Deputy Commissioner of Income Tax, Central Circle, Panaji., Panaji V. M/s Prithvi Consultants Pvt. Ltd., Panaji

ITA 289/PAN/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 3012 (ITAT-PANAJI)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-02-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 03-02-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 08-07-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: M SAINATH
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI N.S. SAINI , HONBLE ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, HONBLE JUDICIAL MEMBER ITA NO. 289/PNJ/201 5 (ASST. YEAR : 200 9 - 1 0 ) DCIT, CENTRAL CIRCLE, PANAJI GOA. VS. M/S. PRITHVI CONSULTANTS PVT. LTD., NO. 407, 4 TH FLOOR, SHIV TOWERS, PATTO PLAZA, PANAJI GOA. PAN NO. AABCP 1395 F (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI M. SAINATH C A DEPARTMENT BY : SHRI R.N. SIDDAPP A JI - D R DATE OF HEARING : 03 / 0 2 /201 6 . DATE OF PRONOUNCEMENT : 03 / 0 2 /201 6 . O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) , PANAJI - 2 IN ITA NO. 129/ CIT(A) - VI/2013 - 14, ITA NO.35/CIT(A) /PNJ - 2/2014 - 15 , DATED 24 /0 3 /201 5 FOR THE ASSESSMENT YEAR 2009 - 10 . 2. SHRI R.N. SIDDAPPAJI DEPARTMENTAL REPRESENTATIVE REPRESENTED ON BEHALF OF THE REVENUE AND SHRI M. SAINATH, CA REPRESENTED ON BEHALF OF THE ASSESSEE . 3 . IT WAS SUBMITTED BY THE DEPARTMENTAL REPRESENTATIVE THAT THE ISSUE IN THE APPEAL OF THE REVENUE WAS AGAINST THE ACTION OF THE COMMISSIONER OF INCOME TAX (APPEALS) IN DELETING THE ADDITION ON ACCOUNT OF LONG TERM CAPITAL GAIN S . IT WAS THE SUBMISSION THAT THE 2 ITA NO. 289/PNJ/2015 ASSESSEE HAD E NTERED INTO TWO JOINT VENTURE AGREEMENTS WITH M/S. UNICORN DEVELOPERS ON 31/12/2008 . THE SAID AGREEMENTS WERE ENTERED INTO IN RESPECT OF TWO SPECIFIC PROPERTIES ADMEASURING 13178 SQ.MTS. KNOW N AS BONBO VA L UED AT 9 CRORES AND OTHER PROPERTY BEING AN AREA 37500 SQ.MTS . ALSO KNOWN AS BONBO FOR A CONSIDERATION OF 15 CRORES. IT WAS THE SUBMISSION THAT AS PER THE JOINT VENTURE AGREEMENT S , THE ASSESSEE HAD HANDED OVER THE POSSESSION TO THE DEVELOPERS. THE DEPARTMENTAL REPRESENTATIVE HAS DR A W N OUR ATTENTION TO PAGE 4 6 OF THE PAPER BOOK , WHICH IS A COPY OF JOINT VENTURE IN RESPECT OF SMALLER PROPERTY . HE ALSO DRAWN OUR ATTENTION TO PAGE 49 OF THE PAPER BOOK WHEREIN CLAUSE 3 OF THE SAID AGREEMENT IT HAS BEEN CATEGORICALLY ADMITTED THAT THE AGREEMENT WAS IRREVOCABLE AND EITHER OF THE PARTIES HAD NO RIGHT IN ANY WAY TO TERMINATE THE JOINT VENTURE AGREEMENT. HE ALSO DR E W OUR ATTENTION TO PAGE 53 OF THE PAPER BOOK IN CLAUSE 5( O ) TO SHOW THAT THE ASSESSE E HAD GRANTED EXCLUSIVE RIGHT TO DEVELOP THE SAID PROPERTY IN ACCORDANCE AND UNDER JOINT DEVELOPMENT AGREEMENT AND THE ASSESSEE HAS BOUND ITSELF WITH THE NEGATIVE COVENANT IN FAVOUR OF THE DEVELOPER. THE DEPARTMENTAL REPRESENTATIVE FURTHER DR E W OUR ATTENTION TO PAGE 54 OF THE PAPER BOOK AT CLAUSE 8A WHEREIN IT HAS BEEN CATEGORICALLY MENTIONED THAT THE ASSESSEE HAS HANDED OVER THE POSSESSION OF THE SAID PROPERTY FREE OF ANY ENCUMBRANCES TO THE JOINT VENTURE AND THE JOINT VENTURE WAS ENTITLED TO EXPLOIT THE RIGHTS OBTAINED THEREIN FOR THE PURPOSE OF ITS BUSINESS . HE FURTHER DRE W OUR ATTENTION TO PAGE 59 AT PARA 14 WHEREIN THE ASSESSEE HAS GRANTED LIBERTY TO THE DEVELO P ER TO DISPOSE OF THE ENTIRE PROJECT WITHOUT COMMENCING THE CONSTRUCTION TO ANY THIRD PARTY OR PERSON AT A MINIMUM GUARANTEED RETURN OF 9 CRORES I N RESPECT OF SMALL PROPERTY AND 15 CRORES IN RESPECT OF BIGGER PROPERTY . IT WAS THE SUBMISSION THAT THE ASSESSEE HAVING HANDED OVER THE POSSESSION OF THE PROPERTY , IN VIEW OF THE PROVISIONS OF SEC. 2(47)(V) OF THE ACT, AS THE ASSESSEE S PART PERFORM ANCE HAS BEEN COMPLETED IN VIEW OF THE PROVISIONS OF SEC. 53A OF THE TRANSFER OF PROPERTY ACT, T HE TRANSFER WAS COMPLETE D AND CAPITAL GAIN S WAS LEVIABLE FOR THE ASSESSMENT YEAR 2009 - 10 . IT WAS THE 3 ITA NO. 289/PNJ/2015 SUBMISSION THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT REPORTED IN 260 ITR 491 (BOM.) WHEREIN IT HAS BEEN HELD THAT I F THE CON TRACT, READ AS A WHOLE, INDICATES PASSING OF OR TRANSFERRING OF COMPLETE CONTROL OVER THE PROPERTY IN FAVOUR OF THE DEVELOPER, THEN THE DATE OF THE CONTRACT WOULD BE RELEVANT TO DECIDE THE YEAR OF CHARGEABILITY . IT WAS THE SUBMISSION THAT SIMILAR WAS THE VIEW OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. DR. T.K. DAYALU REPORTED IN (2011) 14 TAXMANN. COM 120 (KAR.) . IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD DELETED THE ADDITION ON THE GROUND THAT NO ACTI VITY WAS CARRIED ON IN THE JOINT VENTURE. IT WAS THE SUBMISSION THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAD RELIED UPON THE DECISION OF THE COORDINATE BENCH OF THIS TRIBUNAL HYDERABAD BENCH IN THE CASE OF M/S. BINJUSAORIA PROPERTIES PVT. LTD. VS. ACIT IN ITA NO. 157/HYD/11 WHEREIN IT HAS BEEN HELD THAT NO DEVELOPMENT ACTIVITY OF THE LAND HAD TAKEN AND THE SALE CONSIDERATION IN THE FORM OF THE DEVELOP ED AREA HAD NOT BEEN RECEIVED. IT WAS THE SUBMISSION THAT IN THE PRESENT CASE , THE CONSIDERATION WAS SPECIFICALLY QUANTIFIED AND THE POSSESSION WAS ALSO HANDED OVER AND CONSEQUENTLY THE CAPITAL GAINS WAS LEVIABLE DURING THE ASSESSMENT YEAR 2009 - 10 ONLY. 4 . IN REPLY , AUTHORIZED REPRESENTATIVE OF THE ASSESSEE SUBMITTED THAT FOR THE PURPOSE OF SEC. 2(47)(V) TO APPLY THERE MUST BE A CONTRACT, THERE MUST BE AN OBLIGATION TO PERFORM, THERE MUST BE A SPECIFICATION OF THE CONSIDERATION AND THE CONSIDERATION SHOULD BE PART OF THE INCOME OF THE ASSESSEE. IT WAS THE SUBMISSION TH A T T HE ASSESSEE HAD GONE TO THE COURT WHICH HAD LEAD TO AN ARBITRATION ALSO , AND THE PROPERTY WAS SUBSEQUENTLY SOLD DURING THE ASSESSMENT YEAR 2012 - 13 WHEN CONSIDERATION OF 9 CRORES IN RESPECT OF THE SMALLER PROPERTY WAS RECEIVED. IT WAS THE SUBMISSION THAT THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS LIABLE TO BE SUSTAINED. 4 ITA NO. 289/PNJ/2015 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. IN THE PRESENT CASE, THERE IS A JOINT VENTURE AGREEMENT AND AS PER THE JOINT VENTURE AGREEMENT, THE CONSIDERATION HAS ALSO BEEN SPECIFIED AND POSSESSION HAS ALSO BEEN HANDED OVER. THE FACT THAT THE ASSESSEE HAS ALSO GONE TO THE COURT AND ARBITRATION HAS ALSO BEEN DONE , WHICH CLEARLY SHOWS THAT THESE AGREEMENTS WERE BEING ACTED UPON. THE PROVISIONS OF SEC 2(47) WHICH DEFINES TRANSFER APPLIES TO AN ASSESSEE AND IS NOT BOUND BY THE ACTS OF THE PURCHASER OR DEVELOPER , OF THE ASSET. IF THE ASSESSEE COMPLIES WITH ANY OF THE SUB - CLAUSE OF SEC. 2(47), THEN IT IS TO BE HELD THAT THE ASSESSEE HAS TRANSFERRED THE SAID CAPITAL ASSET. IN THE PRESENT CASE, THE ASSESSEE IS NOT IN A POSSESSION OF THE PROPERTY INSOFAR AS THE ASSESSEE HAS ALREADY TRANSFERRED THE PROPERTY WHEN SIGNING THE AGREEMENT DATED 31/12/2008 . THE ASSESSEE HAS BEEN GUARANTEED A MINIMUM CONSIDERATION OF 9 CRORES & 15 CRORES AS PER THE TWO AGREEMENTS. THE AGREEMENTS ARE ADMITTEDLY IRREVOCABLE . THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING. THIS BEING SO , IT WOULD HAVE TO BE HELD THAT THE TRANSFER OF THE PROPERTY TO OK PLACE AT THE TIME OF SIGNING OF THE AGREEMENT DATED 31/12/2008 . CONSEQUENTLY, R E S PECTFULLY FOLLOWING THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADI A (SUPRA) AND THE DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF DR. T.K. DAYALU (SUPRA) , IT IS HELD THAT THE CAPITAL GAINS IN RESPECT OF THE TRANSFER OF THE SAID PROPERT IES IS LEVIABLE DURING THE ASSESSMENT YEAR 2009 - 10 AND CONSEQUENTLY ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) STANDS REVERSED. 6 . IN THE RESULT, APPEAL OF THE REVENUE STANDS ALLOWED. ORDER PRONOUNCED IN THE COURT AT THE CLOSE OF THE HEARING ON WEDNESDAY , THE 03 RD DAY OF FEBRUARY , 201 6 AT GOA . S D / - S D / - (N.S.SAINI) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 03 RD FEBRUARY , 201 6 . 5 ITA NO. 289/PNJ/2015 VR/ - COPY TO: 1 . THE ASSESSEE. 2 . THE REVENUE. 3 . THE CIT 4 . THE CIT(A) 5 . THE D.R . 6 . GUARD FILE. BY ORDER ASSISTANT REGISTRAR I.T.A.T., PANAJI .