B.V. Narayana Reddy, R.R.Dist V. The ACIT, Central Circle-1, Hyderabad

ITA 1616/HYD/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7754 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 25-10-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITRA
• Keywords: Capital asset; Search and seizure; Opportunity of being heard; Cost of acquisition; Fair market value
• Section: 54F; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1616/HYD/2012 ASSESSMENT YEAR: 2007-08 SHRI B. V. NARAYANA REDDY, RR DISTRICT. PAN AKHPB 7433 K ASST. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE 1, HYD. (APPELLANT) (RESPONDENT) ASSESSEE BY SHRI Y. RATNAKAR REVENUE BY SHRI RAJAT MITRA DATE OF HEARING 04-12-2014 DATE OF PRONOUNCEMENT 10-12-2014 O R D E R PER SAKTIJIT DEY, J.M.: THIS APPEAL OF ASSESSEE IS DIRECTED AGAINST ORDER DATED 28/0/2012 OF LD. CIT(A)-I, HYDERABAD FOR THE ASSESS MENT YEAR 2007- 08. 2. THOUGH ASSESSEE HAS RAISED 12 GROUNDS, BUT, THE ISSUE FOR CONSIDERATION IS BASICALLY CONFINED TO ASSESSMENT OF LONG TERM CAPITAL GAIN OF RS. 3,69,63,500. OF COURSE, ASSESSE E HAS RAISED ADDITIONAL GROUND FOR CONSIDERATION OF ITS CLAIM O F EXEMPTION U/S 54F. 3. BRIEFLY, THE FACTS ARE, ASSESSEE IS AN INDIVIDUA L. A SEARCH AND SEIZURE OPERATION WAS CONDUCTED IN THE BUSINESS OF PREMISES OF 2 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY M/S BPR INFRASTRUCTURE PVT. LTD. ON 22/10/2008. DUR ING THE SEARCH AND SEIZURE OPERATION CERTAIN INCRIMINATING MATERIA L RELATING TO ASSESSEE WAS FOUND AND SEIZED. ON THE BASIS OF SUCH SEIZED MATERIAL, AO ISSUED NOTICE U/S 153C OF THE ACT ON 2 8/07/09 CALLING UPON ASSESSEE TO FURNISH ITS RETURN OF INCOME FOR A Y 2003-04 TO 2008-09. ASSESSEE RESPONDED TO THE NOTICE U/S 153C BY FILING RETURN OF INCOME FOR THE IMPUGNED AY ON 07/09/09 DE CLARING INCOME OF RS. 78,046. DURING THE ASSESSMENT PROCEEDING, AO ON VERIFICATION OF THE SEIZED MATERIAL FOUND THAT THE SAME IS A DEVELOPMENT AGREEMENT ENTERED INTO BY ASSESSEE AND E. GOVINDA REDY WITH M/S BPR INFRASTRUCTURE LTD. ON 04/05/2006 UNDER WHICH A LAND ADMEASURING 4 ACRE 36 GUNTAS IN SURVEY NOS. 78 ,79,80, 81 & 82, SITUATED AT ATTAPUR, RAJENDRA NAGAR MANDAL WAS HANDED OVER TO THE DEVELOPER M/S BPR INFRASTRUCTURE LTD. FOR THE P URPOSE OF DEVELOPMENT ACTIVITY. HE FURTHER NOTICED THAT DEVEL OPMENT AGREEMENT WAS REGISTERED AT SRO, RAJENDRA NAGAR BY DOCUMENT NO. 6657/2006. AS PER THE TERMS OF THE DEVELOPMENT AGREEMENT, IN LIEU OF THE LAND GIVEN FOR DEVELOPMENT, OWNERS WERE ENTITLED FOR 50% OF THE TOTAL RESIDENTIAL AREA CONSTRUCTED AS PE R THE MUTUAL UNDERSTANDING. HE FURTHER NOTED THAT SUBSEQUENTLY O N 23/04/07, A RATIFICATION DEED WAS EXECUTED WHICH WAS ALSO REGIS TERED ON 23/04/2007 VIDE DOCUMENT NO. 4999/2007 TO INCLUDE B. RAGHAVENDRA REDDY, B. SRINIVASA REDDY, B. MADHUSUDA N REDDY AND E. PRATAP