ITO, Mohali V. Smt. Raman Preet Kaur, Mohali

ITA 1117/CHANDI/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 8403 (ITAT-CHANDIGARH)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset
• Section: 147; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.1117/CHD/2016 (ASSESSMENT YEAR : 2008-09) THE INCOME TAX OFFICER, VS. SMT.RAMAN PREET KAUR, WARD 6(3), H.NO.2647, SECTOPR 70, MOHALI. MOHALI. PAN: AKPPK0118E (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI MANJIT SINGH, DR RESPONDENT BY : NONE DATE OF HEARING : 02.01.2017 DATE OF PRONOUNCEMENT : 05.01.2017 O R D E R PER ANNAPURNA GUPTA, A.M . : THE APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. COMMISSIONER OF INCOME TAX (APPEALS)-2, CHANDIGARH DATED 17.8.2016 RELATING TO ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS RELATING TO THE CASE ARE THAT A HOUSING SOCIETY NAMED AS DEFENSE SERVICES COOPERATI VE HOUSE BUILDING SOCIETY LTD., MOHALI (HEREINAFTER RE FERRED TO AS SOCIETY) CONSISTING OF 207 MEMBERS WAS FORM ED, WHICH WAS THE OWNER OF 27.3 ACRES OF LAND I N VILLAGE 2 KANSAL, DISTRICT MOHALI. THIS SOCIETY ENTERED INTO A TRIPARTITE JOINT DEVELOPMENT AGREEMENT ON 27..4.200 7 WITH M/S HASH BUILDERS PVT. LTD., CHANDIGARH AND M/S TAT A HOUSING DEVELOPMENT COMPANY LTD., MUMBAI BY VIRTUE OF WHICH THE SOCIETY WOULD TRANSFER ITS LAND FOR DEVEL OPMENT IN LIEU OF MONETARY CONSIDERATION AND ALSO CONSIDER ATION IN KIND TO THE MEMBERS OF THE SOCIETY. THE ASSESSE E WAS ALSO A MEMBER OF THE SAID SOCIETY OWNING 150 SQ.YAR DS PLOT OF LAND. THE TOTAL CONSIDERATION WAS SETTLED A T RS.10,50,000/- PLUS ALLOTMENT OF ONE FLAT OF 1150 S Q.FT. TO THE ASSESSEE. IN VIEW OF THE ABOVE REASONS, PROCEE DINGS UNDER SECTION 147 OF THE INCOME TAX ACT, 1961 (IN S HORT THE ACT) WERE INITIATED AND NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO THE ASSESSEE IN RESPONSE TO W HICH THE ASSESSEE FILED RETURN OF INCOME DECLARING TOTAL INCOME OF ONLY RS.4,197/- AND NO CAPITAL GAIN WAS DECLARE D. THE ASSESSMENT WAS FRAMED BY TREATING TRANSACTIONS OF THE ASSESSEE WITH THE AFORESTATED BUILDERS AS TRANSFER OF LAND AND SHORT TERM CAPITAL GAIN WAS COMPUTED THEREON ON ACCOUNT OF FULL CONSIDERATION RECEIVABLE AT RS.61,3 5,000/-, WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHEREIN IT WAS BROUGHT TO HIS NOTICE THAT ON IDENTICAL FACTS, THE ISSUE IN APPEAL HAD BEEN DECID ED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF SHRI C.S. ATWAL (ITA NO.200 OF 2013). THE LD. CIT 3 (APPEALS) FOLLOWING THE JUDGMENT OF THE HON'BLE PUN JAB & HARYANA HIGH COURT DIRECTED THE ASSESSING OFFICER T O RECOMPUTE THE SHORT TERM CAPITAL GAIN ONLY ON THE A MOUNT ACTUALLY RECEIVED BY THE ASSESSEE IN PURSUANCE TO T HE SAID AGREEMENT. 4. AGGRIEVED BY THE SAME, THE REVENUE HAS NOW COME UP IN APPEAL, RAISING THE FOLLOWING GROUNDS : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PARTIES HAD AGREED FOR PRO-RATA TRANSFER OF LAND WHEREAS BY VIRTUE OF EXECUTING THE JOINT DEVELOPMENT AGREEMENT (JDA) READ WITH POSSESSION LETTER AND DULY REGISTERED IRREVOCABLE SPECIAL POWER OF ATTORNEY, THERE WAS A GRANT AND ASSIGNMENT OF ALL RIGHTS IN THE ENTIRE PROPERTY IN FAVOUR OF TATA HOUSING DEVELOPMENT COMPANY LIMITED (THDC) AND SO 'TRANSFER' FOR THE PURPOSES O F SECTION 2(47)(V) OF THE INCOME TAX ACT 1961READ WITH SECTION 2(47)(II), 2(47)(VIJ, AND EXPLANATION BELOW 2(47) AND SECTION 269UA HAD TAKEN PLACE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND M LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THAT NO POSSESSION HAD BEEN GIVEN BY THE TRANSFER OR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA READ WITH 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 FACTS THAT AS PER THE JDA THERE WAS A GRANT AND ASSIGNMENT OF ALL RIGHTS IN THE ENTIRE PROPERTY I N FAVOUR OF THDC ALONG WITH HANDING OVER OF PHYSICAL AND VACANT POSSESSION. 