Badam Chandrasekhara Reddy, Hyderabad V. ITO,Ward 6(3), Hyderabad

ITA 163/HYD/2014

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3756 (ITAT-HYDERABAD)
• Duration Of Justice: 6 year(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 26-11-2019
• Assessment Year: 2009-2010
• Appeal Filed On: 03-02-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income; Search and seizure; Salary income; Cost of acquisition; Wrong claim; Capital receipt; TDS; Capital Gains
• Section: 54F; 234B; 143(2); 13; 22; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH : HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 163 /HYD./201 4 ASSESSMENT YEAR: 200 9 - 10 LATE SH. BADAM CHANDRASEKHARA REDDY VS. ITO, WARD 6(3) HYDERABAD HYDERABAD PAN: ACVPB8249F REP. BY L.R. SMT.SHALINI REDDY (WIFE ) (APPELLANT) (RESPONDENT) FOR ASSESSEE : SH. S.RAMA RAO, A.R. FOR REVENUE : S MT. K.J. DIVYA, D.R. DATE OF HEARING : 26 / 11 / 20 19 DATE OF PRONOUNCEMENT : 25 / 0 2 / 20 20 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE AY 2009 - 10 AGAINST THE ORDER OF LD.CIT(A) - IV, HYDERABAD DATED 14.11.2013. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL , FILED HIS RETURN OF INCOME FOR THE AY 2009 - 10 ON 0 3. 0 7.2009 ADMITTING TAXABLE INCOME OF RS.8,14,680/ - BESIDES AGRICULTURAL INCOME AT RS.1,80,000/ - . THE ASSESSEE H AD DERIVED INCOME FROM SALARY, HOUSE PROPERTY, LONG TERM CAPITAL GAIN, BUSINESS INCOME AND ALSO INCOME FROM OTHER SOURCES. THE RETURN OF INCOME WAS TAKEN UP FOR SCRUTINY UNDER CASS AND ON ISSUANCE ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 2 OF A NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (THE ACT) , THE ASSESSEE APPEARED AND FILED RELEVANT INFORMATION. ON VERIFICATION OF THE DETAILS SO FILED, THE AO OBSERVED THAT IN HIS COMPUTATION OF TOTAL INCOME , THE ASSESSEE HAD SHOWN LONG TERM CAPITAL GAIN OF RS.73,01,087/ - AND CLAIMED EXEMPTION U/S 54F OF THE ACT F OR RS.71,76,700/ - AND, THEREFORE, THE NET LONG TERM CAPITAL OFFERED FOR TAXATION WAS RS.1,24,387/ - . 2.1. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS REQUESTED TO FURNISH DETAILS OF PROPERTIES SOLD ON WHICH CAPITAL GAIN WAS OFFERED TO TA X. IN RESPONSE TO THE SAME, THE ASSESSEE FILED THE COP Y OF THE SALE DEED A CCORDING TO WHICH , IN THE PREVIOUS YEAR RELEVANT TO THE A.Y. 2009 - 10 , THE ASSESSEE HAD TRANSFERRED PLOT NOS. 199 AND 200 ( ADMEASURING 1500 SQ. YARDS ) SITUATED AT SURVEY NO.5/3, RAIDURG PANMAKTHA VILLAGE, SERILINGAMPALLY M ANDAL, R.R. D ISTRICT . THE ASSESSEE WAS ALSO REQUESTED TO FURNISH ALL THE RELEVANT DETAILS WITH REGARD TO ACQUISITION OF ABOVE PROPERTY, COST OF IMPROVEMENT, FULL VALUE OF CONSIDERATION RECEIVED AND ENTITLEMENT OF ASSESSEE WITH REGARD TO EXEMPTION CLAIMED U/S 54F OF THE ACT. 2.2. THE A.O. OBSERVED THAT ON 17.09.2008, THE ASSESSEE A S A GP HOLDER OF SRI M. SURESH REDDY HAS SOLD THE ABOVE PLOT ADMEASURING 1500 SQ.YDS TO SRI CM RA JESH FOR A CONSI DERATION OF RS.1,65,00,000/ - AND THE ENTIRE CONSIDERATION WAS RECEIVED BY THE ASSESSEE ON VARIOUS DATES AS DETAILED IN THE SALE DEED. T HE ASSESSEE HAS SHOWN ONLY RS.82.50 LAKHS AS HIS SHARE OF CAPITAL RECEIPT WHILE COMPUTING THE LONG TERM CAPITAL GAIN. THEREFORE, THE AO ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE FULL ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 3 VALUE OF CONSIDERATION SHOULD NOT BE ADOPTED AT RS.1.65 CRORES AS AGAINST RS.82.50 LAKHS ADMITTED BY ASSESSEE IN THE RETURN OF INCOME FILED ON 0 3.07.2009. IN RESPONSE TO THE SAME , THE ASSESSEE FILED A NOTE STATING AS UNDER. 1. VIDE AN AGREEMENT DATED 16TH OF AUGUST 1989 SRI M. SURESH REDDY AND 4 OTHERS ENTERED INTO AN AGREEMENT TO POOL THEIR FUNDS AND INVEST IN LAND WHICH WOULD BE REGISTERED IN THE NAME OF M. SURESH REDDY, AND LATER SOLD AND THE REALIZED PROFIT WOULD BE SHARED IN AN AGREED RATIO . 2. IN FURTHERANCE OF THIS AGREEME NT ON 28TH OF AUGUST 1989 LAND ADMEASURING ACRES 2 GTS 20 WAS ACQUIRED AS PER ABOVE AGREEME NT WAS REGISTERED IN THE N A ME OF SRI M SURESH REDDY . 3. MR SURESH REDDY AND OTHERS THEN APPROACHED MR B . C . REDDY TO PURCHASE 50% OF THE LAND ON PAYMENT OF CONSIDERATION AND AS PER AGREEMENT DATED 4TH DAY OF SEPTEMBER 1989 M. SURESH REDDY AND OTHERS AGRE ED TO PART WITH 50%. SHARE OF LAND IN FAVOUR OF B C REDDY . 4. ON 6TH SEPTEMBER 1989 M SURESH REDDY ALONG WITH OTHERS EXECUTED A GPA FAVOURING B C REDDY FOR CARRYING OUT ALL SUCH ACTIVITIES TO RESULT IN SALE O F LAND. 5. ON 17TH SEPTEMBER 2008 VIDE DOC NU MBER 7357, M SURESH REDDY THROUGH GPA B C REDDY SOLD 1500 S Q YDS TO C M RAJESH FOR RS.1 ,65,00,000/ - . 6. AS B C REDDY WAS ENTITLED TO 50% SHARE OF LAND AND PROFIT IN TERMS OF THE AGREEMENT DATED 4TH SEPTEMBER 1989 , B C REDDY RECEIVED 80 LACS AS CONSIDERAT ION AND RETURNED RS . 82 , 50 , 000/ - AND CLAIMED DEDUCTION U/S 54F ON INVESTMENT MADE IN HOUSE PROPERTY . IN VIEW OF THE ABOVE , IT IS SUBMITTED THAT SRI B C REDDY HAS RIGHTFULLY OFFERED RS 82.50 LACS BEING HIS SHARE OF CONSIDERATION FOR TAXATION UNDER THE HE AD 'LONG TERM CAPITAL GAINS' AND WE REQUEST YOU TO KINDLY CONSIDER ABOVE SUBMISSIONS. 2.3. THE A.O. HOWEVER , WAS NOT CONVINCED WITH THE ABOVE REASONS AND IN PARAS 2.3 OF HIS ORDER, OBSERVED AS UNDER. 1. ON PERUSAL OF SALE DEED DATED 28.8.1989 , IT IS FOUND THAT LATE KHAJA MOINUDDIN WAS THE ORIGINAL OWNER, PATTADAR AND POSSESSOR OF LAND ADMEA SU RING 7 ACRES SITUATED A T SY.NO.5/3, RAIDURG PANMAKTA VILLAGE, SRI G. RAMCHANDER RAO BEING TENANT OF THE ABOVE LAND FILED A SUIT IN 1980 FOR PER PETUAL INJECTION. DURING THE PENDENCY OF THE ABOVE SUIT, SRI G. RAMCHANDER RAO EXPIRED. S U BSEQUENTLY, THE LEGAL HEIRS OF LATE KHAJA MOINUDDIN AND THE LEGAL HEIRS OF G. RAMACHANDER RAO ENTERED INTO A COMPROMISE AND AGREED FOR ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 4 POSSESSION OF 37 ACRES 20 GUNTAS EACH UNDER THE COMPROMISE DECREE PASSED ON 2.4.84. 2. SRI G.RAMACHANDER RAO ENTERED INTO AN AGREEMENT WITH SRI K.ANJALAH FOR SALE OF THE ABOVE LAND AND RECEIVED SALE CONSIDERATION ALSO. SRI K.ANJAIAH IN TURN ENTERED INTO AN AGREEMENT OF SALE WITH BNR DEVELOPERS (P) LTD AND RECEIVED ADVANCES. SRI G.RAMACHANDER RAO AND SRI K.ANJAIAH ENTERED INTO A SALE AGREEMENT WITH BNR DEVELOPERS (P) LTD AND REGISTERED IRREVOCABLE GPA ON 15.09.198 6 VIDE REGD. DOCUMENT NO.660/86 IN FAVOUR OF ASSESSEE WHO IS MANAGING DIRECTOR OF BNR DEVELOPERS (P) LTD. 3. THE ASSESSEE HAD ALL ALONG B EEN IN CONTINUOUS POSSESSION OF 12 ACRES 20 GUNTAS OF LAND SITUATED IN SY NO.5/3, RAIDURG PANMAKHTA VILLAGE AS GPA HOL DER OF SRI G.RAMACHANDER RAO AND HIS NOMINEES SINCE 15.09.1986 TILL THE DEVELOPED PLOTS WERE SOLD OUT IN THE ABOVE LAY - OUT. 4. SRI M.SURESH REDDY AND 4 OTHERS NEVER PAID ANY CONSIDERATION TO ANYBODY FOR ACQUISITION OF LAND SITUATED AT S Y .NO.5/.3, RAIDURG AND THE SAME IS EVIDENT FROM RECITALS IN SALE DEED DATED 28.8.1989. 5. ALL THE COPIES OF MEMORANDUM OF UNDERSTANDING FURNISHED BY THE ASSESSEE ARE NOT ACTED UPON AT ANY POINT OF TIME AND HENCE ARE SELF - SERVING DOCUMENTS PRODUCED NOW TO AVOID PAYMENT OF CAPITAL GAINS ARISING ON RECEIPT OF TOTAL CONSIDERATION OF RS.1,65, 00,000 / - . 6.THE ASSESSEE DESPITE BEING AFFORDED NUMBER OF OPPORTUNITIES FAILED TO ADDUCE ANY EVIDENCE IN SUPPORT OF HIS CLAIM THAT SRI M.SURESH REDDY AND 4 OTHERS OFFERED CAPITAL GAINS IN RESPECT OF THEIR ALLEGED 'SHARE IN RESPECTIVE ASSESSMEN T YEARS. THIS IS NECESSARY IN THE LIGHT OF THE FACT THAT THE ASSESSEE IS GPA HOLDER AND IS OWNER IN HIS OWN RIGHT TO THE EXTENT OF 100%. THE CLAIM OF DIVISION OF SALE CONSIDERATION BY GIVING EFFECT TO A MOU SHOULD BE BACKED BY EVIDENCE. 7. ON PERUSAL OF BANK ACCOUNTS OF THE ASSESSEE, IT IS FOUND THAT THE ENTIRE SALE CONSIDERATION OF RS.1.65 CRORES WAS RECEIVED BY THE ASSESSEE AND THE ASSESSEE FAILED TO PRO DUCE SRI M.SURESH REDDY AND 4 OTHERS IN SUPPO RT OF HIS CLAIM THAT THE CONSIDERATION IS DISTRIBUTED AMONGST THEM IN ACCORDANCE WITH TERMS AND CONDITIONS OF THE ALLEGED MOU. 8. THE ASSESSEE FAILED TO ADDUCE EVIDENCE THAT SRI M.SURESH REDDY AND 4 OTHERS DULY FILED THEIR RETURNS OF INCOME FOR THE RESPEC TIVE ASSESSMENT YEARS OFFERING THEIR SHARE OF CAPITAL GAINS FOR TAXATION. 2.4 IN VIEW OF THE FOREGOING, THE LONG - TERM CAPITAL GAINS ARISING ON SALE OF PLOT 199 & 200 SITUATED AT SY.NO.5/3, RAIDURG MATHKA VILLAGE IS RECOMPUTED BY ADOPTING FULL VALUE OF CONSIDERATION ACCRUED TO THE ASSESSEE AT RS.1.65 CRORES AS AGAINST RS.82.50 LACS OFFERED BY THE ASSESSEE. FURTHER THE DETAILS OF COST OF ACQUISITION AND COST OF IMPROVEMENT PERTAINING TO THE ABOVE PLOTS WERE FURNISHED DURING THE COURSE OF ASSESSMENT PROCE EDINGS. ACCORDINGLY, THE LONG TERM CAPITAL GAINS ARISING ON SALE OF THE ABOVE PLOT IS WORKED OUT AS FOLLOWS: LONG TERM CAPITAL GAIN SALE CONSIDERATION RS. 1,65,00,000/ - LESS: INDEXED COST OF ACQUISITION RS.53 , 646/ - RS. 99,564 / - INDEXED COST OF IMPROVEMENT RS.23,983/ - 7500 X 582/199 RS. 21,925/ - LONG TERM CAPITAL GAINS RS.1,64,00,436/ - . ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 5 2. 4 . HE THUS REJECTED ASSESSEES CLAIM THAT HE IS ONLY 50% OWNER OF THE PROPERTY AND COMPUTED LONG TERM CAPITAL GAIN ON THE WHOLE OF THE RECEIPT. 2. 