Prasanth Govindu, Hyderabad, Hyderabad V. ACIT, Circle-11(1), Hyd, Hyderabad

ITA 1293/HYD/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2661 (ITAT-HYDERABAD)
• Duration Of Justice: 10 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-08-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 17-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 06-10-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Salary income; Revised return
• Section: 54F; 148

Judgement Text

ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.1293/HYD/2016 (ASSESSMENT YEAR: 2009-10) SHRI G. PRASANTH HYDERABAD PAN: AGTPG 4271 A VS ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE 11(1) , HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI B. SHANTHI KUMAR FOR REVENUE : SHRI L. RAMJI RAO, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2009-10. IN T HIS APPEAL, THE ASSESSEE IS AGGRIEVED BY THE ORDER OF T HE LEARNED CIT (A)-5, HYDERABAD, DATED 29.07.2016. THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE CIT (A) ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF THE AO THAT THE DEVELOPMENT AGREEMENT DATED 12.05.2008 WITH M/S. DIAMOND INFRA AMOUNTED TO TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V). 2. THE CIT (A) ERRED BOTH IN LAW AND ON FACTS IN UPHOLDING THE ACTION OF AO IN REJECTING THE CLAIM U /S 54F MADE AT THE TIME OF ASSESSMENT THROUGH A LETTER. DATE OF HEARING : 30.08.2017 DATE OF PRONOUNCEMENT : 31.08.2017 ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 2 OF 6 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DERIVING INCOME FROM SALARY AND OTHER S OURCES, FILED HIS RETURN OF INCOME FOR THE A.Y 2009-10 ON 23.03.20 10 ADMITTING INCOME OF RS.4,95,260. THE AO, THEREAFTER, CAME TO KNOW THAT THE ASSESSEE, ALONG WITH OTHER LAND OWNERS, HAD ENTERED INTO DEVELOPMENT AGREEMENT WITH M/S. DIAMOND INFRA DATED 12.05.2008. TO CONSIDER THE INCIDENCE OF CAPITAL G AINS PURSUANT TO THE ABOVE DEVELOPMENT AGREEMENT, THE AO ISSUED A NOTICE U/S 148 OF THE ACT, DATED 17.12.2013. 3. THE ASSESSEE, VIDE LETTER DATED 9.1.2014 REQUEST ED TO TREAT THE RETURN ALREADY FILED AS A RETURN FILED IN COMPLIANCE TO NOTICE U/S 148. THEREAFTER, THE AO PROCEEDED TO CON SIDER THE ASSESSEES CONTENTIONS AT LENGTH. THE ASSESSEE SUBM ITTED THAT AS PER THE DEVELOPMENT AGREEMENT, IN LIEU OF THE LAND HANDED OVER TO THE DEVELOPER, THE ASSESSEE IS TO GET 3386.31 SFT O F THE DEVELOPED AREA IN THE FORM OF 2 FLATS AND THAT THE ASSESSEE H AS NOT RECEIVED ANY DEVELOPED AREA FROM THE BUILDER, THOUGH THE TIM E LIMIT OF 36 MONTHS MENTIONED IN THE DEVELOPMENT AGREEMENT HAS L APSED AND THEREFORE, NO CAPITAL GAINS HAS ARISEN TO THE ASSES SEE. APART FROM THE ABOVE CONTENTION, THE ASSESSEE ALSO MADE AN ALT ERNATE CLAIM OF EXEMPTION U/S 54F OF THE ACT, FOR THE TWO FLATS, THE ASSESSEE WAS SUPPOSED TO RECEIVE. THE AO WAS, HOWEVER, NOT C ONVINCED WITH THE ASSESSEES CONTENTION AND HELD THAT THE CA PITAL GAIN HAS ARISEN DURING THE RELEVANT A.Y 2009-10 IN VIEW OF T HE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESHWARA RAO REPORTED IN 50 TAXMANN.COM 137 WHEREIN IT WAS HELD THAT THE CAPITAL GAIN WOULD ARISE IN THE YEAR IN WHICH THE D EVELOPMENT AGREEMENT WAS ENTERED INTO ALONG WITH HANDING OVER OF THE ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 3 OF 6 POSSESSION OF THE LAND. AS REGARDS THE CLAIM OF EXE MPTION U/S 54F HE HELD THAT SINCE THE SAME WAS NOT MADE IN THE RET URN OF INCOME, THE SAME CANNOT BE ENTERTAINED WITHOUT THE ASSESSEE FILING THE REVISED RETURN OF INCOME AS HELD BY THE HON'BLE SUPREME COURT IN THE CASE OF GOETZE (INDIA) LTD VS. CIT (20 06) 284 ITR 323 (S.C). AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRMED THE ORDER OF THE AO AND THE ASSES SEE IS IN SECOND APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ASSESSEE IS NOT PRESSING GROUND OF APPEAL NO.1 ABOUT THE INCIDENCE OF CAPITAL GAIN IN THE RELEVANT A.Y. 5. AS REGARDS GROUND NO.2, HE SUBMITTED THAT THE ASSESSEE HAS RECEIVED TWO FLATS IN LIEU OF THE LAND SURRENDERED BY HIM BY VIRTUE OF THE DEVELOPMENT AGREEMENT AND THER EFORE, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION OF CAPITAL GAIN FOR BOTH THE FLATS U/S 54F OF THE ACT. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE FOLLOWING DECISIONS: A) ITAT KOLKATA BENCH IN THE CASE OF MADHABI NAG VS . ACIT IN ITA NO.512/KOL/2015, DATED 9.12.2015. B) HON'BLE A.P. HIGH COURT IN THE CASE OF CIT VS. S YED ALI ADIL IN ITTA NO.410 OF 2012, DATED 20.12.2012. C) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. JAI PARABOLIC SPRINGS LTD DATED 7.4.2008 D) HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S. RAMCO INTERNATIONAL IN ITA NO.417 OF 2008 DATED 8.12.2008. ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 4 OF 6 E) HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. NATRAJ STATIONERY PRODUCTS (P) LTD IN ITA NOS.1009 & 1012 OF 2007. F) ITAT BANGALORE IN THE CASE OF ACIT VS. MR.SUNDAR A DEREBAIL POOJARY IN ITA NO.625/BANG/2015 DATED 7.8.2015. 6. THE LEARNED DR, HOWEVER, SUBMITTED THAT SINCE TH E ASSESSEE HAS NOT MADE THE CLAIM OF EXEMPTION OF THE CAPITAL GAIN U/S 54F OF THE ACT FOR THE TWO FLATS SUPPOSED TO BE RECEIVED BY THE ASSESSEE BY VIRTUE OF THE DEVELOPMENT AGREEMENT, TH E SAME WAS NOT ENTERTAINED BY THE AUTHORITIES BELOW. HE HOWEVE R, SUBMITTED THAT IF THE TRIBUNAL WAS INCLINED TO ACCEPT THE ASS ESSEES CONTENTION, THE ISSUE SHOULD BE REMITTED BACK TO TH E AO FOR VERIFYING WHETHER THE ASSESSEE FULFILS THE OTHER CO NDITIONS OF SECTION 54F OF THE ACT. AS ADMITTEDLY, THE ASSESSEE HAS NOT RECEIVED THE CONSTRUCTED FLATS WITHIN THREE YEARS F ROM THE DEVELOPMENT AGREEMENT. 7. IN REBUTTAL, THE LEARNED COUNSEL FOR THE ASSESSE E SUBMITTED THAT THERE ARE DECISIONS TO THE EFFECT TH AT THE ASSESSEE SHALL BE ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT, IF THE ASSESSEE HAS INVESTED THE ENTIRE CAPITAL GAINS WITHIN THE PE RIOD OF THREE YEARS FROM THE TRANSFER OF THE ORIGINAL ASSET, BUT THE CONSTRUCTION IS NOT COMPLETED WITHIN A PERIOD OF 3 YEARS FOR THE REASONS BEYOND THE CONTROL OF THE ASSESSEE. 