Sri K.G.Subbarama Setty, Bangalore V. Assistant Commissioner of Income-Tax, Bangalore

ITA 2318/BANG/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 7386 (ITAT-BANGALORE)
• Duration Of Justice: 3 year(s) 8 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-08-2020
• Assessment Year: 2007-2008
• Appeal Filed On: 28-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRIYADARSHI MISHRA
• Keywords: Opportunity of being heard; Set aside; Capital Gains
• Section: 234B; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI A.K GARODIA, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.2318, 2319 & 2320/BANG/2016 ASSESSMENT YEAR : 2007-08 1. SRI K.G SUBBARAMA SETTY (ITA NO.2318), ACGPS 0517 G 2. SRI K.S AKHILESH BABU (ITA NO.2319) PAN ACNPA 3743 K 3. SRI K.A SUJIT CHANDAN (ITA NO.2320) PAN AJGPS 8502 G NO.172, KAVI LAKSHMEESHA ROAD, V.V PURAM, BENGALURU-560 004. VS. THE ASST. COMMISSIONER OF INCOME-TAX, CIRCLE-5(2)(1), BENGALURU. APPELLANT RESPONDENT ASSESSEE BY : SMT. SHEETAL, ADVOCATE REVENUE BY : SHRI PRIYADARSHI MISHRA, JCIT DATE OF HEARING : 26-08-2020 DATE OF PRONOUNCEMENT : 28-08-2020 ORDER PER BENCH : PRESENT APPEALS HAVE BEEN FILED BY ASSESSEES AGAIN ST ORDER DATED 19/09/2016 PASSED BY LD.CIT (A)-5, BANG ALORE FOR ASSESSMENT YEAR 2007-08. PAGE 2 OF 6 ITA NOS.2318, 2319 & 2320/BANG/2016 2. LD.AR SUBMITTED THAT ASSESSEE IS AN INDIVIDUAL A ND FILED THE RETURN OF INCOME FOR YEAR UNDER CONSIDERA TION. A NOTICE UNDER SECTION 148 OF THE ACT WAS ISSUED TO T HE ASSESSEE IS BEFORE US. LD. AO NOTED THAT ASSESSEE H AD EXECUTED JOINT DEVELOPMENT AGREEMENT ALONG WITH THE CO- OWNERS OF PROPERTY ON 01/03/2007. ON THE SAME DATE OF POWER OF ATTORNEY WAS EXECUTED IN FAVOUR OF THE DEV ELOPER COMPANY AND THE LAND WAS GIVEN FOR DEVELOPMENT IN W HICH EACH CO-OWNER HAD A PARTICULAR SHARE OF THE DEVELOP ED STRUCTURE AND THE TOTAL WAS FIXED AT 38.50% WITH TH E DEVELOPER SHARE BEING 61.50%. FOLLOWING DECISION OF HONBLE KARNATAKA HIGH COURT IN CASE OF CIT VS T.K DAYALU, REPORTED IN 202 TAXMAN 531 LD.AO WAS OF THE OPINION THAT THE TRANSFER TOOK PLACE DURING THE FINANCIAL YEAR RELEV ANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND THAT CHARGE ABILITY TO CAPITAL GAINS ARISES DURING THE YEAR UNDER CONSI DERATION. HE ALSO RELIED UPON DECISION OF HONBLE BOMBAY HIGH COURT IN CASE OF CHATURBHUJ DWARKADAS KAPADIA VS CIT REPO RTED IN 260 ITR 491. 3. LD. AO THUS COMPUTED THE CAPITAL GAINS UNDER THE HEAD SHORT TERM IN THE HANDS OF ASSESSEE IS BEFORE US IN PROPORTIONATE TO THE SHARE IN DEVELOPED CONSTRUCTIO N. LD. AO ALSO CONSIDERED THE RATE FIXED BY GOVERNMENT OF KAR NATAKA AT RS.760 PER SQUARE FEET AS SALE CONSIDERATION RECEIV ED IN EXCHANGE OF 61.50% UNDIVIDED SHARE OF LAND WITH THE DEVELOPER. 4. AGGRIEVED BY THE ADDITIONS MADE BY LD.AO ASSESSE E IS BEFORE US FILED APPEAL BEFORE LD.CIT(A) BEFORE LD.C IT(A) PAGE 3 OF 6 ITA NOS.2318, 2319 & 2320/BANG/2016 ASSESSEE HAS CHALLENGED THE SHORT TERM CAPITAL GAIN COMPUTED BY LD.AO AS EXCESSIVE AND UNREASONABLE. 5. LD.CIT (A) HOWEVER REJECTED ALL THE CONTENTIONS OF ASSESSEE. 6. AGGRIEVED BY ORDER OF LD. CIT (A) ASSESSEE IS AR E IN APPEAL BEFORE US. 7. WE NOTE THAT ALL THE ASSESSEES ARE CO-OWNERS OF THE SAME JOINT DEVELOPMENT AGREEMENT AND ISSUES ALLEGED BY THEM ARE SIMILAR AND ON IDENTICAL FACTS. 8. GROUND 1-2,6 ARE GENERAL IN NATURE AND THEREFORE DO NOT REQUIRE ADJUDICATION 9. GROUND 3-5: LD.AR SUBMITTED THAT, SUBMITTED THAT, LD.CIT(A) FAILED TO ADJUDICATE ADDITIONS CHALLENGED BY ASSESSEE. IT HAS ALSO BEEN SUBMITTED THAT EVEN BEFO RE US ASSESSEE DO NOT CHALLENGE THE YEAR OF TAXABILITY IT HAS BEEN SUBMITTED BY LD.AR THAT, NATURE OF CAPITAL GAINS WH ETHER SHORT-TERM OR LONG-TERM AS WELL AS THE RATE OF CONS TRUCTION APPLIED BY LD.AO THAT WAS SUBJECT MATTER OF CHALLEN GE BEFORE LD.CIT(A) IN GROUND NO.9. 10. LD.SR.DR RELIED ON ORDERS PASSED BY AUTHORITIES BELOW. HOWEVER, HE COULD NOT CONTRADICT THIS ACCOUNT AND A DVANCED BY LD.AR THAT, QUANTUM OF ADDITIONS CHALLENGED BY A SSESSEE HAS NOT BEEN ADJUDICATED BY LD.CIT(A). 11. WE HAVE HEARD RIVAL SUBMISSIONS ADVANCED BY BOT H SIDES IN LIGHT OF RECORDS PLACED BEFORE US. 12. GROUND NO. 9 RAISED BY ASSESSEE BEFORE LD.CIT(A ) READS AS UNDER: PAGE 4 OF 6 ITA NOS.2318, 2319 & 2320/BANG/2016 9, WITHOUT PREJUDICE, THE SHORT TERM CAPITAL GAINS AS COMPUTED BY LD. ASSESSING AUTHORITY IS EXCESSIVE, ARBITRARY AND UNREASONABLE AND LIABLE TO BE REDUCED SUBSTANTIALLY 13. ON PERUSAL OF ORDER PASSED BY LD.CIT(A) WE NOTE THAT THIS GROUND HAS NOT BEEN ADJUDICATED BY LD.CIT (A). IN THE INTEREST OF JUSTICE WE ARE OF OPINION THAT T HIS ISSUE NEEDS TO BE REMANDED TO LD.CIT(A) FOR ADJUDICATING IN ACCORDANCE WITH LAW AND IN LINE WITH THE RATIO IS L AID DOWN BY HONBLE KARNATAKA HIGH COURT IN VARIOUS CASES. NEEDLESS TO SAY THAT, PROPER OPPORTUNITY OF BEING HEARD SHAL L BE GRANTED TO ASSESSEE IN ACCORDANCE WITH LAW. ACCORDINGLY, WE SET ASIDE THIS APPEAL BACK TO LD.CI T(A) FOR DETERMINING THE QUANTUM OF CAPITAL GAINS COMPUTED I N THE HANDS OF ASSESSEE IS BEFORE US. ACCORDINGLY GROUNDS 3-5 STANDS ALLOWED FOR STATISTI CAL PURPOSES. 14. GROUND NO. 7-9 IS IN RESPECT OF LEVY OF INTEREST UNDER SECTION 234B. 15. ADMITTEDLY THIS ISSUE IS AGAINST ASSESSEE. HOWE VER AS WE HAVE SET ASIDE THE QUANTUM ADDITION INTEREST UND ER SECTION 234B WILL HAVE TO BE RECOMPUTED IN ACCORDAN CE WITH THE ADDITION THAT IS COMPUTED IN RESPECT OF CHARGEA BILITY TO CAPITAL GAINS. ACCORDINGLY, THIS GROUND IS ALSO SET ASIDE TO LD.CI T(A) FOR COMPUTING THE INTEREST UNDER SECTION 234B IN ACCORDANCE WITH LAW. PAGE 5 OF 6 ITA NOS.2318, 2319 & 2320/BANG/2016 IN THE RESULT, APPEAL FILED BY ASSESSEE STANDS ALLO WED PARTLY FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH AUG, 2020. SD/- SD/- (A.K GARODIA) (BEENA PILLAI) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE, DATED, THE 28 TH AUG, 2020. /VMS/ COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME-TAX APPELLATE TRIBUNAL. BANGALORE PAGE 6 OF 6 ITA NOS.2318, 2319 & 2320/BANG/2016 DATE INITIAL 1. DRAFT DICTATED ON ON DRAGON SR.PS 2. DRAFT PLACED BEFORE AUTHOR -08-2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER -08-2020 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. -08-2020 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS -08-2020 SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON -08-2020 SR.PS 7. DATE OF UPLOADING THE ORDER ON WEBSITE -08-2020 SR.PS 8. IF NOT UPLOADED, FURNISH THE REASON -- SR.PS 9. FILE SENT TO THE BENCH CLERK -08-2020 SR.PS 10. DATE ON WHICH FILE GOES TO THE AR 11. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 12. DATE OF DISPATCH OF ORDER. 13. DRAFT DICTATION SHEETS ARE ATTACHED NO SR.PS