REDDY AS PARTNERS TO THE DEVELOPMENT AGREEMENT BEING OWNERS OF THE LAND. AO, FURTHER, NOTED THAT O N 03/01/2009, A MOU WAS EXECUTED BETWEEN E. GOVINDA REDDY AND ASSES SEE WITH M/S BPR INFRASTRUCTURE LTD. SPECIFYING THE SHARING RATIO BETWEEN THE LAND OWNERS AS 60:40. THUS, AS PER THE MOU, ASS ESSEE WAS OWNER OF 40% OF THE LAND OF 4.36 ACRE. AS PER THE M OU, TOTAL 39 VILLAS WERE TO BE CONSTRUCTED ON THE PROPERTY KNOWN AS PEARL COUNTY OUT OF WHICH 19 VILLAS EACH WERE TO BE TAKE N BY OWNERS AND 3 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY DEVELOPER AND THE REMAINING ONE VILLA WAS TO BE SOL D AND THE SALE PROCEEDS IS TO BE DISTRIBUTED BETWEEN DEVELOPER AND OWNER. AO NOTED THAT 19 VILLAS OF THE OWNERS WERE FURTHER DIV IDED AMONGST THE LAND OWNERS WITH E. GOVINDA REDDY GETTING 11 VILLAS AND ASSESSEE HAVING 7 VILLAS AND THE SHARE FROM THE SALE PROCEED S OF 39 TH VILLA IS TO BE DIVIDED IN 60:40 RATIO BETWEEN ASSESSEE AND E . GOVINDA REDDY. 4. IN COURSE OF ASSESSMENT PROCEEDING, IT WAS SUBMI TTED BY ASSESSEE THAT THEY HAVE NOT GIVEN POSSESSION OVER T HE LAND TO THE DEVELOPER AND THEY RETAIN POSSESSION TILL CONSTRUCT ION OF THE BUILDING IS COMPLETED AND THEIR SHARE IN BUILT UP A REA IS HANDED OVER TO THEM. IT WAS SUBMITTED THAT AS PER SECTION 53A OF THE TP ACT, UNLESS POSSESSION IS DELIVERED NO TRANSFER TAK ES PLACE. ASSESSEE ALSO RAISED SOME OTHER ISSUES IN SUPPORT O F ITS CLAIM THAT LONG TERM CAPITAL GAIN CANNOT BE ASSESSED IN AY UND ER DISPUTE. AO, HOWEVER, REJECTING THE SUBMISSIONS OF ASSESSEE, HEL D THAT AS ASSESSEE HAS ENTERED INTO THE DEVELOPMENT AGREEMENT IN THE IMPUGNED AY, THERE IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) ATTRACTING CAPITAL GAIN. HAVING HELD THAT CAPITAL GAIN IS TAXABLE IN THE IMPUGNED AY, AO PROCEEDED TO COMPUTE CAPITAL GAIN. AO OBSERVED THAT AS PER INFORMATION OBTAINED FROM THE DEVELOPER M/S BPR INFRASTRUCTURE LTD., THE COST OF CONSTRUCTION WORKS OUT TO RS. 1,240 PER SQFT.. AO OBSERVED THAT SINCE ASSESSEE ALSO GETS A PORTION OF LAND ALONG WITH VILLAS, THE VALUE OF LAND IS ALSO TO BE TAKEN TOWARDS SALE CONSIDERATION. ESTIMA TING THE VALUE OF LAND RECEIVED BY ASSESSEE AT RS. 60 PER SFT., TO TAL VALUE WAS WORKED AT RS. 1300 PER SQFT. TAKING NOTE OF THE FAC T THAT ASSESSEE IS ENTITLED TO TOTAL PLINTH AREA OF 27073 SQFT., AO WORKED OUT SALE CONSIDERATION IN THE HANDS OF ASSESSEE AT RS. 3,51, 94,900 ( RS. 1300 X 27073 SQFT.). FURTHER BY TAKING INTO ACCOUNT , THE APPROXIMATE CONSTRUCTED AREA OF 4000 SQFT. FOR ONE VILLA SOLD, OF 4 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY WHICH ASSESSEE IS ENTITLED FOR 40%, AO WORKED OUT A SSESSEES SHARE AT RS. 20,80,000. THUS, TOTAL SALE CONSIDERAT ION RECEIVABLE BY ASSESSEE WAS WORKED OUT TO RS. 3,72,74,900. BY A LLOWING COST OF ACQUISITION OF RS. 3,11,400, LONG TERM CAPITAL G AIN WAS COMPUTED AT RS. 3,69,63,500. BEING AGGRIEVED OF THE DETERMIN ATION OF LONG TERM CAPITAL GAIN IN THE IMPUGNED AY, ASSESSEE PREF ERRED APPEAL BEFORE LD. CIT(A). 5. BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE C HALLENGING THE ASSESSMENT ORDER, SUBMITTED THAT AO ERRED IN HOLDIN G THAT TRANSFER HAS TAKEN PLACE ON EXECUTION OF DEVELOPMENT AGREEME NT. FURTHER, IT WAS SUBMITTED THAT EVEN IF DEVELOPMENT AGREEMENT IS TAKEN AS DATE FOR RECOGNIZING CAPITAL GAIN, THEN, SALE CONSIDERAT ION IS ALSO TO BE ADOPTED AS PREVAILING ON THE DATE OF AGREEMENT AND NOT AS PER THE COST INCURRED BY THE BUILDER, WHICH IS ARRIVED AT A FTER COMPLETION OF THE TOTAL CONSTRUCTION BY THE BUILDER FROM THE FUTU RE COURSE OF ACTION. IT WAS SUBMITTED THAT COST INCURRED BY BUIL DER WAS RIGHTLY MADE AVAILABLE TO AO BECAUSE SEARCH TOOK PLACE IN T HE PREMISES OF THE BUILDER ON 22/10/2008 AFTER A LAPSE OF 2 YEAR S FROM THE DATE OF DEVELOPMENT AGREEMENT. IT WAS SUBMITTED, IF AO O PINED THAT CAPITAL GAIN ARISES IN THE YEAR IN WHICH DEVELOPMEN T AGREEMENT TOOK PLACE IS TO BE ACCEPTED, THEN, IT WILL BE ILLE GAL TO ARRIVE AT THE COST WHICH WOULD BE INCURRED BY BUILDER DURING FUT URE COURSE OF HIS ACTION AND THE VALUE THUS ARRIVED AT WILL BE ESTIMA TION ON NOTIONAL BASIS ONLY, WHICH IS NOT A METHOD PRESCRIBED IN THE STATUTE. FURTHER, ARGUMENT WAS ADVANCED BY ASSESSEE TO THE EFFECT THA T IF AT ALL CAPITAL GAIN IS TO BE CHARGED FOR ARRIVING AT THE S ALE CONSIDERATION, THE VALUE AS PER THE SRO SHOULD BE ADOPTED, BUT, NO T ON ESTIMATION BASIS. IT WAS FURTHER SUBMITTED THAT AO ALSO ERRED IN TAXING THE ENTIRE INCOME IN THE HANDS OF ASSESSEE IN STEAD OF TAXING HIM TO THE EXTENT OF HIS SHARE. ALTERNATIVE ARGUMENT WAS A LSO TAKEN THAT 5 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY LAND TRANSFERRED BEING AN AGRICULTURAL LAND CANNOT BE TREATED AS CAPITAL ASSET AS PER SECTION 2(14) OF THE ACT. 6. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE AND GOING THROUGH THE FACTS AND MATERIALS ON RECORD, DI D NOT FIND ANY SUCH MERIT IN SUCH SUBMISSIONS. LD. CIT(A) CONCLUDE D THAT LAND IN QUESTION CANNOT BE CONSIDERED TO BE AN AGRICULTURAL LAND AS IT IS NOT BEYOND 8 KILOMETERS OF A MUNICIPALITY. LD. CIT(A) A LSO REJECTED ASSESSEES CONTENTION THAT THERE IS NO TRANSFER IN THE IMPUGNED AY SOLELY ON THE BASIS OF THE DEVELOPMENT AGREEMENT. L D. CIT(A) OBSERVED THAT AS PER THE DEVELOPMENT AGREEMENT, ASS ESSEE ALONG WITH CO-OWNER E. GOVINDA REDDY RECEIVED SOME OF RS. 20 LAKHS AS REFUNDABLE SECURITY DEPOSITS, HOWEVER, LAND OWNERS HAVE ALSO MADE AVAILABLE THE LAND TO DEVELOPER FOR THE PURPOS E OF DEVELOPING THE SAME TO CONSTRUCT RESIDENTIAL APARTMENTS AND TO OBTAIN NECESSARY PERMISSION FROM HUDA, MUNICIPALITY AND AP TRANSCO. HE, FURTHER NOTED THAT AFTER OBTAINING NECESSARY APPROVAL/PERMISSIONS FROM THE CONCERNED AUTHORITIES DEVELOPER HAS ALSO COMMENCED CONSTRUCTION WORK AND AS ON THE DATE OF HEARING OF APPEAL, THE PROJECT IS ALMOST NEARING COMPLETION. HE, THEREFORE, HELD THAT ALL THE INGREDIENTS OF TRANSFER AS PER S ECTION 2(47)(V) READ WITH SECTION 53A HAVE BEEN FULFILLED. AS FAR AS ASS ESSEES CONTENTION THAT THERE ARE OTHER CO-OWNERS ALONG WIT H ASSESSEE, LD. CIT(A) ALSO REJECTED SUCH CONTENTION BY OBSERVING T HAT IN THE DEVELOPMENT AGREEMENT, ASSESSEE HAS BEEN SHOWN AS A BSOLUTE OWNER ALONG WITH E. GOVINDA REDDY WITH FULL POWERS OF ENJOYMENT. SO FAR AS OBJECTION RELATING TO WORKING OF SALE CON SIDERATION, LD. CIT(A) ALSO DID NOT ACCEPT THE CONTENTION OF ASSESS EE BY OBSERVING THAT ASSESSEE COULD NOT PRODUCE ANY MATERIAL TO CON TRADICT THE VALUATION OF AO. ON THE AFORESAID FINDING, LD. CIT( A) UPHELD, THE LONG TERM CAPITAL GAIN COMPUTED BY AO. 6 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY 7. LD. AR MOSTLY REITERATED THE SUBMISSIONS MADE BE FORE THE FIRST APPELLATE AUTHORITY. THE FIRST CONTENTION OF LD. AR IS, TRANSFER HAS NOT TAKEN PLACE ON EXECUTION OF THE DEVELOPMENT AGREEMENT ON 04/05/2006, HENCE, CAPITAL GAIN IS NOT TAXABLE IN T HE IMPUGNED AY. LD. AR REFERRING TO CLAUSE 5 AND 14 OF THE DEVELOPM ENT AGREEMENT, A COPY OF WHICH IS AT PAGE 22 OF THE PAPER BOOK, SU BMITTED THAT AFORESAID CLAUSES MAKE IT CLEAR THAT POSSESSION WAS NEVER DELIVERED TO THE DEVELOPER ON EXECUTION OF THE DEVE LOPMENT AGREEMENT, HENCE, THE CONDITIONS OF SECTION 2(47)(V ) READ WITH SECTION 53A OF THE TP ACT IS NOT FULFILLED. SECOND CONTENTION OF LD. AR IS, AO HAS TOTALLY ERRED WHILE CONSIDERING THE S ALE CONSIDERATION AT RS. 3,72,74,900 TO BE ASSESSEES SHARE ON THE BA SIS OF THE COST OF CONSTRUCTION INCURRED BY THE BUILDER. LD. AR SUB MITTED THAT SALE CONSIDERATION HAS TO BE TAKEN ON THE BASIS OF FAIR MARKET VALUE AS ON THE DATE OF EXECUTION OF THE DEVELOPMENT AGREEME NT ON 04/05/06. LD. AR REFERRING TO THE DEVELOPMENT AGREE MENT SUBMITTED THAT AS PER THE STAMP DUTY VALUATION OF THE SUB-REG ISTRAR, THE VALUE OF THE PROPERTY IS RS. 5,41,20,000 FOR THE TOTAL LA ND WHEREAS ASSESSEE AND HIS CO-OWNER E. GOVINDA REEDY HAVE GIV EN 50% OF THE LAND TO THE DEVELOPER FOR DEVELOPMENT ACTIVITY AND 50% OF THE LAND WAS RETAINED BY LAND OWNERS. THEREFORE, THE VA LUE OF 50% LAND GIVEN TO THE DEVELOPER WILL BE RS. 2,70,60,000. IT WAS SUBMITTED THAT EVEN THIS RS. 2,70,60,000 AGAIN IS TO BE DISTR IBUTED BETWEEN THE LAND OWNERS AT THE RATIO OF 60:40. THEREFORE, A SSESSEES 40% SHARE WOULD COME TO RS. 1,08,24,000. AFTER DEDUCTIN G THE COST OF ACQUISITION OF RS. 3,11,400, TAXABLE CAPITAL GAIN A T THE HANDS OF ASSESSEE WOULD BE RS. 1,05,12,600. LD. AR SUBMITTED THAT EVEN THIS TAXABLE CAPITAL GAIN OF RS. 1,05,12,600 CANNOT ALSO BE CONSIDERED ENTIRELY AT THE HANDS OF ASSESSEE AS LAN D FALLING TO THE SHARE OF ASSESSEE IS NOT ENTIRELY HIS OWN, BUT, BEL ONG TO OTHER THREE 7 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY CO-OWNERS BY VIRTUE OF REGISTERED PARTITION DEED ON 26/06/95. LD. AR FINALLY SUBMITTED THAT AGAINST LONG TERM CAPITAL GAIN AS ACCRUED TO ASSESSEE, HE WOULD BE ELIGIBLE TO CLAIM DEDUCTIO N U/S 54F OF THE ACT IN RESPECT OF THE RESIDENTIAL VILLAS, HE HAS RE CEIVED IN LIEU OF THE LAND TRANSFERRED. 