8. HAVING REGARD TO THE RIVAL CONTENTIONS AND ALSO THE MATERIAL ON RECORD, WE FIND THAT THE AO HAS DISALLO WED THE ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 5 OF 6 ASSESSEES CLAIM OF EXEMPTION U/S 54F OF THE ACT, MA INLY ON THE GROUND THAT THE ASSESSEE HAS NOT MADE THE CLAIM OF SECTION 54F IN THE ORIGINAL RETURN OF INCOME AND ALSO ON THE GROUN D THAT THE ASSESSEE HAS GOT TWO FLATS PURSUANT TO THE DEVELOPM ENT AGREEMENT. SINCE THE CLAIM OF THE ASSESSEE U/S 54F OF THE ACT IS A LEGAL ISSUE, WE ARE INCLINED TO ADMIT THE ASSESSEE S CLAIM, AS THE HON'BLE SUPREME COURT IN THE CASE OF GOETZ INDIA, H AS HELD THAT THE RESTRICTION ON THE REVENUE AUTHORITIES IN ENTER TAINING A CLAIM WITHOUT FILING A REVISED RETURN OF INCOME DOES NOT APPLY TO THE TRIBUNAL. 9. AS REGARDS THE ALLOWABILITY OF THE ASSESSEES CL AIM, IT IS SEEN THAT THE ASSESSEE IS RECEIVING TWO RESIDENTIAL FLATS BY VIRTUE OF THE DEVELOPMENT AGREEMENT. THEREFORE, THE ASSESSEE IS DEEMED TO HAVE INVESTED THE CAPITAL GAIN IN THE TWO RESIDENTI AL FLATS. THE COMPLETION OF THE CONSTRUCTION OF THE ENTIRE BUILDI NG IS UNDISPUTEDLY NOT WITHIN THE POWER OF THE ASSESSEE. THE FOLLOWING DECISIONS AFFIRM THE POINT THAT EVEN IF THE CONSTRU CTION IS NOT COMPLETED WITHIN 3 YEARS, THE ASSESSEE IS STILL ELI GIBLE FOR EXEMPTION U/S 54F OF THE ACT IF THE ENTIRE CAPITAL G AIN HAS BEEN INVESTED: I) SARDARMAL KOTHARI, 302 ITR 286 (MAD.) II) SMT. RANJEET SANDHU VS. DCIT (2010) 133 TTJ 006 4 (CHANDIGARH). III) SATISH CHANDRA GUPTA VS. AO 54 ITD 508 (DEL.) IV) NARASIMHA RAJU RUDRA RAO VS. ACIT (35 TAXMANN.C OM 90) ITA NO.12 93 OF 2016PRASANTH GOVINDU HYDERABAD. PAGE 6 OF 6 V) PRADEEP KUMAR CHOUDHRY VS. DCIT IN ITA NO.1520/HYD/2013, DATED 31.12.2014. 10. RESPECTFULLY FOLLOWING THE SAME, WE DEEM IT FIT AND PROPER TO REMIT THE ISSUE TO THE FILE OF THE AO WIT H A DIRECTION TO VERIFY IF THE ASSESSEE SATISFIES THE OTHER CONDITIO NS U/S 54F EXCEPT FOR COMPLETION OF THE CONSTRUCTION WHICH WE HAVE AL READY HELD TO BE FOR THE REASONS BEYOND THE CONTROL OF THE ASSESS EE AND WE ALSO HOLD THAT THE ASSESSEE SHALL ALSO BE ELIGIBLE FOR E XEMPTION IN RESPECT OF TWO FLATS HE IS SUPPOSED TO RECEIVE PURS UANT TO THE DEVELOPMENT AGREEMENT IN VIEW OF THE DECISIONS CITE D IN PARA 3 ABOVE. 11. IN THE RESULT, ASSESSEES APPEAL IS TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST AUGUST, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 31 ST AUGUST, 2017. VINODAN/SPS COPY TO: 1 SHRI B. SHANTHI KUMAR, ADVOCATE, 111, TARAMANDAL COMPLEX, 5- 9-13, SAIFABAD, HYDERABAD 500004 2 ASSTT. COMMISSIONER OF INCOME TAX, CIRCLE-11(1), SIGNATURE TOWERS, WHITE FIELDS, GACHHIBOWLI,-MIYAPUR ROAD, HYD ERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER