AI Insights
The case involves Shri Madhu Kumar Patel, an individual and resident of the U.K., who entered into a Joint Development Agreement with M/s. SNR Nirman India (P) Ltd to construct residential flats. The Income Tax Department assessed his income from these transactions under Long Term Capital Gain (LTCG) for various assessment years, leading to disputes over the correct assessment year and the double taxation of certain incomes. The Tribunal's decision addressed issues of whether the income was correctly assessed in the respective years and whether the assessee was entitled to deductions and credits for taxes paid.
Appeal Details
Counselvise Citation
[2022] 140 COUNSELVISE.COM (IT) 128965 (ITAT-HYDERABAD)
Assessee PAN
Bench
Appeal Number
CRN Number
Duration Of Justice
2 month(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
25-12-2022
Appeal Filed By
Assessee
Order Result
PartlyAllowed
Bench Allotted
DB-A
Next Hearing Date
09-11-2022
Assessment Year
2015-2016
Appeal Filed On
25-10-2022
Judgement Text
ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 1 of 20 आयकर अपीलȣय अͬधकरण, हैदराबाद पीठ IN THE INCOME TAX APPELLATE TRIBUNAL Hyderabad ‘ B ‘ Bench, Hyderabad Before Shri R.K. Panda, Accountant Member AND Shri K. Narasimha Chary, Judicial Member ITA No. 395/Hyd/2022 Assessment Year:2015-16 Shri Madhu Kumar Patel Hyderabad PAN:BVDPP3797G Vs. A.D.I.T (Intl.Taxation)-2 Hyderabad (Appellant) (Respondent) Assessee by : Shri K.A. Sai Prasad, CA Revenue by: Shri Rajendra Kumar, CIT(DR) Date of hearing: 10/11/2022 Date of pronouncement: 26/12/2022 ORDER Per R.K. Panda, A.M This appeal filed by the assessee is directed against the order dated 19.7.2022 passed u/s 147 r.w.s. 144C(13) of the I.T. Act for the A.Y 2015-16. 2. Facts of the case, in brief, are that the assessee is an individual and a resident of the U.K. He filed his return of income on 31.08.2015 declaring total income at Rs.2,91,07,000/- as income from Long Term Capital Gain. 3. In this case, information was received that the assessee had entered into a Joint Development Agreement with M/s. SNR Nirman India (P) Ltd on 13.01.2012 to construct ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 2 of 20 residential flats on agreed sharing ratio of 65.35(65% for the developer share and 35% for the landowners share) on 9680 sq. yards of land in survey No.51/1, situated at Mansoorabad Village, Saroornagar Mandal, R.R. Distt. As per the above agreement, the assessee had received 52 constructed flats as his share admeasuring 65,190 sq.ft built-up area. The total cost of the project was Rs.19,35,96,000/- out of which assessee’s share was Rs.6,77,58,600/- (35%). However, the assessee had not filed return of income for the A.Y 2012-13 declaring the same as taxable income for which the assessment for the A.Y 2012-13 was reopened. After considering all material on record, the assessment for A.Y 2012-13 was completed by the Assessing Officer by bringing the income from LTCG of Rs.6,77,58,600/- to tax in respect of the 52 Flats. 4. Further, it was seen that during the A.Y 2015-16, the assessee had entered into further agreements of sale cum irrevocable general power of attorney with possession with the developer M/s. SNR Nirmal India (P) Ltd whereby the assessee sold and conveyed 23 flats out of the 52 flats (he had already sold 29 flats in A.Y 2014-15) allocated to him by virtue of development cum GPA agreement dated 13.01.2012, to the developer- purchaser for a total consideration of Rs.4,38,57,500/- as below: S.No Document No. & Date No. of flats sold Consideration 1 1705/2015 dated 4.3.2015 10 Rs.1,87,97,500 2 1706/2015 dt. 24.3.2015 13 Rs.2,50,60,000 Total 23 Rs.4,38,57,500 5. However, the assessee had not declared this income of Rs.4,38,57,500/- from LTCG in his ITR for A.Y 2015-16. ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 3 of 20 Therefore, the Assessing Officer after recording reasons for reopening issued notice u/s 148 of the I.T. Act to the assessee in response to which the assessee filed his return of income on 24.11.2020 declaring the same LTCG as declared in the origin return of income. However, his gross total income was revised to Rs.2,94,23,179/-. The assessee also asked for the reasons recorded which was supplied to the assessee. The assessee thereafter raised objection to issuance of notice u/s 148 on the ground that these transactions were assessable in the A.Y 2016- 17 and not in A.Y 2015-16. However, the Assessing Officer rejected the objections raised by the assessee and proceeded to complete the assessment. 