Telukunta Chandra Mohan Rao(HUF), Secunderabad V. Income Tax Officer, Ward-10(5), Hyderabad

ITA 731/Hyd/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 0640 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 10-09-2018
• Assessment Year: 2010-2011
• Appeal Filed On: 23-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V RAJITHA
• Assessee Lawyers: A V RAGHURAM

Judgement Text

ITA NOS 731 OF 2018 TELUKUNTA CHANDRA MOHAN RAO HUF SECUNDERABAD. PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.731/HYD/2018 (ASSESSMENT YEAR: 2010-11) M/S. TELUKUNTA CHANDRA MOHAN RAO (HUF) SECUNDERABAD PAN:AAAHT6793H VS INCOME TAX OFFICER WARD 10(5) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI A.V. RAGHURAM FOR REVENUE : SMT. V. RAJITHA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11 AGAIN ST THE ORDER OF THE CIT (A)-6, HYDERABAD, DATED 5/2/20 18. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE ORDER OF THE ID. COMMISSIONER OF INCOME TAX (APPEAL S)-6, HYDERABAD, DISMISSING THE APPEAL OF THE APPELLANT I S PERVERSE, ILLEGAL AND UNSUSTAINABLE ON FACTS AND IN LAW. 2. THE COMMISSIONER (APPEALS) ERRED IN SUSTAINING T HE ACTION OF THE ASSESSING OFFICER IN BRINGING TO TAX THE ALLEGED CAPITAL GAINS IN THE A.Y UNDER CONSIDERATIO N. 3. WITHOUT PREJUDICE, THE COMMISSIONER (APPEALS) ER RED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER IN AD OPTING THE COST OF LAND SURRENDERED FOR DEVELOPMENT AT RS. 5.98 CRORES. THE COMMISSIONER (APPEALS) OUGHT TO HAVE APPRECIATED THAT WHAT THE APPELLANT GOT ON SURRENDE R OF LAND IS THE SUPER STRUCTURE, WHICH SHOULD BE THE BA SIS FOR DATE OF HEARING: 10.09. 201 8 DATE OF PRONOUNCEMENT: 12.09.2018 ITA NOS 731 OF 2018 TELUKUNTA CHANDRA MOHAN RAO HUF SECUNDERABAD. PAGE 2 OF 4 ARRIVING AT THE VALUE OF LAND SURRENDERED IN THE DEVELOPMENT AGREEMENT. 4. WITHOUT PREJUDICE TO ABOVE GROUND, THE COMMISSIO NER (APPEALS) FURTHER FAILED TO APPRECIATE THAT THE VAL UE ADOPTED BY THE ASSESSING OFFICER AT RS.5.98 CRORES IS COMPOSITE VALUE OF THE LAND AND SUPER STRUCTURE WHI CH COULD NOT HAVE BEEN TAKEN IN ENTIRETY FOR THE PURPO SE OF DETERMINING THE VALUE OF LAND SURRENDERED. THE AUTHORITIES BELOW OUGHT TO HAVE APPRECIATED THAT ON LY VALUE OF THE SUPER STRUCTURE SHOULD HAVE BEEN TAKEN . FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT TH E TIME OF HEARING, IT IS PRAYED THAT THE HON'BLE TRIB UNAL MAY BE PLEASED TO ALLOW THE APPEAL. 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE ALONG WITH OTH ER FAMILY MEMBERS HAD ENTERED INTO AN AGREEMENT WITH M/S.SAPT AGIRI CONSTRUCTIONS FOR DEVELOPMENT OF THE PROPERTY BEARI NG NO.9-1- 219/232, ST. MARYS ROAD, SECUNDERABAD, FOR CONSTRU CTION OF A MULTI-STOREYED COMMERCIAL COMPLEX CONSISTING OF SHO PS, SHOWROOMS, OFFICES, PARKING PLACES AND OTHER COMMER CIAL UNITS ETC, VIDE THE DEVELOPMENT CUM GPA AGREEMENT, REGIST ERED VIDE DOCUMENT NO.40/2000 ON 10.01.2000. THE AO OBSERVED THAT THE CAPITAL GAINS HAS ARISEN TO THE ASSESSEE ON THE SIG NING OF THE DEVELOPMENT AGREEMENT AND THEREFORE, THE CAPITAL GA INS SHOULD BE BROUGHT TO TAX DURING THE RELEVANT A.Y. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO CONFIRME D THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND APPEAL BEFORE US BY RAISING THE ABOVE GROUNDS OF APPEAL. THE LEARNED COUNSEL FO R THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BE FORE THE AUTHORITIES BELOW, SUBMITTED THAT THE CASE OF THE O THER CO-OWNERS HAD COME UP BEFORE THE TRIBUNAL IN ITA NOS.1583 TO 1592/HYD/2017 AND THIS TRIBUNAL AT PARA 8.1 HAS CLE ARLY HELD ITA NOS 731 OF 2018 TELUKUNTA CHANDRA MOHAN RAO HUF SECUNDERABAD. PAGE 3 OF 4 THAT THE CAPITAL GAINS IS CHARGEABLE TO TAX ONLY IN THE A.Y 2003-04 AS IT WAS HELD THAT THE ACTUAL TRANSFER TOOK PLACE IN THE YEAR 2003. THEREFORE, ACCORDING TO HIM, THE CAPITAL GAINS CANN OT BE BROUGHT TO TAX IN THE A.Y 2010-11. 3. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE COORDINATE BENCH IN THE CASE OF OTHER CO-OWNERS HAS HELD AS UNDER: 8.1 BEFORE US, THE QUESTION RAISED IS, IN THE CASE OF 'JDA' TRANSACTION, AT WHAT POINT OF TIME, CAPITAL GAIN ARISES. IT IS SETTLED L AW THAT IN THE YEAR IN WHICH THE POSSESSION OF THE PROPERTY IS PASSED ON TO THE DEVE LOPER IS THE YEAR IN WHICH THE PROVISION OF CAPITAL GAINS GET ATTRACTED. IN THE CA SE OF POTLA NAGESWARA RAO (SUPRA) THE HON'BLE AP HIGH COURT HELD AS UNDER: 'THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT AR E CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN T HE TRANSFER IS COMPLETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREE MENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ASSESSMENT OF INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT T. PRABHAKAR RAO (HUF) AND OTHERS. WAS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FA CTUALLY IT WAS FOUND THAT BOTH THE AFORESAID ASPECTS TOOK PLACE IN THE PREVIO US YEAR RELEVANT TO THE ASSESSMENT YEAR 2003-04.' FROM THE ABOVE DECISION, WHEN THE TRANSFER IS COMPL ETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREEMENT FOR SALE H AS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ASSESSMENT OF INCO ME FOR THE AY WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN . THEREFORE, IN THE GIVEN CASE, THE ASSESSEE HAS ENTERED INTO 'JDA' IN THE YE AR 10/01/2000 AND POSSESSION WAS HANDED OVER FOR DEVELOPMENT. BUT DUE TO OCCUPAT ION OF THE PROPERTY BY THE TENANTS, THE DEVELOPER WAS ABLE TO VACATE THE TENEN TS ONLY IN THE YEAR 2003. HENCE, IT CAN BE CONSTRUED THAT THE ACTUAL VACANT P OSSESSION WAS HANDED OVER TO THE DEVELOPER ONLY IN 2003. THEREFORE, THE ACTUA L TRANSFER TOOK PLACE IN THE YEAR 2003. THE PROVISIONS OF CAPITAL GAINS ARE ATTR ACTED IN THE YEAR 2003. HENCE, THE STAND OF THE AO TO CHARGE THE CAPITAL GA INS IN THE YEAR 2010-11 IS NOT PROPER. SECONDLY, THE REASON FOR BRINGING TO TA X IN THE YEAR 2010-11 WAS THE LETTER OF THE DEVELOPER TO ANNOUNCE THAT THE BUILDI NG IS READY FOR OCCUPATION WITHOUT COMPLYING TO THE 'JDA' AND APPROVAL NORMS. EVEN THOUGH THE SAME WAS ITA NOS 731 OF 2018 TELUKUNTA CHANDRA MOHAN RAO HUF SECUNDERABAD. PAGE 4 OF 4 BROUGHT TO THE NOTICE OF THE AO, ACCORDING TO US, T HE REASON FOR REOPENING THE ASSESSMENT IS ON FAULTY GROUND. 5. RESPECTFULLY FOLLOWING THE SAME, THE APPEAL OF T HE ASSESSEE IS ALLOWED AND IT IS HELD THAT THE CAPITAL GAIN IS TAXABLE IN THE YEAR 2003 WHEN THE ACTUAL VACANT POSITION OF THE LAND WAS GIVEN TO THE DEVELOPER. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12 TH SEPTEMBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 12 TH SEPTEMBER, 2018. VINODAN/SPS COPY TO: 1 SHRI A.V.RAGHURAM & P VINOD, ADVOCATES, 610 BABUK HAN ESTATE, BASHEERBAGH, HYDERABAD 2 ITO WARD 10(5) IT TOWERS, AC GUARDS, MASAB TANK, HYDERA BAD 3 CIT (A)-4, HYDERABAD 4 PR. CIT 6, HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER