Deputy Cmmissioner of Income Tax, Circle-1(1), Bangalore V. Sri Vinod Narappa Reddy, Bangalore

ITA 1853/BANG/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 5521 (ITAT-BANGALORE)
• Duration Of Justice: 2 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-10-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 29-09-2020
• Assessment Year: 2013-2014
• Appeal Filed On: 29-05-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R PREMI
• Assessee Lawyers: V SRINIVASAN
• Keywords: Capital asset; Business income; Tax effect; Capital Gains
• Section: 54F; 13; 148; 54

Judgement Text

ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE IN THE INCOME TAX APPELLATE TRIBUNAL CBENCH: BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENTAND SHRI B.R. BASKARAN, ACCOUNTANT MEMBER ITA NOS.1853 TO 1855/BANG/2018 ASSESSMENT YEARS: 2013-14 TO 2015-16 DEPUTY COMMISSIONER OF INCOME-TAX CIRCLE-2(1)(1) BANGALORE VS. SRI VINOD NARAPPA REDDY NO.14, BHAVIKA, 30 TH MAIN BTM LAYOUT 2 ND STAGE BENGALURU-560 076 PAN NO : ACGPN8586N APPELLANT RESPONDENT APPELLANT BY : SMT. R. PREMI, D.R. RESPONDENT BY : SHRI V. SRINIVASAN, A.R. DATE OF HEARING : 29.09.2020 DATE OF PRONOUNCEMENT : 05.10.2020 O R D E R PERB.R. BASKARAN, ACCOUNTANT MEMBER: ALL THE THREE APPEALS FILED AT THE INSTANCE OF THE REVENUE ARE DIRECTED AGAINST THE COMMON ORDER DATED 28-03-2018 PASSED BY LD CIT(A)-2, BENGALURU AND THEY RELATE TO THE ASSESSME NT YEARS 2013- 14 TO 2015-16. 2. WE NOTICE THAT THE LD CIT(A) HAS PASSED A COM MON ORDER COVERING AY 2012-13 TO 2015-16. THE LD A.R SUBMITT ED THAT THE REVENUE HAD PREFERRED APPEAL CHALLENGING THE ORDER PASSED BY LD CIT(A) FOR AY 2012-13 ALSO, BUT THE SAID APPEAL COU LD NOT BE PURSUED BY THE REVENUE, AS TAX EFFECT INVOLVED IN T HAT APPEAL WAS ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 2 OF 10 BELOW THE MONETARY LIMITS PRESCRIBED BY CBDT. HENC E THE APPEALS FOR REMAINING THREE YEARS ARE BEING PURSUED BY THE REVENUE. 3. SINCE THE ISSUES URGED IN ALL THE THREE YEAR S ARE IDENTICAL IN NATURE, THEY WERE HEARD TOGETHER AND ARE BEING DISP OSED OF BY THIS COMMON ORDER, FOR THE SAKE OF CONVENIENCE. 4. THE GROUNDS OF APPEAL URGED BY THE REVENUE IN AY 2013-14 ARE EXTRACTED BELOW:- I. THE CIT(A) ERRED IN TREATING THE BUSINESS PROFITS, EARNED BY THE ASSESSEE IN THE FORM OF SHARE OF REVENUE FROM ENTIRE RESIDENTIA L PROJECT FROM A.Y. 2012- 13 TO THE A.Y. 2015-16, AS CAPITAL GAIN. II. THE CIT(A) ERRED IN HOLDING THE BUSINESS TRANSACTIO N OF THE ASSESSEE AS INVESTMENT EVEN AFTER ACKNOWLEDGING THE FACT THAT T HE ASSESSEE HAD NO INTENTION TO RETAIN ANY SUPER BUILT UP AREA BUT HE WANTED TO GET AN IMMEDIATE RETURN OUT OF THIS ADVENTURE IN THE NATUR E OF TRADE. III. THE CIT(A) ERRED IN TREATING THE LAND OF THE ASSESS EE AS CAPITAL ASSET FOR THE A.Y. 2012-13 TO THE A.Y. 2015-16 DESPITE THE FA CT THAT IT WAS CONVERTED INTO A TRADING ASSET EVEN PRIOR TO THESE ASSESSMENT YEARS. IV. WITHOUT PREJUDICE TO THE ABOVE GROUND, THE CIT(A) E RRED IN PLACING RELIANCE ON THE DECISION OF DELHI ITAT IN THE CASE OF MOHINDER KUMAR JAIN WHERE MULTIPLE PROPERTIES WERE SOLD IN DIFFERENT AS SESSMENT YEARS BUT THE PROCEEDS WERE APPLIED IN ONLY ONE NEW ASSET, WHEREA S IN THE CASE OF THE ASSESSEE ONLY ONE ASSET WAS SOLD WITH THE CONSIDERA TION SPREAD OUT IN VARIOUS AYS. FOR OTHER TWO YEARS ALSO, THE REVENUE HAS RAISED ID ENTICAL GROUNDS OF APPEAL. 5. THE ISSUE URGED BY THE REVENUE IS WHETHER TH E LD CIT(A) WAS CORRECT IN LAW IN HOLDING THAT THE SHARE OF REVENUE RECEIVED BY THE ASSESSEE FROM THE DEVELOPER OF RESIDENTIAL PROJECT IS ASSESSABLE AS CAPITAL GAINS AND NOT AS BUSINESS INCOME. ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 3 OF 10 6. THE FACTS RELATING TO THE ISSUE ARE SET OUT IN BRIEF. THE ASSESSEES FATHER NAMED SHRI KODANDARAMA REDDY HAD OWNED CERTAIN LANDS IN BIDARAGUPPE VILLAGE, ATTIBELE HOBL I, ANEKAL TALUK, BANGALORE DISTRICT. M/S SHRIRAM PROPERTIES LTD ENT ERED INTO A DEVELOPMENT AGREEMENT ON 21.08.2008 WITH THE FATHER OF THE ASSESSEE AND ALSO WITH OTHER PERSONS, WHO OWNED ADJ ACENT LANDS. AS PER THE DEVELOPMENT AGREEMENT, RESIDENTIAL VILLA S WERE PROPOSED TO THE CONSTRUCTED. IN THE MEAN TIME, SHRI KODANDA RAMA REDDY DIED INTESTATE ON 05-01-2011 LEAVING BEHIND HIS WIF E, TWO DAUGHTERS AND TWO SONS AS HIS LEGAL HEIRS. TWO DAUGHTERS OF LATE SHRI KODANDARAMA REDDY EXECUTED A RELEASE DEED IN FAVOUR OF THEIR MOTHER AND BROTHERS. ACCORDINGLY, THE WIFE AND TWO SONS OF SHRI KODANDARAMA REDDY BECAME OWNERS OF THE LAND, REFERR ED ABOVE. THE ASSESSEE HEREIN IS ONE OF THE SONS AND ONE OF T HE LEGAL HEIRS OF SHRI KODANDARAMA REDDY. 7. SUBSEQUENT TO THE DEATH OF SHRI KODANDARAMA REDDY, THE ASSESSEE AND OTHER CO-OWNERS ENTERED INTO ANOTHER D EVELOPMENT AGREEMENT ON 17.03.2011, WHICH SUPERSEDED THE EARLI ER AGREEMENT ENTERED ON 21.08.2008. AS PER THE NEW AGREEMENT, R ESIDENTIAL APARTMENTS WERE PROPOSED TO BE CONSTRUCTED, INSTEAD OF RESIDENTIAL VILLAS. AS PER THE OLD AGREEMENT, THE LAND OWNERS WERE PROPOSED TO BE GIVEN A PORTION OF BUILT UP AREA. HOWEVER, AS P ER THE NEW AGREEMENT, THE ASSESSEE HEREIN OPTED TO RECEIVE 2.6 4% OF THE REVENUE ARISING ON SALE AGGREGATE SALEABLE AREA OF THE RESIDENTIAL APARTMENTS. THE ABOVE SAID JOINT DEVELOPMENT AGREE MENT WAS AGAIN MODIFIED ON 26.6.2012. ACCORDING TO THE ASSE SSEE THE POSSESSION OF LAND WAS HANDED OVER TO M/S SHRIRAM P ROPERTIES LTD ONLY ON 26.06.2012 AFTER EXECUTION OF MODIFIED AGRE EMENT. ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 4 OF 10 8. THE ASSESSEE RECEIVED FOLLOWING AMOUNTS FRO M M/S SHRIRAM PROPERTIES LTD:- F Y 2011-12 ( AY 2012-13) - 97,23,585 FY 2012-13 (AY 2013-14) - 2,53,02,119 FY 2013-14 (AY 2014-15) - 1,94,41,184 FY 2014-15 (AY 2015-16) - 1,86,85,404 FY 2015-16 (AY 2016-17) - 88,00,610 THE ASSESSEE OFFERED THE AMOUNTS RECEIVED BY HIM AS LONG TERM CAPITAL GAINS IN RESPECTIVE YEAR OF RECEIPTS. THE A SSESSEE ALSO CLAIMED EXEMPTION U/S 54 OF THE INCOME-TAX ACT,1961 ['THE ACT' FOR SHORT] AGAINST THE LONG TERM CAPITAL GAINS IN RESPE CT OF INVESTMENT MADE BY HIM IN A HOUSE PROPERTY. 9. IT IS STATED THAT IN AY 2012-13, THE AO A SSESSED THE AMOUNT OF RS.97,23,585/- AS SHORT TERM CAPITAL GAIN . HOWEVER, IN AY 2013-14 TO 2015-16, THE AO HELD THAT THE ASSESSE E HAS UNDERTAKEN ADVENTURE IN THE NATURE OF TRADE AND ACC ORDINGLY ASSESSED THE AMOUNT RECEIVED BY THE ASSESSEE IN EAC H OF THE YEARS AS INCOME FROM BUSINESS. 10. THE LD CIT(A), HOWEVER, HELD THAT THE AMO UNT RECEIVED BY THE ASSESSEE IN AY 2012-13 TO 2015-16 IS ASSESSA BLE AS INCOME FROM LONG TERM CAPITAL GAINS. AGGRIEVED, THE REVENU E HAS FILED THESE APPEALS. AS NOTICED EARLIER, THE APPEAL RELATING T O AY 2012-13 WAS DISMISSED ON ACCOUNT OF LOW MONETARY EFFECT. 11. THE LD D.R SUBMITTED THAT THE AO HAS TAKE N A VIEW THAT THE TRANSFER OF LAND HAS TAKEN PLACE IN FY 200 8-09, WHEN THE FATHER OF THE ASSESSEE HAD INITIALLY ENTERED AGREEM ENT WITH M/S SHRIRAM PROPERTIES LTD. AFTER MAKING ENQUIRIES WIT H THE OFFICIALS OF ABOVE SAID COMPANY, THE AO HAD COME TO THE CONCLUSI ON THAT THE POSSESSION OF LAND WAS HANDED OVER TO THEM PRIOR TO MARCH, 2010 ITSELF, WHEN THE DEVELOPER HAD STARTED HIS PROJECT. FURTHER, THE AO NOTICED THAT THE ASSESSEE HAS BEEN RECEIVED AMOUNTS YEAR AFTER YEAR ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 5 OF 10 UPON SALE OF APARTMENTS, AS HIS SHARE. HENCE THE A O TOOK THE VIEW THAT THE ASSESSEE IS DOING BUSINESS IN THE NATURE O F ADVENTURE IN THE NATURE OF TRADE. ACCORDINGLY HE ASSESSED THE R ECEIPTS AS BUSINESS INCOME IN AY 2013-14 TO 2015-16. 12. THE LD D.R SUBMITTED THAT THE AO HAD REOPEN ED THE ASSESSMENT OF AY 2009-10 BY ISSUING NOTICE U/S 148 OF THE ACT IN ORDER TO ASSESS THE CAPITAL GAINS IN THAT YEAR, SIN CE HE HAS TAKEN THE VIEW THAT THE POSSESSION OF LAND WAS GIVEN IN F Y 2008-09. HOWEVER, THE SUCCEEDING AO HAS TAKEN THE VIEW THAT THE LAND WAS ACTUALLY TRANSFERRED TO THE DEVELOPER ON 26.6.2012 AND IT IS RELEVANT FOR AY 2013-14 ONLY. 13. THE LD D.R SUBMITTED THAT THERE IS SOME CONFU SION IN THIS MATTER AND ACCORDINGLY PRAYED THAT THE MATTER MAY B E RESTORED TO THE FILE OF AO FOR EXAMINING IT AFRESH. 14. ON THE CONTRARY, THE LD A.R SUBMITTED THAT THE GROUNDS URGED BY THE REVENUE DO NOT RELATE TO THE YEAR OF T AXATION OF INCOME. HE SUBMITTED THAT THE CASE OF THE REVENUE IS THAT T HE AMOUNTS RECEIVED BY THE ASSESSEE IS ASSESSABLE AS BUSINESS PROFITS AND NOT AS LONG TERM CAPITAL GAINS AS HELD BY LD CIT(A). H E SUBMITTED THAT THE AO HAS TAKEN THE VIEW THAT THE AMOUNTS RECEIVED BY THE ASSESSEE IS IN THE NATURE OF BUSINESS RECEIPTS, ONL Y FOR THE REASON THAT THE ASSESSEE HAS BEEN RECEIVING AMOUNTS YEAR A FTER YEAR. HE SUBMITTED THAT, AS PER DEVELOPMENT AGREEMENT, THE A SSESSEE WAS GIVEN 2.64% OF THE GROSS RECEIPTS RECEIVED BY THE D EVELOPER ON SALE OF FLATS AND HENCE THE ASSESSEE HAS BEEN RECEIVING HIS SHARE AS AND WHEN THE FLATS ARE SOLD. HE SUBMITTED THAT THE REC EIPT OF SALE CONSIDERATION IN INSTALMENTS CANNOT BE THE SOLE CRI TERIA TO DETERMINE THE NATURE OF RECEIPT. HE SUBMITTED THAT THE ASSESSEE HAS TRANSFERRED HIS RIGHT OVER THE LAND TO THE DEVE LOPER AND THE SAID ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 6 OF 10 LAND WAS HELD BY THE ASSESSEE AS CAPITAL ASSET. HE NCE THE AMOUNT RECEIVED ON TRANSFER OF CAPITAL ASSET IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS. SINCE THE CAPITAL ASSET WAS HELD FO R MORE THAN 36 MONTHS, THE GAINS ARISING ON TRANSFER OF LAND IS AS SESSABLE AS LONG TERM CAPITAL GAIN ONLY. 15. THE LD A.R FURTHER SUBMITTED THAT THE OTHE R CO-OWNERS OF THE LAND, I.E., MOTHER AND BROTHER OF THE ASSESSEE, HAV E DECLARED THE RECEIPTS AS LONG TERM CAPITAL GAINS ONLY AND THE SA ME HAS BEEN ACCEPTED BY THEIR RESPECTIVE ASSESSING OFFICERS. FU RTHER, IN THE ASSESSEES OWN CASE, THE AO HAS ASSESSED THE RECEIP TS AS SHORT TERM CAPITAL GAIN IN AY 2012-13. HE SUBMITTED THAT THE AO HAS TAKEN CONTRADICTORY STAND IN DIFFERENT YEARS. 16. WE HEARD THE PARTIES AND PERUSED THE RECOR D. A PERUSAL OF THE GROUNDS OF APPEAL URGED BY THE REVENUE WOULD SH OW THAT THE REVENUE IS AGGRIEVED BY THE DECISION OF LD CIT(A) I N HOLDING THAT THE AMOUNTS RECEIVED BY THE ASSESSEE IS ASSESSABLE AS L ONG TERM CAPITAL GAINS. HENCE WE CONFINE OURSELVES WITH THE SAID IS SUE ALONE. WE NOTICE THAT THE LD CIT(A) HAS DEALT WITH THIS ISSUE AS UNDER:- 9.5 ADVENTURE IN THE NATURE OF TRADE/CAPITAL GAIN? 9.5.1 THE A.O. FOR TREATING THE SAME AS ADVENTURE IN THE NATURE OF TRADE HAS SOLD AS UNDER: THE ASSESSEE HAS AGREED TO RECEIVING THE REVENUE O N THE SALE OF EACH OF THE APARTMENT IN ITS SHARE AND IS ACCORDING LY RECEIVING IT YEAR ON YEAR. IN SUCH A CASE, IT CAN ONLY BE CONSI DERED THAT THE ASSESSEE IS DOING BUSINESS IN THE NATURE OF ADVENTU RE IN THE NATURE OF TRADE OR CONCERN AND HENCE THE RECEIPT HAS TO BE CONSIDERED AS BUSINESS PROFIT. 9.5.2 IN REPLY THE APPELLANT HAS GIVEN ITS SUBMISSI ONS SAYING THAT INITIALLY 25% SUPER BUILT UP AREA WAS AGREED TO BE GIVEN TO THE LAND OWNERS BY THE DEVELOPER IN LIEU OF THE TRANSFE R OF THEIR RIGHTS IN THE LAND TO THE BUYERS OF THE FLATS. THE SAME 2 5% WAS PROPORTIONATELY SHARED BY ALL THE CO-OWNERS IN THE RATIO OF THE LAND ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 7 OF 10 OWNED BY THEM. HOWEVER, AS SOME OF THE LAND OWNERS WERE NOT HAPPY WITH THIS ARRANGEMENT, THE SAME WAS SUBSEQUEN TLY MODIFIED AFTER NEGOTIATIONS WITH THE DEVELOPER IN RESPECT OF SOME OF THE PROPERTY OWNERS TO TRANSLATE THE 25% SHARE IN THE S UPER BUILT UP SPACE (PROPORTIONATE) INTO A FIXED PERCENTAGE OF SH ARE IN THE GROSS REVENUE OF THE PROJECT AS COMPENSATION FOR TOWARDS THE LAND. THE APPELLANT ALONG WITH FEW OTHER OWNERS HAVE OPTED FO R THIS METHOD OF COMPENSATION. ALL OTHER TERMS AND CONDITIONS RE MAINING THE SAME, THIS CHANGE FROM FIXED PERCENTAGE OF SUPER BU ILT UP SPACE TO A FIXED PERCENTAGE OF GROSS REVENUE, DOES NOT CHANG E THE ESSENTIAL CHARACTER OF THE TRANSACTION. FURTHER, IT IS STATE D THAT, AS HE HAD NO INTENTION TO RETAIN THE SUPER BUILT UP AREA OFFE RED BY THE DEVELOPER INITIALLY, THE APPELLANT HAS CHOSEN TO OP T FOR THE FIXED PERCENTAGE COMPENSATION ESSENTIALLY TO AVOID GETTIN G STUCK WITH SUPER BUILT UP SPACE IN THE PROJECT IF IN CASE HE I S NOT ABLE TO SELL THE SAME AND ALSO HE WANTED TO GET IMMEDIATE RETURN S FROM THE JDA FOR REINVESTMENT IN THE HOUSE PROPERTY, ON WHIC H EXEMPTION U/S 54F HAS BEEN CLAIMED. IT IS ALSO STATED THAT T HE APPELLANT BEING AN IT PROFESSIONAL HAD NO INTENTION TO DO ANY BUSIN ESS IN THE PROPERTY WHICH HAS BEEN INHERITED FROM HIS FATHER A S A CO-OWNER ALONG WITH MOTHER AND BROTHER. CONSIDERING ALL THE ABOVE, IT IS SEEN THAT THE TRANSACTION IS ESSENTIALLY A TRANSFER OF CO-OWNERSHIP PROPERTY BY ENTERING INTO A JDA ALONG WITH THE OTHE R CO-OWNERS AND THE SAME CANNOT BE TREATED AS ADVENTURE IN THE NATURE OF TRADE. 9.5.3 IN THIS REGARD, THE AO IN THE ASST ORDER FOR THE AY 2013-14 (WHICH WAS FOLLOWED FOR THE A.Y 2014-15 & 2015-16) HAS ESSENTIALLY HELD AS UNDER: THE ASSESSEE HAS AGREED TO RECEIVING THE REVENUE ON THE SALE OF EACH OF THE APARTMENT IN ITS SHARE AND IS ACCORDING LY RECEIVING IT YEAR ON YEAR. IN SUCH A CASE, IT CAN ONLY BE CONSI DERED THAT THE ASSESSEE IS DOING BUSINESS IN THE NATURE OF ADVENTU RE IN THE NATURE OF TRADE OR CONCERN AND HENCE THE RECEIPT HAS TO BE CONSIDERED AS BUSINESS PROFIT. 9.5.4 THE FACT OF RECEIPT OF CONSIDERATION SPREAD O VER SEVERAL YEARS DOES NOT CHANGE THE NATURE OF TRANSACTION. E VEN IN THE CASE OF RECEIPT OF SALE CONSIDERATION BY WAY OF SUPER BU ILT UP SPACE ALSO, IT MAY HAPPEN THAT THE SELLER MAY RECEIVE THE POSSESSION OF THE FLATS AT VARIOUS INTERVALS FALLING IN DIFFERENT FINANCIAL YEARS, DEPENDING ON THE COMPLETION OF VARIOUS STAGES OF TH E PROJECT NECESSITATING TAXING THE SAID CAPITAL GAINS SPREAD OVER SEVERAL YEARS. THERE IS NO OTHER FACT/ARGUMENT PUT FORTH B Y THE AO. THEREFORE, THERE IS NO FORCE IN THE ARGUMENT OF THE AO THAT THE TRANSACTION IS IN THE NATURE OF ADVENTURE/TRADE. A CCORDINGLY, I AM OF THE VIEW THAT THE TRANSFER OF THE PROPERTY SHALL BE TREATED AS A LONG TERM CAPITAL GAIN. . ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 8 OF 10 . 9.5.7 THE APPELLANT HAS ALSO SUBMITTED THAT UNDER THE SIMILAR CIRCUMSTANCES THE DEPARTMENT HAS TREATED TH E TRANSACTION TO BE THAT OF CAPITAL GAINS IN THE HANDS OF ALL THE CO-OWNERS THOSE WHO HAVE TAKEN SUPER BUILT UP SPACE AND ALSO THOSE WHO HAVE OPTED FOR PROPORTIONATE % OF SALE PROCEEDS EXCEPT I N HIS CASE. THE APPELLANT ALSO REFERRED TO THE ORDERS PASSED IN THE CASES OF HIS MOTHER MRS. SULOCHANAMMA AND BROTHER SRI VISHNU SWA ROOP REDDY WHEREIN UNDER THE IDENTICAL CIRCUMSTANCES (RE CEIVING CERTAIN PERCENTAGE OF GROSS RECEIPTS) HELD THE GAIN FROM THE SALE OF LAND TRANSACTION AS LONG TERM CAPITAL GAIN. IT IS SUBMITTED THAT IN THE CASE OF BROTHER OF THE APPELLANT, NAMELY SRI N. VISHNU SWAROOP REDDY, THE HONBLE COMMISSIONER OF INCOME TAX (APPE AS)-7, HYDERABAD, HAS PASSED A FAVOURABLE ORDER DIRECTING THE ASSESSING OFFICER TO GIVE EXEMPTION U/S 54F OF THE INCOME TAX ACT, WHEREIN THE GAIN WAS ASSUMED TO BE A LONG TERM CAPITAL GAIN . COPY OF THE CIT(A) ORDER WAS ALSO PRODUCED. 9.5.8 IN VIEW OF THE ABOVE, I AM OF THE VIEW THAT THE FACT OF RECEIPT OF CONSIDERATION SPREAD OVER SEVERAL YEARS DOES NOT CHANGE THE TRUE NATURE OF THE TRANSACTION FROM CAPITAL GAI NS TO BUSINESS. EVEN IN THE CASE OF RECEIPT OF SALE CONSIDERATION B Y WAY OF SUPER BUILT UP SPACE ALSO, IT MAY HAPPEN THAT THE SELLER OF LAND MAY RECEIVE THE POSSESSION OF THE FLATS AT VARIOUS INTE RVALS FALLING IN DIFFERENT FINANCIAL YEARS, DEPENDING ON THE COMPLET ION OF VARIOUS STAGES OF THE PROJECT, NECESSITATING TAXING THE SAI D CAPITAL GAINS SPREAD OVER SEVERAL YEARS. THERE IS NO OTHER FACT/ ARGUMENT PUT FORTH BY THE AO FOR CONSIDERING THE SAID GAIN RETUR NED AS LONG TERM CAPITAL GAINS IN TO BUSINESS INCOME. THEREFORE, I AM OF THE VIEW THAT THERE IS NO FORCE IN THE ARGUMENT OF THE AO TH AT THE TRANSACTION IS IN THE NATURE OF ADVENTURE/TRADE. 9.5.9 ACCORDINGLY, RESPECTFULLY FOLLOWING THE DECI SION OF THE ITAT IN THE CASE OF MOHINDER KR. JAIN SUPRA ALS O FOLLOWING THE DECISION TAKEN IN IDENTICAL CIRCUMSTANCES, IN THE H ANDS OF OTHER CO- OWNERS WHO HAVE POOLED THE LAND, MORE SO IN THE HAN DS OF THE MOTHER AND BROTHER OF THE APPELLANT (TWO JOINT FAMI LY CO-OWNERS) BY THE CONCERNED AO AND THE CIT(A), TO BE CONSISTEN T IN THE APPROACH OF THE DEPARTMENT. I AM OF THE VIEW THAT THE TRANSFER OF THE PROPERTY SHALL BE TREATED AS A LOING TERM CAPIT AL GAIN FOR ALL THE ASST YEARS INVOLVED. ACCORDINGLY, THE AO IS DIRECT ED TO TREAT THE GAIN AS LONG TERM CAPITAL GAIN AS RETURNED BY THE A PPELLANT FOR THE YEARS INVOLVED IN THIS BATCH OF APPEALS. ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 9 OF 10 17. WE NOTICE THAT THE ASSESSING OFFICER HAS T REATED THE AMOUNTS RECEIVED BY THE ASSESSEE AS BUSINESS RECEIPTS, SOLE LY FOR THE REASON THAT THE AMOUNTS WERE RECEIVED IN INSTALMENTS. THE UNDISPUTED FACTS REMAIN THAT THE ASSESSEE IS THE OWNER OF LAND AND HE HAS TRANSFERRED THE SAME TO THE DEVELOPER, M/S SHRIRAM PROPERTIES LTD UNDER A JOINT DEVELOPMENT AGREEMENT. IT IS A FACT THAT THE ASSESSEE HAS NOT CARRIED ON ANY VENTURE OR BUSINESS ACTIVITY BY SO TRANSFERRING THE LAND. ON THE CONTRARY, IT IS M/S SHRIRAM PROPERTIES LTD, WHICH IS CARRYING ON BUSINESS ACTIVITY. THE R OLE OF THE ASSESSEE IS RESTRICTED TO TRANSFERRING THE LAND AND RECEIVIN G THE CONSIDERATION. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE LAND WAS HELD BY THE ASSESSEE AS CAPITAL ASSET ON LY. HENCE THE TRANSFER OF LAND WOULD GIVE RISE TO CAPITAL GAINS O NLY AS PER THE PROVISIONS OF THE ACT. 18. IT SO HAPPENED THAT THE CONSIDERATION FOR T RANSFER OF LAND WAS SO FIXED THAT THE ASSESSEE WOULD BE RECEIVING 2.64% OF THE SALE CONSIDERATION OF FLATS THAT ARE GOING TO BE CONSTRU CTED. HENCE THE ASSESSEE WOULD BE RECEIVING AMOUNTS AS AND WHEN THE FLATS ARE SOLD. AS RIGHTLY OBSERVED BY LD CIT(A), THE RECEIP T OF CONSIDERATION OVER A PERIOD ON SALE OF A CAPITAL ASSET DOES NOT C HANGE THE TRUE NATURE OF TRANSACTIONS FROM CAPITAL GAINS TO BUSINE SS. IRRESPECTIVE OF TIMING OF RECEIPT OF SALE CONSIDERATION, THE TRA NSFER OF A CAPITAL ASSET WOULD GIVE RISE TO CAPITAL GAINS ONLY. HEN CE WE ARE OF THE VIEW THAT THE LD CIT(A) WAS JUSTIFIED IN HOLDING TH AT THE AMOUNTS RECEIVED BY THE ASSESSEE IS ASSESSABLE AS LONG TERM CAPITAL GAINS. 19. AT THE TIME OF HEARING, THE LD A.R SUBMITTE D THAT THE ASSESSEE HAS CLAIMED DEDUCTION U/S 54 OF THE ACT AN D AO DID NOT EXAMINE THE SAME, SINCE HE HAD ASSESSED THE RECEIPT S AS BUSINESS INCOME. ACCORDINGLY HE PRAYED THAT THE ASSESSING O FFICER MAY BE DIRECTED TO ALLOW THE DEDUCTION. ON THE CONTRARY, THE LD D.R ITA NOS.1853 TO 1855/BANG/2018 SRI VINOD NARAPPA REDDY, BANGALORE PAGE 10 OF 10 SUBMITTED THAT THERE WAS NO OCCASION FOR THE AO TO EXAMINE THE CLAIM OF DEDUCTION U/S 54 OF THE ACT. ACCORDINGLY THE LD D.R SUBMITTED THAT, IF THE TRIBUNAL HOLDS THAT THE AMOU NTS RECEIVED BY THE ASSESSEE IS ASSESSABLE AS LONG TERM CAPITAL GAI NS, THEN THE QUESTION OF DEDUCTION U/S 54 SHOULD BE RESTORED TO THE FILE OF THE AO. 20. WE HAVE AGREED WITH THE VIEW TAKEN BY THE LD CIT(A) THAT THE AMOUNTS RECEIVED BY THE ASSESSEE IS ASSESSABLE AS L ONG TERM CAPITAL GAINS. WE ALSO NOTICE THAT THE THERE WAS NO OCCASI ON FOR THE AO TO EXAMINE THE CLAIM FOR DEDUCTION U/S 54 OF THE ACT, SINCE HE HAD ASSESSED THE RECEIPTS AS BUSINESS INCOME. ACCORDIN GLY, WE FIND MERIT IN THE CONTENTIONS OF THE LD D.R. ACCORDINGL Y, WE RESTORE THE ISSUE OF CLAIM FOR DEDUCTION U/S 54 OF THE ACT TO T HE FILE OF THE AO. 21. IN THE RESULT, ALL THE APPEALS OF THE REVEN UE ARE TREATED AS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 5 TH OCT, 2020. SD/- (N.V. VASUDEVAN) VICE PRESIDENT SD/- (B.R. BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED 5 TH OCT, 2020. VG/SPS 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.