Mrs. Sadia Sheikh, Panaji V. DCIT, Central Circle, Panaji

ITA 233/PAN/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5219 (ITAT-PANAJI)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2013
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 16-08-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ASHA DESAI
• Assessee Lawyers: S C ANVEKAR; V Y VAIDYA
• Keywords: Unexplained investment; Sale consideration of property below Jantri Value; Capital asset; Search and seizure; Cost of acquisition; Fair market value; Reason to believe
• Section: 143(3); 50C; 153A; 131; 69; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI P.K. BANSAL, HONBLE ACCOUNTANT MEMBER AND SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER ITA NOS. 232/PNJ/2013 : (ASST. YEAR : 2008 - 09 ) MR. SADIQ SHEIKH FR 5, 4 TH FLOOR, SOUZA TOWERS, OPP. MUNICIPAL GARDEN, PANAJI, GOA 403 001 (APPELLANT) PAN : AMFPS2073J VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) ITA NOS. 233/PNJ/2013 : (ASST. YEAR : 2008 - 09 ) MR S . SADIA SHEIKH FR 5, 4 TH FLOOR, SOUZA TOWERS, OPP. MUNICIPAL GARDEN, PANAJI, GOA 403 001 (APPELLANT) PAN : A KQPS9076A VS. DY. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, PANAJI, GOA (RESPONDENT) APPELLANT BY : V.Y. VAIDYA , ADV. & S.C. ANVEKAR, CA RESPONDENT BY : SMT. ASHA DESAI, DR DATE OF HEARING : 0 3 /0 9 /2013 DATE OF PRONOUNCEMENT : 27 /09/2013 O R D E R PER P.K. BANSAL : 1. SINCE BOTH THE APPEALS HAVE COMMON GROUNDS OF APPEAL AND RELATE TO SPOUSE OF EACH OTHER, THEREFORE, BOTH THE APPEALS ARE BEING DISPOSED OFF BY THIS COMMON ORDER. THE ASSESSEE IS GOVERNED BY THE PROVISIONS OF SEC. 5A OF THE INCOME TAX ACT AND 50% OF THE IN COME IS APPORTIONED IN THE 2 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) HANDS OF HIS WIFE. BOTH THE APPEALS HAVE BEEN FILED AGAINST THE COMMON ORDER OF CIT(A) DT. 2.8.2013 BY TAKING THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACT AND CIRCUMSTANCES AND IN LAW THE LEARNED C.I.T (A) ERRED IN CONFIRMING THE ADDITION OF RS.8,69,84,420/ - (50% OF RS.17,39,68,839/ - AS PER PROVISIONS OF 5A OF I.T. ACT 1961) IN AN ORDER PASSED U/S 153A R.W.S. 143(3) OF I.T. ACT, 1961. 2. THE LEA RNED C.I.T (A) ERRED IN CONFIRMING ADDITION OF RS.14,05,63,839/ - IN RESPECT OF ADVANCE RECEIVED FROM M/S AUDI CONSTRUCTIONS FOR SALE OF 18 FLATS FOR A CONSIDERATION OF RS.15,17,65,695/ - . 3. THE LEARNED CIT ( A ) FAILED TO APPRECIATE THAT I) THE POSSES SION OF PROPERTY WAS NOT GIVEN TO M/S AUDI CONSTRUCTIONS AND THE ASSESSEE CONTINUED TO BE IN POSSESSION OF PROPERTY IN THE RELEVANT YEAR. II) THE TRANSACTION FOR SALE OF 18 FLATS TO M/S AUDI CONSTRUCTIONS DID NOT MATERIALIZE AND WAS CANCELLED. III) THE ENTIRE ADVANCE OF RS. 14,05,63,839/ - WAS REFUNDED TO M/S AUDI CONSTRUCTIONS BY THE ASSESSEE IV) AFTER CANCELLATION FURTHER EXPENDITURE OF RS.1.25 CR WAS INCURRED BY THE ASSESSEE TO BRING THE PROPERTY IN TO A BETTER MARKETABLE CONDITION. V) SUBSEQUENTL Y THE FLATS WERE SOLD TO M/S SALGAONKAR MINING IND PVT LTD IN F.Y 2010 - 11 ( A.Y 2011 - 12 ) FOR A CONSIDERATION OF RS. 15,18,00,000.00 RESULTING IN TO A CAPITAL GAIN OF RS.9,73,04,819.00 AND AS PER PROVISIONS OF 5A 50% OF THE SAME AT RS4,86,52,410.00 (HUSBAN D AND WIFE) PURSUANT TO TRANSFER U/S 2(47) AND THE SAME WAS ACCOUNTED AND OFFERED TO TAX IN A.Y 2011 - 12. 4. THE LEARNED C.I.T (A) ERRED IN CONFIRMING ADDITION OF RS.2,98,05,000/ - IN RESPECT OF TRANSFER OF RIGHTS IN MODEL MYSTIQUE PROJECT TO M/S SALGAONKAR MINING IND PVT. LTD. 5. THE LEARNED C.I.T (A) FAILED TO APPRECIATE THAT ON THE RELEVANT DATE THE CONSTRUCTION ITSELF WAS NOT COMPLETE AND THERE WAS NO POSSESSION HANDED OVER TO M/S SALGAONKAR MINING IND PVT. LTD. RESULTING IN TO A TRANSFER U/S 2(47) OF I .T. ACT, 1961. 6. THE LEARNED C.I.T (A) ERRED IN ENHANCING THE ASSESSMENT BY ADOPTING MARKING VALUE IN A.Y. 2008 - 09 AS SALE CONSIDERATION AND THEREBY ADOPTING A SALE CONSIDERATION OF RS.1,73,66,723/ - FOR CASTLE ROCK PROJECT AND RS.17.1 CR FOR CABO PROJECT. 7. THE LEARNED C.I.T (A) FAILED TO APPRECIATE THAT I) 11 FLATS OUT OF 42 FLATS WERE SURRENDERED TO SRI ATANSIO MONSERRATE VIDE AGREEMENT DATED 18.03.2008 II) 9 FLATS OUT OF 42 FLATS WERE SURRENDERED TO BUILDER M/S LANDSCAPE DEVELOPERS VIDE AGREEMENT DATED 26.03.2010 3 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) III) THE 11 FLATS AND 9 FLATS WERE SUBSEQUENTLY SOLD BY SRI ATANSIO MONSERRATE AND M/S LANDSCAPE DEVELOPERS RESPECTIVELY AND WERE ACCOUNTED AND OFFERED BY THEM. IV) THE ASSESSEE RECEIVED ONLY 22 FLATAS AND WHICH WERE PROPERLY A CCOUNTED BY THE ASSESSEE. 8. THE LEARNED C.I.T (A) ERRED IN CONFIRMING ADDITION OF RS.36,00,000/ - IN RESPECT OF PAYMENT TO MR. ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN TITLE OF PROPERTY MOSPOTEM SITUATED AT TALEGAON. 9. THE LEARNED C.I.T (A) ERRED IN MAKING ADDITION OF RS.61,00,027/ - IN RESPECT OF PAYMENT TO MR. TAHIR ISANI BY ADOPTING ARBITRARY COST AND PROFIT TO THE VALUE OF FLATS GIVEN TO MR. TAHIR ISSANI AS COMMISSION. 10. THE REASONS ASSIGNED FOR UPHOLDING THE DISAL LOWANCE AND MAKING ENHANCEMENT ARE WRONG, INSUFFICIENT AND CONTRARY TO LAW AND FACTS OF THE CASE. 2. AT THE OUTSET, THE ASSESSEE DID NOT PRESS GROUND NOS. 4 & 5, THEREFORE, THE SAME STANDS DISMISSED AS NOT PRESSED. 3. GROUND NO. 11 IS GENERAL AND DOES NO T REQUIRE ANY ADJUDICATION. 4. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE ACTION U/S 132 OF THE INCOME TAX ACT WAS CARRIED OUT AT THE RESIDENTIAL PREMISES OF THE ASSESSEE AT GOA ON 25.2.2010. IN RESPONSE TO THE NOTICE U/S 153A, BOTH THE ASSESSEES FILED THEIR RETURN OF INCOME ON 2.8.2011 DECLARING TOTAL INCOME AT RS.1,63,10,100/ - AND AGRICULTURAL INCOME AT RS. 30,000/ - IN EACH CASE. THE ASSESSMENT WAS COMPLETED BY THE AO AFTER MAKING AN ADDITION OF RS.17,39,68,839/ - ON THE FOLLOWING ISSUE S : I) CAPITAL GAINS OF RS.14,05,63,839/ - ON ACCOUNT OF SALE OF 18 FLATS TO M/S. AUDI CONSTRUCTION PVT. LTD. AT SALE CONSIDERATION OF RS.15,17,65,695/ - . II) ADDITION ON ACCOUNT OF PROFIT OF RS.2,98,05,000/ - ON ASSIGNMENT OF RIGHTS TO M/S.SALGAONKAR MINING INDUSTRIES LTD. III) ADDITION ON ACCOUNT OF TRANSACTION WITH MR. ARMANDO GONSALVES AMOUNTING TO RS. 36 LACS. 4 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) 50% OF THE ABOVE ADDITIONS WERE ATTRIBUTABLE TO THE SPOUSE OF THE ASSESSEE, MRS. SADIA SHEIKH U/S 5A OF THE INCOME TAX ACT. THE ASSESSEE WENT IN APPEAL BEFORE THE CIT(A). CIT(A) CONFIRMED THE ABOVE ADDITIONS MADE BY THE AO BUT ALSO ENHANCED THE ASSESSMENT BY ADOPTING THE SALE CONSIDERATION OF RS.1,73,66,723/ - FOR CASTLE ROCK PROJECT AND RS. 17.1 CRORE FOR CABO PROJECT FOR THE PURPOSE OF COMPUTI NG THE CAPITAL GAIN. THE SALE CONSIDERATION AND GAIN IN RESPECT OF 4 FLATS GIVEN TO TAHIR ISANI AS BROKERAGE WAS ALSO ADDED ON THE BASIS OF THE MARKET VALUE. THE CIT(A) FURTHER HELD THAT THE MARKET VALUE OF THE 42 FLATS IS TAXABLE IGNORING THE FACT THAT 11 FLATS WERE SURRENDERED TO SHRI ATANSIO MONSERRATE AND 9 FLATS WERE SURRENDERED TO M/S. LANDSCAPE DEVELOPERS AND THE ASSESSEE ACTUALLY RECEIVED ONLY 22 FLATS. 5. GROUND NOS. 2 AND 3 RELATE TO THE SAME ISSUE RELATING TO THE ADDITION OF RS. 14,05,63,839/ - , 50% OF WHICH IS ADDED IN THE HAND OF EACH OF THE ASSESSEE. THE BRIEF FACTS RELATING TO THE ISSUES INVOLVED IN THESE GROUNDS ARE THAT DURING THE COURSE OF THE SEARCH A REGISTERED AGREEMENT DT. 18 .3.2008 VIDE PAGES 7 TO 84 OF ANNEXURE A/EB/8 DATED 25.2.201 0 WAS FOUND. AS PER THE AGREEMENT, THE ASSESSEE RECEIVED A SUM OF RS.15,17,65,695/ - FROM M/S. AUDI CONSTRUCTION PVT. LTD. FOR SALE OF 18 FLATS OF CABO PROJECT. WHEN CONFRONTED BY THE AO DURING THE COURSE OF HEARING, THE ASSESSEE CLAIMED THAT POSSESSION OF THE FLATS WAS NOT CONVEYED AND THEREFORE THE SALE WAS NOT OVER. THE INCOME ACCRUED IN THE A.Y. 2011 - 12 WHEN THE ASSESSEE RETURNED IT AND PAID THE TAX. THE AO CAME TO THE CONCLUSION THAT THE SALE TOOK PLACE IN THE IMPUGNED ASSE SSMENT YEAR AND THEREFORE BROUGHT THE INCOME ACCRUING THEREON AMOUNTING TO RS.14,05,63,839/ - AS THE REGISTERED AGREEMENT IS BACKED BY THE RECEIPT OF ALMOST ENTIRE SALE CONSIDERATION BY THE ASSESSEE IN MARCH ITSELF. THE ASSESSEE ALSO STATED THAT THE AGREEM ENT WAS CANCELLED ON 26.7.2010 AND AMOUNT ADVANCED WAS PAID BACK AND THE SALE DEED WAS REGISTERED IN RESPECT OF THESE 18 FLATS VIDE 15 SALE DEEDS DT. 30.7.2010 VALUED AT RS.15,18,00,000/ - WITH M/S. SALGAONCAR MINING 5 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) INDUSTRIES PVT. LTD. INSTEAD OF M/S. AUD I CONSTRUCTION PVT. LTD. THE AO MENTIONED THAT THERE ARE COMMON DIRECTORS IN M/S. AUDI CONSTRUCTION PVT. LTD. AND M/S. SALGAON K AR MINING INDUSTRIES PVT. LTD. AND THE SUBSEQUENT TRANSACTION WAS MADE OUT JUST TO ESCAPE THE INCIDENCE OF TAX AND PENALTY AS TH E ASSESSEE WAS CAUGHT WITH THE EVIDENCE OF THE SALE DURING THE COURSE OF THE SEARCH. WHEN THE MATTER WENT BEFORE CIT(A), CIT(A) UPHELD THE ACTION OF THE AO. 5.1 BEFORE US, THE LD. AR VEHEMENTLY CONTENDED THAT THE ISSUE INVOLVED RELATES TO THE YEAR OF TAXABILITY ON ACCOUNT OF SALE OF 18 FLATS ON 18 .3.2008. THE ASSESSEE RECEIVED AN ADVANCE OF RS.14,05,63,839/ - FROM M/S. AUDI CONSTRUCTION PVT. LTD. FOR SALE OF 18 FL ATS, HOWEVER, THE POSSESSION OF THESE FLATS WAS NOT GIVEN AND NO RIGHTS WERE TRANSFERRED BY THE AGREEMENT DT. 18 .3.2008 . THE OBLIGATIONS OF THE STRUCTURE AS SET FORTH IN THE AGREEMENT WERE NOT COMPLETE TO BE DELIVERED TO THE SAID PARTY. DURING THE ASSESS MENT, IT WAS ALSO IMPRESSED THAT ON COMPLETION OF THE PERFORMANCE, A PROPER SALE DEED WOULD BE DRAWN AND TITLE WOULD BE CONVEYED TO THE SAID PARTY. ON COMPLETION OF THIS, IT WOULD BE RECOGNIZED AS A SALE IN OUR BOOKS. OUR ATTENTION WAS ALSO DRAWN TO CLAU SE 7(A) OF THE AGREEMENT WHICH PROVIDES THAT THE BUILDER/CONFIRMING PARTY SHALL DELIVER THE SAID FLATS ALONGWITH PARKING LOTS AT A FUTURE DATE WITHIN 8 MONTHS AFTER RECEIVING EXTRA COST, IF ANY, AND OBTAINING NO DUES CERTIFICATE. ADDITIONAL PERIOD OF 6 MO NTHS WAS ALSO PROVIDED FOR THE IMPLEMENTATION OF THE EXTRA WORK, IF REQUESTED BY THE PURCHASER. CLAUSE 7(B) OF THE AGREEMENT PROVIDED THAT THE BUILDER/CONFIRMING PARTY UPON COMPLETION OF THE SAID FLATS AND AFTER OBTAINING COMPLETION AND OCCUPANCY CERTIFIC ATE FROM THE CONCERNED AUTHORITIES SHALL SEND A NOTICE TO THE PURCHASER REQUESTING TO TAKE POSSESSION WITHIN 15 DAYS FROM THE RECEIPT OF THE SAME. CLAUSE 9(A) OF THE AGREEMENT PROVIDED THAT IF FOR REASONS OTHER THAN DETAILED IN CLAUSE 8 ABOVE, THE BUILDER /CONFIRMING PARTY IS UNABLE TO OR FAILS TO GIVE POSSESSION OF THE SAID FLATS TO THE PURCHASER WITHIN DATE SPECIFIED IN CLAUSE 7 OR WITHIN DEEMED EXTENSION PERIOD OF 6 MONTHS, THEN, THE PURCHASER 6 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) SHALL BE ENTITLED TO GIVE NOTICE TO THE OWNERS AND THE BUILDE R/CONFIRMING PARTY TERMINATING THIS AGREEMENT AND IN SUCH CASE, THE OWNER SHALL WITHIN 4 WEEKS FROM THE RECEIPT OF SUCH NOTICE REFUND THE AMOUNT TO THE PURCHASER. CLAUSE 19(C) OF THE AGREEMENT PROVIDED THAT IT IS ALSO FURTHER EXPLICITLY AGREED BY THE PAR TY THAT THE SALE DEED SHALL BE EXECUTED BY THE OWNERS AND THE BUILDER/CONFIRMING PARTY IN FAVOUR OF THE PURCHASER. ATTENTION WAS ALSO DRAWN TO CLAUSE 23 WHICH PROVIDES THAT THE POSSESSION OF THE SAID FLATS IS NOT HANDED OVER TO THE PURCHASER ON EXECUTION OF THIS AGREEMENT AND IT WILL BE HANDED OVER ONLY AS PER CLAUSE 8. THUS, IT WAS CONTENDED ON THE BASIS OF THIS CLAUSE THAT THE SAID UNITS WERE NOT YET READY FOR DELIVERY AND THEY WERE PROPOSED TO BE READY FOR COMPLETE DELIVERY BASED ON THE SPECIFICATION O F THE FLATS AS PER THE AGREEMENT OF SALE ONLY AT A FUTURE DATE. THUS, THERE WAS NO TRANSFER DURING THE RELEVANT YEAR ATTRACTING LIABILITY TO TAX. SINCE THE ASSESSEE COULD NOT BE ABLE TO COMPLETE THE STRUCTURE WITHIN THE STIPULATED TIME, M/S. AUDI CONSTRU CTION PVT. LTD. CANCELLED THE AGREEMENT ON 26.7.2010 AND THE ASSESSEE HAD TO PAY BACK ALL THE MONEY WHICH WAS RECEIVED AS ADVANCE. THE FACT HAS BEEN STATED BY THE ASSESSEE IN THE STATEMENT ALSO. THE INCOME CANNOT BE ASSESSED TO TAX IN THE HANDS OF THE AS SESSEE UNTIL THE TRANSFER HAS TAKEN PLACE. THE ASSESSEE EVEN HAD TO INCUR RS.1.25 CRORE MORE EXPENSES TO MAKE THE FLATS MARKETABLE. EFFORTS WERE MADE TO FIND A NEW BUYER AND ACCORDINGLY, THE ASSESSEE GOT M/S. SALGAONKAR MINING INDUSTRIES PVT. LTD. THE D EAL WAS STRUCK AT RS. 15.18 CRORE FOR WHICH THE SALE DEED WAS EXECUTED ON 30.7.2010 AND THEREFORE THE CAPITAL GAINS WAS OFFERED IN A.Y 2011 - 12. THE ASSESSEE PAID THE TAX AND THE TRANSACTION WAS DULY ACCEPTED BY THE DEPARTMENT. 5.2 THE LD. DR, ON THE OTHE R HAND, VEHEMENTLY RELIED ON THE ORDER OF THE AO AND CONTENDED THAT THE TRANSFER HAS TAKEN PLACE IN THE IMPUGNED ASSESSMENT YEAR AS THE WHOLE OF THE CONSIDERATION HAS PASSED DURING THE YEAR. 7 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) 5.3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL ON RECORD. THE ONLY ISSUE IN THIS CASE IS WHETHER THE CAPITAL GAINS ON THE SALE OF 18 FLATS AROSE DURING THE IMPUGNED YEAR OR NOT. THE PROVISIONS RELATING TO THE COMPUTATION OF INCOME FROM CAPITAL GAINS ARE CONTAINED IN CHAPTER IV OF TH E INCOME TAX ACT. SECTION 45 OF THE SAID CHAPTER WHICH IS THE CHARGING PROVISION PROVIDES THAT ANY PROFIT AND GAINS ARISING FROM THE TRANSFER OF CAPITAL ASSET EFFECTED IN THE PREVIOUS YEAR SHALL, SAVE AS OTHERWISE PROVIDED IN OTHER SECTIONS, BE CHARGEABLE TO INCOME TAX UNDER THE HEAD CAPITAL GAINS AND SHALL BE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER TOOK PLACE. SEC. 48 GIVES THE MODE OF COMPUTATION OF CAPITAL GAIN AND PROVIDES THAT THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED AFTER ALLOWING CERTAIN DEDUCTIONS FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF TRANSFER OF THE CAPITAL ASSET. THE QUESTION ARISES THAT ARISES FOR OUR CONSIDERATION IN THE PRESENT CASE IS WHETHER THE TRANSFER IN RESPECT OF THE 18 FLATS HAS TAKEN PLACE DURING THE IMPUGNED YEAR IN RESPECT OF WHICH THE AGREEMENT TO SELL WAS REGISTERED AND THE ASSESSEE HAS RECEIVED ADVANCE. THE ASSESSEE CLAIMS THAT THE TRANSFER OF THE FLATS HAS NOT TAKEN PLACE DURING THE YEAR AS THE ASSESSEE HAS NOT GIVEN THE POSSESSION DURING THE YEAR IN COMPLIANCE OF THE AGREEMENT AND THE AGREEMENT WAS SUBSEQUENTLY CANCELLED AND THE ASSESSEE REFUNDED THE WHOLE OF THE AD VANCE WHATEVER THE ASSESSEE RECEIVED. ACCORDING TO THE ASSESSEE, THE TRANSFER HAS TAKEN PLACE IN THE ASSESSMENT YEAR 2011 - 12 WHEN THE ASSESSEE HAS SOLD ALL THESE FLATS TO SOME OTHER PARTY FROM WHOM THE ASSESSEE HAS RECEIVED THE SALE CONSIDERATION. THE AS SESSEE HAS SHOWN THE CAPITAL GAINS DURING THAT YEAR. 5.3.1 WE HAVE GONE THROUGH THE AGREEMENT FOR SALE DT. 18 .3.2008 ( COPY OF WHICH IS FILED AND AVAILABLE AT PAGE 95 TO 186 OF THE PAPER BOOK ) . AS PER THE AGREEMENT, WE NOTED THAT THE ASSESSEE HAS AGREED TO SELL TO M/S. AUDI CONSTRUCTION PVT. LTD. ALL THE FLATS IN BLOCK - F IN THE HOUSING PROJECT CABO AT 8 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) LANDSCAPE TOWN - PHASE II HAVING TOTAL SUPER BUILT - UP AREA OF 265 7 .95 SQ. MTR. + TOTAL TERRACE AREA OF 253.52 SQ. MTR. FOR A CONSIDERATION OF RS.15,17,66,6 95/ - . THESE FLATS ARE YET TO BE CONSTRUCTED BY THE BUILDER AND FOR WHICH THE BUILDER I.E. THE CONFIRMING PARTY , AGREED TO CONSTRUCT THESE FLATS AS PER THE SPECIFICATION DETAILED IN SCHEDULE IV. THE ASSESSEE ALSO AGREED TO CONVEY THE SAID FLATS WITHIN 8 MONTHS FROM THE DATE OF EXECUTION OF THE AGREEMENT FOR SALE . THE PURCHASER HAS PAID A SUM OF RS.15.15 CRORE TO THE ASSESSEE VIDE CHEQUE NO. 862308 DT. 12.3.2008 DRAWN ON HDFC BANK IN ADVANCE AND THE BALANCE C ONSIDERATION WHICH WAS AGREED AMOUNTING TO RS. 2,66,695/ - WAS TO BE PAID WITHIN 30 DAYS FROM THE DATE OF EXECUTION OF THE AGREEMENT FOR SALE AND IN CONSIDERATION OF THIS, THE BUILDER , IN VIEW OF THE AGREEMENT BETWEEN THE ASSESSEE AND THE PURCHASER , AGREED T O CONSTRUCT THE SAID FLATS AS PER THE AGREEMENT BETWEEN THE ASSESSEE AND THE BUILDER DT. 5.10.2002. THE PURCHASER WAS ALSO ENTITLED, IF HE SO DESIRED, TO MAKE ANY CHANGES, ALTERATION IN THE PLAN OR ADDITION TO THE SPECIFICATION DETAILED IN SCHEDULE IV BUT FOR WHICH HE HAS TO REQUEST IN WRITING AND FOR THE EXTRA WORK, HE HAS TO BEAR THE COST. THE SAID FLATS WERE TO BE DELIVERED ALONGWITH PARKING LOTS ALLOTTED AGAINST THE SAID FLATS FOR THE USE AND POSSESSION OF THE PURCHASER WITHIN 8 MONTHS FROM THE DATE O F THE AGREEMENT PROVIDED ALL THE AMOUNTS TOWARDS THE EXTRA COST, IF ANY, AND THE AMOUNTS SPECIFIED IN CLAUSE 18(A), 18(B), 18(C) AND 18(D) ARE RECEIVED BY THE BUILDER FROM THE PURCHASER BEFORE HANDING OVER POSSESSION OF THE SAID FLATS TO THE PURCHASER. FO R IMPLEMENTATION OF THE EXTRA WORK REQUESTED BY THE PURCHASER AND FOR UNFORESEEN CIRCUMSTANCES BEYOND THE CONTROL OF THE BUILDER, THE PERIOD OF HANDING OVER POSSESSION SHALL BE DEEMED TO HAVE BEEN EXTENDED BY 6 MONTHS. IN VIEW OF THIS CLAUSE IN THE AGREEM ENT, WE NOTED THAT THE POSSESSION OF THE FLATS HAS NOT BEEN DELIVERED BY THE ASSESSEE TO M/S. AUDI CONSTRUCTION PVT. LTD. AT THE TIME OF EXECUTION OF THE AGREEMENT AND THE RECEIPT OF THE ADVANCE . THE POSSESSION HAS TO BE DELIVERED WITHIN 8 MONTHS FROM THE DATE OF THE AGREEMENT. THE PURCHASER WAS ALSO BOUND TO MAKE THE PAYMENT BEYOND THE CONSIDERATION, 9 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) AN AMOUNT OF RS. 90,000/ - AGAINST EACH FLAT AND RS. 1.50 LACS AGAINST THE PENTHOUSE AS HIS CONTRIBUTION TOWARDS THE MAINTENANCE CHARGES/FEES FOR A PERIOD OF 10 YEARS. AN AMOUNT OF RS. 20,000/ - WAS ALSO TO BE DEPOSITED AGAINST EACH FLAT IN ADVANCE AS CONTRIBUTION TOWARDS THE ELECTRIC AND WATER CONSUMPTION BILLS , CHARGES OF COMMON AREAS SUCH AS STAIRCASE, LIFT, GARDEN, PARKING AREA ETC., REPLACEMENT OF ITEMS, COST TOWARDS REPAIR OF EQUIPMENT. WE NOTED THAT SUBSEQUENTLY A DEED OF CANCELLATION DT. 26.7.2010 WAS EXECUTED BETWEEN THE ASSESSEE AND M/S. AUDI CONSTRUCTION PVT. LTD. FOR WHICH M/S. LANDSCAPE DEVELOPER WAS MADE TO BE THE CONFIRMING PARTY. BY THIS AGREE MENT, BOTH THE PARTIES AGREED TO CANCEL THE AGREEMENT DT. 18.3.2008 AND AS PER CLAUSE 2 OF THIS AGREEMENT, THE ASSESSEE REFUNDED A SUM OF RS. 15,17,66,695/ - VIDE CHEQUE NO. 057521 DT. 26.7.2010 DRAWN ON BANK OF INDIA TO M/S. AUDI CONSTRUCTION PVT. LTD. SU BSEQUENTLY, A DEED OF SALE WAS EXECUTED ON 30.7.2010 AND THE SAME VERY FLATS WERE SOLD BY THE ASSESSEE TO M/S. SALGAONKAR MINING INDUSTRIES PVT. LTD. IN RESPECT OF EACH FLAT, SEPARATE SALE DEEDS WERE EXECUTED AND REGISTERED. COPIES OF TWO OF THE SALE DEE DS WERE FILED BEFORE US. WE ALSO NOTED THAT THE STATEMENT OF THE ASSESSEE U/S 131 AFTER THE SEARCH RECORDED IN THE OFFICE OF THE DDIT (INV . ) ON 25.3.2010 AND QUESTION WAS ASKED IN RESPECT OF CHARGEABILITY TO TAX THE SAID TRANSACTION IN THE IMPUGNED ASSESSMENT. THOSE QUESTIONS AND ANSWERS ARE REPRODUCED AS UNDER : Q. NO. 12 I AM SHOWING YOU PAGE NO. 7 TO 84 OF ANNEXURE A/EB/8 DATED 2 5 . 02.2 0 10 WHICH IS A COPY OF THE REGISTERED AGREEMENT OF SALE DATED 27 . 03.2008 WITH M/S AUDI CONSTRUCTION COMPANY PVT. LTD. FOR THE SALES OF 18 FLATS (WITH SUPER BUILDUP AREA 2658 SQ. METERS AND TERRACE AREA 253 SQ. METERS ALONG WITH 18 CAR PARKING SLOTS) IN BLOC K F OF PROJECT CABO FOR CONSIDERATION AMOUNT RS. 15,17,65,695/ - . PLEASE EXPLAIN WHETHER ABOVE AMOUNT WAS RECEIVED BY YOU. ANS. YES I HAVE RECEIVED THE SAID AMOUNT. THE SAME IS BEING REFLECTED IN MY ACCOUNTS AS ADVANCE RECEIVED FROM M/S AUDI CONSTRUCTION COMPANY PVT. LTD. 10 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) Q. NO. 1 3 DO YOU AND MRS. SADIA SHEIKH HAVE ANY RIGHT IN THE SAID BUILT UP AREA OF 2658 SQ.MTRS (18 FLATS) IN THE F BLOCK OF THE PROJECT CABO, AFTER THE AGREEMENTS WITH M/S AUDI CONSTRUCTION COMPANY PVT. LTD.? ANS . WE STILL HAVE RIGHTS TILL POSSESSION AND CONVEYANCE IS EXECUTED BY US. Q. NO. 1 4 ACCORDING CLAUSE 7 OF THE ABOVE REGISTERED AGREEMENT OF SALE, IT IS RESPONSIBILITY OF BUILDER I.E. M/S. LANDSCAPE DEVELOPERS TO DELIVER THE POSSESSION OF THE ABOVE FLATS. E XPLAIN WHY THE PROFITS IN TRANSACTION WITH M/S. AUDI CONSTRUCTION COMPANY PVT. LTD. SHOULD NOT BE BROUGHT TO TAX IN THE YEAR OF ASSIGNMENT OF YOUR RIGHTS IN BUILT UP AREA I.E., IN AY 2008 - 09. ANS. BUILDER IS ONLY A CONFIRMING PARTY TO THE AGREEMENT AND TH E RESPONSIBILITY OF THE DELIVERY WILL ALWAYS RESTS WITH US. PLEASE REFER CLAUSE 9(A) AND 9(B) OF PAGE 50 AND 51 OF THE AGREEMENT WHICH PROVIDE FOR REFUND IN THE EVENT OF THE POSSESSION IS NOT BEING HANDED OVER WITH INTEREST AT 8%. THEREFORE, TILL OUR OBL IGATION ARE DISCHARGED BY MEANS OF EXECUTION OF SALE DEED AND POSSESSION THEY CANNOT BE RECOGNIZED AS INCOME. 5.3.2 WE NOTED THAT THE ASSESSEE HAS DULY SHOWN THE AMOUNT RECEIVED AS ADVANCE UNDER THE AGREEMENT FOR S A L E DT. 18 .3.2008 RECEIVED FROM M/S. AUDI CONSTRUCTION PVT. LTD. IN HIS REGULAR BOOKS OF ACCOUNTS. IT IS NOT A CASE WHERE ONE CAN SAY THAT THE TRANSACTION ENTERED INTO BY THE ASSESSEE WAS NOT SHOWN OR THE ASSESSEE WANTED TO CONCEAL THE SAME. UNDER THESE FACTS, THE QUESTI ON ARISES WHETHER ANY TRANSFER HAS TAKEN PLACE DURING THE YEAR UNDER CONSIDERATION OR NOT. SEC. 2(47) DEFINES TRANSFER. FOR READY REFERENCE, THIS SECTION IS REPRODUCED BELOW : 2 ( 47 ) - [ 'TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDES, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK - IN - TRADE OF A B USINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ;] [OR] [( IVA )THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; OR] [( V ) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) ; OR 11 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) ( VI ) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO - OPERATIVE SOCIETY, COMPANY OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. [ EXPLANATION 1 ]. FOR THE PURPOSES OF SUB - CLAUSES ( V ) AND ( VI ), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE ( D ) OF SECTION 269UA.] [ EXPLANATION 2. FOR THE REMOVAL OF DOUBTS, IT IS HEREBY CLARIFIED THAT 'TRANSFER' INCLUDES AND SHALL BE DEEMED TO HAVE ALWAYS INCLUDED DISPOSING OF OR PARTING WITH AN ASSET OR ANY I NTEREST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTARILY OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR OUTSIDE INDIA) OR OTHERWISE, NOTWIT HSTANDING THAT SUCH TRANSFER OF RIGHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON OR FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTERED OR INCORPORATED OUTSIDE INDIA; FROM THE PERUSAL OF THE SAID SECTION WE ARE OF THE V IEW THAT WHEN THE AGREEMENT TO SELL HAS BEEN EXECUTED, SINCE THE FLATS ARE YET TO BE CONSTRUCTED, THEREFORE, IT CANNOT BE SAID THAT THERE IS SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET. FROM THE AGREEMENT IT IS APPARENT THAT THE ASSESSEE HAS NOT EXTINGU ISHED HIS RIGHT BUT HAS TO DISCHARGE HIS OBLIGATION UNDER THE AGREEMENT TO SELL. THEREFORE, THE SUB - CLAUSE (I) TO SEC. 2( 4 7) WAS NOT CLEARLY APPLICABLE DURING THE IMPUGNED YEAR SO THAT IT CAN BE SAID THAT THE TRANSFER HAS TAKEN PLACE DURING THE YEAR. WE HAVE ALSO GONE THROUGH THE PROVISIONS OF SUB - CLAUSE (V) OF SEC. 2(47). FOR THE APPLICABILITY OF CLAUSE (V) OF SEC. 2(47), IN OUR OPINION, POSSESSION IS THE ESSENTIAL ELEMENT TO BE CONSIDERED. IT IS NOT ESSENTIAL THAT THE ENTIRE SALE CONSIDERATION UPTO THE LAST INSTALMENT SHOULD BE RECEIVED BY THE OWNER. SEC. 53A OF THE TRANSFER OF PROPERTY ACT READS AS UNDER : 53A. PART PERFORMANCE WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEH ALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMANCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY PART THEREOF, OR THE TRANSFEREE, BEING ALR EADY IN POSSESSION, CONTINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, 12 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) AND THE TRANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE THERE IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT BEEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR THE TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UNDER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE AND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROPERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION, OTHER THAN A RIGHT EXPRESSLY PROVIDED BY TH E TERMS OF THE CONTRACT: P ROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF THE CONTRACT OR OF THE PART PERFORMANCE THEREOF. FROM THE PERUSAL OF THE SAID SECTION IT IS APPARENT THAT SEC. 53A CAN BE APPLIED ONLY IF FOLLOWING CONDITIONS ARE FULFILLED : A) THE CONTRACT SHOULD HAVE BEEN IN WRITING, SIGNED BY THE TRANSFEROR B) THE TRANSFEREE SHOULD HAVE GOT POSSESSION OF THE PROPERTY COVE RED BY THE CONTRACT. C) THE TRANSFER EE SHOULD HAVE DONE SOME ACT IN FURTHERANCE OF THE CONTRACT. D) THE TRANSFEREE HAS EITHER PERFORMED HIS PART OF THE CONTRACT OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT. IT IS AN UNDISPUTED FACT IN THIS CASE THAT THE AS SESSEE HAS NOT DELIVERED THE POSSESSION OF THE FLATS TO M/S. AUDI CONSTRUCTION PVT. LTD. EVEN THOUGH THE ASSESSEE HAS RECEIVED THE ADVANCE AND HAS EXECUTED THE AGREEMENT TO SELL. SINCE THE POSSESSION HAS NOT BEEN DELIVERED, THE PROVISIONS OF SEC. 53A OF T RANSFER OF PROPERTY ACT , IN OUR OPINION, WILL NOT APPLY AND THEREBY CLAUSE NO. (V) OF SEC. 2(47) WILL NOT APPLY DURING THE IMPUGNED YEAR. MERE EXECUTION OF THE AGREEMENT BY THE ASSESSEE WHEN THE POSSESSION HAS NOT BEEN DELIVERED, IN OUR OPINION, CANNOT BE SAID THAT THE TRANSFER IN RELATION TO THE 18 FLATS HAS TAKEN PLACE. SINCE NO TRANSFER HAS TAKEN PLACE WITHIN THE PROVISIONS OF SEC. 2(47) OF THE INCOME TAX ACT, THEREFORE, IN OUR OPINION, THE CAPITAL GAINS CANNOT BE CHARGED TO TAX ON THE SALE OF THE 18 F LATS DURING THE IMPUGNED ASSESSMENT YEAR. 13 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) WE, THEREFORE, DELETE THE ADDITION MADE BY THE AO IN RESPECT OF THE CAPITAL GAIN AMOUNTING TO RS.14,05,63,839/ - IN THE HANDS OF BOTH THE ASSESSEES (50% IN EACH CASE). THUS, GROUND NOS. 2 AND 3 ARE ALLOWED. 6. GROUND NO. 1 IT WAS POINTED OUT IS GENERAL AND RELATES TO THE TOTAL ADDITION MADE BY THE AO WHICH HAS SEPARATELY BEEN TAKEN BY THE ASSESSEE IN GROUND NOS. 2, 3, 4, 5 AND 8 AND THEREFORE THIS GROUND DOES NOT REQUIRE ANY ADJUDICATION. 7. GROUND NOS. 4 AND 5 SINCE NOT PRESSED, THEREFORE, DISMISSED AS NOT PRESSED. 8. GROUND NOS. 6 AND 7 RELATE TO THE COMMON ISSUE RELATING TO ENHANCEMENT MADE BY CIT(A) AMOUNTING TO RS.1,73,66,723/ - FOR CASTLE ROCK PROJECT AND RS.17.1 CRORE FOR CABO PROJECT INCREASING THE SALE CONSIDERATION. THE BRIEF FACTS RELATING TO THIS GROUND ARE THAT THE ASSESSEE DECLARED LONG TERM CAPITAL GAINS ARISING FROM SALE OF LAND TO M/S. LANDSCAPE DEVELOPERS PVT. LTD. AS PER AGREEMENT DT. 5.10.2002. AS THE AGREEMENT COULD BE COMPLETED IN A.Y 2008 - 09, THE INCOME HAS BEEN RETURNED DURING THAT YEAR. THE AO TAXED THIS CAPITAL GAIN IN A.Y 2003 - 04 WHEN THE AGREEMENT FOR S ALE WAS ENTERED INTO. ITAT PANAJI BENCH IN THEIR ORDER DT. 6.1.2013 IN ITA NO. 76 & 77/PNJ/2012 FOR A.Y. 2003 - 04 IN THE CASE OF THE ASSESSEE HELD THAT CAPITAL GAINS IS ASSESSABLE ONLY IN A.Y. 2008 - 09 IN WHICH THE ASSESSEE HAS DECLARED THE CAPITAL GAINS. THE AO ACCORDINGLY ASSESSED IT DURING THE YEAR. CIT(A) WAS OF THE VIEW THAT THE INCOME HAS NOT BEEN CORRECTLY DECLARED BY THE ASSESS EE. HE NOTED THAT IN DETERMINING THE COST OF ACQUISITION, THE ASSESSEE MADE THE FOLLOWING ADDITIONS TO THE COST OF THE LAND. I) COMMISSION PAYMENT OF RS. 16 LACS AS PER COMMISSION AGREEMENT. 14 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) II) COMMISSION PAYMENT TO MR. TAHIR ISANI AMOUNTING TO RS.3,64,462/ - F OR CASTLE PROJECT AND RS. 11,54,319/ - FOR CABO PROJECT FOR WHICH NO COMMISSION AGREEMENT IS AVAILABLE. CIT(A) WAS ALSO OF THE VIEW THAT THE ASSESSEE HAS NOT CORRECTLY DECLARED THE VALUE IN RESPECT OF THE SALE CONSIDERATION FOR THE LAND TRANSFERRED. HE NO TED THAT THE ASSESSEE HAS DECLARED THE INCOME ON THE SALE OF CASTLE ROCK LAND AND CABO LAND AS UNDER : 'SADIQ SHAUKAT ALI SHAIKH ANNEXURES PAN : AMFPS2073J A.Y. 2008 - 09 SRL NO PARTICULARS QUAN - TITY SALE - DATE COST - DATE SALE - VALUE COST - VALUE INDEX - COST INDEX INDEX GAIN BOOK - GAIN 1. CASTLE ROCK LAND 21/06/2007 01/04/2001 7672,200 2847,872 3683,515 551/426 3988,685 4824,328 2. CABO LAND 21/06/2007 01/04/2001 25240,000 1266,292 1637,857 551/426 23602,143 23973,708 32912,200 4114,164 27590,828 28798,036 1 CASTLE ROCK LAND 39,88,685 LESS : - EXPENSES INCURRED COMM ON SALE AGRE TO ROBERT VAGES 1600,000 DATED 10/9/2008 PRORATA BROKERAGE & COMM TO TAHIR FROM 364,462 RS.9191000 DEDN U/S 5A OF IT ACT 1961 SHARE OF 1012,112 SADIA SHEIKH 2976,574 NET CAPITAL GAINS 10,12,11 2 CABO LAND 236,02,143 LESS : - EXPENSES INCURRED PRORATA BROKERAGE & COMM TO TAHIR FROM 1154,319 RS.9191000 DEDN U/S 5A OF IT ACT 1961 SHARE OF 11223,912 SADIA SHEIKH 12378,231 NET CAPITAL GAINS 112,23,912 TOTAL NET CAPITAL GAINS 122,36,023 15 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) CIT(A) NOTED THAT AS PER THE AGREEMENT OF S A L E , SALE CONSIDERATION FOR CASTLE ROCK IS RS. 40 LACS + VALUE OF 6 COMPLETED FLATS VALUED AT RS. 36,72,200/ - AND IN RESPECT OF CABO PROJECT , 42 FLATS VALUED AT RS. 2,52,40,000/ - . CIT(A) WAS OF THE OPINION THAT THE ASSESSEE HAS NOT SHOWN THE VALUE OF THE FLATS TO BE RECEIVED BY THE ASSESSEE FOR THE TRANSFER OF THE LAND CORRECTLY IN THE AGREEMENT AND THE VALUE OF THESE CONSTRUCTED FLATS HAS TO BE TAKEN TO BE THE MARKET VALUE AS MAY BE PREVAILING DURING THE A.Y 2008 - 09. CIT(A), ACCORDINGLY, ASKED THE ASSESSEE TO PREPARE THE DETAILS OF THE VALUE OF CO NSTRUCTED FLATS RECEIVED/RECEIVABLE BY HIM WHICH ACCORDING TO HIM WERE TAXABLE IN THE IMPUGNED ASSESSMENT YEAR AND ACCORDINGLY, HE PROPOSED ENHANCEMENT AND ACCORDINGLY ISSUED NOTICE TO THE ASSESSEE. THE CIT(A) NOTED THAT OUT OF THESE 42 FLATS, THE ASSESSE E ENTERED INTO AGREEMENT FOR 18 FLATS WITH M/S. AUDI CONSTRUCTION PVT. LTD. FOR A SUM OF RS. 15.17 CRORES VIDE AGREEMENT DT. 18.3.2008 AND THE SUPER BUILT - UP AREA OF THESE 18 FLATS WAS 2658 SQ. MTRS. THEREFORE, THE CIT(A) TOOK IT TO BE THE MARKET VALUE OF THE FLATS DURING A.Y 2008 - 09. ANOTHER ISSUE WHICH CIT(A) WANTED TO DECIDE IS WHETHER THE ASSESSEE IS TO BE TAXED IN RESPECT OF 42 FLATS RECEIVABLE BY HIM AS PER THE AGREEMENT DT. 5.10.2002 OR IN RESPECT OF 31 FLATS ( 11 FLATS CLAIMED BY THE ASSESSEE TO HA VE BEEN SURRENDERED TO SHRI ATANASIO MONSERRATE AS PER AGREEMENT DT. 18.3.2008) OR IN RESPECT OF ONLY 22 FLATS (9 FLATS HAVING BEEN CLAIMED TO BE SURRENDERED TO THE BUILDER, M/S. LANDSCAPE DEVELOPERS) VIDE AGREEMENT DT. 26.3.2010 (I.E. SUBSEQUENT TO THE SE ARCH AND ASSESSMENT YEAR IN QUESTION). CIT(A) REFERRED TO HIS ORDER FOR A.Y. 2009 - 10 AND TOOK THE VIEW THAT THE SURRENDER OF THESE FLATS IS SHAM AND ACCORDINGLY, TOOK THE VIEW THAT THE ENTIRE SALE CONSIDERATION IN RESPECT OF 9 FLATS TO BE INCLUDED IN THE INCOME OF THE ASSESSEE. THE CIT(A) ALSO OBSERVED THAT THE ASSESSEE HIMSELF HAS ACCEPTED THAT THE CAPITAL GAINS IN RESPECT OF THE LAND SURRENDERED IN TERMS OF COMPLETE SET OF 42 FLATS ACCRUED TO HIM IN THE COMPUTATION SHEET WHERE THE ASSESSEE HAS TAKEN THE ENTIRE VALUE OF RS. 2,52,40,000/ - FOR THE 42 FLATS WHICH WAS NOT CORRECT VALUE AS PER CIT(A) AND CIT(A) TOOK THE VIEW THAT THE ASSESSEE WAS ENTITLED FOR 16 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) 42 FLATS AS THE ASSESSEE HAS ENTERED INTO AGREEMENT WITH M/S. AUDI CONSTRUCTION PVT. LTD. DT. 18.3.200 8. FOR SALE OF 18 FLATS, THE RATE FOR SUPER BUILT - UP AREA AS PER CIT(A) AS PER THE SALE AGREEMENT WORKED OUT TO RS.2,657.98/SQ. MTR. THEREFORE, HE WORKED OUT THE VALUE FOR THE 42 FLATS MEASURING 5988.58 SQ. MTR. AT RS. 34.19 CRORES (RS. 2657.95 X 5988.58 ). THIS CONSIDERATION HE DIVIDED INTO TWO PARTS AS THE ASSESSEE HAD TRANSFERRED ONLY HALF PART OF THE LAND AND THEREFORE HE WORKED OUT THE SALE CONSIDERATION IN RESPECT OF THE HALF SHARE OF THE LAND AT RS. 17.1 CRORES. FOR THE CASTLE ROCK PROJECT, SIMILA R CALCULATION WAS MADE. CIT(A) NOTED FROM THE SALE DEED THAT FROM JULY TO SEPTEMBER, 2008, 4 FLATS WERE SOLD FOR RS. 2,49,38,000/ - MEASURING 716.98 SQ. MTRS. CIT(A), THEREFORE, WORKED OUT THE VALUE OF 6 FLATS OF 854 SQ.MTRS. AT RS.2,97,03,829/ - AND DIVIDED IT BY TWO AND TOOK THE VALUE OF THE HALF PORTION OF THE LAND AT RS.1,33,66,723/ - . SINCE THE ASSESSEE HAS RECEIVED RS. 40 LACS IN CASH, CIT(A) REPLACED RS. 1,33,66,723/ - IN PLACE OF RS.36,72,200/ - AND TOOK THE VIEW THAT THE SA LE CONSIDERATION SHOULD BE TAKEN AT RS. 1,73,66,723/ - . 8.1 THE ASSESSEE CAME IN APPEAL BEFORE US AGAINST THE ENHANCEMENT OF THE SALE CONSIDERATION IN RESPECT OF THESE FLATS. THE LD. AR DREW OUR ATTENTION TOWARDS THE AGREEMENT DT. 5.10.2002 , COPY OF WHICH IS AVAILABLE ON RECORD AND STATED THAT FROM THE AGREEMENT IN RESPECT OF CASTLE ROCK PROJECT IT IS APPARENT THAT THE ASSESSEE HAS TO RECEIVE RS. 40 LACS IN CASH + 6 COMPLETED FLATS VALUED AT RS.36,72,200/ - . IT WAS CONTENDED THAT OUT OF THE 6 FLATS, 4 FLAT S WERE GIVEN TO SHRI TAHIR ISANI AS BROKERAGE. SHRI TAHIR ISANI HAS FILED CONFIRMATION AND ALREADY DECLARED THE INCOME BASED ON THE METHOD OF ACCOUNTING AND PAID TAX. OUR ATTENTION WAS ALSO DRAWN TOWARDS THE DECISION OF THE TRIBUNAL FOR A.Y. 2004 - 05 IN T HE CASE OF THE ASSESSEE WHERE WE NOTED THAT THE TRIBUNAL HAS ACCEPTED THIS FACT OF GIVING 4 FLATS TO SHRI TAHIR ISANI AS BROKERAGE. IT WAS CONTENDED THAT THERE IS NO BASIS OF RE - VALUING THE SALE CONSIDERATION WHICH HAS ACTUALLY BEEN RECEIVED BY THE ASSESS EE. SIMILARLY, IN RESPECT OF CABO PROJECT, IT 17 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) WAS CONTENDED THAT AS PER THE AGREEMENT DT. 5.10.2002 THE CONSIDERATION FOR LAND IN CABO PROJECT IS ONLY RS. 2,52,40,000/ - IN THE FORM OF 42 FLATS. HOWEVER, VIDE AGREEMENT DTD. 15.3.2008, 11 FLATS WERE SURREN DERED TO SHRI ATANASIO MONSERRATE AND VIDE AGREEMENT DT. 26.3.2010, 9 FLATS WERE SURRENDERED TO M/S. LANDSCAPE DEVELOPERS. THUS, THE ASSESSEE ACTUALLY RECEIVED ONLY 22 FLATS. SHRI ATANASIO MONSERRATE ALSO ACCOUNTED INCOME IN RESPECT OF 11 FLATS AND THE S AME IS NOT TAXABLE IN THE HANDS OF THE ASSESSEE. THIS STAND OF THE ASSESSEE IS ACCEPTED BY THE TRIBUNAL IN ITS ORDER FOR THE A.Y 2005 - 06 IN THE CASE OF THE ASSESSEE. M/S. LANDSCAPE DEVELOPERS HAVE ALSO OFFERED INCOME IN RESPECT OF 9 FLATS IN THE A.Y. 200 9 - 10. SAME IS BEING TAXED IN THE HANDS OF THE ASSESSEE RESULTING IN DOUBLE TAXATION. THE ASSESSEE ACTUALLY RECEIVED ONLY 22 FLATS. HOWEVER, CIT(A) BY ADOPTING MARKET VALUE OF 42 FLATS WORKED OUT THE CAPITAL GAINS OF RS.17.1 CRORES. IT WAS VEHEMENTLY CO NTENDED THAT THE CAPITAL GAINS HAS TO BE COMPUTED WITH REFERENCE TO THE SALE CONSIDERATION REFERRED TO IN THE AGREEMENT TO SELL. OUR ATTENTION WAS DRAWN TOWARDS CLAUSE PG. 7 & 8 IN RESPECT OF THE AGREEMENT FOR CABO PROJECT AND PG. 7 & 8 OF THE AGREEMENT F OR CASTLE ROCK PROJECT. IT WAS POINTED OUT THAT IN THE AGREEMENT FOR THE TRANSFER OF THE LAND, TOTAL CONSIDERATION HAS BEEN CLEARLY MENTIONED AT RS. 2,52,40,000/ - AS WELL AS RS.76,72,200/ - . IT IS ONLY THE MODE OF THE PAYMENT OF THE CONSIDERATION WHICH IS SPECIFIED TO BE PAID PARTIALLY BY WAY OF FLATS. THE CAPITAL GAINS HAS BEEN COMPUTED U/S 48 . THIS SECTION DOES NOT TALK OF SUBSTITUTION OF THE MARKET VALUE. IT IS NOT A CASE WHETHER THE AO OR CIT(A) HAS APPLIED THE PROVISIONS OF SEC. 50C OF THE INCOME T AX ACT. IN THIS REGARD, RELIANCE WAS PLACED ON THE DECISION OF ELDECO INFRASTRUCTURE & PROPERTIES LTD. VS. CIT, 23 TAXMANN.COM 17 (DEL), CIT VS. SMT. NILOFER I SINGH, 309 ITR 233 (DEL), ITO VS. CHANDRAKANT R. PATEL, 11 TAXMANN.COM 180 (AHD) AND DEV KUMAR JAIN VS. ITO, 180 TAXMANN.COM 110 (DEL). IT WAS FURTHER CONTENDED THAT IF THE SALE CONSIDERATION WILL BE INCREASED , CORRESPONDINGLY WHILE COMPUTING THE CAPITAL GAINS DURING 18 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) A.Y 2011 - 12 THE COST OF ACQUISITION WILL ALSO BE INCREASED IN THE HANDS OF THE ASS ESSEE AND ULTIMATELY THERE WILL BE NO IMPACT ON THE REVENUE. 8.2 THE LD. DR, ON THE OTHER HAND, RELIED ON THE ORDER OF CIT(A). 8.3 WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL ON RECORD. WE HAVE ALSO GONE THROUGH THE VARI OUS CASE LAWS AS RELIED BY THE LD. AR. CAPITAL GAIN IS CHARGEABLE TO TAX U/S 45 OF THE INCOME TAX ACT. HOW THE CAPITAL GAIN IS TO BE COMPUTED HAS BEEN LAID DOWN U/S 48 OF THE INCOME TAX ACT. SEC. 48 OF THE INCOME TAX ACT LAYS DOWN AS UNDER : 48. THE INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS, NAMELY: ( I ) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; ( II ) THE COST OF ACQUISITION OF THE ASSET AND THE COST OF ANY IMPROVEMENT THERETO. THIS SECTION CLEARLY STATES THAT THE CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATIO N RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF CAPITAL ASSET, THE AMOUNTS STATED THEREIN. THERE IS NO DISPUTE IN THIS CASE WITH REGARD TO THE AMOUNTS TO BE DEDUCTED OUT OF THE CONSIDERATION RECEIVED OR ACCRUING TO THE ASSESSEE. THE ONLY DISPUTE IN THIS CASE, WE NOTED IS WITH REGARD TO THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. WE NOTED THAT THE ASSESSEE HAS ENTERED INTO TWO AGREEMENTS WITH M/S. LANDSCAPE DEVELOPERS DT. 5.10.2002 IN RESPECT OF CASTLE R OCK LAND AS WELL AS CABO LAND. IN RESPECT OF CABO LAND, WE NOTED THAT IN RESPECT OF THE SALE CONSIDERATION, THE AGREEMENT STATES AS UNDER WHEREAS THE VENDORS HERETO DO HEREBY AGREE TO SELL UNTO THE DEVELOPER/PURCHASER ALL THAT PART AND PORTION OF THE PROPERTY 19 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) ADMEASURING 16140 M 2 (HEREINAFTER REFERRED TO AS THE SAID PROPERTY) DESCRIBED IN THE SCHEDULE II HEREINUNDER AND DELINEATED IN RED IN THE PLAN ANNEXED HEREWITH AS ANNEXURE I AND WHICH IS A PART OF THE SAID WHOLE PROPERTY, ALONG WITH ALL ITS DEVELOPMENT RIGHTS FOR A CONSIDERATION OF RS. 2,52,40,000/ - (RUPEES TWO CRORES FIFTY TWO LAKHS FORTY THOUSAND ONLY) ON THE TERMS AND CONDITIONS STIPUL ATED HEREINUNDER : NOW THIS AGREEMENT WITNESSETH : - I CONSIDERATION : 1. THE VENDORS AGREED TO SELL TO THE DEVELOPER/PURCHASER FREE FROM ENCUMBRANCES AND THE DEVELOPER/PURCHASER AGREE TO PURCHASE FROM THE VENDORS THE SAID PROPERTY ADMEASURING 16140 M 2 OUT OF THE PROPERTY BEARING SURVEY NO. 235/1 WITH THE RESERVATION OF ALL THE UNDIVIDED SHARE OF LAND PROPORTIONATE TO THE SUPER BUILT UP AREA OF 5884 M 2 + 211 M 2 (TERRACE) I.E. SALEABLE AREA 5989.50 M 2 SITUATED AT TALEIGAO WITHIN THE LIMITS OF VILLAGE PANC HAYAT, TALEIGAO, FOR A TOTAL CONSIDERATION OF RS.2,52,40,000/ - (RUPEES TWO CRORES FIFTY TWO LAKHS FORTY THOUSAND ONLY) PAYABLE IN THE MANNER GIVEN BELOW. SIMILARLY, IN RESPECT OF CASTLE ROCK LAND, THE STATES THE CONSIDERATION TO BE RECEIVED BY THE ASSE SSEE AS UNDER WHEREAS THE VENDORS HERETO AS THE OWNERS IN POSSESSION OF THE PLOT NOS. 7, 10, 11, 12 (HEREINAFTER REFERRED TO AS THE SAID PLOTS) DO HEREBY AGREE TO SELL UNTO THE DEVELOPER/PURCHASER ALL THE SAID PLOTS TOTALLY ADMEASURING 5096 M 2 DESCRI BED IN SCHEDULE II HEREINUNDER AND DELINEATED IN RED IN THE PLAN ANNEXED HEREWITH AS ANNEXURE I AND WHICH IS A PART OF THE SAID WHOLE PROPERTY, ALONG WITH ALL ITS DEVELOPMENT RIGHTS FOR A CONSIDERATION OF RS.76,72,200/ - (RUPEES SEVENTY - SIX LAKHS SEVENTY - TW O THOUSAND TWO HUNDRED ONLY) ON THE TERMS AND CONDITIONS STIPULATED HEREINUNDER. NOW THIS AGREEMENT WITNESSETH THAT : I. CONSIDERATION : - 1. THE VENDORS AGREED TO SELL TO THE DEVELOPER/PURCHASER FREE FROM ENCUMBRANCES AND THE DEVELOPER/PURCHASER AGREE TO PURCHASE FROM THE VENDORS THE SAID PLOTS ADMEASURING 5096 M 2 OUT OF THE PROPERTY BEARING SURVEY NO. 235/1 WITH THE RESERVATION OF ALL THE UNDIVIDED SHARE OF LAND PROPORTIONATE TO THE SUPER BUILT UP AREA OF 854 M 2 SITUATED AT TALEIGAO WITHIN THE 20 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) LIMITS OF V ILLAGE PANCHAYAT, TALEIGAO, FOR A TOTAL CONSIDERATION OF RS.76,7 2 ,200/ - (RUPEES SEVENTY - SIX LAKHS SEVENTY - TWO THOUSAND TWO HUNDRED ONLY) PAYABLE IN THE MANNER GIVEN BELOW. FROM THESE CLAUSES, IT IS APPARENT THAT THE CONSIDERATION AGREED BETWEEN THE PARTI ES IN RESPECT OF CABO LAND AS WELL AS CASTLE ROCK LAND IS RS.2,52,40,000/ - AND RS. 76,72,200/ - . IT IS UP TO THE PARTIES TO DECIDE HOW THIS CONSIDERATION HAS TO BE RECEIVED BY THE ASSESSEE. THE ASSESSEE HAS AGREED TO RECEIVE THE CONSIDERATION PARTLY I N CASH AND PARTLY BY WAY OF FLATS. THERE REMAINS NO DOUBT FROM THE READING OF THESE CLAUSES THAT THE CONSIDERATION AGREED FOR THE SALE OF THE RESPECTIVE LAND IS RS. 2,52,40,000/ - AND RS. 76,72,200/ - . IT IS NOT THE CASE OF THE REVENUE THAT THE AGREED CONSIDERATION IS MORE THAN WHAT HAS BEEN STATED IN THE AGREEMENT TO SELL. IF THE ASSESSEE HAS RECEIVED PART OF THE CONSIDERATION IN KIND, IT DOES NOT GIVE LICENCE TO THE REVENUE TO WORK OUT THE MARKET VALU E OF THE FLATS WHICH HAS BEEN RECEIVED BY THE ASSESSEE. WE DO NOT FIND ANY PROVISION UNDER THE INCOME TAX ACT RELATING TO COMPUTATION OF INCOME FOR CAPITAL GAINS BY WHICH THE DEPARTMENT CAN SUBSTITUTE THE ACTUAL CONSIDERATION RECEIVED OR ACCRUING TO THE A SSESSEE WITH THE MARKET VALUE. I T IS NOT THE CASE OF THE REVENUE THAT THE PROVISIONS OF SEC. 50C WERE APPLICABLE IN THE CASE OF THE ASSESSEE. EARLIER, THERE WAS SEC. 52 IN THE STATUTE WHICH READ AS UNDER : ' 52(1) WHERE THE PERSON WHO ACQUIRES A CAPITAL ASSET FROM AN ASSESSEE IS DIRECTLY OR INDIRECTLY CONNECTED WITH THE ASSESSEE AND THE INCOME - TAX OFFICER HAS REASON TO BELIEVE THAT THE TRANSFER WAS EFFECTED WITH THE OBJECT OF AVOIDANCE OR REDUCTION OF THE LIABILITY OF THE ASSESSEE UNDER SECTION 45, THE FU LL VALUE OF THE CONSIDERATION FOR THE TRANSFER SHALL, WITH THE PREVIOUS APPROVAL OF THE INSPECTING ASSISTANT COMMISSIONER, BE TAKEN TO BE THE FAIR MARKET VALUE OF THE CAPITAL ASSET ON THE DATE OF THE TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SU B - SECTION (1), IF IN THE OPINION OF THE INCOME - TAX OFFICER THE FAIR MARKET VALUE OF A CAPITAL ASSET TRANSFERRED BY AN ASSESSEE AS ON THE DATE OF THE TRANSFER EXCEEDS THE FULL VALUE OF THE CONSIDERATION DECLARED BY THE ASSESSEE IN RESPECT OF THE TRANSFER OF SUCH CAPITAL ASSET BY AN AMOUNT OF NOT LESS THAN FIFTEEN PER CENT. OF THE VALUE SO DECLARED, THE FULL VALUE OF 21 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) THE CONSIDERATION FOR SUCH CAPITAL ASSET SHALL, WITH THE PREVIOUS APPROVAL OF THE INSPECTING ASSISTANT COMMISSIONER, BE TAKEN TO BE ITS FAIR MAR KET VALUE ON THE DATE OF ITS TRANSFER.' BUT THIS SECTION WAS ALSO OMITTED BY THE FINANCE ACT, 1987 W.E.F. 1.4.1988. EVEN WHILE INTERPRETING THIS SECTION, THE HON'BLE SUPREME COURT IN THE CASE OF K.P. VERGHESE VS. ITO (SC), 131 ITR 597 TOOK THE VIEW THAT DIFFERENCE BETWEEN THE MARKET VALUE AND THE CONSIDERATION DECLARED IS NOT SUFFICIENT. ASSESSEE MUST BE SHOWN TO HAVE RECEIVED MORE THAN WHAT IS DECLARED OR DISCLOSED BY HIM AS CONSIDERATION. THE HON'BLE SUPREME COURT IN THAT CASE CLEARLY HELD THAT THE B URDEN IS ON THE REVENUE AND NOT ON THE ASSESSEE TO PROVE THAT MORE THAN THE STATED CONSIDERATION HAS BEEN RECEIVED OR ACCRUED TO THE ASSESSEE. WE NOTED THAT AS ON TODAY THERE IS NO SUCH PROVISIONS AND EVEN NO OTHER PROVISION PARALLEL TO SEC. 52 HAS BEEN I NSERTED WHICH MAY GIVE POWER TO THE REVENUE TO SUBSTITUTE THE MARKET VALUE IN PLACE OF AGREED CONSIDERATION. WE ALSO NOTED FROM THE ORDER OF CIT(A) THAT CIT(A) WHILE ENHANCING THE ASSESSMENT IGNORED THE FACT THAT THE AGREEMENT IN RESPECT OF BOTH THE PROJE CTS HAS BEEN ENTERED INTO BY THE ASSESSEE AS ON 5.10.2002 AND CIT(A) TRIED TO ASCERTAIN THE MARKET VALUE IN RESPECT OF THE FLATS RECEIVED BY THE ASSESSEE AS ON 31.3.2008. THIS ALSO, IN OUR OPINION, IS TOTALLY ILLEGAL AND INVALID. WE NOTED FROM THE COMPUT ATION OF CAPITAL GAINS AS RETURNED BY THE ASSESSEE THAT THE ASSESSEE HAS SHOWN THE CONSIDERATION IN RESPECT OF EACH OF THE PROJECT AT RS. 2,52,40,000/ - AND RS. 76,72,000/ - RESPECTIVELY. SINCE THE TOTAL CONSIDERATION HAS CLEARLY BEEN MENTIONED IN EACH OF THE AGREEMENT, THE RECEIPT OF LESSER FLATS THAN WHAT HAS BEEN AGREED, IN OUR OPINION, WILL NOT AFFECT THE SALE CONSIDERATION FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. IN VIEW OF TH IS, WE ARE OF THE VIEW THAT CIT(A) HAS ILLEGALLY INVOKED HIS JURISDICTION ENHANCING THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE. IT IS ALSO NOT THE CASE OF THE REVENUE THAT THE AGREEMENTS ENTERED INTO BY THE ASSESSEE WITH M/S. LANDSCAPE DEVELOPER WERE NOT GENUINE AGREEMENTS AND WERE BOGUS. IN VIEW OF THIS FACT, WE SET ASIDE THE ORDER OF CIT(A) AND 22 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) DELETE THE ENHANCEMENT MADE BY CIT(A). THUS, GROUND NOS. 6 & 7 TAKEN BY THE ASSESSEE ARE ALLOWED. 9. GROUND NO. 8 RELATES TO SUSTENANCE OF ADDITION OF RS. 36 LACS IN RESPECT OF PAYMENT TO MR. ARMANDO GONSALVES FOR THE PURCHASE OF RIGHTS IN TITLE OF PROPERTY MOSPOTEM SITUATED AT TALEGAON . BOTH THE PARTIES AGREED THAT THIS ISSUE IS COVERED BY THE DECISION OF THIS TRIBUNAL IN THE CASE OF THE ASSESSEE IN ITA N O S . 89 , 90, 127 & 128 /PNJ/2013 IN WHICH WHILE DEALING WITH THE SAME ISSUE, THIS TRIBUNAL RESTORED THIS ISSUE TO THE FILE OF AO BY OBSERVING AS UNDER : 7. GROUND NOS. 7 AND 8 RELATE TO THE ADDITION OF RS. 30 LACS IN RESPECT OF ADVANCE PAYMENT TO ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITUATED AT TALEIGAO. THIS IS A COMMON GROUND IN BOTH THE APPEALS I.E. ITA NOS. 89 & 90/PNJ/2013. THE SHORT FACTS OF THE GROUNDS ARE AS UNDER : 7.1 DURING THE COURSE OF SEARC H AND SEIZURE, SEIZED MATERIAL ANNEXURE A/EB - 1/4 DT. 18.3.2010 CONTAINED DETAILS OF TRANSACTION BETWEEN SADIQ SHAIKH AND ARMANDO GONSALVES. SADIQ SHAIKH MADE PAYMENT OF RS. 36 LACS AND RS. 30 LACS UNDER THE ASSIGNMENT AGREEMENTS DT. 5.5.2007 AND 1.12.2006 RESPECTIVELY. DETAILS OF MODE OF ABOVE PAYMENTS ARE NOT MENTIONED IN THE SAID ASSIGNMENT DEEDS. THEREFORE, AO HAS MADE ADDITION OF RS. 30 LACS AS UNEXPLAINED INVESTMENT IN A.Y 2007 - 08. MATTER CARRIED TO CIT(A) AND CIT(A) HAS CONFIRMED THE SAME. 7.2 THE LD. AR SUBMITTED THAT PAYMENT OF RS. 30 LACS WAS MADE TO ARMANDO GONSALVES FOR PURCHASE OF RIGHTS IN TITLE OF THE PROPERTY KNOWN AS MOSPOTEM & MOROD CAUDANA SITUATED AT TALEIGAO VIDE DEED OF ASSIGNMENT DT. 1.12.2006. COPY OF THE DEED OF ASSIGNMENT IS AT PAGES 68 TO 78 OF THE PAPER BOOK. THE PAYMENT WAS MADE BY CHEQUE BY EMGEE HOUSING PVT. LTD. ON BEHALF OF THE ASSESSEE, WHO OWED MONEY TO THE ASSESSEE. THE LEDGER EXTRACT CONFIRMATION OF ARMANDO GONSALVES, PROPRIETOR OF HOME MAKERS WAS FILED. EMGEE HOUSI NG PVT. LTD. HAVE ALSO CONFIRMED THE PAYMENT. COPY OF CONFIRMATIONS BY ARMANDO GONSALVEDS AND EMGEE HOUSING PVT. LTD. ARE ON PAGE 79 AND 80 OF THE PAPER BOOK. THUS, THE TRANSACTION IS RECORDED IN BOOKS AND CONFIRMATIONS ARE AVAILABLE. SECTION 69 CAN BE APPLIED IF THE PAYMENT IS NOT ACCOUNTED WHEREAS IN THIS CASE, THE TRANSACTIONS ARE RECORDED IN THE BOOKS AND CONFIRMATION OF THE PARTIES IS AVAILABLE. THEREFORE, ADDITION IS WITHOUT ANY BASIS AND DESERVES TO BE DELETED. 23 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) 7.3 ON THE OTHER HAND, THE LD. DR RELIED UPON THE ORDER OF CIT(A). 7.4 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT DURING THE COURSE OF HEARING THE LD. AR HAS FILED THIS CONFIRMATION BEFORE US. WE FIND FROM P AGE 80 OF THE CONFIRMATION LETTER THAT THIS PAYMENT IS MADE BY CHEQUE DT. 1.9.2006. THEREFORE, WHEN ALL THE PAYMENTS ARE MADE BY CHEQUE, THERE IS NO REASON TO DIS - BELIEVE THE SAME. THEREFORE, IN THE INTEREST OF JUSTICE AND FAIR PLAY, WE RESTORE THIS ISSU E TO THE FILE OF AO TO VERIFY WHETHER THIS PAYMENT IS MADE BY CHEQUE OR NOT AND IF THE AO FINDS THAT THIS PAYMENT IS MADE BY CHEQUE NO. 118996 DT. 1.9.2006, THEN, ADDITION MAY BE DELETED AFTER VERIFYING THE SAME. THEREFORE, THIS ISSUE IN BOTH THE APPEALS IS ALLOWED FOR STATISTICAL PURPOSE. IN THE RESULT, ITA NOS. 89 & 90/PNJ/2013 ARE ALLOWED FOR STATISTICAL PURPOSE. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THIS TRIBUNAL, WE SET ASIDE THE ORDER OF CIT(A) AND DIRECT THE AO TO RE - DECIDE THIS ISSUE IN ACCORDANCE WITH OUR FINDING GIVEN IN O UR ORDER FOR A.Y 2007 - 08 UNDER PARA 7.4. 10. GROUND NO. 9 RELATES TO ENHANCEMENT MADE BY CIT(A) IN RESPECT OF COMMISSION PAID TO MR. TAHIR ISANI VALUED AT RS. 61,00,027/ - . CIT(A) NOTED THAT THE ASSESSEE HAS PAID THE COMMISSION TO MR. TAHIR ISANI AMOUNTING TO RS. 11,54,319/ - ON ACCOUNT OF CABO PROJECT AND RS.3,64,462/ - ON ACCOUNT OF CASTLE ROCK PROJECT. CIT(A) OBSERVED THAT THIS ISSUE HAS BEEN DISCUSSED BY HIM IN HIS ORDER FOR A.Y 2004 - 05 IN ITA NO. 178/D CIT,CC,PANAJI/CIT(A) - VI/BLORE/2011 - 2012 OF MR. SADIQ SHAIKH AND ITA NO. 173/DCIT,CC,PANAJI/CIT(A) - VI/BLORE/2011 - 12 IN THE CASE OF MRS. SADIA SADIQ SHAIKH. THE CIT(A) REPRODUCED THE RELEVANT PORTION AS UNDER : 'IT IS AN UNDISPUTED FACT THAT DURING THE C OURSE OF SEARCH, 4 SALE AGREEMENTS IN RESPECT OF 4 FLATS OF CASTLE ROCK PROJECT BELONGING TO THE APPELLANT WERE FOUND, WHEREIN THE SAID FLATS HAD BEEN ASSIGNED TO ONE MR TAHIR ISANI FOR A TOTAL CONSIDERATION OF ` 91,95, 000 / - , AND INCOME FROM THE SAME HAD NOT BEEN OFFERED FOR TAX. WHEN QUESTIONED, THE APPELLANT HAS STATED THAT THE TRANSACTION IS NOT OF SALE BUT PERTAINS TO A COMMISSION ARRANGEMENT FOR WHICH THE FLATS WERE GIVEN TO MR TAHIR ISANI IN LIEU OF COMMISSION PAYMENT PAYABLE TO HIM. THE APPELLANT ALSO 24 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) RELIED ON A LETTER BY MR TAHIR ISANI ADMITTING THAT 4 FLATS WERE PAYABLE AS COMMISSION BY HIM FOR THE PROPERTY AT ODXELL, GOA, OF WHICH 2 FLATS HAD BEEN RECEIVED BY HIM (TAHIR ISANI) AND OFFERED FOR TAX AS COMMISSION IN THE F.Y. 2009 - 10 (A.Y. 2010 - 11) AND THAT THE REMAINING 2 FLATS WERE YET TO BE ACCOUNTED BY HIM. IT IS FOUND, HOWEVER, THAT TOTAL NUMBER OF FLATS RECEIVABLE BY THE APPELLANT IN QUESTION IS ONLY 6 FROM THE CASTLE ROCK PROJECT. THESE ARE RECEIVABLE AS PART CO NSIDERATION IN LIEU OF LAND SURRENDERED TO M/S LANDSCAPE DEVELOPERS FOR DEVELOPMENT OF PROPERTY. INCOME FROM THIS (THOUGH ACCRUING IN 2003 - 04 AS PER ASSESSING OFFICER AND AS PER AGREEMENT DATED 05.10.2002), HAS BEEN OFFERED FOR TAX BY APPELLANT ONLY IN A. Y. 2008 - 09. IT IS TO BE NOTED THAT THE RIGHT TO RECEIVE THE COMPLETED FLATS FROM THE BUILDER IS AN ENFORCEABLE RIGHT IN THIS CASE AND ALSO A CAPITAL ASSET IN HANDS OF THE APPELLANT AND TRANSFER OF THIS RIGHT IS A TRANSFER OF CAPITAL ASSET FOR CONSIDERATION IN TERMS OF SEC 2(47) OF INCOME TAX ACT RESULTING IN CAPITAL GAIN CHARGEABLE TO TAX AT THE POINT OF TIME OF SUCH A TRANSFER. THEREFORE, TAXATION IN THE A.Y. RELEVANT TO PREVIOUS YEAR IN WHICH THE SAID RIGHT IS TRANSFERRED IS IN ORDER AND CORRECTLY TAXED BY THE ASSESSING OFFICER. IT IS HIGHLY UNBELIEVABLE THAT OUT OF 6 FLATS ARISING TO THE APPELLANT, 4 FLATS WERE DISCHARGED AS COMMISSION. THERE IS NO COMMISSION AGREEMENT. THE APPELLANT HAS SEPARATELY CLAIMED RS 16 LAKHS EXPENDITURE AS COMMISSION FOR CASTLE ROCK PROJECT IN RESPECT OF SALE OF ONE FLAT TO MR ROBERTO ALAN M VIEGAS WHICH IS BACKED BY A WRITTEN AGRE EMENT AND ALLOWED BY THE ASSESSING OFFICER. FROM THE COMPUTATION OF INCOME FILED IN A.Y. 2008 - 09 IN WHICH INCOME DERIVED FROM SALE OF LAND (LAND IN QUESTION) HAS BEEN OFFERED FOR TAX (ALTHOUGH AS PER THE ASSESSING OFFICER, THE SAME IS TAXABLE IN A. Y. 2003 - 04), IT IS CLEAR THAT COMMISSION AMOUNT HAS BEEN TAKEN AT ` 91,95, 000 / - . THE VALUE OF FLATS SO SURRENDERED BY THE APPELLANT IS ONLY 679 X 36,72,000 = 26,14, 000 / - . 854 THE PROFIT EARNED OF ` 61,00,027 / - HAS NOT BEEN ACCOUNTED. AS IS CLEAR FROM THE COMPUTATION FILED BY THE APPELLANT, OUT OF THIS 'COMMISSION PAYABLE ' TO MR TAHIR ISANI, ONLY A SMALL PART [I.E., ` 3,64,462/ - (CASTLE ROCK PROJECT) + ` 11,54,319/ - (CABO PROJECT)] HAS BEEN CLAIMED AS BEING TOW ARDS THE PROPERTY IN QUESTION ASSESSABLE IN THE HANDS OF THE APPELLANT. IT IS CLEAR THEREFORE THAT THE ASSIGNMENT OF RIGHTS TO MR TAHIR ISANI IS NOT LINKED TO ANY COMMISSION PAYABLE AGAINST INCOME CHARGEABLE TO TAX IN THE HANDS OF THE APPELLANT EXCEPT TO T HE EXTENT OF SHOWN ABOVE EVEN AS PER THE CLAIM MADE BY THE APPELLANT HIMSELF. IN SUCH A SITUATION, THIS SURRENDER OF RIGHTS IN FAVOUR OF MR TAHIR ISANI IN EXCHANGE FOR A VALUE OF ` 91,91, 000 / - IS CLEARLY A RECEIPT IN THE HANDS OF THE APPELLANT (EVEN IF HE HAS APPLIED IT TO PAY COMMISSION IN RESPECT OF SOME OTHER INCOME OR A CAPITAL ASSET OR SOME OTHER BUSINESS) AND PROFITS FROM THE SAME AFTER REDUCING COST TO THE APPELLANT IS REQUIRED TO BE B ROUGHT TO TAX AS THE APPELLANT'S INCOME. 25 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) EVEN IF THIS AMOUNT WAS PAYABLE TO MR TAHIR ISANI AS COMMISSION AS CLAIMED BY THE APPELLANT, IT IS CLEARLY FOR SOME OTHER PROPERTY OR SOME OTHER TAXABLE ENTITY AND NOT ON ACCOUNT OF THE PROPERTY SHOWN.' AS IS APPARENT, THE CLAIM OF COMMISSION IS NOT BACKED BY ANY AGREEMENT OR EVIDENCE OR PURPOSE. THE SAME IS DISALLOWED AND INCOME IS ENHANCED TO THIS EXTENT. DURING THE A.Y 200 8 - 09 , THE CIT(A) ON THE BASIS OF FINDING GIVEN IN A.Y 2004 - 05 ADDED A SUM OF RS.61,00,027/ - IN THE INCOME OF THE ASSESSEE BY ENHANCING THE INCOME OF THE ASSESSEE. BOTH THE PARTIES AGREED BEFORE US THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL FOR A.Y 2004 - 05 AND THIS TRIBUNAL ACCEPTED THE COMMISSION BEING PAID T O MR. TAHIR ISANI. 10.1 WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY CONSIDERED THE SAME. WE NOTED THAT THIS ISSUE IS DULY COVERED BY THE DECISION OF THIS TRIBUNAL IN ITA NO. 87 & 88/PNJ/2013 DT. 31.7.2013 IN WHICH THIS TRIBUNAL HAS DULY ACCEPTED THE COMMISSION BEING PAID BY THE ASSESSEE TO MR. TAHIR ISANI AND THIS TRIBUNAL REVERSED THE ORDER OF CIT(A) BY OBSERVING AS UNDER : 3.3 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES. LOOKING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE FIND THAT THERE WAS SALE AGREEMENT WITH MR. TAHIR ISANI WHICH WAS FOUND IN THE COURSE OF SEARCH PROCEEDINGS. IT WAS CLARIFIED DURING THE STATEMENT RECORDED ON OATH THAT THIS AGREEMENTS WERE ACCRUING TO MR. TAHIR ISANI AS COMMISSION FOR SERVICES RENDERED BY HIM . THERE WAS CONSEQUENTIAL SURVEY PROCEEDINGS ON MR. TAHIR ISANI DURING THE SAME TIME AND MR. TAHIR ISANI ALSO GAVE STATEMENT ON OATH THAT SUBJECT MATTER OF THESE FLATS WERE COMMISSION INCOME. WE FIND THAT DURING THE COURSE OF ASSESSMENT CONFIRMATION FROM MR. TAHIR ISANI REGARDING ASSESSABILITY OF 4 FLATS WERE GIVEN. MR. TAHIR ISANI IN HIS RETURN OF INCOME HAS ALREADY SHOWN THESE TWO FLATS AS COMMISSION INCOME AND BALANCE FLATS WOULD BE RECOGNISED AS COMMISSION INCOME ON RECEIPT OF POSSESSION LETTER. THE REFORE, WE ARE OF THE VIEW THAT THE ASSESSEE HAS ALREADY GIVEN 4 FLATS AS COMMISSION, THEREFORE, IT CANNOT BE ADDED IN THE HANDS OF THE ASSESSEE. THER EFORE, WE DELETE THE ADDITION. 26 ITA NOS. 232 & 233/PNJ/2013 (ASST. YEAR : 2008 - 09) RESPECTFULLY FOLLOWING THE DECISION OF THIS TRIBUNAL, WE SET ASIDE THE O RDER OF CIT(A) AND DELETE THE ADDITION MADE BY CIT(A). THUS, THIS GROUND STANDS ALLOWED. 11. IN THE RESULT, BOTH THE APPEALS FILED BY ASSESSEES ARE PARTLY ALLOWED. 12. ORDER PRONOUNCED IN THE OPEN COURT ON 2 7 /09/2013. S D / - (D.T.GARASIA) JUDICIAL MEMBER S D / - (P.K. BANSAL) ACCOUNTANT MEMBER PLACE : PANAJI / GOA DATED : 2 7 /09/ 2013 *SSL* COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT, PANAJI (4) CIT(A), PANAJI (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER SR. P RIVATE S ECRETARY ITAT, PANAJI, GOA