Smt. D.Nagamani, Visakhapatnam V. THE DCIT, CENTRAL CIRCLE-1, Visakhapatnam

ITA 247/VIZ/2013

• Counselvise Citation: [2016] 130 COUNSELVISE.COM (IT) 9870 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 5 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-09-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 15-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Search and seizure; Cost of acquisition; Retraction
• Section: 54F; 133A; 148; 54

Judgement Text

ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.247/VIZAG/2013 ( / ASSESSMENT YEAR: 2008-09) SMT. D. NAGAMANI, VISAKHAPATNAM VS. DCIT, CENTRAL CIRCLE - 1, VISAKHAPATNAM [PAN: AEVPD3787L ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI M.N. MURTHY NAIK, DR / DATE OF HEARING : 13.07.2016 / DATE OF PRONOUNCEMENT : 20.09.2016 / O R D E R PER V. DURGA RAO, JUDICIAL MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF CIT(A)-I, HYDERABAD DATED 31.1.2013 FOR THE ASSESSM ENT YEAR 2008-09. 2. FACTS ARE IN BRIEF THAT THE ASSESSEE IS AN INDIV IDUAL DERIVED INCOME FROM PENSION, HOUSE PROPERTY AND AGRICULTURE. A SE ARCH AND SEIZURE ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 2 OPERATION WAS CONDUCTED IN THE RESIDENTIAL PREMISES OF SHRI P. RAMA RAJU, PROPRIETOR M/S. VIGNESWARA CONSTRUCTIONS, VIS AKHAPATNAM ON 22.8.2008. A SURVEY U/S 133A OF THE INCOME TAX ACT , 1961 (HEREINAFTER CALLED AS 'THE ACT') WAS ALSO CONDUCTED AT THE BUSI NESS PREMISES OF HIS CONCERN. IN THE COURSE OF SURVEY, IT WAS FOUND THA T THE ASSESSEE HAD TRANSFERRED 450 SQ.YDS. OF PROPERTY AT SURVEY NO.44 /7 OF MADDILAPALEM VILLAGE, VISAKHAPATNAM TO THE SAID CONCERN FOR DEVE LOPING THE LAND INTO AN APARTMENT IN THE NAME OF SHRI REKHA RESIDENCY. THE ASSESSEE WAS TO RECEIVE CONSIDERATION IN THE FORM OF BUILT UP AR EA OF 6500 SQ.FT. IN HER STATEMENT RECORDED U/S 132(4) OF THE ACT, SHE H AS SUBMITTED THAT SHE HAD NOT FILED THE RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2008-09 AND STATED THAT SHE IS SUBMITTING A LETTER DATED 17 .10.2008 IN WHICH SHE HAS GIVEN COMPUTATION ARRIVED AT A CAPITAL GAIN OF ` 31,53,280/- AND STATED THAT SHE WILL PAY THE TAX AND THE CAPITAL GA INS SHORTLY. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT THE RE WAS AN ESCAPEMENT OF INCOME. ACCORDINGLY, A NOTICE U/S 14 8 OF THE ACT WAS ISSUED TO THE ASSESSEE ON 9.8.2009. ASSESSEE FILED A RETURN OF INCOME ON 9.11.2009 DECLARING LOSS OF ` 46,108/- BESIDES AGRICULTURAL INCOME OF ` 42,600/-. HOWEVER, NO CAPITAL GAIN WAS ADMITTED. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE A.O. HAS ASKED T HE ASSESSEE TO PRODUCE THE PURCHASE DEEDS IN RESPECT OF ORIGINAL A SSET AND ALSO ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 3 DOCUMENTAL PROOF IN RESPECT OF EXEMPTION/EXPENSES C LAIMED. HOWEVER, THE ASSESSEE COULD NOT PRODUCE ANY EVIDENCE EXCEPT DEVELOPMENT AGREEMENT. THEREFORE, THE A.O. HAS ASKED THE ASSES SEE THAT IN THE ABSENCE OF ANY DETAILS, WHY THE ADMITTED CAPITAL GA INS OF ` 31,53,280/- SHOULD NOT BE BROUGHT TO TAX FOR THE A.Y. 2008-09, SUBJECT TO FURNISHING THE PROOF REGARDING COST OF ACQUISITION OF PROPERTY AND EXPENDITURE CLAIMED TOWARDS CONSTRUCTION. IN RESPONSE, THE AUTH ORIZED REPRESENTATIVE OF THE ASSESSEE FILED A COMPUTATION OF CAPITAL GAINS ON 18.10.2010 AS UNDER: SALE OF UNDIVIDED UNSPECIFIED SHARE OF LAND INCLUDI NG TWO FLATS SOLD BY THE BUILDER AND CASH RECEIVED BY YOU 38,90,000 LESS: COST OF THE LAND (INDEXED COST) . 9,59,641 BUILDING VALUE CONSTRUCTED IN 1997-98 INCLUDING BOUNDARY WALL . .5,05,829 14,65,470 24,24,530 LESS: COST OF ONE FLAT CLAIMED AS EXEMPTION U/S 54 24,24,530 CAPITAL GAINS NIL 3. THE A.O. AFTER CONSIDERING THE ABOVE HAS OBSERVE D THAT THE ASSESSEE WAS TAKING DIFFERENT FIGURES IN RESPECT OF SALE CONSIDERATION AND THE COST OF FLAT CLAIMED AS EXEMPT, AS UNDER: ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 4 TOTAL CONSIDERATION EXEMPTION CLAIMED U/S 54F CAPITAL GAINS ADMITTED IN HER STATEMENT DATED 17.10.2010 56,43,750 10,25,000 31,53,280 IN HER LETTER DATED 16.10.2010 37,40,000 22,74,450 NIL IN HER LETTER DATED 18.10.2010 38,90,000 24,24,530 NIL 4. FROM THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT THE ASSESSEE WAS CONTRADICTING ON EACH OCCASION ADMITTING DIFFER ENT FIGURES WITHOUT SHOWING ANY BASIS OR FURNISHING ANY PROOF. HE AGAI N ISSUED A SHOW CAUSE NOTICE DATED 26.10.2010 TO SUBSTANTIATE HER C LAIM AND PROPOSED THE CAPITAL GAINS COMPUTATION. IN RESPONSE, THE ASS ESSEE FILED HER EXPLANATION ALONG WITH PROOF IN RESPECT OF HER AGRI CULTURAL INCOME BUT COULD NOT FURNISH ANY EVIDENCE, COST OF ACQUISITION /IMPROVEMENT. IT WAS SUBMITTED BEFORE THE A.O. THAT THE ASSESSEE HAS NEV ER ADMITTED CAPITAL GAIN OF ` 31,53,280/- AND THAT THE QUESTIONS WERE ASKED AND ANSWERS WERE DICTATED. IT WAS CLAIMED THAT THE APPELLANT H AS RECEIVED ONLY ` 18,45,000/- TOWARDS THE SALE OF UNDIVIDED AND UNSPE CIFIED SHARE OF LAND 246 SQ.YDS. OUT OF 450 SQ.YDS. AND THE BALANCE OF 2 04 SQ.YDS. IS RETAINED AND GIVEN BY THE BUILDERS TO THE LANDLORD. IT WAS FURTHER SUBMITTED THAT INITIALLY THE DEVELOPER HAS AGREED FOR CONSIDERATIO N TOWARDS LAND BY ALLOTTING CONSTRUCTED AREA OF 6500 SQ.FT., HOWEVER, ONLY 4325 SQ.FT. WAS FINALLY ALLOTTED, BALANCE CONSTRUCTED WAS SOLD BY T HE DEVELOPER AND THE ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 5 AMOUNT COLLECTED OF ` 2,45,000/- WAS TAKEN AS SHARE OF LAND. THE DEVELOPER NEVER PAID ` 24 LAKHS TO THE ASSESSEE, ACCORDINGLY THE ASSESSEE HAS SUBMITTED THAT CONSIDERATION WAS ONLY ` 38,90,000/- AND NOT ` 56,43,750/-. THE A.O. AFTER CONSIDERING THE EXPLA NATION OF THE ASSESSEE, HE NOTED THAT THE ASSESSEE HAD BEEN CHANG ING HER STAND FROM TIME TO TIME TO BIFURCATE THE THINGS TO HER CONVENI ENCE IN RESPECT OF COST OF ACQUISITION, EXPENSES CLAIMED AS INCURRED AND EX EMPTION U/S 54F OF THE ACT WAS NEVER FURNISHED. THEREFORE, THE A.O. H AS ADOPTED SALE CONSIDERATION AT ` 56,43,750/- AS ADMITTED BY THE ASSESSEE IN HER STATEMENT DATED 17.10.2010 SUPPORTED BY HER COMPUTA TION SHEET AND REPORT OF THE INVESTING OFFICER. HE FURTHER NOTED THAT EXEMPTION U/S 54F OF THE ACT HAD BEEN CLAIMED BY THE ASSESSEE IN RESP ECT OF CAPITAL ASSET OTHER THAN A RESIDENTIAL HOUSE PROPERTY, WHEREAS IT WAS CLEAR THAT THE ASSESSEE HAS NOT BEEN CONSTRUCTED ANY BUILDING NOR INCURRED ANY EXPENDITURE FOR SUCH PURPOSE AS SHE COULD NEVER FUR NISH NECESSARY EVIDENCE IN THIS REGARD. ACCORDINGLY, THE COST OF ACQUISITION WAS TAKEN AT ` NIL AND NO CREDIT WAS ALLOWED TOWARDS THE COST OF CONSTRUCTION OR EXEMPTION U/S 54F OF THE ACT ALSO. ACCORDINGLY, LO NG TERM CAPITAL GAIN WAS ASSESSED AT ` 56,43,750/-. ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 6 5. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE LD. CIT(A). 6. BEFORE CIT(A), IT WAS SUBMITTED THAT THE DEVELOP MENT AGREEMENT WAS ENTERED IN THE ASSESSMENT YEAR 2005-06 AND THER EFORE, CAPITAL GAINS HAS TO BE TAXED IN THAT YEAR. IT IS ALSO FURTHER C ONTENDED THAT SINCE THE CONSTRUCTED AREA WAS HANDED OVER IN APRIL, 2006, TH E SAID DATE HAS TO BE RECKONED IN THE DATE OF TRANSFER AND ACCORDINGLY, T HE LONG TERM CAPITAL GAIN HAS TO BE TAXED IN THE ASSESSMENT YEAR 2007-08 AND NOT IN THE ASSESSMENT YEAR 2008-09. THE LD. CIT(A) HAS CONSID ERED THE SUBMISSIONS MADE BY THE ASSESSEE. THE ASSESSEE HER SELF HAS CLEARLY ADMITTED CAPITAL GAINS FOR ASSESSMENT YEAR 2008-09. HE HAS HELD THAT THE A.O. CORRECTLY TAXED LONG TERM CAPITAL GAIN IN THE ASSESSMENT YEAR 2008-09. THE RELEVANT PORTION OF THE ORDER IS EXTR ACTED AS UNDER: 7.0 I HAVE GONE THROUGH THE FACTS OF THE CASE AND T HE SUBMISSIONS OF THE APPELLANT. AS REGARDS THE YEAR OF TAXABILITY, IT IS TRUE THAT IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS, THE LONG TERM CAPITAL GAINS ON TRAN SFER OF A CAPITAL ASSET HAS TO BE TAXED EITHER IN THE YEAR IN WHICH THE DEVELOPMEN T AGREEMENT IS ENTERED INTO OR IN THE YEAR IN WHICH POSSESSION OF THE CONSTRUCTED AREA IS HANDED OVER TO THE LANDLORD. IN THE INSTANT CASE, HOWEVER, NO SUCH GAI NS WERE OFFERED TO TAX IN THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO I.E. IN THE ASSESSMENT YEAR 2005-06. IT IS BEING NOW CONTENDED THAT SINCE THE C ONSTRUCTED AREA WAS HANDED OVER IN APRIL 2006, THE SAID DATE HAS TO BE RECKONE D AS THE DATE OF TRANSFER AND ACCORDINGLY, THE LONG TERM CAPITAL GAIN IS TO BE TA XED IN THE ASSESSMENT YEAR 2007- 08 AND NOT IN THE ASSESSMENT YEAR 2008-09, AS HAS B EEN DONE BY THE ASSESSING OFFICER. ON GOING THROUGH THE FACTS OF THE CASE, HO WEVER, IT IS SEEN THAT THE APPELLANT HAS SOUGHT TO SUBSTANTIATE THE HANDING OV ER OF CONSTRUCTED AREA IN THE FINANCIAL YEAR 2006-07 ONLY ON THE BASIS OF CERTAIN REGISTERED DOCUMENTS, EVIDENCING SALE OF FLATS BY HER. SUCH DOCUMENTS CAN INDEED BE CONSIDERED AS EVIDENCE OF TRANSFER OF PROPERTIES BY THE APPELLANT, BUT THOSE CANNOT ESTABLISH THAT THE PROPERTIES ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 7 WERE HANDED OVER TO HER AT THAT TIME ITSELF. EXCEPT FOR SUCH SALE DEEDS, NO OTHER EVIDENCE REGARDING HANDING OVER OF CONSTRUCTED AREA COULD BE FURNISHED BY THE APPELLANT AT ANY STAGE. AS AGAINST THIS, IN HER STA TEMENT DATED 17-2-2008, THE APPELLANT HAD GIVEN A DETAILED AND CATEGORICAL STAT EMENT, ALONG WITH THE LETTER DATED 17-10-2008 GIVING COMPUTATION OF LONG TERM CAPITAL GAINS TAXABLE IN THE ASSESSMENT YEAR 200809. THE RELEVANT PORTION OF TH E STATEMENT HAS BEEN REPRODUCED BY THE ASSESSING OFFICER IN THE ASSESSME NT ORDER AS UNDER: 'Q.3 PLEASE GIVE DETAILS REGARDING THE ACQUISITION OF PROPERTY AT MADDILAPALEM TOTALLING TO 450 SQ. YARDS AND THE SOURCES OF INVES TMENT FOR THE SAME. ANS. THIS PROPERTY WAS ACQUIRED IN THREE FINANCIAL YEARS I.E. 19 1995-96 AND 1996- 97. THE SOURCES FOR THIS INVESTMENT IS SALARY INCOM E AND AGRICULTURAL INCOME AND ALSO PF LOAN. WE HAVE, CONSTRUCTED ONE HOUSE IN THE YEAR FINANCIAL YEAR 1997-98 WORTH RS. 3,22,600/- Q.4 HAVE YOU ADMITTED THE CAPITAL GAIN RELATED TO T HE SALE OF LAND AS MENTIONED ABOVE IN THE RETURNS FILED BY YOU FOR THE ASSESSMEN T YEAR 2008-09? PLEASE GIVE DETAILS OF THE CAPITAL GAINS OBTAINED IN THIS VENTU RE. ANS. I HAVE NOT FILED THE RETURN FOR THE CURRENT YEA R YET. I AM SUBMITTING A LETTER DATED 17-10-2008 IN WHICH HAVE GIVEN THE COMPUTATI ON AND ARRIVED AT A CAPITAL GAIN OF R.31,53,280/-. I WILL PAY THE TAX ON THE CAPITAL GAIN SHORTLY.' 07.1 FROM THE ABOVE, IT IS AMPLY CLEAR THAT THE APP ELLANT HAD CLEARLY AND CATEGORICALLY ADMITTED THE LONG TERM CAPITAL GAINS IN RESPECT OF THE IMPUGNED PROPERTY IN THE ASSESSMENT YEAR 2008-09 ON HER OWN. IT IS ALSO SEEN THAT THOUGH THE SEARCH AND AND SURVEY OPERATIONS IN THE CASE SH RI P.RAMA RAJU, PROP. M/S.VIGNESWARA CONSTRUCTIONS, WERE CONDUCTED ON 22- 8-2008, THE ABOVE STATED -W- AS-RECORDED FROM THE APPELLANT AFTER A CONSIDERABLY LONG TIME ON 17- 10-2008, BY WHAT TIME ANY PRESSURE CONFUSION, WHATSOEVER MUST H AVE BEEN THEREFORE, THERE IS NO MERIT IN THE CONTENTION OF THE AUTHORISED REPRES ENTATIVE THAT 'QUESTIONS WERE ASKED AND THE ANSWERS WERE DICTATED'. BESIDES, EVEN THOUGH THE ABOVE STATEMENT WAS MADE ON 17-8-2008 ITSELF, IT WAS ONLY IN THE RE TURN OF INCOME FILED ON 19-11- 2009 THAT THE APPELLANT DID NOT SHOW SUCH CAPITAL G AINS FOR THE ASSESSMENT YEAR 2008-09. THE VERY TIME GAP BETWEEN THE ADMISSION AN D RETRACTION SHOWS THAT THE SUBSEQUENT ACT OF RETRACTION IS AN AFTERTHOUGHT ONL Y, WHEREAS THE LONG TERM CAPITAL GAIN WAS VOLUNTARILY ADMITTED IN THE ASSESSMENT YEA R 2008-09 IN VIEW OF THE ACTUAL HANDING OVER OF THE CONSTRUCTED AREA IN THE PREVIOU S YEAR 2007-08. THEREFORE, NO INFIRMITY IS FOUND IN THE ACTION OF THE ASSESSING O FFICER IN BRINGING TO TAX THE IMPUGNED LONG TERM CAPITAL GAIN IN THE ASSESSMENT Y EAR 2008-09, AND ACCORDINGLY, THE ADDITIONAL GROUND TAKEN BY THE APPELLANT IS DEC IDED AGAINST THE APPELLANT. 7. SO FAR AS COMPUTATION OF LONG TERM CAPITAL GAIN IS CONCERNED, THE A.O. HAS ADOPTED AN AMOUNT OF ` 56,43,750/-. THE SAME WAS CONFIRMED BY THE CIT(A) BY OBSERVING AS UNDER: ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 8 08.0 AS REGARDS THE COMPUTATION OF SUCH LONG TERM CAPITAL GAIN, IT IS SEEN THAT IN HER STATEMENT, THE APPELLANT HAD CATEGORICALLY ADMI TTED THAT SHE HAD RECEIVED A CASH CONSIDERATION OF RS.24 LAKHS, ALONG WITH THE SHARE OF UNDIVIDED, UNSPECIFIED PORTION, WHICH WORKED OUT TO RS.32,43,750/-. THEREFORE, AS P ER THE APPELLANT'S VOLUNTARY ADMISSION ITSELF, THE TOTAL SALE CONSIDERATION RECE IVED WAS RS.56,43,750/-. DURING THE COURSE OF APPELLATE PROCEEDINGS, IT IS CLAIMED THAT THE APPELLANT HAD ONLY RECEIVED RS.10 LAKHS AS A 'REFUNDABLE DEPOSIT' IT IS ALSO CLA IMED THAT THE SAID AMOUNT WAS REFUNDED ON COMPLETION AND HANDING OVER OF POSSESSI ON. BESIDES, THE APPELLANT HAS CLAIMED THAT INSTEAD OF RECEIVING RS.6500 SQUARE FE ET OF CONSTRUCTED AREA, AS MENTIONED IN THE DEVELOPMENT AGREEMENT AND ALSO ADM ITTED IN THE INITIAL STATEMENT, THE APPELLANT RECEIVED 4,325 SQUARE FEET ONLY AND T OWARDS THE BALANCE SURRENDERED AREA, THE DEVELOPER PAID HER RS.20,45,000/-. ACCORD INGLY, IT HAS NOW BEEN CLAIMED THAT THE CONSIDERATION WAS RS.38,90,000/- ONLY AND NOT RS.56,43,750/-. HOWEVER, IT IS CLEAR THAT THESE CLAIMS HAVE NOT BEEN SUBSTANTIA TED WITH ANY EVIDENCE, AS AGAINST THE CATEGORICAL ADMISSION MADE BY THE APPELLANT. AS DISCUSSED BY THE ASSESSING OFFICER, THE APPELLANT GAVE DIFFERENT VERSIONS REGA RDING THE QUANTUM AND- MANNER AT VARIOUS TIMES. HOWEVER, NONE OF SUCH VERSIONS, COUL D EVER BE SUBSTANTIATED WITH EVIDENCE. THEREFORE, IN MY CONSIDERED OPINION, IT I S ONLY THE INITIAL STATEMENT AND THE FIRST LETTER DATED 17.10.2008, WHICH CAN BE CONSIDE RED AS A TRUE AND UNINFLUENCED INDICATOR OF THE TOTAL SALE CONSIDERATION AND SUCH CONSIDERATION WAS INDEED RS.56,43,750/-. 8. SO FAR AS COST OF ACQUISITION IS CONCERNED, THE CIT(A) DIRECTED THE A.O. TO VERIFY THE COST OF THE LAND AND DIRECTED TO GRANT DEDUCTION ON INDEXED COST OF ACQUISITION. AS PER THE CLAIM OF E XEMPTION U/S 54F OF THE ACT, SHE HAS NOT FILED ANY DETAILS IN RESPECT O F CLAIM U/S 54F OF THE ACT. HE CONFIRMED THE ORDER OF THE A.O. BY OBSERVI NG AS UNDER: 08.2 AS REGARDS THE CLAIM OF EXEMPTION U/S.54F, IT IS SEEN THAT IN HER STATEMENT DATED 17-10-2010, THE APPELLANT HAD CLAIMED THE SAM E AT RS. 10,25,000/-. IN HER LETTER DATED 16-10-2010, THE CLAIM WAS RAISED TO RS .22,74,450/-, WHILE IN ANOTHER LETTER DATED 18-10-2010, THE APPELLANT CLAIMED RS.2 4,24,530/- AS DEDUCTION U/S.54F. THE VARIATION IN THE CLAIMS ITSELF SHOWS THAT THE A PPELLANT HERSELF IS NOT SURE ABOUT THE CLAIM OR THE BASIS THEREOF. EVEN IN THE COURSE OF APPELLATE PROCEEDINGS, NO CONCRETE WORKING OR EVIDENCE WITH REGARD TO SUCH CL AIM COULD BE SUBMITTED AND IT WAS ONLY CLAIMED THAT IN VIEW OF CERTAIN CASE LAWS, EITHER THE COST OF ALL THE FLATS OR AT LEAST THE COST OF 2 CONTIGUOUS FLATS SHOULD BE C ONSIDERED AS AMOUNT SPENT FOR ACQUISITION OF A RESIDENTIAL HOUSE. IT IS CLEAR THA T DESPITE SUCH CLAIMS NO EVIDENCE WITH REGARD TO ACQUISITION OF SUCH FLATS WAS GIVEN BEFORE THE ASSESSING OFFICER, NOR HAS ANY EVIDENCE BEEN SOUGHT TO BE ADMITTED IN THE COURSE OF THESE PROCEEDINGS. IT IS CLEAR THAT EXEMPTION U/S.54F IS SUBJECT TO VARIO US OTHER CONDITIONS, SUCH AS ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 9 RETENTION FOR A SPECIFIC PERIOD, ETC. THE APPELLANT HAS AT NO STAGE BEEN ABLE TO ESTABLISH THAT IT HAD COMPLIED WITH ALL SUCH CONDIT IONS AS HAVE BEEN PROVIDED U/S 54F. ACCORDINGLY, FINDING NO INFIRMITY IN THE DENI AL OF THE CLAIM U/S 54F, THE GROUND RAISED IN THIS REGARD IS ALSO DECIDED AGAINST THE A PPELLANT. 9. ON BEING AGGRIEVED, ASSESSEE CARRIED MATTER IN A PPEAL BEFORE THE TRIBUNAL. 10. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATION IS Y EAR OF TAXABILITY OF CAPITAL GAINS. THE FACTS WHICH LEAD TO THE ISSUE A RE THAT THE ASSESSEE IS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT ON 12.3. 2005 WITH M/S. VIGHNESWARA CONSTRUCTIONS, VISAKHAPATNAM AND AGREED TO SHARE BUILT UP AREA IN THE RATIO OF 46% FOR THE LAND OWNER AND 54% FOR THE DEVELOPER. AS PER THE SAID JOINT DEVELOPMENT AGREEMENT, THE AS SESSEE HAS GOT 6500 SQ.FT. SUPER BUILT UP AREA IN THE PROPOSED APARTMEN T. DURING THE COURSE OF SEARCH AND SEIZURE OPERATIONS IN THE CASED OF SH RI P. RAMA RAJU, PROPRIETOR OF SHRI VIGNESWARA CONSTRUCTINOS, THE AS SESSEE IN HER STATEMENT RECORDED ON 17.10.2008 HAS ADMITTED THAT THE CAPITAL GAIN IN RESPECT OF JOINT DEVELOPMENT AGREEMENT IS COMING FO R THE ASSESSMENT YEAR 2008-09, ACCORDINGLY, FILED A STATEMENT OF COM PUTATION OF CAPITAL GAIN BEFORE THE ASSESSING OFFICER. BASED ON SUCH ADMISSION, THE A.O. COME TO THE CONCLUSION THAT TRANSFER HAD TAKEN PLAC E FOR THE ASSESSMENT ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 10 YEAR 2008-09. IT IS THE CONTENTION OF THE ASSESSEE THAT SHE HAD ENTERED INTO JOINT DEVELOPMENT AGREEMENT IN THE YEAR 2004-0 5 AND THE BUILDER HAS HANDED OVER THE POSSESSION OF CONSTRUCTED APART MENT IN APRIL, 2006 AND ACCORDINGLY, TRANSFER WILL TAKE PLACE EITHER FO R THE ASSESSMENT YEAR 2005-06 OR ASSESSMENT YEAR 2006-07, BUT NOT FOR THE ASSESSMENT YEAR 2008-09. THE ASSESSEE FURTHER CONTENDED THAT SHE H AD ADMITTED CAPITAL GAINS FOR THE ASSESSMENT YEAR 2008-09, WHILE ANSWER ING STATEMENT RECORDED DURING THE COURSE OF SURVEY, BUT THE FACTS INDICATES THAT THE TRANSFER HAD TAKEN PLACE IN THE ASSESSMENT YEAR 200 5-06 IF THE DATE OF JOINT DEVELOPMENT AGREEMENT IS CONSIDERED AS DATE O F TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT, OR IF THE D ATE OF HANDING OVER POSSESSION BY THE BUILDER IS CONSIDERED, THEN THE T RANSFER WILL TAKE PLACE FOR THE ASSESSMENT YEAR 2006-07, THEREFORE, THE A.O . WAS NOT CORRECT IN COMING TO THE CONCLUSION THAT THE TRANSFER IS TAKEN PLACE FOR THE ASSESSMENT YEAR 2008-09. 11. HAVING HEARD BOTH THE PARTIES AND CONSIDERED MA TERIALS ON RECORD, WE DO NOT FIND ANY MERITS IN THE ARGUMENTS OF THE A SSESSEE FOR THE REASON THAT THE ASSESSEE HAD CATEGORICALLY ADMITTED DURING THE COURSE OF SURVEY THAT CAPITAL GAIN ARISES FOR THE ASSESSMENT YEAR 2008-09 AND ACCORDINGLY, FURNISHED A STATEMENT OF COMPUTATION O F CAPITAL GAIN, ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 11 HOWEVER, RETRACTED FROM HER ADMISSION WHILE FILING THE RETURN OF INCOME FOR THE ASSESSMENT YEAR 2008-09. IT IS ADMITTED FA CT THAT THE ASSESSEE IS ENTERED INTO A JOINT DEVELOPMENT AGREEMENT ON 12 .3.2005 WHICH PERTAINS TO THE ASSESSMENT YEAR 2005-06. IT IS TRU E THAT IN VIEW OF VARIOUS JUDICIAL PRONOUNCEMENTS, THE LONG TERM CAPI TAL GAIN ON TRANSFER OF A CAPITAL ASSET HAS TO BE TAXED EITHER IN THE YE AR IN WHICH THE DEVELOPMENT AGREEMENT IS ENTERED INTO OR IN THE YEA R IN WHICH POSSESSION OF THE CONSTRUCTED AREA IS HANDED OVER T O THE LAND LORD. IN THE INSTANT CASE, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND THAT THE ASSESSEE HAS ENTERED INTO A JOINT DEVELOPMENT A GREEMENT ON 12.3.2005 WHICH FALLS UNDER THE ASSESSMENT YEAR 200 5-06. HOWEVER, NO SUCH GAINS WERE OFFERED TO TAX IN THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO I.E. IN THE ASSESSMENT YEAR 2005-06. THE ASSESSEE CLAIMS THAT THE BUILDER HAS HANDED OVER TH E POSSESSION OF CONSTRUCTED APARTMENT IN THE MONTH OF APRIL, 2006 A ND ACCORDINGLY THE TRANSFER WOULD TAKEN PLACE FOR THE ASSESSMENT YEAR 2006-07. BUT THE FACT IS THAT THE ASSESSEE CLAIMS TO HAVE RECEIVED T HE POSSESSION OF CONSTRUCTED APARTMENT IN THE MONTH OF APRIL, 2006 B ASED ON THE SALE DEED EXECUTED BY HER IN FAVOUR OF THE PROSPECTIVE B UYER IN THE MONTH OF APRIL, 2006 ON WHICH DATE THE BUILDER HAS ENTERED I NTO A SEPARATE CONSTRUCTION AGREEMENT FOR CONSTRUCTION APARTMENT F OR THE PROSPECTIVE ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 12 BUYERS. ON PERUSAL OF THE SAID CONSTRUCTION AGREEM ENT, WE FIND THAT THE BUILDER AGREED TO COMPLETE THE CONSTRUCTION OF THE SAID FLAT AND HANDED OVER THE POSSESSION OF THE SAME WITHIN 18 MONTHS FR OM THE DATE OF THIS AGREEMENT. IF YOU TAKE THE DATE OF SALE OF UNDIVID ED PORTION OF LAND AND DATE OF CONSTRUCTION AGREEMENT COUPLED WITH PERIOD TAKEN BY THE BUILDER FOR CONSTRUCTION OF THE APARTMENT WHICH FALLS WITHI N THE FINANCIAL YEAR 2006-07 RELEVANT TO ASSESSMENT YEAR 2008-09. BASED ON SUCH AGREEMENT, THE ASSESSEE HAS AGREED TO DISCLOSE CAPI TAL GAIN FOR THE ASSESSMENT YEAR 2008-09 AT THE TIME OF SURVEY. HOW EVER, SHE HAS RETRACTED HER OWN STATEMENT AND CLAIMS THAT IF AT A LL TRANSFER HAS TAKEN PLACE IT WILL TAKE PLACE FOR THE ASSESSMENT YEAR 20 05-06 OR 2006-07, BUT NOT FOR THE ASSESSMENT YEAR 2008-09. THEREFORE, WE ARE OF THE VIEW THAT THE A.O. IS RIGHT IN COMPUTING CAPITAL GAIN ON TRANSFER OF LAND IN PURSUANT TO JOINT DEVELOPMENT AGREEMENT FOR THE ASS ESSMENT YEAR 2008- 09 BASED N THE ASSESSEES OWN ADMISSION AT THE TIME OF SURVEY WHICH IS FURTHER SUPPORTED BY COPIES OF SALE DEED AND CONSTR UCTION AGREEMENTS. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS R IGHTLY UPHELD THE ORDER OF THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF LD. CIT(A), HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORD ER AND REJECT THE GROUND RAISED BY THE ASSESSEE. ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 13 12. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATI ON IS COMPUTATION OF LONG TERM CAPITAL GAIN. THE A.O. HAS ADOPTED CO NSIDERATION OF ` 56,43,750/- IN RESPECT OF TRANSFER OF LAND IN LIEU OF CONSTRUCTION OF 6500SQ.FT. BUILDING AND ALSO CASH CONSIDERATION OF ` 24 LAKHS ADMITTED BY THE ASSESSEE AT THE TIME OF SURVEY. THE ASSESSEE C LAIMS THAT SHE HAD NOT RECEIVED CASH CONSIDERATION OF ` 24 LAKHS IN ADDITION TO SUPER BUILT UP AREA OF 6500 SQ.FT. THE ASSESSEE FURTHER CLAIMS THAT AS PER THE JOINT DEVELOPMENT AGREEMENT, SHE IS SUPPOSED TO RECEIVE 6 500 SQ.FT. SUPER BUILT UP AREA, HOWEVER, SHE HAD RECEIVED 4325 SQ.FT . SUPER BUILT UP AREA AND REMAINING 2175 SQ.FT. HAS BEEN SURRENDERED TO T HE BUILDER FOR WHICH SHE HAS RECEIVED A CONSIDERATION OF 20,45,000/-. T HE TOTAL CONSIDERATION RECEIVED TOWARDS TRANSFER OF LAND PURSUANT TO JOINT DEVELOPMENT AGREEMENT IS ` 42,07,500/- AS AGAINST THIS, THE A.O. HAS ADOPTED CONSIDERATION OF ` 56,43,750/-. 13. HAVING HEARD BOTH THE PARTIES AND CONSIDERED TH E MATERIALS AVAILABLE ON RECORD, WE FIND THAT THE A.O. HAS CONS IDERED CONSIDERATION OF ` 56,43,750/- TOWARDS SALE OF UNDIVIDED AND UNSPECIF IED SHARE OF LAND BEING THE COST OF CONSTRUCTION OF 6500 SQ.FT. BUILT UP AREA OF ` 32,43,750/- AND CASH CONSIDERATION OF ` 24 LAKHS OVER AND ABOVE THE SUPER BUILT UP AREA AS AGREED BY THE ASSESSEE AT TH E TIME OF SURVEY. ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 14 THE A.O. HAS ADOPTED SUCH CONSIDERATION AS AGREED B Y THE ASSESSEE AT THE TIME OF RECORDING STATEMENT. HOWEVER, THE ASSE SSEE CLAIMS THAT THE CONSIDERATION ADOPTED BY THE A.O. IS NOT CORRECT, B ECAUSE THE A.O. HAS TAKEN CONSIDERATION TOWARDS 6500 SQ.FT. SUPER BUILT UP AREA AND ALSO CASH CONSIDERATION OF ` 24 LAKHS. BUT THE FACT IS THAT SHE HAD RECEIVED SUPER BUILT UP AREA OF 4325 SQ.FT. AND SURRENDERED REMAINING 2175 SQ.FT. CONSTRUCTED AREA TO THE BUILDER FOR WHICH SHE HAD R ECEIVED ` 20,45,000/- WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR T HE REASON THAT INITIALLY THE A.O. HAS TAKEN COST OF CONSTRUCTION O F 6500 SQ.FT. AREA AS CONSIDERATION FOR TRANSFER OF 54% UNDIVIDED AND UNS PECIFIED SHARE OF LAND AND CASH CONSIDERATION OF ` 24 LAKHS. ACCORDING TO THE ASSESSEE, SHE HAD RECEIVED ONLY 4325 SQ.FT. BUT NOT 6500 SQ.F T. SUPER BUILT UP AREA. THOUGH ASSESSEE CLAIMS TO HAVE RECEIVED ONLY 4325 S Q.FT. AREA, SHE COULD NOT SUBSTANTIATE HER CLAIM WITH ANY EVIDENCES . AS DISCUSSED BY THE ASSESSING OFFICER, THE ASSESSEE GAVE DIFFERENT VERSION REGARDING THE QUANTUM AND MANNER OF COMPUTATION OF LONG TERM CAPI TAL GAINS ON VARIOUS TIMES, HOWEVER, NONE OF SUCH VERSIONS ARE S UBSTANTIATED WITH EVIDENCES. THEREFORE, CONSIDERING THE OVER ALL FAC TS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE ISSUE N EEDS TO BE RE- EXAMINED BY THE A.O. IN THE LIGHT OF THE ABOVE DISC USSIONS TO FIND OUT WHAT IS THE EXACT AMOUNT OF CONSIDERATION RECEIVED BY THE ASSESSEE ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 15 TOWARDS TRANSFER OF UNDIVIDED PORTION OF LAND AND S URRENDER OF 2175 SQ.FT. SUPER BUILT UP AREA. HENCE, WE SET ASIDE TH E ISSUE TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO EXAMINE THE ISSUE W ITH REFERENCE TO EVIDENCES AND RE-COMPUTE THE CAPITAL GAIN IN ACCORD ANCE WITH LAW. 14. THE NEXT ISSUE WITH REGARD TO EXEMPTION U/S 54F OF THE ACT. THE ASSESSEE HAS CLAIMED EXEMPTION U/S 54F OF THE ACT T OWARDS RE- INVESTMENT IN PURCHASE OF ANOTHER RESIDENTIAL HOUSE PROPERTY. IT IS SEEN FROM THE STATEMENT DATED 17.10.2010 THAT THE ASSESS EE HAD CLAIMED EXEMPTION OF ` 10,25,000/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS IN HER LETTER DATED 16.10.2010, THE CLA IM WAS RAISED TO ` 22,72,450/-. THE ASSESSEE HAS FILED YET ANOTHER LE TTER DATED 18.10.2010, WHEREIN SHE HAD CLAIMED EXEMPTION OF ` 24,24,530/-. ACCORDING TO THE A.O., THE ASSESSEE IS NOT ELIGIBLE FOR CLAIMING EXEMPTION U/S 54F OF THE ACT, AS AT THE TIME OF INVESTMENT, S HE HAD INVESTED IN MORE THAN ONE RESIDENTIAL HOUSE PROPERTY, ACCORDING LY, AS PER THE PROVISIONS OF SECTION 54F OF THE ACT, SHE IS NOT EL IGIBLE FOR CLAIMING EXEMPTION. IT IS THE CONTENTION OF THE ASSESSEE TH AT IN VIEW OF CERTAIN CASE LAWS, EITHER THE COST OF ALL THE FLATS OR THE COST OF ATLEAST TWO CONTIGUOUS FLATS SHOULD BE CONSIDERED AS AMOUNT SPE NT FOR ACQUISITION OF RESIDENTIAL HOUSES. THE ASSESSEE FURTHER CONTENDED THAT SHE HAD ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 16 RECEIVED FOUR FLATS WHICH ARE SITUATED IN A SINGLE RESIDENTIAL COMPLEX AND ADJACENT TO EACH OTHER, THEREFORE, IN VIEW OF THE J UDICIAL DECISIONS, SHE IS ELIGIBLE FOR CLAIMING EXEMPTION U/S 54F OF THE ACT IN RESPECT OF ALL FOUR FLATS. TO SUPPORT HER CASE, RELIED UPON THE DECISI ON OF HONBLE HIGH COURT OF ANDHRA PRADESH IN THE CASE OF P. NAGESWARA RAO VS. DCIT (2014) 365 ITR 249 AND ALSO THE DECISION OF HONBLE HIGH COURT OF MADRAS IN THE CASE OF CIT VS. V.R. KARPAGAM (2015) 373 ITR 127. 15. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATE RIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. HAS REJECTED EXEMPTION CLAIMED BY THE ASSESSEE UNDER THE PROVISIONS OF SECTION 54F OF THE ACT. ACCORDING TO THE A.O., THE ASSESSEE IS NOT ELIGIBLE TO CLAIM EXEMPTION U/S 54F OF THE A CT, BECAUSE AT THE TIME OF RE-INVESTMENT IN NEW RESIDENTIAL HOUSE, SHE HAS PURCHASED MORE THAN ONE RESIDENTIAL HOUSE PROPERTY. IT IS THE CONTENTI ON OF THE ASSESSEE THAT IN VIEW OF CERTAIN CASE LAWS EITHER THE COST OF ALL THE FLATS OR ATLEAST THE COST OF TWO CONTIGUOUS FLATS SHOULD BE CONSIDERED A S AMOUNT SPENT FOR ACQUISITION OF RESIDENTIAL HOUSE. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT WHEN ASSESSEE TRANSFER S ANY ASSET OTHER THAN A RESIDENTIAL HOUSE PROPERTY, IN PURSUANCE TO A JOINT DEVELOPMENT AGREEMENT, THE ASSESSEE IS ELIGIBLE TO CLAIM EXEMPT ION U/S 54F OF THE ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 17 ACT IN RESPECT OF ONE RESIDENTIAL HOUSE OR TWO RESI DENTIAL APARTMENTS WHICH ARE ADJACENT TO EACH OTHER. IN THE PRESENT C ASE ON HAND, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, WE FIND T HAT THE ASSESSEE HAS MADE DIFFERENT CLAIMS AT DIFFERENT STAGES WITHOUT A NY DOCUMENTARY EVIDENCE TO SHOW THAT SHE HAD MADE INVESTMENT IN RE SIDENTIAL HOUSE PROPERTY. NO DOUBT THE ASSESSEE IS ELIGIBLE TO CLA IM EXEMPTION IN RESPECT OF ONE RESIDENTIAL HOUSE PROPERTY, HOWEVER, ON PERUSAL OF THE FACTS AVAILABLE ON RECORD, IT IS CLEAR THAT THE CLA IM MADE BY THE ASSESSEE IS INCONSISTENT. THE ASSESSEE HAD MADE A CLAIM OF ` 10,25,000/- AT THE TIME OF SURVEY AND THE SAME HAS BEEN ENHANCED TO ` 22,74,450/- AND FINALLY RAISED TO ` 24,24,530/-. THOUGH ASSESSEE IS ELIGIBLE TO CLAIM EXEMPTION U/S 54F OF THE ACT IN RESPECT OF ONE RESI DENTIAL HOUSE, IN VIEW OF INCONSISTENT CLAIM MADE BY THE ASSESSEE, WE DEEM IT APPROPRIATE TO REMIT THE MATTER BACK TO FILE OF THE A.O. TO CONSID ER THE ISSUE AFRESH. ACCORDINGLY, WE SET ASIDE THE ISSUE TO THE FILE OF THE A.O. AND DIRECT THE A.O. TO EXAMINE THE CLAIM MADE BY THE ASSESSEE WITH REFERENCE TO THE PROVISIONS OF SECTION 54F OF THE ACT. IN CASE, THE ASSESSEE HAS CLAIMED EXEMPTION IN RESPECT OF ONE RESIDENTIAL HOUSE PROPE RTY OR TWO CONTIGUOUS FLATS ADJACENT TO EACH OTHER, THEN THE A .O. IS DIRECTED TO ALLOW EXEMPTION AS CLAIMED BY THE ASSESSEE. IN CAS E THE ASSESSEE HAS CLAIMED EXEMPTION IN RESPECT OF FOUR FLATS, THEN TH E A.O. IS DIRECTED TO ITA NO.247/VIZAG/2013 SMT. D. NAGAMANI, VISAKHAPATNAM 18 ALLOW EXEMPTION IN RESPECT OF ONE FLAT ACCORDING TO THE CHOICE OF THE ASSESSEE. 16. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 20 TH SEPT16. SD/- SD/- ( . ) ( . ) (G. MANJUNATHA) (V. DURGA RAO) /ACCOUNTANT MEMBER /JUDICIAL MEMBER ! /VISAKHAPATNAM: % /DATED : 20.09.2016 VG/SPS '! (! /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT SMT. D. NAGAMANI, C/O A. J. MOHA N, B.COM, LLB DR.NO.47-12-2/1, DWARAKANAGAR, VISAKHAPATNAM-530 01 6 2. / THE RESPONDENT THE DCIT, CENTRAL CIRCLE-1, VIS AKHAPATNAM 3. ) / THE CIT (CENTRAL), HYDERABAD 4. ) ( ) / THE CIT(A)-I, HYDERABAD 5. ! , , , , ! / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // /0 , (SR.PRIVATE SECRETARY) , , ! / ITAT, VISAKHAPATNAM