ITO, Mohali V. Sh. Dalhit Singh, Mohali

ITA 560/CHANDI/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 5197 (ITAT-CHANDIGARH)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 31-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: CHANDRA KANTA
• Keywords: Capital asset; Principle of natural justice; Additional evidence; Revised return
• Section: 54F; 147; 148

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SMT. DIVA SINGH, JUDICIAL MEMBER AND DR. B.R.R. KUMAR, ACCOUNTANT MEMBER ITA NO.560/CHD/2017 ASSESSMENT YEAR: 2008-09 THE ITO VS. SH. DILJIT SINGH WARD 6(3) C/O CAPT. GURDEV SINGH MOHALI H.NO. 2668, PHASE-1 MOHALI PAN NO. BNYPS2807M ITA NO.577/CHD/2017 ASSESSMENT YEAR: 2008-09 DILJIT SINGH VS. THE ITO C/O CAPT. GURDEV SINGH WARD 6(3) H.NO. 2668, PHASE 11 MOHALI MOHALI (APPELLANT) (RESPONDENT) ASSESSEE BY : SH. JASPAL SHARMA DEPARTMENT BY : SMT. CHANDRAKANTA DATE OF HEARING : 12/12/2017 DATE OF PRONOUNCEMENT : 08/03/2018 ORDER PER BENCH: THE ABOVE APPEALS HAVE BEEN FILED BY THE REVENUE AN D BY THE ASSESSEE AGAINST THE SIMILAR ORDER OF LD. CIT(A)-2, CHANDIGA RH DT. 02/01/2017. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) HAS ERRED IN HOLDING THAT THE PARTIES HAD AG REED FOR PRO-RATA TRANSFER OF LAND WHEREAS BY VIRTUE OF EXECUTING THE JOINT DEVEL OPMENT AGREEMENT (JDA) READ WITH POSSESSION LETTER AND DULY REGISTERED IRR EVOCABLE SPECIAL POWER OF ATTORNEY, THERE WAS A GRANT AND ASSIGNMENT OF ALL R IGHTS IN THE ENTIRE PROPERTY IN FAVOUR OF TATA HOUSING DEVELOPMENT COMPANY LIMITED (THDC) AND SO 'TRANSFERROR THE PURPOSES OF SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 READ WITH SECTION 2(47)(II), 2(47)(VI), AND EXPLANATION BELOW 2(47) A ND SECTION 269UA HAD TAKEN PLACE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THAT NO POSSESSION HAD BEEN GIVEN BY- THE 2 TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA READ WITH POSSESSION LETTER AND IRREVOCABLE SPECIAL POWE R OF ATTORNEY SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE TRANSFER OF PROPER TY ACT 1882, COMPLETELY DISREGARDING THE FACTS THAT AS PER THE JDA THERE WA S A GRANT AND ASSIGNMENT OF ALL RIGHTS IN THE ENTIRE PROPERTY IN FAVOUR OF THDC ALO NG WITH HANDING OVER OF PHYSICAL AND VACANT POSSESSION. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD CIT(A) HAS ERRED IN HOLDING THAT THAT NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF THE JDA SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF THE TRA NSFER OF PROPERTY ACT 1882 WHEREAS BY VIRTUE OF THE DULY REGISTERED IRREVOCABL E SPECIAL POWER OF ATTORNEY, THE DEVELOPER WAS IN COMPLETE CONTROL OF THE PROPERTY A ND WAS IN POSSESSION THEREOF INCLUDING ALL RIGHTS OF A DEFACTO OWNER. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE ESSENTIAL INGR EDIENTS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT 1882 WERE NOT FULFILLED ON THE MERE GROUND THAT THE JDA WAS NOT REGISTERED WHEREAS SECTION 2(47)(V) OF THE INCOME TAX ACT 1961 ONLY REFERS TO THE CONTRACT OF THE NATURE REFERRED TO IN SECTIO N 53A OF THE TRANSFER OF PROPERTY ACT AND THE REQUIREMENT OF REGISTRATION OF AGREEMEN T UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT CANNOT BE READ INTO SECTIO N 2(47)(V) OF THE INCOME TAX ACT 1961 READ WITH SECTION 2(47)(II), 2(47)(VI), AN D EXPLANATION BELOW 2(47) AND SECTION 269UA. 5. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE ID. CIT(A) HAS ERRED IN HOLDING THAT THE POSSESSION DELIVERED, IFF AT ALL, WAS AS A LICENCEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPA CITY OF THE TRANSFEREE WHEREAS ALL POSSIBLE RIGHTS IN THE PROPERTY INCLUDI NG THE RIGHT TO SELL ETC, HAD BEEN GIVEN TO THE BUILDER. 6. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN BIFURCATING THE AGREEMENT INTO DIFFERE NT PORTIONS AND ALLOWING THE ASSESSEE TO PAY CAPITAL GAINS TAX ONLY WHEN CASH OR MONEY IS RECEIVED WHEREAS SECTION 45 OF THE INCOME TAX ACT 1961 IS A DEEMING PROVISION WHERE CAPITAL GAIN IS LIABLE TO BE TAXED IN THE YEAR IN WHICH TRANSFER TA KES PLACE AND THERE IS NO PROVISION UNDER THE LAW TO ALLOW THE ASSESSEE TO PA Y CAPITAL GAINS TAX BEYOND THE YEAR IN WHICH THE CAPITAL GAIN HAS ACCRUED. 7. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN NOT ADJUDICATING ON THE CRUCIAL ISSUE OF APPLICABILITY OF SECTION 2(47)(II) AND 2(47)(VI) OF THE INCOME TAX ACT 1961 IN THE CAS E OF THE ASSESSEE AS THE PROVISIONS OF SECTION 2(47)(II) AND 2(47)(VI) ALSO MAKE THE ASSESSEE LIABLE FOR CAPITAL GAINS UNDER THE INCOME TAX ACT 1961. 8. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 2(4 7)(VI) OF THE INCOME TAX ACT WERE NOT APPLICABLE IN ABSENCE OF REGISTERED CONVEYANCE DEED DISREGARDING THE DECISION OF THE SUPREME COURT IN PODAR CEMENT LTD. HOLDING THAT THE PRINCIPLE OF COMMON LAW, TRANSFER OF PROPERTY ACT AND REGISTRATI ON ACT WERE NOT CONCLUSIVE FOR INTERPRETATION OF PROVISIONS OF INCOME TAX ACT 9. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LD. CIT(A) HAS ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 2(47)(II) ARE NOT APPLICABLE WHEREAS ALL THE MEMBERS OF SOCIETY SURRENDERED THEI R INDIVIDUAL RIGHTS IN THE PLOTS TOGETHER WITH ORIGINAL PURCHASE DEEDS IN FAVOUR OF SOCIETY TO BE SUBSEQUENTLY TRANSFERRED TO TATA HOUSING DEVELOPMENT COMPANY LIM ITED (THDC) LEADING TO EXTINGUISHMENT OF RIGHTS IN THE PLOTS. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 3 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN HAVING CONFIRMED THE ORDER OF THE LD. ASSESSING OFF ICER WHICH WAS ILLEGAL, UNWARRANTED AND WITHOUT JURISDICTION AS NO NOTICE U NDER SECTION 148 WAS SERVED UPON THE ASSESSEE. 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN HAVING HELD THAT THE ASSESSING OFFICER HAS RIGHTLY SERVED THE NOTICE ON THE ASSESSEE ON THE LAST KNOWN ADDRESS AS NO RETURN HAS BEEN FILED BY THE ASSESSEE, WHICH IS AGAINST FACTS. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN HAVING HELD THAT THE RETURNS FILED BY THE ASSESSEE ARE NOT RELIABLE AND COGENT EVIDENCE. 5. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS ERRED IN HAVING HELD THAT THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION UNDER SECTION 54F OF THE INCOME TAX ACT. 4. BRIEF FACTS OF THE CASE ARE THAT A HOUSING SOCIE TY, NAMED AS THE DEFENCE SERVICES CO-OPERATIVE HOUSE BUILDING SOCIETY LTD., MOHALI (HEREINAFTER REFERRED TO AS 'SOCIETY') CONSISTING OF 207 MEMBERS WAS FORMED, WHICH WAS THE OWNER OF 27.3 ACRES OF LAND IN VILLAGE KANSAL, DISTRICT MOHALI. T HIS SOCIETY ENTERED INTO A TRIPARTITE DEVELOPMENT AGREEMENT (HEREINAFTER REFER RED TO AS 'AGREEMENT') ON 27.04.2007 WITH LIFE HASH BUILDERS PVT. LTD., CHANDIGARH (HEREINAFT ER REFERRED TO AS 'HASH') AND M/S TATA HOUSING DEVELOPMENT COMPANY LTD., MUMBAI (HEREINAFT ER REFERRED TO AS THDC), BY VIRTUE OF WHICH THE SOCIETY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MO NE TARY CONSIDERATION AND ALSO CONSIDERATION IN KIND TO THE MEMBERS OF THE SOCIETY. THE ASSESSEE WAS ALSO A MEMBER OF THE SAID SOCIETY OWNING 500 SQ. YARDS PLOT OF LAND. THIS ARRANGEMENT MADE BY WAY OF JOINT DEVELOPMENT AGREEMENT CONSTITUTED TRANSFER OF CAPIT A! ASSET. THE TOTAL CONSIDERATION WAS SETTLED AT RS. 80,00,000/- AS MON ETARY CONSIDERATION AND FURNISHED FLAT OF 2250 SQ. FEET AS CONSIDERATION IN KIND. THE TOTAL COST OF THE FURNISHED FLATS COMES TO APPROXIMATELY RS, 1,01,25, 000/- @ 4500 PER SQ. FEET AND THUS TOTAL CONSIDERATION ACCRUING TO THE ASSESSEE W AS TAKEN BY THE ASSESSING OFFICER AT RS. 1,81,25,000/-. AFTER ALLOWING THE CO ST OF ACQUISITION, THE LONG TERM CAPITAL GAINS WERE COMPUTED AT RS. 1,78,25,000/-. I N VIEW OF THE ABOVE REASONS, PROCEEDING U/S 147 WAS INITIATED AND NOTICE U/S 148 WAS ISSUED ON 26.10.2009. IN RESPONSE TO NOTICE U/S 148 THE ASSESSEE HAS NOT FIL ED THE RETURN OF INCOME. 5. BEFORE THE LD. CIT(A) THE ASSESSEE HAS SHOWN EVI DENCES REGARDING THE DECLARATION OF LONG TERM CAPITAL GAIN AT RS. 29,76, 424/- WHICH WAS CALCULATED ON THE BASIS OF SALE CONSIDERATION ACTUALLY RECEIVED I .E. RS. 32 LACS. THE REVISED RETURN FILED BY THE ASSESSEE DECLARING THE CAPITAL GAIN ON THE BASIS OF ACTUAL 4 RECEIPT BY THE ASSESSEE I. E. RS. 32 LACS IN LIEU O F TRANSFER OF CAPITAL ASSET IS IN CONSONANCE WITH THE DECISION OF THE JURISDICTIONAL HIGH COURT I.E. HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL AND OTHERS VS. CIT(2015)59 TAXMANN.COM 35. THIS REVISED RETURN WAS NOT BEFORE THE A.O AT THE TIME OF COMPLETION OF ASSESSMENT. AS THE ASSESSMENT ORDER W AS COMPLETED EX-PARTE THE ADDITIONAL EVIDENCE FILED ARE VITAL FOR DECIDING TH E APPEAL AND IN THE INTEREST OF NATURAL JUSTICE THESE ARE ADMITTED AND ADJUDICATED BY THE LD. CIT(A) 5.1 BEFORE THE LD.CIT(A) THE ASSESSEE HAS DRAWN AT TENTION TO THE DECISION OF HON'BLE PUNJAB AND HARYANA HIGH COURT IN THE CASE O F SH. C.S ATWAL AND OTHERS DECIDED IN THE CASE OF OTHER MEMBERS OF ANOTHER SOC IETY NAMELY PUNJABI CO- OPERATIVE HOUSING BUILDING SOCIETY ON SIMILAR AND I DENTICAL FACTS. THE HON'BLE COURT HAS SUMMARIZED THE CONCLUSION AT PARA 46 OF T HE SAID ORDER AS UNDER:- '46. WE SUMMARIZE OUR CONCLUSIONS AS UNDER.- 1. PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 02.03.2007 AND 25.04.2C07 IN RESPECT OF 3.08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HAS AGREED FOR PRO-RA TA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO T HE 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 1882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICEN SEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSF EREE. 4. FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATION, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL I NGREDIENTS OF SECTION 53A IF 1882 ACT WERE REQUIRED TO BE FULFILLED. IN THE ABSENCE O F REGISTRATION OF JDA DATED 25.02.2007 HAVING BEEN EXECUTED AFTER 24.09.2001, T HE AGREEMENT DOES NOT FALL U/S 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)( V) OF THE ACT DOES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSE APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPER, CA PITA GAIN TAX HAS ALREADY BEEN PAID ON THAT AND SALE DEEDS HAVE ALSO BEEN EXE CUTED. IN VIEW OF CANCELLATION OR JUA DATED 25.02.2007, NO FURTHER AM OUNT HAS BEEN RECEIVED AND NO ACTION THEREON HAS BEEN TAKEN IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED., CAPITAL GAINS TAX SHALL BE DISCHARGED TH EREON IN ACCORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSING OF THE APPEALS, WE OBSERVE THAT THE ASSESSE APPELLANTS SHALL REMAIN BOUND BY THEIR SAID STAND. 6. THE ISSUE OF ELIGIBILITY TO CAPITAL GAINS TAX HAVIN G BEEN DECIDED IN FAVOUR OF THE ASSESSE, THE QUESTION OF EXEMPTION U/S 54F O F THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. 7. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIG HT IN HOLDING THE ASSESSE-APPELLANT TO BE LIABLE TO CAPITAL GAINS TAX IN RESPECT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CONSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRE SENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN P ILS. THEREFORE, THE APPEALS ARE ALLOWED. 5 8 CONSEQUENTLY, THE SUBSTANTIAL QUESTIONS OF LAW A S REPRODUCED IN THE BEGINNING OF THE JUDGMENT ARE ANSWERED IN THE MANNE R INDICATED HEREIN BEFORE AND THE APPEALS OF THE ASSESSE ARE DISPOSED OF ACCO RDINGLY.' BY FOLLOWING THE JUDGMENT OF THE HON'BLE PUNJAB & H ARYANA HIGH COURT, THE LD.CIT(A) DIRECTED THE ASSESSING OFFICER TO RE-COMP UTE THE LONG TERM CAPITAL GAINS ON THE AMOUNT ACTUALLY RECEIVED BY THE APPELL ANT IN PURSUANCE OF THE SAID AGREEMENT. HOWEVER THE LD.CIT(A) HELD THAT ASS ESSEE WILL NOT BE ENTITLED FOR DEDUCTION U/S 54F OF THE ACT. 6. BEFORE US DURING THE HEARING THE LD. DR SUBMITTE D THAT THE ACTION OF THE ASSESSING OFFICER IS INCONSONANCE WITH THE ORDER OF THE COORDINATE BENCH OF ITAT, CHANDIGARH IN THE CASE OF C.S. ATWAL & OTHRS (SUPRA) AND RELIED ON THE ORDER OF THE A.O. WHILE LD. AR RELIED ON THE ORDER OF THE LD. CIT(A) TO THE EXTENT OF COMPUTATION OF CAPITAL GAINS. 7. WE HAVE GONE THROUGH THE MATERIAL PLACED BEFORE US. SINCE THE ORDER OF THE LD. CIT(A) IS BASED ON THE ORDER OF THE HONBLE HIGH COURT ORDER IN THE CASE OF C.S. ATWAL(SUPRA) WE HEREBY UPHOLD THE ORDER OF THE LD. CIT(A). REGARDING THE DEDUCTION UNDER SECTION 54F WHICH HAS NOT BEEN ALLOWED BY THE LD. CIT(A) WE HEREBY DIRECT THE ASSESSING OFFICER TO ALLOW THE DUE BENEFITS TO THE ASSESSEE AS PROVIDED UNDER THE INCOME TAX ACT. SINCE THE ISS UE HAS BEEN DECIDED IN THE FAVOUR OF THE ASSESSEE, ANY DECISION ON THE GROUNDS OF REOPENING BECOMES ACADEMIC IN NATURE AND HENCE NEEDS NO ADJUDICATION. 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISMISSED AND CROSS APPEAL OF THE ASSESSEE IS ALLOWED.. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (DIVA SINGH) (DR. B.R.R. KUM AR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 08/03/2018 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR