DCIT, Central Circle -6, Hyderabad V. Shri K. Gopal Raj, Hyderabad

ITA 140/HYD/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69759 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 31-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Keywords: Capital asset; Valuation report
• Section: 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 140/HYD/2012 ASSESSMENT YEAR : 2008-09 DY. COMMISSIONER OF INCOME TAX, ASSESSEE CENTRAL CIRCLE 6, HYDERABAD. VS. SHRI K. GOPAL RAJ, RESPONDENT HYDERABAD. (PAN AJBPK1167E) ITA NO. 28/HYD/2012 ASSESSMENT YEAR : 2008-09 SHRI K. GOPAL RAJ, ASSESSEE HYDERABAD. (PAN AJBPK1167E) VS. DY. COMMISSIONER OF INCOME TAX, RESPONDENT CENTRAL CIRCLE 6, HYDERABAD. REVENUE BY : SHRI V. MADHUVANI ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING : 19/06/2013 DATE OF PRONOUNCEMENT : 30/08/ 2013 ORDER PER SAKTIJIT DEY, J.M.: THESE ARE THE CROSS APPEALS DIRECTED AGAINST THE O RDER OF CIT(A)-I, HYDERABAD, DATED 28/11/2011 FOR THE ASSES SMENT YEAR 2008-09. 2. BRIEFLY THE FACTS OF THE CASE ARE A SEARCH AND S EIZURE OPERATION U/S 132 OF THE IT ACT WAS CONDUCTED IN TH E RESIDENTIAL 2 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ PREMISES OF THE ASSESSEE ON 07/07/2008. ASSESSEE FI LED RETURN OF INCOME FOR THE AY 2008-09 ON 08/09/2008 DECLARING I NCOME OF RS. 19,35,680/-. DURING ASSESSMENT PROCEEDINGS, THE ASS ESSING OFFICER OBSERVED THAT CERTAIN DOCUMENTS WERE SEIZED DURING SEARCH OPERATION AS A/GR/RES/0L PAGE 35 TO 63. THES E PAPERS ARE COPIES OF DEVELOPMENT AGREEMENT AND SUPPLEMENTA RY AGREEMENT. AS PER THESE DOCUMENTS THE ASSESSEE ENTE RED INTO A DEVELOPMENT AGREEMENT ON 3-2-2007 WITH M/S. LEGEN D ESTATES PVT LTD IN RESPECT OF LAND OWNED BY HIM IN SURVEY NO.102, ADMEASURING 6 ACRES 39 GUNTAS SITUATED SERILINGAMPALY MANDAL, RANGA REDDY DISTRICT. AS PER THIS AGREEMENT, ASSESSEE AND HIS TWO SONS GRANTED RIGHTS TO M/S. LEGEND ESTATES PVT LTD FOR THE PURPOSE DEVELOPMENT OF THE SAID PROPERTY FOR MAKING RESIDENTIAL/COMMERCIAL COM PLEX. IN CONSIDERATION OF THE RIGHTS GRANTED, THE DEVELOPER AGREED TO GIVE 50% OF THE FULLY DEVELOPED BUILT UP SPACE IN T HE FORM OF RESIDENTIAL/COMMERCIAL UNITS TO THE ASSESSEE AND THE DEVELOPER SHALL GET 50% OF THE CONSTRUCTED AREA. ACCORDINGLY, THE DEVELOPER I.E. LEGEND ESTATES PVT. LTD PAID RS.L,25 ,000/- AS RETURNABLE EARNEST MONEY DEPOSIT ON 3-2-2007 VIDE T HE REGD. DOCUMENT. ANOTHER UNREGISTERED SUPPLEMENTARY AGREEM ENT WAS ALSO ENTERED INTO ON THE SAME DAY AS PER WHICH THE DEVELOPER AGREED TO PAY A FURTHER RETURNABLE EARNE ST MONEY DEPOSIT OF RS.11,98,75,000/- TO THE ASSESSEE. THUS, THE TOTAL ADVANCE RECEIVED BY THE ASSESSEE AGGREGATES TO RS.1 2.00 CRORES. HOWEVER, IT WAS LATER CLAIMED BY THE ASSESS EE THAT OUT OF RS.12.00 CRORES, RS.3 CRORES WAS RETURNED BY THE ASSESSEE, BRINGING DOWN THE ADVANCE TO RS.9 CRORES. 3. THE AO OBSERVED THAT INCIDENCE OF CAPITAL GAIN A ROSE IN VIEW OF THE FACT THAT THE ASSESSEE PARTED WITH THE RIGHTS OVER THE LAND BY ENTERING INTO DEVELOPMENT AGREEMENT AND ISSUED 3 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ SHOW CAUSE NOTICE ASKING THE ASSESSEE TO EXPLAIN. T HE ASSESSEE IN HIS REPLY CONTENDED THAT THERE WAS NO T RANSFER OF LAND AS THE POSSESSION OF LAND WAS NOT HANDED OVER TO THE DEVELOPER/BUILDER AND AS SUCH PROVISION OF SEC.53A OF THE TRANSFER OF PROPERTY ACT CANNOT BE INVOKED. HE ALSO CONTENDED THAT PERMITTING THE BUILDER TO ENTER UPON THE PROPE RTY AND CONSTRUCT THE BUILDING SHALL NOT BE CONSTRUED AS DE LIVERY OF POSSESSION IN PART PERFORMANCE OF THE CONTRACT AS U NDERSTOOD UNDER THE PROVISIONS OF SEC.53A OF THE TRANSFER OF PROPERTY ACT OR UNDER THE PROVISIONS OF INCOME-TAX ACT. THE ASSE SSING OFFICER FOR THE DETAILED REASONING GIVEN IN THE ASS ESSMENT ORDER HELD THAT THE DEVELOPMENT AGREEMENT ENTERED I NTO BY THE ASSESSEE GAVE RISE TO INCIDENCE OF CAPITAL GAIN . HE ALSO HELD THAT THE DECISIONS RELIED ON BY THE ASSESSEE A RE FACTUALLY DISTINGUISHABLE. IN SUPPORT OF HIS CONCLUSION, THE AO RELIED UPON THE FOLLOWING JUDICIAL AUTHORITIES. 1. CHATURBHUJ DWARAKADAS KAPADIA VS. CIT 260 ITR 491 (MUMBAI) 2. T.ACHYUTH RAO VS. ACIT 4. WHILE COMPUTING CAPITAL GAIN, THE AO HAD ARRIVED AT THE COST OF THE LAND TRANSFERRED AND THE COST OF CONSTR UCTED AREA THAT COMES TO THE SHARE OF THE ASSESSEE BY REFERRIN G TO THE INFORMATION OBTAINED FROM THE OFFICE OF THE SUB-REG ISTRAR AND THE DEPARTMENTAL VALUATION OFFICER. THE COST PER SQ . YARD WAS THUS ARRIVED AT RS.15/- AS ON 01/04/1984 AND COST O F CONSTRUCTION PER SQUARE FOOT WAS ARRIVED AT RS.868/ -. APPLYING THESE RATES, THE AO COMPUTED THE COST OF THE 50% OF THE LAND GIVEN FOR DEVELOPMENT AT RS.13,14,110/- AND THE COS T OF DEVELOPED AREA AT RS. 56,23,51,160/-. THAT APART, T HE AO ALSO COMPUTED THE COST OF PARKING AREA FALLING TO THE SH ARE OF THE 4 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ ASSESSEE AT RS. 5,39,88,300/- APPLYING THE RATE OF RS. 450/- PER SQUARE FOOT AS COMMUNICATED BY THE SRO. THE ASS ESSMENT WAS THUS COMPLETED BY DETERMINING THE TOTAL INCOME OF THE ASSESSEE AT RS.61,69,61,030/- AND A TAX DEMAND OF R S. 18,39,57,962/- WAS RAISED. 5. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). 6. IN THE COURSE OF APPELLATE PROCEEDINGS, THE LD. AR ARGUED AGAINST THE CONCLUSIONS ARRIVED AT BY THE AS SESSING OFFICER IN CONSIDERING THE DEVELOPMENT AGREEMENT EN TERED INTO BY THE ASSESSEE WITH THE DEVELOPER TANTAMOUNT TO TR ANSFER OF PROPERTY IN THE HANDS OF THE ASSESSEE. IT WAS CONTE NDED THAT THE AO FAILED TO NOTICE THE UNWILLINGNESS OF THE DE VELOPER TO CARRY ON THE PROJECT AS THE DEVELOPER SUBSEQUENTLY REVISED THE SHARING BASIS OF THE BUILT UP AREA FROM 50: 50 TO 3 8.5:61.5 DUE TO VARIOUS REASONS AND ALSO ON ACCOUNT OF DELAY IN THE PROGRESS OF THE PROJECT. THIS WAS FURTHER EVIDENCED BY THE EVENT OF TAKING OVER THE PROJECT OF DEVELOPMENT BY A NEW COMPANY BY NAME M/S. R.D.B. LEGEND INFRASTRUCTURE P VT LTD. HE, THEREFORE SUBMITTED THAT IT IS TOTALLY ARBITRAR Y ON THE PART OF THE AO TO TREAT SUCH AGREEMENT AS TRANSFER AND T O COMPUTE INCOME IN THE HANDS OF THE ASSESSEE WHEN THE PROJECT WAS N OT COMPLETE AND NOT HANDED OVER TO THE ASSESSEE. THE A R ALSO RELIED ON THE DECISION OF THE HON'BLE ITAT, HYDERAB AD BENCH IN THE CASE OF K.RADHIKA VS. DCIT TO SUPPORT HIS CASE THAT AS THERE IS NO INTENT ON THE PART OF THE DEVELOPER TO CARRY ON THE PROJECT; HENCE THERE IS NO TRANSFER WITHIN THE MEAN ING OF SEC.2(47) OF THE ACT R.W.S. 53A OF TRANSFER OF PROPERTY ACT. 7. IN THE COURSE OF APPELLATE PROCEEDINGS THE ASSESSEE 5 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ RAISED ADDITIONAL GROUND AS FOLLOWS: 01. WITHOUT PREJUDICE THE CLAIM THAT THE CAPITAL GAIN ARISING OUT OF THE DEVELOPMENT AGREEMENT IS ASSESSABLE IN THE YEAR IN WHICH CONSTRUCTED AREA IS HANDED OVER TO THE LAND OWNER, IT IS SUBMITTED THAT AS PER AO'S OWN REASONING THAT THE TRANSFER TOOK PLACE ON THE DATE OF ENTERING INTO THE DEVELOPMENT AGREEMENT , THE CAPITAL GAIN SHOULD HAVE BEEN ASSESSED IN THE A SST. YEAR 2007-08 BUT NOT IN AY 2008-09 AS ASSESSED AND THEREFORE, THE ORDER IS REQUIRED TO BE SET ASIDE. 02. THE ORDER OF THE AO IS NOT CORRECT IN THE LIGH T OF THE RECENT PRINCIPLES EVOLVED BY THE JURISDICTIONAL ITA T IN THE CASE OF K.RADHIKA VS. DCIT (47 SOT 180) INASMUCH AS THE FIRST DEVELOPER WAS NOT WILLING TO PERFORM H IS PART OF THE CONTRACT AS ENVISAGED IN SEC.53A OF T.P. ACT AS HE DID NOT EXECUTE THE PROJECT AS PER INITIAL DEVELOPM ENT AGREEMENT AND THE WORK WAS TAKEN OVER BY A NEW DEVELOPER (M/S. RBD LEGEND INFRASTRUCTURE PVT LTD) IN THE YEAR 2010-11 CHANGING THE SHARING RATIO. 8. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS FINDINGS OF THE THE AO, THE CIT(A) GAVE ELABORAT E FINDINGS, WHICH ARE AS UNDER: 9. THERE IS A DEVELOPMENT AGREEMENT BETWEEN THE ASS ESSEE SHRI K.GOPAL RAJ ALONG WITH HIS TWO SONS WITH M/S. LEGEND ESTATES PVT LTD EXECUTED ON 3-2-2007 WHEREIN THE AS SESSEE AND HIS TWO SONS HAVE DECIDED TO DEVELOP THE PROPER TY IN CONSIDERATION OF OBTAINING 50% OF THE CONSTRUCTED A REA ON THE LAND ADMEASURING 6 ACRES 39 GUNTAS SITUATED AT SERILINGAMPALLI MANDAL IN RANGA REDDY DISTRICT. THE DEVELOPER AGREED TO DEVELOP THE SAME AT THE RATIO OF 50: 50 A ND PAID A SUM OF RS.12 CRORES AS EARNEST MONEY DEPOSIT AND GO T REGISTERED THE DOCUMENT IMMEDIATELY. THEREAFTER THE DEVELOPER PROCEEDED TO DEVELOP THE LAND BY CARRYING OUT EXCAVATION AND LEVELLING WORK ON THE VACANT LAND. T HE DEVELOPER ALSO APPROACHED GREATER HYDERABAD MUNICIPAL 6 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ CORPORATION FOR SANCTIONING OF THE BUILDING PLANS AND OBTAINED THE PERMISSION VIDE FILE NO.0711/CSC/TP-11/2007 DAT ED 5-8- 2008 FROM COMMISSIONER AND SPECIAL OFFICER, GHMC, HYDERABAD. THEREAFTER THE DEVELOPER PAID A SUM OF R S. 7,53,75,350/- AS FEE TO THE MUNICIPAL CORPORATION F OR FURTHER CONSTRUCTION ON THE LAND AS PER PERMISSION GRANTED. THE DEVELOPMENT AGREEMENT DATED 3-2-2007 IS ANNEXED WIT H DETAILED SPECIFICATIONS FOR THE TYPE OF CONSTRUCTIO N, QUALITY OF WOOD FOR THE DOORS, WINDOWS, VITRIFIED TILES FOR TH E FLOORING AND SPECIFIC COLOURED CERAMIC TILES AND OTHER SANIT ARY FITTINGS ETC. SIMILARLY, SPECIFICATIONS ARE ALSO GIVEN FOR P LASTERING, PAINTING, KITCHEN WORK AND ELECTRICAL WORKS WITH GE NERATOR BACK UP ETC. PROVISIONS WERE ALSO MADE FOR ELEVATOR , TELEPHONE, TELEVISION, WATER SUPPLY, DEVELOPMENT OF COMMON AREA, SECURITY SYSTEM ETC. THERE IS SPECIFIC MENTIO N FOR SPECIAL AMENITIES LIKE HEALTH CLUB, SPORTS FACILITI ES, GYM AND YOGA, SUPER MARKET SO ON AND SO FORTH. IT IS NOT A SIMPLE AGREEMENT IN BROADER SENSE BUT IT CONTAINS VARIOUS SPECIFICATIONS TO BE PROVIDED IN THE CONSTRUCTION T O BE UNDERTAKEN ON THE PROPERTY OF THE ASSESSEE. THERE I S SERIOUS INTENT SHOWN BY BOTH THE PARTIES TO DEVELOP THE PRO PERTY. 10. AFTER OBTAINING THE MUNICIPAL PERMISSION, THE A SSESSEE STARTED THE WORK OF CONSTRUCTION AND SPENT ABOUT RS . 17.49 CRORES AS AT THE END OF THE MARCH, 2011. THIS IS IN ADDITION TO RS.12 CRORES PAID TO THE ASSESSEE AS EARNEST MONEY. THE SUBSEQUENT ENTRY OF RDB LEGEND INFRASTRUCTURE PVT. LTD. INTO THE PICTURE VIDE SUPPLEMENTARY AGREEMENT DATED 11-2 -2011 DOES NOT ALTER THE NATURE OF THE CONTRACT AS WELL A S CONTENT OF THE CONTRACT. THE CIT(A) FURTHER OBSERVED THAT IF O NE LOOKS AT THE COMPOSITION OF M/S. RDB LEGEND INFRASTRUCTURE P VT. LTD. IS TO BE NOTED THAT THE DEVELOPER M/S. LEGEND ESTAT ES PVT. 7 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ LTD. IS HAVING SHARES OF RS.24,54,900/- AND M/S. RD B REALTY AND INFRASTRUCTURE PVT LTD OWNING 25,55,100 SHARES IN THAT COMPANY. IN BOTH THE COMPANIES I.E. M/S. LEGEND EST ATES PVT LTD AND THE NEWLY CREATED RDB LEGEND INFRASTRUCTURE PVT LTD, SHRI B.NAGESWARA RAO IS HOLDING THE POSITION AS DIR ECTOR ALONG WITH ONE SHRI D.RAJASEKHARA REDDY. THIS NEWLY FORMED COMPANY IS NOT A NEW ENTITY ALTOGETHER TO CONSIDER THAT IT IS DIFFERENT FROM ORIGINAL DEVELOPER. IN FACT, THE SUP PLEMENTARY AGREEMENT DATED 11-2-2011 WAS SIGNED BY SHRI B. NAG ESWARA RAO IN BOTH THE CAPACITIES AS MANAGING DIRECTOR OF LEGEND ESTATES PVT LTD AND MANAGING DIRECTOR OF RDB LEGEND INFRASTRUCTURE PVT LTD. THIS NEW COMPANY HAS BEEN B ROUGHT INTO THE PICTURE ONLY TO CLAIM BEFORE THE DEPARTMEN T THAT THE DEVELOPER HAS SHELVED THE PROJECT THEREBY THERE IS NO TRANSFER WITHIN THE MEANING OF SEC.2(47) R.W.S. 53A OF T.P. ACT. THE CIT(A) WAS OF THE VIEW THAT THIS ARRANGEME NT MADE SUBSEQUENT TO THE ASSESSMENT FRAMED BY THE AO IS ON LY AN AFTERTHOUGHT TO GET AWAY FROM THE TAXATION RATHER T HAN ON NEED BASE BECAUSE FUNDS HAVE BEEN GIVEN BY THE SAME PERSONS TO BOTH THE CONCERNS. IT IS ONLY A DIFFEREN T ACCOUNT IN WHICH THE FUNDS ARE CREDITED. THERE IS NO DIFFERENC E BETWEEN THESE TWO ENTITIES TO SAY THE LEAST. EVEN IF ONE AS SUMES THAT A NEW COMPANY HAS TAKEN OVER THE PROJECT IT DOES NO T CHANGE THE CHARACTER AND CONTENT OF THE DEVELOPMENT AGREEM ENT ENTERED INTO BY THE ASSESSEE ORIGINALLY. IT IS FOR THE DEVELOPER TO DEVELOP THE PROPERTY EITHER BY HIMSELF OR THROUG H HIS NOMINEE. THE PROJECT OF DEVELOPMENT OF THE PROPERTY IS ON AND NOT SHELVED AS ARGUED BY THE ASSESSEE. THEREBY ONE CANNOT SAY THAT THERE IS NO INTENT ON THE PART OF T HE DEVELOPER TO DEVELOP THIS PROPERTY. BECAUSE OF HIS INTENT TO DEVELOP THE PROPERTY, HE HAS BROUGHT IN A NEW ENTIT Y TO CARRY 8 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ ON THE PROJECT. HENCE THE ARGUMENT OF THE ASSESSEE DOES NOT STAND ON THIS GROUND. 11. THE CIT(A) HELD THAT AFTER CONSIDERING THE CUMU LATIVE EFFECT OF ALL THE FACTS SUCH AS DEVELOPMENT AGREEME NT DATED 3-2-2007, RECEIPT OF AMOUNT OF RS.12 CRORES AS PART PERFORMANCE OF THE CONTRACT, AND EXECUTION OF THE P ROJECT AFTER TAKING OVER THE POSSESSION OF THE LAND WILL I NDICATE EXISTENCE OF ALL THE INGREDIENTS OF TRANSFER AS PER SECTION 2(47) OF THE ACT. THERE IS WRITTEN DOCUMENT BETWEEN THE PARTIES TO DEVELOP THE PROPERTY, THERE IS MONETARY CONSIDERATION IN THE FORM OF SECURITY DEPOSIT OF RS .12 CRORES PAID BY THE DEVELOPER TO THE ASSESSEE IN LIEU OF TH E LAND, PHYSICAL POSSESSION OF THE PROPERTY HAS BEEN GIVEN TO THE DEVELOPER, DEVELOPER APPROACHED THE GHMC AND GOT BU ILDING PERMISSION PLAN, DEVELOPER COMMENCED THE LAND DEVEL OPMENT AS WELL AS CONSTRUCTION OF THE BUILDING AS PER PLAN APPROVED, ETC. ALL THESE ABOVE FACTORS INDICATE THE TRUE NATU RE OF THE TRANSACTION ENTERED INTO BY BOTH THE PARTIES. IT IS NOT CORRECT ON THE PART OF THE ASSESSEE TO CONTEND THAT THERE IS NO WILLINGNESS ON THE PART OF THE DEVELOPER TO CARRY O N THE PROJECT BECAUSE THE DEVELOPER HAS COMMENCED THE PRO JECT INCURRED HUGE EXPENDITURE ON THE LAND AND OBTAINED MUNICIPAL PERMISSION AND PAID HUGE AMOUNT AS FEE TO CARRY OUT THE CONSTRUCTION ACTIVITY. MERELY BECAUSE THE DEVELOPER HAS ROPED IN OTHER SISTER CONCERN TO CARRY ON THE UNFINISHED PROJECT, IT CANNOT BE PRESUMED THAT THE PROJECT HAS BEEN SHELVE D. IN FACT, THE NEW ENTITY IS NOT A UNRELATED CONCERN AT ALL. THE MANAGING DIRECTOR AND THE DIRECTOR OF THE DEVELOPER COMPANY IS ALSO HOLDING SIMILAR POSITIONS IN THE NEW ENTITY . SHRI B. NAGESWARA RAO HAS SIGNED THE SO CALLED SUPPLEMENTAR Y AGREEMENT DATED 11-2-2011 IN BOTH THE CAPACITY OF M /S. 9 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ LEGEND ESTATES PVT LTD AND M/S. RBD LEGEND INFRASTR UCTURE PVT LTD. THE DEVELOPER COMPANY HAS A SUBSTANTIAL ST AKE IN THE NEWLY FORMED ENTITY BY HOLDING AROUND 48% OF THE SH ARES IN M/S. RBD LEGEND INFRASTRUCTURE PVT LTD. HENCE, IT I S NOT A CASE THAT THE DEVELOPER HAS SHELVED THE PROJECT AND HAS NO INTENTION TO CARRY ON THE PROJECT. ON THE CONTRARY, THE DEVELOPER IS VERY SERIOUS TO CARRY ON THE PROJECT. WITH REGARD TO THE CONTENTION OF THE ASSESSEE THAT PART OF THE SECURITY DEPOSIT OF RS. 3 CRORES WAS REFUNDED TO THE DEVELOP ER HENCE THE AGREEMENT BETWEEN THE OWNER AND THE DEVELOPER D OES NOT STAND ANY MORE, THE CIT(A) HELD THAT EXAMINING THE DETAILS OF SUCH REFUND REVEALED THAT THIS AMOUNT OF RS. 3 CROR ES REPRESENTS LOAN GIVEN TO THE MANAGING DIRECTOR OF D EVELOPER COMPANY WHICH CARRIES INTEREST. IT HAS NOTHING TO D O WITH THE SECURITY DEPOSIT RECEIVED BY THE ASSESSEE. HENCE NO AMOUNT OF SECURITY DEPOSIT HAS BEEN REFUNDED AS CONTENDED BY THE ASSESSEE. 12. WHILE DEALING WITH THE ASSESSEES CONTENTION WI TH REGARD TO THE ESTIMATION MADE BY THE AO IN RESPECT OF BUIL T UP AREA FOR THE PURPOSE OF COMPUTING CAPITAL GAINS IN HIS H ANDS ON THE GROUND THAT THERE IS NO INCOME IN THE HANDS OF ASSE SSEE AS NO CONSTRUCTED PROPERTY WAS HANDED OVER TO HIM, THE CI T(A) REJECTED SUCH CONTENTION BY HOLDING THAT CAPITAL GA INS NEED NOT BE TAXED ON RECEIPT BASIS ALONE BUT CAN ALSO BE SUBJECTED TO TAX ON ACCRUAL METHOD ALSO. WHAT IS TO BE EXAMI NED WHILE ASSESSING THE INCOME, WHETHER ANY INCOME HAS BEEN R ECEIVED BY THE ASSESSEE OR ACCRUES TO THE ASSESSEE. IN THIS CASE, CAPITAL GAINS ACCRUED TO THE ASSESSEE BY VIRTUE OF THE DEVELOPMENT AGREEMENT, RECEIPT OF SECURITY DEPOSIT AND HANDING OF PHYSICAL POSSESSION OF THE LANDED PROPER TY TO THE DEVELOPER. HENCE, CAPITAL GAIN ARISES IN THE HANDS OF THE 10 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ ASSESSEE FOR THE PROPERTY TRANSFERRED TO THE DEVELO PER FOR DEVELOPMENT. WHENEVER THE INCOME IS ASSESSED ON ACC RUAL BASIS, IN SOME CASES, THERE IS SOME AMOUNT OF ESTIM ATION IS REQUIRED. THERE IS NO DISPUTE ABOUT THE ESTIMATION OF INCOME MADE BY THE AO IN ORDER TO COMPUTE THE CAPITAL GAIN S IN THE HANDS OF THE ASSESSEE. IT IS NOT NECESSARY THAT INC OME HAS TO BE CALCULATED ON REAL TERMS THAT MEANS ON ACTUAL RE CEIPT BASIS. THERE IS SOME AMOUNT OF ESTIMATION REQUIRED TO COMPUTE THE INCOME PROVIDED SUCH ESTIMATION IS MADE ON REASONABLE BASIS WITH SOME BASE ATTACHED TO SUCH ES TIMATION. ONE NEED NOT COMPUTE THE TOTAL INCOME PURELY ON THE BASIS OF ACTUAL DELIVERY METHOD. THE AO PROCEEDED TO ESTIMAT E THE INCOME BASED ON CERTAIN PARAMETERS. HE HAS TAKEN TH E SUB- REGISTRAR BASE RATE FOR THE PURPOSE OF COMPUTING TH E COST OF THE PROPERTY IN THE HANDS OF THE ASSESSEE. THERE AR E CLEAR EVIDENCES TO THAT EFFECT AND THE ASSESSEE ALSO DID NOT DISPUTE THE ESTIMATION OF THE COST OF THE PROPERTY. AS FAR AS ESTIMATION OF CONSTRUCTED AREA IS CONCERNED, THE CI T(A) OBSERVED THAT THE AO OBTAINED THE VALUATION REPORT FROM THE CHIEF ENGINEER, VALUATION CELL, INCOME-TAX DEPARTME NT FOR COST OF CONSTRUCTION OF APARTMENT BUILDING 'LEGEND MADAPUR- II SITUATED AT KONDAPUR, SERILINGAMPALLI, RANGA REDDY DISTRICT WHICH WAS DEVELOPED BY M/S. LEGEND ESTATES PVT LTD, HYDERABAD. THE SPECIFICATIONS MENTIONED IN THE VALU ATION REPORT OF THAT PROPERTY ARE SIMILAR TO THE SPECIFIC ATIONS PROVIDED IN THE PROJECT OF INSTANT CASE. BOTH THE P ROPERTIES ARE IN SERILINGAMPALLY AREA ONLY. THERE IS NO EXAGG ERATION OF VALUES AND THE AO HAS TAKEN SIMILAR PROPERTY DEVELO PED BY SAME BUILDER DURING THAT PERIOD. ON THE CONTRARY, T HE ASSESSEE HAS NOT BROUGHT ANY MATERIAL ON RECORD TO SUGGEST THAT THE ESTIMATION MADE BY THE AO IS ARBITRARY AND ON HIGHER 11 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ SIDE. HE COULD NOT POINT OUT ANY DEFECT IN THE PARA METERS BASING ON WHICH THE AO ESTIMATED THE VALUE OF CONSI DERATION. ACCORDINGLY, THE AO ADOPTED RS.868/- PER SQUARE FOO T FOR RESIDENTIAL/COMMERCIAL BUILT UP AREA WHICH IS VERY MUCH WITHIN THE REASONABLE LIMITS OF TYPE OF CONSTRUCTION UNDERTAKEN ON THE ASSESSEE'S PROPERTY. WITH THE NAT URE OF SPECIFICATIONS MENTIONED' IN THE AGREEMENT THE ESTI MATION MADE BY