Dy.CIT, Central Circle-3, Hyderabad V. Shri N Thirupathi Rao, Hyderabad

ITA 723/HYD/2014

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6255 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-01-2017
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 29-11-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 23-04-2014
• Court: TRIBUNAL
• Department Lawyers: A SITARAMA RAO
• Section: 143(3); 153A; 132

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SMT P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIH, ACCOUNTANT MEMBER ITA NO. 723/HYD/2014 ASSESSMENT YEAR: 2006-07 THE DY INCOME TAX OFFICER CENTRAL CIRCLE- 3 HYDERABAD VS. SHRI N. THIRUPATHI RAO, HYDERABAD PAN ABFPN3611A (APPELLANT) (RESPONDENT) REVENUE BY : SHRI A. SITARAMA RAO ASSESSEE BY : SHRI K.C. DEVDAS DATE OF HEARING : 29-11-2016 DATE OF PRONOUNCEMENT : 18-01-2017 ORDER PER P. MADHAVI DEVI, J.M.: IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ORD ER OF THE CIT(A)-VI, DATED 27-12-2013, HOLDING THAT THE C APITAL GAINS DO NOT ARISE IN THE ASSESSMENT YEAR (A.Y) 200 6-07. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER:- 1. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT PHYSICAL POSS ESSION OF THE PROPERTY WAS GIVEN ON 19-10-2006 AND HENCE CAPITAL GAINS DO NOT ARISE IN AY 2006-07. 2. IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE, AND IN LAW, THE CIT(A) ERRED IN HOLDING THAT ASSESSING OFFICER HAS NO JURISDICTION TO ASSESSEE CAPITAL GAINS IN THE ABSEN CE OF ANY INCRIMINATING MATERIAL. 3. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR ALTER GRO UNDS OR ADD A NEW GROUND, WHICH MAY BE NECESSARY. 2 ITA NO. 723/HYD/2014 SHRI N THIRUPATHI RAO, HYD. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL AND DIRECTOR IN M/S MIDWEST GRANITE PVT LTD., HAD FILED HIS ORIGINAL RETURN OF INCOME ON 01-07-20 06, ADMITTING INCOME OF RS. 7,50,407/-,. THERE WAS A SEARCH IN SEIZURE OPERATION U/S 132 OF INCOME TAX ACT, AT THE RESIDENTIAL PREMISES OF THE ASSESSEE ON 24-07-2008, IN CONNECTION WITH SEARCH OPERATION CARRIED OUT IN THE GROUP CASE OF M/S MIDWEST GRANITE PVT. LTD. CONSEQUENT T O THE SEARCH ACTION, THE PROCEEDINGS U/S 153A WERE INITI ATED BY ISSUANCE OF NOTICES DATED 16-04-2010 FOR THE ASSESS MENT YEARS (A.Y) 2003-04 TO 2008-09. THE ASSESSEE FILE D THE RETURN OF INCOME FOR THE A.Y 2006-07 ON 19-11-2010 ADMITTING AN INCOME OF RS. 7,64,181/-. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER (A.O) OBSERVED THAT THE ASSESSEE HAS ENTERED INTO A DEVEL OPMENT AGREEMENT CUM GPA ALONG WITH SIX OTHERS ON 28-09-20 05 WITH M/S VISION AVENUES PVT LTD., HYDERABAD, AS PER WHICH, THE ASSESSEE AND OTHERS CONTRIBUTED LAND MEA SURING AC 4.12 GUNTAS LOCATED AT SURVEY NO. 57,58,64,65 AN D 56 OF HAFEEZ VILLAGE, SERI LIMGAMPALLY MANDAL, RANGARE DDY DISTRICT FOR DEVELOPMENT. HE OBSERVED THAT THE ASSE SSEE HAS DELIVERED PHYSICAL POSSESSION OF THE LAND TO M/S VI SION AVENUES PVT LTD., HYDERABAD, AND THEREFORE HE WAS O F THE OPINION OF THAT THERE IS A TRANSFER WITHIN THE PROV ISION OF SEC. 2(47)(V) OF THE ACT AND HENCE CAPITAL GAINS HA S ARISEN TO THE ASSESSEE. HE THEREFORE, COMPUTED THE SHORT TERM CAPITAL GAINS AND BROUGHT IT TO TAX. AGGRIEVED, TH E ASSESSEE IS PREFERRED AN APPEAL BEFORE THE CIT(A), WHO ALLOW ED THE SAME BY OBSERVING THAT THOUGH THE DEVELOPMENT AGREE MENT IS DATED 28-09-2005, THE PHYSICAL POSSESSION OF THE 3 ITA NO. 723/HYD/2014 SHRI N THIRUPATHI RAO, HYD. PROPERTY WAS GIVEN TO THE DEVELOPER ON 29-09-2006 A ND THEREFORE THE CAPITAL GAINS HAS NOT ARISEN DURING T HE RELEVANT ASSESSMENT YEAR. AGAINST THIS FINDING OF THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US . 3. THE LD. DR, WHILE SUPPORTING THE ORDERS OF THE A .O, PLACED RELIANCE UPON THE DECISION OF THE JURISDICTI ONAL HIGH COURT I.E HONBLE ANDHRA PRADESH HIGH COURT IN THE CASE OF POTLA NAGESHWARA RAO VS DCIT [2014] 50 TAXMANN.COM 137 (ANDHRA PRADESH)/[2014] 226 TAXMAN 173 ,IN SUPPORT OF HIS CONTENTION THAT THE CAPITAL GAINS IS TAXABLE IN THE YEAR OF DEVELOPMENT AGREEMENT. HE ALSO PLACED RELIANCE UPON THE DECISION OF THE CO-ORDINATE BENCH OF THIS TRIBU NAL IN THE CASE OF KUSHAL KUMAR KANKARIA VS ACIT CENTRAL CIR-1 , HYDERABAD, [2015] 59 TAXMANN.COM 177 HYDERABAD TRIBUNAL. 4. THE LD COUNSEL FOR THE ASSESSEE ON THE OTHER HAN D, SUPPORTED THE ORDERS OF THE CIT(A) AND ALSO REFERRE D TO THE RELEVANT PAGES IN THE PAPER BOOK FILED BY HIM TO DEMONSTRATE THAT THE POSSESSION OF THE PROPERTY WAS HANDED OVER BY THE ASSESSEE AND OTHERS TO THE DEVEL OPER ONLY ON 29-10-2006. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT DURING THE ASSESSM ENT PROCEEDINGS U/S 153A W.R.S 143(3) OF THE ACT, THE A.O 4 ITA NO. 723/HYD/2014 SHRI N THIRUPATHI RAO, HYD. ISSUED A DETAILED QUESTIONNAIRE WHICH IS PLACED AT PAGES TEN TO FOURTEEN AND ONE OF THE QUESTION THEREIN WAS WITH REGARD TO THE DEVELOPMENT AGREEMENT AND ALSO THE RE LEVANT DETAILS THERE-TO. THE ASSESSEE HAD FILED DETAILED WRITTEN SUBMISSIONS EXPLAINING THAT THE ASSESSEE HAS ENTERE D INTO A DEVELOPMENT AGREEMENT ON 28-09-05 AND THAT THE POSSESSION WAS HANDEDOVER TO THE DEVELOPER ON 29-10 - 2006. WE FIND THAT THE ASSESSING OFFICER HAS NOT G IVEN ANY FINDING ON THESE SUBMISSIONS, BUT THE CIT(A) HAS CONSIDERED THESE SUBMISSIONS TO HOLD THAT THE CAPIT AL GAINS HAS NOT ARISEN IN THE YEAR OF ENTERING INTO THE DEV ELOPMENT AGREEMENT. EXCEPT FOR RELIANCE UPON THE DECISION O F THE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAG ESHWARA RAO CITED (SUPRA), THE LD. DR HAS NOT BEEN ABLE TO PRODUCE ANY EVIDENCE TO REBUT THE FINDINGS OF THE CIT(A). IN THE DECISIONS RELIED UP ON BY THE LD. DR, THE DATE OF E NTERING INTO THE DEVELOPMENT AGREEMENT AND ALSO THE HANDING OVER OF THE POSSESSION OF THE PROPERTY IS ONE AND THE SA ME. IN THE CASE BEFORE US, ADMITTEDLY THE DATE OF AGREEMEN T AND THE DATE OF HANDING OVER OF THE POSSESSION ARE DIFF ERENT. THE HONBLE AP HIGH COURT IN THE CASE OF POTLA NAGESHWARA RAO CITED (SUPRA) HAS FOLLOWED THE DECIS ION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS COMMISSIONER OF INCOME-TAX, (2 003) 260 ITR 491, WHEREIN ALSO THE POSSESSION WAS HANDED OVER ON THE DATE OF AGREEMENT ITSELF. THEREFORE, THE FACTS BEFORE US ARE DISTINGUISHABLE FROM THE FACTS OF THE CASES BEF ORE THE HONBLE HIGH COURTS IN THE CASE CITED SUPRA. IN VI EW OF THE 5 ITA NO. 723/HYD/2014 SHRI N THIRUPATHI RAO, HYD. SAME, WE SEE NO REASON TO INTERFERE WITH THE ORDER OF THE CIT(A) . ACCORDINGLY THE REVENUES APPEAL IS DISMI SSED 6. IN THE RESULT, THE REVENUES APPEAL IS DISMISSED . PRONOUNCED IN THE OPEN COURT ON 18 TH JANUARY , 2017. SD/- SD/- (B. RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 18 TH JANUARY, 2017 KRK 1) SHRI N THIRUPATHI RAO, PLOT NO.1, SAGAR CO-OPERATI VE SOCIETY, BANJARA HILLS, HYD. 2) DCIT, CENTRAL -3, HYDERABAD 3) CIT -VI, HYDERABAD 4) CIT(I), HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., H YDERABAD. 6) GUARD FILE