ACIT NON CORPORATE CIRCLE 7 (1), CHENNAI V. SHRI. BABU PHILIP, CHENNAI

ITA 1686/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 2980 (ITAT-CHENNAI)
• Duration Of Justice: 9 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-03-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ARUN KURIAN JOSEPH
• Keywords: Set aside; Capital Gains
• Section: 54F; 201

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , B B ENCH, CHENNAI , . , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S.JAYARAMAN, ACCOUNTANT MEMBER / I.T.A. NOS.1667 & 1686 /CHNY/2018 /ASSESSMENT YEARS: 2012-13 & 2008-09 THE ASSISTANT COMMISSIONER OF INCOME TAX, NON-CORPORATE CIRCLE-7(1) CHENNAI. VS SHRI BABU PHILIP W-101, 2 ND AVENUE, ANNA NAGAR, CHENNAI-600 040. PAN:AETPB4465M ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SRIDHAR DORA, JCIT /RESPONDENT BY : MR. ARUN KURIAN JOSEPH, ADVOCATE /DATE OF HEARING : 04.03.2019 /DATE OF PRONOUNCEMENT : 04.03.2019 / O R D E R PER S.JAYARAMAN, AM: THE REVENUE FILED THESE APPEALS AGAINST THE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, IN ITA NO. 13/CIT(A)-7/2016-17 DATED 28.02.2018 FOR ASSESSMENT YEAR 2008-09 AND IN ITA NO. 22/CIT(A)-7/2015-16 DATED 28.02.201 8 FOR ASSESSMENT YEAR 2012-13, RESPECTIVELY. 2. SHRI BABU PHILIP, THE ASSESSEE, ADMITTED CAPI TAL GAINS FROM THIRUVANMIYUR PROPERTY IN THE ASSESSMENT YEAR 201 2-13 AND CLAIMED 2 ITANOS.1667 & 1686/CHNY/2018 DEDUCTION UNDER SECTION 54F. WHILE COMPLETING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2012-13, THE ASSESSING OFFICER FOUN D THAT THE ASSESSEE AND THREE OTHER CO-OWNERS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT DATED 20.12.2007 WITH THE DEVELOPER M/S.R AMNEEYAM SIMHAPURI ESTATES PVT. LTD . BASED ON THIS INFORMAT ION, THE AO REOPENED THIS ASSESSEES ASSESSMENT FOR THE ASSESSMENT YEAR 2008-09 AND RE- ASSESSED THE CAPITAL GAINS IN THE ASSESSMENT YEAR 2008-09. IN THE VIEW OF THE ASSESSING OFFICER, SINCE THE CAPITAL GAINS WAS ASSESSABLE ONLY IN ASSESSMENT YEAR 2008-09, THEREFORE, HE REFUSED TO ALLOW THE ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 54F IN THE ASSESSMENT YEAR 2012-13. THUS, HE COMPLETED BOTH OF THESE AS SESSMENTS. AGGRIEVED AGAINST THOSE ORDERS, THE ASSESSEE FILE D APPEALS BEFORE THE CIT(A). THE LD CIT(A) EXAMINED THE IMPUGNED JOINT D EVELOPMENT AGREEMENT AND HELD , INTER ALIA, THAT NO CAPITAL GA IN AS CONTEMPLATED WITHIN THE MEANING OF SECTION 45(1) HAS ARISEN IN THE ASSESSMENT YEAR 2008-09 FOR THE REASON THAT A READING OF THE JOINT DEVELOPMENT AGREEMENT SHOWS THAT THE ASSESSEE AND THE OTHER CO-OWNERS CONTINUE TO BE OWNERS THROUGHOUT THE AGREEMENT AND HAVE AT N O STAGE PURPORTED TO TRANSFER RIGHTS AKIN TO OWNERSHIP TO THE DEVELO PER. AT THE HIGHEST, POSSESSION ALONE IS GIVEN UNDER THE AGREEMENT AND THAT TOO FOR A SPECIFIC PURPOSE- THE PURPOSE BEING TO DEVELOP THE PROPERTY AS ENVISAGED BY ALL THE PARTIES. HENCE, THE LD. CIT(A) HELD THAT NO TAXABLE 3 ITANOS.1667 & 1686/CHNY/2018 CAPITAL GAINS ARISES IN THE HANDS OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2008 IE IN THE ASSESSMENT YEAR 2008-09. THERE FORE, LD CIT (A) CONFIRMED THE ASSESSEES CAPITAL GAIN ADMISSION I N THE ASSESSMENT YEAR 2012-13 AND ALLOWED THE DEDUCTION CLAIMED BY THE ASSESSEE UNDER SECTION 54F ALSO IN THE ASSESSMENT YEAR 2012- 13. AGGRIEVED AGAINST THOSE ORDERS, THE REVENUE FILED THESE APPE ALS WITH THE FOLLOWING GROUNDS:- ITA NO.1667/CHNY/2018; 1.THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.L THE CIT(A) ERRED IN DIRECTING THE AO TO ALLOW D EDUCTION ULS.54F AND ULS.54EC BY HOLDING THAT THE ASSESSEE IS LIABLE TO OFFER CAPITAL GAINS IN THE PRESENT AY 2012-13. 2.2 THE CIT(A) FAILED TO CONSIDER THE FOLLOWING CLA USES IN THE JDA DATED 20.12.2007, CLEARLY CONFIRMS THAT THE ASSESSEE HAD TRANSFERRED THE RIGHTS OF THE PROPERTY TO THE DEVELOPER IN THE AY 2008-09 ITS ELF: 5. BOTH THE OWNERS AND DEVELOPER AGREE THAT THE DE VELOPER IS FREE TO SELL ALL THE RESIDENTIAL APARTMENTS ALONG W ITH CAR PARK IN THE PROPOSED BUILDING/S TO BE CONSTRUCTED IN THE SC HEDULE A MENTIONED PROPERTY AND TO THIS EFFECT, THE OWNERS A GREE TO EXECUTE AND REGISTER A POWER OF ATTORNEY IN FAVOUR OF MR. M CHANDRU NOMINEE OF THE DEVELOPER WITHIN TEN DAYS FR OM THE DATE OF SIGNING THE JDA. 11. THE OWNERS HEREBY AUTHORIZE THE DEVELOPER TO SE LL THEIR SHARE OF FLATS TO BE CONSTRUCTED ON THE SCHEDULED A MENTIONED PROPERTY ALONG WITH THE PROPORTIONATE UNDIVIDED SHA RE OF LAND. 2.3 THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT AS MENTIONED IN THE CLAUSES OF THE JDA SHOW THAT THE POSSESSION HAS CLE ARLY BEEN GIVEN TO THE DEVELOPER AND THEREBY THE PART PERFORMANCE AMOUNTIN G TO TRANSFER OF ASSET HAS ALREADY BEEN TAKEN PLACE DURING THE AY 2008-09. THEREFORE, AS PER SECTION 2(47) OF THE IT ACT, R.W.S. 53A OF TRANSFER OF PROPERTY ACT CAPITAL GAINS ARISES IN THE AY 2008-09 ITSELF, NOT IN THE A Y 2012-13. 4 ITANOS.1667 & 1686/CHNY/2018 3. FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED AT THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED CIT(A) B E SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. ITA NO.1686/CHNY/2018: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOM E TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.L THE CIT(A) ERRED IN HOLDING THAT NO CAPITAL G AINS ARISES IN THE HANDS OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2008 I.E. AY 200 8-09. 2.2THE CIT(A) FAILED TO CONSIDER THE FOLLOWING CLAU SES IN THE JDA DATED 20.122007, CLEARLY CONFIRMS THAT THE ASSESSEE HAD T RANSFERRED THE RIGHTS OF THE PROPERTY TO THE DEVELOPER: 5. BOTH THE OWNERS AND DEVELOPER AGREE THAT THE DE VELOPER IS FREE TO SELL ALL THE RESIDENTIAL APARTMENTS ALONG W ITH CAR PARK IN THE PROPOSED BUILDING/S TO BE CONSTRUCTED IN THE SC HEDULE A MENTIONED PROPERTY AND TO THIS EFFECT, THE OWNERS A GREE TO EXECUTE AND REGISTER A POWER OF ATTORNEY IN FAVOUR OF MR. M CHANDRU NOMINEE OF THE DEVELOPER WITHIN TEN DAYS FR OM THE DATE OF SIGNING THE JDA. 11. THE OWNERS HEREBY AUTHORIZE THE DEVELOPER TO SE LL THEIR SHARE OF FLATS TO BE CONSTRUCTED ON THE SCHEDULED A MENTIONED PROPERTY ALONG WITH THE PROPORTIONATE UNDIVIDED SHA RE OF LAND. 2.3 THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT T HAT AS MENTIONED IN THE CLAUSES OF THE JDA SHOW THAT THE POSSESSION HAS CLE ARLY BEEN GIVEN TO THE DEVELOPER AND THEREBY THE PART PERFORMANCE AMOUNTIN G TO TRANSFER OF ASSET HAS ALREADY BEEN TAKEN PLACE DURING THE AY 2008-09. THEREFORE, AS PER SECTION 2(47) OF THE IT ACT, R.W.S. 53A OF TRANSFER OF PROPERTY ACT CAPITAL GAINS ARISES IN THE AY 2008-09 ITSELF. 3 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSIONE R OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE R ESTORED. 3. THE LD. DR SUPPORTED THE ORDERS OF THE ASSESS ING OFFICER , ON THE ABOVE LINES OF GROUNDS OF APPEAL AND PLEADE D THAT THE LONG TERM CAPITAL GAINS ASSESSED IN THE ASSESSMENT YEAR 200 8-09 BE CONFIRMED 5 ITANOS.1667 & 1686/CHNY/2018 AND THE DEDUCTION ALLOWED BY THE LD CIT(A) IN THE ASSESSMENT YEAR 2012-13 BE REVERSED. 4. PER CONTRA, LD. A R SUPPORTED THE ORDERS OF THE LD CIT(A) AND REQUESTED THAT THE LONG TERM CAPITAL GAIN MADE IN T HE ASSESSMENT YEAR 2012-13 BE CONFIRMED, AND CONSEQUENTLY, THE LONG TE RM CAPITAL GAIN ASSESSED IN THE ASSESSMENT YEAR 2008-09 BUT DELETE D BY THE LD. CIT(A) BE CONFIRMED. FURTHER, HE INVITED OUR ATTENTION T O THIS TRIBUNALS DECISION IN THE CASE OF MRS. MARY ZACHARIAH (ONE OF THE CO-OWNERS) IN ITA NO.416/MDS/2016 FOR THE ASSESSMENT YEAR 2012-1 3 AND SUBMITTED THAT IN THE CO-OWNERS CASE, THE REVENUE ASSESSED T HE LONG TERM CAPITAL GAIN IN THE ASSESSMENT YEAR 2012-13 , WHICH WAS T HE SUBJECT MATTER IN THE ABOVE APPEAL, AND THIS TRIBUNAL DISPOSED OF ON 10.06.2016. SIMILARLY, THE REVENUE ASSESSED THE LONG TERM CAPIT AL GAINS IN THE ASSESSMENT YEAR 2012-13 IN ANOTHER CO-OWNERS HANDS ALSO. ON THESE GROUNDS ALSO, THE LD AR PLEADED THAT THE LONG TERM CAPITAL GAINS MADE IN THE ASSESSMENT YEAR 2012-13 BE CONFIRMED, CONSEQ UENTLY, THE LONG TERM CAPITAL GAINS ASSESSED IN THE ASSESSMENT YEAR 2008-09 BUT DELETED BY THE LD. CIT(A) BE CONFIRMED. 5. WE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. WE FIND MERIT IN THE SUBMISSIONS MADE BY LD. AR. THE LD 6 ITANOS.1667 & 1686/CHNY/2018 CIT(A) EXAMINED THE JOINT DEVELOPMENT AGREEMENT BET WEEN THE ASSESSEE AND I) MRS.ELIZABETH PHILIP (II) MR.MOH AN NAINAN PHILIP & (III) MRS.MARY ZACHARIA DATED 20.12.2007 AND THE DEVELOPE R, M/S.RAMNEEYAM SIMHAPURI ESTATES PVT.LTD AND OTHER RELEVANT MATERIAL AND HELD THAT NO CAPITAL GAIN AS CONTEMP LATED WITHIN THE MEANING OF SECTION 45(1) HAS ARISEN IN THE ASSESSM ENT YEAR 2008-09 FOR THE REASON THAT A READING OF THE JOINT DEVEL OPMENT AGREEMENT SHOWS THAT THE ASSESSEE AND OTHER CO-OWNERS CONTI NUE TO BE OWNERS THROUGHOUT THE AGREEMENT AND HAVE AT NO STAGE PURP ORTED TO TRANSFER RIGHTS AKIN TO OWNERSHIP TO THE DEVELOPER AND AT T HE HIGHEST POSSESSION ALONE WAS GIVEN UNDER THE AGREEMENT AND THAT TOO F OR A SPECIFIC PURPOSE- THE PURPOSE BEING TO DEVELOP THE PROPERTY AS ENVISAGED BY ALL THE PARTIES. THEREFORE, AFTER CONSIDERING ALL THE F ACTS, THE CASE LAWS AND DOCUMENTARY EVIDENCES, THE LD. CIT(A) HELD THAT NO TAXABLE CAPITAL GAINS ARISES IN THE HANDS OF THE ASSESSEE FOR THE YEAR ENDING 31.03.2008 IE IN THE ASSESSMENT YEAR 2008-09. HENCE , THE LD CIT(A) CONFIRMED THE ASSESSEES CAPITAL GAINS ADMISSION IN THE ASSESSMENT YEAR 2012-13 AND ALLOWED THE DEDUCTION CLAIMED BY T HE ASSESSEE U/S 54F ALSO. THOUGH, THE REVENUE HAS CHALLENGED THE FI NDINGS RECORDED BY THE LD CIT (A), IT HAS NOT PLACED ANY MATERIAL TO D ISLODGE SUCH FINDINGS. FURTHER, IT IS CLEAR FROM THIS TRIBUNAL ORDER IN IT A NO.416/MDS/2016, SUPRA, THAT THE REVENUE ASSESSED THE LONG TERM C APITAL GAINS ARISING 7 ITANOS.1667 & 1686/CHNY/2018 FROM THE SAME PROPERTY IN THE ASSESSMENT YEAR 2012 -13, IN ONE OF THE CO-OWNERS CASE, WHICH ATTAINED FINALITY AND THERE FORE, WE DO NOT FIND ANY ERROR IN THE ORDERS OF LD. CIT(A). THEREFORE, T HE REVENUES APPEALS FOR BOTH THESE ASSESSMENT YEARS ARE DISMISSED. 6. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 4 TH MARCH, 2019 AT CHENNAI SD/ SD/- ( ) ( . ) (GEORGE MATHAN) (S.JAYARAMAN) ( ! / JUDICIAL MEMBER) ( ! / ACCOUNTANT MEMBER) /CHENNAI, $ /DATED 04 TH MARCH, 2019 SOMU () *) /COPY TO: 1. APPELLANT 2. RESPONDENT 3. + () /CIT(A) 4. + /CIT 5. ) / /DR 6. 2 /GF