5 . T HEREAFTER , HE PROCEEDED TO CONSIDER THE CLAIM OF EXEMPTION U/S 54F OF THE ACT. HE OBSERVED FROM COMPUTATIO N OF INCOME AND FORM 26 AS FOR THE A.Y. 2008 - 09 AND 2009 - 10 THAT THE ASSESSEE IS THE OWNER OF 3 RESIDENTIAL PROPERTIES AS ON THE DATE OF TRANSFER OF THE PLOT. THEREFORE, HE ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE EXEMPTION CLAIMED U/S 54F OF THE ACT S HOULD NOT BE DENIED. THE ASSESSEE VIDE LETTER DATED 15.05.2009 SUBMITTED AS UNDER: 'OWNERSHIP OF MORE THAN ONE PROPERTY ON DATE OF SALE ASSESSEE HAS BEEN ASKED TO SHOW CAUSE WHY DEDUCTION U/S 54F SHOULD BE ALLOWED AT ALL GIVEN THAT HE HAS SHOWN RENT FROM MORE THAN ONE PROPERTY ON DATE OF TRANSFER. THE OTHER 3 RESIDENTIAL PROPERTIES DO NOT BELONG TO HIM. B C REDDY AND B N R DEVELOPERS (P) LTD DEVELOPED AND SOLD APARTMENT BLOCKS IN KANTISIKHARA COMPLEX, PUNJAGUTTA AND B N REDDY TOWERS, BASHEERBAGH. AFTER ALL OTHER SPACE WAS SOLD IN THESE BLOCKS, THERE WAS SOME SPACE LEFT WHICH WAS NOT/COULD NOT BE SOLD. AS THE SPACE REMAINED UNSOLD, THE ASS ESSEE LET THESE PREMISES ON RENT AND RETURNED THE RENT IN HIS ACCOUNT. PLEASE NOTE THAT THERE IS NO PURCHASE OF PROPERTY OR OBTAINING OF OWNERSHIP OF PROPERTY IN THE CONVENTIONAL OR LEGAL SENSE BUT COULD ONLY REALIZE RENT ON VACANT PROPERTY. IT MAY ALSO BE NOTED THAT THERE IS NO RIGHT TO DISPOSE OF THE PROPERTY. AS B C REDDY DOES NOT 'OWN' ANY PROPERTY ON THE DATE OF TRANSFER, HE IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE INCOME TAX ACT IN RESPECT OF INVESTMENT IN NEW PROPERTY. ' 2. 6 . THE AO HOWEVER , WAS NOT CONVINCED WITH ASSESSEES CONTENTIONS AND AT PARAS 3.2 AND 3.3 OF HIS ORDER HELD AS UNDER: - 3.2 THE ABOVE SUBMISSIONS ARE PERUSED AND FOUND TO BE NOT ACCEPTABLE FOR THE FOLLOWING REASONS: ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 6 A)THE ASSESSEE ON HIS OWN VOLITION ADMITTED RENTAL INCOME S FROM THE ABOVE THREE RESIDENTIAL PROPERTIES AS OWNER U/S 22 OF I.T.ACT, 1961 FOR THE AYS 2008 - 2009 AND 2009 - 2010. ON ONE HAND HE IS CONCEDING THAT HE IS OWNER FOR THE PURPOSES OF SECTION 22 OF THE I.T.ACT, 1961 AND ON THE OTHER HAND HE IS CONTENDING THAT HE IS NOT OWNER IN THE CONVENTIONAL OR LEGAL SENSE. FROM THE ABOVE, IT IS CLEARLY EVIDENT THAT THE ASSESSEE IS BLOWING HOT AND COLD ON THE SAME ISSUE OF OWNERSHIP OF THE ABOVE THREE RESIDENTIAL PROPERTIES. B) AS PER THE SPECIFIC PROVISIONS OF SECTION 54F OF I.T.ACT, 1961 , THE ASSESSEE SHOULD NOT OWN MORE THAN ONE RESIDENTIAL HOUSE AS ON THE DATE OF TRANSFER OF ORIGINAL ASSET. ADMITTEDLY, THE ASSESSEE DEVELOPED THE ABOVE THREE RESIDENTIAL PROPERTIES AND THE ABOVE THREE RESIDENTIAL PROPERTIES WERE NOT SOLD BEFORE 17.09.2008, I.E. THE DATE OF TRANSFER OF ORIGINAL ASSET. C) OWNERSHIP AS ENVISAGED IN THE PROVISO TO SECTION 54F IS NOT REGISTERED OWNERSHIP PER SE, AS CLAIMED BY THE ASSESSEE. EVEN BENEFICIAL OWNERSHIP ( WITHOUT FORMAL DEED OF CONVEYANCE ) WITH FULL DOMAIN AND CONTROL OVER THE POSSESSION OF THE RESIDENTIAL PROPERTY IS ENOUGH TO DISENTITLE THE ASSESSEE FROM CLAIMING EXEMPTION U/S 54 F OF THE I.T.ACT, 1961. D) THE ABOVE PROPOSITION IS WELL ELABORATED BY PUNE T RIBUNAL IN THE CASE OF SHETTY G D VS ITO REPORTED IN 112 IT D AT PP 103 AND DELHI TRIBUNAL IN THE CASE OF V.K.S.BAWA VS ACIT REPORTED IN 53 IT D AT PP.232 . E) REGISTERED OWNERSHIP IN THE INSTANT CASE OF THE ASSESSEE IS NOT