Rama Raju Seetha Penumatsa, Hyderabad V. Income Tax Officer, Ward-8(1), Hyderabad

ITA 307/Hyd/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4212 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 17-01-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 13-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: A V RAGHURAM
• Keywords: Capital asset; Cost of acquisition; Competent authority; Capital Gains
• Section: 43B; 54F; 142(1); 143(1); 201; 274; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER I.T.A. NO. 308 /HYD/201 8 ASSESSMENT YEAR: 20 14 - 15 SRI SHIVA PRASAD PENUMATSA, HYDERABAD [PAN : A QAPP6146N ] VS INCOME TAX OFFICER, WARD - 8(1), HYDERABAD (APPELLANT) (RESPONDENT) I.T.A. NO. 30 7 /HYD/201 8 ASSESSMENT YEAR: 20 14 - 15 RAMA RAJU SEETHA PENUMASTA HYDERABAD [PAN : CDQPP0637R ] VS INCOME TAX OFFICER, WARD - 8(1), HYDERABAD (APPEL LANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM , AR FOR REVENUE : S HRI NILA NJAN DEY , D R DATE OF HEARING : 17 - 0 1 - 201 9 DATE OF PRONOUNCE MENT : 13 - 0 3 - 201 9 O R D E R PER S. RIFAUR RAHMAN, A.M. : BOTH THESE APPEAL S FILED BY THE ASSESSE E S ARE DIRECTED AGAINST A COMMON ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEAL S) - 8 , HYDERABAD , DATED 22 - 12 - 201 7 . A S IDENTICAL ISSUE S ARE INVOLVED IN BOTH THESE A PPEALS, WE FIND IT CONVENIENT TO PASS A COMMON ORDER. ITA NO S . 307 & 308 /H YD/201 8 : - 2 - : 2. BRIEF FACTS OF THE CASE , AS TAKEN FRO M THE CASE OF SHIVA PRASAD PENUMASTA (ITA NO. 308 / H/2018) , ARE THAT T HE ASSESSEE , A N INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE AY. 2014 - 15 ON 11 - 02 - 2016 , DECLARING INCOME OF RS. 3,81,370/ - AND THE SAME WAS P ROCESSED U/S. 143(1) OF THE INCOME TAX ACT [ IN SHORT THE ACT ] ON 26 - 02 - 2016 . T HE CASE WAS SELECTED FOR SCRUTINY UNDER CASS. A CCORDINGLY NOTICE U/S. 143(2) OF THE A CT WAS ISSUED ON 20 - 09 - 2016 . S UBSEQUENTLY , A NOTICE U/S. 142(1) WAS ISSUED TO THE ASSESSEE CALLING FOR NECESSARY INFORMATION PERTAINING TO DEDUCTIONS CLAIMED U/S. 54B, 54C, 54D, 54G, 54GA AND 54F (AS QUOTED IN CASS REASONS) ETC. I N RESPONSE TO T H E NOTICES, THE AR OF THE ASSESSEE APPEARED FROM TIME TO TIME AND SUBMITTED TH E INFORMATION/CLA RIFICATION CALLED FOR. T HE ASSESSEE S S UB MISSIONS/ CLARIFICATIONS WERE VERIFIED BY THE ASSESSING OFFICER AND ACCORDINGLY, A SHOW CAUSE NOTICE WAS ISSUED TO THE AS S ESSEE ON 09 - 12 - 2016 . 