Late Jahangir Bee Rep. by L.R. S.A.Waheed, Hyderabad, Hyderabad V. ITO, Ward-8(1), Hyderabad, Hyderabad

ITA 560/HYD/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4161 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Next Hearing Date: 07-08-2018
• Assessment Year: 2004-2005
• Appeal Filed On: 27-03-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Cost of acquisition; Reasonable cause
• Section: 54F; 148; 54; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMARAO, ACCOUNTANT MEMBER I.T.A. NO. 560/HYD/2017 ASSESSMENT YEAR: 2004-05 LATE JAHANGIR BEE, REP. BY LR S.A. WAHEED, HYDERABAD [PAN: BHPPB9365N] VS INCOME TAX OFFICER, WARD-8(1), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO, AR FOR REVENUE : SHRI M.H. NAIK, DR DATE OF HEARING : 07-08-2018 DATE OF PRONOUNCEMENT : 17-08-2018 O R D E R PER SMT. P. MADHAVI DEVI, J.M. : THIS IS AN ASSESSEES APPEAL FOR THE AY. 2004-05 AGA INST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) -4, HYDERABAD, DATED 22-03-2016. 2. AT THE OUTSET, IT IS SEEN THAT THERE IS A DELAY OF T HREE HUNDRED AND TEN (310) DAYS IN FILING OF THE APPEAL B EFORE US AND THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONA TION OF THE SAME. THE ASSESSEE HAS STATED THAT THE CIT(A) HAS ITA NO. 560/HYD/2017 :- 2 - : DISPOSED-OF THE APPEAL VIDE ORDER DT. 22-03-2016, WHE REAS THE PETITIONER, SMT. JAHANGIR BI, PASSED AWAY ON 11-08-201 4 AND THE ORDER WAS SENT TO THE PETITIONERS PREVIOUS ADDRESS. IT WAS SUBMITTED THAT THE LEGAL-HEIRS OF THE DECEASED, I.E., HER THREE SONS WERE NOT IN THE KNOWLEDGE OF THE APPELLATE ORDER OF THE CIT(A) AS IT WAS ALSO SENT TO THE ADDRESS GIVEN IN FORM -35, WHICH IS THE ADDRESS OF THE CHARTERED ACCOUNTANT. IT IS ALSO SUBMITTED THAT ALL THE THREE LEGAL-HEIRS OF THE DECEASED A RE UN- EDUCATED AND ARE CARRYING ON PETTY BUSINESSES AND ON LY AFTER COMING TO KNOW ABOUT THE PROCEEDINGS THROUGH THEIR ADVO CATE, SHRI S. RAMA RAO, THEY HAVE FILED THE PRESENT APPEAL B EFORE THE TRIBUNAL. TAKING THE ABOVE CONTENTIONS INTO CONSIDERATION AND BEING SATISFIED WITH THE REASONABLE CAUSE FOR THE DELAY , WE ARE INCLINED TO CONDONE THE DELAY. WE THUS, PROCEED TO ADJ UDICATE THE APPEAL OF THE ASSESSEE AS UNDER. 3. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN HOLDING THAT THERE WAS TRANSFER OF THE LAND DURING THE PREV IOUS YEAR RELEVANT FOR THE ASSESSMENT YEAR 2004-05 WHEN THE APPELLANT COULD NOT HAND OVER THE POSSESSION OF THE PROPERTY AND WHEN THE DE VELOPER COULD NOT COMMENCE ANY ACTIVITY FOR CONSTRUCTION OF THE PROPE RTY. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THERE WAS NO CAPITAL GAIN ARISING DURING THE YEAR UNDER CONSIDERATION AND, THEREFORE, ERRED IN CONFIRMING T HE ACTION OF THE ASSESSING OFFICER IN DETERMINING THE CAPITAL GAIN F OR THE YEAR UNDER CONSIDERATION. ITA NO. 560/HYD/2017 :- 3 - : 4. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE SALE CONSIDERATION OF THE PROPERTY A S ARRIVED AT BY THE ASSESSING OFFICER OF RS.63,71,290/- WITHOUT CONSIDE RING THE FACT THAT THE RATE ADOPTED OF RS.1,700/- PER SQ.FT INCLUDES T HE VALUE OF THE LAND WHICH IS OWNED BY THE APPELLANT. THE LEARNED CIT(A) OUGHT TO HAVE SEEN THAT THE VALUE OF THE LAND BE EXCLUDED FROM TH E SAID AMOUNT OF RS.1,700/- PER SQ.FT FOR THE PURPOSE OF ARRIVING AT THE COST OF CONSTRUCTION. 5. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMING THE INDEXED COST OF ACQUISITION AS DETER MINED BY THE ASSESSING OFFICER OF RS.1,18,835/- WITHOUT CONSIDER ING THE VARIOUS OTHER FACTORS. 6. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE SEEN THAT THE MARKET VALUE OF THE LAND AT THE SAID PLACE WAS ABOUT RS.200/- PER SQ.YARD AND THERE WERE RESIDENTIAL HOU SES IN THE SAID AREA THE COST OF WHICH SHOULD HAVE ALSO BEEN CONSID ERED. 7. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO CONSIDER THE FACT THAT THE LAND WAS NOT VACANT LAND BUT RESIDENTIAL PORTIONS WERE EXISTING IN THE LAND THE COST OF WHIC H SHOULD HAVE BEEN CONSIDERED OR THE MARKET VALUE OF THE SAME AS ON 1. 4.1981 SHOULD HAVE BEEN TAKEN INTO CONSIDERATION. 8. THE LEARNED 'COMMISSIONER OF INCOME TAX (APPEALS ) ERRED IN CONFIRMING THE CAPITAL GAIN RS. 75,90,290/- WHILE C OMPLETING THE ASSESSMENT WITHOUT GRANTING DEDUCTION U/S 54 OR 54F OF THE I.T. ACT. THE LEARNED COMMISSIONER OF THE INCOME TAX (APPEALS ) OUGHT TO HAVE SEEN THAT THE APPELLANT RECEIVED AS CONSIDERED CONS TRUCTED AREA AND THE SAID AREA IS RESIDENTIAL PORTION OF THE BUILDIN G AND, THEREFORE, DEDUCTION UNDER SECTION 54/54F OF THE I.T. ACT SHOU LD HAVE BEEN ALLOWED. 9. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME O F HEARING. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, ALONG WITH TEN OTHER CO-OWNERS OF A PROPERTIES BEARING HOUSE NO S. 8-3-483, 486 TO 502 ALONG WITH OPEN LAND ADMEASURIN G 4702.52 SQ. YDS., EXCLUDING PROPERTY BEARING HOUSE NO. 8-3-483 COMPRISING OF ABOUT 250 SQ. YDS., SITUATED AT ITA NO. 560/HYD/2017 :- 4 - : YELLAREDDYGUDA, HYDERABAD, HAD ENTERED INTO A DEVELO PMENT AGREEMENT WITH A FIRM, M/S. SUN MARK BUILDERS ON 04-1 1- 2003 FOR DEVELOPMENT OF A PROPERTY BY CONSTRUCTION OF RESIDENTIAL FLATS, SHARING THE BUILT-UP AREA IN THE RATIO OF 39 : 61%. OBSERVING THAT THE SAID TRANSACTION FALLS UNDER THE PURVIEW OF TRANSFER OF PROPERTY WITHIN THE MEANING OF SECTION 2(47)(V) OF THE INCOME TAX ACT [ACT], THE ASSESSING OF FICER VERIFIED WHETHER THE ASSESSEE HAS FILED ANY RETURN OF INCOME AND OFFERED THE CAPITAL GAINS TO TAX. HE FOUND THAT THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS TO TAX, AND THEREFORE A NOTICE U/S. 148 WAS ISSUED TO THE ASSESSEE AND THE ASSESSMEN T U/S. 144 R.W.S. 147 OF THE ACT WAS COMPLETED BY BRINGING T O TAX THE LONG TERM CAPITAL GAINS. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A), CHALLENGING THE VALIDITY OF THE REOPENING U/S . 147 OF THE ACT AND ALSO THE MERITS OF THE ADDITION. THE CIT(A) CON FIRMED THE ADDITION AND DISMISSED THE APPEAL AGAINST WHICH THE ASSESSEE IS IN SECOND APPEAL BEFORE US. 5. AT THE TIME OF HEARING, LD. COUNSEL FOR THE ASSESS EE, SUBMITTED THAT IN THE CASE OF THE CO-OWNERS, SIMILAR ISS UES HAD COME UP BEFORE THE B BENCH OF THE TRIBUNAL IN ITA NOS. 666/HYD/2014 AND OTHERS AND VIDE ORDER DT. 20-03-2015 , THE TRIBUNAL HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSES SEES THEREIN. A COPY OF THE SAID ORDER IS FILED BEFORE US . ON GOING THROUGH THE SAME, WE FIND THAT THE PROPERTY UNDER TRANSFE R IS THE SAME AND THE ASSESSEES THEREIN ARE THE CO-OWNERS O F THE PROPERTY. THE TRIBUNAL IN PARAS 9 TO 18 HAS CONSIDER ED THE ITA NO. 560/HYD/2017 :- 5 - : ISSUE AT LENGTH AND HAS HELD THAT THE CAPITAL GAIN IS TAX ABLE IN THE RELEVANT ASSESSMENT YEAR. HOWEVER, WITH REGARD TO THE SALE CONSIDERATION TO BE ADOPTED, THE MATTER HAS BEEN SET ASID E TO THE FILE OF THE ASSESSING OFFICER. SIMILARLY, COMPUTA TION OF COST OF ACQUISITION AND ALSO THE CLAIM OF DEDUCTION U/S. 5 4F HAVE ALSO BEEN SET ASIDE TO THE FILE OF THE ASSESSING OFFIC ER. FOR THE SAKE OF READY REFERENCE AND CONVENIENCE, THE RELEVAN T PARAGRAPHS OF THE SAID ORDER ARE RE-PRODUCED HEREUND ER: A: YEAR OF TAXABILITY: 9. WITH REFERENCE TO THE YEAR OF TAXABILITY OF CAPI TAL GAINS, THERE IS NO DISPUTE WITH REFERENCE TO THE FACT THAT ASSESSEE S HEREINABOVE ENTERED INTO AN AGREEMENT FOR DEVELOPMENT ON 04-11- 2003. IT IS ALSO AGREED UPON BY BOTH THE PARTIES THAT CONSTRUCTION S HALL BE COMPLETED WITHIN 42 MONTHS FROM THE DATE OF AGREEMENT. ASSESS ING OFFICER WHILE COMPLETING THE ASSESSMENT HAS TAKEN INTO CONSIDERAT ION THE FACT OF RECEIPT OF DEPOSIT AND ALSO HANDING OVER THE POSSES SION, WHILE INVOKING THE DEFINITION OF TRANSFER U/S.2(47). HE R ELIED UPON THE FOLLOWING DECISIONS: I. CHATURBHUJ DWARKADAS KAPADIA VS. CIT [260 ITR 491] II. JASBIR SINGH ..IN RE AAR (2007) 294 ITR 196 (AAR); III. DR. T.ATCHUTA RAO VS. ACIT [106 ITD 388 (HYD)] 10. IN VIEW OF THE FACTS AND THE LAW RELIED UPON BY THE ASSESSING OFFICER, HE HELD THAT THE TRANSACTION SATISFIES THE CONDITIONS OF SECTION 53A OF TRANSFER OF PROPERTY ACT AND THEREFORE, TRAN SACTION IS COVERED UNDER 2(47)(V)/(VI). ACCORDINGLY, THE AMOUNT IS TAX ABLE IN THE YEAR UNDER CONSIDERATION. THE LD.CIT(A) AS BRIEFLY STATE D ABOVE RELIED ON THE ADDITIONAL FACT OF TENANTS BEING VACATED AND CO MPLETION OF THE PROJECT AS PER THE TERMS AND NON-FILING OF RETURNS ADMITTING CAPITAL GAINS EVEN AT A LATER POINT OF TIME TO CONFIRM THE ACTION OF AO. 11. BEFORE US, LD.COUNSELS URGED THAT BEFORE ENTERI NG THIS AGREEMENT, ASSESSEES HEREIN HAVE ENTERED INTO MANY JOINT DEVELOPMENT AGREEMENTS AT VARIOUS POINTS OF TIME WH ICH HAVE NOT BEEN FRUCTIFIED. IN SUPPORT THEY FILED VARIOUS COPI ES OF THE AGREEMENTS IN THE PAPER BOOK AS UNDER : ITA NO. 560/HYD/2017 :- 6 - : 1. COPY OF THE JOINT DEVELOPMENT ENTERED INTO BETWEEN THE APPLICANTS & 7 OTHERS AND MOHD. MAHER ALAM KHAN DATED 30.8.1994. 2. IRREVOCABLE GENERAL POWER OF ATTORNEY EXECUTED BY T HE APPELLANTS IN FAVOUR OF MOHD. MAHEL ALAM KHAN EXECUTED ON 30.8.19 94. 3. DEED OF CANCELLATION OF IRREVOCABLE GPA MENTIONED A T S.NO.2 ABOVE EXECUTED ON 16.10.1997. 4. DEED DATED 23.6.2000 FOR EFFECTING CANCELLATION OF DEVELOPMENT AGREEMENT EXECUTED ON 28.9.1995 IN FAVOUR OF N. RAV I KUMAR. 5. DEVELOPMENT AGREEMENT EXECUTED ON 28.6.2000 BY THE APPELLANTS IN FAVOUR OF SRI DWARAKAMAI ESTATES P. LTD., 6. DEVELOPMENT AGREEMENT ENTERED INTO BETWEEN THE APPE LLANTS AND SMT. P. CHANDRAMATHI EXECUTED ON 24.11.2000. 12. IT WAS SUBMITTED THAT AFTER CANCELLING THE EARL IER AGREEMENTS, ASSESSEE ENTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. SUN MARK BUILDERS ON 04-11-2003. IT WAS FURTHER SUBMITTED T HAT PROPERTY WAS UNDER UNAUTHORISED OCCUPATION OF HUT DWELLERS AND A SUIT WAS FILED BEFORE THE LAND GRABBING COURT. THE HONBLE COURT S TAYED THE IMPLEMENTATION OF THE DEVELOPMENT AGREEMENT. AFTER PROLONGED CONCILIATION PROCEEDINGS, SUBSTANTIAL AMOUNTS WERE PAID FOR GETTING THEM VACATED. ASSESSEES COUNSELS REFERRED TO PAYME NTS LISTED IN ANNEXURE BEFORE THE CIT(A). IT WAS SUBMITTED THAT IMPLEMENTATION OF THE DEVELOPMENT AGREEMENT STARTED ONLY AFTER 22-11- 2006 WHEN MUNICIPAL PERMISSION WAS GRANTED. TILL THEN, THE D EVELOPER COULD NOT COMMENCE ANY CONSTRUCTION. THE CONSTRUCTION WAS CO MPLETED AFTER MARCH, 2010. IN THE INTERREGNUM PERIOD, THE DEVELO PERS ACTIVITY WAS ONLY CLEARING THE LEGAL IMPEDIMENTS. THEREFORE, AS SESSEES ARE UNDER THE IMPRESSION THAT THEY ARE NOT LIABLE TO TAX IN T HE IMPUGNED ASSESSMENT YEAR. FURTHER, IT WAS SUBMITTED THAT AS SESSEES WERE SEMI-ILLITERATE AND HAVING NO OTHER INCOMES, BEING WORKING AS SMALL CAR MECHANICS ETC., AND THEY ARE NOT FULLY CONVERSA NT WITH THE LEGAL PROCEEDINGS. IT WAS ALSO FURTHER SUBMITTED THAT TH E DEVELOPER HAD SPENT LOT OF AMOUNTS ON BEHALF OF ASSESSEES AND THE REFORE ACCORDING TO THEM, THERE WAS NO CAPITAL GAINS ARISING IN THE TRANSACTION. IT WAS SUBMITTED THAT RELYING ON VARIOUS CASE LAWS, THE ME RE PERMISSION FOR DEVELOPMENT DOES NOT ATTRACT THE PROVISIONS OF SECT ION 2(47) SO AS TO IMPOSE THE CAPITAL GAINS TAX IN THE IMPUGNED YEAR. ITA NO. 560/HYD/2017 :- 7 - : 13. LD. DR, HOWEVER, SUPPORTED THE ORDERS OF THE AU THORITIES. 14. WE HAVE CONSIDERED THE ISSUE AND PERUSED THE VA RIOUS DOCUMENTS. THERE IS NO DISPUTE WITH THE FACT THAT BEFORE ENTERING IN TO THIS AGREEMENT WITH M/S. SUN MARK BUILDERS, ASSE SSEES HAVE ENTERED INTO MANY AGREEMENTS WHICH DID NOT FRUCTIFY . HOWEVER, THAT DOES NOT MEAN THAT THIS AGREEMENT ALSO HAD THE SAME FATE. AS SEEN FROM SOME OF THE TERMS OF THE AGREEMENT PLACED ON T HE PAPER BOOK, PARTICULARLY CLAUSE 4, 5, 8 AND 20 AS UNDER THE AGR EEMENT HAS SPECIAL TERMS: 4 (A) THE DEVELOPER IS HEREBY PERMITTED BY THE OWNERS TO DEVELOP THE SCHEDULE MENTIONED PROPERTY BY CONSTRUCTING THEREON A RESIDENTIAL COMPLEX CONSISTING OF CELLOR FOR PARKING AND GROUND + FOUR UPPER FLOORS. THE DEVELOPER SHALL CONSTRUCT ACCORDING TO THE MCH PERM ISSION COVER THE ENTIRE LAND OR SITE COMPRISED IN THE SCHEDULE MENTIONED PR OPERTY. (B) IT IS HEREBY SPECIFICALLY AGREED AND DECLARE TH AT THE DEVELOPER SHALL CONSTRUCT AND COMPLETELY UTILIZING FULLY ENTITLEMEN T AREAS AS SANCTIONED BY THE MUNICIPAL CORPORATION OF HYDERABAD. (C) THAT SINCE THE PORTION OF THE SCHEDULE PROPERTY IS IN OCCUPATION OF TENANTS, THE FIRST PARTY OWNERS SHALL GET THEM EVIC TED IMMEDIATELY AT THEIR COST AND ACCORD PERMISSION TO THE DEVELOPER TO COMMENCE THE DEVELOPMENT WORK AFTER DEMOLISHING THE EXISTING STRUCTURES. 5(A) THE DEVELOPER HEREBY AGREE, COVENANT AND UNDER TAKES TO HANDOVER OR DELIVER 39% OF THE CONSTRUCTED AREA I.E., SUPER-BUI LT AREAS WHICH INCLUDE ALL SHAREABLE AREAS IN COMMON PASSAGED, BASEMENT, SEWAG E LINES, ELECTRICAL LINES, BALCONIES ETC., IN ALL FLOORS OF THE PROPOSED COMPL EX OR MUTUALLY AGREED BETWEEN THE PARTIES TO THE OWNERS FREE OF COST IN L IEU OF UTILISATION OF THEIR LAND COMPRISED IN THE SCHEDULE MENTIONED PROPERTY F OR THE ABOVE SAID DEVELOPMENT AND CONSTRUCTION. THE REMAINING 61% OF THE CONSTRUCTED AREA WOULD BE RETAINED BY THE DEVELOPER. THE EARMARKING OF THE PORTIONS SHALL BE MADE AFTER RECEIPT OF THE APPROVED PLANS. (B) THE DEVELOPER SHALL HAVE THE RIGHTS OVER THE SI TE AND TERRACE FLOORS OF THE PROPOSED RESIDENTIAL COMPLEX TO THE EXTENT OF 6 1%. IN CASE FURTHER FLOOR IS PERMITTED TO BE CONSTRUCTED BY THE MCH THE SAME SHALL BE APPORTIONED IN THE ABOVE RATIO I.E., 39 : 61 BETWEEN THE OWNERS AN D THE DEVELOPER. (C) IF THE OWNERS OR THE DEVELOPER RECEIVED MORE OF CONSTRUCTED AREAS THAT HER/HER/THEY ARE/IS ENTITLED TO IN TERMS OF CL AUSE (A) ABOVE, THEN THE PARTY RECEIVING THE EXTRA CONSTRUCTED AREAS SHALL PAY TO THE OTHER PART CASH COMPENSATION CALCULATE AT THE COST OF RATE. THE SAI D CASH COMPENSATION SHALL BE PAID AT THE TIME OF DELIVERY OF CONSTRUCTED AREA S. ITA NO. 560/HYD/2017 :- 8 - : (D) IT IS ALSO HEREBY SPECIFICALLY AGREED AND DECLA RED THAT THE FLATS CONSTRUCTED AREAS TO BE ALLOTTED TO THE OWNERS SHAL L BE COMPLETED IN ALL RESPECTED AND THE POSSESSION OF THE SAID FLATS OR C ONSTRUCTED AREAS SHALL BE HANDED OVER TO THE OWNERS. (E) ANY DEPOSITS AND EXPENSES PAYABLE TO APSEB TRAN SFORMER, SERVICES LINES, SEWERAGE BOARDS, WATER DEPARTMENTS, GENERATO R AND ERECTION CHARGES WILL BE BORNE BY THE OWNERS TO THE EXTENT T HEIR SHARE OF THE PROPERTY. (F) IT IS FURTHER AGREED THAT THE OWNERS SHALL PAY ALL THE AMOUNTS FOR ANY EXTRA WORKS SUCH AS LOFTS, SHELVES, RACKS AND EXTRA -ELECTRICAL POINTS TO THE EXTENT OF THEIR ALLOTTED FLATS AND OTHER BUILT UP A REAS. 8. THAT THE OWNERS HEREBY UNDERTAKE TO DEMOLISH T HE EXISTING BUILDING IN THE SCHEDULE PROPERTY AT THEIR COST AND PLACE TH E DEVELOPER IN ACTUAL POSSESSION OR THE SCHEDULE MENTIONED PROPERTY WITHI N A PERIOD OF ONE MONTH FOR THE PURPOSES OF CARRYING ON THE WORKS OR CONSTR UCTIONS AND FOR THE PURPOSE OF FULFILLING THE OBLIGATIONS IN TERMS OF T HIS AGREEMENT. THE OWNERS HEREBY AGREE NOT TO INTERFERE IN THE CONSTRUCTION O R OTHER WORKS BEING CARRIED OUT BY THE DEVELOPER IN OR OVER THE SCHEDULE MENTIO NED PROPERTY PROVIDED THE SAID WORKS OR CONSTRUCTION ARE NOT INCONSISTENT WITH THE TERMS AND CONDITIONS INCORPORATED IN THIS AGREEMENT. 20. IT IS MUTUALLY AGREED UPON AND ALWAYS PROVIDED THAT IN THE EVENT OF THE WORKS AT THE SCHEDULE MENTIONED PROPERTY SUFFER ED OR OTHERWISE INTERRUPTED DUE TO IMPOSITION OF STATUTORY RESTRICT IONS, NATURAL CALAMITIES, CONTROL OR BAN IMPOSED ON CONSTRUCTION MATERIAL I.E ., ON SALE, DISTRIBUTION AND PROCUREMENT ETC., PROHIBITORY ORDERS OF ANY COU RT OF LAW OR STATUTORY BODIES, THE TIME INVOLVED IN SUCH PROCESSES OR EVEN TUALLY, SHALL BE EXCLUDED FROM THE STIPULATED PERIOD. 15. SUBSEQUENTLY, THE OWNERS HAVE APPOINTED THE DEV ELOPER AS THE GENERAL POWER OF ATTORNEY HOLDER TO DO, EXECUTE AND CARRY OUT ANY OR ALL OF THE FOLLOWING ACTS AS STATED THEREIN. ONE O F THE CONDITIONS WAS ALSO FOR PAYMENT OF RENT PER MONTH FROM THE DATE OF DISMANTLING OF HOUSE AND IF PROJECT WAS NOT IN STIPULATED TIME OF 3 YEARS, THEN A PENALTY OF RS.10,000/- PER MONTH SHALL BE PAID TILL THE COMPLETION OF CONSTRUCTION. HOWEVER, SIX MONTHS GRACE PERIOD WAS ALLOWED. BY PERUSING THE ABOVE TERMS OF THE AGREEMENT AND THE F ACT THAT THE RECEIPTS OBTAINED FROM THE TENANTS INDICATE THAT MO ST OF THE TENANTS HAVE BEEN SETTLED AND PAID BY THE TIME AGREEMENT WA S ENTERED INTO, WE ARE OF THE OPINION THAT ASSESSEES DID GIVE POSSE SSION OF THE PROPERTY TO THE SAID DEVELOPER AT THE TIME OF ENTER ING INTO AGREEMENT AND THE TERMS OF AGREEMENT HAVE BEEN FULFILLED. ITA NO. 560/HYD/2017 :- 9 - : 16. THE HONBLE A.P. HIGH COURT IN THE CASE OF POTL A NAGESWARA RAO VS. DCIT [365 ITR 249] HELD AS UNDER: EACH AND EVERY INDIVIDUAL CASE STANDS ON ITS OWN F OOTING. BEFORE ADMITTING AN APPEAL THE HIGH COURT MUST EXAMINE THE ISSUE BEF ORE IT ON ITS OWN MERITS. THE PENDENCY OF ANOTHER MATTER CANNOT BE A GROUND T O PROCEED WITH THE MATTER. ON MARCH 7, 2003, THE ASSESSEE ENTERED INTO AN AGRE EMENT WITH A DEVELOPER AND THE PLAN OF THE BUILDING WAS APPROVED ON MARCH 31, 2003. THESE DATES FELL IN THE PREVIOUS YEAR 2002-03, RELEVANT TO THE A.Y. 2003-04. THUS, THE TRIBUNAL HELD THAT THE LAND BEING A CAPITAL ASSET W AS TRANSFERRED BY THE ASSESSEE TO THE DEVELOPER DURING THE A.Y. 2003-04, FOR CONSTRUCTION AND IT WAS ENOUGH IF THE ASSESSEE HAD RECEIVED THE RIGHT T O RECEIVE CONSIDERATION ON A LATER DATE, SO AS TO ATTRACT THE EXIGIBILITY TO T AX ON CAPITAL GAINS DURING THE YEAR 2003-04. ON APPEAL: HELD, DISMISSING THE APPEAL THAT THE ELEMENT OF FAC TUAL POSSESSION AND AGREEMENT ARE CONTEMPLATED AS TRANSFER WITHIN MEANI NG OF THE SECTION 2(47) OF THE INCOME TAX ACT, 1961. WHEN THE TRANSFER IS C OMPLETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN AGREEMENT FOR SALE HAD T O BE TAKEN INTO CONSIDERATION FOR PURPOSE OF ASSESSMENT OF INCOME F OR THE ASSESSMENT YEAR WHEN AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. IN THE CASE OF THE ASSESSEE, FACTUALLY IT WAS FOUND THAT BOTH THE ASPECTS TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003- 04. HENCE, THE ASSESSEE WAS LIABLE TO PAY TAX ON THE CAPITAL GAINS FOR THE ASSESSMENT YEAR 2003-04. 17. CONSIDERING THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT AND THE FACTS OF THE CASE, WE ARE OF THE OPINION THAT T HE AGREEMENT ENTERED INTO BY ASSESSEES ALSO SATISFIES THE PROVISIONS OF SECTION 53A OF TRANSFER OF PROPERTY ACT, AND THEREFORE, THE SAID T RANSACTION ATTRACTS THE PROVISIONS OF SECTION 2(47) IE. DEFINITION OF T RANSFER SO AS TO ATTRACT CAPITAL GAINS DURING THE IMPUGNED YEAR. 18. IN THE CASE OF MR. R. SRINIVASARAO AND OTHERS ITA.NO.1786/HYD/2012 AND OTHERS DATED 28.08.2014, B INJUSARIA PROPERTIES P. LTD., VS. ACIT ITA.NO.157/HYD/2011 DA TED 04.04.2014 AND ALSO IN THE CASE OF K. RADHIKA AND OTHERS VS. D CIT, CENTRAL-II, HYDERABAD IN ITA.NO.208/HYD/2011, RELIED ON BY ASSE SSEES COUNSEL THE AGREEMENTS HAVE NOT BEEN IMPLEMENTED AN D IT WAS CONSIDERED THAT THERE WAS NO WILLINGNESS TO PERFORM FOR THE PURPOSE OF SECTION 53A. IN THOSE CASES, IT WAS HELD UNLESS THE PARTY HAS PERFORMED OR IS WILLING TO PERFORM ITS OBLIGATIONS UNDER THE CONTRACT AND IN THE SAME SEQUENCE IN WHICH THESE ARE TO BE P ERFORMED, IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 53A O F THE TRANSFER OF PROPERTY ACT WILL COME INTO PLAY ON THE FACTS OF TH AT CASE. IT IS FURTHER ITA NO. 560/HYD/2017 :- 10 -: HELD THAT UNLESS PROVISIONS OF SECTION 53A OF T.P. ACT ARE SATISFIED ON THE FACTS OF CASE, THE TRANSACTIONS IN QUESTION CAN NOT FALL WITHIN THE SCOPE OF DEEMED TRANSFER UNDER SECTION 2(47)(V) OF THE I.T. ACT. AS BRIEFLY STATED ABOVE, THE PARTIES HAVE PERFORMED TH E CONTRACT AS PER THE TERMS OF THE CONTRACT. THEREFORE, THE PRINCIPLE S LAID DOWN IN THE ABOVE CASE, DOES NOT APPLY TO THE FACTS OF THE PRES ENT CASE. THEREFORE, WE ARE OF THE OPINION THAT CAPITAL GAINS IS CORRECT LY IMPOSED IN THE ORDER UNDER CONSIDERATION. THE ACTION OF THE ASSESS ING OFFICER IN LEVYING CAPITAL GAINS IN THE IMPUGNED YEAR IS CONSE QUENTLY UPHELD. B. SALE CONSIDERATION TO BE ADOPTED 19. AS BRIEFLY STATED ABOVE, THE A.O. WHILE CONSIDE RING THE SALE CONSIDERATION HAS TAKEN TWO AMOUNTS FOR CONSIDERATI ON, ONE AMOUNT IS SALE CONSIDERATION RECEIVED UNDER THE GUISE OF REFUNDABLE DEPOSIT OF RS.11,00,165 AND OTHER VALUE OF CONSTRUCTED ARE A OF FLATS RECEIVED IN LIEU OF ASSET GIVEN FOR DEVELOPMENT AT RS.63,71 ,290 IN EACH CASE. ASSESSEE DID CONTEST THAT BOTH THE AMOUNTS CANNOT B E TAKEN AND VALUE OF COST OF CONSTRUCTION FOR THE BUILDER HAS T O BE ADOPTED AND NOT THE MARKET PRICE OF SALE VALUE. AS ALREADY STATED A BOVE, LD. CIT(A) DID NOT ADJUDICATE THIS ISSUE AT ALL. 20. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE ARE OF THE OPINION A.O. CANNOT TAKE BOTH THE AMOUNTS INTO CONSIDERATIO N AS IT WILL BE A DOUBLE ADDITION. TO THAT EXTENT, A.O. ACTION CANNOT BE UPHELD. IT IS ALSO ASSESSEES CONTENTION THAT VALUE OF CONSTRUCTE D AREA ADOPTED BY THE A.O. IS ON THE BASIS OF THE SALE PRICE OF CERTA IN APARTMENTS AND ASSESSEES WERE NOT GIVEN ANY OPPORTUNITY TO PLACE THEIR SUBMISSIONS. SINCE MOST OF THE ORDERS ARE EXPARTE, THE ASSESSEE S CONTENTIONS THAT COST OF CONSTRUCTION OF THE BUILDER SHOULD BE ADOP TED HAS NOT BEEN EXAMINED AT ALL. THEREFORE, IN THE INTEREST OF JUST ICE, WE SET ASIDE THIS ISSUE TO THE FILE OF A.O. WITH A DIRECTION TO ADOPT VALUE OF CONSTRUCTED AREA OF FLATS IN VIEW LAND PARTED WITH, AFTER GIVIN G DUE OPPORTUNITY TO THE ASSESSEE. ASSESSEES CONTENTION SHOULD BE CONSID ERED IN ITS CORRECT PERSPECTIVE AND SHOULD NOT BE BRUSHED ASIDE WITHOUT ANY VALID REASON. WITH THIS DIRECTION, THE ISSUE OF ADO PTING VALUE OF SALE CONSIDERATION IS RESTORED TO THE FILE OF A.O.. ASSE SSEES GROUNDS ON THAT ARE ACCORDINGLY ALLOWED FOR STATISTICAL PURPOS ES. C. COST OF ACQUISITION : 21. THIS ISSUE ALSO REQUIRE RE-EXAMINATION BY THE A SSESSING OFFICER. ASSESSING OFFICER ADOPTED AMOUNT OF RS.1,18,835 IN EACH CASE AS COST OF ACQUISITION. IT WAS THE CONTENTION OF THE A SSESSEE THAT THERE WERE BUILDINGS ON THE SAID LAND WHICH WERE DEMOLISH ED AND THE COST ITA NO. 560/HYD/2017 :- 11 -: OF WHICH WAS ALSO TO BE ADOPTED. THEREFORE, COST OF LAND ALONE CANNOT BE ADOPTED. COST OF BUILDINGS AT THE TIME OF ENTE RING INTO AGREEMENT SHOULD BE CONSIDERED. IN ADDITION, ASSESSEE ALSO CL AIMS TO HAVE PAID LOT OF AMOUNTS TO THE TENANTS, UNAUTHORIZED HUTMENT DWELLERS AS PART OF CLEARING THE TITLE ALONG WITH LITIGATION EXPENSE S. THIS EXPENDITURE ALSO WILL FORM PART OF COST OF ACQUISITION. SUBJECT TO VERIFICATION AND FURNISHING NECESSARY EVIDENCES, THE A.O. IS DIRECTE D TO EXAMINE, ASSESSEES CONTENTIONS AND ALLOW THE INDEXED COST OF ACQUISITION ON THE BASIS OF FACTS AND LAW. THIS ISSUE ALSO ACCORDI NGLY RESTORED TO THE FILE OF A.O. FOR FRESH CONSIDERATION. D. CLAIM OF DEDUCTION UNDER SECTION 54 AND 54F 22. SINCE ASSESSEES HAVE ENTERED INTO A DEVELOPMENT AGREEMENT OF CONSTRUCTING RESIDENTIAL PROPERTIES IN LIEU OF PART ING WITH THE RESIDENTIAL BUILDING, THEY ARE ELIGIBLE FOR DEDUCTI ON UNDER SECTION 54/54F AS THE CASE MAY BE. THE A.O. HAD NO OCCASION TO EXAMINE THIS ASPECT AS THE ASSESSMENT WAS COMPLETED EXPARTE . BEFORE THE LD. CIT(A), ASSESSEE MADE THIS CLAIM WHICH LD. CIT(A) R EJECTED ON THE REASON THAT PROVISIONS OF SECTION 54F ARE NOT APPLI CABLE. LD. CIT(A) IGNORED THE FACT THAT ALTERNATE CONTENTION UNDER SE CTION 54 IS ELIGIBLE TO THE ASSESSEE. SINCE WE ARE SETTING ASIDE THE ENT IRE COMPUTATION OF CAPITAL GAINS TO THE FILE OF ASSESSING OFFICER, HE IS DIRECTED TO EXAMINE THE ASPECT OF CLAIM OF DEDUCTION UNDER SECTION 54/5 4F, KEEPING IN VIEW THE JUDICIAL PRONOUNCEMENTS ON THE ISSUE BY TH E ITAT/HIGH COURT. ASSESSEE SHOULD BE GIVEN DUE OPPORTUNITY FOR MAKING NECESSARY CLAIMS. ASSESSEES WHO HAVE NOT FILED RETU RNS I.E., MOHD. NASEER, MOHD. QAISER, MOHD. SABIR, HAVE FILED COMPU TATION OF CAPITAL GAINS AS PART OF PAPER BOOK, WHICH INDICATE THAT TH ERE IS NO CAPITAL GAINS OR MARGINAL CAPITAL GAIN WHICH MAY BECOME LES S THAN TAXABLE INCOME. HOWEVER, THIS ASPECT CAN BE EXAMINED BY THE A.O. IN THE PROCEEDINGS CONSEQUENT TO THIS ORDER. ALL THE EXPEN DITURE CLAIMED BY THE ASSESSEE SHOULD BE CONSIDERED AND DETAILED DISC USSION MAY BE MADE IF THEY ARE NOT ACCEPTED BY THE A.O. SO THAT T HE APPELLATE AUTHORITIES CAN EXAMINE THE CORRECTNESS OF THE CONT ENTIONS. 23. WITH THESE OBSERVATIONS/DIRECTIONS ENTIRE COMPU TATION OF CAPITAL GAIN IN ALL THE SEVEN CASES IS RESTORED TO THE FILE OF A.O. TO DO ACCORDING TO LAW AND FACTS. ASSESSING OFFICER IS FR EE TO MAKE NECESSARY ENQUIRIES IF REQUIRED. NEEDLESS TO STATE AGAIN THAT ASSESSEES SHOULD BE GIVEN DUE OPPORTUNITY. 24. IN ALL THE APPEALS, GROUNDS TO THAT EXTENT ARE PARTLY ALLOWED FOR STATISTICAL PURPOSES. ITA NO. 560/HYD/2017 :- 12 -: 5.1. RESPECTFULLY FOLLOWING THE DECISION OF THE CO-OR DINATE BENCH IN THE CASE OF THE CO-OWNERS UNDER THE SIMILAR F ACTS AND CIRCUMSTANCES, WE DEEM IT FIT AND PROPER TO REMAND THIS ISSUE ALSO TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DI RECTIONS. 6. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALLO WED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 17 TH AUGUST, 2018 SD/- SD/- (INTURI RAMARAO) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED 17 TH AUGUST, 2018 TNMM ITA NO. 560/HYD/2017 :- 13 -: COPY TO : 1. SHRI S.A. WAHEED, H.NO. 8-3-434, YELLAREDDYGUDA, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-6(5), HYDERABAD. 3. CIT(APPEALS)-4, HYDERABAD. 4. PR.CIT-6, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.