POSSIBLE. SINCE, THE ASSESSEE HIMSELF DEVELOPED THE ABOVE THREE RESIDENTIAL PROPERTIES OUT OF HIS OWN FUNDS AND THE SAME HAVE NOT YET BEEN SOLD AS ON THE DATE OF TRANSFER OF ABOVE PLOTS SIT UATED AT RAIDURG PANMAKHTA VILLAGE. F) WITHOUT PREJUDICE TO THE ABOVE, IT IS FURTHER FOUND THAT THE ASSESSEE INVESTED HIS CAPITAL GAIN IN COMMERCIAL PROPERTY. FOR THE ABOVE REASON ALSO, THE ASSESSEE IS NOT ENTITLED TO EXEMPTION U/S 54 F OF IT ACT, 1961. H OWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSEE MADE A FRESH CLAIM OF INVESTMENT IN A RESIDENTIAL PROPERTY WHICH WAS NOT CONSIDERED FOR THE SIMPLE REASON THAT THE ASSESSEE FAILED TO COMPLY WITH THE PROVISIONS OF SECTION 54F( 4) OF THE IT ACT, 1961. SINCE EXEMPTION IS BEING DENIED FOR VIOLATION OF THE THRESHOLD CONDITION OF OWNING MORE THAN ONE RESIDENTIAL HOUSE, THE FRESH CLAIM OF THE ASSESSEE BECAME ACADEMIC AND HENCE NOT CONSIDERED: 3.3 . IN VIEW OF THE FOREGOING, EXEMPTION CLAIMED U/ S 54F OF THE I.T.ACT, 1961 IS DENIED AND ENTIRE LONG - TERM CAPITAL GAIN OF RS.L,64,00,436/ - AS DISCUSSED AT PARA 2 ABOVE IS ASSESSED TO TAX. THE ASSESSEE OFFERED NET LONG TERM CAPITAL GAINS OF RS.1,24,387/ - ONLY AND HENCE THE DIFFERENCE OF RS.1,62,76,049/ - IS ADDED TO THE INCOME RETURNED UNDER THE HEAD CAPITAL GAINS. ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 7 3.4 . PENALTY PROCEEDINGS U/S. 271(1) (C) ARE INITIATED SEPARATELY FOR FURNISHING INACCURATE PARTICULARS OF LONG TERM CAPITAL GAINS AND FOR WRONG CLAIM OF EXEMPTION U/S 54 F OF I.T.ACT, 1961. 3.5 . SUBJECT TO THE ABOVE , THE TOTAL TAXABLE INCOME IS COMPUTED AS UNDER: INCOME RETURNED RS. 8,14,680/ - ADD: 1. ADDITION OF LTCG AS DISCUSSED ABOVE: RS. 1,62,76,049/ - RS. 1,62,76,049/ - INCOME ASSESSED RS. 1,70,90,729 / - AGRICULTURAL INCOME: RS.1,80,000 TAX THEREON : RS. 34,25,174/ - ADD: SURCHARGE : RS. 3,42,517/ - EDUCATIONAL CESS : RS. 1,13,031/ - INT. U/S. 234B : RS. 12,32,385/ - INT. U/S. 234C : RS. 119/ - RS. 51,13,226/ - LESS: TDS : RS. 1,46,258/ - SELF. AS ST. TAX : RS. 30,731/ - TAX PAYABLE : RS. 49,36,240/ - THIS SHOULD BE PAID AS PER DEMAND NOTICE ENCLOSED . 3. AGGRIEVED , THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO CONFIRMED THE ORDER OF AO AND ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL BY RAISING THE FOLLOWING GROUNDS OF APPEAL. 1. THE ORDER OF THE LD.CIT(A) IS ERRONEOUS BOTH ON FACTS AND IN LAW TO THE EXTENT IT IS PREJUDICIAL TO THE APPELLANT HEREIN. 2. THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE AO IN CHARGING CAPITAL GAIN ARISING ON THE SALE OF ENTIRE LAND OF 1500 SQ.YARDS WITHOUT LIMITING THE CAPITAL GAIN TO THE EXTENT OF 50% OF THE GAIN DERIVED BY THE APPELLANT. 3. TH E LD.CIT(A) OUGHT TO HAVE CONSIDERED THE FACT THAT THE APPELLANT HAD ONLY 50% RIGHT IN THE PROPERTY TRANSFERRED AND, THEREFORE, THE ENTIRE CAPITAL GAIN CANNOT BE BROUGHT TO TAX IN THE ASSESSMENT OF THE APPELLANT. 4. THE LD.CIT(A) ERRED IN HOLDING THAT THE APPELLANT IS NOT ENTITLED FOR EXEMPTION U/S 54F OF THE I.T.ACT PARTICULARLY WHEN THE APPELLANT DID NOT OWN ANY OTHER RESIDENTIAL HOUSE AT THE TIME OF ACQUISITION OF THE PROPERTY. 