V.S. Chandra Shekar, V. ACIT,

ITA 243/BANG/2014

• Counselvise Citation: 24321114 RSA 2014
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 17-02-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: C H SUNDAR RAO; P DHIVAHAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Question of law; Cost of acquisition; Revised return
• Section: 50C; 142(1); 133(6); 28

Judgement Text

ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE ABENCH, BANGALORE BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI JASON P. BOAZ, ACCOUNTANT MEMBER ITA NO.243/BANG/2014 (ASSESSMENT YEAR: 2010-11) SHRI V.S. CHANDRASHEKAR PROP: M/S. MADHURA DEVELOPERS, NO.46, 9 TH CROSS 28 TH MAIN, 1 ST PHASE, JP NAGAR, BANGALORE 560078 PAN: ACMPC 6369 G VS. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE 4(1) BANGALORE (APPELLANT) (RESPONDENT) ITA NO.215/BANG/2014 (ASSESSMENT YEAR: 2010-11) DY.. COMMISSIONER OF INCOME TAX CIRCLE 4(1) BANGALORE VS. SHRI V.S. CHANDRASHEKAR PROP: M/S. MADHURA DEVELOPERS, NO.46, 9 TH CROSS 28 TH MAIN, 1 ST PHASE, JP NAGAR, BANGALORE 560078 PAN: ACMPC 6369 G (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI TATA KRISHNA, ADVOCATE DEPARTMENT BY: SHRI C.H. SUNDAR R AO, CIT (DR) & SHRI P. DHIVAHAR, JCIT DATE OF HEARING: 18/11//2014 DATE OF PRONOUNCEMENT: 28/11/2014 O R D E R PER RAJPAL YADAV, J.M. THE ASSESSEE AND THE REVENUE ARE IN CROSS APPEAL BE FORE US AGAINST THE ORDER OF THE LEARNED CIT (A), DATED 11. 11.2013 PASSED FOR ASSESSMENT YEAR 2010-11. ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 2 OF 14 ITA NO.243/BANG/2014 2. FIRST WE TAKE ITA NO.243/BANG/2014. THE GROUNDS OF APPEAL TAKEN BY THE ASSESSEE ARE NOT IN CONSONANCE WITH RULE 8 OF THE ITAT RULES, THEY ARE DESCRIPTIVE AND ARGUMEN TATIVE IN NATURE. IN BRIEF, HIS GRIEVANCE REVOLVES AROUND A S INGLE ISSUE, WHEREBY HE PLEADED THAT THE LEARNED CIT (A) HAS ERR ED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN TR EATING THE SALE OF PLOT AS AN INVESTMENT, GIVING RISE TO CAPITAL GA IN, INSTEAD OF ACCEPTING THE BUSINESS LOSS CLAIMED BY THE ASSESSEE IN THE RETURN. THE LEARNED CIT (A) FURTHER ERRED IN HOLDIN G THAT SALE CONSIDERATION IS TO BE DEEMED EQUIVALENT TO THE VAL UE ON WHICH STAMP DUTY WAS PAID BY THE VENDEE ON PURCHASE OF TH IS PROPERTY. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E IS AN INVIDIDUAL. HE IS RUNNING A PROPRIETORSHIP CONCERN IN THE NAME AND STYLE OF M/S MADHURA DEVELOPERS. A SURVEY U/S 1 33A WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE ON 7.7. 2010. HE FILED HIS RETURN OF INCOME ON 15.10.2010 DECLARING A TOTA L INCOME OF RS.3,00,75,130/-. THE CASE OF THE ASSESSEE WAS SELE CTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) WAS ISSUE D ON 19.01.2011. QUESTIONNAIRES U/S 142(1) WERE ISSUED O N VARIOUS DATES. ON SCRUTINY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT THE ASSESSEE HAD CLAIMED A LOSS OF RS. 98,62,500/- ON SALE OF A PROPERTY. THE BREIF FACTS IN RESPECT OF T HIS TRANSACTION ARE THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT ON 31.12.2005 TO PURCHASE A PROPERTY AT 