ACIT, Chandigarh V. Sh. Hardev Singh Arshi, Chandigarh

ITA 1111/CHANDI/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5172 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-05-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 21-02-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 01-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MITTAL
• Keywords: Capital asset
• Section: 54F; 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE MS. DIVA SINGH, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1111/CHD/2016 ASSESSMENT YEAR: 2007-08 THE ACIT, VS. SHRI HARDEV SINGH ARSHI, CIRCLE 4(1), # 1108, SECTOR 33-C, CHANDIGARH. CHANDIGARH. PAN NO. ACYPA7895H (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MITTAL, SR.DR RESPONDENT BY : SHRI TEJ MOHAN SINGH DATE OF HEARING : 21.02.2017 DATE OF PRONOUNCEMENT : 18.05.2017 ORDER PER MS. DIVA SINGH,JM THE PRESENT APPEAL HAS BEEN FILED BY THE REVENUE ASSAILING THE CORRECTNESS OF THE ORDER DATED 11.08.2016 OF LD. CIT(A)-2 CHANDIGARH PERTAINING TO 2007-08 ASSESSMENT YEAR ON THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PARTIES HAD AGREED, FOR PRO-RATA T RANSFER OF LAND WHEREAS BY VIRTUE OF EXECUTING THE JOINT DEVELOPMENT AGREEMENT (JDA) REA D WITH POSSESSION LETTER AND DULY REGISTERED IRREVOCABLE SPECIAL POWER OF ATTORNEY, T HERE WAS A GRANT AND ASSIGNMENT OF ALL RIGHTS IN THE ENTIRE PROPERTY IN FAVOUR OF TATA HOU SING DEVELOPMENT COMPANY LIMITED (THDC) AND SO 'TRANSFER' FOR THE PURPOSES OF SECTIO N 2(47)(V) OF THE INCOME TAX ACT 1961 READ WITH SECTION 2(47)(II), 2(47)(VI), AND EXPLANATION BELOW 2(47) A ND SECTION 269UA HAD TAKEN PLACE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CST(A) HAS ERRED IN HOLDING THAT THAT NO POSSESSION HAD BEEN GIVEN BY T HE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA READ WIT H POSSESSION LETTER AND IRREVOCABLE SPECIAL POWER OF ATTORNEY SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882, COMPLETELY DISREGARDING THE FACT S THAT AS PER THE JDA THERE WAS A GRANT AND ASSIGNMENT OF ALL RIGHTS IN THE ENTIRE PROPERTY IN FAVOUR OF THDC ALONG WITH HANDING OVER OF PHYSICAL AND VACANT POSSESSION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN L AW, THE LD, CIT(A) HAS ERRED IN HOLDING THAT THAT NO POSSESSION HAD BEEN GIVEN BY T HE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 WHEREAS BY VIRTUE OF THE DULY REGISTERED IRREVOCABLE SPECIAL POWER OF ATTORNEY, THE DEVELOPER WAS IN COMPLETE CONTROL OF THE PROPERTY A ND WAS IN POSSESSION THEREOF INCLUDING ALL RIGHTS OF A DEFACT O OWNER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ESSENTIAL INGREDIENTS OF SECTION 5 3A OF THE TRANSFER OF PROPERTY ACT 1882 WERE NOT FULFILLED ON THE MERE GROUND THAT THE JDA WAS NOT REGISTERED WHEREAS SECT ION 2(47)(V) OF THE INCOME TAX ACT 1961 ONLY REFERS TO THE CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND THE REQUIREMENT OF REGISTRATION OF AGREEMENT UNDER SECTION 53A OF THE TRANSFER OF PROP ERTY ACT CANNOT BE READ INTO SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 READ WITH SECTION 2(47)( II), 2(47)(VI) AND EXPLANATION 2 BELOW 2(47) AND SECTION 269UA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE POSSESSION DELIVERED, IF AT ALL, W AS AS A LICENCEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF THE TRANSFEREE WHEREAS ALL POSSIBLE RIGHTS IN THE PROPERTY INCLUDING THE RIGHT TO SELL ETC, HAD BEEN GIVEN TO THE BUILDER. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD CIT(A) HAS ERRED IN BIFURCATING THE AGREEMENT INTO DIFFERENT PORTIONS A ND ALLOWING THE ASSESSEE TO PAY CAPITAL GAINS TAX ONLY WHEN CASH OR MONEY IS RECEIVED WHERE AS SECTION 45 OF THE INCOME TAX ACT 1961 IS A DEEMING PROVISION WHERE CAPITAL GAIN IS L IABLE TO BE TAXED IN THE YEAR IN WHICH TRANSFER TAKES PLACE AND THERE IS NO PROVISION UNDE R THE LAW TO ALLOW THE ASSESSEE TO PAY CAPITAL GAINS TAX BEYOND THE YEAR IN WHICH THE CAPI TAL GAIN HAS ACCRUED. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING ON THE CRUCIAL ISSUE OF APPLICABILITY OF SECTION 2(47)(II) AND 2(47)(VI) OF THE INCOME TAX ACT 1961 IN THE CASE OF THE ASSESSEE AS THE PROVISIONS OF SECTION 2(47)(II) AND 2(47)(VI) ALSO MAKE THE ASSESSEE LIABLE FOR CAPITAL GAINS UNDER THE INCOME TAX ACT 1961. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND LAW, THE LD CIT(A) HAS ERRED IN HO/DING THAT THE PROVISIONS OF SECTION 2(47)(VI) OF THE INCOME TAX ACT WERE NOT APPLICABLE IN ABSENCE OF REGISTERED CONVEYANCE DEED DISREGARDING THE DECISION OF THE SUPREME COURT IN PODAR CEMENT LTD. HOLDING THAT THE PRINCIPLE OF COM MON LAW, TRANSFER OF PROPERTY ACT AND REGISTRATION ACT WERE NOT CONCLUSIVE FOR INTERPRETA TION OF PROVISIONS OF INCOME TAX ACT. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 2(47)(II) AR E NOT APPLICABLE WHEREAS ALL THE MEMBERS OF SOCIETY SURRENDERED THEIR INDIVIDUAL RIGHTS IN T HE PLOTS TOGETHER WITH ORIGINAL PURCHASE DEEDS IN FAVOUR OF SOCIETY TO BE SUBSEQUENTLY TRANS FERRED TO TATA HOUSING DEVELOPMENT COMPANY LIMITED (THDC) LEADING TO EXTINGUISHMENT OF RIGHTS IN THE PLOTS. 2. THE LD. AR SUBMITTED, RIGHT AT THE OUTSET, THAT THE IS SUE IS COVERED IN FAVOUR OF THE ASSESSEE BY VIRTUE OF THE DECISION OF HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF SHRI C.S. ATWAL VS CIT & ANOTHER (2015) 378 ITR 244 (P&H). INVITING ATTENTION TO THE IMPUGNED ORDER, IT WAS HIS SUB MISSION THAT INFACT IT IS THIS DECISION, WHICH HAS BEEN FOLLOWED BY THE LD. C IT(A). THE LD. SR.DR MR. S.K.MITTAL, RELYING UPON THE ASSESSMENT ORDER DID NOT DISPUTE THIS POSITION. 3. THE RELEVANT FACTS OF THE CASE ARE THAT THE AO ISSUE D NOTICE U/S 148 OF INCOME TAX ACT ON THE BASIS OF INFORMATION RECEIVED THAT ASSESSEE IS A MEMBER OF PUNJABI CO-OP HOUSING SOCIETY LTD. THE SAID SOCIETY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT WITH HASH BUILDER PVT. LTD . IN WHICH THROUGH THIS AGREEMENT THE ENTIRE LAND OF THE SOCIETY WAS TRANSFE RRED TO TATA HOUSING DEVELOPMENT COMPANY FOR A CONSIDERATION OF RS. 2,37 ,03,75,000/- AND EACH MEMBER WAS TO GET A CONSIDERATION INCLUDING THE VALU E OF THE FLAT. THE ASSESSING OFFICER NOTED THAT THE CAPITAL GAINS ON ACCOUNT OF CON SIDERATION RECEIVED/RECEIVABLE HAVE ESCAPED ASSESSMENT AND THERE FORE, AFTER RECORDING REASONS ISSUED NOTICE U/S 148 OF THE ACT. THE VALI DITY OF THE JURISDICTION CHALLENGED BY THE ASSESSEE WAS UPHELD BY THE LD. CI T(A) ON THE MERITS. THE FACTS TAKEN INTO CONSIDERATION BY THE TAX AUTHORITIES A RE SUMMED UP BY THE LD. CIT(A) 3 AS FOLLOWS : 7.1 BRIEF FACTS OF THE CASE ON THIS ISSUE ARE THAT A HOUSING SOCIETY, NAMED AS THE PUNJABI CO-OP HOUSE BUILDING SOCIETY LTD., MOHALI ( HEREINAFTER REFERRED TO AS 'SOCIETY') CONSISTING OF 95 MEMBERS WAS FORMED, WHI CH WAS THE OWNER OF 21.02 ACRES OF LAND IN VILLAGE KANSAL, DISTRICT MOHALI. THIS SO CIETY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT (HEREINAFTER REFERRED TO AS ' AGREEMENT') ON 25.02.2007 WITH M/S HASH BUILDERS PVT. LTD., CHANDIGARH (HEREINAFTE R REFERRED TO AS 'HASH') AND M/S TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI (HERE INAFTER REFERRED TO AS THDC'), BY VIRTUE OF WHICH THE SOCIETY WOULD TRANSF ER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERATION AND ALSO CONSIDERATI ON IN KIND TO THE MEMBERS OF THE SOCIETY. THE APPELLANT WAS ALSO A MEMBER OF THE SAID SOCIETY OWNING 1000 SQ. YARDS LAND. THE TOTAL CONSIDERATION WAS SETTLED AT RS. 82,50,000/- PLUS ALLOTMENT OF ONE FLAT OF 2250 SQ. FEET TO THE APPELLANT, FN VIEW OF THE ABOVE REASONS, PROCEEDING U/S 147 WAS INITIATED AND NOTICE U/S 148 WAS ISSUED TO THE APPELLANT ON 25.07.2013. IN RESPONSE TO NOTICE U/S 148 THE APPELLANT INTIMATED ON 16.08. 2013 THAT THE RETURN ORIGINALLY FILED ON 15.03.2008 DECLARING TOTAL INCOME OF RS. 15,59,2 30/- BE TREATED AS THE RETURN FILED IN RESPONSE TO THE SAID NOTICE WHICH INCLUDED CAPITAL GAINS OF RS. 14,10.429/-. 4. CONSIDERING THESE FACTS, THE APPEAL OF THE ASSESSEE WA S ALLOWED BY THE LD. CIT(A) ON THE FOLLOWING REASONING : 7.2 DURING APPEAL PROCEEDINGS, THE LD. A/R SUBMIT TED THAT THERE ARE 95 MEMBERS OF THE SAID SOCIETY WHO FILED APPEAL ON IDENTICAL F ACTS AND THE APPEAL HAS BEEN DECIDED BY HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CAS E OF SH. C.S. ATWAL. [ITA NO 200 OF 2013]. ON PERUSAL OF THE ORDER IT IS SEEN TH AT THE ADDITIONS ON ACCOUNT OF CAPITAL GAIN WERE MADE RELYING UPON THE DECISION OF HON'BLE ITAT, CHANDIGARH IN THE CASE OF SH. CHARANJEET ATWAL (ITA NO. 448/CHD/2011) . THE ASSESSING OFFICER IN THIS CASE COMPUTED THE CAPITAL GAINS AT RS. 1,82,85,429/- BY TAKING INTO CONSIDERATION RECEIVABLE IN CASH AT RS. 82,50,000/- AND THE VALUE OF ONE FLA T OF 2250 SQ. FEET @ 4500/- SQ. FEET FOR RS. 1,01,25,000/-. THE APPELLANT HAD DISCLOSED CAPITAL GAINS OF RS. 15,59,230/-, IN HIS RETURN OF INCOME AS THE APPELLANT HAD RECEIVED RS. 33,00,000/- ONLY IN PURSUANCE OF THE SAID AGREEMENT. A SUBMISSION WAS FILED DURING THE P RESENT PROCEEDINGS. IT IS SUBMITTED THAT THE CASE OF SH. C.S. ATWAL HAS BEEN DECIDED BY HONBLE PUNJAB & HARYANA COURT IN ITA NO. 200 OF 2013 (O&M) VIDE ITS ORDER DATED JULY 22, 2015 IN FAVOUR OF THE ASSESSEE. THE HON'BLE COURT HAS SUMMARIZED THE CONC LUSION AT PARA 46 OF THE SAID ORDER AS UNDER: 46. WE SUMMARIZE OUR CONCLUSIONS AS UNDER: 1. PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 02.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HAS AGRE ED FOR PRO-RATA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02. 