5. THE LD.CIT(A) ERRED IN NOT CONSIDERING THE EXPLANATION THAT THE COMPUT ATION OF THE LTCG MADE BY THE AO IS NOT CORRECT. 6. THE LD.CIT(A) ERRED IN CONFIRMING THE LEVY OF INTEREST U/S 234B OF THE I.T.ACT OF RS.12,32,385/ - . 6. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 4. THE LD.COUNSEL FOR THE ASSESSEE HAS FIL ED A PAPER BOOK ALONG WITH WRITTEN SUBMISSIONS FILED BEFORE THE LD.CIT(A) AND ARGUED ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 8 EXTENSIVELY THAT THE ASSESSEE IS ONLY 50% SHAREHOLDER OF THE LAND AND ACCORDINGLY HAS RIGH T LY CONSIDERED 50% OF THE CAPITAL RECEIPT FOR COMPUTING THE LONG TERM CAPITAL GAIN. HE SUBMITTED THAT TO BRING THE CAPITAL GAIN ON THE ENTIRE PLOT TO TAX IN THE HANDS OF THE ASSESSEE, THE ASSESSEE SHOULD HAVE A RIGHT TO RECEIVE THE ENTIRE SALE CONSIDERATION IN HIS OWN RIGHT AND NOT AS A GPA HOLDER OF THE LAND OWNERS. WITH REGARD TO THE CLAIM OF DEDUCTION U/S S.54F OF THE ACT , HE RELIED UPON THE CONTENTIONS OF ASSESSEE BEFORE THE CIT(A). HE ARGUED AT LENGTH TO CONVINCE THE BENCH THAT THE ASSESSEE IS NOT THE SOLE OWNER OF THE PROPERTY. 5. THE LD.DR HOWEVER , SUPPORTED THE ORDERS OF CIT(A) AND DREW OUR ATTENTION TO RELEVANT PAR A S OF CIT (A)S ORDER WHEREIN THE CIT(A) HAS BROUGHT OUT THE FACTUAL POSITION FOR DENY ING THE CLAIM OF ASSESSEE. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MA TERIAL PLACED ON RECORD, WE FIND THAT : (1) T HE LANDED PROPERTY OF 75 ACRES IN SY.NO.5/3, AT RAIDURG PANMAKTHA VILLAGE, SERILINGAMPALLY, R.R.DIST. ORIGINALLY BELONG ED TO ONE KHAJA MOINUDDIN AND AFTER HIS DEALTH, IT WAS MUTATED IN THE NAMES OF HIS LEGAL HEIRS. (2) ONE MR.G . RAMCHANDER RAO WAS THE TENANT OF THE SAID PROPERTY AND HE FILED A SUIT IN THE COURT OF MUNSIF MAGISTRATE (WEST) TALUK RR DT. A GAINST TH REE OF THE LEGAL HEIRS OF LATE KHAJA MOINUDDIN WHO WERE OWNERS OF THE PROPERTY , FOR PER PETUAL INJUNCTION. (3) THE S UIT ENDED IN A COMPROMISE DECREE WHEREIN TENANT AND THE OWNERS GOT ACRES 37.2 0 GUNTAS EACH. (COPY IS NOT FILED BEFORE US) ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 9 (4) THEREAFTER, THE LEGAL HEIR S OF LATE G.RAMCHANDER RAO ENTERED INTO AN AGREEMENT WITH ONE SRI K.AN JAIAH , S/O LATE K . KOTIAH , FOR SALE OF THE SAID LAND AND ALSO RECEIVED SALE CONSIDERATION. (COPY IS NOT FILED BEFORE US) (5) THEREAFTER, THE LEGAL HEIRS OF LATE. G.RAMCHANDER RAO AND SRI K.ANJAIAH, ENTERED INTO AN AGREEMENT OF SALE WITH M/S BNR DEVELOP ERS (P) LTD. A ND RECEIVED ADVANCES AND ALSO RE GISTERED IRREVOCABLE GPA ON 15.09.1986 VIDE REGISTERED DOCUMENT NO.660/86 IN FAVOUR OF THE MANAGING DIRECTOR OF THE COMPANY ( SRI B CHANDRA SEKHAR REDDY, THE ASSESSEE ). THE PROPERTY WAS THUS REGISTERED IN THE NAME OF THE SHAREHOLDER. (COPY OF THIS DOCUMENT IS NOT FILED BEFORE US) (6) THEREAFTER, THE ASSESSEE OFFERED TO SELL 2 ACRES 20 GUNTAS OF LAND AND SRI M.SURESH REDDY OFFERED TO PURCHASE THE SAME FOR A CONSIDERATION WHICH WAS ACCEPTED BY THE ASSESSEE. IN ORDER TO PERFECT THE TITLE , THE VENDORS OF THE ASSESSEE REQUESTED THE ORIGINAL OWNERS OF THE LAND ALSO TO JOIN AND EXECUTE THE SALE DEED , BECAUSE THE PROPERTY STILL S TOOD IN THE NAME OF THE ORIGINAL PATTADAR S. (7) ACCORDINGLY, THE REGISTERED SALE DEED NO. 10164 DATED 26.8.89 WAS REGISTERED IN FAVOUR OF SRI M.SURESH REDDY. (8) PRIOR TO THIS REGISTERED SALE DEED, THERE IS AN ALLEGED UNREGISTERED AGREEMENT OF SALE DATED 16.8.89, WHEREIN 5 PARTIES NAMELY S/SH RI M . SURESH REDDY, DEVARAPALLY RAM REDDY, M. BIKSHAM REDDY, N ARASIMHA REDDY AND KANDLA RAJENDER REDDY CONTRIBUTED THEIR SHARE OF MONEY FOR PURCHASE OF THE LAND AND AGREED THAT THE PROPERTY WOULD BE REGISTERED IN THE NAME OF THE ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 10 FIRST PARTY I.E. SHRI M SURESH REDDY WHO SHALL HOLD THE SAME BOTH ON HIS BEHALF AND ON BEHALF OF OTHER PARTIES . (9) IT WAS ALSO AGREED THAT THE PARTIES MAY DECIDE TO SELL EACH OF THEIR SHARES TO ONE COMMON PURCHASER WHO EVER SO DESIRE. (10) SUBSEQUENTLY ON 4 TH SEPTEMBER, 1 989, THESE PARTIES ENTERED INTO AN AGREEMENT WITH THE ASSESSEE STATING THAT THEY HAVE PURCHASED 2.20 ACRES OF LAND FROM MR. M OINUDDIN KHAN AND OTHERS UNDER REGISTERED SALE DEED NO. 10164 OF 1989, DT. 28.8.89 AND THAT THE LAND WAS REGISTERED IN THE NAME OF THE FIRST PARTY I.E. SRI M . S URESH REDDY , S/O SIVA REDDY, WHO HELD THE SAME ON HIS BEHALF AS WELL AS ON BEHALF OF THE OTHER PARTIES AND THAT THE 5 PARTIES OF THE AGREEMENT PROPOSED TO ALIENATE 50% OF THE LAND IN FAVOUR OF THE 6 TH PARTY I.E. THE ASSESSEE HEREIN , AND THE ASSESSEE AGREED TO PAY RS.40,000/ - AS HIS SHARE OF COST OF THE LAND. THIS AGREEMENT IS ALSO NOT REGISTERED. (11) ON 5.9.1989, A REGD. GPA NO.1224 OF 1989, WAS EXECUTED IN FAVOUR OF THE ASSESSEE BEFORE US, TO ACT ON THEIR BEHALF FOR DEVELOPMENT OF THEIR LAND OF 12 - 20 ACRES OF LAND IN SY.NO. 5/3, RAIDURG, PANMAKTHA VILLAGE. (12) SUBSEQUENTLY , ON 17 TH SEPTEMBER, 2 008 , SHRI M . S URESH REDDY REPRESENTED BY HIS GPA HOLDER I.E. THE ASSESSEE HEREIN SOLD 1500 SQ.YDS OF THE DE VELOPED LAYOUT TO ONE MR.C.M.RAJESH AND THE ASSESSEE HAS RECEIVED TOTAL CONSIDERATION OF RS.1,65,00,000/ - . 6.1. THE AO AND THE CIT(A) BOTH HELD THAT THE AGREEMENTS RELIED UPON BY THE ASSESSEE TO SAY THAT HE IS ONLY A 50% SHAREHOLDER OF 2.20 ACRES OF LA ND ARE BOTH UNREGISTERED DOCUMENTS, AND, THEREFORE, CANNOT BE RELIED UPON, PARTICULARLY SINCE THE ASSESSEE ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 11 HAS BECOME THE OWNER OF 37 ACRES - 20 GUNTAS OF LAND I.E. THE ENTIRE LAND BY VIRTUE OF REGISTERED SALE DEED DATED 28.8.19 89 . 7. WE HAVE PERUSED THE COPIES OF DOCUMENTS FILED IN THE PAPER BOOK AND FIND THAT THE UN - REGISTERED AGREEMENTS ARE ALSO ON STAMP PAPERS WHICH WERE PURCHASED ON THE SAME DATES ON WHICH THE STAMP PAPERS WHICH WERE USED FOR REGISTERING THE TRANSACTIONS WERE PURCHASED. THEREFORE, THE CONTENTIONS OF THE ASSESSEE ABOUT THE AGREEMENTS CANNOT BE BRUSHED ASIDE TOTALLY. IT IS TRUE THAT THE AGREEMENTS FOR PURCHASE OF LAND BETWEEN MR. SURESH REDDY AND OTHERS IS NOT FINDING PLACE IN THE REGISTERED DOCUMENTS BY WHICH MR. SURESH REDDY HAS PURCHASED THE LAND AND EVEN THE AGREEMENT BETWEEN THE ASSESSEE AND THE OTHER SIX PARTIES IS ALSO NOT FINDING PLACE IN THE REGISTERED DOCUMENTS IN WHICH THE ASSESSEE HAS REGISTERED THE 1500 SQ . YARDS ON THE DEVELOPED LAY OUT TO ONE MR.CM RAJESH. SINCE THE STAMP PAPERS USED FOR RECORDING THE REGISTERED AS WELL AS UNREGISTERED DOCUMENTS ARE IN SERIATIM, WE ARE OF THE OPINION THAT THE SAID DOCUMENTS CANNOT BE BRUSHED ASIDE. SINCE ALL THE DOCUMENTS ARE NOT FILED BEFORE THE TRIBUNAL, WE ARE ALSO NOT A BLE TO APPRECIATE THE CONTENTIONS OF THE ASSESSEE. ONE OF THE CONTENTIONS OF THE ASSESSEE IS THAT HE RETAINED RS.82,50,000/ - AND RETURNED THE BALANCE TO ONE MR. SURESH REDDY IS ALSO NOT BROUGHT TO RECORD. ALL THESE FACTS ARE TO BE VERIFIED BY THE AUTHORI TIES. IN THIS VIEW OF THE MATTER, WE DEEM IT FIT AND PROPER TO REMAND THE ISSUE TO THE FILE OF AO TO CONSIDER ALL THE DOCUMENTS FILED BY ASSESSEE AND EVEN IF THE AGREEMENTS ARE NOT REGISTERED BUT SINCE THE STAMP PAPERS ARE FOUND TO BE GENUINE, THE TRANSAC TIONS ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 12 HAVE TO BE ACCEPTED AS CORRECT. THE AO IS ACCORDINGLY DIRECTED TO VERIFY THE SAME AND RE - ADJUDICATE THE ISSUE IN ACCORDANCE WITH LAW. 8. THE NEXT ISSUE IS WITH REGARD TO EXEMPTION U/S 54F OF THE ACT. WE FIND THAT THE ASSESSEE HAS BEEN OFFERING REN TAL INCOME FROM THREE RESIDENTIAL PROPERTIES DUE TO WHICH THE AO AND THE CIT(A) HAVE DENIED EXEMPTION U/S 54F OF THE ACT. THE ASSESSEES CONTENTION THAT THE SAID PROPERTIES BELONG TO THE COMPANY WHICH HAS CONSTRUCTED THE HOUSES BUT SINCE THEY REMAINED UNS OLD AND WERE LET OUT AND INCOME WAS OFFERED TO TAX IN THE HANDS OF THE ASSESSEE ALSO NEEDS VERIFICATION BY THE AO. THE AO HAS TO EXAMINE AS TO WHEN THE FLATS WERE CONSTRUCTED AND BY WHOM, AND IF SOLD WHEN THE FLATS HAVE BEEN SOLD BY THE ASSESSEE OR B NR D EVELOPERS PVT.LTD. IF IT IS FOUND THAT ASSESSEES CONTENTION IS CORRECT THAT THESE FLATS WERE STOCK - IN - TRADE OF THE COMPANY, AND INCOME HAS BEEN OFFERED TO TAX IN THE ASSESSEES HANDS AND DO NOT BELONG TO ASSESSEE, THEN ONLY ASSESSEE WILL BE ELIGIBLE TO CLAIM EXEMPTION U/S 54F OF THE ACT. THE AO IS ACCORDINGLY DIRECTED TO VERIFY ASSESSEES CLAIM AFRESH IN ACCORDANCE WITH OUR DIRECTIONS AS ABOVE. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 25 TH FEBRUARY, 2020 . SD / - S D/ - (MOHAN ALANKAMONY) (P MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 25 TH FEBRUARY, 2019. * GMV ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 13 COPY OF ORDER FORWARDED TO: 1. LATE SH.BADAM CHANDRA SEKHARA REDDY, REPRESENTED BY L.R. SMT.SHALINI REDDY (WIFE), C/O SRI S.RAMA RAO, ADVOCATE, FLAT NO.102, SHRIYAS ELEGANCE, 3 - 6 - 643, STREET NO.9, HIMAYATNAGAR, HYDERABAD 500 209. 2. ITO, WARD 6 (3), HYDERABAD. 3. CIT(A) - IV, HYDERABAD 4. CIT - III, HYDERABAD 5. ACIT, RANGE 6, HYDERABAD 6. THE D.R. ITAT HYDERABAD 7 . GUARD FILE ITA NO.163/HYD./2014 AY 2009 - 10 LATE BADAM CHANDRA SEKHARA REDDY (L/H SMT.SHALINI REDDY) HYD. VS. ITO, WARD 6(3), HYD. 14 1. DRAFT DICTATED ON 10/02/ 20 20 21/02/20 20 2. DRAFT PLACED BEFORE THE AUTHOR 11/02/20 20 24/02/20 20 3. DRAFT PLACED BEFORE THE SECOND MEMBER 4. DRAFT APPROVED BY SECOND MEMBER 5. APPROVED DRAFT COMES TO SRPS 6. KEPT FOR PRONOUNCEMENT /02/20 20 7. FILE SENT TO BENCH CLERK