Sh. Charanjit Singh, Jalandhar V. The Income Tax Officer, Jalandhar

ITA 358/ASR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0646 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Assessee Lawyers: DINESH SARNA
• Section: 143(3); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. (CAMP AT JALANDHAR) BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.358(ASR)/2015 ASSESSMENT YEAR:2007-08 PAN: AJOPS5059E SH. CHARANJIT SINGH VS. INCOME TAX OFFICER, PATEL CHOWK, WARD-1, JALANDHAR, JALANDHAR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.DINESH SARNA, ADVOCATE RESPONDENT BY: SH. A.N. MISHRA, DR DATE OF HEARING: 22/06/2016 DATE OF PRONOUNCEMENT: 27/06/2016 ORDER PER A.D. JAIN, JM; THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2007-08, AGAINST THE ORDER DATED 05.06.2015, PASSED BY THE LD. CIT(A )-1, JALANDHAR. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THAT THE ORDER OF WORTHY CIT(A, JALANDHAR DATED 0.5.06.2015 IS AGAINST THE LAW AND FACTS OF THIS CASE. 2. THAT THE WORTHY CIT(A), JALANDHAR HAS ERRED IN L AW AND ON FACTS BY UPHOLDING THE ADDITION OF RS.1,42,21,731/- MADE BY THE AO BY APPLYING NOTIONAL CAPITAL GAIN, IGNORING THE SUBMI SSION OF THE ASSESSEE AND WITHOUT APPRECIATING THE FACT THAT ASS ESSEE RECEIVED ONLY PART PAYMENT OF RS.33,00,000/- AND HE HAS DECL ARED THE LONG TERM CAPITAL GAIN ON PROPORTIONATE BASIS ON THE SAL E OF THIS PLOT UNDER CONSIDERATION. 2 ITA NO.358(ASR)/2015 A.Y. 2007-08 3. THAT THE WORTHY CIT(A), JALANDHAR HAS ERRED IN L AW AND ON FACTS BY UPHOLDING THE ACTION OF AO OF BRINGING TO TAX THE N OTIONAL CAPITAL GAIN AMOUNTING TO RS.1,47,21,731/- ON RELYING UPON JOINT DEVELOPMENT AGREEMENT WHICH WAS NOT EXECUTED AND SA LE AS PER THAT AGREEMENT WAS NOT COMPLETE. 4. THAT THE WORTHY CIT(A), JALANDHAR HAS ERRED IN L AW AND ON FACTS BY UPHOLDING THE ADDITION MADE BY THE AO ON NOTIONAL B ASIS WITHOUT APPRECIATING THE FACTS THAT AS PER AGREEMENT FLAT S HALL BE GIVEN ONLY AFTER FULL LAND I.E. 500 SQ. YARD, HAS BEEN TRANSFE RRED TO THE BUYER. THERE IS NO PROVISION IN AGREEMENT TO ALLOT PROPORT IONATE FLAT OR MAKE EQUIVALENT PROPORTIONATE PAYMENT. SO FAR THE PRESENT TRANSACTION WHERE ONLY A PART OF THE LAND HAS BEEN TRANSFERRED, NO CONSIDERATION ON ACCOUNT OF FLAT IS AVAILABLE. SO, NO QUESTION OF TAX LIABILITY ARISES. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE IS A N INDIVIDUAL, FILED HIS RETURN OF INCOME ON 31.10.2007 DECLARING AN INCOME OF RS.17,08,129/- PLUS AGRICULTURAL INCOME OF RS.1,80,000/- WHICH WAS PROC ESSED U/S 143(1) OF THE ACT. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRU TINY AND ASSESSMENT U/S 143(3) WAS COMPLETED ON 30.12.2009 AT THE RETURNED INCOME. FURTHER, VIDE ORDER U/S 154, DATED 16.06.2011, INCOME OF THE ASSE SSEE WAS DETERMINED AT RS.18,67,947/-. THE ASSESSEES CASE WAS REOPENED BY ISSUING NOTICE UNDER SECTION 148 OF THE ACT AND IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED THAT THE ORIGINAL RETURN OF INCOME FILED MAY BE TREATED AS HIS RETURNED FILED IN RESPONSE TO THE NOTICE U/S 148 OF THE ACT AND FURNI SHED ALL THE INFORMATION REQUIRED FROM TIME TO TIME. DURING THE YEAR UNDER C ONSIDERATION, THE ASSESSEE SOLD HIS PLOT MEASURING 500 SQ. YARDS WHICH WAS ALL OTTED TO HIM BY THE CO- OPERATIVE SOCIETY, NAMELY PUNJABI CO-OPERATIVE HOUS E BUILDING SOCIETY LTD., MOHALI AND RECEIVED ONLY PART PAYMENT OF RS.33,00,0 00/- AND HE HAS DECLARED 3 ITA NO.358(ASR)/2015 A.Y. 2007-08 THE LONG TERM CAPITAL GAIN ON PROPORTIONATE BASIS O N THE SALE OF THIS PLOT. FURTHER, AT THAT TIME ONLY A PART OF THE REGISTRY C ORRESPONDING TO THE RECEIPT OF CONSIDERATION OF RS.33,00,000/- HAD BEEN EXECUTED. BUT IGNORING THE SUBMISSION OF THE ASSESSEE, THE AO PROCEEDED TO COM PUTE THE LONG TERM CAPITAL GAIN BY TAKING FULL VALUE OF THE CONSIDERATION ACCR UED TO THE ASSESSEE AND WRONGLY MADE AN ADDITION OF RS.1,47,21,731/- ON ACC OUNT OF DIFFERENCE IN LONG TERM CAPITAL GAIN ON NOTIONAL BASIS. 3. AGGRIEVED, THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT(A), WHO CONFIRMED THE ORDER OF THE ASSESSING OFFICER. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE DECISION OF T HE HONBLE HIGH COURT, IN THE CASE OF C.S. ATWAL VS. THE COMMISSIONER OF INCOME TAX, LUDHIANA AND ANOTHER, VIDE ORDER DATED 22.07.2015, PASSED IN ITA NO.200 OF 2013 (O & M), REPORTED AT 279 ITR 330 (P&H) ( A COPY OF THE ORDER IS PLACED ON RECORD). 5. THE LD. DR, ON THE OTHER, RELIED ON THE IMPUGNED ORDER. 6. HAVING HEARD THE RIVAL CONTENTIONS IN THE LIGHT OF THE MATERIAL PLACED ON RECORD, WE ARE OF THE VIEW THAT THE CASE OF THE AS SESSEE IS SQUARELY COVERED BY THE DECISION OF THE HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CHARANJIT SINGH ATWAL VS. CIT, VIDE ORDER, DATED 22.07.2015, PASSED IN ITA 4 ITA NO.358(ASR)/2015 A.Y. 2007-08 NO.200 OF 2013 (O&N), REPORTED AS 279 CTR 330 (P&H) , WHEREIN, IT HAS BEEN HELD THAT SINCE NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE TRANSFER ACT AND CONSEQUENTLY, SECTION 2(47)(V) OF THE I.T. ACT, DID NOT APPLY, TH AT FURTHER, WILLINGNESS TO PERFORM THEIR PART OF THE CONTRACT WAS ABSENT ON TH E PART OF THE DEVELOPERS, OR IT COULD NOT BE PERFORMED BY THEM, WHICH WAS ONE OF T HE CONDITIONS PRECEDENT FOR APPLYING SECTION 53A OF THE TRANSFER ACT; THAT IN CLAUSE 26 OF THE JDA DATED 25.02.2007, THE PRINCIPLE OF FORCE MAJEURE H AD BEEN PROVIDED FOR, WHICH WOULD BE APPLICABLE WITH FULL VIGOUR IN THE CIRCU MSTANCES; THAT FROM THE CUMULATIVE EFFECT OF THE COVENANTS CONTAINED IN TH E JDA READ WITH THE REGISTERED SPECIAL POWER OF ATTORNEY DATED 26.02.2 007, IT COULD NOT BE HELD THAT THE MANDATORY REQUIREMENTS OF SECTION 53A OF T HE TRANSFER ACT WERE COMPLIED WITH, WHICH STOOD INCORPORATED IN SECTION 2(47)(V) OF THE ACT; THAT ONCE THAT WAS SO, IT COULD NOT BE SAID THAT THE AS SESSEES WERE LIABLE TO CAPITAL GAIN TAX IN RESPECT OF THE REMAINING LAND WHICH WAS NOT TRANSFERRED BY THEM TO THE DEVELOPER/BUILDER BECAUSE OF SUPERVISING EVENT AND NOT ON ACCOUNT OF ANY VOLITION ON THEIR PART; AND THAT VIEWED FROM ANOTHE R ANGLE, IT COULD NOT BE SAID THAT ANY INCOME CHARGEABLE TO CAPITAL GAINS TAX IN RESPECT OF THE REMAINING LAND HAD ACCRUED OR ARISEN TO THE ASSESSEE IN THE F ACTS OF THE CASE. 7. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION O F HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CHARANJIT SINGH AT WAL VS. CIT (SUPRA), AS THE 5 ITA NO.358(ASR)/2015 A.Y. 2007-08 FACTS OF THE PRESENT CASE ARE EXACTLY SIMILAR AS TH OSE DECIDED BY THE HONBLE HIGH COURT, THE APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH JUNE, 2016. SD/- SD/- (T. S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 27/06/2016. /SKR/ COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE:SH. CHARANJIT SINGH, PATEL CHO WK, JALANDHAR. (2) THE ITO WARD-1(1), JALANDHAR. (3) THE CIT(A), JLR (4) THE CIT, JLR (5) THE SR DR, I.T.A.T. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.