RECEIVED IN INSTALMENTS AND THE FINAL INSTALMENT WA S RECEIVED ONLY ON 5.6.2004. THEREFORE, UNTIL AND UNLESS THE CASH CONSIDERATION RECEIVED BY THE ASSESSEE, IT CANNOT BE EXPECTED THAT THE ASSESSEE CAN INVEST PRIOR TO THE RECEIPT OF THE CON SIDERATION. FOR APPLYING SECTION 2(47) OF THE I.T. ACT, 1961 FOR THE PURPOSE OF TRANSFER, THERE SHOULD BE A CONSTRUCTIVE TRANSFE R OF POSSESSION ALONG WITH THE TITLE OF THE PROPERTY WHEN THE SALE CONSIDERATION WAS DEPENDENT ON THE COMPLETION OF TH E DEVELOPMENT PROJECT AND FINALLY GETTING THE BUILT UP AREA BY THE ASSESSEE, THEN IN OUR VIEW, THE TRANSFER WAS NOT CO MPLETE. THERE WAS NO TRANSFER OF THE TITLE OF THE PROPERTY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN ON THE DATE OF EXECUTIO N OF THE DEVELOPMENT AGREEMENT BECAUSE THE POSSESSION WAS HA NDED OVER FOR CONSTRUCTION PURPOSE AND ALL RIGHTS AND LEGAL T ITLES OVER THE PROPERTY WERE WITH THE ASSESSEE HERSELF. MOREOVER, WE AGREE WITH THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE THAT WHEN THE DEPARTMENT HAS ASSESSED TO CAPITAL GAIN IN THE ASSESSMENT YEAR 2005-06, THEN THE DEPARTMENT CANNOT BE PERMITTED TO TAKE A DIFFERENT STAND OF TRANSFER AND ARISING OF THE CAPITAL GAIN IN THE EARLIER YEAR FOR THE PURPOSE OF GRANTING THE EXEMPTION U/S.54EC OF THE I.T. ACT. ACCORDINGL Y, WE FIND NO ERROR OR ILLEGALITY IN THE ORDER OF THE CIT(A) AND T HE SAME IS UPHELD . THERE IS A CLEAR FINDING BY THIS TRIBUNAL THAT TRAN SFER WAS EFFECTED IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR 2005- 06. OBVIOUSLY, THERE CANNOT BE TWO TRANSFERS FOR THE SAME PROPERTY AND ONCE TRANSFER I.T.A. NO. 1078/MDS/10 7 HAS BEEN CONSIDERED IN ASSESSMENT YEAR 2005-06, IT CANNOT AGAIN BE CONSIDERED IN ASSESSMENT YEAR 2004-05. WE ARE, THE REFORE, OF THE OPINION LD. CIT(APPEALS) WAS RIGHT IN HIS OPINION T HAT THE ASSESSMENT ORDER FOR THE IMPUGNED ASSESSMENT YEAR COULD NOT BE SUSTAINED WITH REGARD TO THE CAPITAL GAIN ASSESSED. WE DO NOT FIN D ANY REASON TO INTERFERE WITH THE ORDER OF LD. CIT(APPEALS). 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON THE TWELFTH DAY OF JULY, 2011. SD/- SD/- (U.B.S. BEDI) (ABRAHAM P. GEORGE) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 12 TH JULY, 2011. KRI. COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-VI, CHENNAI-34 (4) CIT, CHENNAI-V, CHENNAI (5) D.R. (6) GUARD FILE