THE AO IS REASONABLE ENOUGH TO COVER THE CO ST OF CONSTRUCTION OF THE DEVELOPER. THE CIT(A), THUS, HE LD THAT THERE IS NO ARBITRARINESS ON THE PART OF THE AO TO ARRIVE AT SUCH FIGURE. HOWEVER, THE CIT(A) FELT THAT THE AO A DOPTED ARBITRARY FIGURE OF RS,450/- PER SQUARE FOOT IN RES PECT OF CAR PARKING WHICH IS DEFINITELY ON HIGHER RANGE AND NEE DED TO BE MODERATED BASING ON TRUE FACTORS FOR SUCH ESTIMATIO N. HE OBSERVED THAT IT IS TO BE EXAMINED WHETHER SEPARATE STRUCTURE IS CONSTRUCTED FOR CAR PARKING OR THE SAM E IS PROVIDED WITHIN THE UNDERGROUND OR CELLAR AREAS. IF THE PARKING IS PROVIDED IN THE CELLAR AND UNDERGROUND A REAS, THE COST OF CONSTRUCTION SHOULD NOT BE AT SUCH HIGH RAT E. IN SUCH CASE, THE COST OF CONSTRUCTION OF CAR PARKING MAY N OT EXCEED RS.150J- PER SQ. FOOT. WHEREAS IF THE CAR PARKING I S PROVIDED SEPARATELY BY BUILDING ALTOGETHER SEPARATE STRUCTUR E THEN THE RATE ADOPTED BY HIM IS REASONABLE. 13. THE CIT(A) HAVING COME TO A CONCLUSION THAT THE RE IS TRANSFER OF CAPITAL ASSET AS PER THE DEVELOPMENT AG REEMENT, HOWEVER, WENT ON TO EXAMINE FURTHER WHETHER THE TAX ABILITY OF CAPITAL GAIN ARISE IN THE IMPUGNED YEAR OR IN AS ST. YEAR 2007-08 OR ASST. YEAR 2009-10. THE CIT(A) HELD THAT THOUGH THE AGREEMENT WAS DATED 3-2-2007, ACTUAL POSSESSION OF THE LAND WAS HANDED OVER ONLY IN THE FINANCIAL YEAR 200 8-09 RELEVANT TO THE ASST. YEAR 2009-10 BECAUSE THE DEVELOPER HAS 12 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ APPLIED FOR PERMISSION FROM GHMC AND GOT THE PERMIS SION ON 5-8-2008. SOON AFTER, HE STARTED DEVELOPING THE LAN D AFTER TAKING PHYSICAL POSSESSION OF THE LAND. SUBSEQUENTL Y ALSO, AMOUNTS WERE SPENT FOR LAND DEVELOPMENT, CONSTRUCTI ON OF THE SUPER STRUCTURE ON THE SAID LAND. AS PER CLAUSE 8 OF THE DEVELOPMENT AGREEMENT DATED 3-2-2007, THE POSSESSION OF THE SCHEDULED PROPERTY SHALL BE HANDED OVER TO THE DEVELOPER BY THE FIRST PARTY AFTER DEVELOPER OBTAINS APPROVAL OF THE BUILDING PLAN FROM HUDA. THE CIT(A) HELD THAT I N VIEW OF THE SPECIFIC CLAUSE IN THE DEVELOPMENT AGREEMENT AND AL SO IN THE FACTS AND CIRCUMSTANCES OF THE CASE WHICH IS EVIDEN T BY THE SUBSEQUENT ACT OF THE DEVELOPER BY INCURRING HUGE E XPENSES NOT ONLY FOR THE MUNICIPAL FEE BUT ALSO ON CONSTRUC TION AND DEVELOPMENT, THE PHYSICAL POSSESSION WAS TAKEN OVER BY THE DEVELOPER ONLY IN THE YEAR 2008-09 RELEVANT TO THE ASST. YEAR 2009-10. THEREBY TAXABILITY UNDER THE HEAD 'CAPITAL GAINS' OF THE CONSIDERATION, CAN BE CONSIDERED ONLY IN THE AS ST. YEAR 2009-10 BUT NOT IN ASST. YEAR 2008-09 WHERE NO ACTI ON WAS TAKEN BY THE DEVELOPER. HE FURTHER HELD THAT ALTHOU GH AGREEMENT WAS EXECUTED AND AMOUNT WAS RECEIVED IN T HE FINANCIAL YEAR 2006-07 RELEVANT TO ASST. YEAR 2007- 08, TRANSFER OF PROPERTY TOOK PLACE ONLY IN THE FINANCI AL YEAR 2008-09 RELEVANT TO THE ASST. YEAR 2009-10. TRANSFE R AS PER SEC.2(47) IS COMPLETE ONLY WHEN ALL THE THREE FACTO RS ARE EXECUTED. SINCE IN THIS CASE, THE PHYSICAL POSSESSI ON OF THE PROPERTY WAS HANDED OVER IN THE ASST. YEAR 2009-10, THE CAPITAL GAINS IS TO BE TAXED IN THAT YEAR ONLY. THE TRANSACTION OF TRANSFER IS COMPLETE ONLY IF THE POSSESSION OF T HE PROPERTY GIVEN AND CONSIDERATION RECEIVED. 14. ON THE AFORESAID BASIS, THE CIT(A) HELD THAT TH E CAPITAL GAIN IS TO BE ASSESSED IN THE HANDS OF THE ASSESSEE BY VIRTUE 13 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ OF THE TRANSFER OF THE LANDED PROPERTY FOR DEVELOPM ENT IS IN THE ASST. YEAR 2009-10 THE YEAR IN WHICH PHYSICAL P OSSESSION WAS GIVEN TO THE DEVELOPER. HE, THEREFORE, HELD THA T THE ADDITION MADE IN THE INSTANT YEAR IS REQUIRED TO BE DELETED AND ACCORDINGLY DIRECTED THE ASSESSING OFFICER TO D ELETE THE CAPITAL GAINS OF RS.61,SO,2S,3S0/- FROM THE TOTAL INCOME OF THE ASSESSEE. AT THE SAME TIME, HE IS DIRECTED TO E XAMINE THE TAXABILITY OF THE CAPITAL GAINS BY VIRTUE OF ABOVE TRANSFER IN THE AY 2009-10 AS PER LAW. THE CIT(A) FURTHER DIREC TED THE ASSESSING OFFICER TO EXAMINE THE TAXABILITY OF CAPI TAL GAINS IN THE HANDS OF THE ASSESSEE AS WELL AS HIS TWO SONS 17. AGGRIEVED BY THE ORDER OF THE CIT(A) THE REVENU E AS WELL AS THE ASSESSEE ARE IN APPEAL BEFORE US. 18. FIRSTLY, WE TAKE UP THE APPEAL OF THE REVENUE B EING ITA NO. 140/H/12 WHEREIN THE REVENUE HAS RAISED THE FOL LOWING GROUNDS OF APPEAL: 1. THE LEARNED CIT(A) OUGHT TO HAVE GIVEN BASIS FOR HIS DECISION THAT THE COST OF CONSTRUCTION OF PARKING S PACE ADOPTED BY THE ASSESSING OFFICER @ RS. 450/-, NEED TO BE MODERATED IF THE PARKING SPACE IS BUILT IN THE CELL AR. THE DECISION OF THE CIT(A) WITHOUT ANY BASIS OR EVIDENC E, IS NOT ACCEPTABLE. 2. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T COST OF CONSTRUCTION FOR THE PARKING SPACE WAS ADOP TED ON THE BASIS OF SRO REPORT. 3. THE LEARNED CIT(A) OUGHT TO HAVE APPRECIATED THA T IN GENERAL THE SRO RATE IS LESSER THAN THE MARKET VALU E. FURTHER, A REDUCTION FROM THE SRO RATE MADE BY THE LEARNED CIT(A) IS ARBITRARY AND DEFIES LOGIC. 19. WE HAVE HEARD SUBMISSIONS OF THE PARTIES AND PE RUSED 14 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ THE MATERIALS ON RECORD. AS CAN BE SEEN FROM THE GR OUNDS RAISED BY THE DEPARTMENT, THE DEPARTMENT IS ONLY AG GRIEVED BY THE COST OF CONSTRUCTION ADOPTED BY THE CIT(A). HOWEVER, ON PERUSAL OF THE ORDER OF THE CIT(A) IN PARA 10.1 AND 11 OF HIS ORDER, IT IS TO BE SEEN THAT THE CIT(A) HAS CAT EGORICALLY HELD THAT THE ASSESSABILITY OF CAPITAL GAIN CAN BE CONSIDERED ONLY IN AY 2009-10 AND NOT IN THE IMPUGNED ASSESSME NT YEAR. THE OBSERVATIONS MADE BY THE CIT(A) IS REPRODUCED HEREUNDER: 10.1 HAVING SAID THAT THERE IS A TRANSFER WITHIN T HE MEANING OF SEC.2(47) TO COMPUTE CAPITAL GAINS IN TH E HANDS OF THE ASSESSEE, IT IS NECESSARY TO EXAMINE WHETHER THE TAXABILITY OF CAPITAL GAIN ARISE IN THI S YEAR OR IN ASST. YEAR 2007-08 OR ASST. YEAR 2009-10. THO UGH THE AGREEMENT WAS DATED 3-2-2007, ACTUAL POSSESSION OF THE LAND WAS HANDED OVER ONLY IN THE YEAR 2008-09 RELEVANT TO THE ASST. YEAR 2009-10 BECAUSE THE DEVELOPER HAS APPLIED FOR PERMISSION FROM GHMC AND GOT THE PERMIT ORDER ON 5-8-2008. SOON AFTER, HE STARTED DEVELOPING THE LAND AFTER TAKING PHYSICAL POSSESSIO N OF THE LAND. SUBSEQUENTLY ALSO, AMOUNTS ARE SPENT FOR LAND DEVELOPMENT, CONSTRUCTION OF THE SUPER STRUCTURE ON THE SAID LAND. AS PER CLAUSE 8 OF THE DEVELOPMENT AGREEMENT DATED 3-2-2007, THE POSSESSION OF THE SCHEDULED PROPERTY SHALL BE HANDED OVER TO THE DEVE LOPER BY THE FIRST PARTY AFTER DEVELOPER OBTAINS APPROVAL OF THE BUILDING PLAN FROM HUDA. IN VIEW OF THE SPECIFIC CLAUSE IN THE DEVELOPMENT AGREEMENT AND ALSO ON THE FACTS AND CIRCUMSTANCES OF THE CASE WHICH IS EVIDENT BY THE SUBSEQUENT ACT OF THE DEVELOPER BY INCURRING HUGE EXPENSES NOT ONLY FOR THE MUNICIPAL FEE BUT ALSO ON CONSTRUCTION AND DEVELOPMENT, THE PHYSICAL POSSESSI ON WAS TAKEN OVER BY THE DEVELOPER ONLY IN THE YEAR 20 08- 09 RELEVANT TO THE ASST. YEAR 2009-10. THEREBY TAXABILITY UNDER THE HEAD 'CAPITAL GAINS' OF THE CONSIDERATION, CAN BE CONSIDERED ONLY IN THE ASST. YEAR 2009-10 BUT NOT IN ASST. YEAR 2008-09 WHERE NO ACTI ON WAS TAKEN BY THE DEVELOPER. ALTHOUGH AGREEMENT WAS EXECUTED AND AMOUNT WAS RECEIVED IN THE FINANCIAL Y EAR 2006-07 RELEVANT TO ASST. YEAR 2007-08, TRANSFER OF PROPERTY TOOK PLACE ONLY IN THE FINANCIAL YEAR 2008 -09 15 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ RELEVANT TO THE ASST. YEAR 2009-10. TRANSFER AS PER SEC.2(47) IS COMPLETE ONLY WHEN ALL THE THREE FACTO RS ARE EXECUTED. SINCE IN THIS CASE, THE PHYSICAL POSSESSI ON OF THE PROPERTY WAS HANDED OVER IN THE ASST. YEAR 2009 -10, THE CAPITAL GAINS IS TO BE TAXED IN THAT YEAR ONLY. THE TRANSACTION OF TRANSFER IS COMPLETE ONLY IF THE POS SESSION OF THE PROPERTY GIVEN AND CONSIDERATION RECEIVED. 11. IN VIEW OF THE ABOVE FACTS AND POSITION OF THE LAW, IT IS HELD THAT THE CAPITAL GAIN TO BE ASSESSED IN THE HANDS OF THE ASSESSEE BY VIRTUE OF THE TRANSFER OF THE LA NDED PROPERTY FOR DEVELOPMENT IS ASSESSABLE IN THE ASST. YEAR 2009-10 THE YEAR IN WHICH PHYSICAL POSSESSION WAS G IVEN TO THE DEVELOPER. CONSEQUENTLY, THE ADDITION MADE I N THE INSTANT YEAR IS REQUIRED TO BE DELETED AND ACCORDIN GLY THE AO IS DIRECTED TO DELETE THE CAPITAL GAINS OF RS.61,SO,2S,3S0/- FROM THE TOTAL INCOME OF THE ASSESSEE. AT THE SAME TIME, HE IS DIRECTED TO EXAMI NE THE TAXABILITY OF THE CAPITAL GAINS BY VIRTUE OF AB OVE TRANSFER IN THE AY 2009-10 AS PER LAW. 20. THUS, AS CAN BE SEEN FROM THE ABOVE EXTRACTED P ORTION, THE CIT(A) HAS CATEGORICALLY HELD THAT NO CAPITAL G AIN CAN BE CHARGED IN THE IMPUGNED ASSESSMENT YEAR AND SINCE S UCH DECISION OF THE CIT(A) HAS NOT BEEN CHALLENGED BY T HE DEPARTMENT, THE OTHER ISSUE WITH REGARD TO ADOPTION OF RATE OF CONSTRUCTION HAS ACTUALLY BECOME INCONSEQUENTIAL AS IT IS PURELY ACADEMIC IN NATURE. EVEN OTHERWISE ALSO, THE FINDING OF THE CIT(A) WITH REGARD TO COST OF CONSTRUCTION ADOP TED AT RS. 450/- PER SQ.FT. FOR CAR PARKING IS REASONABLE AS I N OUR VIEW THE RATE ADOPTED BY THE ASSESSING OFFICER IS HIGH A ND EXCESSIVE AND WITHOUT ANY BASIS. THE ASSESSING OFFI CER WITHOUT BRINGING ON RECORD ANY COMPARABLE CASE HAS SIMPLY ADOPTED THE RATE, OUT OF HIS OWN IMAGINATION. IN TH E AFORESAID CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INTERFE RE WITH THE ORDER OF THE CIT(A) IN THIS REGARD. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT(A) AND DISMISS THE GROUNDS RAISED BY THE REVENUE. 16 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ 21. IN THE RESULT, APPEAL OF THE REVENUE BEING ITA NO. 140/H/12 IS DISMISSED. ITA NO. 28/H/12 ASSESSEES APPEAL 22. COMING TO THE APPEAL OF THE ASSESSEE, THE ASSES SEE HAS RAISED A NUMBER OF GROUNDS TOTALLING TO 12 AS WELL AS AN ADDITIONAL GROUND BASICALLY CHALLENGING THE FINDING OF THE CIT(A) THAT THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 53A OF TRANSFER OF PROPERTY ACT READ WITH SECTION 2 (47(V) OF THE IT ACT AND DIRECTING THE ASSESSING OFFICER TO E XAMINE THE TAXABILITY OF CAPITAL GAIN IN AY 2009-10. 23. THE LEARNED AR SUBMITTED BEFORE US THAT THOUGH THE ASSESSEE HAD ENTERED INTO REGISTERED DEVELOPMENT AG REEMENT WITH THE DEVELOPER LEGEND ESTATES PVT. LTD ON 03/02 /2007 BUT IN REALITY THERE WAS NO DEVELOPMENT ACTIVITY CARRIE D OUT BY THE DEVELOPER TILL 2010 AND THE ASSESSEE HAD TO ENTER I NTO FRESH DEVELOPMENT WITH ANOTHER DEVELOPER, NAMELY, RBD LEG END INFRASTRUCTURE PVT. LTD. ON 11/02/2011. IT WAS FURT HER CONTENDED THAT NO DEVELOPMENT ACTIVITY IN PURSUANCE TO THE DEVELOPMENT AGREEMENT DATED 03/02/2007 HAD TAKEN PL ACE WOULD BE FURTHER EVIDENT FROM THE FACT THAT THE ASS ESSEE ENTERED INTO REGISTERED SUPPLEMENTARY AGREEMENT ON 03/10/2010 WITH THE DEVELOPER LEGEND ESTATES CHANGI NG THE RATIO OF SHARING OF THE CONSTRUCTED AREA. IT WAS SU BMITTED THAT WHEN THE DEVELOPER HAS FAILED TO PERFORM HIS PART O F THE CONTRACT AS PER THE DEVELOPMENT AGREEMENT THERE CAN NOT BE ANY TRANSFER ENVISAGED U/S 2(47)(V) OF THE ACT. IT WAS THEREFORE CONTENDED THAT THOUGH THE CIT(A( WAS CORR ECT TO THE EXTENT OF HOLDING THAT NO CAPITAL GAIN ARISES DURIN G THE IMPUGNED ASSESSMENT YEAR BUT THE CIT(A) WAS NOT COR RECT IN 17 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ HOLDING THAT THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 53 OF THE TRANSFER OF PROPERTY ACT READ WITH SECTIO N 2(47)(V) OF THE ACT FOR THE PURPOSE OF CAPITAL GAIN IN THE A SSESSMENT YEAR 2009-10. IT WAS CONTENDED BY THE LEARNED AR TH AT THE CIT(A) WHILE DECIDING THE APPEAL FOR A PARTICULAR A SSESSMENT YEAR HAS TO CONFINE TO THAT ASSESSMENT YEAR ONLY AN D CANNOT DIRECT THE ASSESSING OFFICER TO ASSESS THE INCOME I N ANOTHER ASSESSMENT YEAR, WHICH IS BEYOND HIS JURISDICTION. IN SUPPORT OF SUCH CONTENTION, THE LEARNED AR HAS RELIED UPON THE FOLLOWING DECISIONS: 1. MALABAR FISHERIES CO. VS. CIT [1979] 120 ITR 49 (SC) 2. VIJAYA PRODUCTIONS (P) LTD. VS. ADDL. CIT [2012] 134 ITD 19 (TM) 3. P.C. PURI VS. CIT [1985], 151 ITR 584(DEL.) 24. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDER OF THE CIT(A) ON THIS ASPECT. 25. WE HAVE HEARD THE SUBMISSIONS OF THE PARTIES AN D PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO CAREFU LLY EXAMINED THE DECISIONS RELIED UPON BY THE LEARNED A R. BEFORE GOING INTO THE MERITS OF THE ISSUE IT IS NECESSARY TO BEAR IN MIND CERTAIN DATES, WHICH ARE VERY MUCH CRUCIAL FOR DECIDING THE ISSUE. 03/02/2007 THE ASSESSEE ENTERS INTO A DEVELOPMENT AGREEMENT THROUGH THE REGISTERED DOCUMENT WITH LEGE ND ESTATES PVT. LTD. FOR DEVELOPMENT OF THE PROPERTY. ON THE SAME DATE, THE ASSESSEE ENTERS INTO A UNREGISTERED SUPPLEMENTARY AGREEMENT WITH THE DEVELOPER FOR REFUNDABLE SECURITY DEPOSIT OF RS. 12 CRORES. 03/10/2010 - ASSESSEE EXECUTES ANOTHER REGISTERED 18 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ DEVELOPMENT AGREEMENT WITH LEGEND ESTATES CHANGING RATIO OF SHARING CONSTRUCTED AREA. 11/02/2011 ASSESSEE ENTERS INTO A TRIPARTITE AGREEMENT WITH LEGEND ESTATES PVT. LTD AND RBD LEGE ND INFRASTRUCTURE PVT. LTD., UNDER WHICH, RBD LEGEND T AKES OVER THE DEVELOPMENT OF THE PROPERTY. 26. AS CAN BE SEEN FROM THE REGISTERED DEVELOPMENT AGREEMENT DATED 03/02/2007 WITH LEGEND ESTATES PVT. LTD., DEVELOPER WAS ENTRUSTED TO DEVELOP THE PROPERTY BEL ONGING TO THE ASSESSEE ALONG WITH OTHER CO-OWNER. AS PER CLAU SE 5 OF THE DEVELOPMENT AGREEMENT IRRECOVERABLE RIGHT WAS G IVEN TO THE DEVELOPER FOR DEVELOPING THE PROPERTY. AS PER C LAUSE 8 OF THE DEVELOPMENT AGREEMENT, THE ACTUAL POSSESSION OF LAND WOULD BE DEEMED TO HAVE BEEN HANDED OVER TO THE DEV ELOPER AFTER OBTAINING PERMISSION FROM THE GHMC. AS PER TH E MATERIAL AVAILABLE ON RECORD, PERMISSION FROM GHMC WAS OBTAINED ON 05/08/2008. HENCE, POSSESSION OF THE PR OPERTY WOULD BE DEEMED TO HAVE BEEN HANDED OVER TO THE DEV ELOPER AFTER OBTAINING PERMISSION FROM GHMC ON 05/08/2008. THIS IS FURTHER EVIDENT FROM THE FACT THAT THE DEVELOPER IN FACT HAS STARTED DEVELOPMENT ACTIVITY AFTER OBTAINING PERMIS SION BY MAKING SUBSTANTIAL INVESTMENT. THEREFORE, NEITHER T HE EXECUTION OF DEVELOPMENT AGREEMENT AND PAYMENT OF T HE SECURITY DEPOSIT OF RS. 12 CRORES NOR TAKING OVER T HE POSSESSION BY THE DEVELOPER OF THE PROPERTY HAPPENE D DURING THE IMPUGNED ASSESSMENT YEAR. IN THE AFORESAID VIEW OF THE MATTER THE CIT(A) WAS CORRECT IN HOLDING THAT UNDER NO CIRCUMSTANCES THE CAPITAL GAIN COULD HAVE BEEN CHAR GED TO TAX IN THE IMPUGNED ASSESSMENT YEAR. THE RATIO LAID DOW N BY THE HONBLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWA RAKADAS VS. ACIT, 260 ITR 491 (BOM.) AND K. RADHIKA VS. DCI T, ITAT, 19 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ HYDERABAD, 47 SOT 180, ALSO SUPPORT THE VIEW THAT T HE CAPITAL GAIN CANNOT BE CHARGED TO TAX IN THE IMPUGNED ASSES SMENT YEAR I.E. 2008-09. HOWEVER, IT IS A FACT ON RECORD THAT THE DEVELOPER WAS HANDED OVER THE POSSESSION OF THE PRO PERTY AFTER OBTAINING PERMISSION FROM GHMC ON 05/08/2008 AND FURTHER THE SECOND DEVELOPMENT AGREEMENT EXECUTED O N 11/02/2011 WITH RBD LEGEND, THOUGH, IS AN UNREGIST ERED DOCUMENT, HOWEVER, CLEARLY REVEALS THAT THE EARLIER DEVELOPER I.E. LEGEND ESTATES PT. LTD. HAD NOT ONLY TAKEN POS SESSION OF THE PROPERTY BUT HAS ALSO STARTED CONSTRUCTION OF T HE PROJECT. FURTHERMORE, THE REGISTERED DEVELOPMENT AGREEMENT W ITH THE DEVELOPER M/S LEGEND ESTATES P. LTD. HAS NOT BEEN C ANCELLED. THEREFORE, IT CANNOT BE SAID THAT THE DEVELOPER M/S LEGEND ESTATES P. LTD. HAS BACKED OUT OR EXPRESSED ITS UNW ILLINGNESS IN CARRYING OUT THE DEVELOPMENT ACTIVITY. THE DEVEL OPMENT AGREEMENT EXECUTED ON 11.02/2011 BEING AN UNREGISTE RED DOCUMENT IT CANNOT HAVE MUCH RELEVANCE. IN THE AFOR ESAID CIRCUMSTANCES, THEREFORE, THE CONCLUSION ARRIVED AT BY THE CIT(A) TO THE EFFECT THAT THERE IS A TRANSFER WITHI N THE MEANING OF SECTION 53A READ WITH SECTION 2(47)(V) O F THE ACT, CANNOT BE HELD TO BE WITHOUT ANY SUBSTANCE. THE AFO RESAID CONCLUSION OF THE CIT(A) CERTAINLY IS CAPABLE OF BE ING EXAMINED IN THE LIGHT OF THE RATIO LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARAKADAS VS. ACIT, 260 ITR 491 (BOM.) AND K. RADHIKA VS. DCIT, I TAT, HYDERABAD, 47 SOT 180. WE, THEREFORE, DO NOT FIND A NY INFIRMITY IN THE ORDER OF THE CIT(A) IN DIRECTING T HE ASSESSING OFFICER TO EXAMINE THE ISSUE OF TAXABILITY OF CAPIT AL GAIN IN THE ASSESSMENT YEAR 2009-10 WHEN HIS POWERS UNDER THE S TATUTE ARE CO-TERMINUS WITH THAT OF THE ASSESSING OFFICER IN OUR VIEW, THE STATUTE HAS NEITHER PUT ANY FETTERS NOR THE CIT (A) IS 20 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ POWERLESS IN DIRECTING THE ASSESSING OFFICER TO EXA MINE THE TAXABILITY OF A PARTICULAR INCOME IN AN APPROPRIATE ASSESSMENT YEAR EVEN IF HE FINDS IT NOT TAXABLE IN THE ASSESSM ENT YEAR UNDER DISPUTE. THE ASSESSEE CERTAINLY CANNOT HAVE A NY GRIEVANCE IN ASSESSABILITY OF AN INCOME IN A PARTIC ULAR ASSESSMENT YEAR IF OTHERWISE IT IS TAXABLE IN THAT ASSESSMENT YEAR IN ACCORDANCE WITH LAW. IN THE FACTS OF THE PR ESENT CASE THE CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO EX AMINE THE TAXABILITY OF CAPITAL GAIN IN ASSESSMENT YEAR 2009- 10. HOWEVER, SUCH DIRECTION OF THE CIT(A) IS SUBJECTED TO THE PROVISION CONTAINED IN SECTIONS 149, 150 AND 153 OF THE ACT. IT IS OPEN FOR THE ASSESSEE TO PUT FORWARD HIS CONT ENTIONS WITH REGARD TO THE TAXABILITY OR OTHERWISE OF THE CAPITA L GAIN IN THE CONCERNED ASSESSMENT YEAR DURING THE ASSESSMENT PRO CEEDING OF THAT ASSESSMENT YEAR. THE ASSESSING OFFICER CERT AINLY HAS TO CONSIDER THE ASSESSEES CONTENTION KEEPING IN VI EW THE RATIO LAID DOWN IN THE JUDICIAL PRECEDENTS GOVERNIN G THIS ISSUE AND THEREAFTER TAKE A DECISION IN THE MATTER. THE D ECISIONS RELIED UPON BY THE LEARNED AR ARE CLEARLY DISTINGUI SHABLE ON FACT AND ARE NOT APPLICABLE TO THE CASE OF THE ASSE SSEE. IN THE AFORESAID VIEW OF THE MATTER, WE ARE NOT INCLINED T O ENTERTAIN THE GROUNDS RAISED BY THE ASSESSEE, WHICH ARE ACCOR DINGLY DISMISSED. 27. IN THE RESULT, APPEAL OF THE ASSESSEE BEING ITA NO. 28/H/12 IS DISMISSED. 21 ITA NOS. 140 & 28/HYD/12 SRI GOPAL RAJ 28. TO SUM UP, BOTH THE APPEALS UNDER CONSIDERATION ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 30/08/2013. SD/- SD/- (CHANDRA POOJARI) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: AUGUST, 2013. KV COPY TO:- 1) DCIT, CC-6, 7 TH FLOOR, AAYAKAR BHAVAN, LB STADIUM ROAD, BASHEERBAGH, HYDERABAD 500 004. 2) SHRI K. GOPAL RAJ, 15-9-612, SIDDIAMBER BAZAR, H YDERABAD. 3) CIT(A)-I, HYDERABAD. 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T ., HYDERABAD.