9/1A, AREKERE VILLAGE, BEGUR HOBLI, BANGALORE WITH M/S. NAMASTE EXPORTS LT D, FOR A TOTAL CONSIDERATION OF RS.4,25,00,000/-. HE MADE A PAYMENT OF RS.15.00 LAKHS ON 23.12.2005. THE TOTAL AREA OF THE LAND WAS ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 3 OF 14 39,162 SQ.FT. THE ASSESSEE HAS SOLD THIS PLOT IN TH REE PIECES. ON 26.3.2007, HE SOLD TWO PIECES OF LAND MEASURING 855 0 SFT AND 9000 SFT FOR A CONSIDERATION OF RS.64,12,550/- AND RS.71,25,000/- RESPECTIVELY. THE REMAINING PART OF THE LAND MEASURING 21157 SQ.FT HAS BEEN SOLD ON 1.3.2010 FOR A CONSIDERATION OF RS.1,91,00,000/-. IN THIS WAY, THE ASSESSEE HAS CLAIMED A LOSS OF RS.98,62,500/-. ACCORDING TO THE ASSESSING OFFICER, AN INQUIRY WAS CONDUCTED WITH THE JURISDIC TIONAL SUB- REGISTRAR. IT WAS FOUND THAT THE STATE GOVT. WITH T HE PURPOSE OF CHARGING STAMP DUTY ON REGISTRATION OF THE SALE DEE D, HAS NOTIFIED THE CIRCLE RATE WHICH ARE TO BE ADOPTED FOR CHARGIN G STAMP DUTY. THE GUIDANCE VALUE OF THIS PROPERTY FOR THIS PURPOS E FOR THE PERIOD 24.2.2007 TO 25.9.11 COMMAND A PRICE OF RS.1 400 PER SFT, WHEREAS, AS PER THE SALE VALUE CONSIDERATION SHOWN BY THE ASSESSEE, THE RATE WORKED OUT TO RS.902/- PER SFT. THE LEARNED ASSESSING OFFICER WORKED OUT THE COST OF ACQUISITIO N AT RS.1085 PER SFT, BEING THE PROPORTIONATE COST OF THE PROPER TY AS ON 23.12.2005 (DATE OF AGREEMENT). THIS COST HAS BEEN WORKED OUT BY DIVIDING THE TOTAL CONSIDERATION PAID BY THE ASS ESSEE I.E. RS.4,25,00,000/- BY THE TOTAL AREA I.E. 39162 SQ. F T. THE VALUE OF THE PORTION OF THE PROPERTY WORKED OUT TO RS.2,29,5 5,345/- (21157 SFT X RS.1085). THE PROFIT ON SALE OF THE SA ID PORTION OF THE PROPERTY WAS DETERMINED AT RS.66,64,455/- (I.E. 211 57 X 1400 = RS.2,96,19,800, SALE CONSIDERATION - 2,29,44,345, C OST OF ACQUISITION). THIS FIGURE HAS BEEN DETERMINED BY T HE ASSESSING OFFICER AGAINST THE LOSS OF RS.98,62,500/- CLAIMED BY THE ASSESSEE. HE DISALLOWED THE LOSS AND MADE ADDITION IN THIS REGARD AT RS.1,65,26,955/- (I.E. RS.66,64,455 + RS. 98,62,500). ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 4 OF 14 4. APPEAL TO THE CIT (A) DID NOT BRING ANY RELIEF T O THE ASSESSEE. 5. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATIV ES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THERE ARE CERTAI N BASIC FACTS WHICH ARE NOT DISPUTED BY THE PARTIES. THE ASSESSEE HAD ADOPTED SALE VALUE OF THE PLOT AT RS.902/- PER SFT. THE ARE A OF THE PLOT SOLD IS OF 21,157 SFT. AS PER THE INFORMATION OBTAINED U /S 133(6) OF THE INCOME TAX ACT BY THE ASSESSING OFFICER, THE ST ATE GOVT. HAS NOTIFIED THE CIRCLE RATE OF THE PROPERTY IN THIS AR EA, FOR THE PURPOSE OF LEVY OF STAMP DUTY WHILE REGISTERING THE SALE DEED IS RS.1400/- PER SFT. THIS ASPECT WAS NOT CHALLENGED B Y THE ASSESSEE BEFORE THE ASSESSING OFFICER ALSO. IN OTHE R WORDS, THE ASSESSEE DID NOT DISPUTE ABOUT THE FAIR MARKET VALU E OF THE PROPERTY NOTIFIED BY THE STATE GVOT. FOR THE PURPOS E OF CHARGING STAMP DUTY. THE ASSESSEE COULD HAVE CHALLENGED IT A S PER SUB SECTION 2 OF SECTION 50C AND IN THAT CASE THE MATTE R OUGHT TO BE REFERRED TO THE EVALUATION CELL. IT IS NOT DISCERNI BLE THAT THIS STAND HAS TAKEN BY THE ASSESSEE. THUS TO THIS EXTENT, THE RE ARE NO DISPUTE BETWEEN THE PARTIES ON THE FACTS. 6. THE DISPUTE IS, WHETHER THE BUSINESS LOSS SHOWN BY THE ASSESSEE CAN BE CONVERTED IN THE CAPITAL GAIN?. WHE THER THE ASSESSEE HAD MADE INVESTMENT OR IT WAS A BUSINESS V ENTURE?. THE LEARNED COUNSEL FOR THE ASSESSEE HAS RAISED MUL TI FOLD CONTENTION WHILE IMPUGNING THE ORDER OF THE LEARNED CIT (A). HIS FIRST CONTENTION WAS THAT THE ASSESSEE IS IN THE BU SINESS OF REAL ESTATE. HE IS A DEVELOPER, THEREFORE, HE HAD BEEN P URCHASING THE LAND FOR THE PURPOSE OF THE BUSINESS. IN THIS TRANS ACTION, THE INVESTMENT WAS MADE IN TRADING FIELD. THE ADVANCES PAID BY THE ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 5 OF 14 ASSESSEE WERE SHOWN AS A CURRENT ASSET IN THE ACCOU NT. FOR THIS PURPOSE, HE DREW OUR ATTENTION TOWARDS PAGE NO.192 OF THE PAPER BOOK, WHEREIN SCHEDULE FORMING PART OF BALANCE SHEE T AS ON 31.3.2008 HAS BEEN PLACED ON RECORD. HE ALSO DREW O UR ATTENTION TOWARDS PAGE NO.140 WHEREIN SUB-SCHEDULE EXHIBITING THE ADVANCE PAID FOR LAND PURCHASES HAS BEEN PLACED ON RECORD. THIS SCHEDULE IS FORMING PART OF BALANCE SHEET AS ON 31. 03.2006. ON THE STRENGTH OF THESE TWO DOCUMENTS, IT WAS CONTEND ED THAT THE ASSESSEE HAS BEEN IN THE BUSINESS OF DEVELOPING REA L ESTATE AS A BUILDER, HENCE HE WAS MAKING INVESTMENT IN THE TRAD ING FIELD. ON PAGE 140 IS THE LIST OF MORE THAN 25 PROPERTIES WHI CH WERE TREATED AS A STOCK. THEREFORE, THE ADVANCES MADE WI TH REGARD TO THIS PLOT COULD ALSO BE CONSIDERED AS AN ADVANCE FO R THE STOCK. THE LEARNED DR ON THE OTHER HAND DREW OUR ATTENTION TOWARDS PAGE NOS. 192, 193 AND 222. HE POINED OUT THAT AS O N 31.3.2008, THIS ALLEGED ADVANCE HAS BEEN SHIFTED TO WARDS INVESTMENT. THE MOMENT THE ASSESSEE HAS CHANGED THE TREATMENT TO THE LAND IN DISPUTE, HE WOULD HAVE SHO WN THE PROFIT IN THE RELEVANT YEAR, BUT IN THIS YEAR IT WILL ONLY GIVE RISE TO THE CAPITAL GAIN. THE ASSESSING OFFICER IN HIS REMAND R EPORT HAS SPECIFICALLY POINTED OUT THAT IT WAS AN INVESTMENT ACCOUNT WHICH WOULD GIVE RISE TO THE CAPITAL GAIN ONLY. HE MADE R EFERENCE TO PAGE NOS.253 TO 255, 265 TO 267 AND 279 WHERE THRE E REMANDS REPORTS CALLED BY THE CIT (A) ARE AVAILABLE. HE TOO K US THROUGH THESE REPORTS. 7. ON DUE CONSIDERATION OF THE FACTS AND CIRCUMSTAN CES, WE FIND THAT, EXCEPT THE ADVANCES SHOWN IN THE CURRENT ASSET FOR THE YEAR ENDING ON 31.3.2006, THERE IS NO OTHER EVIDENC E BROUGHT TO OUR NOTICE BY THE ASSESSEE THAT THIS LAND WAS PURCH ASED FOR THE ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 6 OF 14 PURPOSE OF BUSINESS. THE ASSESSEE HIMSELF HAS CHAN GED THE CHARACTER OF THE LAND, AS AN INVESTMENT WHILE FINAL ISING THE ACCOUNT FOR THE YEAR ENDING ON 31.3.2008. THE MOMEN T IT WAS SHOWN AS AN INVESTMENT ITEM, ON SALE OF THE INVESTM ENT, CAPITAL GAIN WOULD ARISE. IT IS ALSO NOT IN DISPUTE THAT AN Y ASSESSEE CAN ENGAGE TRADING AS WELL AS INVESTMENT SIMULTANEOUSLY , BUT IN THAT CASE THE ASSESSEE HAS TO MAINTAIN SEPARATE ACCOUNT FOR HIS TRADING ACTIVITY AS WELL AS INVESTMENT ACTIVITY. IT IS FOR THE ASSESSEE TO DEMONSTRATE THAT A PARTICULAR ITEM IS P ART OF TRADING ASSET OR INVESTMENT. THE ASSESSEE FAILED TO BRING A NY EVIDENCE ON THE RECORD INDICATING THAT IN THE PAST ALSO THE INC OME FROM THIS ASSET WAS SHOWN AS A BUSINESS INCOME. THE ASSESSEE HAS FILED REVISED RETURN FOR ASSESSMENT YEARS 2007-08 AND 200 8-09, BUT THESE RETURNS HAVE BEEN FILED AFTER THE SURVEY OPER ATIONS I.E. ON 29.11.2010. THE RETURN FOR THE PRESENT YEAR WAS FIL ED ON 15.10.2010. THUS THERE IS NOTHING ON THE RECORD WH ICH CAN SUGGEST THAT THE ADVANCES PAID BY THE ASSESSEE AT A SUM OF RS.3,20,00,000/- AS ON 31.03.2008 TO THE VENDOR I.E . NAMASTHE EXPORTS LTD WAS PAID FOR ACQUIRING STOCK-IN-TRADE F OR THE PURPOSE OF THE BUSINESS. IT WAS A SIMPLICITOR INVESTMENT AT THE END OF THE ASSESSEE AND ON SALE OF INVESTMENT, ONLY CAPITAL GA IN WOULD ARISE TO THE ASSESSEE. THE ASSESSEE IN ORDER TO BUTTRESS HIS CONTENTION HAS RELIED UPON THE FOLLOWING DECISIONS: I) ACIT VS. MADAN LAL AHUJA (1982) 136 ITR 640 (ALL .) II) CIT VS. BILAHARI INVESTMENT (P) LTD VS. (2008) CIT 299 ITR 1 (SC) III) CIT VS. NAGRI MILLS CO. LTD 33 ITR 681 (BOM.) IV) K.H.MODY, IN RE (1940) 8 ITR 179 (BOM.) V) KARAMCHAND THAPAR & BROTHERS VS. CIT 82 ITR 899 ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 7 OF 14 IN THE CASE OF MADAN LAL AHUJA (SUPRA), THE ASSESSE E HAD PURCHASED LAND MEASURING 28,278 YARDS WHICH HE DEVE LOPED AS A COLONY AND SOLD IN SMALL PIECES. THE FACTS LEADIN G TO THAT CASE SUGGEST THAT LAND WAS PURCHASED DURING 1942 TO 1947 . THE ENTIRE LAND WAS COMBINED IN ONE UNIT AND DEVELOPED AS SUCH UNDER ONE SHCME. THE EXPENSES INCURRED ON THE DEVEL OPMENT AND LAY OUT OF THE PLOT WAS FOR THE WHOLE UNIT AND NOT ON PART OF IT. IN THAT BACKGROUND, THE HON'BLE HIGH COURT HAS UPHELD THAT PROFIT OR LOSS EARNED BY THE DEVELOPER COULD NOT BE CORRECTLY DETERMINED, UNLESS TRANSACTION OF SALE OF ENTIRE LA ND WAS COMPLETE. ON THE STRENGTH OF THIS DECISION, THE ASS ESSEE RAISED TWO CONTENTIONS; FIRSTLY THAT PROFIT AND LOSS EVEN WHILE COMPUTING THE CAPITAL GAIN/LOSS IS TO BE COMPUTED BY TAKING I NTO CONSIDERATION THE EARLIER TWO SALE INSTANCES I.E. 2 6.03.2007 VIDE 8550 AND 9500 S.FT AREAS WERE SOLD BY THE ASSESSEE. THE SECOND FOLD IS THAT, IT SUGGEST THAT THE ASSESSEE HAD SOLD THE PLOTS IN ORDINARY COURSE OF BUSINESS. IN OUR OPINION THE FAC TS ARE QUITE DISTINGUISHABLE IN THE CASE OF MADAN LAL AHUJA (SUP RA), WHEREIN IT WAS CONSIDERED THAT THE ASSESSEE HAD PURCHASED R OUGHLY 5 ACRES OF LAND WHICH WAS ACQUIRED OVER A PERIOD OF 5 EYARS. IT WOULD BE DEVELOPED AS ONE VENTURE. IN THAT BACKGROU ND, THE HON'BLE COURT HAS UPHELD THAT DETERMINATION OF PROF ITS ON COMPLETION OF COMPLETE TRANSACTION, IN OTHER WORDS IT WAS A CASE SUGGESTING THE PROJECT COMPLETION METHOD OF ACCOUNT ING AND NOT PERCENTAGE COMPLETION METHOD OF ACCOUNTING. THE ASS ESSEE HIMSELF HAS RETURNED THE INCOME ON EARLIER SALE INS TANCES. THOSE RETURNS WERE ORIGINALLY FILED, CONSIDERING IT AS AN INVESTMENT AND THEY HAVE BEEN REVISED ON 29.11.2010 I.E. AFTER THE SURVEY AND AFTER FILING RETURN IN THIS YEAR. THEY ARE NOT WITH IN TIME ALSO. THEREFORE, THE ASSESSEE CANNOT DRAW ANY BENEFIT FRO M THIS ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 8 OF 14 DECISION. THE OTHER TWO DECISIONS I.E. IN THE CASE OF BILAHARI INVESTMENT (P) LTD AND NAGRI MILLS CO. LTD (SUPRA), THE ASSESSEE CONTENDED THAT EVEN IF ITS EARLIER TRANSACTIONS ARE TAKEN TOGETHER IN THIS YEAR, THEN THERE WOULD BE NO LOSS TO THE RE VENUE. THESE TRANSACTIONS ARE REVENUE IN NEUTRAL, THE CAPITAL GA IN FROM THE SALE OF THIS PLOT WOULD BE DETERMINED AFTER COMPUTI NG THE SALE PROCEEDS OF EARLIER PLOTS. WE FIND THAT IN THE CASE OF NAGRI MILLS CO. LTD, THE HON'BLE COURT PROCEEDED ON THE PREMISE THAT THE ASSESSEE WAS CARRYING ON THE BUSINESS. HERE, WE HAV E ARRIVED AT A CONCLUSION THAT THIS LAND WAS NOT A STOCK IN TRAD E OF THE ASSESSEE. THE CAPITAL GAIN CAN BE COMPUTED WHEN A P ARTICULAR PORTION OF THE LAND HAS BEEN SOLD BY THE ASSESSEE B Y TAKING PROPORTIONATE VALUE OF THE COST OF ACQUISITION VIS- -VIS SALE VALUE BY KEEPING IN MIND THE AREA SOLD. THEREFORE, THESE DECISIONS ARE OF NO HELP TO THE ASSESSEE AND NOT APPLICABLE ON TH E FACTS. SIMILARLY THE FACTS IN THE CASE OF KARAM CHAND THAP AR VS. CIT (SUPRA) ARE QUITE DISTINGUISHABLE. THE HON'BLE COUR T HAS OBSERVED THAT WHETHER A PARTICULAR LOSS IS A CAPITA L LOSS OR A REVENUE LOSS IS A MIX QUESTION OF LAW AND FACTS AND DEPENDENT UPON THE FACTS OF EACH CASE. THEREFORE, ON THE BASI S OF THE FACTS OF THE PRESENT CASE, WE HAVE HELD THAT THE ASSESSEE HA S MADE INVESTMENT WHICH HAS BEEN REALISED IN THIS YEAR AND THE CAPITAL GAIN WOULD ARISE TO THE ASSESSEE. 8. IN THE NEXT FOLD OF SUBMISSION, THE LEARNED COUN SEL FOR THE ASSESSEE SUBMITTED THAT PERUSAL OF SECTION 50C(1) W OULD REVEAL THAT IT IS APPLICABLE WHEN LAND OR BUILDING OR BOTH ARE SOLD. THE ASSESSEE WAS IN POSSESSION ONLY RIGHTS IN THE AGREE MENT TO PURCHASE WHICH CANNOT BE EQUATED WITH LAND OR BUILD ING POSSESSED BY THE ASSESSEE. THEREFORE, SECTION 50C I S NOT ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 9 OF 14 APPLICABLE IN THE PRESENT CASE. IN ORDER TO BUTTRES S HIS CONTENTION, HE RELIED UPON THE JUDGMENT OF BOMBAY B ENCH OF THE ITAT IN THE CASE OF ATUL G. PURANIK VS. INCOME TAX OFFICER (2011) 11 ITR (T) 120 (MUM) AND ITAT KOLKATA BENCH IN THE CASE OF DCIT V. RAJENDRA SINGH 147 TTJ 87. THE AGREEMENT OF SALE DATED 23.12.2005 IS AVAILABLE ON PAGE 78 OF THE PAPER BOO K. VIDE THIS AGREEMENT M/S NAMASTE EXPORTS LTD AGREED TO SELL TH E LAND IN DISPUTE TO THE ASSESSEE FOR A CONSIDERATION OF RS.4 ,25,00,000/-. THE TIME LIMIT TO GET THE SALE DEED EXECUTED AND MA DE THE PAYMENT HAS BEEN MENTIONED IN CLAUSE 2 AND THIS TIM E LIMIT WAS FOR NINE MONTHS. THE ASSESSEE HAS PAID RS.15.00 LAK HS AT THE TIME OF EXECUTION OF AGREEMENT. AS PER HIS ACCOUNT, HE PAID RS.2,25,00,000/- AS ON 31.3.2007. IN THE SCHEDULE O F INVESTMENT FOR THE YEAR ENDING ON 31.3.2008, THE ASSESSEE HAS SHOWN PAYMENT OF RS. 3,20,00,000/-. THE ASSESSEE HAS NOT PLACED ON RECORD ANY OTHER CORRESPONDENCES BETWEEN THE VENDOR S I.E NAMASTE EXPORTS LTD VIS--VIS HIMSELF, INDICATING H OW THE LIMIT FOR PAYMENT OF THE BALANCE WAS EXTENDED, WHAT IS TH E NATURE OF OTHER RIGHTS ACCRUED TO THE ASSESSEE BY VIRTUE OF S UBSTANTIAL PAYMENT OF RS.3,20,00,000/-. SECTION 2(47) OF THE I NCOME TAX ACT 1961 PROVIDES THE DEFINITION OF EXPRESSION TRA NSFER. ACCORDING TO THIS DEFINITION, IF POSSESSION WAS DEL IVERED TO THE ASSESSEE, TRANSFER WOULD BE COMPLETE. THE ASSESSEE HAS ALREADY PAID MORE THAN 80% OF THE SALE CONSDIERATION. THE V ENDOR WHEN EXECUTED THE SALE DEED ON 1.3.2010 HAS RECOGNIZED T HE AGREEMENT DATED 23.12.2005. THE SELF LIFE OF THE AG REEMENT HAD ALREADY EXPIRED AND IF NOT GIVEN EFFECT, A A SUIT F OR SPECIFIC PURPOSE OF THE CONTRACT WOULD BE TIME BARRED BEYOND THREE YEARS. ON THE OTHER HAND, THE VENDOR MUST HAVE EXTENDED TI ME LIMIT OR IT HAS CREATED RIGHTS OF THE ASSESSEE. THE PAYMENT OF THE SALE ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 10 OF 14 CONSIDERATION HAS BEEN GIVEN TO THE ASSESSEE AS ON 1.3.2010. THE ASSESSEE HAS SHOWN IT IN HIS RETURN ALSO. THUS SOME RIGHTS OF VENDOR M/S NAMASTE EXPORTS LTD HAS BEEN EXTINGUISHE D WHEN IT EXECUTED AGREEMENT IN FAVOUR OF THE ASSESSEE. SIMIL ARLY THE ASSESSEE HAD ACQUIRED RIGHTS IN THE LAND. THESE RIG HTS WERE TO ACQUIRE THE LAND AS A OWNER. THEREFORE, FOR ALL PRA CTICAL PURPOSES, THE ASSESSEE WAS TREATED AS OWNER OF THIS PROPERTY. EVEN IF IT IS CONSTRUED, WHEN HE WAS NOT OWNER, THEN THE RIGHTS B Y VIRTUE OF THE AGREEMENT RECOGNISED BY THE VENDOR NAMASTE EXPO RTS LTD WAS HAVING THE RIGHT TO LAND, WHEREAS IN BOTH THE D ECISIONS RELIED UPON BY THE ASSESSEE, TENANCY OR LEASEHOLD RIGHTS W ERE SOLD BY THE ASSESSEE. IN THAT BACKGROUND, THE TRIBUNAL HAS OBSERVED THAT SECTION 50C IS NOT APPLICABLE. IN THE PRESENT CASE THE ASSESSEE WAS POSSESSING RIGHT TO LAND WHICH WAS NOT DISPUTED BY THE VENDOR. AS WE HAVE EARLIER OBSERVED THAT IT WAS AN INVESTMENT AT THE END OF THE ASSESSEE, AND THE SALE OF THIS PIECE OF LAND, CAPITAL GAIN WOULD ARISE TO THE ASSESSEE WHICH IS TO BE COM PUTED AS PER SECTION 48. THE MOMENT COMPUTATION IS TO BE MADE AC CORDING TO SECTION 48, THEN CONSEQUENTLY SECTION 50C IS APPLIC ABLE. THE LEARNED CIT (A) HAS APPRECIATED THE CONTROVERSY IN RIGHT PERSPECTIVE. 9. THE ASSESSEE HAS NOT TREATED THE PROPERTY AS A S TOCK IN TRADE. THEREFORE, ON TRANSFER OF THIS PROPERTY, ONL Y CAPITAL GAIN WOULD ARISE TO THE ASSESSEE AND IT WOULD BE COMPUTE D AS PER SECTION 48 R.W.S 50C OF THE ACT. SECTION 50C CONTEM PLATES WHERE, THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BU ILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY A UTHORITY OF A STATE GOVT. FOR THE PURPOSE OF THE PAYMENT OF STAMP DUTY IN ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 11 OF 14 RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR A SSESSED SHALL FOR THE PURPOSE OF SECTION 48 BE DEEMED TO BE THE F ULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING, AS A RESULT OF SUCH TRANSFER. THE CAPITAL GAIN IS TO BE COMPUTED AS PER SECTION 4 8 OF THE INCOME TAX ACT WHICH PROVIDE THAT INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAINS SHALL BE COMPUTED BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET, THE FOLLOWING AM OUNT NAMELY; A) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONN ECTION WITH SUCH TRANSFER AND (B) THE COST OF ACQUISITION OF TH E ASSET AND THE COST OF ANY IMPROVEMENT THEREOF. FOR OUR PURPOSE, T HE EXPRESSION USED FULL VALUE OF THE CONSIDERATION IS RELEVANT. THIS FULL VALUE OF THE CONSIDERATION IS TO BE REPLACED BY DEEMED VA LUE WHICH IS ADOPTED FOR THE PURPOSE OF STAMP DUTY EVALUATION. I N THE PRESENT CASE, THE ASSESSEE HAS SHOWN THE FULL VALUE OF THE CONSIDERATION @ RS.902/- PER SFT, WHEREAS FOR THE PURPOSE OF STAM P DUTY VALUATION, THE FULL VALUE IS RS.1400 PER SFT. THIS RS.1400 PER SFT IS TO BE DEEMED AS FULL VALUE OF THE CONSIDERATION PROVIDED U/S 48. 10. IN THE NEXT FOLD OF SUBMISSIONS, IT HAS BEEN PL EADED BY THE ASSESSEE THAT HE HAS DECLARED A LOSS OF RS.60,43,85 9/- ON THIS PROPERTY. IT SHOULD NOT HAVE BEEN IGNORED BY THE R EVENUE AUTHORITIES. THE ASSESSEE HAS WORKED OUT THIS LOSS ON THE GROUND THAT HE HAS PURCHASED THE PROPERTY FOR A SUM OF RS.4,25,00,000/-. ONE PIECE OF THE PROPERTY MEASUR ING 8550 SFT WAS SOLD FOR RS.64,12,500/- ON 26.03.2007, SECOND P IECE WAS SOLD ON THIS VERY DAY MEASURING 9500 SFT FOR A CONS IDERATION OF RS.71,25,000/- AND THE REMAINING PIECE WAS SOLD ON 1.03.2010 MEASURING 21157 SFT FOR RS.1,91,00,000/-. THUS THE TOTAL AREA ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 12 OF 14 HAS BEEN SOLD FOR RS.3,26,37,500/-. IT GIVES A LOSS OF RS.98,62,500/-. IN THE FIRST TWO SALE DEEDS, THE CO ST OF ACQUISITION WAS RS.92,75,380/- AND RS.1,03,05,978/- WHEREAS THE SALE CONSIDERATION WAS RS.64,12,500/- AND RS.71 ,25,000/-. THE ASSESSEE HAS PLEADED THAT HE HAS A LOSS OF RS.6 0,43,859/-. THIS ARGUMENT HAS BEEN RAISED ON THE GROUND THAT TH IS TRANSACTION IS TO BE CONSTRUED AS ONE TRANSACTION. THE GAIN SHOWN IN THE ASSESSMENT YEAR 2007-08 AND 2008-09 HA S BEEN REVISED BY FILING A REVISED RETURN. IT HAS BEEN TRE ATED AS A BUSINESS LOSS IN THE REVISED RETURN. FOR BUTTRESSIN G THIS CONTENTION ALSO THE ASSESSEE HAD MADE REFERENCE TO THE DECISION OF MADAN LAL AHUJA, BILAHARI INVESTMENT (P) LTD AND NAGRI MILLS CO. LTD (SUPRA). WE DO NOT FIND ANY MERIT IN THE CO NTENTIONS OF THE ASSESSEE, BECAUSE WE HAVE UPHELD THE ACTION OF THE ASSESSING OFFICER THAT THE ASSESSEE HAS TREATED THE PURCHASE OF THE PLOT AS AN INVESTMENT. HE HAS SOLD HIS INVESTMENT IN THREE PARTS. WITH REGARD TO EARLIER TWO SALE TRANSACTIONS, HE HAS ALR EADY OFFERED THE INCOME UNDER THE HEAD CAPITAL GAIN BUT LATER ON R EVISED HIS STAND. THIS RIVISION HAS BEEN MADE AFTER THE SURVEY OPERATION. IT WAS NOT A VENTURE FOR BUSINESS PURPOSE. THEREFORE, THE ASSESSEE CANNOT BE PERMITTED TO CLAIM THAT HE HAS COMPLETED THE PROJECT OF DEVELOPMENT IN THIS YEAR AND INCOME IS TO BE RECOGN ISED IN THIS YEAR. THE LOSS, IF ANY, THOUGH REPRESENT TO EARLIER YEARS, NOT TO THIS YEAR. MORE SO, IF THE RATES FOR DETERMINING TH E SALE CONSIDERATION FOR THE PURPOSE OF SECTION 50C IS TO BE SEEN, THEN IT WOULD SUGGEST THAT THERE IS NO LOSS. THE LOSS HAS B EEN COMPUTED BY TAKING THE SALE CONSIDERATION AT RS.902/- PER SF T AND THE COST OF ACQUISITION AT RS.1085/- PER SFT. WE DO NOT KNOW THE GUIDELINE VALUE OF THE PROPERTY ON 26.03.2007 WHEN THE ASSESS EE SOLD TWO PIECES OF LAND. IF IT WAS MORE THAN RS.1085 PER SFT , THEN THERE ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 13 OF 14 COULD NOT BE ANY LOSS AND FOR THE SAKE OF ARGUMENTS , CONTENTION OF THE ASSESSEE ARE TO BE ACCEPTED IN THIS YEAR, TH EN RS.1400/- PER SFT IS TO BE APPLIED ON EARLIER TWO SALE DEEDS ALSO FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. THEN AGAIN THERE WOULD NOT BE ANY LOSS. THEREFORE, WE DO NOT FIND ANY MERI T IN THE CONTENTIONS OF THE LEARNED COUNSEL FOR THE ASSESSEE , CONSEQUENTLY APPEAL OF THE ASSESSEE IS DISMISSED. ITA NO.215/BANG/2014 11. IN THIS APPEAL, THE GRIEVANCE OF THE REVENUE IS THAT THE LEARNED CIT (A) HAS DELETED THE ADDITION OF RS.33,1 7,427/-. DURING THE COURSE OF SURVEY, A PROVISIONAL PROFIT A ND LOSS ACCOUNT WAS PREPARED. THE ASSESSEE HAD SHOWN MISCELLANEOUS RECEIPTS AT RS.34,62,981/- IN THE PROVISIONAL P&L A/C DURING TH E SURVEY OPERATION, WHEREAS THE SAME HAD BEEN SHOWN AT RS.1, 22,779/- IN THE P&L A/C FILED WITH THE RETURN OF INCOME. THE RE WAS A DEFICIT OF RS.33,40,202/-. THE ASSESSING OFFICER HA S REJECTED THE STATEMENT OF THE ASSESSEE THAT SUM OF RS.33,40,202/ - FORMED PART OF THE ASSESSEES OFFER OF THE AMOUNT OF RS.3, 15,00,603/- FOR TAX DURING THE SURVEY OPERATION. THE ASSESSING OFFI CER HAS MADE THE ADDITION. 12. WITH THE ASSISTANCE OF THE LEARNED REPRESENTATI VES, WE HAVE GONE THROUGH THE RECORD CAREFULLY. THE LEARNED FIRS T APPELLATE AUTHORITY, ON VERIFICATION OF THE FACTS AND CIRCUMS TANCES FOUND THAT THIS SUM ON MISCELLANEOUS RECEIPTS INCLUDED IN THE PROVISIONAL P&L A/C AT THE TIME OF SURVEY HAS BEEN INCLUDED IN THE TOTAL AMOUNT OFFERED BY THE ASSESSEE AT RS.3,15 ,00,603/-. THE LEARNED CIT (A) HAS REPRODUCED THE LIST OF THE PERSONS TO WHOM THESE MISCELLANEOUS SUNDRY CREDIT REPRESENT. A FTER GOING ITA 243 & 215 OF 2014 VS CHANDRASHEKAR BANGALORE. PAGE 14 OF 14 THROUGH THE FINDINGS OF THE CIT (A) IN PARA NO.4.5, WE ARE OF THE VIEW THAT THE ASSESSEE HAS DULY EXPLAINED THE MISCE LLANEOUS RECEIPTS ACCOUNTED DURING THE COURSE OF SURVEY AND POINTED OUT THAT THESE RECEIPTS HAVE BEEN INCLUDED IN THE TOTAL AMOUNT OFFERED BY THE ASSESSEE. THE LEARNED DR COULD NOT B RING ANY MATERIAL TO OUR NOTICE POINTING OUT ANY FACTUAL ERR OR IN APPRECIATION OF THE FACTS BY THE LEARNED CIT (A). S INCE THE ASSESSEE HIMSELF HAS ACCOUNTED THOSE MISCELLANEOUS RECEIPTS IN THE TOTAL AMOUNT OFFERED DURING THE COURSE OF SURVE Y, NO SEPARATE ADDITION CAN BE MADE. THE LEARNED CIT (A) HAS RIGHT LY DELETED THE ADDITION. IN VIEW OF THE ABOVE DISCUSSION, WE DO NO T FIND ANY MERIT IN THIS APPEAL OF THE REVENUE ALSO, IT IS DIS MISSED. 13. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2014. SD/- SD/- (JASON P. BOAZ) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER BANGALORE DATED 28 TH NOVEMBER, 2014. VNODAN/SPS COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, BANGALORE BENCHES, BANGALORE