Appeal Details
Counselvise Citation
[2019] 116 COUNSELVISE.COM (IT) 6961 (ITAT-BANGALORE)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
2 year(s) 9 month(s) 26 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
31-07-2019
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
B
Assessment Year
2006-2007
Appeal Filed On
04-10-2016
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.1733/BANG/2016 ASSESSMENT YEAR : 2006-07 THE ASST. COMMISSIONER OF INCOME-TAX CIRCLE-6(3)(1), BELLARY. VS. SMT. DEEPA MALINI DEVI, NO.303, RAMKY UTSAV, SEENAPPA LAYOUT, NEW BEL ROAD, RMV II STAGE, BANGALORE-560 094. PAN ABPPD 1123 K APPELLANT RESPONDENT APPELLANT BY : SHRI R.N SIDDAPPAJI, ADDL. CIT (DR) RESPONDENT BY : SHRI C RAMESH, C.A DATE OF HEARING : 10.07.2019 DATE OF PRONOUNCEMENT : 31.07.2019 O R D E R PERB.R BASKARAN,ACCOUNTANT MEMBER THE REVENUE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 29-07-2016 PASSED BY LD CIT(A)-14, BANGALORE AND IT RELATES TO THE ASSESSMENT YEAR 2006-07. THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) IN DELETING THE ADDITION OF LONG TERM CAPITAL GAINS MADE BY THE AO. 2. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE AND ALONG WITH OTHER CO-OWNERS HA VE ENTERED INTO A JOINT DEVELOPMENT AGREEMENT (JDA) WITH M/S DYNAST Y DEVELOPERS ITA NO.1733/BANG/2016 PAGE 2 OF 10 (P) LTD ON 15-12-2005 FOR DEVELOPMENT OF A PROPERTY KNOWN AS BRINDAVANA BEARING MUNICIPAL NO.17, SIXTEENTH CRO SS, SADASHIVA NAGAR, WARD NO.99, BANGALORE MEASURING 43264 SQ.FT. AS PER THE DEVELOPMENT AGREEMENT, 50% OF DEVELOPED AREA COMPRI SING OF APARTMENTS, COMMON AREAS, TERRACE RIGHTS, GARDEN AR EA, BASEMENT CAR PARKING, SURFACE CAR PARKING ETC., SHALL BE HAN DED OVER TO THE OWNERS OF THE PROPERTY. THE AO NOTICED THAT THE ASS ESSEE HELD 1/5 TH SHARE IN THE PROPERTY AND DID NOT DISCLOSE ANY CAPI TAL GAIN. THE AO WAS OF THE VIEW THAT THE POSSESSION OF PROPERTY HAS BEEN HANDED OVER TO THE DEVELOPER AND HENCE, AS PER THE DECISIO N RENDERED BY HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS . DR. T.K.DAYALU (ITA NO.3209 AND 3165 OF 2005 DATED 20-06-2011), TH E ASSESSEE IS REQUIRED TO OFFER CAPITAL GAINS UPON ENTERING JDA. 3. BEFORE THE AO, THE ASSESSEE SUBMITTED THAT THE DEVELOPER HAS NOT FULFILLED THE CONDITIONS MENTIONED IN JDA AND A CCORDINGLY THE CO-OWNERS HAVE CANCELLED THE JDA VIDE NOTICE DATED 05-1-2012 ISSUED TO THE DEVELOPER. IT WAS SUBMITTED THAT THE DEVELOPER HAS NOT CHANGED THE STATUS OF LAND, OBTAIN SALE DEED ET C., WHICH WERE ESSENTIAL FOR EXECUTING JDA. ACCORDINGLY IT WAS CO NTENDED THAT THE JDA WAS NOT GIVEN EFFECT TO. IN VIEW OF THE ABOVE SUBMISSIONS, THE AO ISSUED SUMMONS TO M/S DYNASTY DEVELOPERS, WHO FU RNISHED COPIES OF JDA, POWER OF ATTORNEY, SUPPLEMENTARY AGR EEMENT ETC. AFTER GOING THROUGH THE SAME, THE AO REJECTED THE S UBMISSIONS OF THE ASSESSEE. ACCORDINGLY, THE AO COMPUTED THE CAP ITAL GAINS AT RS.479.81 LAKHS AND ASSESSED 1/5 TH OF THE SAME, BEING THE SHARE OF ASSESSEE AMOUNTING TO RS.95.96 LAKHS IN THE HANDS O F THE ASSESSEE. ITA NO.1733/BANG/2016 PAGE 3 OF 10 4. THE LD CIT(A) DELETED THE SAME AND HENCE THE REVENUE HAS FILED THIS APPEAL BEFORE US. 5. THE LD D.R SUPPORTED THE ORDER PASSED BY THE AO. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE IMPUGNED LA ND WAS EARMARKED FOR PUBLIC USE AND FURTHER THE TITLE OF ASSESSEE AND OTHER CO-OWNERS ON THE LAND WAS NOT CLEAR. THE DEVELOPE R AGREED TO GET THE TITLE CLEARED AND ALSO AGREED TO CHANGE THE STA TUS OF LAND FROM PUBLIC TO RESIDENTIAL. WITHOUT THESE CHANGES, THE LAND COULD NOT HAVE BEEN PUT TO THE DESIRED USE AT ALL. ACCORDING LY HE SUBMITTED THAT THE POSSESSION OF LAND WAS NOT GIVEN TO THE DE VELOPER AND ACCORDINGLY THE JDA AGREEMENT WAS NOT GIVEN EFFECT TO. ACCORDINGLY, HE CONTENDED THAT THE LD CIT(A) WAS JUSTIFIED IN CA NCELLING THE ADDITION, SINCE NO CAPITAL GAIN ACCRUED TO THE ASSE SSEE. 6. IN THE REJOINDER, THE LD D.R SOUGHT SOME TIME TO COLLECT CERTAIN DETAILS. ACCORDINGLY THE LD D.R WAS GIVEN TEN DAYS TIME TO FURNISH ANY DETAILS WHICH WILL UPSET THE FINDINGS GIVEN BY LD CIT(A). HOWEVER, TILL DATE THE LD D.R HAS NOT FURNISHED ANY DETAILS AND HENCE WE PROCEED TO DISPOSE OF THE APPEAL. 7. WE NOTICE THAT THE LD CIT(A) HAS CANCELLED T HE ADDITION BY FOLLOWING THE DECISION RENDERED BY HIS COUNTERPART IN ANOTHER CO- OWNERS CASE. FOR THE SAKE OF CONVENIENCE, WE EXTR ACT BELOW THE OBSERVATIONS MADE AND DECISION TAKEN BY LD CIT(A):- ITA NO.1733/BANG/2016 PAGE 4 OF 10 3. THE PROPERTY IN QUESTION, BR1NDAVANA, NO 17, 16TH CROSS SADASHIVNAGAR, WARD NO. 99, BANGALORE, BELONGED TO THE MAHARAJA OF MYSORE, HIS HIGHNESS JAYACHAMARAJENDRA WADIYAR, AND WAS PART OF THE BANGALORE PALACE ORCHARDS. IT APPEARS THAT THE MAHARAJA GIFTED THE SAID PROPERTY TO MAHARAJKUMARI LEELAVATHI AVARU. THE MAHARAJKUMARI LEELAVATHI AVARU WAS MARRIED TO SRIDAR K. BASAVARAJE URS. THEY ADOPTED A SON SRI K.B. RAMACHANDRA RAJE URS, THE MAHARAJKUMARI PASSES AWAY IN THE YEAR 1958 AND THE SAID PROPERTY DEVOLVED ON HER HUSBAND SIRDAR K. BASAVARAJE URS. THE SAID SRI K. BASAVARAJE [IRS PASSED AWAY ON 30- 09-1980 LEAVING BEHIND HIM HIS RMLY SURVIVING HEIR SIRDAR K.B. RAMACHANDRA RAJE URS, THE FATHER OF THE ASSESSEE. 4. THE ASSESSEE, SMT DEEPA MALINI DEVI IS THE DAUGHTER OF LATE SRI RAMACHANDRA RAJE URS AND HAS BECOME A CO -OWNER OF THE PROPERTY BY VIRTUE OF SUCCESSION UNDER THE HINDU MITHAKSHARA SCHOOL OF INHERITANCE. 5. THE PROPERTY IN QUESTION HAS HAD A TWISTED HISTORY AND THE SAME CONTINUES AT PRESENT. THERE IS NO PROPER DOCUMENTATION OF THE TRANSACTIONS WITHIN THE ROYAL FAMILY AND THE OWNERSHIP OF THE PROPERTY IS NOT CLEAR. PRESENTLY BDA IS CLAIMING IT TO BE ART O F PALACE ORCHARDS AND IS A PUBLIC PARK AREA. THERE IS NO SALE DEED OR GIFT DEED ON RECORD, TO SHOW THAT T HE PROPERTY WAS GIVEN BY THE MAHARAJA TO THE MAHARAJKUMARI. REFERENCE IS DRAWN TO PARA ILL OF TH E JDA WHERE IN EVEN THE DATE OF SUCH GIFT HAS NOT BEE N MENTIONED. 6. THE ENTIRE PALACE ORCHARD PROPERTY WAS ACQUIRED BY THE LTOA AND SADASHIVA NAGAR/ PALACE ORCHARDS LAYOUT WAS FORMED. THE BILNDAVANA, CONTAINING THE RELICS OF THE DECEASED ROYALTY WAS RETAINED AS A PA RK AREA. IN THE COP THE SAID PROPERTY WAS MARKED AS PUBLIC USE. THAT WAS THE REASON WHY THE FAMILY MEMBERS DID NOT EXPLOIT THE LAND THEMSELVES. ITA NO.1733/BANG/2016 PAGE 5 OF 10 7. AT THIS JUNCTURE, IN 2005, MR JITU VIRWANI OF DYNASTY BUILDERS, APPROACHED THE FAMILY AND OFFERED TO GET THE TITLE DEED AND SALE DEED IN THE NAME OF THE FAMILY MEMBERS BY USING HIS GOOD OFFICES WITH THE GOVERNMENT OF KARNATAKA AND ALSO GET THE LAND USE CHANGED FROM PUBLIC TO RESIDENTIAL. WITHOUT THESE CHANGES THE LAND CANNOT BE USED FOR ANY PURPOSE AT ALL AND HAS NO VALUE. 8. THE AO IN HIS ASESSMEENT ORDER STATED THAT THE ASSESSEE ALONG WITH HER FATHER SRI.K.11.RAMACHANDRA RAJE URS, BROTHER SRI. CHANCLURANGA KANTHARAJ IJRS SISTERS SMT.TRIPURASUNDARI DEVI AND SINT. DEEPAMAHINI DEVI ENTERED INTO IT JOINT DEVELOPMENT AGREEMENT WITH M/ S DYNASTY DEVELOPERS (P) LTD. THE DEED WAS REGISTERED WITH THE SUBREGISTRAR, GANDHINAGAR, BANGALORE ON 15 - 12-2005 FOR DEVELOPING THEIR PROPERTY KNOWN AS 'BRINDAVANA', BEARING MUNICIPAL NO.1 7, 1611, CROSS , SADASHIVARIAGAR, WARD-NO.99, BANGALORE MEASURING IN ALL 43264 SQ.FT. IN CONSIDERATION, THE DEVELOPER S AGREEING TO CONSTRUCT AND DELIVERING 50% OF THE DEVELOPMENT COMPRISING OF APARTMENTS, COMMON AREAS, TERRACE RIGHTS, GARDEN AREA, BASEMENT CAR PARKING, SURFACE CAR PARKING IN THE RESIDENTIAL BUILDING TO BE CONSTRUCTED AND THE OWNERS AGREED TO CONVEY 30% OF THE UNDIVIDED SHARE TO THE DEVELOPER OR TO ANYONE NOMINATED BY THE DEVELOPER. THE OWNERS ALSO RECEIVED A REFUNDABLE DEPOSIT OF RS.25 LAKHS A ND THE POSSESSION OF THE LAND WAS HANDED OVER TO THE DEVELOPER FOR DEVELOPING AND CONSTRUCTION OF FLATS. ACCORDINGLY, THIS IS A TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE INCOME-TAX ACT AND IS LIABLE TO PA' CAPITAL GAINS LAX ON THE TRANSFER OF THE PROPERTY. 9. THE AO CONCLUDED THE ASSESSMENT BY MAKING AN ADDITION OF LONG TERM CAPITAL GAINS TO THE EXTENT O F RS.95,96,216. AGGRIEVED BY THE ORDER OF THE AU, THE ASSESSEE IS IN APPEAL BEFORE ME. ITA NO.1733/BANG/2016 PAGE 6 OF 10 10. THE ASSESSEE FILED A WRITTEN SUBMISSION ALONG WITH THE APPEAL ORDER OF THE CIT(APPCALS) MYSORE (I T. 13.03.2014 FOR AY 2006-07 ON 02.06.2016 DRAWING ATTENTION TO PARA 6 OF PAGE 5 OF THE CIT (APPEALS), MYSORE ORDER WHEREIN THE APPELLANT'S NAME HAS BEEN MENTIONED AS ONE OF THE OWNERS. 11. THE CIT(APPEALS), MYSORE IN ITA NOS. 233, 234, 235 & 36/CIT(A)MYS/13-14 CIT. 13.03.2014 IN PARA 6 OBSERVED THAT: THE APPELLANT TILED WRITTEN SUBMISSION DT. 25.02.20 14 AND ANOTHER WRITTEN SUBMISSION DT. 10.03.2014. IN THIS, IT IS ARGUED BY THE APPELLANT AS FOLLOWS : ASSESSEES MR. CHANCLURANGA KANT/I RJ URS ALONG WITH HIS LATHER SRI K.B. RAMCHANDRA RAJE URS AND HI S SISTERS SM!. TRIPURASUNDARI DEVI, MRS. DEEPANIALINI DEVI AND MRS. KEERHI MAKI DEVI (COLLECTIVELY HEREIN AFTER REFERRED TO AS OWNERS) HAVE ENTERED IN TO JOI NT DEVELOPMENT AGREEMENT WITH DYNASTY DEVELOPERS ON 15.12.2005. UNDER THE JOINT DEVELOPMENT AGREEMENT THE OWNERS HAVE AGREED TO BRING IN THE LAND KNOWN AS BRINCLA VAN SITUATED IN SODNSHIVNAGAR, BONGO/ORE MEASURING 44136 SQ. FT. INCLUDING THE AREA OCCUPIED BY THE TEMPLE AND BRINDAVAN AND THE BUILDERS HAVE AGREED TO GIVE IN EXCHANGE 50% OF THE CONSTRUCTED AREA AND REFUNDABLE DEPOSIT OF RS.25,00,000/-...... .... FURTHER, THE CIT(APPEALS), MYSORE CONCLUDED THE APPEAL AS UNDER : '6) PERMISSIVE POSSESSION. 6.1) THE OWNERS SHALL ON THE DEVELOPERS SECURING TH E CHANGE OF LAND USE WILL PERMIT THE DEVELOPERS TO EN TER UPON THE SCHEDULE PROPERTY FOR DEVELOPMENT; 6.2) THE OWNERS HEREBY SHALL PERMIT ENTRY TO THE DEVELOPERS INTO THE SCHEDULE PROPERTY AS A PART OF THE CONTRACT GRANTING THE DEVELOPERS OR ITS NOMINEE/S I/IL' RIG/IT TO CONSTRUCT IN SOME OF THIS AGREEMENT FOR DEVELOPMENT AFTER THE CHANGE OF' LAND USE. IT IS SPECIFICALLY UNDERSTOOD BETWEEN THE PARTIES THAT TH E AUTHORITY SO GRANTED UNDER THIS CLAUSE IS NOT BEING ITA NO.1733/BANG/2016 PAGE 7 OF 10 GIVEN OR INTENDED ID HE GIVEN BY THE OWNERS IN PART PERFORMANCE OF ANY AGREEMENT AS STIPULATED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT OR THE SECTION 2(47)(V) OF THE INCOME TAX ACT, 1961; 7.1 FROM THE ABOVE, IT CAN BE SEEN THAT TILE PERMISSION FR ENTERING INTO THE PROPERTY IS TO BE G IVEN AFTER THE DEVELOPER OBTAINS CHANGE OF LAND USE AND THE DEVELOPER COULD NOT GET TILE CHANGE OF LAND USE DONE BECAUSE OF THE LITIGATION. THE DETAILS OF LITI GATION NARRATED EARLIER IN THIS ORDER SHOW PECULIAR FACTS THAT THE APPELLANT DOES NOT HAVE CLEAR TITLE ESTABLISHIN G THE