6. So far as the argument of the assessee that even though document No.1075/15 and 1076/15 were executed on 24.3.2015 (A.Y 2015-16) they were registered only on 8.4.2015 (A.Y 2016-17) and therefore, the capital gain accrued only for the A.Y 2016-17 and not in A.Y 2015-16 is concerned, the Assessing Officer rejected the same on the ground that those documents are both agreements of sale with GPA and from the date of execution, the assessee had handed over the property to the buyer i.e. SNR Nirman India (P) Ltd. Therefore, ‘transfer’ had taken place on the date of execution i.e., 24.3.2015. According to the Assessing Officer, the capital gain tax liability would be attracted immediately when the irrevocable POA is executed in favour of the buyer, as it constitutes the ‘transaction’ by which the buyer is allowed to take possession of the property in part performance of the contract for transfer within the meaning of section 2(47)(v) of the I.T. Act, 1961. He noted that as per the document i.e., documents 1705/15 and 1706/15 are concerned, these were ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 4 of 20 executed on 24.3.2015 i.e. A.Y 2015-16, the entire consideration was paid by the purchaser to the vendor the receipt of which the vendor had admitted and acknowledged vide the documents. Further the vendor has also given the vacant possession of the said property to the purchaser on 24.3.2015 when the deed of agreement of sale cum GPA was made and executed. Relying on the provisions of section 2(47) of the I.T. Act, 1961 and considering the fact that substantive compliance of the contract had taken place during the financial year 2014-15, the Assessing Officer held that the capital gain is assessable in A.Y 2015-16 and not in A.Y 2016-17. 7. So far as the issue relating to deemed income being reversal of deduction u/s 54F granted in A.Y 2012-13 is concerned, the Assessing Officer noted that the assessee had entered into JDA with the developer on 13th of January 2012 wherein the assessee was to receive 52 flats. However, there is no material on record to show that the assessee had actually received the said 52 ready built flats on the date of entering into JDA. Also, the assessee has not furnished occupancy certificate in respect of all 52 flats so as to reckon the actual date of acquisition of flats in the hands of assessee. He, therefore, was of the opinion that under the circumstances, the end of the financial year, i.e., 31st March 2012 could be considered as date of acquisition of the flats in the hands of the assessee. Since the assessee has sold 23 flats which were forming part of the said 52 flats on 24th March 2015, the Assessing Officer held that the assessee parted with the new asset/new residential house consisting of 52 flats during the financial year 2014-15, i.e., AY 2015-16. Therefore, as far as AY 2015-16 is concerned, the assessee is liable for tax on Income ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 5 of 20 from LTCG on the amount that was exempted u/s. 54F in AY 2012-13 w.r.t 23 flats. The Assessing Officer accordingly brought to tax the amount of Rs.2,99,46,738 which was the deduction granted u/s 54F for A.Y 2012-13. The Assessing Officer accordingly determined the total income of the assessee at Rs.10.32.27,117/- in the draft assessment order. 8. The assessee filed objections before the DRP against the draft order passed by the Assessing Officer. However, the DRP vide directions dated 30.06.2022 passed u/s 144C(5) partly allowed the objections of the assessee and upheld the additions/variations made in the draft order dat6ed 27.09.2021. 8.1 The Assessing Officer thereafter determined the total income of the assessee at Rs.7,34,64,243/- wherein he made additions of Rs.1,41,04,625/- being Short Term Capital Gain on account of sale of 23 flats before three years and also added back the deduction granted u/s 54F in A.Y 2012-13 in respect of the 23 flats amounting to Rs.2,99,46,438/-. 9. Aggrieved with such order of the Assessing Officer/DRP, the assessee is in appeal before the Tribunal by raising the following grounds of appeal: “1. The order u/s.147 r.w.s 144C(13) dt. 19-07-2022 passed by the Ld. Assessing Officer pursuant to the directions of the Ld. DRP is not correct either in law or on facts and in both. 2(a) The Ld. DRP having observed (para 2.7.4) that the 2(a) amount of Rs.2,91,07,000/- has already been considered for taxation in AY.2014-15 pertaining to sale of 29 flats, is not justified in not accepting the claim that the said income admitted in AY.2015-16 be deleted. 2(b) The Ld. DRP failed appreciate the claim that the sum of Rs.2,91,07,000/- gets taxed twice, once in the order 144C for AY. 2014- ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 6 of 20 15 on execution of sale deed and for the second time as admitted by the appellant in his return of income for AY.2015-16. 2(c) The Ld. Assessing Officer is not justified in not discussing this issue in his order u/s.147 r.w.s 144C(13). 3(a) The Ld. Assessing Officer in the facts and circumstances of the case is not justified in reducing the cost only in computing the income on transaction of sale of 23 flats treating the same as Short Term Capital Gains ignoring the directions of DRP to reduce the indexed cost. 3(b) The Ld. Assessing Officer failed to appreciate the fact that the period of holding of 23flats in question is more than 3 years from the date of acquisition and hence, resulting capital gain is long-term entitling the appellant for deduction of indexed cost of acquisition. 4. The Ld. DRP in the facts and circumstances of the case is not justified in not allowing the credit of taxes of Rs.1,00,07,393/- paid in assessment year 2016-17 in respect of transaction of sale of 23 flats for Rs.4,38,57,500/- now brought to tax in assessment year 2015-16. 5(a). The Ld. DRP having observed (para 2.4.5) that the exemption granted u/s.54F during A.Y2012-13 needs to be brought back to tax in the year in which the property is sold i.e., in A.Y 2014-15 is not justified in not deleting the same in the year under consideration. 5(b) The Ld. DRP in facts and circumstances of the case failed to appreciate the claim that the transfer of property took place after 3 years from the date of acquisition i.e., 13-01-2012 being the date of JDA, and hence provisions of sec.54F(3) are not applicable to the facts of the case in the year under consideration. 6.The appellant craves leave to add, amend or alter any of the above ground(grounds).” 10. The learned Counsel for the assessee did not press ground of appeal No.1 for which the learned DR has no objection. Accordingly, the same is dismissed as not pressed. Ground of appeal 6 being general in nature is dismissed. 11. In Grounds of appeal No.2a, 2b and 2c, the assessee has challenged the order of the Assessing Officer in taxing the amount of Rs.2,91,07,000/-twice. The learned Counsel for the assessee submitted that while hearing before the DRP were pending, the Department reopened the assessment for the A.Y ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 7 of 20 2014-15 and in the order passed u/s 144C, the entire sum of Rs.5,12,07,000/- was proposed to be taxed in A.Y 2014-15 based on the dates of registration rejecting the claim that the said sum of Rs.5,12,07,000/- was admitted to tax in three different A.Ys. The learned Counsel for the assessee referring to the order of the DRP for the impugned A.Y drew the attention of the Bench to Para 2.7.3 and drew the attention of the Bench to the following table according to which the assessee has admitted the amount of Rs.5,12,07,000/- to tax in 3 different A.Ys: S.No A.Y Amount in Rs. 1 2013-14 1,20,00,000 2 2014-15 1,01,00,000 3 2015-16 2,91,07,000 Total 5,12,07,000 12. He submitted that the action of the Department in proposing to tax the capital gain of Rs.5,12,07,000/- to tax in A.Y 2014-15 is also accepted by the assessee. He submitted that the order for A.Y 2013-14 was passed u/s 143(1) and the order for A.Y 2014-15 is still pending before the DRP and the amount of Rs.2,91,07,000/-, which was offered to tax in A.Y 2015-16, is sought to be deleted. He submitted that since the assessee has admitted the amount of Rs.2,91,07,000/- as LTCG in A.Y 2014- 15, addition of the same for the impugned A.Y will amount to double addition of the same amount and therefore, despite the DRP admitting the same, sustained the addition which is not correct. He submitted that although the assessee in the instant case has admitted the amount of Rs.2,91,07,00/- to tax in A.Y 2015-16, however, the Revenue has brought the same to tax in A.Y 2014-15, therefore, the same should be excluded from taxation from the impugned A.Y. Referring to various decisions, he submitted that though the sum of Rs.2,91,07,000/- was ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 8 of 20 admitted to tax in a particular A.Y, by the assessee himself, however, he is entitled to claim deduction of the same before the appellate authority since the same cannot be taxed in the year. For the above proposition, the learned Counsel for the assessee relied on the following decisions: 1) CIT vs. Shelly Products and another (261 ITR 367) (S.C) 2) CIT vs. Bharat General Reinsurance Co. Ltd (81 ITR 303) (Del.). 3) Prithvi Share Brokers (349 ITR 336) (Mum) 4) Parikh & Co. (122 ITR 610) Guj. High Court) 5) S.R. Kosthi vs. CIT (276 ITR 165 (Guj.H.C) 6) Sanghi Industries vs. ACIT (ITA Nos.979 to 1001/Hyd/2017) 13. He accordingly submitted that the Assessing Officer should be directed to delete the sum of Rs.2,91,07,000/- since the same has already been considered for taxation in the A.Y 2014-15. 14. The learned DR, on the other hand, while relying on the order of the Assessing Officer submitted that the issue may be restored to the file of the Assessing Officer with a direction to verify the record and adjudicate the issue afresh. 15. We have heard the rival arguments made by both the sides, perused the orders of the AO and the DRP and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the AO in ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 9 of 20 the instant case brought to tax an amount of Rs.4,38,57,500/- being income from LTCG declared in A.Y 2016-17 on the ground that document No.1705/15 and 1706/15 were executed on 24.3.2015 which pertain to A.Y 2015-16 and the capital gain accrued in the A.Y 2015-16. Further, it is the case of the Assessing Officer that the irrevocable power of attorney was made in favour of the buyer and it constitutes the “transaction” by which the buyer was allowed to take possession of the property in part performance of the contract for transfer, within the meaning of section 2(47)(v) of the I.T. Act, 1961. The buyer also paid entire consideration and the receipt of the same has been admitted by the vendor and acknowledged in the document itself. Further, the vendor has given vacant position of the said property to the purchaser on 24.3.2015 when the deed of agreement of sale cum GPA was made and executed. 15.1 We find the DRP while sustaining the addition made by the Assessing Officer has though acknowledged that the amount of Rs.2,91,07,000/- has already been considered for taxation in the A.Y 2014-15 pertaining to the sale of 29 flats, however, sustained the addition on the ground that there is no scope for telescoping for the sum of Rs.2,91,07,000 in this year as this amount pertains to sale of 29 flats and considered for taxation in A.Y 2014-15. Further, it was also the observation of the DRP that its role is restricted to adjudicate as to whether the income on sale of 23 flats has been brought to tax during the A.Y 2015-16 correctly or not. The observation of the learned DRP at Para 2.7.4 to 2.7.7 reads as under: “2.7.4 The amount of Rs.,91,07,000/- has already been considered for taxation for the A.Y. 2014-15 pertaining to the sale of 29 flats. The assessee has again lats for a consideration of Rs. ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 10 of 20 4.38.57.500/-. In this regard as Observed the above, this amount has not been offered to tax by the assessee and hence LE AO has reopened the A.Y. by recording the reasons. The action of the AO In this regard has been upheld for the reasons mentioned in above para no 2.2. 2.7.5 To sum up, the total sale of 52 flats have been considered for taxation by the department as under: A.Y No.of flats sold Sale consideration 2014-15 29 Rs.5,12,07,000 2015-16 23 Rs.4,38,57,500 2.7.6 Thus, there is no scope for telescoping of the sum of Rs. 2,91,07,000/- in this year as this amount pertains to sale 29 flats and considered for taxation in the A.Y. 2014-15. 2.7.7 Further, the DRP's role is restricted to the adjudicate as to whether the income on sale of 23 flats has been brought to tax during A.Y. 2015- 16 correctly or not. In view of the facts and reasons recorded by the AO, the Panel has already upheld that the amount of Rs. 4.38,57,500/- should be brought to tax for A.Y. 2015-16 only.” 15.2 It is the submission of the learned Counsel for the assessee that once the amount of Rs. 2,91,07,000/- is brought to tax in A.Y 2014-15, therefore, the addition of the same in this year amounts to double addition of the same amount which is not justified. We find merit in the above argument of the learned Counsel for the assessee. We find the Hon'ble Supreme Court in the case of CIT vs. Shelly Products & Anr (Supra) has observed as under: “If he has by mistake or inadvertence or on account of ignorance, included in his income any amount which is exempted from payment of income-tax, or is not income within the contemplation of law, he may likewise bring this to the notice of the assessing authority, which if satisfied, may grant him relief and refund the tax paid in excess, if any Such matters can be brought to the notice of the concerned authority in a case when refund is due and payable, and the authority concerned, on being satisfied, shall grant appropriate relief”. ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 11 of 20 16. We find the Hon'ble Delhi High Court in the case of CIT vs. Bharat General Reinsurance Co. Ltd (Supra) has observed as under: “13. It is true that the assessed itself had included that dividend income in its return for the year in question but there is no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resoled from the position which it had wrongly taken while filing the return. Quite apart from it, it is incumbent on the income-tax department to find out whether a particular income was assessable in the particular year or not. Merely because the assessee wrongly included the income in its return for a particular year, it cannot confer jurisdiction on the department to tax that income in that year even though legally such income did not pertain to that year. We are, therefore, of the view that the income from dividend was not assessable during the assessment year 1958-59 but it was assessable in the assessment year 1953-54. It cannot, therefore, be taxed in the assessment year 1958-59. 17. The various other decisions relied on by the learned Counsel for the assessee also support the arguments of the learned Counsel for the assessee that the same amount cannot be taxed twice in two different A.Ys. Under these circumstances, we deem it proper to restore the issue to the file of the Assessing Officer with a direction to verify the record and if the amount of Rs.2,91,07,000/- has been brought to tax in A.Y 2014-15, then the same should be deleted from A.Y 2015-16. We hold and direct accordingly. Needless to say, the Assessing Officer shall give due opportunity of being heard to the assessee while deciding the issue. The first issue raised by the assessee in the grounds of appeal 2a, 2b, and 2c are accordingly allowed for statistical purposes. ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 12 of 20 18. Ground of appeal 3a relates to the deduction of indexed cost of acquisition wherein the assessee has challenged the order of the Assessing Officer in not granting indexed cost of acquisition. 18.1 The learned Counsel for the assessee submitted that the sum of Rs.4,38,57,500/- was admitted to tax in A.Y 2016-17 and the DRP has directed the same to be brought to tax in A.Y 2015-16. He submitted that the assessee is not objecting to this observation of the DRP. However, he drew the attention of the Bench to Para 2.6.2 of the order of the DRP where the DRP has observed as under: “2.6.2 It is seen from the records, that the cost of acquisition of 52 flats admeasuring 65,190 sq.ft is Rs.6,77,58,600/- (as brought to tax in A.Y 2012-13). Thus, the cost of acquisition for 23 flats admeasuring 28625 sq.ft (65,190 sq.ft being total built area (-)36565 sq.ft being built up area of 29 flats) will be 2,97,52,875/-. Accordingly, we direct the Assessing Officer to reduce the indexed cost of acquisition from the sale consideration and arrive at the correct LTCG”. 19. He submitted that as per the direction of the DRP, the Assessing Officer was supposed to reduce the indexed cost of acquisition. However, the Assessing Officer in the order passed u/s 144C(13) simply reduced the cost of Rs.2,97,52,875/- without giving any indexation benefit. He submitted that since the flats in question got accrued to the assessee as per the Jt. Development Agreement dated 13.1.2012 and the sale of 23 flats took place on 24.3.2015, which is not disputed by the Assessing Officer, therefore, the asset is a long term one and hence benefit of indexed cost of acquisition is available to the assessee. He submitted that when the DRP has given a direction, the Assessing Officer is duty bound to follow the same. ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 13 of 20 20. The learned DR, on the other hand, heavily relied on the order of the Assessing Officer. 21. We have heard the rival arguments made by both the sides, perused the orders of the AO and the DRP and the paper book filed on behalf of the assessee. A perusal of para 2.6.2 of the order of the DRP which has already been reproduced in the preceding para clearly shows that the DRP has directed the Assessing Officer to reduce the indexed cost of acquisition from the sale consideration and arrive at the correct LTCG. However, a perusal of the assessment order shows that the Assessing Officer has not granted the benefit of indexed cost of acquisition from the sale consideration to arrive at the correct LTCG. We, therefore, direct the Assessing Officer to follow the direction of the DRP and allow indexed cost of acquisition from the sale consideration. Ground raised by the assessee on this issue is accordingly allowed. 22. In Ground of appeal No.3b, 5(a) & 5(b) the assessee has challenged the order of the Assessing Officer in reversing 54F deduction granted in A.Y 2012-13. 22.1 The learned Counsel for the assessee submitted that the Assessing Officer proposed to bring the sum of Rs.2,99,46,438/- to tax as reversal of deduction granted in A.Y 2012-13 stating that the transfer is within 3 years. He submitted that since the date of transfer even according to the Assessing Officer is 24.3.2015, the transfer is made after 3 years from the date of Jt. Development Agreement i.e., 13.1.2012 and therefore, the Assessing Officer is not justified in proposing to reverse the ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 14 of 20 deduction u/s 54F. Further, the Assessing Officer in the draft assessment order u/s 144C for A.Y 2014-15 has already proposed to reverse the entire deduction u/s 54F claim in A.Y 2012-13 amounting to Rs.6,77,04,992/-. Therefore, reversal of the deduction u/s 54F once again in A.Y 2015-16 will amount to double addition. 23. Referring to the order of the DRP at para 2.4.5 and 2.4.6 the learned Counsel for the assessee drew the attention of the Bench to the same which reads as under: “2.4.5 However, we note that the assessee has sold these properties during the A.Y 2014-15 and hence the exemption granted u/s.54F during A.Y 2012-13 needs to be brought back to tax in the year in which the property is sold i.e., in the A.Y 2014-15. It is also noted that the AO in the draft assessment order for A.Y. 2014- 15, has rightly brought back this exemption of Rs. 6,77,04,992/- to tax as LTCG, which was allowed u/s.54F in AY 2012-13. 2.4.6 As regards, the proposed addition in of proportionate 54F deduction in the said A.Y 2015-16, we note that AO in the DAO has proposed to add back 54F of Rs. 2,99,46,438/- to tax on protective' basis. Hence, it does not require any deletion”. 24. He submitted that once the assessee has accepted the same in the A.Y 2014-15, no addition of the same can be made in the A.Y 2015-16. 25. The learned DR, on the other hand, heavily relied on the order of the DRP. 26. We have heard the rival arguments made by both the sides, perused the orders of the AO and the DRP and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case was granted deduction u/s 54F in ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 15 of 20 respect of 23 flats amounting to Rs.2,99,46,438/- in A.Y 2012-13. We find since the assessee sold the flats within a period of 3 years, the Assessing Officer reversed the deduction of Rs.2,99,46,438/- allowed u/s 54F of the I.T. Act on the ground that the transfer is within 3 years. It is the submission of the learned Counsel for the assessee that the date of transfer is 24.3.2015 and the date of Jt. Development Agreement is 13.1.2012 and therefore, the transfer is made after a period of 3 years and therefore, the Assessing Officer was not justified in proposing to reverse the deduction u/s 54F of the I.T. Act. It is the alternate contention of the learned Counsel for the assessee that when the Assessing Officer in the draft assessment order u/s 144C for A.Y 2014-15 has already proposed to reverse the entire deduction u/s 54F claimed in A.Y 2012-13 amounting to Rs.6,77,04,992/-, therefore, reversal of the deduction u/s 54F again in A.Y 2015-16 will amount to double taxation. We find merit in the above argument of the learned Counsel for the assessee. A perusal of the order of the DRP at para 2.4.5 shows that the Assessing Officer in the draft order for A.Y 2014-15 has already brought to tax the amount of Rs.6,77,04,992/- as LTCG which was allowed u/s 54F in A.Y 2012-13. However, the DRP at Para 2.4.6 of the order sustained the addition made by the Assessing Officer on the ground that the same is made on protective basis. Since in the instant case, the flats were allotted to the assessee as per the JDA on 13.01.2012 and the flats were sold on 24.3.2015, therefore, the new asset was sold after a period of 3 years and therefore, the provisions of section 54F(3), in our opinion, shall not apply. Further, when the entire sum of Rs.6,77,04,992/- was reversed in A.Y 2014-15, therefore, again addition of the same, under protective basis, in A.Y 2015-16, in our opinion, is also not justified. We, therefore, direct the ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 16 of 20 Assessing Officer to verify the record and if the amount of Rs.2,99,46,438/- has already been brought to tax in A.Y 2014-15 or the transactions for the year under consideration is beyond a period of 3 years, then not to make any addition by reversing the deduction already allowed u/s 54F in A.Y 2012-13. Needless to say, that the Assessing Officer while verifying the record shall give due opportunity of being heard to the assessee and decide the issue as per fact and law. We hold and direct accordingly. Grounds of appeal 3b, 5a and 5b are accordingly allowed for statistical purposes. 27. In Ground of appeal No.4, the assessee has requested to give credit of tax paid in A.Y 2016-17 to A.Y 2015-16. 27.1 The learned Counsel for the assessee submitted that the assessee admitted a sum of Rs.4,38,57,500/- to tax in A.Y 2016-17 and paid tax of Rs.1,00, 07,393/- consisting of TDS and 140A tax. He submitted that the DRP directed the said sum of Rs.4,38,57,500/- to be treated as income in A.Y 2015-16 and the assessee has not objected to the same. However, before the DRP, the assessee has claimed that since the income is proposed to be preponed for the A.Y 2015-16, therefore, the tax paid on that income in A.Y 2016-17 should also be given credit in A.Y 2015- 16. However, the DRP at para 2.7.8 refused to accept the claim by observing as under: “2.7.8. Regarding the claim of credit of taxes paid on the amount of sale consideration of Rs.4,38,57,500/- in A.Y 2016-17 to be allowed this year, the relevant question does not arise this year as the status of the assessment of the A.Y 2016-17 in which the assessee offered capital gain and paid taxes is not known and not before the panel. The jurisdiction of the panel is restricted to the issues pertaining to A.Y 2015- 16 only.” ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 17 of 20 28. He submitted that the Bangalore Bench of the Tribunal in the case of Shivganga Drillers (P) Ltd vs. CPC, Income Tax Bangalore (195 ITD 555) and the Delhi Bench of the Tribunal in the case of M/s. Interglobe Enterprises (P) Ltd vs. ACIT vide ITA No.6580/Del/2019 order dated 7.6.2022 has allowed such claim made by the assessee. He accordingly submitted that the Assessing Officer be directed to give credit for the sum of Rs.1,00,07,393/- being TDS and 140A tax paid in A.Y 2016-17 towards tax liability for A.Y 2015-16. 29. The learned DR, on the other hand, heavily relied on the order of the Assessing Officer and the DRP. 30. We have heard the rival arguments made by both the sides, perused the orders of the AO and the DRP and the paper book filed on behalf of the assessee. We have also considered the various decisions cited before us by both sides. We find the assessee in the instant case had admitted an amount of Rs.4,38,57,500/- to tax in A.Y 2016-17 and paid tax of Rs.1,00,07,393/- being TDS and 140A tax. We find the DRP directed the said sum of Rs.4,38,57,500/- to be treated as income in A.Y 2015-16 and the assessee has not objected to the above addition. However, the request of the assessee before the DRP that the tax of Rs.1,00,07,393/- paid in A.Y 2016-17 in respect of the income of Rs.4,38,57,500/- be given credit in A.Y 2015-16 was rejected on the ground that the status of the assessment for A.Y 2016-17 in which the assessee offered capital gain and paid taxes is not known and not before the Panel. It is the submission of the learned Counsel for the assessee that the amount of ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 18 of 20 Rs.1,00,07,393/- is as per the 26AS and 140A tax paid in A.Y 2016-17 which is verifiable and since the income has been preponed to A.Y 2015-16, therefore, the corresponding taxation credit also should be given. 31. We find the Delhi Bench of the Tribunal in the case of Interglobe Enterprises (P) Ltd (Supra) while dealing with an identical issue has observed as under: “5. We have carefully considered the rival submissions. It is the case of the assessee that when the issue of availability of TDS credit in the appropriate assessment year is examined in the light of Section 199(3) r.w. Rule 37BA(3) of the Income Tax Rules, it would be clear that credit for tax deducted at source and paid to the Central Government, shall be given for the assessment year for which such income is assessable. The assessee contends that the TDS credit is available in the financial year where the corresponding income has been referred by the assessee. A reference was made to the decision of the Co-ordinate Bench in the case of Greatship India Ltd. vs. DCIT in ITA Printed from itatorders.in I.T.A. No.6580/Del/2019 3 No.5562/Mum/2018 order dated 8th June, 2020 to contend that the TDS credit cannot be postponed to a different assessment year on the basis of deduction carried out by the deductor when the accrued income from such transaction has been reported in the earlier assessment year. 6. A combined reading of Section 199(3) r.w. Rule 37BA(3) makes the position of law clear that credit for TDS is available in the year in which the income is reported and as a corollary, should not be deferred to some other assessment year. In the instant case, the Revenue has allowed the credit in the subsequent assessment year when the TDS is shown to have been credited in the form 26AS. However, as stated on behalf of the assessee, the corresponding income will not be found to be recorded and therefore such direction would belie the letter and spirit of Section 199(3) and Rule 37BA(3) thereto. Thus, on first principles, we are inclined to agree with the stand taken on behalf of the assessee for eligibility TDS credit in the Assessment Year 2016-17 itself when income has been claimed to have accrued/arisen and included for determination to chargeable income. 7. In the same vein, however, we note that no positive finding of the Revenue Authorities below is available to show as to whether tax credit for TDS reflected in form No. 26AS in Assessment Year 2017-18 has been claimed or otherwise in that assessment year. A verification of factual position is required to shun the possibility of double claim. The assessee shall be entitled to credit of TDS corresponding to the income reported in the Assessment Year 2016-17 itself provided; (i) the assessee has not claimed any credit of TDS in any other assessment ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 19 of 20 year; (ii) an Printed from itatorders.in I.T.A. No.6580/Del/2019 4 undertaking/affidavit is placed by the assessee before the Revenue Authorities to lend assurance that such credit claimed in Assessment Year 2016-17 shall not be doubly claimed in any other assessment year in future based on form 26AS or any other document. On being satisfied, the Assessing Officer shall grant the TDS credit in terms of observations made hereinabove. With these observations, the impugned order of the CIT(A) is set aside and restore back to the file of the Assessing Officer for grant of credit in accordance with law. 8. In the result, the appeal of the assessee is allowed for statistical purposes.” 32. Respectfully following the decision of the Delhi Bench of the Tribunal (cited supra) we restore the issue to the file of the Assessing Officer with a direction to verify the record and if any other benefit is not claimed by the assessee in respect of the amount of tax of Rs.1,00,07,393/- paid in A.Y 2016-17, in respect of the income of Rs.4,38,57,500/- then allow the credit of the same for the A.Y 2015-16. Needless to say, the Assessing Officer shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Ground of appeal No.4 raised by the assessee is accordingly allowed for statistical purposes. 33. In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced in the Open Court on 26 th December, 2022. Sd/- Sd/- (K. NARASIMHA CHARY) JUDICIAL MEMBER (R.K. PANDA) ACCOUNTANT MEMBER Hyderabad, dated 26 th December, 2022 Vinodan/sps ITA No 395 of 2022 Madhu Kumar Patel Hyderabad Page 20 of 20 Copy to: S.No Addresses 1 Shri Madhu Kumar Patel C/o Katrapati & Associates, 1-1-298/2/B/3, 1 st Floor, Ashok Nagar, Street No.1, Hyderabad 500020 2 ADIT, Office of the ADIT(Int. Taxation)2 Aayakar Bhavan, Basheerbagh, Hyderabad 3 DRP-1, Bengaluru 4 Pr. CIT-, (Int. Taxation), Hyderabad 5 DR, ITAT Hyderabad Benches 6 Guard File By Order
Other Referred Cases
CIT vs. Shelly Products and another (261 ITR 367) (S.C), CIT vs. Bharat General Reinsurance Co. Ltd (81 ITR 303) (Del.), Prithvi Share Brokers (349 ITR 336) (Mum), Parikh & Co. (122 ITR 610) Guj. High Court, S.R. Kosthi vs. CIT (276 ITR 165 (Guj.H.C), Sanghi Industries vs. ACIT (ITA Nos.979 to 1001/Hyd/2017), Shivganga Drillers (P) Ltd vs. CPC, Income Tax Bangalore (195 ITD 555), M/s. Interglobe Enterprises (P) Ltd vs. ACIT (ITA No.6580/Del/2019 order dated 7.6.2022)
Laws Referred To
Income Tax Act
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