2.1 IN RESPONSE TO THE ABOVE MENTIONED SHOW CAUSE LETTER, ASSESSEE SUBMITTED HIS REPLY O N 16 - 12 - 2016 WHEREI N IT WAS STATED THAT THE CA PITAL GAIN ARISES ONLY WHEN THE DEVELOPER HAD DONE SOMETHING ON HIS PART TO IMPLEMENT THE PROVIS IONS OF DEVELOPMENT AGREEMENT - CUM - IRRECO VERABLE GEN ERAL POWER OF ATTORNEY (DAIGPA ) DATED 07/10/2013 AND IT IS DEMONSTRATED IN THE ASS ESSEE S CASE THAT NOTHING HAS BEEN DONE BY THE DE VELOPER IN THIS REGARD . IT WAS, THEREFORE, STATED THAT CAPITAL GAINS SHA LL NOT BE ATTRACTED FOR THE AY. 2014 - 1 5 AND IN SUPPORT OF THE SAME, LD.AR OF THE ASSESSEE RELIED ON THE FOLLOWING CASE LAW : I. BINJUSARI A [106 DTR 321] (HYD)(TRIB); II. FIBARS INFRATECH P. LTD., [98 DTR 281] (HYD)(TRIB); III. RANJITH REDDY IN ITA NO. 292/ HYD/ 2012 , DT . 07 - 06 - 13; IV. K. RADHIKA & OTHERS [65 D TDR 250] (HYD)(TRIB); ITA NO S . 307 & 308 /H YD/201 8 : - 3 - : 2.2 AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE AO RELYING UPON THE DECISION OF THE ITAT, HYDERABAD IN THE CASE OF B. MAHENDER REDDY IN ITA NO. 1567/H/20914, DA TED 26/06/2015, HELD THAT THE ASSESSEE IS LIAB LE FOR CAPI TAL GAINS ON THE SAID DAI GPA IN THE YEAR UNDER CONSIDERATION. ACCORDINGLY, AO C OMPUTED THE CAPITA L GAI NS AT RS. 1, 32 ,52,469/ - , BY OBSERVING AS UNDER: 1.0 DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2014 - 15 THE ASSESSEE HAS GIVEN HIS LAND OF 1 ACR AT SURVEY NO.367 OF PUPPALGUDA VILLAGE, RAJENDRANAGAR MANDAI, RANGA REDDY DIST FOR DEVELOPMENT INTO INDEP ENDENT VILLAS B EARING SIZE 400 TO 500 SQ . YDS AS D ETAILED IN THE DEVELOPMENT AGREEMENT DATED 07 - 10 - 2013 (VIDE DOC NO.14837 / 13). THIS DEVELOPMENT AGREEMENT WAS ENTERED WITH M / S APARNA CONSTRUCTIONS & ESTATE PVT LIMITED BY THE ASSESSEE ALONG WITH OTHER 13 LAN DLORDS AGGREGATING TO A TOTAL LAND OF AC.6 - 34 G TS . IN THE SURVEY NO.367 OF PUPPALGUDA VILLAGE, RAJENDRANAGAR MANDAI, R . R . DIST . TO DEVELOP INTO A MODERN G ATED COMMUNITY HAVING RESIDENTIAL VILLAS ETC. THIS AGREEMENT WAS ENTERED WITH ONE OF THE PREMIER WELL ESTABLISHED DEVELOPER I.E., M / S APARNA CONSTRUCTI ONS & ESTATE PVT LIMITED WITH CLEAR TERMS AND CONDITIONS, SHARE OF RATIO S AMONG OWNERS AND DEVELOPER AND ON RECEIPT OF REFUNDABLE / ADJUSTABLE DEPOSIT FROM THE DEVELOPER BY LANDLORDS ETC SO AS TO CONCLUDE THE CONSTRUCTION. 2.0 HENCE, THE DEVELOPMENT AGREEMENT ENTERED BY ASSESSEE CLEARLY DEPICTS THE INTENT AND CLEAR DESIRE OF LAND OWNERS AND DEVELOPER TO DEVELOP A MODERN GATED RESIDENTIAL VILLAS COMMUNITY. IN VIEW OF THESE FACTS, IT IS CLEARLY QUALIFIED AS TRA NSFER OF PROPERT Y AS DEFINED UNDER SEC.2(47) OF THE I . T ACT, 1961. HOWEVER, WHEN THE SAME IS PUT ACROSS BEFORE THE ASSE SSEE / AUTHORIZED REPRESENTATIVE OF THE ASSESSEE DURING THE COURSE OF THE SCRUTINY PROCEEDINGS, THE ASSESSEE'S AR CONTENDED THAT THE APPLI CABLE CAPITAL G AINS IS NOT ATTRACTED AS PROJECT IS NOT TAKEN UP YET. THE ASSESSEE'S AR'S CONTENTION IS NOT ACCEPTABLE A S THE PROPERTY IS CLEARLY TRANSFERRED WITHIN THE LIBERAL MEANING OF SECTION 2(47) OF THE I . T . ACT TO THE DEVELOPER SO AS TO START SUBSEQU ENT CONSTRUCTION WORKS SUCH AS OBTAINING PLAN APPROVAL, ITA NO S . 307 & 308 /H YD/201 8 : - 4 - : MUNICIPAL APPROVAL, LAND LEVELLING AND OTHER CONSTRUCTIONS RELA TED ACTIVITIES. HENCE, NOT WITHSTANDING THE STAGE OF COMPLETION I STAGE OF WORKS TAKEN UP BY THE DEVELOPER, THE SPIRIT OF THE DEVELOPMENT AGREEMENT CLEARL Y ENVISAGE THE TRUE TRANSFER OF PROPERTY BY THE ASSESSEE TO THE DEVELOPER AS STIPULATED UNDER SEC.2(47 ) OF THE I T ACT, AND SQUARELY ATTRACTS THE CAPITAL GAINS ON THE BASIS OF THE FACTS OF THE ASSESSE'S CASE AND ASSESSEE HAS CLEARLY ADMITT ED THE SAME IN T HE RETURN OF INCOME WHICH WAS FILED FOR THE ASST YEAR 2014 - 15 HOLDING TO THE ANALOGY OF TRANSFER OF PR OPERTY IN THE YEAR OF DEVELOPMENT AGREEMENT THAT IS A Y 2014 - 15, U NDER SEC.2(47) OF THE I T ACT, READ WITH S EC.53A OF TRANSFER OF PROPERTY ACT. HENCE, AS PER THE DEVELOPMENT AGREEMENT, THE CAPITAL GAIN IS SQUARELY LEVIABLE IN ASSESSEE'S CASE IN VIEW OF A BOVE DISCUSSION AND FOLLOWING LOGICAL AND ANALYTICAL REASONING AS PER THE PROVISIONS OF I. T . ACT READ WITH THE DEVELOPMENT AGREEMENT OF TH E ASSESSEE AS ENTERED ON 7 - 10 - 2013. (I) THE CLAUSE(I) OF THE DEVELOPMENT AGREEMENT DATED 07 - 10 - 2013 READS AS UNDER AND CLEARLY PROVES DEPICTING THE POSSESSION OF THE ASSESSEE'S LAND BY DEVELOPER AS TRANSFERRED WITH IRRECOVE RABLE RIGHTS TO THE DEVELOPER. HENCE, SECTION 2(47) OF THE I T ACT IS SQUARELY APPLICABLE AS IT IS TRANSFER OF PROPERTY LEADING TO LEVY OF CAPITAL GAIN S IN THE HANDS OF LANDLORDS / TRANSFEROR AS PER THIS DEVELOPMENT AGREEMENT. 'THE OWNERS HEREBY GRANT THE IRREVOCABLE RIGHTS TO THE DEV ELOPER TO CONSTRUCT THE GATED COMMUNITY CONSISTING OF INDEPENDENT HOUSES, AS PER THE SPECIFICATIONS ANNEXED HERETO, SUBJ ECT TO THE OTHER TERMS OF THIS AGREEMENT AND ACCORDINGLY, DELIVER THE POSSESSION OF A SCHEDULE PROPER TY OF THE DEVELOPER.' (II) FURTHE R, THE DEVELOPMENT AGREEMENT AT CLAUSE (B) CLEARLY PROVIDES RIGHTS TO ENTER INTO SUBSEQUENT AGREEMENT IF ANY FOR EARMARK ING THEIR RESPECTIVE SHARES BY IDENTIFYING THE SAME BY NUMBER OF RESIDENTIAL UNITS / VILLAS ETC SO AS TO COMPLETE THE PROJECT. (III) F URTHER, AT CLAUSE (4), IT IS CLEARLY MENTIONED THAT THE DEVELOPER SHALL OBTAIN NECESSARY PERMISSION, CLEARANCE ETC., AS PER LAW TO CONSTRUCT THE RESIDENTIAL GATED COMMUNITY WITHOUT ANY FURTHER REFERENCE TO THE OWNER ON SU CH TERMS AS ITA NO S . 307 & 308 /H YD/201 8 : - 5 - : THE DEVELOPER MAY DEEM FIT TO EXPEDITE FOR THE DEVELOPER IN THE INTEREST OF THE PROJECT FOR BREVITY AND CLARITY THE CLAUSE (4) AS QUOTED IS RE - PRODUCED AS UNDER. 'THE DEVELOPER SHALL OBTAIN ALL THE NECESSARY PERMISSIONS, CLEARANCES, SERVICE CONNECTIONS, ETC., FROM THE AUTHORIT IES / SERVICE PROVIDERS CONCERNED AND CONSTRUCT INDEPENDENT HOUSES, AS PER THE SPECIFICATIONS MENTIONED IN SCHEDULE - B AN NEXED HERETO AND AS PER THE SANCTIONED PLAN, AT THE DEVELOPER'S COST. THE DEVELOPER SHALL BE ENTITL ED TO INCLUDE ANY OTHER LAND FOR THE PURPOSE OF DEVELOPING THE SAME ALONG WITH THE SCHEDULE PROPERTY, WITHOUT ANY FURTHER REFERENCE TO THE OWNERS, ON SUC H TE RMS AS THE DEVELOPER MAY DEEM IT EXPEDIENT FOR THE DEVELOPER, WITHO UT ANYWAY REDUCING THE SCHEDULE AREAS AND ENTER INTO SUITABLE AGREEME NT WITH THIRD PARTIES. IF THE DEVELOPER ENTERS INTO DEVELOPMENT AGREEMENT WITH THIRD PARTIES AND OBTAINS PERMISSION FOR CONSTRUCTION FROM THE COMPETENT AUTHORITY, THE LAND COVERED BY THE SAME P ERMISSION SHALL BE TREATED AS JOINT PROPERTY, SUBJECT TO THE SC HEME AND THE DEVELOPER SHALL BE ENTITLED TO ALLOT THE SCHEDULE AREA OUT OF PLOTTED C OVERED BY SUCH PERMISSION. ' SIMIL ARLY THE OTHER CLAUSES ALSO REINFORCE THE TRANSFER OF PROPERTY BY THE ASSESSEE TO THE DEVELOPER AS PER THE PROVISIONS OF SEC.2(47) OF LT . ACT I.E. TO SAY WITHOUT TRANSFER OF PROPERTY IN CLEAR TERMS BY THE LAND LORD / ASS ESSEE, IT WOULD BE VERY DIFFICULT FO R DEVELOPER TO START THE PROJECT FOR CONSTRUCTION AS ENVISAGED. HENCE, THE DEVELOPER BECOMES TRUE OWNER OF THE PROPERTY FROM THE DATE OF DEVELOPMENT AGREEMENT AND THE ASSESSEE IS VIRTUAL OWNER TO THE EXTENT OF TO BE CONS TRUCTED AREA AND HE IS NO MORE A OWN ER OF THE FULL LAND AS IT EXISTED PRIOR TO DEVELOPMENT AGREEMENT FALLING UNDER 60% SHARE OF DEVELOPER. HENCE, THE 60% SHARE OF LAND STAN DS COMPLETELY TRANSFERRED. TO THE DEVELOPER FOR A CONSIDERATION COMPUTABLE AS EQUIVA LENT TO THE CONSTRUCTION COST ATTRIB UTABLE TO 40% OF TOTAL CONSTRUCTED AREA FALLING TO THE ASESSEE'S SHARE. ON THIS ANALYSIS THE CHARGEABLE CAPITAL GAIN IS TO BE CALCULATED IN THE HANDS OF THE ASSESSEE BY ADOPTING CONSTRUCTION COST AS OBTAINED PER SFT AS E QUIVALENT TO TRANSFER OF LAND. ACCOR DINGLY THE SAME IS COMPUTED AS UNDER AS PER THE PROVISIONS OF THE I . T . ACT , AS UNDER: ITA NO S . 307 & 308 /H YD/201 8 : - 6 - : THE TOTAL CHARGEABLE VALUE OF THE DEVELOPMENT AG REEMENT AS PER SRO DISTRICT , REGISTRAR RANGA REDDY RS. 22,82,00,000 THE TOTAL LAND GIVEN FOR DEVELOPMENT BY THE ASSESSEE ALONG WITH OTHERS AC. 6.34 GU NTAS OR E QUIVALENT TO 274 GUNTAS. 40% OF THE CHARGEABLE VALUE OF THE D EVELOPMENT AGREEMENT (LAND OWNERS SHARE) RS.1,33,25,547 PROPORTIONATE SHARE OF THE ASSESSEE 9,12,8000 X 40 GTS /274 GUNTAS RS. 1,33,25,5 47 LESS: INDEXED COST OF THE LAND FOREGOING OF THE ASSESSEE (60% OF THE 1 ACRE LAND) 22310 X 939 (13 - 14) = 1,21,797 X 60% 172 (89 - 90) (THE ASSESSEE I NDEXED COST OF ACQUISITION AT RS . 1,21,797/ - AS PER COMPUTATION OF TOTAL INCOME AND THE S AME IS RESTRICTED 60% (AS THE FOR EGOING LAND IS 60% RS. 73,078 BALANCE (LONG TERM CAPITAL GAIN) RS. 1,32,52,469 2.3 AS REGAR DS, ASSESSEE S CLAIM OF DEDUCTION U/S 54, THE AO DISALLOWED THE SAME ON THE FOLLOWING GROUNDS: I) THE AMENDMENT MADE IN THE 54F REGARDING ALLOWANCE OF ONE RESI DENTIAL HOUSE AS DEDUCT ION IS DECLARATORY AND CLARIFICATORY IN NATURE AND IT IS APPLICABLE FOR THE YEAR UNDER CONSIDERATION. II) EVE N OTHERWISE, THE ASSESSEE DID NOT COMPLETE THE CONSTRUCTION OF THE RESIDENTIAL HOUSE WITHIN 3 YEARS FROM THE DA TE OF TRAN SFER. 3. AGG RIEVED BY THE ORDER OF AO, THE ASSESS EE PREFERRED AN AP PEAL BEFORE THE CIT(A), WHO HAS UPHELD THE ORDER OF A O. ITA NO S . 307 & 308 /H YD/201 8 : - 7 - : 4. AGGR IE VED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US RAISING THE FOLLOWING GROUNDS OF APPEAL: 1. THE ORDER OF THE LEARNED CIT(A) IS NOT ONLY ERRONEOUS BOTH ON FACTS AND IN LAW BUT IS PERVERSE IN NOT FOLLOWING THE JUDICIAL PRIN CIPLES OF DISCIPLINE. 2. THE LEARNED CIT(A) FAILED TO APPRECIATE THAT ONCE THE FACT IS CLEAR THAT THE LAND ITSELF IS NOT CONVERTED FROM AGRICULTURE TO NON - AGRICULTURE AND THE DEVELOPER HAS NOT DONE ANYTHING ON HIS PART THE CASE IS COVERED BY THE DECISION OF THE HON'BLE ITAT IN THE CASE OF BINJUSARIA AND RADHIKA WHICH IS IN ACCORDANCE WITH THE RATIO OF THE HON'BLE SUPREME COU RT IN THE CASE OF BALBIR SINGH MAINI AND THEREBY ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER ASSESSING CAPITAL GAINS. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT (A) ERRED IN REJECTING THE GROUND FOR ALLOWING DEDUCTION U/S.54F THOUGH TH E SAME IS SUPPORTED BY THE DECISION OF THE HON'BLE ITAT AND OF HON'BLE HIGH COURT OF KARNATAKA. 4. ANY OTHER GROUND THAT MAY BE URG ED AT THE TIME OF HEARING. 5. LD. AR SUBMITTED THAT ASSESSEE HAS ENT ERED INTO DEVELOPMENT AGREEMENT ON 07/10/2013 , AS PE R WHICH, THE DEVELOPER HAS TO CONVERT THE AGRICULTURAL LAND AND THEN PROCEED WITH THE DEVELOPMENT OF THE PROPERTY. AS PER THE STATUS REPORT SUBMI TTED B Y THE DEVELOPER, IT HAS NOT EVEN APPLIED FOR CONVERSION OF LAND IN ORDER TO COMMENCE THE DEVELOPMENT ACTI V ITIES. HE SUBMITTED THAT THERE IS NO TRANSFER AS ENVISAGED BY THE AO AND PRAYED FOR DELETING THE ADDITION. 6. LD. DR SUBMITTED A STATUS REPORT OF THE PROJECT D A TED 0 3/01/2019 FROM THE AO ON THE DIRECTION O F THE BENCH. HOWEVER, HE RELIED ON THE ORDER OF LD. CIT(A). ITA NO S . 307 & 308 /H YD/201 8 : - 8 - : 7. CONSIDERED THE RIVA L SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD . IT IS NOTICED THAT ASSESSEE HAS ENTERED INTO DEVELOPMENT AGREEMENT AND HANDED OVER THE LAND TO THE DEVELOPER, BUT, THE DEVELOPER HAS NOT CARRIED OUT ANY ACTIVITIES IN TH E LAND TO FULFIL ITS PART OF OBLIGATION. FURTHER, THE REPORT OF THE AO CLEARLY INDICATE S THAT THE DEVELOPER HAS NOT CARRIED OUT ANY ACTIVITY EVEN NOW AND THE STATUS OF THE PROJECT IS STILL AT THE PREMATURE STAGE. IT CLEARLY SHOWS T HAT THE TRANSFER AS PER S ECTION 2(47)(V) OF THE ACT HAS NOT TAKEN PLACE DURING THE AY UNDER CONSIDER ATION. HOWEVER, ASSESSEE HAS DECLARED IN THE RETURN OF INCOME AS TRANSFER TAKEN PLACE IN THE AY BY OFFERING CAP ITAL GAINS AND CLAIMING TH E SAME AS DEDUCTION U/S 54F. IN OUR CONSIDER ED VIEW, THERE IS NO TRANSFER IN THE AY UNDER CONSIDERATION. THE REFORE, LONG TERM CAPITAL GAIN HAS NOT ARISEN DURING THIS AY. BUT, WE NOTICE THAT ASSESSEE HAS NOT FILED ANY REVIS ED RETURN OF INCOME TO CLAIM THE ABOVE DEDUCTION AND ASSESSEE HAS FILED ONLY REV ISED COMPUTATION. WHETHER, T HIS CAN BE CLAIMED BY ASSESSEE BEFORE AO AS AO DOES NOT HAVE POWER TO ENTERTAIN THE REVISED COMPUTATION IN WHICH ASSESSEE H AS WITHDRAWN CAPITAL GAINS OFFERED IN RETURN OF INCOME. B UT, THE APPELLATE AUTHORITIES HAVE POWER TO E NTERT A I N THE VALID/LEGAL CLAI M OF THE ASS ESSEE AS HELD IN THE CASE OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (P) LTD. [2012] 349 ITR 336 (BOM.). IN THE SAID C ASE, THE HON BLE HIG H COURT HAS HELD AS U NDER : THE ORDERS OF THE C IT(A) AND THE TRIBUNAL CLEARLY INDICATED THAT BOTH THE APPELLATE AUTHORITIES HAD EXERCISED THEIR JURISDICTION TO CONSI DE R TH E ADDITIONAL CLAIM. T HE CONCLUSION THAT THE ERROR IN NOT CLAIMING T HE DEDUCTION IN THE RETURN OF INCOME WAS INADVERTENT C OULD NOT BE FAULTED FOR MORE THAN ONE REA SON. IT WAS A FINDING OF FACT WHICH COULD NOT BE TERMED PERVERSE. THERE WAS NOTHING ON RECORD THAT MILITATED AGAINST THE FINDING. THE REVENUE HAD NOT SUG GESTED MUCH LESS ESTABLISHED THAT THE OMISSION WAS DELIBERATE OR MALA FIDE. BOTH THE APPELLATE AUTHORIT IES HAD THEMSELVES ITA NO S . 307 & 308 /H YD/201 8 : - 9 - : CONSIDERED THE ADDITIONAL CLAIM AND ALLOWED IT. THEY HAD NOT REMANDED THE MATTER TO THE AO TO CONSIDER IT. BOTH THE ORD ERS EXPRESSLY DIRECTED THE AO TO ALLOW THE DEDUCTION OF RS. 40 LAKHS U/S 43B OF THE ACT. THE AO HAD, THEREFORE, NOW ON LY TO COMPUTE ASSESSEE S TAX LIABILITY WHICH HE MUST DO IN ACCORDANCE WITH THE ORDERS ALLOWING THE ASSESSEE A DEDUCTION OF RS. 4 0 LAKHS U/S 43B. 7.1 IN THE CASE OF CIT VS. P RABHU STEE L IN DUSTRIES PVT. LTD., 171 ITR 530 , T HE BOMBAY HIGH COURT NAGPUR BEN CH , HELD THAT THE TRIBUNAL AND THE APPELLATE ASSI STANT COMMISSIONER WERE RIGHT IN THE VIEW THEY TOOK. THE CLAIM HAVING BEEN MADE IN THE COURSE OF THE ASSESSMENT PROC EEDINGS, THE ITO WAS OBLIGED TO ENTERTAIN IT AND CONSIDER IT ON MERITS. 7. 2 THEREFORE, TH E CLAIM OF THE ASSESSEE IS LEGAL AND THE I NCIDENCE OF TRANSFER HAS NOT TAKEN PLACE IN THE AY UNDER CONSIDERATION AND CAPITAL GAINS TAX CANNOT BE IMPOSED ON THE ASSESSEE. THEREFORE, THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 8. AS THE FACTS AND GROUNDS ARE MATERIALLY IDENTICAL IN IT A NO. 30 7 /HYD/2018 IN THE C ASE OF RA MA RAJU SEETH A PENUMA TSA TO THAT OF SHIVA PRASA D PENUMATSA S CASE, FOLLOWIN G THE CONCLUSIONS DRAWN THEREIN, WE ALLOW THE GROUNDS RAISED IN THIS APPEAL. 9. IN THE R ESULT, BOTH THE APPEALS U NDER CONSIDERATION ARE ALLOWED. ORD ER P RONOUNCED IN THE OP EN C OURT ON 13 TH MARCH , 201 9 SD/ - SD/ - (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOU NTANT ME MBER HYDERA BAD, DATED 13 TH MA RCH , 201 9 . ITA NO S . 307 & 308 /H YD/201 8 : - 10 - : KV COPY TO : 1. SRI SHIVA PRASAD PENUMATSA AND 2) RAMA RAJU SEETHA PENUMATSA , C/O. K. VASANT KUMAR, A.V. RAGHU RAM & P. VINOD , ADVOCATES, 610, BABUKHAN ESTATE, BASHEERBAGH, HYD ERABAD. 2. INCOME TAX OFFICER, WARD - 8 (1), HYDERAB AD. 3 . CIT( APPEALS ) - 8 , HYDE RABAD . 4. PR.CIT - 2 , HYDERABAD. 5 . D.R. ITAT, HYDERABAD. 6 . GUARD FILE.