2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF 1882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICENSEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4 FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATI ON, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL I NGREDIENTS OF SECTION 53A IF 1882 ACT WERE REQUIRED TO BE FULFILLED. IN THE ABSE NCE OF REGISTRATION OF JDA DATED 25.02.2007 HAVING BEEN EXECUTED AFTER 24. 09.2001, THE AGREEMENT DOES NOT FALL U/S 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DOES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASS ESSEE APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPER, CA PITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DEEDS HAVE ALSO BEEN EXE CUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.02.2007, NO FURTHER AM OUNT HAS BEEN RECEIVED AND 4 NO ACTION THEREON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED., CAPITAL GAINS TAX SHALL BE DISCHARGED TH EREON IN ACCORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSING OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAIN BOUND BY THEIR SAID STAND. 6. THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS TAX HAVING BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION U/S 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. 7.. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIGHT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPITAL GAINS TA X IN RESPECT O9F REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CONSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRE SENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN P ILS. THEREFORE, THE APPEALS ARE ALLOWED. 47. CONSEQUENTLY, THE SUBSTANTIAL QUESTIONS OF LAW AS REPRODUCED IN THE BEGINNING OF THE JUDGMENT ARE ANSWERED IN THE MANNER INDICATED H EREIN BEFORE AND THE APPEALS OF THE ASSESSEE ARE DISPOSED OF ACCORDINGLY .' 7.3 BY RESPECTFULLY FOLLOWING THE JUDGMENT OF THE H ON'BLE PUNJAB & HARYANA HIGH COURT, THE ADDITION OF RS. 1,82,85,4297- IS DE LETED. GROUNDS OF APPEAL NO. 3 TO 6 ARE ALLOWED. 5. CONSIDERING THE AFORESAID JUDGEMENT OF THE HON'BLE JU RISDICTIONAL HIGH COURT, WE FIND THAT THERE IS NO MERIT IN THE APPEAL FILED BY THE REVENUE. WE NOTE THAT NO CHANGE IN FACT OR CIRCUMSTANCE OR FOR THAT MATTER, POSITION OF LAW WAS BROUGHT TO OUR NOTICE BY THE LD. SR.DR. IN THE FACTS AS THEY STAN D, WE FIND NO GOOD REASON TO VARY THE DECISION. BEING SATISFIED WITH T HE REASONING AND FINDING, THE SAME IS UPHELD. SAID ORDER WAS PRONOUNCED IN T HE OPEN COURT AT THE TIME OF HEARING ITSELF. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18 TH MAY,2017. SD/- SD/- (ANNAPURNA GUPTA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER POONAM COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR ASSTT. REGISTRAR ITAT,CHANDIGARH. 5 DRAFT DICTATED 15.05.2017 SR.PS DRAFT PLACED BEFORE AUTHOR 16.05.2017 SR.PS APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS ORDER SIGNED AND PRONOUNCED ON FILE SENT TO THE BENCH CLERK SR.PS DATE ON WHICH FILE GOES TO THE AR DATE ON WHICH FILE GOES TO THE HEAD CLERK. DATE OF DISPATCH OF ORDER.