8. THE LD. DR, ON THE OTHER HAND, SUBMITTED BEFORE US THAT ASSESSEES CONTENTION THAT LAND WAS NOT TRANSFERRED ON EXECUTION OF DEVELOPMENT AGREEMENT CANNOT BE ACCEPTED IN VIEW OF THE FACT THAT NOT ONLY ASSESSEE HAS EXECUTED DEVELOPMENT AGREEMEN T, BUT, THE DEVELOPER WAS ALSO HANDED OVER POSSESSION OF LAND F OR PROCEEDING WITH CONSTRUCTION ACTIVITY. THEREFORE, THERE IS TRA NSFER IN TERMS OF SECTION 2(47)(V) READ WITH SECTION 53A OF THE TP AC T. AS FAR AS OTHER ISSUES RAISED BY ASSESSEE ARE CONCERNED, LD. DR RELIED UPON THE FINDING OF AO AND LD. CIT(A). 9. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES AS WELL A S OTHER MATERIALS ON RECORD. THERE IS NO DISPUTE TO THE FAC T THAT ASSESSEE ALONG WITH E. GOVINDA REDDY HAS ENTERED INTO THE DE VELOPMENT AGREEMENT WITH M/S BPR INFRASTRUCTURE LTD. ON 04/05 /06. IT IS ALSO EVIDENT FROM THE FACTS AND MATERIALS ON RECORD THAT DEVELOPER IN TERMS WITH THE DEVELOPMENT AGREEMENT HAS STARTED TH E DEVELOPMENT WORK BY NOT ONLY OBTAINING PERMISSION FROM CONCERNED AUTHORITIES AND HAS ALSO STARTED CONSTRUC TION ACTIVITIES AND THE CONSTRUCTION IS ALMOST COMPLETE. THEREFORE, ASSESSEES CONTENTION THAT POSSESSION WAS NOT HANDED OVER TO D EVELOPER CANNOT BE ACCEPTED. IT IS HIGHLY IMPROBABLE THAT W ITHOUT BEING HANDLED OVER POSSESSION OVER LAND, THE DEVELOPER WO ULD HAVE STARTED THE DEVELOPMENT ACTIVITY. IN THAT VIEW OF T HE MATTER AS MATERIAL FACTS AVAILABLE ON RECORD INDICATE THAT DE VELOPER WAS HANDED OVER POSSESSION OF LAND FOR STARTING DEVELO PMENT ACTIVITY 8 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY ON EXECUTION OF DEVELOPMENT AGREEMENT ON 04/05/06, TRANSFER IN TERMS OF SECTION 2(47(V) READ WITH SECTION 53A OF T P ACT FOR ALL INTENT AND PURPOSE HAS TAKEN PLACE IN THE IMPUGNED AY. IN SUPPORT OF SUCH VIEW, WE RELY ON THE DECISION OF HONBLE JU RISDICTIONAL HIGH COURT IN CASE OF POTLA NAGESWARA RAO VS. CIT, 365 I TR 249. SO FAR AS ADOPTION OF SALE CONSIDERATION AT RS. 3,72,74,90 0, WE FIND MERIT IN THE CONTENTION OF LD. AR THAT SALE CONSIDERATION CANNOT BE TAKEN ON THE BASIS OF COST OF CONSTRUCTION TO THE DEVELOP ER. MOREOVER, THE SALE CONSIDERATION DEEMED TO HAVE BEEN RECEIVED BY ASSESSEE HAS TO BE ARRIVED AT ON THE BASIS OF FMV AS ON THE DATE OF DEVELOPMENT AGREEMENT I.E. ON 04/05/06. ON A REFERENCE TO REGIS TERED DEVELOPMENT AGREEMENT, A COPY OF WHICH IS AT PAGE 2 2 OF PAPER BOOK, IT IS EVIDENT THAT THE SRO HAS VALUED THE PRO PERTY FOR STAMP DUTY PURPOSE AT RS. 5,41,20,000. IN THAT VIEW OF TH E MATTER, UNLESS, THERE IS EVIDENCE TO SHOW THAT THE FMV OF THE PROPE RTY IS MORE THAN THE VALUE ADOPTED BY SRO FOR STAMP DUTY PURPOSE, TH E VALUE ADOPTED BY SRO HAS TO BE CONSIDERED AS FMV OF THE P ROPERTY. TAKING THAT INTO ASPECT, ASSESSEES SHARE IN THE DE EMED SALE CONSIDERATION HAS TO BE WORKED OUT. MOREOVER, IT IS A FACT ON RECORD THAT DURING THE ASSESSMENT PROCEEDING AS WELL AS BE FORE THE FIRST APPELLATE AUTHORITY, ASSESSEE HAS BROUGHT IT ON REC ORD THAT BY VIRTUE OF A REGISTERED PARTITION DEED DATED 23/06/1 995, ASSESSEE IS NOT ABSOLUTE OWNER OF THE PROPERTY, BUT, HE OWNS 1/ 4 TH SHARE ALONG WITH HIS THREE SONS. IT IS ALSO A FACT ON RECORD, T HOUGH, IN THE DEVELOPMENT AGREEMENT ASSESSEE ALONG WITH E. GOVIND A REDDY HAVE EXECUTED WITH DEVELOPER BY PROJECTING THEM AS ABSOLUTE OWNERS OF LAND, BUT, ON THE BASIS OF REGISTERED PAR TITION DEED A RATIFICATION DEED WAS EXECUTED ON 23/04/07, A COPY OF WHICH IS AT PAGE 52 OF PAPER BOOK, WHEREIN THE OTHER CO-OWNERS HAVE ALSO BEEN MADE PARTY TO THE DEVELOPMENT AGREEMENT. THE A FORESAID RATIFICATION DEED HAS ALSO BEEN REGISTERED WITH SRO . THEREFORE, 9 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY ASSESSEES CLAIM FOR APPORTIONING THE TAXABLE CAPIT AL GAIN AMONGST ALL THE CO-OWNERS HAS TO BE CONSIDERED KEEPING IN V IEW THE REGISTERED PARTITION DEED DATED 23/06/95 AND RATIFI CATION DEED DATED 23/04/07. AS BOTH THE REGISTERED PARTITION DEED AND REGISTERED RATIFICATION DEED CAME INTO EXISTENCE PRIOR TO THE DATE OF SEARCH, THEY CANNOT BE IGNORED OR OVERLOOKED BY TERMING THE M AS COLLUSIVE ARRANGEMENT. AS NEITHER AO NOR LD. CIT(A) HAS PROPE RLY APPRECIATED ASSESSEES CONTENTION BY KEEPING IN VIE W THE AFORESAID DOCUMENTARY EVIDENCES BROUGHT ON RECORD, WE ARE OF THE VIEW THAT THE ENTIRE ISSUE OF COMPUTATION OF CAPITAL GAIN NEE DS TO BE EXAMINED AFRESH BY TAKING INTO ACCOUNT ALL THE FACT S AND MATERIALS BROUGHT ON RECORD. ACCORDINGLY, WE SET ASIDE THE IM PUGNED ORDER OF LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF AO FOR CONSIDERING AFRESH AFTER AFFORDING DUE OPPORTUNITY OF BEING HEARD TO ASSESSEE. WHILE EXAMINING THE ISSUE OF COMPUTATION OF CAPITAL GAIN, AO IS ALSO DIRECTED TO CONSIDER ASSESSEES CL AIM OF EXEMPTION U/S 54F IN TERMS WITH THE STATUTORY PROVISION AND A S MAY BE PERMISSIBLE IN LAW. 10. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 10/12/2014. SD/- SD/- (B. RAMAKOTAIAH) (SAKTIJIT DEY) ACCOUNTANT MEMBER JU DICIAL MEMBER HYDERABAD, DATED:10 TH DECEMBER, 2014 KV 10 ITA NO. 1616/HYD/2012 SRI B.V. NARAYANA REDDY COPY TO:- 1) SHRI B.V. NARAYANA REDDY, NO. 4-2-148, ATTAPUR, R.N. MANDAI, HYDERABAD, RR DISTRICT. 2) ACIT, CENTRAL CIRCLE -1, HYD. 3) CIT(A)-I, HYDERABAD 4) CIT(CENTRAL), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.