The Income Tax Officer, Amritsar. V. Sh. Raj Mohinder Singh S/O Sh. Iqbal Singh, Amritsar.

ITA 638/ASR/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7836 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 8 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 22-08-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 11-12-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 54F; 148

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 I.T.A NO. 638/(ASR)/2015 ASSESSMENT YEAR: 2007-08 PAN: AWIPS3878E INCOME TAX OFFICER, WARD 4 (3), AMRITSAR. VS. SH. RAJ MOHINDER SINGH S/O SH. IQBAL SINGH, 9-A, RANJIT AVENUE, AMRITSAR. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. RAHUL DHAWAN (D. R.) RESPONDENT BY: MS. ANANYA KAPOOR & SH. SALIL KAPO OR (ADV.) DATE OF HEARING: 22.08.2017 DATE OF PRONOUNCEMENT: 23.08.201 7 ORDER PER T. S. KAPOOR (AM): THIS IS AN APPEAL FILED BY REVENUE AGAINST THE ORDE R OF LD. CIT(A), AMRITSAR DATED 28.09.2015 FOR ASST. YEAR: 2007-08. 2. THE GROUNDS OF APPEAL TAKEN BY REVENUE ARE REPRO DUCED BELOW: 1.ON THE FACTS AND CIRCUMSTANCES OF THE, THE LD. C IT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,75,64,798/- WITHOUT APPRECIATING THE FACT THAT THE CASE OF THE ASSESSEE COVERED WITHIN THE MEANING OF SECTION 45 AND SECTION 2(47)( II), 2(47)(VI), 2(47)(V) OF THE INCOME TAX ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.1,75,64,79 8/- WITHOUT APPRECIATING THE FACT THAT THE CASE IS COVE RED AS PER SECTION 48 OF THE INCOME TAX ACT, 1961. ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 2 3. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THE AGREEMENT WIT H THDC AND HASH CLEARLY PROVIDED FOR VACANT PHYSICAL POSSE SSION TO BE HANDED OVER AND THAT SUCH VACANT PHYSICAL POSSES SION WAS ALSO HANDED OVER BY THE ASSESSEE. 4. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS NOT APPRECIATED THE FACT THAT THDC/HASH WERE EN JOYED THE NATURE AND EXTENT OF THE RIGHTS THAT THE ASSESS EE GRANTED BY VIRTUE OF THE AGREEMENT. 5. THE APPELLANT CRAVES LEAVE TO AMEND OR ADD ANY O R MORE GROUNDS OF APPEAL. 3. THE LD. DR FAIRLY ACCEPTED THAT THE ISSUE IN APP EAL IS SQUARELY COVERED IN FAVOUR OF ASSESSEE BY THE ORDER OF HON'B LE PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL AND OTHERS. 4. THE LD. AR EXPLAINING THE FACTS OF THE CASE SUBM ITTED THAT ASSESSEE WAS A MEMBER OF A PUNJABI COOPERATIVE HOUSE BUILDIN G SOCIETY LTD. ALONG WITH OTHER MEMBERS AND WAS IN A POSSESSION OF A PLOT MEASURING 500 SQ. YARDS WHICH WAS AGREED TO BE SURRENDERED FO R A TOTAL CONSIDERATION OF RS.82,50,000/- PLUS ALLOTMENT OF O NE FLAT OF 2250 SQ. FT, IN VIEW OF JOINT DEVELOPMENT AGREEMENT WITH M/S HAS H BUILDERS (P) LTD. CHANDIGARH AND M/S TATA HOUSING DEVELOPMENT COMPAN Y LTD. MUMBAI. THE LD. AR SUBMITTED THAT THE AGREEMENT COU LD NOT BE EXECUTED AND ASSESSEE RECEIVED ONLY A PART OF SALE CONSIDERA TION WHEREAS ASSESSING OFFICER CALCULATED CAPITAL GAINS ON THE B ASIS OF ENTIRE SALE CONSIDERATION. THE LD. AR SUBMITTED THAT ON SIMILAR FACTS AND CIRCUMSTANCES, THE HON'BLE PUNJAB & HARYANA HIGH CO URT IN THE CASE OF C.S. ATWAL AND OTHERS REPORTED AS 279 CTR 330(P&H) HAS HELD THAT ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 3 CAPITAL GAIN UNDER THESE CIRCUMSTANCES CAN BE TAXED ON THE BASIS OF ACTUAL RECEIPTS ONLY. 5. THE LD. AR FURTHER SUBMITTED THAT HON'BLE AMRITS AR BENCH OF THE TRIBUNAL HAS ALREADY TAKEN A VIEW IN FAVOUR OF ASSE SSEE IN ITA NO. 573/ASR/2015 IN THE CASE OF SMT. RAJNIT KAUR AND IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES AND JUDICIAL PRECEDENTS, IT WAS SUBMITTED THAT THE APPEAL FILED BY REVENUE MAY BE DISMISSED. 6. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THOUGH THE MATERIAL PLACED ON RECORD. WE FIND THAT ASSESSEE DECLARED A RETURN OF INCOME DECLARING INCOME OF RS20,610/- PLUS AGRICULTURAL IN COME. LATER ON THE ASSESSING OFFICER ON RECEIPT AND INFORMATION OF ACI T AMRITSAR ISSUED NOTICE U/S 148 AND THE CASE WAS REOPENED AND ASSESS ING OFFICER WORKED OUT LONG TERM CAPITAL GAIN AMOUNTING RS.1,75,64,798 /- ON THE BASIS OF ENTIRE SALE CONSIDERATION. 7. AGGRIEVED WITH THE ORDER, THE ASSESSEE FILED AN APPEAL BEFORE LD. CIT(A), WHO ALLOWED THE APPEAL OF ASSESSEE BY DESER VING AS UNDER: IN THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT IN THE APPEAL PROCEEDINGS IT WAS SUBMITTED THAT THE ASSESS EE HAD ONLY GIVEN HIS CONSENT TO THE SOCIETY FOR TRIPARTITE AGR EEMENT AND HE HAD ONLY RECEIVED A SUM OF RS. 33,00,000/- ON THE DATES MENTIONED IN THE REASONS RECORDED. THE ASSESSEE HAD FURTHER STAT ED THAT HE HAD NOT SOLD OR OTHERWISE TRANSFERRED ANY RIGHT OF SHAR E IN THE PLOT ALLOTTED TO HIM NOR ANY RIGHT HAD EXTINGUISHED AND NO CAPITAL GAIN WAS CHARGEABLE IN HIS CASE. IT WAS FURTHER STATED T HAT HE HAD RECEIVED ONLY ADVANCE OF RS. 15 LAKHS DURING THE PR EVIOUS YEAR RELEVANT FOR AY 2007-08 AND RECEIVED FURTHER ADVANC E OF RS. 18 LAKHS DURING THE YEAR RELEVANT FOR A Y 2008-09. THE APPELLANT SUBMITTED THAT MANY OTHER CO-ALLOTEES / MEMBER OF THE PUNJABI COOPERATIVE HOUSE BUILDING SO CIETY, MOHALI HAD FILED APPEAL BEFORE THE HON'BLEBLE PUNJAB & HA RYANA HIGH ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 4 COURT AGAINST THE ADDITION MADE IN THEIR CASES IN R ESPECT OF THE CONSIDERATION RECEIVED BY THEM UNDER THE SAID TRIPA RTITE AGREEMENT. THE HON'BLEBLE PUNJAB 85 HARYANA HIGH COURT HAS NO W DECIDED THE MATTER VIDE ITS ORDER DATED 22-07-2015 IN THE CASE OF C S ATWAL VS CIT LUDHIANA 85 ORS AND HELD AS UNDER:- 1. PERUSAL OF THE JDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 02.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HAD AGRE ED FOR PRO-RATA TRANSFER OF LAND. 2. 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 1882 AC T. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICEN SE FOR THE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4. FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATION, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIA L INGREDIENTS OF SECTION 53A OF 1882 ACT WERE REQUIRED TO BE FULFILL ED. IN THE ABSENCE OF REGISTRATION OF JDA DATED 25.02.2007 HAVING BEEN EXECUTED AFTER 24.09.2001, THE AGREEMENT DOES NOT FALL UNDER SECTI ON 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DO ES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESS EE- APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPE R, CAPITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DE EDS HAVE ALSO BEEN EXECUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.02.2007, NO FURTHER AMOUNT HAS BEEN RECEIVED AND NO ACTION THER EON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED, CAPITAL GAINS TAX SHALL BE DISCHARGED THEREON IN AC CORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSIN G OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAI N BOUND BY THEIR SAID STAND. 6. THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS TAX HAVIN G BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION U NDER SECTION 54F OF THE ACT WOULD NOT SURVIVE ANY LONGER AND HAS BEE N RENDERED ACADEMIC. 7. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIG HT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPITAL GAINS TA X IN RESPECT OF REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CO NSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INC APABLE OF PERFORMANCE AT PRESENT DUE TO VARIOUS ORDERS PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE , THE APPEALS ARE ALLOWED. THE APPELLANT HAD CONTENDED IN HIS WRITTEN SUBMISSI ONS THAT THE ASSESSEE HAD NEITHER SOLD NOR TRANSFERRED HIS RIGHT OVER THE LAND NOR HIS RIGHT WAS EXTINGUISHED AND THEREFORE NO CAPITAL GAIN WAS ACCRUING ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 5 TO HIM. HOWEVER HE HAD ACTUALLY RECEIVED A SUM OF R S 15,00,000/- ONLY DURING THE PREVIOUS YEAR RELEVANT TO AY 2007-08.THE THE ASSESSEE IS A SENIOR CITIZEN AND WANTS TO LIVE IN PEACE AND NOT I NTERESTED IN PROLONGED LITIGATION WITH THE DEPARTMENT. UNDER THE CIRCUMSTANCES HIS LIABILITY TO LTCG MAY BE TAKEN AT RS 13,05,552/- AS WORKED OUT BELOW IN ACCORDANCE WITH THE ORDER PASSED BY THE HON'BLE PUNJAB & HARYANA HIGH COURT, CHANDIGARH:- (A) AMOUNT RECEIVED FOR 120 SQ YARDS ON 24-02-2007 RS 15,00,000/- (B) LESS :- PROPORTIONATE INDEXED COST FOR 120 SQ YARDS RS 194,448/- ON THE BASIS OF ESTIMATE MADE BY THE AO FOR 500 S Q YDS (C) BALANCE LONG TERM CAPITAL GAIN RS. 13,05.522/- CONSIDERING THE FACTS OF THE CASE OF THE ASSESSEE A ND THE FINDINGS GIVEN BY THE HONHLE PUNJAB 8S HARYANA HIGH COURT DATED 22-07-2015 IN THE CASE OF C S ATWAL VS CIT LUDHIANA 8S ORS AND THE WRITTEN SUBMISSIONS OF THE APPELLANT, THE LONG TERM CAPITAL GAIN COMPUTED BY THE APPELLANT AT RS 13,05,552/- (A S ABOVE) IN RESPECT OF THE AMOUNT RECEIVED FOR 120 SQ YDS ON 24-02- 2007 IS CONFIRMED AS AGAINST THE LONG TERM CAPITAL GAIN OF RS 1,75,64,798/- COMPUTED BY THE AO. THE LONG TERM CAP ITAL GAIN ON THE BALANCE ADVANCE OF RS 18,00,000/- RECEIVED BY T HE APPELLANT IN THE ASSESSMENT YEAR 2008-09 WAS ACCORDINGLY TAXABLE IN THE A Y 2008-09. 8. WE FIND THAT THE ISSUE IN DISPUTE IS SQUARELY CO VERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISIO N OF THE HON'BLE HIGH COURT OF PUJAB & HARYANA IN THE CASE OF CHARANJIT SINGH ATWAL VS. CIT, VIDE ORDER, DATED 22.07.2015, PASSED 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 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 AC T 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 ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 6 DEVELOPERS, AS IT COULD NOT BE PERFORMED BY THEM, W HICH WAS ONE OF THE CONDITIONS PRECEDENT FOR APPLYING SECTION 53A OF TH E TRANSFER ACT. FURTHER, IN CLAUSE 26 OF THE JDA DATED25.02.2007, T HE PRINCIPLE OF FORCE MAJEURE HAD BEEN PROVIDED FOR, WHICH WOULD BE APPLI CABLE WITH FULL VIGOUR IN THE CIRCUMSTANCES. FROM THE CUMULATIVE EF FECT OF THE COVENANTS CONTAINED IN THE JDA READ WITH THE REGISTERED SPECI AL POWER OF ATTORNEY DATED 26.02.2007, IT COULD NOT BE HELD THAT THE MAN DATORY REQUIREMENTS OF SECTION 53A OF THE TRANSFER ACT WERE COMPILED WI TH, WHICH STOOD INCORPORATED IN SECTION 2(47)(V) OF THE ACT AND ONC E THAT WAS SO, IT COULD NOT BE SAID THAT THE ASSESSEES WERE LIABLE TO CAPIT AL GAIN TAX IN RESPECT OF THE REMAINING LAND WHICH WAS NOT TRANSFERRED BY THE M TO THE DEVELOPER/BUILDER BECAUSE OF SUPERVISING EVENT AND NOT ON ACCOUNT OF ANY VOLITION ON THEIR PART; AND THAT VIEWED FROM AN OTHER ANGLE, IT COULD NOT BE SAID THAT ANY INCOME CHARGEABLE TO CAPITAL G AINS TAX IN RESPECT OF THE REMAINING LAND HAD ACCRUED OR ARISEN TO THE ASS ESSEE IN THE FACTS OF THE CASE. 9. THE LD. CIT(A) HAS ALSO FOLLOWED THE AFORESAID D ECISION OF THE HON'BLE PUNJAB & HARYANA HIGH COURT, WHILE ALLOWING THE APPEAL OF THE ASSESSEE AND HAS HELD A PART OF CAPITAL GAIN TAXABL E ON THE BASIS OF ACTUAL RECEIPTS. THE REVENUE HAS WRONGLY TAKEN THE FIGURE OF CAPITAL GAIN AT RS.17,56,4,798/- WHEREAS THE CORRECT FIGURE SHOU LD HAVE BEEN AFTER REDUCING THE AMOUNT OF ADDITION SUSTAINED BY HIM. ITA NO. 638(ASR)/2015 ASSESSMENT YEAR: 2007-08 7 10. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF HON'BLE HIGH COURT OF PUNJAB & HARYANA IN THE CASE OF CHARANJIT SINGH ATWAL VS. CIT (SUPRA), AS THE FACTS OF THE PRESENT CASE ARE EXACT LY SIMILAR AS THOSE DECIDED BY THE HON'BLE HIGH COURT, THE APPEAL OF TH E REVENUE IS DISMISSED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 23.08.2017 SD/- SD/- (N. K. CHOUDHRY) (T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 23.08.2017. /GP/SR. PS . COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER