The ITO, Ward-3, Rajahmundry, Rajahmundry V. Smt. Chilkuri Satyavathi,

ITA 165/VIZ/2012

• Counselvise Citation: 16525314 RSA 2012
• Duration Of Justice: 2 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2004-2005
• Appeal Filed On: 14-05-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D MANOJ KUMAR
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 165/VIZ/2012 ASSESSMENT YEAR : 2006-07 INCOME TAX OFFICER, WARD 3, RAJAHMUNDRY. CHILUKURI SATYAVATHI, RAJAHMUNDRY PAN ADMPC2103K (APPELLANT) (RESPONDENT) REVENUE BY SHRI D. MANOJ KUMAR ASSESSEE BY SHRI G.V.N. HARI DATE OF HEARING 09-07-2014 DATE OF PRONOUNCEMENT 09-07-2014 O R D E R PER BENCH: THIS IS AN APPEAL FILED BY THE REVENUE DIRECTED AG AINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 23/01/2012 FOR AY 2004- 05. 2. THE SHORT POINT THAT REQUIRES OUR CONSIDERATION IN THIS APPEAL, IS THE YEAR OF TAXABILITY. THE ASSESSEE HAS NOT ADMITTED A NY CAPITALS ON THE PROCEEDINGS RECEIVED ON TRANSFER OF LAND TO M/S PRI ME PROPERTY DEVELOPERS DURING THE YEAR. IT IS THE CONTENTION OF THE ASSESSEE THAT POSSESSION OF THE LAND HAS BEEN HANDED OVER TO THE DEVELOPER ON 26/06/1998 AND THE GAINS, IF ANY, ARE ATTRACTED IN THE YEAR AY 1999-2000 AS PER SECTION 2(47) OF THE IT ACT, 1961. THE AO DI D NOT AGREE. THE ALTERNATIVE CONTENTION OF THE ASSESSEE FOR EXEMPTIO N OF TWO RESIDENTIAL UNITS U/S 54F WAS ALSO NOT ACCEPTED BY THE AO ON TH E GROUND THAT SECTION 54F ENTITLES EXEMPTION FOR ONLY ONE RESIDENTIAL UNI T. FURTHER, THE AO 2 ITA NO. 165/VIZ/12 CHILUKURI SATYAVATHI TREATED AN AMOUNT OF RS. 2 LAKHS ALSO AS CONSIDERA TION RECEIVED BY THE ASSESSEE FOR TRANSFER OF LAND. 3. AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN AP PEAL BEFORE THE CIT(A). THE CIT(A) EXAMINED THE CLAUSE 23 & 25 OF T HE DEVELOPMENT AGREEMENT AND CAME TO A CONCLUSION THAT THE TRANSFE R IN QUESTION WAS COMPLETED ON 26/07/1998 I.E. AY 1999-2000. HE REFER RED TO VARIOUS DECISIONS IN HIS ORDER AND GRANTED RELIEF. HE ALSO HELD THAT REOPENING IS BAD IN LAW. 4. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE REC ORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE DE VELOPMENT AGREEMENT IN QUESTION WAS ENTERED INTO ON 26/07/1998. CLAUSE 23 & 25 OF THE DEVELOPMENT AGREEMENT READ AS FOLLOWS: CLAUSE 23: THE OWNER AGREES TO HAND OVER THE POSSESSION OF THE SCHEDULED PROPERTY TO THE DEVELOPER ON THE DAY OF EXECUTION O F THIS AGREEMENT. CLAUSE 25: THIS AGREEMENT SHALL NOT BE TERMINATED BY EITHER OF THE PARTIES TO THIS AGREEMENT AND IT SHALL BE KEPT ALIVE TILL THE DEVELOPMENT CONTEMPLATED UNDER THIS AGREEMENT IS COMPLETED AND THE NECESSARY DOCUMENTATION THEREOF HAS TAKEN PLACE IN FAVOUR OF THE THIRD PARTIES WITH REGARD TO FLATS THAT ARE GOING TO BE CONSTRUCT ED IN THE SCHEDULED PROPERTY AFTER THE OWNER ARE GIVEN THE SPECIFIC FLA TS AGREED IN THE SAID BUILDING. 6. ON PERUSAL OF THE SAME DEMONSTRATES THAT POSSESS ION WAS HANDED OVER TO THE BUILDER ON 26/07/1998. THE SAID AGREEME NT WAS NOT REVOCABLE. THE LEARNED CIT(A) RECORDED THAT THE PARTIES HAVE A CTED ON THE AGREEMENT AND THE CONSTRUCTION WAS COMPLETED. THE ASSESSEE RE CEIVED FLATS AS PER THE DEVELOPMENT AGREEMENT SUBSEQUENTLY. ON THIS FAC TUAL MATRIX, WE UPHOLD THE FINDINGS OF THE FIRST APPELLATE AUTHORIT Y THAT THE CAPITAL GAIN IN QUESTION IS ASSESSABLE ONLY IN THE AY 1999-2000 AS TRANSFER U/S 2(47) OF THE IT ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, HAS TAKEN 3 ITA NO. 165/VIZ/12 CHILUKURI SATYAVATHI PLACE ON 26/07/1998. WE DRAW SUPPORT FROM THE JUDGM ENT OF THE HONBLE HONBLE ANDHRA PRADESH HIGH COURT IN ITTA NO.245 OF 2014 IN CASE OF POTLA NAGESWARA RAO VS. DCIT, VIDE JUDGMENT DATED 0 9/04/2014 WHEREIN IT HAS HELD AS UNDER: THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT ARE CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN THE TRANSFER IS COMPLETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREE MENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ASSESSMENT OF INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FACTUALLY IT WAS FOUND THAT BOTH THE AFORESAID ASPECTS TOOK PLAC E IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003-04. HENCE, THE LEARNED TR IBUNAL HAS RIGHTLY HELD THAT THE APPELLANT IS LIABLE TO PAY TAX ON THE CAPITAL GAIN FOR THE ASSESSMENT YEAR. ACCORDINGLY, WE DO NOT FIND ANY ELEMENT OF LAW TO A DMIT THIS APPEAL. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON 09/07/2014. SD/- SD/- (SAKTIJIT DEY) (J. SUDHAKAR REDDY) JUDICIAL MEMBER ACCOUNTANT MEMBER VISAKHAPATNAM, DATED: 9 TH JULY, 2014 KV COPY TO:- 1) SMT. CHILUKURI SATYAVATHI, W/O CHILUKURI AYYA RA O, D.NO. 79-13-13/1, SYAMALANAGAR, RAJAHMUNDRY. 2) ITO, WARD 3, RAJAHMUNDRY 3) CIT(A), VISAKHAPATNAM 4) CIT-I, RAJAHMUNDRY 5)THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., VIZAG.