ACIT 31(2), MUMBAI V. HARINARAYAN L. SINGH, MUMBAI

ITA 2532/MUM/2015

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7476 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 11 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-04-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: I
• Assessment Year: 2008-2009
• Appeal Filed On: 01-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Application of stay; Cost of acquisition; Fair market value
• Section: 143(3); 133(6); 148; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES J, MUMBAI BEFORE SHRI G S PANNU, ACCOUNTANT MEMBER & SHRI RAM LAL NEGI, JUDICIAL MEMBER ITA NO.1574/MUM/2013 ASSESSMENT YEAR: 2007-08 ITA NO.3299/MUM.2013 ASSESSMENT YEAR: 2008-09 ITA NO.3303/MUM/2013 ASSESSMENT YEAR: 2008-09 JAIPRAKASH L SINGH, KHWAISH, LAXMI SINGH ESTATE, S V ROAD, GOREGOAN (W), MUMBAI 400 062 PAN AACPS4994F VS. DCIT 24(3)/ ITO 31(2)(1) MUMBAI (APPELLANT) (RESPONDENT) CO NO.161/MUM/2016 (ARISING OUT OF ITA NO.1264/MUM/2015 FOR ASSESSMENT YEAR :2007-08) JAIPRAKASH L SINGH, MUMBAI 400 062 PAN AACPS4994F VS. ITO 31(2)(1) MUMBAI (CROSS OBJECTOR) (RESPONDENT) ITA NO.1264/MUM/2015 ASSESSMENT YEAR: 2007-08 ITA NO.2531/MUM/2015 ASSESSMENT YEAR: 2008-09 ITA NO.4530/MUM/2013 ASSESSMENT YEAR: 2008-09 ITA NO.2530/MUM/2015 ASSESSMENT YEAR: 2008-09 ITO 31(2)(1)/ACIT 31(2) /ACIT 24(3) MUMBAI VS. JAIPRAKASH L SINGH, MUMBAI 400 062 PAN AACPS4994F (APPELLANT) (RESPONDENT) FOR THE ASSESSEE/CROSS-OBJECTOR : SHRI M SUBRAMANIA N FOR THE REVENUE : SHRI N S JANPANGI (CIT-DR) JAIPRAKASH L SINGH & ORS. 2 ITA NO.2345/MUM/2013 ASSESSMENT YEAR: 2008-09 ACIT 24(3) MUMBAI VS. SATYAPRAKASH SINGH, 25 LAXMI NIWAS, NEAR MTNL, SV ROAD, GOREGAON (W), MUMBAI 400 062 PAN AAGPS0472A (APPELLANT) (RESPONDENT) ITA NO.2532/MUM/2015 ASSESSMENT YEAR: 2008-09 ITA NO.2533/MUM/2015 ASSESSMENT YEAR: 2008-09 ITA NO.4529/MUM/2013 ASSESSMENT YEAR: 2008-09 ACIT 31(1)/ACIT 24(3) MUMBAI VS. HARINARAYAN L SINGH, B-3 HARINDRA BUNGLOW, LAXMI SINGH COMPOUND, SV ROAD, GOREGAON (W), MUMBAI 400 062 PAN AARPS9776J (APPELLANT) (RESPONDENT) ITA NO.3301/MUM/2013 ASSESSMENT YEAR: 2008-09 ITA NO.3302/MUM/2013 ASSESSMENT YEAR: 2008-09 HARINARAYAN L SINGH, MUMBAI 400 062 PAN AARPS9776J VS. DCIT 24(3) MUMBAI (APPELLANT) (RESPONDENT) JAIPRAKASH L SINGH & ORS. 3 ITA NO.3052/MUM/2015 ASSESSMENT YEAR: 2008-09 & SA NO. 268/MUM/2018 (ARISING OUT OF ITA NO.3052/MUM/2015 ASSESSMENT YEA R: 2008-09 DR. NEELAM OMPRAKASH SINGH, C/O NEELAM NURSING HOME, LAXMI PALACE, S V ROAD, MALAD (W),MUMBAI 400 064 PAN ABDPS7751C VS. ACIT RG 11(3) MUMBAI (APPELLANT/APPLICANT) RESPONDENT) ITA NO.3195 MUM/2015 ASSESSMENT YEAR: 2008-09 ACIT RG 16(3) MUMBAI VS. NEELAM OMPRAKASH SINGH, MUMBAI 400 064 PAN ABDPS7751C (APPELLANT) RESPONDENT) ITA NO.3093/MUM/2013 ASSESSMENT YEAR: 2009-10 ACIT 24(3) MUMBAI VS. SATYAPRAKASH SINGH 25, LAXMI NIWAS, NEAR MTNL, S V ROAD, GOREGAON (W), MUMBAI -400 064 PAN AAGPS0472A (APPELLANT) RESPONDENT) ITA NO.3261/MUM/2013 ASSESSMENT YEAR: 2008-09 SATYAPRAKASH SINGH MUMBAI -400 064 PAN AAGPS0472A VS. DCIT 24(3) MUMBAI (APPELLANT) RESPONDENT) JAIPRAKASH L SINGH & ORS. 4 ITA NO.4041/MUM/2014 ASSESSMENT YEAR 2010-11 ITA NO.4705/MUM/2012 ASSESSMENT YEAR: 2008-09 DCIT 24(2) MUMBAI VS. MS NATASHA OMPRAKASH SINGH C/O NEELAM NURSINGH HOME, LAXMI PALACE, S V ROAD, MALAD (W) MUMBAI -400 064 PAN BCSPS7886P (APPELLANT) RESPONDENT) FOR THE ASSESSEE : SHRI RAHUL HAKANI FOR THE REVENUE : SHRI N S JANPANGI (CIT-DR) DATE OF HEARING :19.04.2018 DATE OF PRONOUNCEMENT : 19.04.2018 O R D E R PER G.S.PANNU,A.M: THE CAPTIONED APPEALS PREFERRED BY ASSESSEES AND THE REVENUE, INVOLVING ASSESSMENT YEARS VIZ. 2007-08, 2008-09 & 2009-10, A RE IN RESPECT OF FOUR DIFFERENT ASSESSEES BELONGING TO ONE FAMILY. AT THE TIME OF HEARING, IT WAS A COMMON POINT BETWEEN THE PARTIES THAT THE DISPUTES IN ALL THE AP PEALS STAND ON AN IDENTICAL FOOTING THEREFORE, THEY HAVE BEEN CLUBBED, HEARD TOGETHER, AND WE PASS THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 2. THE CROSS APPEALS BY THE ASSESSEE AND THE REVENU E, BEARING ITA NOS. 3303/MUM/2013 & 4530/MUM/2013 RESPECTIVELY FOR ASSE SSMENT YEAR 2008-09 IN THE CASE OF JAIPRAKASH L SINGH ARE BEING TAKEN UP AT TH E THRESHOLD AS THE LEAD CASE. BEFORE WE PROCEED TO REFER TO THE SPECIFIC GROUNDS RAISED, A BRIEF BACKGROUND OF THE MANNER IN WHICH THE CAPTIONED PROCEEDINGS HAVE ARIS EN CAN BE SUMMARIZED AS FOLLOWS. THE ASSESSEE, SHRI JAIPRAKASH SINGH, ALON G WITH HIS FOUR BROTHERS, WAS CO- JAIPRAKASH L SINGH & ORS. 5 OWNER OF A LAND SITUATED AT GOREGOAN (WEST). THE L AND BELONGED TO ONE SHRI LAXMI SINGH UDIT SINGH, FATHER OF THE ASSESSEE, WHO DIED INTESTATE ON 15.03.1986, LEAVING BEHIND HIS WIDOW SMT KAUDHLYA LAXMI SINGH, HIS FI VE SONS AND FIVE DAUGHTERS. SMT. KAUDHLYA LAXMI SINGH AND FIVE DAUGHTERS RELINQ UISHED THEIR RIGHTS IN FAVOUR OF SONS. ONE OF THE SONS, DR. OMPRAKASH SINGH ALSO DI ED INTESTATE ON 07.06.1991 LEAVING BEHIND HIS WIDOW SMT. NEELAM OMPRAKASH SING H, ALONG WITH A SON AND A DAUGHTER. THE CO-OWNERS ENTERED INTO DEVELOPMENT A GREEMENT WITH M/S. BRICKWORKS TRADING PVT. LTD. ON 09.10.2002, WHEREBY THEY AGREED TO GIVE THE LAND FOR DEVELOPMENT AND CONSTRUCTION OF BUILDING TO THE DEVELOPER. ON THE SAME DATE THE POWER OF ATTORNEY WAS ALSO EXECUTED IN FAVOUR O F THE DEVELOPER WHICH WAS ALSO DULY REGISTERED. 3. THE RETURN OF INCOME FOR A.Y. 2008-09 WAS FILED BY THE ASSESSEE ON 12.02.2009 DECLARING LONG TERM CAPITAL GAIN OF ` 8,06,47,126/- IN RESPECT OF DEVELOPMENT RIGHTS ASSIGNED TO M/S. BRICKWORKS TRAD ING PVT. LTD. THE RETURN OF INCOME, SO FILED WAS IN TERMS OF SECTION 139(4) OF THE ACT, WAS REGULARIZED BY THE ASSESSING OFFICER BY ISSUING NOTICE U/S. 148 OF THE ACT. IN THE ENSUING ASSESSMENT MADE U/S. 143(3) R.W.S 147 OF THE ACT, VIDE ORDER D ATED 28.12.2011, THE TOTAL INCOME HAS BEEN ASSESSED AT ` 18,18,59,920/- THE DIFFERENCE BETWEEN THE RETURNED INCOME AND THE ASSESSED INCOME CAN BE UNDERSTOOD AS FOLLOWS. THE ASSESSING OFFICER PERUSED THE DEVELOPMENT AGREEMENT DATED 09. 10.2002 AND NOTED THAT THE SALE PROCEEDS OF THE SALE OF FLATS, SHOPS AND OTHER PREMISES TO BE DEVELOPED ON THE IMPUGNED LAND WERE TO BE SHARED BETWEEN THE DEVELOP ER AND THE ASSESSEE CO- OWNERS IN THE RATIO OF 60:40. THE SAID 40% WAS EQU ALLY DIVISIBLE BETWEEN THE CO- OWNERS AND, THUS, THE ASSESSEES SHARE WAS 1/5 TH . IT WAS NOTED BY THE ASSESSING JAIPRAKASH L SINGH & ORS. 6 OFFICER THAT IN TERMS OF FURTHER DEED OF RECTIFICAT ION WITH THE DEVELOPER DATED 25.03.2008, THE ASSESSEE WAS ALLOTTED FOUR FLATS, T WO PENT HOUSES AND ONE SHOP IN ADDITION TO THE REVENUES WHICH WERE ALREADY SHOWN I N DIFFERENT YEARS AS PER THE AGREEMENT EARLIER AGREED UPON. THE SUPPLEMENTARY A GREEMENT ALSO ENTITLED THE ASSESSEE TO RECEIVE 8% OF THE SHOPPING AREA IN A MA LL TO BE DEVELOPED. THE ASSESSING OFFICER ISSUED NOTICE U/S. 133(6) TO M/S. BRICKWORKS TRADING PVT. LTD. AND ASCERTAINED THE DETAILS OF THE CONSIDERATION PAID T O THE ASSESSEE INCLUDING THE BUILT- UP AREA IN THE PROPOSED DEVELOPMENT. THE ASSESSING OFFICER REQUIRED THE ASSESSEE TO EXPLAIN AS TO WHY THE VALUE OF FLATS/SHOPS/PENT HOUSES ALLOTTED TO THE ASSESSEE IN TERMS OF THE RECTIFICATION DEED DATED 25.03.2008, W AS NOT INCLUDED IN THE WORKING OF LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER WAS NOT SATISFIED WITH THE EXPLANATION AND IN PARA 12 OF HIS ORDER, HE HAS ADDED A SUM OF ` 5,34,84,990/- TO THE RETURN OF INCOME, REPRESENTING THE VALUE OF FLAT/PENT HOUSE/ SHOP ETC., ALLOTTED TO THE ASSESSEE. SECONDLY, THE ASSESSING OFFICER EXAMINED THE WORKING OF LONG TERM CAPITAL GAIN AND NOTED THAT THE INDEXED COST OF ACQ UISITION WAS NOT APPROPRIATELY ADOPTED. THE ASSESSING OFFICER WAS ALSO NOT SATISF IED WITH THE FAIR MARKET VALUE (FMV) OF THE PLOT AS ON 01.04.1981 ADOPTED BY THE A SSESSEE AS THE COST OF ACQUISITION. ON BOTH THESE ASPECTS, HE FURTHER MAD E AN ADDITION OF ` 9,80,42,847/-. THIRDLY, HE ALSO MADE AN ADDITION OF ` 29,37,229/- WITH RESPECT TO THE FLATS WHICH WERE IN TURN SOLD BY THE ASSESSEE. THUS, AS AGAINS T RETURNED LONG TERM CAPITAL GAIN OF ` 8,06,47,126/- THE ASSESSING OFFICER COMPUTED THE S AME AT ` 18,16,27,202/-. ALL THESE ADDITIONS WERE CARRIED IN APPEAL BEFORE T HE CIT(A), WHO HAS ALLOWED PARTIAL RELIEF. THE CIT(A) SET ASIDE THE ACTION OF THE ASS ESSING OFFICER WITH REGARD TO THE INDEXED VALUE OF THE COST OF ACQUISITION AS ALSO IN CLUSION OF THE VALUE OF JAIPRAKASH L SINGH & ORS. 7 FLATS/PENTHOUSE/SHOPS IN THE COMPUTATION OF LONG TE RM CAPITAL GAIN. THESE ASPECTS HAVE BEEN CHALLENGED BY THE REVENUE BEFORE US IN IT A NO. 4350/MUM/2013 WHEREAS, NOT BEING SATISFIED WITH THE ORDER OF THE CIT(A), THE ASSESSEE IS IN APPEAL IN ITA NO. 3303/MUM/2013. SINCE THE TWO CROSS APPE ALS RAISE COMMON ISSUES THEY ARE BEING TAKEN UP TOGETHER. 4. THE AFORESAID DISCUSSION WOULD SHOW THAT THE DIF FERENCES BETWEEN THE ASSESSEE AND REVENUE PERTAIN TO COMPUTATION AND QUA NTIFICATION OF LONG TERM CAPITAL GAINS. HOWEVER, AT THE TIME OF HEARING, TH E LEARNED REPRESENTATIVE FOR THE ASSESSEE HAS NOT URGED THE ORIGINAL GROUNDS RAISED IN THE MEMO OF APPEAL BUT GAVE A TWIST TO THE ENTIRE CONTROVERSY AND RAISED AN ADD ITIONAL GROUND ON A POINT OF LAW, WHEREBY IT IS CONTESTED THAT THERE IS NO TRANSFER O F ASSET IN THE PREVIOUS YEAR RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION AND , THEREFORE, NO PART OF THE CAPITAL GAIN CAN BE ASSESSED IN THE INSTANT YEAR. PERTINENTLY, THE SAID GROUND IS BASED ON THE MEANING OF THE EXPRESSION TRANSFER CONTAINED IN SECTION 2(47) OF THE ACT AND, HAVING REGARD TO THE TERMS AND CONDITIONS OF AGREEMENT DATED 09.10.2002; AND, AS IT INVOLVES A POINT OF LAW FOR WHICH NECESS ARY FACTS ARE AVAILABLE ON RECORD, THE SAID ADDITIONAL GROUND WAS ADMITTED FOR ADJUDIC ATION. ANOTHER PERTINENT ASPECT BROUGHT OUT WAS THAT A SIMILAR POINT WAS RAISED IN THE CASE OF TWO OF THE OTHER CO- OWNERS NAMELY, S/SHRI AWADHNARAYAN SINGH AND SATYA PRAKASH SINGH, WHICH CAME UP BEFORE THE TRIBUNAL IN ITA NO.7363/MUM/2003 & OR S FOR A.Y. 2007-08 AND THE TRIBUNAL VIDE ITS ORDER, DATED 02.03.2016, ADMITTED SUCH PLEA AND HELD THAT TRANSFER IN TERMS OF THE SAID DEVELOPMENT AGREEME NT TOOK PLACE IN A.Y. 2003-04 AND ACCORDINGLY NO CAPITAL GAIN WAS ASSESSABLE IN T HE INSTANT YEAR. FOR ALL THE SAID JAIPRAKASH L SINGH & ORS. 8 REASONS, IT WAS DEEMED FIT TO ADMIT THE ADDITIONAL GROUND AND ACCORDINGLY THE RESPECTIVE COUNSELS WERE HEARD ON THIS AT THE THRES HOLD. 5. AS A CONSEQUENCE THE APPEAL HAS BEEN HEARD ON TH E PRELIMINARY ISSUE TO THE EFFECT THAT SINCE TRANSFER IN TERMS OF THE DEVELO PMENT AGREEMENT DATED 09.10.2002 HAS TAKEN PLACE IN A.Y. 2003-04, THE ASSESSMENT OF CAPITAL GAIN IN THIS YEAR IS NOT JUSTIFIED. ON THIS ASPECT, WE HAVE PERUSED THE DEC ISION OF THE TRIBUNAL DATED 02.03.2016 (SUPRA), WHEREIN THE RELEVANT DISCUSSION IS AS UNDER: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE RECORD. IT IS A WELL SETTLED PROPOSITION OF LAW THAT THERE IS NO ESTOPPEL AGAINST LAW AND HENCE WE ARE OF THE VIEW THAT THE ASSESSEES HEREIN ARE ENTITLED TO CONTEND THAT THE INCOME OFFERED BY THEM IS NOT LIAB LE TO TAX DURING THE YEAR UNDER CONSIDERATION, IF THE SAID INCOME IS NOT LIABLE TO TAX AT ALL IN THAT YEAR. IN THE INSTANT CASES, THE UNDISPUTED FAC T REMAINS THAT THE ASSESSEES HAVE ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S BRICKWORK TRADING PVT. LTD. ON 09-10-2002. THE VER Y FACT THAT THE DEVELOPMENT PROJECT WAS COMPLETED IN THE FY 2006-07 ITSELF SHOWS THAT THE AGREEMENT SHOULD HAVE BEEN ENTERED MUCH EARLIER . THE POWER OF ATTORNEY EXECUTED IN FAVOUR OF THE DEVELOPER HAS BE EN REGISTERED IN OCT., 2002. HENCE THERE IS MERIT IN THE SUBMISSIONS OF TH E ASSESSEES THAT THE POSSESSION WAS HANDED OVER TO THE DEVELOPER AT THAT POINT OF TIME ITSELF. 8. IN THIS REGARD, WE MAY REFER TO THE PROVISIONS OF SEC. 2(47), WHICH DEFINES THE WORD TRANSFER. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE PROVISIONS OF CLAUSE (V) AND (VI) OF SEC. 2(47) OF THE ACT:- 2(47) TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUDES, ...... (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SEC. 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882); OR (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 AGREEMENT OR AN Y ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EF FECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMM OVABLE PROPERTY. JAIPRAKASH L SINGH & ORS. 9 IN THE INSTANT CASE, BY VIRTUE OF DEVELOPMENT AGREE MENT, THE ASSESSEE HAS HANDED OVER THE POSSESSION OF THE IMPUGNED LAND DURING THE FY 2002-03. HENCE, IN TERMS OF SEC.2(47)(V) AND 2(47)( VI) OF THE ACT, THE TAXABILITY OF CAPITAL GAIN HAS TO BE CONSIDERED IN AY 2003-04. OUR VIEW GETS SUPPORT FROM THE DECISION RENDERED BY HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHU DWARKADAS KAPADIA VS. CIT (260 ITR 491). 9 THE LEGAL POSITION OF DEVELOPMENT AGREEMENT VIS- -VIS SECTION 2(47(V) OF THE ACT WAS CONSIDERED BY THE HONBLE BO MBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA, CITED SUP RA. THE RELEVANT OBSERVATIONS OF THE HIGH COURT, IN THAT CASE, ARE E XTRACTED BELOW: IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT THERE WAS NO EFFECTIVE TRANSFER TILL GRANT OF IRREVOCABLE LICENC E. IN THIS CONNECTION, THE JUDGMENTS OF THE SUPREME COURT WERE CITED ON BEHALF OF THE ASSESSEE, BUT ALL THOSE JUDGMENTS WER E PRIOR TO INTRODUCTION OF THE CONCEPT OF DEEMED TRANSFER UNDE R SECTION 2(47)(V). IN THIS MATTER, THE AGREEMENT IN QUESTION IS A DEVELOPMENT AGREEMENT. SUCH DEVELOPMENT AGREEMENTS DO NOT CONSTITUTE TRANSFER IN GENERAL LAW. THEY ARE SP READ OVER A PERIOD OF TIME. THEY CONTEMPLATE VARIOUS STAGES. TH E BOMBAY HIGH COURT IN VARIOUS JUDGMENTS HAS TAKEN THE VIEW IN SEVERAL MATTERS THAT THE OBJECT OF ENTERING INTO A DEVELOPM ENT AGREEMENT IS TO ENABLE A PROFESSIONAL BUILDER/CONTR ACTOR TO MAKE PROFITS BY COMPLETING THE BUILDING AND SELLING THE FLATS AT A PROFIT. THAT THE AIM OF THESE PROFESSIONAL CONTRA CTORS WAS ONLY TO MAKE PROFITS BY COMPLETING THE BUILDING AND , THEREFORE, NO INTEREST IN THE LAND STANDS CREATED IN THEIR FAV OUR UNDER SUCH AGREEMENTS, THAT SUCH AGREEMENTS ARE ONLY A MO DE OF REMUNERATING THE BUILDER FOR HIS SERVICES OF CONSTR UCTING THE BUILDING (SEE GURUDEV DEVELOPERS V KURLA KONKAN NIW AS CO- OPERATIVE HOUSING SOCIETY (2000) 3 MAH LJ 131). IT IS PRECISELY FOR THIS REASON THAT THE LEGISLATURE HAS INTRODUCED SECTION 2(47(V) READ WITH SECTION 45 WHICH INDICATES THAT C APITAL GAINS IS TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS A RE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. IN THIS CASE THA T TEST HAS NOT BEEN APPLIED BY THE DEPARTMENT. NO REASON HAS B EEN GIVEN WHY THAT TEST HAS NOT BEEN APPLIED, PARTICULA RLY WHEN THE AGREEMENT IN QUESTION, READ AS A WHOLE, SHOWS T HAT IT IS A DEVELOPMENT AGREEMENT. THERE IS A DIFFERENCE BETWEE N THE CONTRACT ON ONE HAND AND THE PERFORMANCE ON THE OTH ER HAND. IN THIS CASE, THE TRIBUNAL AS WELL AS THE DEPARTMEN T HAVE COME TO THE CONCLUSION THAT THE TRANSFER TOOK PLACE DURI NG THE ACCOUNTING YEAR ENDING 31.3.1996, AS SUBSTANTIAL PA YMENTS WERE EFFECTED DURING THAT YEAR AND SUBSTANTIAL PERM ISSIONS WERE OBTAINED. IN SUCH CASES OF DEVELOPMENT AGREEME NT, ONE CANNOT GO BY SUBSTANTIAL PERFORMANCE OF A CONTRACT. IN SUCH JAIPRAKASH L SINGH & ORS. 10 CASES, THE YEAR OF CHARGEABILITY IS THE YEAR IN WHI CH THE CONTRACT IS EXECUTED. THIS IS IN VIEW OF SECTION 2( 47(V) OF THE ACT....... ........ IN THIS CASE, THE AGREEMENT IS A DEVELOPME NT AGREEMENT AND IN OUR VIEW, THE TEST TO BE APPLIED TO DECIDE T HE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE TRANSACTION WAS ENTERED INTO. WE HAVE TAKEN THIS VIEW FOR THE REASON THAT T HE DEVELOPMENT AGREEMENT DOES NOT TRANSFER THE INTERES T IN THE PROPERTY TO THE DEVELOPER IN GENERAL LAW AND, THERE FORE, SECTION 2(47)(V) HAS BEEN ENACTED AND IN SUCH CASES , EVEN ENTERING INTO SUCH A CONTRACT COULD AMOUNT TO TRANS FER FROM THE DATE OF AGREEMENT ITSELF. .... THEREFORE, IF ON A BARE READING OF A CONTRACT IN ITS ENTIRETY AN ASSESSING OFFICER COMES TO THE CONCLUSION THAT IN THE GUISE OF AGREEMENT FO R SALE, A DEVELOPMENT AGREEMENT IS CONTEMPLATED, UNDER WHICH THE DEVELOPER APPLIES FOR PERMISSIONS FROM VARIOUS AUTH ORITIES, EITHER UNDER POWER OF ATTORNEY OR OTHERWISE AND IN THE NAME OF THE ASSESSEE, THEN THE ASSESSING OFFICER IS ENTI TLED TO TAKE THE DATE OF CONTRACT AS THE DATE OF TRANSFER IN VIE W OF SECTION 2(47(V)..... WE DO NOT FIND MERIT IN THE ARGUMENT O F THE ASSESSEE THAT THE COURT SHOULD GO ONLY BY THE DATE OF ACTUAL POSSESSION AND THAT IN THIS PARTICULAR CASE, THE CO URT SHOULD GO BY THE DATE ON WHICH IRREVOCABLE LICENCE WAS GIVEN. 10. WE FEEL IT NECESSARY TO DISCUSS ABOUT THE FACT S OF THE CASE OF CHARUBHUJ DWARKADAS KAPADIA, REFERRED SUPRA, IN ORD ER TO UNDERSTAND THE LEGAL PROPOSITION LAID DOWN BY THE HONBLE BOMB AY HIGH COURT. IN THAT CASE, THE ASSESSEE ENTERED INTO AN AGREEMENT O N 18.8.1994 TO SELL THE PROPERTY TO A BUILDER FOR A CONSIDERATION OF RS .1.85 CRORES WITH A RIGHT TO THE BUILDER TO DEVELOP THE PROPERTY IN ACCORDANC E WITH THE RELEVANT RULES. THE ASSESSEE SHALL GRANT AN IRREVOCABLE LICE NSE TO ENTER UPON THE ASSESSEES SHARE OF THE PROPERTY UPON RECEIPT OF NE CESSARY PERMISSIONS AND APPROVALS AND ALSO THE NOC UNDER CHAPTER XXC OF THE INCOME TAX ACT. BY 31.3.1996, THE BUILDER OBTAINED MOST OF THE APPROVALS AND ALSO PAID MAJOR PORTION OF THE CONSIDERATION. THE POWER OF ATTORNEY WAS EXECUTED IN FAVOUR OF THE BUILDER ON 12.3.1999. THE ASSESSEE OFFERED THE CAPITAL GAINS IN THE ASSESSMENT YEAR 1999-2000, SIN CE THE LICENCE AND POWER OF ATTORNEY WERE GIVEN IN THE FINANCIAL YEAR 1998-99. THE AO AND ITAT HELD THAT THE CAPITAL GAINS IS ASSESSABLE IN T HE ASSESSMENT YEAR 1996-97 SINCE SUBSTANTIAL COMPLIANCE OF TERMS OF AG REEMENT HAS TAKEN PLACE BEFORE 31.3.1996. HOWEVER THE HIGH COURT HELD THAT THE IMPUGNED SALE AGREEMENT IS ONLY A DEVELOPMENT AGREEMENT AN D HENCE THE CAPITAL GAIN IS ASSESSABLE IN THE YEAR IN WHICH THE SAID AG REEMENT WAS ENTERED INTO. THUS THE CONTENTIONS OF BOTH THE ASSESSEE AS WELL AS THAT OF THE REVENUE WITH REGARD TO THE YEAR OF CHARGEABILITY WE RE REJECTED. JAIPRAKASH L SINGH & ORS. 11 11. THUS, AS PER THE LEGAL PROPOSITION LAID DOWN BY THE HONBLE BOMBAY HIGH COURT IN THE ABOVE CITED CASE, THE FACTORS SUC H AS DATE OF POSSESSION, SUBSTANTIAL COMPLIANCE OF THE CONTRACT ETC. ARE NOT RELEVANT IN THE CASE OF DEVELOPMENT AGREEMENTS. THE HIGH COU RT HAS OBSERVED THAT THE AIM OF THE BUILDER UNDER THE DEVELOPMENT A GREEMENT WAS TO MAKE PROFITS BY COMPLETING THE BUILDING AND THEREFO RE, NO INTEREST IN THE LAND STANDS CREATED IN THEIR FAVOUR UNDER SUCH AGRE EMENTS. THUS THE SAID AGREEMENTS ARE ONLY A MODE OF REMUNERATING THE BUIL DER FOR HIS SERVICES OF CONSTRUCTING THE BUILDING. THE HIGH COURT HAS NO TICED THAT THE ASSESSEES WERE ENTERING INTO DEVELOPMENT AGREEMENTS WITH THE BUILDERS BY CONFERRING PRIVILEGES OF OWNERSHIP TO THEM AND W ERE CLAIMING THAT THE CAPITAL GAINS WOULD ARISE ONLY AFTER REGISTERING TH E CONVEYANCE DEED. ACCORDINGLY THE HIGH COURT HELD THAT THE SECTION 2( 47)(V) WAS BROUGHT INTO THE STATUTE TO PLUG THIS KIND OF LOOP HOLE. TH US BY CONSIDERING THE OBJECT OF THE DEVELOPMENT AGREEMENTS AND ALSO THE P URPOSE OF INTRODUCTION OF SECTION 2(47)(V) OF THE ACT, THE HO NBLE HIGH COURT HAS FINALLY HELD THAT THE YEAR OF CHARGEABILITY IN THE CASE OF DEVELOPMENT AGREEMENTS IS THE YEAR IN WHICH THE CONTRACT WAS EX ECUTED. 12. IN VIEW OF THE FOREGOING DISCUSSIONS, WE ARE OF THE VIEW THAT THE ASSESSEES HEREIN SUCCEED IN THE ADDITIONAL GROUND U RGED BY THEM. ACCORDINGLY WE HOLD THAT THE CAPITAL GAIN ARISING O N ENTERING OF DEVELOPMENT AGREEMENT IS NOT TAXABLE IN THE ASSESSM ENT YEAR 2007-08, BUT TAXABLE IN AY 2003-04. 6. OSTENSIBLY, OUR CO-ORDINATE BENCH HAS CONSIDERE D THE TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENT DATED 09.10.2002 ENTER ED WITH M/S. BRICKWORKS TRADING PVT. LTD. AND EXAMINED THE SAME IN THE LIGH T OF THE JUDGMENT OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHU DWARKADA S KAPADIA VS. CIT (260 ITR 491). FOLLOWING THE RATIO OF HONBLE BOMBAY HIGH C OURT, IT HAS BEEN CONCLUDED THAT THE TRANSFER FOR THE PURPOSE OF CHARGEABILITY OF CAPITAL GAIN SHALL BE THE YEAR IN WHICH THE SAID AGREEMENT HAS BEEN ENTERED INTO, WHI CH IS A.Y. 2003-04 AND NOT THE CAPTIONED ASSESSMENT YEARS BEFORE US. 7. WE MAY ALSO NOTE HERE THAT IN THE CASE OF ONE OF THE CO-OWNER SHRI AWADHNARAYAN SINGH, THE MATTER AGAIN CAME UP FOR A. YS 2008-09 AND 2009-10 AND, VIDE ORDER DATED 24.08.2016 IN ITA NOS. 3337 & 3338 /MUM/2013 & ORS., THE JAIPRAKASH L SINGH & ORS. 12 TRIBUNAL FOLLOWED THE EARLIER DECISION OF THE CO-OR DINATE BENCH DATED 02.03.2016 (SUPRA), AND HELD THAT THE CAPITAL GAIN IN QUESTION WAS TO BE ASSESSED IN A.Y. 2003- 04. THEREFORE, FOLLOWING THE SAID RATIO, WE SET AS IDE THE ORDER OF THE CIT(A) AND DIRECT THE ASSESSING OFFICER TO RE-COMPUTE THE INCO ME OF THE ASSESSEE IN THE INSTANT YEAR IN THE LIGHT OF THE AFORESAID PRECEDENTS. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IN ITA NO. 3303/MUM/2013 IS ALLOWED TO THE ABOVE EXTENT AND THE CROSS APPEAL IN ITA NO.4530/MUM/2013 IS DISMISSED. 9. NOW WE MAY REFER TO THE OTHER APPEALS PERTAINI NG TO JAIPRAKASH L. SINGH. ITA NO.2530/MUM/2015 IS AN APPEAL BY THE REVENUE FO R ASSESSMENT YEAR 2008-09, WHICH IS DIRECTED AGAINST AN ORDER DATED 19/02/201 5 PASSED BY THE CIT(A) UNDER SECTION 154 OF THE ACT AMENDING HIS EARLIER ORDER D ATED 20/04/2013. IN THE SAID APPEAL, THE REVENUE HAS CHALLENGED THE RECTIFICATIO N CARRIED OUT BY THE CIT(A) ACCEPTING SOME OF THE POINTS RAISED BY THE ASSESSEE REGARDING VALUATION OF PROPERTY AS ON 01/04/1981 FOR THE PURPOSES OF COMPUTING CAPI TAL GAINS. THIS APPEAL OF THE REVENUE IS RENDERED INFRUCTUOUS AS IN THE ORIGINAL PROCEEDINGS FOR ASSESSMENT YEAR 2008-09 WE HAVE ALREADY HELD THAT THE CAPITAL GAIN IS ASSESSABLE IN ASSESSMENT YEAR 2003-04 AND NOT IN THE INSTANT YEAR. THUS, THIS AP PEAL OF THE REVENUE IS DISMISSED. 10. ITA NO.3299/MUM/2013 IS AN APPEAL FILED BY THE ASSESSEE FOR ASSESSMENT YEAR 2008-09, WHICH IS DIRECTED AGAINST AN ORDER PA SSED BY THE CIT DATED 08/03/2013 UNDER SECTION 263 OF THE ACT HOLDING THE ASSESSMENT ORDER DATED 28/12/2011 AS ERRONEOUS AND PREJUDICIAL TO THE INTE REST OF THE REVENUE ON ISSUES WHICH ARE RELATING TO THE COMPUTATION AND QUANTIFIC ATION OF THE CAPITAL GAINS. JAIPRAKASH L SINGH & ORS. 13 10.1 THE SAID APPEAL IS RENDERED INFRUCTUOUS, INASM UCH AS, QUA THE ORIGINAL ASSESSMENT ORDER DATED 28/12/2011, WE HAVE ALREADY HELD IN THE EARLIER PARAS THAT THE CAPITAL GAIN IS ASSESSABLE IN ASSESSMENT YEAR 2 003-04 AND, THE ISSUES RELATING TO COMPUTATION OF CAPITAL GAINS ARE RENDERED ACADEMIC IN THE INSTANT ASSESSMENT YEAR. THUS, THE ORDER OF THE CIT IS RENDERED INFRUCTUOUS AND ACCORDINGLY THE APPEAL OF THE ASSESSEE IS ALLOWED. 11. ITA NO.2531/MUM/2015 IS AN APPEAL BY THE REVENU E, WHICH ARISES FROM THE ORDER OF THE CIT(A) DATED 19/02/2015, WHICH IN TUR N HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3 ) R.W.S. 263 OF THE ACT DATED 25/03/2014. THE SAID PROCEEDINGS ARE AS A CONSEQUE NCE OF THE ORDER PASSED BY THE CIT DATED 08/03/2013, WHICH WE HAVE ALREADY HELD TO BE INFRUCTUOUS WHILE DEALING WITH THE APPEAL OF THE ASSESSEE IN ITA NO.3299/MUM /2013 FOR ASSESSMENT YEAR 2008-09 IN EARLIER PARAS. THUS, THE IMPUGNED ASSES SMENT IS UNTENABLE AND ACCORDINGLY THE APPEAL OF THE REVENUE IS DISMISSE D. 12. THUS, IN SO FAR AS THE APPEALS OF ASSESSEE, JAI PRAKASH L SINGH PERTAINING TO ASSESSMENT YEAR 2008-09 ARE CONCERNED, THEY ARE DIS POSED OFF AS ABOVE. 13. THE OTHER REMAINING APPEALS PERTAINING TO JAIPR AKASH L SINGH ARE IN RELATION TO ASSESSMENT YEAR 2007-08. THE SAID APPEALS ARE D ISPOSED OF IN THE SAME LIGHT AS FOR THE ASSESSMENT YEAR 2008-09 IN THE LIGHT OF THE PRINCIPAL ISSUE THAT THE CAPITAL GAINS IN QUESTION IS LIABLE TO BE ASSESSED IN ASSES SMENT YEAR 2003-04. 14. IN SO FAR AS THE OTHER CAPTIONED APPEALS RELATI NG TO THE OTHER CO-OWNERS ARE CONCERNED, THE FACTS AND CIRCUMSTANCES RELATING TO THE PRELIMINARY ISSUE REGARDING THE YEAR OF ASSESSABILITY OF CAPITAL GAINS STAND ON SIMILAR FOOTING, THEREFORE, OUR JAIPRAKASH L SINGH & ORS. 14 FINDING IN THE CROSS APPEAL IN ITA NOS.3303/MUM/20 13 & 4530/MUM/2013 IN THE EARLIER PARAS SHALL APPLY MUTATIS MUTANDIS IN THESE APPEALS ALSO . ACCORDINGLY, THE APPEALS BY THE ASSESSEES STAND ALLOWED TO THE ABOVE EXTENT AND THOSE BY THE REVENUE ARE DISMISSED. 15. IN VIEW OF THE ABOVE, THE STAY APPLICATION NO.2 68/MUM/2018 IN THE CASE OF DR. NEELAM OMPRAKASH SINGH IS RENDERED INFRUCTUOUS AND IS DISMISSED. THE ABOVE DECISION WAS PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF BOTH THE PARTIES ON THIS DAY OF 19 TH APRIL, 2018. SD/- SD/- (RAM LAL NEGI) (G S PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED : 19 TH APRIL, 2018. SA/VM COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(A), MUMBAI. 4. THE CIT , MUMBAI. 5. THE DR, J BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, MUMBAI