The Income Tax Officer, Dasuya V. Dr. Dr. Amrik singh Basra, Hoshiarpur

ITA 572/ASR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 9551 (ITAT-AMRITSAR)
• Duration Of Justice: 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-10-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 03-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. T. S. KAPOOR, ACCOUNTANT MEMBER AND SH. N.K. CHOUDHRY, JUDICIAL MEMBER ITA NO.571(ASR)/2015 ASSESSMENT YEAR:2008-09 PAN : ADYPR7434G INCOME TAX OFFICER, VS. SH. SUKHDEV SINGH RANDHAWA , DASUYA. RANDHWARA COLONY, MUKERIAN, DISTT. HOSHIARPUR. (APPELLANT) (RESPONDENT) ITA NO.572(ASR)/2015 ASSESSMENT YEAR:2008-09 PAN : ABIPB7849M INCOME TAX OFFICER, VS. DR. AMRIK SINGH BASRA, DASUYA. MIANI ROAD, DASUYA, DISTT. HOSHIARPUR. (APPELLANT) (RESPONDENT) APPELLANT BY: SH.RAHUL DHAWAN, RESPONDENT BY: NONE DATE OF HEARING: 28/09/2016 DATE OF PRONOUNCEMENT: 19/10/2016 ORDER PER T.S.KAPOOR, AM: THE REVENUE HAS FILED THESE TWO APPEALS AGAINST TW O DIFFERENT ORDERS OF LD. CIT(A)-1, JALANDHAR, EACH DATED 27.08 .2015, RELATING TO ASSESSMENT YEAR 2008-09. AS THE ISSUE INVOLVED IN BOTH THE APPEALS IS COMMON, THEREFORE, THEY ARE BEING TAKEN UP TOGETHER BY THIS CONSOLIDATED ORDER, FOR THE SAKE OF CONVENIENCE. THE GROUNDS TAK EN BY THE REVENUE IN ITA NO.571 & 572(ASR)/2015 A.Y. 2008-09 2 BOTH THE APPEALS ARE COMMON. HOWEVER, THE GROUNDS T AKEN IN ITA NO.571/ASR/2015 ARE REPRODUCED BELOW WHICH ARE SIMI LAR IN ITA NO.572/ASR/2015: 1. THAT THE LD. CIT(A) HAS ERRED ON THE FACTS AND IN LAW IN DELETING THE ADDITION OF RS.1,49,25,000/- MADE BY T HE AO ON ACCOUNT OF LONG TERM CAPITAL GAINS. 2. THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND LAW I N FOLLOWING THE JUDGMENT OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL & OTHERS VS. CIT, LUDHIANA W HILE DELETING THE ADDITION OF RS.1,49,25,000/- IN THE CA SE OF THE ASSESSEE. 3. THE LD. CIT(A) HAS ERRED BOTH ON FACTS AND LAW I N NOT ADJUDICATING THE CRUCIAL ISSUE OF APPLICABILITY OF SECTION 2(47)(II) AND (VI) OF THE ACT WHILE DELETING THE AD DITION OF RS.1,49,25,000/- IN THE CASE OF THE ASSESSEE AND HA S FAILED TO APPRECIATE THAT THESE TWO PROVISIONS ARE DE HORS THE PROVISIONS UNDER SECTION 2(47)(V) READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT AND SECTION 17(IA) OF THE REGISTRATION ACT. 4. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE SET ASIDE AND THAT OF THE A.O. RESTORED. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT TH E ASSESSEE FILED HIS RETURN DECLARING AN INCOME OF RS.1,01,937/- ON 27.0 3.2009. SUBSEQUENTLY, A REVISED RETURN WAS FILED ON 24.12.2 009 AT RS.26,89,150/-. LATER ON, THE AO RECEIVED THE INFOR MATION FROM THE CCIT, LUDHIANA AND ON THE BASIS OF THE SAME, THE CASE WAS REOPENED AND AFTER CONSIDERING THE REPLY OF THE ASSESSEE, THE AO WORKE D OUT THE CAPITAL GAIN ON SALE OF LAND AT RS.1,75,12,213/-. ITA NO.571 & 572(ASR)/2015 A.Y. 2008-09 3 3. AGGRIEVED WITH THE ORDER OF THE AO, THE ASSESSEE WENT IN APPEAL BEFORE THE LD. CIT(A), WHO ALLOWED THE APPEAL OF TH E ASSESSEE OBSERVING AS FOLLOWS: 7. I HAVE CAREFULLY CONSIDERED THE ISSUE, THE ASSE SSMENT ORDER AND THE DECISION OF HONBLE H.C. (SUPRA). THERE IS NO DISPU TE THAT FACTS AND CIRCUMSTANCES OF ALL THE CASES ARE SIMILAR EXCEPT M INOR VARIATIONS IN FIGURES ETC. THE RELEVANT PART OF THE DECISION IS REPRODUCED, AS UNDER. WE SUMMARIZE OUR CONCLUSIONS AS UNDER: - 'PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 2.3.007 AND 25.4.200 7 IN RESPECT OF 3.08 ACRES AND WHICH DOES NOT MATERIALIZE. WHERE INCOME HAS, IN FACT, BEEN RECEIVED AND IS SUBSEQUENTLY GIV EN UP IN SUCH CIRCUMSTANCES THAT IT REMAINS THE INCOME OF THE RECIPIENT , EVEN THOUGH GIVEN UP. THE TAX MAY BE PAYABLE. WHERE, HOWEVER, THE INCOME CAN BE SAID NOT TO HAVE RESULTED AT ALL, THERE IS OBVIOUSLY NEITHER ACCRUAL NOR RECEIPT OF INCOME, EVEN THOUGH AN ENTRY TO THAT, EFFECT MIGHT, INCINERATION CIRCUMSTANCES, HAVE BEEN MADE IN THE BOOKS OF ACCOUNT. THIS PRONOUNCEMENT WAS APPLIED BY THE SUPREME COURT IN GODHRA ELECTRICITY CO. LIMITED VS. CIT, (1997) 225 ITR 746 (SC) AND FOLLOW ED BY THE CALCUTTA HIGH COURT IN CIT VS. BALARAMPUR COMMERCIAL ENTERPRISES LIMITED, (2003) 262 ITR 439 (CAL.). RELYING UPON DECISION IN MESSRS SHOORJI VALLCIBHDAS & CO. S CASE (SUPRA), THE SUPREME COURT IN CIT VS. EXCEL INDUSTRIES LIMITED ( 2013) 338 ITR 295 (SC) HELD THAT INCOME TAX CANNOT BE LEVIED ON HYPOTHETICAL IN COME. INCOME ACCRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY A CO RRESPONDING LIABILITY OF THE OTHER PARTY TO PAY THE AMOUNT. ONLY THEN CAN IT BE SAID THAT FOR THE PURPOSES OF TAXABILITY, THE INCOME IS NOT HYPOTHETICAL AND IT H AS REALLY ACCRUED TO THE ASSESSEE. IT WAS OBSERVED AS UNDER: FIRST OF ALL, IT IS NOW WELL SETTLED THAT INCOME TA X CANNOT BE LEVIED ON HYPOTHETICAL INCOME. IN COMMISSIONER OF INCOME TAX VS.. S S HOORJI VALAIBHDAS AND CO., [1962] 46 ITR 144 (SC) IT WAS HELD AS FOLLOWS: INCOME-TAX IS A LEVY ON INCOME. NO DOUBT, THE INCO ME-TAX ACT TAKES INTO ACCOUNT TWO POINTS OF TIME AT WHICH THE LIABILITY TO TAX IS ATTRACTED, VIZ., THE ACCRUAL OF THE INCOME OR ITS RECEIPT; BUT THE SUBSTANCE OF THE MAT TER IS THE INCOME. IF INCOME ? DOES NOT RESULT AT ALL , THERE CANNOT BE A WITH LAW. IN VIEW OF THE AFORESAI D STAND, . WHILE DISPOSING OF THE APPEALS, WE OBSERVEE THAT TH E CISSESSEE APPELLANTS SHALL REMAIN BOUND BY THEIR SAID STAND. THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS LAX HAVIN G BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION UNDER SECTION 5 4F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. ITA NO.571 & 572(ASR)/2015 A.Y. 2008-09 4 THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIG HT IN HOLDING THE ASSESSEE- APPELLANT TO BE LIABLE TO CAPITAL GAINS TAX IN RESP ECT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CONSIDERATION HAD BEEN RECE IVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRESENT D UE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. TH EREFORE, THE APPEALS ARE ALLOWED. CONSEQUENTLY, THE SUBSTANTIAL QUESTIONS OF LAW AS R EPRODUCED IN THE BEGINNING OF THE JUDGMENT ARE ANSWERED IN THE MANNER INDICATED H EREINBEFORE AND THE APPEALS OF THE ASSESSEE ARE DISPOSED OF ACCORDINGLY. 8. SINCE THE FACTS AND CIRCUMSTANCES ARE SIMILAR AN D THE LEGAL ISSUE IS COMMON, RESPECTFULLY FOLLOWING THE DECISION OF THE H.C. OF PUNJAB AND HARYANA (SUPRA). THE A.O. IS DIRECTED TO RESTRICT T HE COMPUTATION OF CAPITAL GAIN TO THE AMOUNTS RECEIVED BY THE ASSESSE E ONLY SUBJECT TO LAW. BALANCE ADDITION OF RS. 1,49,25,000/- STANDS DELETE D. 4. NOW, THE DEPARTMENT IS IN APPEAL BEFORE US. 5. THE LD. DR RELIED ON THE ORDER OF THE ASSESSING OFFICER. 6. NONE APPEARED ON BEHALF OF THE ASSESSEE. 7. HAVING HEARD THE LD. DR IN THE LIGHT OF THE MATE RIAL AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE IN DISP UTE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE 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, PASSE D IN ITA 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 TRAN SFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE O F JDA DATED 25.02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECT ION 53A OF THE TRANSFER ACT AND CONSEQUENTLY, SECTION 2(47)(V) OF THE I.T. ACT, DID NOT APPLY, THAT FURTHER, WILLINGNESS TO PERFORM THEIR P ART OF THE CONTRACT WAS ABSENT ON THE PART OF THE DEVELOPERS, OR IT COULD N OT BE PERFORMED BY ITA NO.571 & 572(ASR)/2015 A.Y. 2008-09 5 THEM, WHICH WAS ONE OF THE CONDITIONS PRECEDENT FO R APPLYING SECTION 53A OF THE TRANSFER ACT. FURTHER, IN CLAUSE 26 OF THE JDA DATED 25.02.2007, THE PRINCIPLE OF FORCE MAJEURE HAD BEE N PROVIDED FOR, WHICH WOULD BE APPLICABLE WITH FULL VIGOUR IN THE CIRCUMS TANCES; 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 THE TRANSFER ACT WERE COMPLIED WITH, WHICH STOOD INCORPORATED IN SEC TION 2(47)(V) OF THE ACT AND ONCE THAT WAS SO, IT COULD NOT BE SAID TH AT THE ASSESSEES WERE LIABLE TO CAPITAL GAIN TAX IN RESPECT OF THE REMAIN ING LAND WHICH WAS NOT TRANSFERRED BY THEM TO THE DEVELOPER/BUILDER BECAUS E OF SUPERVISING EVENT AND NOT ON ACCOUNT OF ANY VOLITION ON THEIR P ART; AND THAT VIEWED FROM ANOTHER ANGLE, IT COULD NOT BE SAID THAT ANY I NCOME CHARGEABLE TO CAPITAL GAINS TAX IN RESPECT OF THE REMAINING LAND HAD ACCRUED OR ARISEN TO THE ASSESSEE IN THE FACTS OF THE CASE. 8. THE LD. CIT(A) HAS ALSO FOLLOWED THE AFORESAID D ECISION OF THE HONBLE PUNJAB & HARYANA HIGH COURT, WHILE ALLOWING THE APPEAL OF THE ASSESSEE. 9. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION O F HONBLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CHARANJIT SINGH ATWAL VS. CIT (SUPRA), AS THE FACTS OF THE PRESENT CASES ARE EXA CTLY SIMILAR AS THOSE ITA NO.571 & 572(ASR)/2015 A.Y. 2008-09 6 DECIDED BY THE HONBLE HIGH COURT, THE APPEALS OF B OTH THE REVENUE ARE DISMISSED 10. IN THE RESULT, BOTH THE APPEALS FILED BY THE R EVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 19/10/201 6. SD/- SD/- (N.K. CHOUDHRY) (T.S. KAPOOR ) JUDICIAL MEMBER ACCOUNTANT MEMBER /SKR/ DATED: 19/10/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEES:I) SH. SUKHDEV SINGH RANDHAWA, MUKERI AN (II) DR. AMRIK SINGH BASRA, DASUYA. 2. THE ITO, DASUYA 3. THE CIT(A)-1, JALANDHAR 4. THE CIT, JALANDHAR. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.