OWNERSHIP EVEN OIL DATE OF JDA WHICH COULD HE TRANSFERRED BY THE APPELLANTS. IT CANNOT BE CONSTRU ED THAT POSSESSION IS HANDED OVER SINCE THAT IS TO HAPPEN AFTER DEVELOPER SECURES (LIE CHANGE OF LAND USE WHICH ALSO DID NOT HAPPEN. HENCE THE FACTS OF T HE CASE OF THE APPELLANTS ARE CLEARLY DISTINGUISHABLE FROM THE CASE LAWS RELIED ON BY THE AO IN AS MUCH A S IN THE CASE OF THE APPELLANT THE POSSESSION IS NOT HANDED OVER AND NO CONSIDERATION IS RECEIVED BY THE APPELLANTS. WHATEVER RECEIVED IS ONLY A REFUNDABLE DEPOSIT WHICH CANNOT BE INCOME OF THE APPELLANTS. UNDER THESE FACTS AND CIRCUMSTANCES, I AM OF THE CONSIDERED VIEW THAT THE ,JDA IS NOT RESULTING IN A NY TRANSFER OF THE PROPERTY IN AS MUCH AS THERE IS NO POSSESSION GIVEN NOR ANY CONSIDERATION RECEIVED AND HENCE I AM OF THE CONSIDERED VIEW THAT TILE CASE LA W RELIED IS NOT APPLICABLE TO THE FACTS OF TILE CASE OF THE APPELLANT AND THE CAPITAL GAINS CANNOT BE ASSESSED FOR THIS YEAR SINCE THE CONTRACT ITSELF IS SUB1JUDI CE AND IS NOT IMPLEMENTABLE. HENCE I DIRECT THE AO TO DELETE THE ADDITION IN THESE CASES. 8. IN EFFECT, THE APPEALS ARE ALLOWED.' 12. THE FACTS REMAINING THE SAME AND THE APPELLANT BEING THE CO-OWNER OF THE SAME PROPERTY IN DISPUTE, FOLLOWING THE DECISION OF CIT(A), MYSORE IN THE CAS E OF OTHER CO- OWNERS OF THE PROPERTY, FOR JUDICIAL CONSISTENCY, THE ORDER OF CIT(A) IS FOLLOWED IN THE CASE OF THE APPELLANT ALSO FOR THE IMPUGNED ASSESSMENT ITA NO.1733/BANG/2016 PAGE 8 OF 10 YEAR. THE APPEAL FILED BY THE APPELLANT IS THUS ALLOWED. 13. IN THE RESULT, THE APPEAL IS ALLOWED. 7. UNDER CLAUSE XI(6), THE DETAILS OF PERMISSIVE PO SSESSION AGREED UPON ARE NARRATED. THE CLAUSES ARE AS FOLLOW S: 8. WE NOTICE THAT THE LD CIT(A), WHO PASSED THE ORDER IN THE HANDS OF SHRI CHANDURANGA KANTH RAJE URS, HAS GIVEN A FINDING THAT THE JDA HAS NOT RESULTED IN ANY TRANSFER OF PR OPERTY, SINCE THE POSSESSION WAS NOT GIVEN. HE HAS GIVEN THE FINDING AFTER DULY EXAMINING THE BACK GROUND OF THE CASE. THE LD CIT( A), IN THE IMPUGNED ORDER, HAS FOLLOWED THE ABOVE SAID DECISIO N OF HIS COUNTERPART, BEFORE US, THE REVENUE DID NOT FURNIS H ANY MATERIAL TO CONTRADICT THE FINDINGS GIVEN BY LD CIT(A). HENCE WE HAVE NO OTHER OPTION, BUT TO CONFIRM THE ORDER PASSED BY LD CIT(A ). 9. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, 31 ST JULY, 2019. / VMS / ITA NO.1733/BANG/2016 PAGE 9 OF 10 COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.1733/BANG/2016 PAGE 10 OF 10 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. DICTATION NOTE ENCLOSED . 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER .
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