4 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, 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 T HE PROPERTY AND WAS IN POSSESSION THEREOF INCLUDING AL L RIGHTS OF A DEFACTO OWNER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ESSENTIAL INGREDIENTS OF SECTION 53 A OF THE TRANSFER OF PROPERTY ACT 1882 WERE NOT FULFILLE D ON THE MERE GROUND THAT THE JDA WAS NOT REGISTERED WHEREAS SECTION 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 PROPERTY ACT CANNOT B E READ INTO SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 READ WITH SECTION 2(47)(II), 2(47)(VI), AND EXPLANATION BELOW 2(47) AND SECTION 269UA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICENCEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF THE TRANSFEREE WHEREAS ALL POSSIBLE RIGHTS IN THE P ROPERTY INCLUDING THE RIGHT TO SELL ETC. HAD BEEN GIVEN TO THE BUILDER. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN BIFURCATING THE 5 AGREEMENT INTO DIFFERENT PORTIONS AND ALLOWING THE ASSESSES TO PAY CAPITAL GAINS TAX ONLY WHEN CASH OR MONEY IS RECEIVED WHEREAS SECTION 45 OF THE INCOME TAX ACT 1961 IS A DEEMING PROVISION WHERE CAPITAL GAIN IS LIABLE TO BE TAXED IN THE YEAR IN WHICH TRANSFER TAKE S PLACE AND THERE IS NO PROVISION UNDER THE LAW TO ALLOW THE ASSESSEE TO PAY CAPITAL GAINS TAX BEYOND THE YE AR IN WHICH THE CAPITAL GAIN HAS ACCRUED. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND 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 ASSESS EE LIABLE FOR CAPITAL GAINS UNDER THE INCOME TAX ACT 19 61. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 2(47)(VI) OF THE INCOME TAX ACT WERE NOT APPLICABLE IN ABSENCE OF REGISTERED CONVEYANCE DEED DISREGARDING THE DECISIO N OF THE SUPREME COURT IN PODAR CEMENT LTD. HOLDING THAT T HE PRINCIPLE OF COMMON LAW, TRANSFER OF PROPERTY ACT A ND REGISTRATION ACT WERE NOT CONCLUSIVE FOR INTERPRETA TION OF PROVISIONS OF INCOME TAX ACT. 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 2(47)(II) ARE NOT APPLICABLE WHE REAS ALL THE MEMBERS OF SOCIETY SURRENDERED THEIR INDIVIDU AL RIGHTS IN THE PLOTS TOGETHER WITH ORIGINAL PURCHASE DEEDS IN FAVOUR OF SOCIETY TO BE SUBSEQUENTLY TRANSFERRED TO TATA HOUSING DEVELOPMENT COMPANY LIMITED (THDC) LEADING TO EXTINGUISHMENT OF RIGHTS IN THE PLOTS. 6 5. BEFORE US THE LD. DR VEHEMENTLY ARGUED THAT THE LD. CIT (APPEALS) HAD ERRED IN DIRECTING THE ASSESS ING OFFICER TO RESTRICT THE CAPITAL GAINS TO THE EXTENT OF CONSIDERATION ACTUALLY RECEIVED BY THE ASSESSEE, WH EN BY VIRTUE TO THE JOINT DEVELOPMENT AGREEMENT READ WITH THE POSSESSION LETTER AND IRREVOCABLE SPECIAL POWER OF ATTORNEY, THE ENTIRE PROPERTY HAD BEEN TRANSFERRED BY THE ASSESSEE IN FAVOUR OF THE DEVELOPMENT COMPANIES AND BUILDERS AND THE CAPITAL GAIN, THEREFORE, OUGHT TO HAVE BEEN COMPUTED TAKING INTO CONSIDERATION ENTIRE AMOU NT RECEIVED AS WELL AS RECEIVABLE BY THE ASSESSEE IN C ASH AND IN KIND. 6. WE HAVE HEARD THE CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE FIND NO INFIRM ITY IN THE ORDER OF THE LEARNED CIT (APPEALS) IN DIRECTING THE ASSESSING OFFICER TO RECOMPUTE THE SHORT TERM CAPIT AL GAIN ON THE AMOUNT ACTUAL RECEIVED BY THE ASSESSEE. WE FIND THAT THE AFORESTATED DIRECTIONS HAVE BEEN GIVEN BY THE CIT (APPEALS) FOLLOWING THE JUDGMENT OF THE HON'BLE PUN JAB & HARYANA HIGH COURT ON THE IDENTICAL ISSUE. THIS FA CT IS NOT DENIED EVEN BY THE REVENUE. SINCE THE ISSUE H AS BEEN DECIDED BY THE HIGHER AUTHORITY AND THE LEARN ED CIT 7 (APPEALS) HAS PASSED THE ORDER FOLLOWING THE DECISI ON OF THE HON'BLE JURISDICTIONAL HIGH COURT, WE FIND NO R EASON TO INTERFERE IN THE SAME. IN VIEW OF THE SAME, ALL THE GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (SANJAY GARG) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 5 TH JANUARY, 2017 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH