G Narasimha Yadav, Secunderabad V. ACIT, Central Circle-1, Hyderabad

ITA 734/HYD/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77946 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-06-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 13-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K A SAI PRASAD
• Keywords: Capital asset; Business income; Source of fund; Additional evidence; Advance ruling; Cost of acquisition; Fair market value; Competent authority; Retraction; Documents seized
• Section: 69C; 143(3); 153A; 144

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER SL. NO. ITA NO. A.Y. APPELLANT RESPONDENT 1. 734/HYD/2013 200405 SRI G. NARASIMHA YADAV, SECUNDERABAD PAN: AEEPG6620A ASST. CIT CENTRAL CIR.1 HYDERABAD 2. 735/HYD/2013 200506 3. 736/HYD/2013 200607 4. 737/HYD/2013 200708 5. 738/HYD/2013 200910 6. 739/HYD/2013 200506 M/S. G. NARASIMHA YADAV HUF, SECUNDERABAD PAN: AABHN8927N ASST. CIT CENTRAL CIR.1 HYDERABAD 7. 740/HYD/2013 200506 SMT. G. SAKUNTHALA SECUNDERABAD PAN: AEEPG6621B ASST. CIT CENTRAL CIR.1 HYDERABAD 8. 741/HYD/2013 200708 9. 742/HYD/2013 200607 SRI G. DURGAIAH YADAV SECUNDERABAD PAN: AEJPG0169F ASST. CIT CENTRAL CIR.1 HYDERABAD 10. 743/HYD/2013 200708 11. 744/HYD/2013 200809 12. 745/HYD/2013 200910 13. 746/HYD/2013 200506 SRI G. JAI KISHAN YADAV SECUNDERABAD PAN: AIAPG8197J ASST. CIT CENTRAL CIR.1 HYDERABAD 14. 747/HYD/2013 200708 15. 748/HYD/2013 200910 APPELLANT BY: SRI K.A. SAI PRASAD RESPONDENT BY: SRI SOLGY JOSE T. KOTTARAM DATE OF HEARING: 28 .0 5 .2014 DATE OF PRONOUNCEMENT: 09.06.2014 O R D E R PER CHANDRA POOJARI, AM: ALL THE ABOVE APPEALS, BY DIFFERENT ASSESSEES, ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE CIT(A)-I, HYDERABAD DATED 28.2.2013. SINCE ALL THE ASSESSEE S BELONG TO A SINGLE GROUP AND THE ISSUES BEING SIMIL AR IN ALL THE CASES, THESE APPEALS ARE CLUBBED AND HEARD TOGE THER AND ARE DISPOSED OF BY THIS COMMON ORDER FOR THE SA KE OF CONVENIENCE. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 2 ITA NO. 734/HYD/2013 (A.Y. 2004-05) 2. FIRSTLY, WE WILL TAKE UP APPEAL IN ITA NO. 734/HYD/ 2013 FOR ADJUDICATION. THE ASSESSEE RAISED THE GR OUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 3,29,000 REPRESENTING SALE PROCEEDS OF AGRICULTURAL LANDS WITHOUT APPRECIATING THE FACT THAT THESE PROCEEDS A RE EXEMPT FROM TAX. 2.1 AT THE TIME OF HEARING, THE LEARNED AR NOT PRESSED THIS GROUND. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 2.2 IN THE RESULT, ITA NO. 734/HYD/2013 IS DISMISSED. ITA NO. 735/HYD/2013 (A.Y. 2005-06) 3. THE ASSESSEE RAISED THE GROUND IN THIS APPEAL THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 40,88,065 REPRESENTING THE CAPITAL GAINS ARISING OU T OF GIVING HIS LAND FOR DEVELOPMENT WITHOUT APPRECIATIN G THE FACT THAT THE ASSESSEE HAS ALREADY OFFERED THE SAME TO TAX IN DIFFERENT YEARS AS AND WHEN THE PROPERTIES WERE SOLD. 3.1 BRIEF FACTS OF THE ISSUE ARE THAT THE ASSESSEE, A C O- OWNER ALONG WITH OTHERS, ENTERED INTO A DEVELOPMENT AGREEMENT-CUM-GPA ON 16.9.2004 WITH M/S. R.V. NIRMAN PVT. LTD., IN RESPECT OF LAND ADMEASURING TW O ACRES SITUATED AT SY. NO. 212, MADINAGUDA VILLAGE, SERILINGAMPALLY MANDAL, HYDERABAD. THE RESULTANT CAPITAL GAIN WAS OFFERED FOR TAX IN THE REGULAR RET URNS AND IN THE RETURN FILED U/S. 153A OF INCOME-TAX ACT, 19 61 FOR A.YS. 2006-07 AND 2007-08 ON THE BASIS OF HANDING O VER OF POSSESSION AND SALE EFFECTED. ACCORDING TO THE LOWER ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 3 AUTHORITIES, THE TRANSFER TOOK PLACE ON 16.9.2004 A ND CAPITAL GAIN IS TO BE TAXED IN THE A.Y. 2005-06. 3.2 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR OUR CONSIDERATION IN CO-OWNER SRI CH. MALLA REDDY'S CAS E IN ITA NO. 771/HYD/2013 FOR A.Y. 2005-06. THE TRIBUNA L VIDE ORDER DATED 6.6.2014 HELD AS FOLLOWS: 27. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. IN THIS CASE THE JOINT DEVELOPMENT AGREEMENT WAS ENTERED BY THE ASSESSEE ALONG WITH SEVEN OTHER PERSONS WITH M/S. RVNPL ON 16.9.2014. ON ENTERING THIS AGREEMENT, THE DEVELOPER HAS PAID A SUM OF RS. 75 LAKHS AS INTEREST FREE REFUNDABLE DEPOSIT TO THE LAND OWNERS. THE LAND OWNERS DELIVERED VACANT PHYSICAL POSSESSION OF THE PROPERTY FOR DEVELOPMENT TO THE DEVELOPER AND THE DEVELOPER IS ALLOWED TO OBTAIN ALL NECESSARY PERMISSIONS AND SANCTIONS FROM HUDA AND SERILINGAMPALLY MUNICIPALITY FOR CONSTRUCTION OF PROPOSED BUILDING AT THEIR OWN COST AND EXPENSES. THE SHARING OF BUILT-UP AREA BETWEEN THE LAND OWNERS AND THE BUILDER IS IN THE RATIO OF 36:64, RESPECTIVELY. THE TIME LIMIT FOR DELIVERING THE BUILT-UP AREA TO THE LAND OWNERS IS 36 MONTHS FROM THE DATE OF OBTAINING NECESSARY SANCTIONS AND PERMISSIONS FROM HUDA AND SERILINGAMPALLY MUNICIPALITY. IT IS ALSO AGREED BETWEEN THE PARTIES THAT DATE OF COMPLETION OF FIRST BLOCK IN THE PROPOSED BUILDING SHALL BE 15 MONTHS FROM THE DATE OF OBTAINING SUCH PERMISSION. THERE IS ALSO PENALTY CLAUSE THAT IF THE DEVELOPER FAILED TO DELIVER THE BUILT-UP AREA FALLING INTO THE SHARE OF LAND OWNERS WITHIN THE STIPULATED PERIOD, THEN THEY SHALL BE LIABLE TO PAY A SUM OF RS. 3 PER SFT PER MONTH FOR SUCH DELAY PERIOD. THERE IS ALSO ONE MORE SUPPLEMENTARY AGREEMENT ENTERED BETWEEN THE PARTIES ON 18.6.2005 WITH REFERENCE TO THE ALLOTMENT OF CERTAIN FLATS. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 4 28. THE MAIN PLEA OF THE ASSESSEE BEFORE US IS THAT THE PROPERTY IS A SUBJECT MATTER OF TRANSFER U/S. 2(47)(V) DOES NOT BELONG TO THE ASSESSEE AND IT BELONGS TO THE HUF. THE ASSESSEE PLEADED THAT THE CAPITAL GAIN ARISING OUT OF SUCH TRANSFER IS OFFERED TO TAX BY THE ASSESSEE IN THE HANDS OF THE HUF FOR A.Y. 2008-09. HE DREW OUR ATTENTION TO THE COPY OF ASSESSMENT ORDER PASSED BY THE ACIT, CENTRAL CIRCLE-1, HYDERABAD IN THE CASE OF SRI CH. MALLA REDDY HUF FOR A.Y. 2007-08 AND COPY OF ACKNOWLEDGEMENT OF RETURN OF INCOME AND ASSESSMENT ORDER IN THE CASE OF CH. MALLA REDDY HUF FOR A.Y. 2008-09 PLACED ON RECORD IN PAPER BOOK NO. 121 AND 122 FOR A.Y. 2007- 08, FOR A.Y. 2008-09 123-126. 29. FURTHER, THE AR ALSO BROUGHT ON RECORD THE ORDER U/S. 171 OF THE ACT IN THE CASE OF CH. MALLA REDDY, CH. NARASIMHA REDDY AND SRI C. GOPAL REDDY DATED 28.2.2003 VIDE PARTITION DEED DATED 31.8.1988 WHICH IS KEPT ON RECORD AT PAPER BOOK NO. 296. HE ALSO BROUGHT ON RECORD ANOTHER ORDER U/S. 171 DATED 28.3.2000 IN THE CASE OF CH. MALLA REDDY, K. MAHENDER REDDY, K. BHADRA REDDY VIDE PARTITION DEED DATED 31.8.1988. IT IS ALSO BROUGHT ON RECORD BY THE ASSESSEE THAT THE RETURN OF INCOME FILED BY THE ASSESSEE AS A HUF IN THE FOLLOWING ASSESSMENT YEAR: (A) CH. MALLA REDDY HUF AY 1999-00 AND 2001-02; PAPER BOOK P. 298 TO 304 (B) CH. BHADRA REDDY HUF AY 2001-02 AND 2002-03; PAPER BOOK P. 305-310. (C) CH. MAHENDER REDDY, AY 2003-04 AND 2002-03; PAPER BOOK P. 321 TO 327. 30. THUS, THE LEARNED AR SUBMITTED THAT THE STATEMENT MADE BY THE ASSESSEE IN THE STATEMENT OF FACTS WITH REGARD TO PROPERTY OWNED BY THE ASSESSEE INDIVIDUAL IS AN ERROR. THERE IS AMPLE EVIDENCE ON RECORD TO SUGGEST THAT THE PROPERTY WAS OWNED BY THE HUF AND CAPITAL GAIN ARISING OUT OF TRANSFER OF THE SAID ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 5 CAPITAL ASSET WAS OFFERED TO TAX BY HUF IN THE A.Y. 2007-08 AND 2008-09. IT CANNOT BE TAXED AGAIN IN THE HANDS OF THE INDIVIDUAL ASSESSEE WHICH AMOUNTS TO DOUBLE TAXATION. THE CBDT IN ITS CIRCULAR NO. 14 (XL-35) DATED 11.4.1955 DIRECTED THE OFFICERS NOT TO TAKE ADVANTAGE OF IGNORANCE OF THE ASSESSEE AS TO HIS RIGHTS. IT IS ONE OF THE DUTIES TO ASSIST THE TAXPAYER IN EVERY REASONABLE WAY, PARTICULARLY IN THE MATTER OF CLAIMING AND SECURING RELIEF AND IN THIS REGARD THE OFFICERS SHOULD TAKE INITIATIVE IN GUIDING A TAXPAYER WHERE PROCEEDINGS OR OTHER PARTICULARS WHERE THEY INDICATE THAT SOME RELIEF IS DUE TO HIM, ETC. THE PURPOSE OF THIS CIRCULAR IS MERELY TO EMPHASISE THAT THE DEPARTMENT SHOULD NOT TAKE ADVANTAGE OF ASSESSEE'S IGNORANCE TO COLLECT MORE TAX OUT OF HIM THAT WHICH IS LEGITIMATELY DUE FROM HIM. 31. IT WAS HELD BY THE KARNATAKA HIGH COURT IN THE CASE OF GOPAL RAMNARAYAN (126 ITR 369) THAT 'COMPUTATION OF TOTAL INCOME AND TAX THEREON ENVISAGES THE FINAL DETERMINATION BY THE ASSESSING AUTHORITY IN TERMS OF SECTIONS 143 OR 144 OF THE ACT. THE ASSESSEE, WHO, FOR INSTANCE, HAD PAID TAX ON THE BASIS OF SELF- ASSESSMENT UNDER A WRONG ASSUMPTION THAT THE ENTIRE INCOME SHOWN THEREIN WAS LIABLE TO TAX, IS ENTITLED TO ASSERT BEFORE THE ASSESSING AUTHORITY WHEN THE CASE IS TAKEN UP FOR ASSESSMENT THAT EITHER WHOLE OR PART THEREOF WAS NOT LIABLE TO FORM PART OF THE TAXABLE INCOME AND THAT THE TAX PAID ON THE BASIS OF SELF-ASSESSMENT WAS NOT LIABLE TO BE PAID, AND THE ASSESSING AUTHORITY, IF IT FINDS THAT EITHER THE WHOLE INCOME OR PART THEREOF WAS NOT LIABLE TO BE INCLUDED IN THE TAXABLE INCOME, IS BOUND TO GIVE EFFECT TO THE CLAIM OF THE ASSESSEE AND COMPUTE THE TOTAL INCOME OF THE ASSESSEE IN ACCORDANCE WITH LAW AND NOT ACCEPT SELF-ASSESSMENT REGARDING HIS TOTAL INCOME.' 32. THE HONBLE SUPREME COURT IN THE CASE OF CIT VS. SHELLY PRODUCTS (261 ITR 367) THAT : ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 6 ' WE FIND CONSIDERABLE FORCE IN THE SUBMISSION OF THE REVENUE AND IT MUST BE UPHELD. WE HAVE EARLIER NOTICED THE SCHEME OF THE ACT. SECTION 4 OF THE ACT CREATES THE CHARGE AND PROVIDES INTER ALIA FOR PAYMENT OF TAX IN ADVANCE OR DEDUCTION OF TAX AT SOURCE. THE ACT PROVIDES FOR THE MANNER IN WHICH ADVANCE TAX IS TO BE PAID AND PENALISES ANY ASSESSEE WHO MAKES A DEFAULT OR DELAYS PAYMENT THEREOF. SIMILARLY THE DEDUCTION OF TAX AT SOURCE IS ALSO PROVIDED FOR IN THE ACT AND FAILURE TO COMPLY WITH THE PROVISIONS ATTRACTS THE PENAL PROVISIONS AGAINST THE PERSON RESPONSIBLE FOR MAKING THE PAYMENT. IT IS, THEREFORE, QUITE APPARENT THAT THE ACT ITSELF PROVIDES FOR PAYMENT OF TAX IN THIS MANNER BY THE ASSESSEE. THE ACT ALSO ENJOINS UPON THE ASSESSEE THE DUTY TO FILE A RETURN OF INCOME DISCLOSING HIS TRUE INCOME. ON THE BASIS OF THE INCOME SO DISCLOSED, THE ASSESSEE IS REQUIRED TO MAKE A SELF-ASSESSMENT AND TO COMPUTE THE TAX PAYABLE ON SUCH INCOME AND TO PAY THE SAME IN THE MANNER PROVIDED BY THE ACT. THUS THE FILING OF RETURN AND THE PAYMENT OF TAX THEREON COMPUTED AT THE PRESCRIBED RATES AMOUNTS TO AN ADMISSION OF TAX LIABILITY WHICH THE ASSESSEE ADMITS TO HAVE INCURRED IN ACCORDANCE WITH THE PROVISIONS OF THE FINANCE ACT AND THE INCOME TAX ACT. BOTH THE QUANTUM OF TAX PAYABLE AND ITS MODE OF RECOVERY ARE AUTHORIZED BY LAW. THE LIABILITY TO PAY INCOME TAX CHARGEABLE UNDER SECTION 4(1) OF THE ACT THUS, DOES NOT DEPEND ON THE ASSESSMENT BEING MADE. AS SOON AS THE FINANCE ACT PRESCRIBES THE RATE OR RATES FOR ANY ASSESSMENT YEAR, THE LIABILITY TO PAY THE TAX ARISES. THE ASSESSEE IS HIMSELF REQUIRED TO COMPUTE HIS TOTAL INCOME AND PAY THE INCOME TAX THEREON WHICH INVOLVES A PROCESS OF SELF-ASSESSMENT. SINCE ALL THIS IS DONE UNDER AUTHORITY OF LAW, THERE IS NO SCOPE FOR CONTENDING THAT ARTICLE 265 IS VIOLATED.' 33. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE HUF HAS DECLARED THE INCOME ARISING OUT OF TRANSFER OF PROPERTY VIDE JOINT ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 7 DEVELOPMENT AGREEMENT DATED 16.9.2004 IN THE HANDS OF HUF FOR A.YS. 2007-08 AND 2008- 09 AND PAID TAX ON 5.8.2009 CONSEQUENT TO THE NOTICE ISSUED TO THE ASSESSEE U/S. 153A OF THE ACT ON 9.9.2009. FOR A.Y. 2006-07 THE HUF HAS FILED THE RETURN OF INCOME ON THE SAME DATE ADMITTING LONG TERM CAPITAL GAINS WHICH WAS FILED CONSEQUENT TO THE SEARCH ACTION AND NOTICE WAS ISSUED U/S. 153C OF THE ACT ON 9.9.2009. FOR A.YS. 2007-08 ALSO RETURN OF INCOME WAS FILED ON 5.8.2010 CONSEQUENT TO THE NOTICE ISSUED U/S. 153C ON 9.9.2009. FURTHER, THE ASSESSMENT WAS FRAMED FOR THESE ASSESSMENT YEARS U/S. 143(3) R.W.S. 153C OF THE ACT. ONCE THE DEPARTMENT ACCEPTED THE RETURN OF INCOME DECLARED BY THE HUF ARISING OUT OF TRANSFER OF CAPITAL ASSET VIDE DEVELOPMENT AGREEMENT DATED 16.9.2004 IT IS NOT PROPER TO TAX THE SAME IN THE HANDS OF THE ASSESSEE IN ANY ASSESSMENT YEAR WHICH AMOUNTS TO DOUBLE TAXATION. ACCORDINGLY, WE ARE INCLINED TO HOLD THAT THE LOWER AUTHORITIES ARE NOT JUSTIFIED IN TAXING THE CAPITAL GAIN ARISING OUT OF TRANSFER OF CAPITAL ASSET VIDE DEVELOPMENT AGREEMENT DATED 16.9.2004. ACCORDINGLY, WE DELETE THE ADDITION AND OTHER GROUNDS ON THIS ISSUE ARE DISMISSED AS INFRUCTUOUS. IN THE RESULT, ITA NO. 771/HYD/2013 IS PARTLY ALLOWED. 3.3 THE ABOVE ORDER OF THE CO-ORDINATE BENCH SUPPORTS THE CLAIM OF THE ASSESSEE. 3.4 FURTHER, THE TRIBUNAL IN THE CASE OF M/S. BINJUSARI A PROPERTIES PVT. LTD. VS. ACIT IN ITA NO. 157/HYD/20 11 FOR A.Y. 2006-07 VIDE ORDER DATED 4.4.2014 HELD AS FOLL OWS: '9. WE HEARD BOTH SIDES AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AND OTHER MATERIAL ON RECORD. THE SHORT DISPUTE ARISING FOR CONSIDERATION IN THIS CASE RELATES TO THE YEAR OF ASSESSABILITY OF CAPITAL GAINS ARISING ON THE PROPERTY, WHICH WAS SUBJECT MATTER OF A DEVELOPMENT AGREEMENT, I.E. WHETHER IT IS ASSESSABLE IN THE YEAR IN WHICH THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 8 DEVELOPMENT AGREEMENT WAS ENTERED INTO, AS DONE BY THE ASSESSING OFFICER, OR IN THE RELEVANT SUBSEQUENT YEAR IN WHICH THE AREA DULY DEVELOPED AND CONSTRUCTED COMING TO THE SHARE OF THE ASSESSEE-OWNER HAS BEEN HANDED OVER TO THE ASSESSEE. THOUGH IT WAS INITIALLY HELD BY VARIOUS BENCHES OF THE TRIBUNAL THAT CAPITAL GAINS ARE TO BE ASSESSED IN THE YEAR IN WHICH DEVELOPMENT AGREEMENT HAS BEEN ENTERED INTO BETWEEN THE OWNER AND THE DEVELOPER, CONSIDERING THE FACT THAT IN MANY CASES, THE DEVELOPMENT AGREEMENT WAS NOT ACTED UPON BY THE DEVELOPER, DIFFERENT VIEWS HAVE TO BE EXPRESSED, AS TO THE YEAR OF ASSESSABILITY, BASED ON THE FACTS AND CIRCUMSTANCES OF EACH CASE. THIS POSITION HAS BEEN EXAMINED AT LENGTH IN THE LIGHT OF CASE- LAW ON THE POINT, IN THE CASE OF SMT. K. RADHIKA AND OTHERS (SUPRA) AND IT WAS ULTIMATELY HELD BY THE COORDINATE BENCH OF THIS TRIBUNAL AS FOLLOWS- 48. WE ARE IN CONSIDERED AGREEMENT WITH THE VIEWS SO EXPRESSED IN THIS COMMENTARY ON THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT. IT IS THUS CLEAR THAT 'WILLINGNESS TO PERFORM' FOR THE PURPOSES OF SECTION 53A IS SOMETHING MORE THAN A STATEMENT OF INTENT; IT IS THE UNQUALIFIED AND UNCONDITIONAL WILLINGNESS ON THE PART OF THE VENDEE TO PERFORM ITS OBLIGATIONS. 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 PERFORMED, IT CANNOT BE SAID THAT THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT WILL COME INTO PLAY ON THE FACTS OF THAT CASE. IT IS ONLY ELEMENTARY THAT, UNLESS PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT ARE SATISFIED ON THE FACTS OF A CASE, THE TRANSACTION IN QUESTION CANNOT FALL WITHIN THE SCOPE OF DEEMED TRANSFER UNDER SECTION 2(47)(V) OF THE IT ACT. LET US THEREFORE CONSIDER WHETHER THE TRANSFEREE, ON THE FACTS OF THE PRESENT CASE, CAN BE SAID TO ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 9 HAVE 'PERFORMED OR IS WILLING TO PERFORM' ITS OBLIGATIONS UNDER THE AGREEMENT. 49. EVEN A CURSORY LOOK AT THE ADMITTED FACTS OF THE CASE WOULD SHOW THAT THE TRANSFEREE HAD NEITHER PERFORMED NOR WAS IT WILLING TO PERFORM ITS OBLIGATION UNDER THE AGREEMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE AGREEMENT BASED ON WHICH CAPITAL GAINS ARE SOUGHT TO BE TAXED IN THE PRESENT CASE IS AGREEMENT DATED 11.05.2005 BUT THIS AGREEMENT WAS NOT ADHERED TO BY THE TRANSFEREE. THE TRANSFEREE ORIGINALLY MADE A PAYMENT OF RS. 10 LAKHS ON 11.5.2005 AND ANOTHER PAYMENT OF RS. 90 LAKHS ON THE SAME DAY AS REFUNDABLE SECURITY DEPOSIT. HOWEVER, OUT OF THIS A SUM OF RS. 50 LAKHS WAS SAID TO BE REFUNDED BY THE LANDLORD TO THE DEVELOPER ON 5.3.2009. AS SUCH, THE ASSESSEE HAS RECEIVED ONLY A MEAGRE AMOUNT AS REFUNDABLE SECURITY DEPOSIT WHICH CANNOT BE CONSTRUED AS RECEIPT OF PART OF SALE CONSIDERATION. ADMITTEDLY, THERE IS NO PROGRESS IN THE DEVELOPMENT AGREEMENT IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THE MUNICIPAL SANCTION FOR DEVELOPMENT WAS OBTAINED NOT IN THIS ASSESSMENT YEAR AND IT WAS OBTAINED ONLY ON 17.09.2006 FROM THE HYDERABAD URBAN DEVELOPMENT AUTHORITY. THE SANCTION OF THE BUILDING PLAN IS UTMOST IMPORTANT FOR THE IMPLEMENTATION OF THE AGREEMENT ENTERED BETWEEN THE PARTIES. WITHOUT SANCTION OF THE BUILDING PLAN, THE VERY GENESIS OF THE AGREEMENT FAILS. TO ENABLE THE EXECUTION OF THE AGREEMENT, FIRSTLY, PLAN IS TO BE APPROVED BY THE COMPETENT AUTHORITY. IN FACT, THE BUILDING PLAN WAS NOT GOT APPROVED BY THE BUILDER IN THE ASSESSMENT YEAR UNDER CONSIDERATION. UNTIL PERMISSION IS GRANTED, A DEVELOPER CANNOT UNDERTAKE CONSTRUCTION. AS A RESULT OF THIS LAPSE BY THE TRANSFEREE, THE CONSTRUCTION WAS NOT TAKEN PLACE IN THE ASSESSMENT YEAR UNDER CONSIDERATION. THERE IS A BREACH AND BREAK DOWN OF DEVELOPMENT AGREEMENT IN THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 10 ASSESSMENT YEAR UNDER CONSIDERATION. NOTHING IS BROUGHT ON RECORD BY AUTHORITIES TO SHOW THAT THERE WAS DEVELOPMENT ACTIVITY IN THE PROJECT DURING THE ASSESSMENT YEAR UNDER CONSIDERATION AND COST OF CONSTRUCTION WAS INCURRED BY THE BUILDER/DEVELOPER. HENCE IT IS TO BE INFERRED THAT NO AMOUNT OF INVESTMENT BY THE DEVELOPER IN THE CONSTRUCTION ACTIVITY DURING THE ASSESSMENT YEAR IN THIS PROJECT AND IT WOULD AMOUNT TO NON-INCURRING OF REQUIRED COST OF ACQUISITION BY THE DEVELOPER. IN THE ASSESSMENT YEAR UNDER CONSIDERATION, IT IS NOT POSSIBLE TO SAY WHETHER THE DEVELOPER PREPARED TO CARRY OUT THOSE PARTS OF THE AGREEMENT TO THEIR LOGICAL END. THE DEVELOPER IN THIS ASSESSMENT YEAR HAD NOT SHOWN ITS READINESS OR HAVING MADE PREPARATION FOR THE COMPLIANCE OF THE AGREEMENT. THE DEVELOPER HAS NOT TAKEN STEPS TO MAKE IT ELIGIBLE TO UNDERTAKE THE PERFORMANCE OF THE AGREEMENT WHICH ARE THE PRIMARY INGREDIENT THAT MAKE A PERSON ELIGIBLE AND ENTITLED TO MAKE THE CONSTRUCTION. THE ACT AND CONDUCT OF THE DEVELOPER IN THIS ASSESSMENT YEAR SHOWS THAT IT HAD VIOLATED ESSENTIAL TERMS OF THE AGREEMENT WHICH TEND TO SUBVERT THE RELATIONSHIP ESTABLISHED BY THE DEVELOPMENT AGREEMENT. BEING SO, IT WAS CLEAR THAT IN THE YEAR UNDER CONSIDERATION, THERE WAS NO TRANSFER OF NOT ONLY THE FLATS AS SUPERSTRUCTURE BUT ALSO THE PROPORTIONATE LAND BY THE ASSESSEE UNDER THE JOINT DEVELOPMENT AGREEMENT. AS PER CLAUSE NO. 12.11 AND 19.1 OF DEVELOPMENT AGREEMENT-CUM POWER OF ATTORNEY, TIME IS THE ESSENCE OF THE CONTRACT AND AS PER CLAUSE NO. 12.11 THE SAID PROPERTY IS TO BE DEVELOPED AND HAND OVER THE POSSESSION OF THE OWNERS ALLOCATION TO THE OWNERS AND OR THEIR NOMINEES WITHIN 24 MONTHS FROM THE DATE OF RECEIVING THE SANCTION OF THE PLAN FROM HUDA AND MUNICIPALITY/GRAM PANCHAYAT WITH A FURTHER GRACE PERIOD OF 3 MONTHS. BUT THE FACT REMAINS THAT THE TRANSFEREE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 11 WAS NOT ONLY FAILED TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT, BUT ALSO UNWILLING TO PERFORM ITS OBLIGATIONS IN THE ASSESSMENT YEAR UNDER CONSIDERATION. EVEN OTHERWISE, THE ASSESSING AUTHORITIES HAS NOT BROUGHT ON RECORD THE ACTUAL POSITION OF THE PROJECT EVEN AS ON THE DATE OF ASSESSMENT OR HE HAS NOT RECORDED THE FINDINGS WHETHER THE DEVELOPER STARTED THE CONSTRUCTION WORK AT ANY TIME DURING THE ASSESSMENT YEAR UNDER CONSIDERATION OR ANY DEVELOPMENT HAS TAKEN PLACE IN THE PROJECT IN THE RELEVANT PERIOD. HE WENT ON TO PROCEED ON THE SOLE ISSUE WITH REGARD TO HANDING OVER THE POSSESSION OF THE PROPERTY TO THE DEVELOPER IN PART PERFORMANCE OF THE DEVELOPMENT AGREEMENT-CUM-GENERAL POWER OF ATTORNEY. IN OUR OPINION, THE HANDING OVER OF THE POSSESSION OF THE PROPERTY IS ONLY ONE OF THE CONDITION U/S 53A OF THE TRANSFER OF PROPERTY ACT BUT IT IS NOT THE SOLE AND ISOLATED CONDITION. IT IS NECESSARY TO GO INTO WHETHER OR NOT THE TRANSFEREE WAS 'WILLING TO PERFORM' ITS OBLIGATION UNDER THESE CONSENT TERMS. WHEN TRANSFEREE, BY ITS CONDUCT AND BY ITS DEEDS, DEMONSTRATES THAT IT IS UNWILLING TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT IN THIS ASSESSMENT YEAR, THE DATE OF AGREEMENT CEASES TO BE RELEVANT. IN SUCH A SITUATION, IT IS ONLY THE ACTUAL PERFORMANCE OF TRANSFEREE'S OBLIGATIONS WHICH CAN GIVE RISE TO THE SITUATION ENVISAGED IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. ON THESE FACTS, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSFEREE WAS WILLING TO PERFORM ITS OBLIGATIONS IN THE FINANCIAL YEAR IN WHICH THE CAPITAL GAINS ARE SOUGHT TO BE TAXED BY THE REVENUE. WE HOLD THAT THIS CONDITION LAID DOWN UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS NOT SATISFIED IN THIS ASSESSMENT YEAR. ONCE WE COME TO THE CONCLUSION THAT THE TRANSFEREE WAS NOT 'WILLING TO PERFORM', AS STIPULATED BY AND WITHIN MEANINGS ASSIGNED TO THIS EXPRESSION UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, ITS ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 12 CONTRACTUAL OBLIGATIONS IN THIS PREVIOUS YEAR RELEVANT TO THE PRESENT ASSESSMENT YEAR, IT IS ONLY A COROLLARY TO THIS FINDING THAT THE DEVELOPMENT AGREEMENT DT. 11.5.2005 BASED ON WHICH THE IMPUGNED TAXABILITY OF CAPITAL GAIN IS IMPOSED BY THE AO AND UPHELD BY THE CIT(A), CANNOT BE SAID TO BE A 'CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT' AND, ACCORDINGLY, PROVISIONS OF SECTION 2(47)(V) CANNOT BE INVOKED ON THE FACTS OF THIS CASE CHATURBHUJ DWARKADAS KAPADIA V. CIT'S CASE (SUPRA) UNDOUBTEDLY LAYS DOWN A PROPOSITION WHICH, MORE OFTEN THAN NOT, FAVOURS THE REVENUE, BUT, ON THE FACTS OF THIS CASE, THE SAID JUDGMENT SUPPORTS THE CASE OF THE ASSESSEE INASMUCH AS 'WILLINGNESS TO PERFORM' HAS BEEN SPECIFICALLY RECOGNIZED AS ONE OF THE ESSENTIAL INGREDIENTS TO COVER A TRANSACTION BY THE SCOPE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. REVENUE DOES NOT GET ANY ASSISTANCE FROM THIS JUDICIAL PRECEDENT. THE VERY FOUNDATION OF REVENUE'S CASE IS THUS DEVOID OF LEGALLY SUSTAINABLE BASIS. 50. THAT IS CLEARLY AN ERRONEOUS ASSUMPTION, AND AN THE PROVISIONS OF DEEMED TRANSFER UNDER SECTION 2(47)(V) COULD NOT HAVE BEEN INVOKED ON THE FACTS OF THE PRESENT CASE AND FOR THE ASSESSMENT YEAR IN DISPUTE BEFORE US. IN THE PRESENT CASE, THE SITUATION IS THAT THE ASSESSEE HAS RECEIVED ONLY A MEAGRE AMOUNT' OUT OF TOTAL CONSIDERATION, THE TRANSFEREE IS AVOIDING ADHERING TO THE AGREEMENT AND THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO SHOW THAT THERE WAS ACTUAL CONSTRUCTION HAS BEEN TAKEN PLACE AT THE IMPUGNED PROPERTY IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO THERE IS NO EVIDENCE TO SHOW THAT THE RIGHT TO RECEIVE THE SALE CONSIDERATION WAS ACTUALLY ACCRUED TO THE ASSESSEE. WITHOUT ACCRUAL OF THE CONSIDERATION TO THE ASSESSEE, THE ASSESSEE IS NOT EXPECTED TO PAY CAPITAL GAINS ON THE ENTIRE AGREED SALES CONSIDERATION. WHEN ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 13 TIME IS ESSENCE OF THE CONTRACT, AND THE TIME SCHEDULE IS NOT ADHERED TO, IT CANNOT BE SAID THAT SUCH A CONTRACT CONFERS ANY RIGHTS ON THE VENDOR/LANDLORD TO SEEK REDRESSAL UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS AGREEMENT CANNOT, THEREFORE, BE SAID TO BE IN THE NATURE OF A CONTRACT REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. IT CANNOT, THEREFORE, BE SAID THAT THE PROVISIONS OF SECTION 2(47)(V) WILL APPLY IN THE SITUATION BEFORE US. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DESERVES TO SUCCEED ON REASON THAT THE CAPITAL GAINS COULD NOT HAVE BEEN TAXED IN THE IN THIS ASSESSMENT YEAR IN APPEAL BEFORE US. THE OTHER GROUNDS RAISED BY THE ASSESSEES IN THEIR APPEALS HAVE BECOME IRRELEVANT AT THIS POINT OF TIME AS WE HAVE HELD THAT PROVISIONS OF SECTION 2(47)(V) WILL NOT APPLY TO THE ASSESSEES IN THE ASSESSMENT YEAR UNDER CONSIDERATION. . 10. IN THE PRESENT CASE, ADMITTEDLY, WHAT HAS BEEN EXECUTED BY THE ASSESSEE IS A DEVELOPMENT AGREEMENT-CUM-GENERAL POWER OF ATTORNEY. A READING OF THE SAID AGREEMENT INDICATES THAT WHAT WAS HANDED OVER BY THE ASSESSEE TO THE DEVELOPER IS ONLY A PERMISSIVE POSSESSION. CLAUSE 5 OF THE SAID AGREEMENT DATED 2ND FEBRUARY, 2006, ON PAGE 3 THEREOF, SPECIFICALLY PROVIDES THAT FIRST PARTY ON SIGNING OF THIS AGREEMENT HAS PERMITTED THE DEVELOPER TO DEVELOP THE SCHEDULED LAND (EMPHASIS ADDED). AS PER CLAUSE 9 OF THE SAID AGREEMENT, CONSIDERATION RECEIVABLE BY THE ASSESSEE FROM THE DEVELOPER IS 38% OF THE RESIDENTIAL PART OF THE DEVELOPED AREA (WHICH WAS LATER REDUCED TO 33%, BY VIRTUE OF A SUPPLEMENTARY AGREEMENT EXECUTED ON 18.10.2007). THAT BEING SO, IT IS ONLY UPON RECEIPT OF SUCH CONSIDERATION IN THE FORM OF DEVELOPED AREA BY THE ASSESSEE IN TERMS OF THE DEVELOPMENT AGREEMENT, THE CAPITAL GAINS BECOMES ASSESSABLE IN THE HANDS OF THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 14 ASSESSEE. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE THIRD MEMBER BENCH OF THE TRIBUNAL IN THE CASE OF VIJAYA PRODUCTIONS PVT. LTD. V/S. ADDL. CIT (134 ITD 19) (TM). 11. EVEN THOUGH THE ASSESSEE IN TERMS OF RECITAL ON PAGE 2 OF THE SUPPLEMENTARY AGREEMENT DATED 3RD FEBRUARY, 2006, WAS TO RECEIVE A REFUNDABLE DEPOSIT OF RS. 2,00,00,016, THROUGH TWO CHEQUES, THE SAID DEPOSIT WAS TO BE REFUNDED ON THE COMPLETE HANDING OVER OF THE AREA FALLING TO THE SHARE OF THE FIRST PARTY, VIZ. THE ASSESSEE; AND IN THE EVENT OF FAILURE ON THE PART OF THE ASSESSEE IN REFUNDING SUCH DEPOSIT, THE SAME SHALL BE ADJUSTED AT THE TIME OF FINAL DELIVERY, BY THE DEVELOPER AGAINST THE AREA TO BE HANDED OVER TO THE ASSESSEE APPLYING A MUTUALLY AGREEABLE RATE. CONSIDERING THESE SPECIFIC CLAUSES AND PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE CAPITAL GAINS IN THE CASE ON HAND, ARE LIABLE TO BE TAXED ONLY IN THE YEAR, IN WHICH THE DEVELOPED AREA, COMING TO THE SHARE OF THE ASSESSEE, HAS BEEN HANDED OVER TO THE ASSESSEE, IN TERMS OF THE DEVELOPMENT AGREEMENT. IN THE PRESENT CASE, AS THE UNDISPUTED FACTS ON RECORD REVEAL, THE DEVELOPER HAS NOT UNDERTAKEN ANY DEVELOPMENTAL ACTIVITY TO EXECUTE THE CONSTRUCTION WORK EVEN TODAY, EVEN THOUGH IN THE FINAL SUPPLEMENTAL AGREEMENT DATED 18TH OCTOBER, 2007 PROVIDED EXTENSION OF TIME FOR THE EXECUTION OF THE CONSTRUCTION, BY STATING THAT THE CONSTRUCTION ACTIVITY SHOULD BE COMPLETED AND DEVELOPED AREA COMING TO THE SHARE OF THE ASSESSEE SHOULD BE HANDED OVER WITHIN A FURTHER TIME OF 48 MONTHS FROM THE DATE OF THAT SUPPLEMENTAL AGREEMENT. 12. IT IS AN UNDISPUTED FACT THAT AS ON DATE, THERE WAS NO DEVELOPMENTAL ACTIVITY ON THE LAND WHICH IS SUBJECT MATTER OF DEVELOPMENT AGREEMENT. THE PROCESS OF CONSTRUCTION HAS NOT BEEN EVEN INITIATED AND NO APPROVAL FOR THE CONSTRUCTION OF THE BUILDING IS OBTAINED. THUS, THE SALE CONSIDERATION IN THE FORM OF DEVELOPED AREA HAS NOT BEEN RECEIVED. MERE RECEIPT OF ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 15 REFUNDABLE DEPOSIT CANNOT BE TERMED AS RECEIPT OF CONSIDERATION. FURTHER, AS SUBMITTED , THE ASSESSING OFFICER CALCULATED THE CAPITAL GAIN ON THE ENTIRE LAND, EVEN THOUGH THE ASSESSEE HAS RETAINED 38% SHARE TO ITSELF. THE VALUATION WAS ALSO DISPUTED. THERE IS, THEREFORE, NO ACCRUAL OF INCOME IN FAVOUR OF THE ASSESSEE AS PER S. 48 OF THE ACT. DUE TO LAPSE ON THE PART OF THE TRANSFEREE, THE CONSTRUCTION HAS NOT TAKEN PLACE IN THE YEAR UNDER CONSIDERATION, AND IT HAS NOT COMMENCED EVEN NOW. IN THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WHEREIN WHILE THE ASSESSEE HAS FULFILLED ITS PART OF THE OBLIGATION UNDER THE DEVELOPMENT AGREEMENT, THE DEVELOPER HAS NOT DONE ANYTHING TO DISCHARGE THE OBLIGATIONS CAST ON IT UNDER THE DEVELOP AGREEMENT, THE CAPITAL GAINS CANNOT BE BROUGHT TO TAX IN THE YEAR UNDER APPEAL, MERELY ON THE BASIS OF SIGNING OF THE DEVELOPMENT AGREEMENT DURING THIS YEAR. WE ARE SUPPORTED IN THIS BEHALF BY THE DECISION OF THE TRIBUNAL DATED 3RD JANUARY, 2014 IN THE CASE OF FIBARS INFRATECH PVT. LTD. (SUPRA), WHEREIN IT WAS HELD AS FOLLOWS- 59. ON THESE FACTS, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSFEREE WAS WILLING TO PERFORM ITS OBLIGATIONS IN THE FINANCIAL YEAR IN WHICH THE CAPITAL GAINS ARE SOUGHT TO BE TAXED BY THE REVENUE. WE HOLD THAT THIS CONDITION LAID DOWN UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS NOT SATISFIED IN THIS ASSESSMENT YEAR. ONCE WE COME TO THE CONCLUSION THAT THE TRANSFEREE'S 'WILLING TO PERFORM' THE CONTRACT IS ASCERTAINABLE IN THE ASSESSMENT YEAR, AS STIPULATED BY AND WITHIN THE MEANINGS ASSIGNED TO THIS EXPRESSION UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT, ITS CONTRACTUAL OBLIGATIONS IN THIS PREVIOUS YEAR RELEVANT TO THE PRESENT ASSESSMENT YEAR, IT IS ONLY A COROLLARY TO THIS FINDING THAT THE DEVELOPMENT AGREEMENT DT. 15.12.2006, BASED ON WHICH THE IMPUGNED TAXABILITY OF CAPITAL GAIN IS IMPOSED BY THE AO AND UPHELD BY THE CIT(A), CANNOT BE SAID TO BE A 'CONTRACT OF THE NATURE REFERRED ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 16 TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT' AND, ACCORDINGLY, PROVISIONS OF SECTION 2(47)(V) CANNOT BE INVOKED ON THE FACTS OF THIS CASE. THE JUDGEMENT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA V. CIT (SUPRA) UNDOUBTEDLY LAYS DOWN A PROPOSITION WHICH, MORE OFTEN THAT NOT, FAVOURS THE REVENUE, BUT, ON THE FACTS OF THIS CASE, THE SAID JUDGMENT SUPPORTS THE CASE OF THE ASSESSEE INASMUCH AS 'WILLINGNESS TO PERFORM' HAS BEEN SPECIFICALLY RECOGNIZED AS ONE OF THE ESSENTIAL INGREDIENTS TO COVER A TRANSACTION BY THE SCOPE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THE REVENUE DOES NOT GET ANY ASSISTANCE FROM THIS JUDICIAL PRECEDENT. THE VERY FOUNDATION OF REVENUE'S CASE IS THUS DEVOID OF LEGALLY SUSTAINABLE BASIS. 60. THAT IS CLEARLY AN ERRONEOUS ASSUMPTION, AS THE PROVISIONS OF DEEMED TRANSFER UNDER SECTION 2(47)(V) COULD NOT HAVE BEEN INVOKED ON THE FACTS OF THE PRESENT CASE AND FOR THE ASSESSMENT YEAR IN DISPUTE BEFORE US. IN THE PRESENT CASE, THE SITUATION IS THAT THE ASSESSEE HAS NOT RECEIVED ANY CONSIDERATION, AND THERE IS NO EVIDENCE BROUGHT ON RECORD BY THE REVENUE AUTHORITIES TO SHOW THAT THERE WAS ACTUAL CONSTRUCTION TAKEN PLACE AT THE IMPUGNED PROPERTY IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION AND ALSO THERE IS NO EVIDENCE TO SHOW THAT THE RIGHT TO RECEIVE THE SALE CONSIDERATION WAS ACTUALLY ACCRUED TO THE ASSESSEE. WITHOUT ACCRUAL OF THE CONSIDERATION TO THE ASSESSEE, THE ASSESSEE IS NOT EXPECTED TO PAY CAPITAL GAINS ON THE ENTIRE AGREED SALES CONSIDERATION. WHEN TIME IS ESSENCE OF THE CONTRACT, AND THE TIME SCHEDULE IS 30 MONTHS TO COMPLETE CONSTRUCTION WITH ADDITIONAL GRACE PERIOD OF 6 MONTHS, IT CANNOT BE SAID THAT SUCH A CONTRACT CONFERS ANY RIGHTS ON THE VENDOR/ LANDLORD TO SEEK REDRESSAL UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS AGREEMENT CANNOT, THEREFORE, BE SAID TO BE IN THE NATURE OF A ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 17 CONTRACT REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT. IT CANNOT, THEREFORE, BE SAID THAT THE PROVISIONS OF SECTION 2(47)(V) WILL APPLY IN THE SITUATION BEFORE US. CONSIDERING THE FACTS AND CIRCUM-STANCES OF THE PRESENT CASE AS DISCUSSED ABOVE, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE DESERVES TO SUCCEED ON THE REASON THAT THE CAPITAL GAINS COULD NOT HAVE BEEN TAXED IN THE IN THIS ASSESSMENT YEAR IN APPEAL BEFORE US. 13. IN THE LIGHT OF THE FOREGOING DISCUSSION, WE SET ASIDE THE IMPUGNED ORDERS OF THE REVENUE AUTHORITIES AND HOLD THAT THE CAPITAL GAINS ON THE PROPERTY IN QUESTION CANNOT BE BROUGHT TO TAX IN THE YEAR UNDER APPEAL, AND CONSEQUENTLY DELETE THE ADDITION MADE BY THE ASSESSING OFFICER AND SUSTAINED BY THE CIT(A). ASSESSEES GROUNDS ON THIS ISSUE ARE ALLOWED. 3.5 FURTHER THE HONBLE HIGH COURT OF BOMBAY AT GOA IN ITS JUDGEMENT IN THE CASE OF CIT VS. SHRI SADIA SHAIKH IN TAX APPEAL NO. 11 AND 12 OF 2013 VIDE JUDGEMENT DATED 2 ND DECEMBER, 2013 HELD THAT THE POSSESSION AS CONTEMPLATED IN S. 53A OF TRANSFER OF PROPERTY ACT WAS, IN FACT, NOT HANDED OVER BY THE ASSESSEE TO THE DEVELO PER. IT HAS FURTHER BEEN FOUND THAT THE AGREEMENT ONLY PERM ITTED THE DEVELOPMENT TO BE CARRIED OUT BY THE DEVELOPER. IT HAS BEEN FOUND THAT THE ENTIRE CONTROL OVER THE PROPERT Y WAS, IN FACT, WITH THE ASSESSEE INASMUCH AS THE LICENCE TO CONSTRUCT THE PROPERTY WAS ALSO IN THE NAME OF THE ASSESSEE. IT WAS, THEREFORE, FOUND THAT EXECUTION OF THE AGREEMENT COULD NOT AMOUNT TO TRANSFER AS CONTEMPLA TED U/S. 53A OF THE TRANSFER OF PROPERTY ACT. 3.6 FOLLOWING THE SAME RATIO LAID DOWN BY THE ABOVE JUDGEMENTS, WE ARE INCLINED TO ALLOW THE GROUND TAK EN BY THE ASSESSEE. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 18 4. THE ASSESSEE RAISED AN ADDITIONAL GROUND IN THIS APPEAL THAT THE CIT(A) IS NOT JUSTIFIED IN NOT DIRE CTING THE AO TO DELETE THE INCOME FROM CAPITAL GAINS, ADMITTE D BY THE ASSESSEE FOR A.YS. 2006-07 AND 2007-08, SINCE T HE SAME INCOME WAS HELD TO BE ASSESSED IN THE A.Y. 200 5-06. 4.1 THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF THE ADDITIONAL GROUND STATING THAT THE ADDITIONAL G ROUND IS PURELY ON LEGAL ISSUE AND NO INVESTIGATION OF FA CTS IS REQUIRED AS THE FACTS ARE ALREADY AVAILABLE ON RECO RD. THE AR ALSO PLACED RELIANCE ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF S.R. KOSHTI VS. CIT (276 ITR 1 65) AND C. PAREKH & CO. VS. CIT (122 ITR 610) FOR THE PROPO SITION THAT AN INCOME CANNOT BE ASSESSED TWICE. 4.2 WE HAVE HEARD BOTH THE PARTIES. THIS ADDITIONAL GROUND IS DISMISSED AS INFRUCTUOUS AS WE HAVE ALREA DY ALLOWED THE ASSESSEE'S MAIN GROUND IN EARLIER PARA. 5. IN THE RESULT, ITA NO. 735/HYD/2013 IS PARTLY ALLOWED. ITA NO. 736/HYD/2013 (A.Y. 2006-07) 6. IN THIS APPEAL THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ASSESSMENT OF THE AO MENTIONING THE INCOME DECLARED AS RS. 6,93,054 AS AGAINST THE DECLARED INCOME OF RS. 46,25,600. 6.1 AT THE TIME OF HEARING, THE LEARNED AR NOT PRESSED THIS GROUND. ACCORDINGLY, THIS GROUND IS DISMISSED AS NOT PRESSED. 6.2 IN THE RESULT, ITA NO. 736/HYD/2013 IS DISMISSED. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 19 ITA NO. 737/HYD/2013 (A.Y. 2007-08) 7. IN THIS APPEAL THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 7,86,01,716 REPRESENTING THE CAPITAL GAINS ARISING OUT OF GIVING HIS LAND FOR DEVELOPMENT WITHOUT APPRECIATIN G THE FACT THAT POSSESSION OF THE PROPERTY WAS NOT GIVEN TO THE DEVELOPERS AND FURTHER THAT THE DEVELOPERS NEVER HA D INTENTION TO GO AHEAD WITH THE DEVELOPMENT OF THE PROPERTY. 7.1 FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COUR SE OF SEARCH PROCEEDINGS IN THE ASSESSEE'S CASE A DEVELOPMENT AGREEMENT EXECUTED BY THE ASSESSEE AND HIS FAMILY MEMBERS WAS FOUND AND SEIZED AS PAGE NOS. 27 TO 36 OF ANNEXURE A/GNY/RES/PO/01. THE SAME WAS A DRAFT DEVELOPMENT AGREEMENT CUM GPA EXECUTED BETWEE N THE ASSESSEE AND HIS FAMILY MEMBERS AND M/S. SREE KRISHNA VENTURES. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER CALLED FOR A COP Y OF DEVELOPMENT AGREEMENT AND CLARIFICATION IN THIS REG ARD FROM M/S. KRISHNA VENTURES P LTD. VIDE LETTER DATED 2-12- 2010, THE SAID PARTY SUBMITTED THAT THE ABOVE DEVELOPMENT AGREEMENT HAD BEEN ENTERED INTO 28-3-20 07 IN RESPECT OF LAND ADMEASURING AC. 67 AND GTS. 30 A T SURVEY NOS. 74, 82, 81 ETC, YELLAMPET. IT WAS ALSO STATED THAT THE COST OF DEVELOPMENT AGREEMENT AS PER THE REGISTERED DOCUMENT NO. 5384/04 WAS RS. 45 CRORES A ND THE SHARING RATIO BETWEEN THE OWNER AND THE DEVELOP ER WAS 33.33% AND 66.67%. POSSESSION OF THE LAND HAD BEEN HANDED OVER TO THE DEVELOPER FOR CONSTRUCTION OF RESIDENTIAL UNITS. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 20 7.2 SINCE IN TERMS OF THE ABOVE SAID DEVELOPMENT AGREEMENT CUM GPA DATED 28-3-2007, THE LAND OWNERS HAD HANDED OVER VACANT AND PEACEFUL POSSESSION OF T HE ENTIRE LAND TO THE DEVELOPER, THE ASSESSING OFFICER OPINED THAT THE SAID AGREEMENT, AS PER THE PROVISIONS OF S EC. 2(47)(V), CONSTITUTED A TRANSFER. HE NOTED THAT IN SEVERAL JUDICIAL PRONOUNCEMENTS, IT HAS BEEN HELD THAT ANY TRANSACTION WHICH ALLOWS THE POSSESSION TO BE TAKEN WOULD CONSTITUTE TRANSFER WITHIN THE MEANING OF SEC . 2(47); AND THAT ANY TRANSACTION WHICH INVOLVES A TR ANSFER OF TITLE IN FUTURE OR EXCHANGE OF A PROPERTY TO BE PUT UP IN FUTURE, WOULD NECESSARILY CONSTITUTE A 'TRANSFER', WITHIN THE MEANING OF SEC. 2(47)(V) OF THE ACT. FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE TRIBU NAL IN THE CASE OF SMT. SHANTHA VIDYA SAGAR ANNAM VS. ITO (ITA NO. 885/HYD/2003, DATED 9-6-2006). BESIDES, HE ALSO REFERRED TO THEIR DECISION IN THE CASE OF DR. MAYA SHENOY [124 TTJ (HYD) 692], HOLDING THAT THE DEVELOPMENT AGREEMENT HAS THE EFFECT OF TRANSFERRING THE LAND F ROM THE OWNER TO THE DEVELOPER. THE ASSESSING OFFICER ALSO RELIED ON THE DECISIONS IN THE CASES OF CHATURBHUJ DWARAKA DAS KAPADIA VS. CIT (260 ITR 491) (BOM) AND JASBIR SING H SARKARIA (2007 294 ITR 196 AAR). ACCORDINGLY, HE O PINED THAT IN THE INSTANT CASE ALSO, THE ASSESSEE WAS LIA BLE FOR CAPITAL GAINS IN THE FINANCIAL YEAR 2006-07, THE YE AR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO AN D THE 'TRANSFER' TOOK PLACE. 7.3 ON APPEAL, THE CIT(A) OBSERVED THAT IN ADDITION TO BEING EVIDENCED BY SEIZED MATERIAL, M/S. KRISHNA VENTURES PVT. LTD, VIDE THEIR LETTER DATED 2-12-201 0 HAD ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 21 ALSO CONFIRMED THAT THE IMPUGNED DEVELOPMENT AGREEMENT HAD INDEED BEEN ENTERED INTO IN RESPECT O F THE LAND ADMEASURING AC. 67 AND 30 GTS. AT SURVEY NOS. 74, 82, 81, ETC., YELLAMPET. THE COST THEREOF WAS RS. 45 CRORES AND THE SHARING RATIO BETWEEN THE LAND OWNER S AND THE DEVELOPER TOO HAD BEEN SPECIFIED AT 33.33% AND 66.67%, RESPECTIVELY. BESIDES, POSSESSION OF THE LA ND HAS ALSO BEEN HANDED OVER TO THE DEVELOPER FOR THE CONSTRUCTION OF RESIDENTIAL UNITS. UNDER THE CIRCUMSTANCES, IT IS CLEAR THAT IN THE LIGHT OF THE DECISION OF THE TRIBUNAL IN THE CASE OF DR. MAYA SHENOY (SUP RA), WHICH HAS BEEN CONSISTENTLY FOLLOWED BY THEM IN THE IR SUBSEQUENT DECISIONS, THERE WAS INDEED A 'TRANSFER' AS CONTEMPLATED U/S. 2(47)(V) OF THE ACT READ WITH THE PROVISIONS OF SEC. 53A OF TRANSFER OF PROPERTY ACT, 1882. 7.4 THE CIT(A) OBSERVED THAT THE VIEW TAKEN BY THE TRIBUNAL FINDS SUPPORT FROM THE VIEW OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA (SUPRA) AND ALSO OF THE HON'BLE AUTHORITY FOR ADVANCE RULING IN THE CASE OF JASBIR SINGH SARKARIA (SUPRA). BESIDES, IT IS SEEN THAT THE ITA T, COCHIN BENCH, IN THEIR RECENT DECISION DATED 28-9-2012 IN THE CASE OF G. SREENIVASAN VS. DCIT (ITA NO. 188/COCH/2 009) HAVE ALSO EXPRESSED A SIMILAR VIEW AFTER REFERRING TO THE ABOVE MENTIONED DECISION OF THE HON'BLE BOMB AY HIGH COURT. ACCORDINGLY, FOLLOWING THE ABOVE MENTI ONED JUDICIAL PRONOUNCEMENTS, IT IS OBSERVED THAT SINCE THE ASSESSEE AND OTHERS HAD ENTERED INTO THE ABOVE REFE RRED DEVELOPMENT AGREEMENT ON 28-3-2007 AND HAD ALSO GIV EN POSSESSION OF LAND FOR CONSTRUCTION OF RESIDENTIAL UNITS THEREON, ON THE SAID DATE ITSELF, THE CAPITAL GAINS ARISING ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 22 FROM SUCH TRANSFER WAS INDEED CHARGEABLE TO TAX IN THE ASSESSMENT YEAR 2007-08. 7.5 THE CIT(A) OBSERVED THAT THE CONTENTION OF THE ASSESSEE THAT THE ABOVE DEVELOPMENT AGREEMENT GAVE TO THE DEVELOPERS ONLY THE LIMITED RIGHT TO SE EK NECESSARY PERMISSION FROM AUTHORITIES AND TO ENTER THE PROPERTY AND CONSTRUCT BUILDINGS AS PER APPROVED PL ANS, AS OBSERVED BY THE TRIBUNAL COCHIN BENCH ALSO IN TH E ABOVE MENTIONED DECISION, IT IS A FACT THAT THE BUILDER/DEVELOPER CANNOT START ANY CONSTRUCTION, UN LESS PHYSICAL POSSESSION OF THE LAND IS HANDED OVER TO H IM. THE ASSESSEE HAS ADMITTED THAT BY WAY OF THE SAID AGREE MENT, THE DEVELOPER HAD BEEN AUTHORIZED TO ENTER UPON THE SCHEDULED PROPERTY AND DEVELOP THE SAME. THE VERY MENTION OF THIS FACT SHOWS THAT POSSESSION OF THE P ROPERTY WAS INDEED GIVEN ON THE SAID DATE ITSELF AS OTHERWI SE, THE DEVELOPERS COULD NOT HAVE ANY RIGHT TO ENTER INTO T HE PROPERTY ITSELF. THE TRIBUNAL, HYDERABAD BENCH ALSO IN THE CASE OF KRISHNA KUMAR D SHAH (HUF) VS. DCIT (ITA NO S. 1164 TO 1167 OF 2010 DATED 12-7-2012) HAVE OPINED T HAT THE POSSESSION NEED NOT BE NECESSARILY SOLE AND EXC LUSIVE POSSESSION, SO LONG AS THE TRANSFEREE IS ENABLED TO EXERCISE GENERAL CONTROL OVER PROPERTY AND TO MAKE USE OF IT FOR THE INTENDED PURPOSE. THEREFORE, THE CIT(A) DID NOT FIND ANY MERIT IN THE CONTENTION OF THE ASSESSEE TH AT THE DEVELOPMENT AGREEMENT AMOUNTED TO ONLY AN EMPTY PERMISSION TO ENTER THE PROPERTY AND CARRY ON CONSTRUCTION. 7.6 THE CIT(A) FURTHER OBSERVED THAT EVEN IF THE DEVELOPERS SUBSEQUENTLY DID NOT EVEN OBTAIN ANY ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 23 APPROVALS FROM THE LOCAL AUTHORITIES OR UNDERTOOK A NY CONSTRUCTION OF BUNGALOWS IN THE IMPUGNED LAND, AND EVEN IF THE LAND IS STANDING AS IT IS EVEN AFTER TH E LAPSE OF FIVE YEARS, THE DEVELOPMENT AGREEMENT DATED 28-3-20 07 CANNOT BE SAID TO HAVE LOST ITS LEGAL SANCTITY. CLE ARLY, THERE IS NO STIPULATION IN THE SAID AGREEMENT THAT THE AG REEMENT ITSELF WILL LAPSE OR WOULD BECOME INVALID IF CONSTR UCTION IS NOT UNDERTAKEN OR PLANS ARE NOT GOT APPROVED FROM T HE LOCAL AUTHORITIES WITHIN A CERTAIN PERIOD OF TIME. 7.7 THE CIT(A) OBSERVED THAT THE CONTENTION WITH REGARD TO WILLINGNESS OF THE DEVELOPER TO PERFORM ITS PART OF CONTRACT, THERE IS NO EVIDENCE TO THE EFFECT THAT N O SUCH WILLINGNESS EXISTED OR THERE WAS ANY CHANGE OR CANCELLATION OF THE PROPOSED DEVELOPMENT ITSELF. I N FACT, IN THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE HAD BEEN REQUIRED TO FURNISH ANY EVIDENCE REGARDING SUCH CANCELLATION, SO AS TO ESTABLISH THA T THE DEVELOPER WAS NOT WILLING TO PERFORM. HOWEVER, DESP ITE BEING GIVEN SUFFICIENT OPPORTUNITY, NO EVIDENCE TO THIS EFFECT COULD BE FURNISHED. IT IS TRUE THAT THE COND UCT OF THE PARTIES IS INDEED THE DETERMINING FACTOR IN REGARD TO SUCH TRANSACTIONS. HOWEVER, SUCH CONDUCT NEEDS TO BE ESTABLISHED BY WAY OF DOCUMENTARY EVIDENCE AND CANN OT BE INFERRED FROM THE MERE DELAY IN EXECUTION OF ANY AGREEMENT, WHICH ITSELF CAN BE ATTRIBUTABLE TO SO M ANY REASONS, OTHER THAN WILLINGNESS ITSELF. IT IS CLEAR THAT IN THE ABSENCE OF ANY EVIDENCE TO THE CONTRARY, THE WILLINGNESS OF THE DEVELOPER TO PERFORM IN THIS CAS E IS REQUIRED TO BE JUDGED ONLY FROM THE AVAILABLE DEVEL OPMENT AGREEMENT, WHICH INDEED SHOWS ABSOLUTE AND UNCONDITIONAL WILLINGNESS, WHICH IS NOT STUDDED WIT H ANY ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 24 CONDITION. THE CIT(A) OBSERVED THAT MERE FACT OF N OT OBTAINING PERMISSIONS OR NOT TAKING UP CONSTRUCTION ALONE CANNOT ESTABLISH THE DEVELOPER'S INTENT IN NOT PERF ORMING ITS PART. UNTIL AND UNLESS THE IMPUGNED DEVELOPMENT AGREEMENT IS ITSELF MODIFIED OR CANCELLED AND IT IS ESTABLISHED WITH EVIDENCE THAT THE PROJECT ITSELF H AS BEEN ABANDONED, IT CANNOT BE SAID THAT THE PARTIES THERE TO DO NOT INTEND TO THE TERMS THERE OF IN FUTURE ALSO OR THAT THE DEVELOPMENT AGREEMENT HAS BROKEN DOWN. 7.8 THE CIT(A) OBSERVED THAT EVEN IF THE DEVELOPER UNDE R THE DEVELOPMENT AGREEMENT WAS REQUIRED TO DEVELOP T HE PROPERTY AND HAND OVER THE POSSESSION OF LAND OWNER 'S SHARE WITHIN A PERIOD OF TWO YEARS FROM THE DATE OF RECEIVING SANCTION OF PLANS FROM THE LOCAL AUTHORIT IES AND EVEN IF THERE WAS A GRACE PERIOD OF SIX MONTHS ONLY THEREIN, IT IS CLEAR THAT THE SAID AGREEMENT DID NO T STIPULATE THAT IN THE CASE OF DELAY EXCEEDING SUCH TIME LIMITS, THE DEVELOPMENT AGREEMENT WOULD BE DEEMED A S CANCELLED OR ABANDONED. THE AR OF THE ASSESSEE CONTENDED BEFORE THE CIT(A) THAT THE CASE LAWS CITE D BY THE ASSESSING OFFICER ARE NOT APPLICABLE, AS IN THO SE CASES, POSSESSION OF PROPERTY HAD BEEN PASSED ON TO THE DEVELOPER AND THE PROPERTIES WERE ULTIMATELY TRANSF ERRED BY WAY OF SALE DEEDS, WHICH IS NOT EXISTING IN THE PRESENT CASE. HOWEVER, IT IS CLEAR THAT HANDING OVER OF POS SESSION IS UNDISPUTED IN THE INSTANT CASE ALSO. AS REGARDS THE ULTIMATE TRANSFER OF PROPERTIES, IT IS CLEAR THAT T ILL THE TIME THE IMPUGNED DEVELOPMENT AGREEMENT IS ITSELF RESCIN DED, THE ASSESSEE AND OTHERS CONTINUE TO HAVE AN ENFORCE ABLE RIGHT TO RECEIVE THE CONSIDERATION AS STIPULATED TH EREIN. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 25 7.9 THE CIT(A) OBSERVED THAT THE RELIANCE OF THE AR OF THE ASSESSEE IN THE CASE OF K. RADHIKA VS. DCIT [14 9 TTJ (HYD) 736], IT WAS HELD THAT HANDING OVER OF POSSES SION IS ONLY ONE OF THE CONDITIONS U/S. 53A OF THE TRANSFER OF PROPERTY ACT, IT IS NECESSARY TO GO INTO WHETHER TH E TRANSFEREE IS 'WILLING TO PERFORM' ITS OBLIGATION. THE TRIBUNAL FELT THAT IF THE TRANSFEREE, BY ITS CONDUC T AND ITS DEEDS, DEMONSTRATES THAT IT IS UNWILLING TO PERFORM ITS OBLIGATIONS UNDER THE AGREEMENT, THE DATE OF AGREEM ENT CEASES TO BE RELEVANT AND IN SUCH A SITUATION IT IS ONLY THE ACTUAL PERFORMANCE OF TRANSFEREE'S OBLIGATIONS WHIC H CAN GIVE RISE TO THE SITUATION ENVISAGED IN SEC. 53 OF THE TRANSFER OF THE PROPERTY ACT. IN THE CASE OF THE PR ESENT ASSESSEE HOWEVER, THE UNWILLINGNESS OF THE DEVELOPE R HAS NOT BEEN ESTABLISHED WITH ANY EVIDENCE. ON THE OTHE R HAND, SINCE THE DEVELOPMENT AGREEMENT CONTINUES TO REMAIN IN FORCE AND POSSESSION OF THE LANDS HAS BEE N TAKEN IN PART PERFORMANCE THEREOF, IT CAN BE REASON ABLY CONCLUDED THAT THE DELAY IN OBTAINING SANCTIONS FRO M MUNICIPAL AUTHORITIES OR INITIATION OF CONSTRUCTION ACTIVITIES MAY BE A CALCULATED MOVE OF THE PARTIES TO THE DEVELOPMENT AGREEMENT IN VIEW OF THE EXISTING MARKE T CONDITIONS. IN FACT, DESPITE BEING SUFFICIENT TIME AND OPPORTUNITY, THE ASSESSEE HAS FAILED TO ESTABLISH I TS CLAIM WITH ANY CORRESPONDENCE, INSTITUTION OF ANY LEGAL A CTION ETC, WHICH DOES INDICATE THAT THE AGREEMENT STAYS A S IT EXISTED ON THE DATE OF AGREEMENT ITSELF AND THE PRE SENT PLEA OF UNWILLINGNESS OF THE DEVELOPER HAS BEEN BRO UGHT IN ONLY WITH A VIEW TO DEFER TAX LIABILITIES OF THAT Y EAR. THEREFORE, HE WAS OF THE VIEW THAT SINCE THE UNWILL INGNESS OF THE DEVELOPER HAS NOT BEEN ESTABLISHED WITH ANY EVIDENCE IN THIS CASE, THE RATIO LAID DOWN IN THE C ASE OF K. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 26 RADHIKA AND OTHERS (SUPRA), IS NOT APPLICABLE IN TH E CASE BEFORE HIM. 7.10 ACCORDINGLY, THE CIT(A) HELD THAT SINCE THE ASSESSE E AND OTHERS HAD ENTERED INTO THE ABOVE MENTIONED DEVELOPMENT AGREEMENT ON 28-3-2007 AND HAD ALSO GIV EN POSSESSION OF LAND FOR CONSTRUCTION OF RESIDENTIAL UNITS THEREON, AND FURTHER BECAUSE THERE EXISTS NO EVIDEN CE REGARDING THE UNWILLINGNESS OF THE DEVELOPER TO ADH ERE TO THE SAID AGREEMENT, THE CAPITAL GAINS ARISING FROM THE IMPUGNED TRANSFER HAS BEEN RIGHTLY BROUGHT BY THE ASSESSING OFFICER TO TAX IN THE ASSESSMENT YEAR 200 7-08. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 7.11 WE HAVE DECIDED SIMILAR ISSUE IN PARAS 3.2 TO 3.6 I N ITA NO. 735/HYD/2013 WHEREIN WE HAVE ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, IN THE INSTANT CASE, THERE WAS NO DEVELOPMENT ACTIVITY BY THE DEVELOPER. WE CANNOT SAY THE CONDITION LAID DOWN U/S. 2(47)(V) OF THE ACT HAS BEEN FULFILLED. BEING SO, TAKING A CONSISTENT VIEW, WE ARE INCLINED TO ALLOW THIS GROUND OF THE ASSESSEE. 7.12 IN THE RESULT, ITA NO. 737/HYD/2013 IS ALLOWED. ITA NO. 738/HYD/2013 (A.Y. 2009-10) 8. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN NOT GIVING FULL RELIEF FOR THE VALUE OF GOLD AND JEWELLERY HELD BY THE FAMILY MEMBERS OF TH E ASSESSEE. 8.1 BRIEF FACTS OF THE CASE ARE THAT THE ONLY ISSUE IN THE A.Y. 2009-10 RELATES TO THE ADDITION OF RS. 17,47,5 12 TOWARDS UNACCOUNTED JEWELLERY. DURING THE COURSE O F ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 27 SEARCH PROCEEDINGS, JEWELLERY OF THE SAID VALUE, WE IGHING 1336.6 G WAS FOUND FROM THE RESIDENCE OF THE ASSESS EE, WHICH WAS ADMITTED AS BELONGING TO THE ASSESSEE HIM SELF, HIS WIFE, ELDER DAUGHTER AND DAUGHTER IN LAW. HOWEV ER, THE ASSESSEE COULD NOT SUBSTANTIATE SUCH CLAIM WITH PROPER EVIDENCE AND THE INVESTMENT IN GOLD JEWELLER Y WAS NOT PROPERLY EXPLAINED. DURING THE COURSE OF ASSESS MENT PROCEEDINGS, THE ASSESSEE WAS ONCE AGAIN GIVEN AN OPPORTUNITY TO SUBSTANTIATE HIS CLAIM. HOWEVER, NO EVIDENCE COULD BE FURNISHED TO SUBSTANTIATE THE SOU RCE OF ACQUISITION. ON THE OTHER HAND, THE ASSESSING OFFIC ER NOTICED THAT THERE WERE NO ENTRIES/ITEMS RELATING T O JEWELLERY IN THE CASH FLOW STATEMENT. IN THE ABSENC E OF ANY EXPLANATION, THE ENTIRE GOLD JEWELLERY OF RS. 17,47 ,512 WAS TREATED AS UNDISCLOSED INVESTMENT FOR THE ASSESSMEN T YEAR 2009-10. 8.2 ON APPEAL, THE CIT(A) OBSERVED THAT IN THE COURSE O F SEARCH, THE GOLD JEWELLERY, TOTALLY WEIGHING 1336.6 G WAS CLAIMED AS BELONGING TO THE ASSESSEE HIMSELF, HIS W IFE, ELDER DAUGHTER AND DAUGHTER-IN-LAW. THOUGH SUCH CLA IM COULD NOT BE ESTABLISHED WITH PROPER EVIDENCE, EXPL AINING THE SOURCE OF INVESTMENT IN JEWELLERY BY THE SAID P ERSONS EITHER IN THE COURSE OF SEARCH OR EVEN IN THE ASSES SMENT PROCEEDINGS, IT IS THE CONTENTION OF THE AR THAT IN VIEW OF INSTRUCTION NO. 1916 OF THE BOARD DT. 11-5-1994, NO ADDITION COULD HAVE BEEN MADE ON ACCOUNT OF JEWELLE RY. 8.3 AS REGARDS THE INSTRUCTION NO. 1916 STATED ABOVE, THE CIT(A) OBSERVED THAT THE SAID INSTRUCTION IS IN FACT IN THE NATURE OF A GUIDELINE FOR DEALING WITH THE JEWE LLERY FOUND IN THE COURSE OF SEARCH AND EFFECT SEIZURE OU T OF ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 28 SUCH JEWELLERY, IF THE SAME IS IN EXCESS OF THE LIM ITS PRESCRIBED THEREIN. SO FAR AS THE DECISION OF THE H ON'BLE KARNATAKA HIGH COURT IN THE CASE OF SMT. PATI DEVI VS ITO (240 ITR 727) IS CONCERNED, FROM THE SAID DECISION, IT IS CLEAR THAT THE HON'BLE COURT HAS APPROVED THE RETROSPECTIVE APPLICABILITY OF THE SAID INSTRUCTION ONLY, BUT THEY HAVE NOT HELD THAT THESE GUIDELINES WOULD APPL Y EVEN TO THE CONSIDERATION OF INVESTMENT IN UNACCOUNTED JEWELLERY IN THE COURSE OF ASSESSMENT PROCEEDINGS A LSO. HOWEVER, THE HON'BLE HIGH COURT HAVE INDEED MENTION ED IN THE SAID JUDGEMENT THAT THE LIMITS REGARDING WEI GHT IN THE SAID INSTRUCTION HAVE BEEN PRESCRIBED 'IN VIEW OF THE SOCIAL CIRCUMSTANCES PREVAILING IN THE COUNTRY'. CONSIDERING SUCH OBSERVATION, IN CONJUNCTION WITH T HE FACTS OF THE CASE, VARIOUS BENCHES OF THE TRIBUNAL HAVE OPINED THAT THE BENEFIT OF THE SAID INSTRUCTION, AF TER CONSIDERING BOTH ASPECTS, CAN BE GIVEN IN THE POST- SEARCH ASSESSMENTS ALSO WHILE DECIDING THE ISSUE OF UNACCO UNTED INVESTMENT IN JEWELLERY. THEREFORE, THE CIT(A) WAS OF THE VIEW THAT THE ISSUE IN THE INSTANT CASE ALSO IS REQ UIRED TO BE DECIDED AFTER CONSIDERING THE LIMITS GIVEN IN TH E SAID INSTRUCTION, COUPLED WITH THE SOCIO-ECONOMIC STATUS OF THE ASSESSEE HEREIN AND HIS FAMILY. 8.4 THE CIT(A) OBSERVED THAT IT IS CLEAR THAT NEITHER T HE ASSESSEE, NOR HIS WIFE, ELDER DAUGHTER OR DAUGHTER- IN-LAW, ARE ASSESSEES TO WEALTH TAX. HOWEVER, CONSIDERING THE FACT THAT THE ASSESSEE HAILS FROM A SOCIALLY WELL-OFF FA MILY AND IT IS CUSTOMARY IN THE STATE OF ANDHRA PRADESH TO R ECEIVE REASONABLE AMOUNT OF JEWELLERY AT THE TIME OF MARRI AGE AND OTHER SOCIAL FUNCTIONS, HE WAS OF THE CONSIDERE D VIEW THAT FULL BENEFIT OF THE SAID INSTRUCTION CAN BE GI VEN TO THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 29 WIFE OF THE ASSESSEE, HOLDING 500 G OF GOLD JEWELLE RY AS EXPLAINED ON THIS ACCOUNT. AS REGARDS THE ASSESSEE HIMSELF, IN VIEW OF THESE FACTORS, BENEFIT OF 100 G CAN BE GIVEN IN HIS OWN CASE ALSO. SO FAR AS THE DAUGHTER OF THE ASSESSEE IS CONCERNED, NO EVIDENCE IN RESPECT OF SP ECIFIC ACQUISITION OF GOLD JEWELLERY OUT OF ANY SOURCES IN HER CASE HAS BEEN PRODUCED AT ANY STAGE. ACCORDINGLY, EVEN I F BENEFIT OF THE SAID INSTRUCTION WAS GIVEN IN HER AS PECT ALSO IN THE COURSE OF SEARCH, NO SUCH BENEFIT COULD HAVE BEEN GIVEN AT THE ASSESSMENT STAGE. LIKEWISE, IN THE CAS E OF THE DAUGHTER-IN-LAW OF THE ASSESSEE ALSO, NO EVIDENCE REGARDING ANY ACQUISITION OF GOLD JEWELLERY BY HER COULD EVER BE PRODUCED. THE ASSESSEE HAS NOT EVEN PROVED THE SOCIAL STANDING OF HER PARENTS SO AS TO GIVE FULL B ENEFIT OF THE LIMITS AS PER THE SAID INSTRUCTION IN HER CASE. HOWEVER, CONSIDERING THE SOCIAL TRADITIONS, HE WAS OF THE VIEW THAT GOLD JEWELLERY TO THE EXTENT OF 250 G CAN BE CONSIDERED AS EXPLAINED ON ACCOUNT OF HER HOLDING. 8.5 THE CIT(A) HELD THAT OUT OF THE TOTAL GOLD JEWELLE RY OF 1336.6 G FOUND IN THE COURSE OF SEARCH, THAT TO THE EXTENT OF 850 G CAN BE CONSIDERED AS REASONABLY EXPLAINED. THE ASSESSING OFFICER IS THEREFORE, DIRE CTED TO CONSIDER THE DIFFERENCE OF 486.6 G ONLY AS UNEXPLAI NED INVESTMENT IN GOLD JEWELLERY. ACCORDINGLY, THE PROPORTIONATE ADDITION OF RS. 6,36,196 WAS SUSTAINE D BY HIM. AGAINST THIS THE ASSESSEE IS IN APPEAL BEFORE US. 8.6 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME FOR CONSIDE RATION IN THE CASE OF SRI CH. MALLA REDDY IN ITA NO. 773/H YD/ ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 30 2013. THE TRIBUNAL VIDE ORDER DATED 6.6.2014 HELD IN PARA 52 AS FOLLOWS: '52. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE CONTENTION OF THE ASSESSEE'S COUNSEL IS THAT THE JEWELLERY FOUND AT THE RESIDENCE OF THE ASSESSEE IS NOT ONLY BELONGS TO THE ASSESSEE BUT ALSO BELONGS TO THE FAMILY MEMBERS OF THE ASSESSEE AND THE SAME SHOULD BE CONSIDERED AS PER THE CBDT CIRCULAR 1916 DATED 11.5.1994. WE ACCEDE TO THE REQUEST OF THE ASSESSEE'S COUNSEL. IN OUR OPINION, IT IS APPROPRIATE TO REMIT THE ISSUE TO THE FILE OF THE AO WITH A DIRECTION THAT IF THE ASSESSEE PROVES THAT ALL THE FAMILY MEMBERS TO WHOM THE SAID GOLD JEWELLERY IS BELONGING ALONG WITH THE ASSESSEE WITH DOCUMENTARY EVIDENCE THAT THEY ARE STAYING UNDER A SINGLE ROOF WHERE THE SEARCH HAS TAKEN PLACE, THEN THE CORRESPONDING DEDUCTION IS TO BE GIVEN IN TERMS OF CBDT CIRCULAR (CITED SUPRA). THIS GROUND IS PARTLY ALLOWED FOR STATISTICAL PURPOSES.' 8.7 ACCORDINGLY, IN VIEW OF THE ABOVE ORDER OF THE TRIBUNAL, WE ARE INCLINED TO DIRECT THE AO TO GIVE CREDIT TO GOLD AND JEWELLERY TO EACH MEMBER OF THE ASSESSEE'S FAMILY MEMBERS IN TERMS OF CBDT CIRCULAR NO. 1916 DATED 11.5.1994 IF THEY ARE LIVING UNDER SINGLE ROOF AS S UPPORTED BY DOCUMENTARY EVIDENCE. THIS GROUND IS PARTLY ALL OWED. 8.8 IN THE RESULT, ITA NO. 738/HYD/2013 IS PARTLY ALLOWED. ITA NO. 739/HYD/2013 (A.Y. 2005-06) ITA NO. 740/HYD/2013 (A.Y. 2005-06) 9. IN BOTH THESE APPEALS, THE ASSESSEES RAISED THE SOL E GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDIT ION OF RS. 20,44,043 (IN ITA NO. 739/HYD/2013) AND RS. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 31 61,32,097 (IN ITA NO. 740/HYD/2013) REPRESENTING TH E CAPITAL GAINS ARISING OUT OF GIVING THE LAND FOR DEVELOPMENT WITHOUT APPRECIATING THE FACT THAT THE ASSESSEES HAVE ALREADY OFFERED THE SAME TO TAX IN D IFFERENT YEARS AS AND WHEN THE PROPERTIES WERE SOLD. 9.1 FOR THE SAKE OF BREVITY, AS THE FACTS ARE SIMILAR I N BOTH THE APPEALS, WE CONSIDER THE FACTS AS IN ITA N O. 739/HYD/2013 IN THE CASE OF M/S. G. NARASIMHA YADAV (HUF). DURING THE COURSE OF SEARCH A DEVELOPMENT AGREEMENT CUM GPA WAS FOUND AND SEIZED AT PAGE NO. 76 TO 90 OF ANNEXURE A/GNY/RES/PO/01 FROM THE PREMISES OF THE ASSESSEE. THE SAME HAD BEEN EXECUTED BY THE ASSESSEE AND OTHERS, ALONG WITH THEIR FAMILY MEMBER S, IN FAVOUR OF M/S. R.V. NIRMAN PVT. LTD ON 16-9-2004 AN D POSSESSION OF THE IMPUGNED LAND HAD BEEN HANDED OVE R TO THE DEVELOPER FOR CONSTRUCTION OF RESIDENTIAL UNITS . THE ASSESSING OFFICER NOTICED THAT THE LAND OWNERS POSS ESSED AC. 2.00 GTS. OF LAND IN SURVEY NO. 212 (PART), SIT UATED AT MADINAGUDA VILLAGE, SERILINGAMPALLY MANDAL SINCE 20 -9- 2001. THE INDIVIDUAL SHARE HOLDINGS OF 7 OWNERS OF THE SAID LAND WERE 10 GTS. EACH WHILE SMT. SAKUNTALA YA DAV AND THE ASSESSEE HUF OWNED 5 GTS. EACH. ALL OF THE SAME WAS GIVEN FOR DEVELOPMENT. THE LAND OWNERS AND DEVELOPERS WERE ENTITLED TO 36% AND 64% OF THE BUIL T UP AREA INCLUDING PARKING AND TERRACE, WHEREAS THE TOT AL CONSTRUCTED SPACE AS PER THE DEVELOPMENT AGREEMENT WAS SHOWN AT 70,000 SQUARE FEET. 9.2 SINCE IN TERMS OF THE ABOVE SAID DEVELOPMENT AGREEMENT CUM GPA DATED 16-9-2004, THE LAND OWNERS HAD HANDED OVER VACANT AND PEACEFUL POSSESSION OF T HE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 32 ENTIRE LAND TO THE DEVELOPER, THE ASSESSING OFFICER OPINED THAT THE SAID AGREEMENT, AS PER THE PROVISIONS OF S EC. 2(47)(V), CONSTITUTED A TRANSFER. HE NOTED THAT IN SEVERAL JUDICIAL PRONOUNCEMENTS, IT HAS BEEN HELD THAT ANY TRANSACTION WHICH ALLOWS THE POSSESSION TO BE TAKEN WOULD CONSTITUTE TRANSFER WITHIN THE MEANING OF SEC . 2(47): AND THAT ANY TRANSACTION WHICH INVOLVES A TR ANSFER OF TITLE IN FUTURE OR EXCHANGE OF A PROPERTY TO BE PUT UP IN FUTURE, WOULD NECESSARILY CONSTITUTE A 'TRANSFER', WITHIN THE MEANING OF SEC. 2(47). FOR THIS PROPOSITION, HE RELIED ON THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. SHANTHA VIDYA SAGAR ANNAM VS. ITO (ITA NO. 885/HYD/ 2003 DATED 9-6-2006). BESIDES, HE ALSO REFERRED TO THEIR DECISION IN THE CASE OF DR. MAYA SHENOY (SUPRA), HO LDING THAT THE DEVELOPMENT AGREEMENT HAS THE EFFECT OF TRANSFERRING THE LAND FROM THE OWNER TO THE DEVELOP ER. THE ASSESSING OFFICER ALSO RELIED ON THE DECISIONS IN T HE CASES OF CHATURBHUJ DWARAKADAS KAPADIA (SUPRA) AND JASBIR SINGH SARKARIA (SUPRA). ACCORDINGLY, HE OPINED THA T IN THE INSTANT CASE ALSO, THE ASSESSEE WAS LIABLE FOR CAPITAL GAINS IN THE FINANCIAL YEAR 2004-05, THE YEAR IN WH ICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO AND THE 'TRANSFER' TOOK PLACE. 9.3 ON APPEAL THE CIT(A) OBSERVED THAT THE FACT OF ENTERING INTO A DEVELOPMENT AGREEMENT WITH REGARD T O THE LAND ADMEASURING AC. 2.00 GTS. IN SURVEY NO. 212 (P ART) AT MADINAGUDA, SERILINGAMPALLY, AS EVIDENCED BY THE SEIZED MATERIAL ALSO, HAS NOT BEEN DISPUTED BY THE ASSESSEE AND OTHERS. IT IS ALSO A 'FACT THAT AS PER THE SAID DEVELOPMENT AGREEMENT, THE POSSESSION OF LAND HAD A LSO BEEN GIVEN TO THE DEVELOPER FOR CONSTRUCTION OF RES IDENTIAL ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 33 UNITS THEREON ON 16-9-2004 ITSELF. THE CONSIDERATI ON TO BE RECEIVED BY THE LAND OWNERS FOR FOREGOING THEIR SHARE IN THE SAID LAND HAD ALSO BEEN SPECIFIED IN THE SAID AGREEMENT, WHICH WAS 36% OF THE TOTAL CONSTRUCTED S PACE OF 70,000 SQ. FEET. UNDER THE CIRCUMSTANCES, IT IS CLEAR THAT IN THE LIGHT OF THE DECISION OF THE HON'BLE JURISDICTIONAL INCOME-TAX APPELLATE TRIBUNAL IN THE CASE OF DR. MAYA SHENOY (SUPRA), WHICH HAS BEEN CONSISTE NTLY FOLLOWED BY THEM IN THEIR SUBSEQUENT DECISIONS, THE RE WAS INDEED A 'TRANSFER' AS CONTEMPLATED U/S. 2(47)(V) O F THE ACT READ WITH THE PROVISIONS OF SEC. 53A OF TRANSFE R OF PROPERTY ACT, 1882. 9.4 THE CIT(A) OBSERVED THAT IT IS CLEAR THAT THE VIEW TAKEN BY THE TRIBUNAL FINDS SUPPORT FROM THE VIEW O F THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA (SUPRA) AND ALSO BY THE HON'BLE AUTHORITY FOR ADVANCE RULING IN THE CASE OF JASBIR SINGH SARKARIA (SUPRA). BESIDES, IT IS SEEN THAT THE HON 'BLE ITAT, COCHIN BENCH, IN THEIR RELATIVELY RECENT DECI SION DATED 28-9-2012 IN THE CASE OF G. SREENIVASAN (SUPR A) HAVE ALSO EXPRESSED A SIMILAR VIEW AFTER REFERRING TO THE ABOVE MENTIONED DECISION OF THE HON'BLE BOMBAY HIGH COURT ACCORDINGLY, FOLLOWING THE ABOVE MENTIONED JU DICIAL PRONOUNCEMENTS, IT IS CLEAR THAT SINCE THE ASSESSEE AND OTHERS HAD ENTERED INTO THE ABOVE REFERRED DEVELOPM ENT AGREEMENT ON 16-9-2004 AND HAD ALSO GIVEN POSSESSIO N OF LAND FOR CONSTRUCTION OF RESIDENTIAL UNITS THEREON, ON THE SAID DATE ITSELF, THE CAPITAL GAINS ARISING FROM SU CH TRANSFER WAS INDEED CHARGEABLE TO TAX IN THE ASSESS MENT YEAR 2005-06. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 34 9.5 THE CIT(A) OBSERVED AS REGARDS THE CONTENTION THAT THE ABOVE DEVELOPMENT AGREEMENT GAVE THE DEVELOPERS THE LIMITED RIGHT TO SEEK NECESSARY PERMISSION FROM AUTHORITIES AND TO ENTER THE PROPERTY AND CONSTRUCT BUILDINGS AS PER APPROVED PLANS ONLY, THAT AS OBSER VED BY THE COCHIN BENCH OF THE TRIBUNAL ALSO IN THE ABOVE MENTIONED DECISION, IT IS A FACT THAT THE BUILDER/D EVELOPER CANNOT START ANY CONSTRUCTION, UNLESS PHYSICAL POSS ESSION OF THE LAND IS HANDED OVER TO HIM. THEREFORE, HE FO UND NO MERIT IN THE CONTENTION OF THE ASSESSEE THAT THE DEVELOPMENT AGREEMENT AMOUNTED TO ONLY AN EMPTY PERMISSION TO ENTER THE PROPERTY AND CARRY ON CONSTRUCTION. OBVIOUSLY, THE DEVELOPERS COULD HAVE PUT IN THEIR EFFORTS AND MONEY INTO THE SAID PROJECT ONLY IN LIEU OF THEIR RIGHTS IN THE SAID LAND, WHICH HAD INDEED BEE N TRANSFERRED TO THEM BY WAY OF SUCH DEVELOPMENT AGREEMENT ITSELF. 9.6 AS REGARDS THE CONTENTION THAT CONSIDERATION FOR TH E TRANSFER WAS NEITHER RECEIVED NOR DID IT ACCRUE ON THE DATE OF ENTERING INTO THE DEVELOPMENT AGREEMENT, HE OBSE RVED THAT IT IS AN ESTABLISHED POSITION OF LAW THAT CONS IDERATION FOR TRANSFER CAN BE EVEN FUTURISTIC. HE PLACED REL IANCE IN THIS REGARD ON THE DECISION OF THE CHENNAI BENCH OF THE TRIBUNAL IN THE CASE OF R. KALANIDHI VS. ITO (122 T TJ 405). IN THE ASSESSEE'S CASE, THE CONSIDERATION TO BE REC EIVED IN LIEU OF SUCH TRANSFER HAD BEEN CLEARLY ASCERTAINED BY SPECIFYING THAT THE ASSESSEE AND OTHERS WERE TO GET 36% OF THE TOTAL CONSTRUCTED AREA OF 70,000 SQ. FEET. ACCO RDINGLY, THE COST OF CONSTRUCTION OF SUCH AREA WAS TO BE THE CONSIDERATION RECEIVED AND THE SAME WAS CATEGORICAL LY ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 35 SPECIFIED ON THE DATE OF ENTERING INTO THE DEVELOPM ENT AGREEMENT ITSELF. 9.7 THE CIT(A) OBSERVED THAT THE ASSESSEE FURTHER CONTENDED THAT THE ASSESSEE HAD OFFERED THE CAPITAL GAINS IN RESPECT OF THE ABOVE TRANSACTION IN THE RE TURNS FOR THE ASSESSMENT YEARS 2006-07 AND 2007-08 AND THAT T HE SAME WAS ACCEPTED BY THE DEPARTMENT. IT IS THEREFOR E CLAIMED THAT IN THE LIGHT OF THE DECISIONS MENTIONE D IN PARA 8.3 ABOVE, THE SAME INCOME COULD NOT HAVE BEEN BROUGHT TO TAX REPEATEDLY. HOWEVER, IT IS CLEAR THA T IN THE LIGHT OF THE DECISIONS CITED ABOVE, THE CORRECT YEA R IN WHICH SUCH CAPITAL GAINS WAS TO BE BROUGHT TO TAX I S ASSESSMENT YEAR 2005-06 ONLY. AS HELD BY THE COCHIN BENCH IN THE CASE OF G. SREENIVASAN (SUPRA), SUCH P LEA IS AGAINST THE SCHEME OF TAXATION AS IT IS A WELL SETT LED PROPOSITION OF LAW THAT TAX CAN BE LEVIED IN A PART ICULAR ASSESSMENT YEAR ONLY IN RESPECT OF THE INCOME ASSES SABLE IN THAT YEAR. IT HAS ALSO BEEN OPINED THAT IT IS NE ITHER THE PREROGATIVE OF THE ASSESSEE NOR OF THE ASSESSING OF FICER TO OFFER/ASSESS THE INCOME OF A PARTICULAR YEAR IN ANY OTHER YEAR. SINCE THE CAPITAL GAINS FROM THE ABOVE REFERR ED DEVELOPMENT AGREEMENT WAS RIGHTLY TAXABLE IN THE ASSESSMENT YEAR 2005-06, THE FACT OF ASSESSEE'S OFF ERING SUCH INCOME IN ANY OTHER YEAR CANNOT ALTER THIS POS ITION. ACCORDINGLY, THIS PLEA OF THE ASSESSEE IS ALSO NOT ACCEPTED AND THE CAPITAL GAIN IS HELD AS RIGHTLY BROUGHT TO. TAX IN THE ASSESSMENT YEAR 2005-06. AGAINST THIS THE ASSES SEES ARE IN APPEAL BEFORE US. 9.8 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR ADJU DI- ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 36 CATION IN ITA NO. 735/HYD/2013 IN EARLIER PARAS 3.2 TO 3.6 OF THIS ORDER IN THE CASE OF SRI G. NARASIMHA Y ADAV. FOLLOWING THE SAME RATIO AND TAKING A CONSISTENT VI EW, WE ARE INCLINED TO ALLOW THIS GROUND IN BOTH THE APPEA LS. 9.9 THE ASSESSEE RAISED AN ADDITIONAL GROUND IN THIS APPEAL THAT THE CIT(A) IS NOT JUSTIFIED IN NOT DIRE CTING THE AO TO DELETE THE INCOME FROM CAPITAL GAINS, ADMITTE D BY THE ASSESSEE FOR A.YS. 2006-07 AND 2007-08, SINCE T HE SAME INCOME WAS HELD TO BE ASSESSED IN THE A.Y. 200 5-06. 9.10 THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF THE ADDITIONAL GROUND STATING THAT THE ADDITIONAL G ROUND IS PURELY ON LEGAL ISSUE AND NO INVESTIGATION OF FA CTS IS REQUIRED AS THE FACTS ARE ALREADY AVAILABLE ON RECO RD. THE AR ALSO PLACED RELIANCE ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF S.R. KOSHTI VS. CIT (276 ITR 1 65) AND C. PAREKH & CO. VS. CIT (122 ITR 610) FOR THE PROPO SITION THAT AN INCOME CANNOT BE ASSESSED TWICE. 9.11 WE HAVE HEARD BOTH THE PARTIES. THIS ADDITIONAL GROUND IS DISMISSED AS INFRUCTUOUS AS WE HAVE ALREA DY ALLOWED THE ASSESSEE'S MAIN GROUND IN EARLIER PARA. 9.12 IN THE RESULT, ITA NOS. 739 AND 740/HYD/2013 ARE PARTLY ALLOWED. ITA NO. 741/HYD/2013 (A.Y. 2007-08) 10. IN THIS APPEAL THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 12,02,27,414 REPRESENTING THE CAPITAL GAINS ARISING OUT OF GIVING HER LAND FOR DEVELOPMENT WITHOUT APPRECIATIN G THE FACT THAT POSSESSION OF THE PROPERTY WAS NOT GIVEN TO THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 37 DEVELOPERS AND FURTHER THAT THE DEVELOPERS NEVER HA D INTENTION TO GO AHEAD WITH THE DEVELOPMENT OF THE PROPERTY. 10.1 SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ITA NO. 737/HYD/2013 FOR A.Y. 2007-08 IN THE CASE OF SRI G. NARASIMHA YADAV. FOLLOWING THE SAME RATIO AND TAKI NG A CONSISTENT VIEW, THIS GROUND OF THE ASSESSEE IS ALL OWED. 10.2 IN THE RESULT, ITA NO. 741/HYD/2013 IS ALLOWED. ITA NO. 742/HYD/2013 (A.Y. 2006-07) 11. THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 61,08,000 REPRESENTING THE ALLEGED UNDISCLOSED CONSIDERATION PAID FOR THE PURCHASE OF AGRICULTURAL LANDS AT JINNARAM DESPITE THE FACT NO EVIDENCE ATTRIBUTABLE FOR SUCH INVESTME NT HAS BEEN IN THE POSSESSION OF THE DEPARTMENT. 11.1 BRIEF FACTS OF THE CASE ARE THAT AS REGARDS THE ADDITION OF RS. 61,08,000/- IN THE ASSESSMENT YEAR 2006- 07, DURING THE COURSE OF SEARCH, DOCUMENTS SEIZED A S PAGE NOS. 11 TO 19 OF ANNEXURE A/GDY/02 FROM THE RESIDENCE OF THE ASSESSEE WERE THE SALE DEED, NO. 5735/2005, DATED 9-12-2005, EXECUTED BY SHRI KHETAN I VISRAM IN FAVOUR OF THE ASSESSEE AND HIS FAMILY IN RESPECT OF AGRICULTURAL LAND OF AC. 9.16 GTS. AT SURVEY NO. 324, OOTLA VILLAGE FOR RS. 3,93,500/-. PAGE NO. 1 TO 10 THEREOF WAS ANOTHER SALE DEED OF THE SAME DATE EXECUTED BY THE SAME VENDOR IN FAVOUR OF THE ASSESSEE AND HIS FAMIL Y FOR AGRICULTURAL LAND ADMEASURING AC. 12.08 GTS. AT THE SAME SURVEY NUMBER FOR RS. 3,93,500/- ONLY. IN HIS STAT EMENT RECORDED U/S. 132( 4) ON THE DAY OF SEARCH, THE ASS ESSEE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 38 STATED THAT THE ABOVE LANDS WERE PURCHASED FROM THE VENDORS FOR RS. 70 LAKHS AND THE AMOUNT PAID AS PER REGISTRATION WAS RS. 8,92,000/- THROUGH CHEQUE, WHI LE THE REMAINING AMOUNT WAS PAID IN CASH. SUBSEQUENTLY, HOWEVER, THE ASSESSEE RETRACTED FROM THE ABOVE STAT EMENT IN HIS SWORN DEPOSITION DATED 17-11-2008 AND CLAIME D THAT THE LAND WAS PURCHASED FOR RS. 8,92,000 ONLY O UT OF HIS REGULAR SOURCES OF INCOME. DURING THE COURSE O F ASSESSMENT PROCEEDINGS, THE ASSESSEE WAS ONCE AGAIN GIVEN AN OPPORTUNITY TO EXPLAIN THE FACT. HOWEVER, IT WAS REITERATED THAT THE SAME WAS PURCHASED FOR RS. 8,92 ,000 ONLY. 11.2 FROM THE STATEMENT U/S. 132(4), WHICH WAS RECORDED IN THE LOCAL LANGUAGE, VIZ., TELUGU ONLY, THE ASSESSING OFFICER OBSERVED THAT WHILE GIVING THE DE TAILS OF IMMOVABLE PROPERTIES OWNED BY HIM AND HIS FAMILY, T HE ASSESSEE HAD CLEARLY STATED THAT THEY HAD PURCHASED 35 ACRES OF LAND AT THE COST OF RS. 2 LAKHS PER ACRE A ND THAT THE TOTAL AMOUNT OF RS. 70 LAKHS WAS PAID TO THE LANDLORDS. IT WAS ALSO ADMITTED THAT THE REGISTERED VALUE PER ACRE WAS RS. 2,240 ONLY THOUGH HE HAD PURCHASED THE SAME FOR RS. 2 LAKHS PER ACRE. THE ASSESSEE HAD GIV EN THE DATE OF AGREEMENT AS OF OCT. 2005 AND REGISTRATION SPECIFICALLY AS 9-12-2005. HE HAD ALSO GIVEN DETAIL S OF MODE OF PAYMENT OF SALE CONSIDERATION, GIVING THE D ETAILS OF CHEQUE NOS. AND AMOUNTS TO THE VENDORS AND HAD CATEGORICALLY ADMITTED THAT THE BALANCE AMOUNT OF R S. 61 LAKHS WAS PART PAID ON THE AGREEMENT DATE AND PARTL Y ON THE DATE OF REGISTRATION. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER CONCLUDED THAT THE SAID STATEMENT U/S. 132(4) WAS AN EVIDENCE IN ITSELF AND THE REPLY OF T HE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 39 ASSESSEE THEREIN WAS VERY CLEAR AND UNAMBIGUOUS. BESIDES, HE NOTED THAT THE AGRICULTURAL LAND WAS SI TUATED IN THE VICINITY OF HYDERABAD AND THE FMV PER ACRE I N THOSE AREAS WAS RS. 2 LAKHS PER ACRE ONLY DURING TH E RELEVANT PERIOD. THE STATEMENT OF THE ASSESSEE FAI RLY MATCHED WITH SUCH MARKET VALUE OF THE PROPERTY AT JINNARAM, THEREFORE, IT WAS VERY LIKELY THAT THE SA ID 35 ACRES OF AGRICULTURAL LAND WAS PURCHASED FOR RS. 8, 92,000 ONLY. ACCORDINGLY, HE TREATED THE AMOUNT OF RS. 61,08,000 AS THE UNDISCLOSED INVESTMENT OF THE ASSE SSEE. 11.3 ON APPEAL, THE CIT(A) OBSERVED THAT THE VALUE OF RS . 2 LAKHS PER ACRE WAS ADMITTED BY THE ASSESSEE IN TH E SAID STATEMENT WAS INDEED AT PAR WITH THE FAIR MARKET VA LUE OF LANDS OF THE LOCALITY, WHICH ITSELF IS LOCATED IN T HE VICINITY OF HYDERABAD. ON GOING THROUGH THE FACTS MENTIONED IN THE STATEMENT U/S. 132(4), THE CIT(A) WAS OF THE CONSIDERED VIEW THAT THE SAME CANNOT BE CONSIDERED AS RECORDED UNDER ANY FORCE, THREAT, COERCION OR CONFU SION, AND ACCORDINGLY IN TERMS OF THE PROVISIONS OF SEC. 132( 4) ITSELF, WAS RIGHTLY ADOPTED AS AN EVIDENCE OF TRUE AND CORRECT INVESTMENT IN THE IMPUGNED LANDS, AS THE SA ME WAS EVEN SUPPORTED BY THE RATES FOUND AS PREVAILING IN THE CONCERNED LOCALITY AT THE RELEVANT TIME. ACCORD INGLY, THE ADDITION OF RS. 61,08,000/- AS UNDISCLOSED INVE STMENT OF THE ASSESSEE IN PURCHASE OF PROPERTY AT JINNARAM IS UPHELD BY THE CIT(A). AGAINST THIS, THE ASSESSEE I S IN APPEAL BEFORE US. 11.4 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. HEREIN THE ADDITION WAS MADE O N THE BASIS OF A STATEMENT RECORDED FROM THE ASSESSEE U/S . ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 40 132(4) OF THE ACT AT THE TIME OF SEARCH. LATER, TH E ASSESSEE FILED A LETTER DATED 15.12.2010 AD STATED THAT THE CONSIDERATION PAID WAS ONLY RS. 8.92 LAKHS. THERE W AS NO OTHER EVIDENCE OTHER THAN THE STATEMENT RECORDED U/ S. 132(4) OF THE ACT. THE DEPARTMENT ALSO EXAMINED TH E VENDOR WHO HAS ALSO CONFIRMED THAT THE CONSIDERATIO N RECEIVED IS RS. 8.92 LAKHS ONLY. THE ASSESSEE, IN THIS CASE, IS AGED ABOUT 70 YEARS. IN OUR OPINION, THE PATTERN OF ANSWERING GIVING MINUTE DETAILS WITH CHEQUE NUMB ERS AT THE ODD HOURS OF THE DAY BY A PERSON OF 70 YEARS OLD IS ITSELF UNUSUAL AND IT CANNOT BE CONSIDERED AS CONCL USIVE EVIDENCE. THE ADDITION CANNOT BE MADE ON PRESUMPTI VE BASIS. IN THE CASE OF SMT. SUSEELA SURESH MALGE VS . ACIT (55 SOT 45) (UR) (MUM) IT IS HELD THAT ADDITION MAD E BY THE AO ON THE BASIS OF STATEMENT RECORDED U/S. 132( 4) ALONE IS NOT JUSTIFIED, UNLESS THERE IS CORROBORATI VE EVIDENCE LINKING THE STATEMENT WITH UNDISCLOSED INC OME. 11.5 BEING SO, IN OUR OPINION, THE ADDITION CANNOT BE CONFIRMED IN THE ABSENCE OF CORROBORATIVE EVIDENCE. ACCORDINGLY, THE ADDITION IS DELETED. 11.6 IN THE RESULT, ITA NO. 742/HYD/2013 IS ALLOWED. ITA NO. 743/HYD/2013 (A.Y. 2007-08) 12. THE ASSESSEE IN THIS APPEAL RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 87,72,500 REPRESENTING THE ALLEGED UNDISCLOSED CONSIDERATION PAID FOR THE PURCHASE OF AGRICULTURAL LANDS AT VELLURU DESPITE THE FACT NO EVIDENCE ATTRIBUTABL E FOR SUCH INVESTMENT HAS BEEN IN THE POSSESSION OF THE DEPARTMENT. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 41 12.1 FACTS OF THE CASE ARE THAT THE ASSESSEE HAD PURCHASED ACRES 7 GUNTAS 39 OF AGRICULTURE LAND AT VELLURU VILLAGE WARANGAL MANDAL FOR RS. 27 LAKHS SR I DURGAIAH YADAV THE ASSESSEE IN HIS STATEMENT U/S 13 2(4) STATED THAT THE TOTAL CONSIDERATION PAID WAS RS. 87 ,72,500 AND THAT THE LAND WAS PURCHASED IN THE NAME OF HIS SON SRI SURESH YADAV. IN THE RETURN FILED U/S 153A THE ASSESSEE ADMITTED RS 27 LAKHS AS UNDISCLOSED INCOME . THE ASSESSING OFFICER TREATED THE ENTIRE SUM OF RS. 87,72.500 AS UNDISCLOSED INVESTMENT U/S 69C AND COMPLETED THE ASSESSMENT U/S 153A MAKING AN ADDITIO N OF RS. 87,72,500, IGNORING THE CLAIM OF THE ASSESSE E MADE IN THE LETTER DT 15.12.2010 FILED BEFORE HIM. THE CLAIM OF THE ASSESSEE IN BRIEF IS THAT WHAT IS STATED AT THE TIME OF SEARCH IS ON ACCOUNT OF CONFUSION. THE ACTUAL CONSIDERATION PAID IS RS. 27 LAKHS AND NOT RS. 87,7 2,500 STATED U/S 132(4). BEFORE THE CIT(A) THE ASSESSEE' S MAIN CLAIM IS THAT THE VENDORS WHEN EXAMINED ON OATH HAV E CONFIRMED THAT THEY HAD RECEIVED RS. 27 LAKHS ONLY AS SALE CONSIDERATION. HENCE THE STATEMENT U/S 132(4) ALON E CANNOT BE THE BASIS FOR ADDITION. THE CIT(A) REJEC TED THE CONTENTION OF THE ASSESSEE AND CONFIRMED THE ADDITI ON. AGAINST THIS, THE ASSESSEE IS IN APPEAL BEFORE US. 12.2 BEFORE US, WHILE REITERATING THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES, THE AR SUBMITTED THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT F OR A.Y. 2008-09 STATED THAT THE ASSESSEE HAD SOLD ONE OF HIS PROPERTIES FOR RS. 87,00,000 AND UTILIZED THE SALE PROCEEDS AS SOURCES FOR THE ACQUISITION OF LAND DISCUSSED IN A.Y. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 42 2007-08. THE RELEVANT PORTION OF THE ASSESSING OFF ICER FOR A.Y. 2008-09 IS AS UNDER: 'Q3. FURNISH THE DETAILS OF IMMOVABLE PROPERTIES OF YOURSELF, YOUR WIFE AND YOUR CHILDREN? ANS. IN THE YEAR 1972 I HAVE PURCHASED 400 SQ.YDS OF LAND SITUATED NEAR SEVEN TEMPLES, BOWENPALLY. THIS LAND WAS SOLD BY ME TO NAGARAJU (KARIMNAGAR) FOR RS. 87 LAKHS IN APRIL 2008. THIS LAND WAS REGISTERED IN THE SAME MONTH. I CONFIRM THAT I HAVE RECEIVED THIS AMOUNT OF RS. 87 LAKHS IN CASH. OUT OF THE AMOUNT RECEIVED BY THIS TRANSACTION I HAVE PAID RS. 67,78,500 TO V. SANKAR REDDY & CHAMAKURA MALLAREDDY AS PER THE AGREEMENT AND GOT REGISTERED THE LAND OF ACRE 7-39 GTS. AT VELLURU VILLAGE. THIS REGISTRATION IS WITH MY SON SHRI G. SURESH YADAV. LINKING BOTH THE REPLIES, WE GOT A CLEAR PICTURE. THE ASSESSEE PURCHASED A LAND FOR RS. 87,50,000. THE SOURCES WERE THAT FORM THE SALE OF PLOT FOR A CONSIDERATION OF RS. 87,00,000.' 12.3 THE AR SUBMITTED THAT THE SALE PROCEEDS OF RS. 87 LAKHS SEPARATELY BROUGHT TO TAX AS CAPITAL GAIN IN A.Y. 2008-09 MAY BE TELESCOPED AS SOURCES FOR THE ACQUIS ITION OF PROPERTY REFERRED TO THE A.Y. 2007-08. THE SOUR CE AND APPLICATION BOTH CANNOT BE CONSIDERED FOR TAXATION AT THE SAME TIME. CONSEQUENTLY THE ADDITION OF RS. 87,72, 500 MADE IN A.Y. 2007-08 MAY BE DELETED. 12.4 AS DISCUSSED IN EARLIER PARA IN ITA NO. 742/HYD/ 2013, HEREIN ALSO THE ADDITION IS MADE ON THE BASIS OF A STATEMENT RECORDED FROM THE ASSESSEE U/S. 132(4) OF THE ACT. IN OUR OPINION, THE STATEMENT RECORDED U/S. 1 32(4) ALONE CANNOT BE A BASIS FOR ADDITION IN THE ABSENCE OF ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 43 CORROBORATIVE MATERIAL. FOLLOWING THE ABOVE RATIO AND TAKING A CONSISTENT VIEW, WE ARE INCLINED TO DELETE THE ADDITION PLACING RELIANCE IN EARLIER PARA IN ITA NO . 742/ HYD/2013. THIS GROUND IS ALLOWED. 12.5 IN THE RESULT, ITA NO. 743/HYD/2013 IS ALLOWED. ITA NO. 744/HYD/2013 (A.Y. 2008-09) 13. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 86,76,307 REPRESENTING THE ALLEGED UNDISCLOSED LONG TERM CAPITAL GAINS ON SALE OF LANDS AT SEETHARAMPURAM DE SPITE THE FACT NO EVIDENCE ATTRIBUTABLE FOR SUCH INVESTME NT HAS BEEN IN THE POSSESSION OF THE DEPARTMENT. 13.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IN HIS STATEMENT U/S. 132(4) DATED 7-8-2008 HAD STATED THAT HE HAD SOLD 400 SQ. YARDS OF LAND AT BOWENPALLY TO SHRI NAGARAJU OF KARIMANGAR FOR RS. 87 LAKHS. AS PER TH E SALE DEED DATED 27-10-2007, HOWEVER, THE CONSIDERATION W AS RS. 32,22,000/- ONLY. THE ASSESSEE SUBSEQUENTLY RETRACTED FROM THE ADMISSION OF RECEIPT OF CONSIDER ATION OF RS. 87 LAKHS, CONTENDING THAT HE WAS UNDER CONFUSIO N ON THE DATE OF SEARCH, EVEN THOUGH HE HAD ADMITTED TO PAY TAX ON THE CAPITAL GAINS OF RS. 25,05,700/-, ADOPTI NG THE COST OF THE PLOT AS ON 1-4-1981 AT RS. 1,30,000/-. 13.2 ON A CONSIDERATION OF THE ISSUE, THE ASSESSING OFFICER NOTICED THAT IN HIS STATEMENT ON THE SAID D ATE, THE ASSESSEE HAD ALSO STATED HAVING PURCHASED AC. 7.39 GTS. OF LAND AT VELLURU VILLAGE FOR RS. 87,72,500/-. TH OUGH HE HAD LATER RETRACTED FROM SUCH STATEMENT, CONTENDING THAT THE SAID LAND WAS PURCHASED FOR RS. 27 LAKHS ONLY, HIS ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 44 STATEMENT CATEGORICALLY REFLECTED ADMISSION OF SALE CONSIDERATION OF RS. 87 LAKHS IN CASH FOR THE BOWEN PALLY PROPERTY, RECEIVED IN APRIL 2008. HE HAD FURTHER EXPLAINED THAT OUT OF THE SAID CASH, HE HAD PAID RS . 67,78,500/- TO V. SANKAR REDDY AND CH. MALLA REDDY FOR THE LAND AT VELLURU VILLAGE. THE ASSESSING OFFICER , THEREFORE, CONCLUDED THAT THE REPLIES OF THE ASSESS EE IN RESPECT OF THE TWO PROPERTIES TAKEN TOGETHER GIVE O UT THE CORRECT AND CLEAR PICTURE, SHOWING THAT THE LAND AT VELLURU VILLAGE WAS PURCHASED FOR RS. 87,50,500/- OUT OF TH E SALE CONSIDERATION OF RS. 87 LAKHS FROM SALE OF LAND AT SEETARAMPURAM VILLAGE, BOWENPALLY. EVEN OTHERWISE, HE OPINED THAT THE BOWENPALLY LAND WAS SITUATED IN A RESIDENTIAL AREA WITH A LAYOUT APPROVED AND THE EXI STING MARKET RATES IN THE AREA WAS RS. 25,000/- PER SQ. Y ARD IN THE YEAR 2007-08. THEREFORE, THE FMV OF THE PROPER TY APPROXIMATELY MATCHED WITH THE VALUE ADMITTED BY TH E ASSESSEE ON THE DAY OF SEARCH. HE ALSO FELT THAT T HE STATEMENT U/S. 132(4) IS AN EVIDENCE IN ITSELF. ACC ORDINGLY, HE OBTAINED THE COST OF THE PROPERTY AS ON 1-4-1981 FROM THE SRO @ RS. 12/- PER SQ. YARD, WHEREBY THE INDEXE D COST OF ACQUISITION CAME TO RS. 23,693/- AND THE CA PITAL GAINS WERE WORKED OUT AT RS. 86,76,307/-. THOUGH TH E ASSESSEE HAD OFFERED CAPITAL GAIN OF RS. 2,50,900/- IN THE ASSESSMENT YEAR 2009-10, HE CONCLUDED THAT CAPITAL GAINS OF RS. 86,76,307/- WERE TO BE TAXED IN THE ASSESSME NT YEAR 2008-09. 13.3 ON APPEAL THE CIT(A) OBSERVED THAT IN RESPECT OF SALE OF BOWENPALLI LAND ALSO, THE ASSESSEE IN THE STATEMENT RECORDED U/S. 132(4) ON 7-8-2008, HAD ADMITTED HAVING SOLD THE SAID LAND FOR RS. 87 LAKHS AS ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 45 AGAINST THE RECORDED CONSIDERATION OF RS. 32,22,000 /- ONLY. SUBSEQUENTLY, HE RETRACTED FROM SUCH ADMISSIO N ON THE GROUND OF CONFUSION AT THE TIME OF RECORDING OF STATEMENT, DESPITE THE FACT THAT CAPITAL GAINS OF R S. 25,05,700/- HAD BEEN ADMITTED BY HIM EARLIER. HOWEV ER, IT IS CLEAR THAT IN VIEW OF DISCUSSION IN PARA 6 AB OVE, SUCH RETRACTION CANNOT BE ACCEPTED AS TRUE AND CORRECT, IN VIEW OF THE FACT THAT THE SUBSEQUENT CLAIM IS NOT SUPPOR TED BY ANY CORROBORATING EVIDENCE. THE MERE MISTAKE IN STA TING THE MONTH OF SALE BEING APRIL 2008 CANNOT ESTABLISH THAT THE ABOVE STATEMENT U/S. 132(4) WAS MADE UNDER' ANY CONFUSED STATE OF MIND. ON THE OTHER HAND, IT IS CL EAR THAT THE IN ADDITION TO THE EVIDENTIARY VALUE OF A STATE MENT U/S. 132( 4), THE CONSIDERATION ADMITTED BY THE ASS ESSEE THEREIN WAS ALSO SUPPORTED BY THE PREVAILING RATE O F RS. 25,000/- PER SQ. YARD IN THE RESIDENTIAL AREA OF BO WENPALLI IN THE YEAR 2007-08. CONSIDERING BOTH THE FACTORS TOGETHER, THE CIT(A) HELD THAT HE HAD NO HESITATION IN UPHOLDING THE ADDITION OF RS. 86,76,307/- ON THIS G ROUND IN THE ASSESSMENT YEAR 2008-09. 13.4 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THIS ISSUE IS SIMILAR TO THE I SSUE DISCUSSED IN ITA NO. 742/HYD/2013. SINCE THERE IS NO CONCLUSIVE EVIDENCE OTHER THAN THE STATEMENT RECORD ED FROM THE ASSESSEE U/S. 132(4) OF THE ACT, WE ARE IN CLINED TO DELETE THE ADDITION BY PLACING RELIANCE ON THE O RDER OF THE TRIBUNAL MUMBAI BENCH IN THE CASE OF SMT. SUSEE LA SURESH MALGE (SUPRA). 13.5 IN THE RESULT, ITA NO. 744/HYD/2013 IS ALLOWED. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 46 ITA NO. 745/HYD/2013 (A.Y. 2009-10) 14. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN NOT GIVING FULL RELIEF FOR THE VALUE OF GOLD AND JEWELLERY HELD BY THE FAMILY MEMBERS OF TH E ASSESSEE. 14.1 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION IN ITA NO. 738/HYD/2013 IN EARLIER PA RAS OF THIS ORDER. ACCORDINGLY, PLACING RELIANCE ON THE S AME AND TAKING A CONSISTENT VIEW, THIS ISSUE IS REMITTED BA CK TO THE FILE OF THE AO TO GIVE CREDIT OF GOLD AND JEWELLERY TO EACH MEMBER OF ASSESSEE'S FAMILY IN TERMS OF CBDT CIRCUL AR NO. 1916 DATED 11.5.1994. THIS GROUND IS PARTLY ALLOWE D. 14.2 IN THE RESULT, ITA NO. 745/HYD/2013 IS PARTLY ALLOWED. ITA NO. 746/HYD/2013 (A.Y. 2005-06) 15. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 40,88,065 REPRESENTING THE CAPITAL GAIN ARISING OUT OF GIVING HIS LAND FOR DEVELOPMENT WITHOUT APPRECIATIN G THE FACT THAT THE ASSESSEE HAS ALREADY OFFERED THE SAME TO TAX IN DIFFERENT YEARS AS AND WHEN THE PROPERTIES WERE SOLD. 15.1 FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COUR SE OF SEARCH A DEVELOPMENT AGREEMENT CUM GPA WAS FOUND AND SEIZED AT PAGE NO. 76 TO 90 OF ANNEXURE A/GNY/ RES/PO/01 FROM THE PREMISES OF THE ASSESSEE. THE S AME HAD BEEN EXECUTED BY THE ASSESSEE AND OTHERS, ALONG WITH THEIR FAMILY MEMBERS, IN FAVOUR OF M/S. R.V. NIRMAN PVT. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 47 LTD ON 16-9-2004 AND POSSESSION OF THE IMPUGNED LAN D HAD BEEN HANDED OVER TO THE DEVELOPER FOR CONSTRUCT ION OF RESIDENTIAL UNITS. THE ASSESSING OFFICER NOTICED T HAT THE LAND OWNERS POSSESSED AC. 2.00 GTS. OF LAND IN SURV EY NO. 212 (PART), SITUATED AT MADINAGUDA VILLAGE, SERILIN GAM- PALLY MANDAL SINCE 20-9-2001. THE INDIVIDUAL SHARE HOLDINGS OF 7 OWNERS OF THE SAID LAND WERE 10 GTS. EACH WHILE SMT. SAKUNTALA YADAV AND NARASIMHA YADAV (HUF ) OWNED 5 GTS. EACH. ALL OF THE SAME WAS GIVEN FOR DEVELOPMENT. THE LAND OWNERS AND DEVELOPERS WERE ENTITLED TO 36% AND 64% OF THE BUILT UP AREA, INCLU DING PARKING AND TERRACE, WHEREAS THE TOTAL CONSTRUCTED SPACE AS PER THE DEVELOPMENT AGREEMENT WAS SHOWN AT 70,00 0 SQUARE FEET. 15.2 THE CIT(A) BY PLACING RELIANCE ON THE ORDER OF THE TRIBUNAL IN THE CASE OF DR. MAYA SHENOY (CITED SUPR A) CONFIRMED THE ADDITION. AGAINST THIS THE ASSESSEE I S IN APPEAL BEFORE US. 15.3 WE HAVE DECIDED SIMILAR ISSUE IN PARAS 3.2 TO 3.6 I N ITA NO. 735/HYD/2013 WHEREIN WE HAVE ALLOWED THE CLAIM OF THE ASSESSEE. ACCORDINGLY, IN THE INSTANT CASE, THERE WAS NO DEVELOPMENT ACTIVITY BY THE DEVELOPER. WE CANNOT SAY THE CONDITION LAID DOWN U/S. 2(47)(V) OF THE ACT HAS BEEN FULFILLED. BEING SO, TAKING A CONSISTENT VIEW, WE ARE INCLINED TO ALLOW THIS GROUND OF THE ASSESSEE. 15.4 THE ASSESSEE RAISED AN ADDITIONAL GROUND IN THIS APPEAL THAT THE CIT(A) IS NOT JUSTIFIED IN NOT DIRE CTING THE AO TO DELETE THE INCOME FROM CAPITAL GAINS, ADMITTE D BY THE ASSESSEE FOR A.YS. 2006-07 AND 2007-08, SINCE T HE SAME INCOME WAS HELD TO BE ASSESSED IN THE A.Y. 200 5-06. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 48 15.5 THE ASSESSEE ALSO FILED A PETITION FOR ADMISSION OF THE ADDITIONAL GROUND STATING THAT THE ADDITIONAL G ROUND IS PURELY ON LEGAL ISSUE AND NO INVESTIGATION OF FA CTS IS REQUIRED AS THE FACTS ARE ALREADY AVAILABLE ON RECO RD. THE AR ALSO PLACED RELIANCE ON THE JUDGMENT OF GUJARAT HIGH COURT IN THE CASE OF S.R. KOSHTI VS. CIT (276 ITR 1 65) AND C. PAREKH & CO. VS. CIT (122 ITR 610) FOR THE PROPO SITION THAT AN INCOME CANNOT BE ASSESSED TWICE. 15.6 WE HAVE HEARD BOTH THE PARTIES. THIS ADDITIONAL GROUND IS DISMISSED AS INFRUCTUOUS AS WE HAVE ALREA DY ALLOWED THE ASSESSEE'S MAIN GROUND IN EARLIER PARA. 15.7 IN THE RESULT, ITA NO. 746/HYD/2013 IS PARTLY ALLOWED. ITA NO. 747/HYD/2013 (A.Y. 2007-08) 16. THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 10,11,85,870 REPRESENTING THE CAPITAL GAINS ARISING OUT OF GIVIN G HIS LAND FOR DEVELOPMENT WITHOUT APPRECIATING THE FACT THAT POSSESSION OF THE PROPERTY WAS NOT GIVEN TO THE DEV ELOPERS AND FURTHER THAT THE DEVELOPERS NEVER HAD INTENTION TO GO AHEAD WITH THE DEVELOPMENT OF THE PROPERTY. 16.1 FACTS OF THE CASE IN BRIEF ARE THAT DURING THE COUR SE OF SEARCH PROCEEDINGS, A DEVELOPMENT AGREEMENT EXEC UTED BY THE ASSESSEE AND HIS FAMILY MEMBERS WAS FOUND AN D SEIZED AS PAGE NOS. 27 TO 36 OF ANNEXURE A/GNY/RES/ PO/01. THE SAME WAS A DRAFT DEVELOPMENT AGREEMENT CUM GPA EXECUTED BETWEEN THE ASSESSEE AND HIS FAMIL Y MEMBERS AND M/S. SRI KRISHNA VENTURES. DURING THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 49 COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFF ICER CALLED FOR A COPY OF DEVELOPMENT AGREEMENT AND CLARIFICATION IN THIS REGARD FROM M/S. SRI KRISHNA VENTURES P LTD. VIDE LETTER DATED 2-12-2010, THE SAID PARTY SUBMITTED THAT THE ABOVE DEVELOPMENT AGREEMENT HAD BEEN ENTERED INTO ON 28-3-2007 IN RESPECT OF LAND ADMEASURING AC. 67 AND GTS. 30 AT SURVEY NOS. 74, 8 2, 81 ETC., YELLAMPET. IT WAS ALSO STATED THAT THE COST OF DEVELOPMENT AGREEMENT AS PER THE REGISTERED DOCUMEN T NO. 5384/04 WAS RS. 45 CRORES AND THE SHARING RATIO BETWEEN THE OWNER AND THE DEVELOPER WAS 33.33% AND 66.67%. POSSESSION OF THE LAND HAD BEEN HANDED OVER TO THE DEVELOPER FOR CONSTRUCTION OF RESIDENTIAL UNITS . 16.2 SINCE IN TERMS OF THE ABOVE SAID DEVELOPMENT AGREEMENT CUM GPA DATED 28-3-2007, THE LAND OWNERS HAD HANDED OVER VACANT AND PEACEFUL POSSESSION OF T HE ENTIRE LAND TO THE DEVELOPER, THE ASSESSING OFFICER OPINED THAT THE SAID AGREEMENT, AS PER THE PROVISIONS OF S EC. 2(47)(V), CONSTITUTED A TRANSFER. HE NOTED THAT IN SEVERAL JUDICIAL PRONOUNCEMENTS, IT HAS BEEN HELD THAT ANY TRANSACTION WHICH ALLOWS THE POSSESSION TO BE TAKEN WOULD CONSTITUTE 'TRANSFER' WITHIN THE MEANING OF S EC. 2(47): AND THAT ANY TRANSACTION WHICH INVOLVES A TR ANSFER OF TITLE IN FUTURE OR EXCHANGE OF A PROPERTY TO BE PUT UP IN FUTURE, WOULD NECESSARILY CONSTITUTE A 'TRANSFER', WITHIN THE MEANING OF SEC. 2(47). FOR THIS PROPOSITION, H E RELIED ON THE DECISION OF TRIBUNAL IN THE CASE OF SMT. SHA NTHA VIDYA SAGAR ANNAM (CITED SUPRA). BESIDES, HE ALSO REFERRED TO THEIR DECISION IN THE CASE OF DR. MAYA SHENOY (CITED SUPRA), HOLDING THAT THE DEVELOPMENT AGREEME NT HAS THE EFFECT OF TRANSFERRING THE LAND FROM THE OW NER TO ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 50 THE DEVELOPER. THE ASSESSING OFFICER ALSO RELIED ON THE DECISIONS IN THE CASES OF CHATURBHUJ DWARAKADAS KAPADIA (CITED SUPRA) AND JASBIR SINGH SARKARIA (CI TED SUPRA). ACCORDINGLY, HE OPINED THAT IN THE INSTANT CASE ALSO, THE ASSESSEE WAS LIABLE FOR CAPITAL GAINS IN THE FINANCIAL YEAR 2006-07, THE YEAR IN WHICH THE DEVELOPMENT AGREEMENT WAS ENTERED INTO AND THE 'TRANSFER' TOOK PLACE. 16.3 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME UP FOR CONSIDERATION IN EARLIER PARAS IN ITA NO. 737/HYD/2 013. FOLLOWING THE SAME RATIO AND TAKING A CONSISTENT VI EW, THIS GROUND OF THE ASSESSEE IS ALLOWED. 16.4 IN THE RESULT, ITA NO. 747/HYD/2013 IS ALLOWED. ITA NO. 748/HYD/2013 (A.Y. 2009-10) 17. IN THIS APPEAL, THE ASSESSEE RAISED THE GROUND THAT THE CIT(A) ERRED IN UPHOLDING THE ADDITION OF RS. 2,14,50,000 REPRESENTING THE SALE PROCEEDS OF AGRIC ULTURAL LANDS WITHOUT APPRECIATING THE FACT THAT THESE PROC EEDS ARE EXEMPT FROM TAX. 17.1 FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS HAVING INCOME FROM RENT AND AGRICULTURE. IT WAS SE EN FROM THE RECEIPT & PAYMENT A/C SUBMITTED BY THE ASSESSEE THAT HE HAD SOLD A PROPERTY FOR RS. 1,69,50,000/- VIDE TWO AGPAS, THE FIRST PORTION, ADMEASURING AC. 2.33 GTS. WAS LOCATED AT SURVEY NO . 25/1/T, PET BASHEERA BAD, QUTBULLAPUR, R.R. DISTRIC T, WHILE THE SECOND PORTION, ADMEASURING AC. 0.30 GTS. WAS ALSO LOCATED AT SAME SURVEY NO. BOTH OF THOSE WERE SOLD TO ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 51 M/S. VAISHNOI INFRATECH AND DEVELOPERS PVT. LTD AND SHRI V. BHASKAR FOR A TOTAL CONSIDERATION OF RS. 2,14,50 ,000/-, (RS. 1,69,50,000/- PLUS RS. 45,00,000/-) WHEREAS TH E COST OF ACQUISITION WAS SHOWN AT RS. 2,41,5001- IN THE R ECEIPT AND PAYMENT A/C FOR THE ASSESSMENT YEAR 2004-05. TH E ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD NOT O FFERED ANY PROFIT FROM THE ABOVE REFERRED SALE IN HIS RETU RN OF INCOME. HE THEREFORE COMPUTED THE LONG TERM CAPITAL GAINS AT RS. 2,11,46,430/- AFTER GIVING DEDUCTION F OR THE INDEXED COST OF ACQUISITION OF RS. 3,03,570/-. 17.2 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HIMSELF AND HIS FAMILY HAILS FROM THE FAMILY OF AGRICULTURISTS AND IS ENGAGED IN FARMING AND AGRICULTURE. HE SUBMITTED TH AT THE ASSESSEE HAS BEEN REPORTING INCOME FROM HOUSE PROPERTY APART FROM AGRICULTURE AND HE IS NOT ENGAG ED IN ANY BUSINESS FOR PAST MANY YEARS, AND SUCH AGRICULT URAL INCOME HAS BEEN ACCEPTED BY THE DEPARTMENT FROM TIM E TO TIME. APART FROM THE LANDS ALREADY OWNED BY HIM, THE ASSESSEE ALONG WITH OTHERS, HAD PURCHASED THE IMPUG NED AGRICULTURAL LANDS ON 22-12-1994, WHICH WERE SOLD T O VAISHNOI INFRATECH & DEVELOPERS PVT. LTD AND SHRI V . BHASKAR ON 4-2-2009. THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE SAID LANDS WERE SITUATED AT PET BASHEERABAD, QUTUBULLAPUR MANDAL, R.R. DISTRICT AND WERE BEYOND THE LIMITS OF ANY TOWN, MUNICIPALITY WI TH A POPULATION EXCEEDING 10,000 OR THE LIMIT NOTIFIED W ITHIN 8 KILOMETRES FROM ANY SUCH TOWN OR MUNICIPALITY AND A S SUCH DID NOT FALL UNDER THE DEFINITION OF CAPITAL A SSET. THE CIT(A) CONFIRMED THE ORDER OF THE AO. AGAINST THIS , THE ASSESSEE IS IN APPEAL BEFORE US. ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 52 17.3 THE ASSESSEE'S PRIMARY CONTENTION IS THAT THE PROPERTY IS AN AGRICULTURAL LAND AND IS SITUATED AT BEYOND 8 KM FROM ANY NOTIFIED MUNICIPALITY WHICH FACT IS SUPPORTED BY VRO'S LETTER PLACED AT PAPER BOOK PAGE NOS. 78 TO 79. THE AR ALSO SUBMITTED THAT THE ASSESSEE IS OFFERING AGRICULTURAL INCOME IN ITS REGULAR RETURN OF INCOME AND ALSO PROCEEDINGS U/S. 153A. HE SUBMITTED THAT THOUGH THE ASSESSEE FILED ADDITIONAL EVIDENCE BEFOR E THE CIT(A), HE HAS FAILED TO ADMIT THE SAME STATING THA T THESE ARE ADDITIONAL EVIDENCES. HE SUBMITTED THAT PURCHA SING OF LAND AND SELLING THE SAME AT HIGHER RATE CANNOT BE A REASON TO HOLD THAT THE ASSESSEE'S PROPERTY IS A NO N- AGRICULTURAL LAND. HE RELIED ON THE JUDGEMENT OF G UJARAT HIGH COURT IN THE CASE OF CIT VS. MANILAL SOMNATH ( 106 ITR 917). 17.4 THE LEARNED DR RELIED ON THE ORDER OF THE CIT(A). 17.5 WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. SIMILAR ISSUE CAME FOR CONSIDE RATION BEFORE THIS TRIBUNAL IN THE CASE OF KAPIL CHIT FUND S PVT. LTD. VS. ITO IN ITA NO. 1424/HYD/2012. THE TRIBUNA L VIDE ORDER DATED 5.9.2013 HELD AS UNDER: '10.22 WE HAVE CAREFULLY GONE THROUGH THE NOTIFICATION ISSUED BY THE CENTRAL GOVERNMENT U/S. 2(1A)(C) PROVISO (II)(B) AND 2(14)(3B) VIDE NO. 9447 (F. NO. 164/(3)/87/ITA-I) DATED 6 TH JANUARY, 1994 AS AMENDED BY NOTIFICATION NO. 11186 DATED 28 TH DECEMBER, 1999. IN THE SCHEDULE ANNEXED TO THE NOTIFICATION DATED 6.1.1994, ENTRY NO. 17 IS RELATING TO HYDERABAD WHEREIN MENTIONED THAT THE AREAS UP TO A DISTANCE OF 8 KM FROM THE MUNICIPAL LIMITS IN ALL DIRECTIONS. IN THE NOTIFICATION 11186 DATED 28.12.1999 THERE IS NO ENTRY RELATING TO HYDERABAD. IT IS CLEAR FROM THESE NOTIFICATIONS ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 53 THAT AGRICULTURAL LAND SITUATED IN AREAS LYING WITHIN A DISTANCE NOT EXCEEDING 8 KM FROM THE LOCAL LIMITS OF HYDERABAD MUNICIPALITY (GHMC) IS COVERED BY THE AMENDED DEFINITIONS OF 'CAPITAL ASSET'. CENTRAL GOVERNMENT IN EXERCISE OF SUCH POWERS HAS ISSUED THE ABOVE NOTIFICATION, AS AMENDED LATEST BY NOTIFICATION NO. 11186 DATED 28.12.1999 CLEARLY CLARIFIES THAT AGRICULTURAL LAND SITUATED IN RURAL AREAS, AREAS OUTSIDE THE MUNICIPALITY OR CANTONMENT BOARD ETC., HAVING A POPULATION OF NOT LESS THAN 10,000 AND ALSO BEYOND THE DISTANCE NOTIFIED BY CENTRAL GOVERNMENT FROM LOCAL LIMITS I.E. THE OUTER LIMITS OF ANY SUCH MUNICIPALITY OR CANTONMENT BOARD ETC., STILL CONTINUES TO BE EXCLUDED FROM THE DEFINITION OF 'CAPITAL ASSET'. ACCORDINGLY, IN VIEW OF SUB-CLAUSE (B) OF SECTION 2(14)(III) OF THE ACT EVEN UNDER THE AMENDED DEFINITION OF EXPRESSION 'CAPITAL ASSET', THE AGRICULTURAL LAND SITUATED IN RURAL AREAS CONTINUES TO BE EXCLUDED FROM THAT DEFINITION. AND AS IN THE PRESENT CASE, ADMITTEDLY, THE AGRICULTURAL LAND OF THE ASSESSEE IS OUTSIDE THE MUNICIPAL LIMITS OF HYDERABAD MUNICIPALITY AND THAT ALSO 8 KM AWAY FROM THE OUTER LIMITS OF THIS MUNICIPALITY, ASSESSEE'S LAND DOES NOT COME WITHIN THE PURVIEW OF SECTION 2(14)(III) EITHER UNDER SUB CLAUSE (A) OR (B) OF THE ACT, HENCE THE SAME CANNOT BE CONSIDERED AS CAPITAL ASSET WITHIN THE MEANING OF THIS SECTION. HENCE, NO CAPITAL GAIN TAX CAN BE CHARGED ON THE SALE TRANSACTION OF THIS LAND ENTERED BY THE ASSESSEE. THIS IS SUPPORTED BY THE ORDER OF KOLKATA BENCH OF THIS TRIBUNAL IN THE CASE OF ARIJIT MITRA (CITED SUPRA), HARISH V. MILANI (SUPRA) AND M.S. SRINIVAS NAICKER VS. ITO (292 ITR 481) (MAD). BY BORROWING THE MEANING FROM THE ABOVE SECTION, WE ARE NOT ABLE TO APPRECIATE THAT THE LAND FALLS WITHIN THE TERRITORIAL LIMIT OF ANY MUNICIPALITY WITHOUT NOTIFICATION OF CENTRAL GOVERNMENT AS HELD BY THE KARNATAKA HIGH COURT IN THE CASE OF MADHUKUMAR N. (HUF) (CITED SUPRA). 10.23 FROM THE FACTS AND CIRCUMSTANCES OF THE CASE, AS NARRATED BEFORE US, IT IS IMPORTANT TO NOTE THAT WHAT WAS THE INTENTION OF THE ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 54 ASSESSEES AT THE TIME OF ACQUIRING THE LAND OR INTERVAL ACTION BY THE ASSESSEE BETWEEN THE PERIOD FROM PURCHASE AND SALE OF THE LAND AND THE RELEVANT IMPROVEMENT/DEVELOPMENT TAKEN PLACE DURING THIS TIME IS RELEVANT FOR DECIDING THE ISSUE WHETHER TRANSACTION WAS IN THE NATURE OF TRADE. THOUGH INTENTION SUBSEQUENTLY FORMED MAY BE TAKEN INTO ACCOUNT, IT IS THE INTENTION AT THE INCEPTION IS CRUCIAL. ONE OF THE ESSENTIAL ELEMENTS IN AN ADVENTURE OF THE TRADE IS THE INTENTION TO TRADE; THAT INTENTION MUST BE PRESENT AT THE TIME OF PURCHASE. THE MERE CIRCUMSTANCES THAT A PROPERTY IS PURCHASED IN THE HOPE THAT WHEN SOLD LATER ON IT WOULD LEAVE A MARGIN OF PROFIT, WOULD NOT BE SUFFICIENT TO SHOW, AN INTENTION TO TRADE AT THE INCEPTION. IN A CASE WHERE THE PURCHASE HAS BEEN MADE SOLELY AND EXCLUSIVELY WITH THE INTENTION TO RESELL AT A PROFIT AND THE PURCHASER HAS NO INTENTION OF HOLDING THE PROPERTY FOR HIMSELF OR OTHERWISE ENJOYING OR USING IT, THE PRESENCE OF SUCH AN INTENTION IS A RELEVANT FACTOR AND UNLESS IT IS OFFSET BY THE PRESENCE OF OTHER FACTORS IT WOULD RAISE AS STRONG PRESUMPTION THAT THE TRANSACTION IS AN ADVENTURE IN THE NATURE OF TRADE. EVEN SO, THE PRESUMPTION IS NOT CONCLUSIVE AND IT IS CONCEIVABLE THAT, ON CONSIDERING ALL THE FACTS AND CIRCUMSTANCES IN THE CASE, THE COURT MAY, DESPITE THE SAID INITIAL INTENTION, BE INCLINED TO HOLD THAT THE TRANSACTION WAS NOT AN ADVENTURE IN THE NATURE OF TRADE. THE PRESUMPTION MAY BE REBUTTED. IN THE PRESENT CASE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE IT CANNOT BE CONSIDERED AS AN ADVENTURE IN THE NATURE OF TRADE. THE INTENTION OF THE ASSESSEE FROM THE INCEPTION WAS TO CARRY ON AGRICULTURAL OPERATIONS AND EVEN THERE WAS NO INTENTION TO SELL THE LAND IN FUTURE AT THAT POINT OF TIME. IT WAS DUE TO THE BOOM IN REAL ESTATE MARKET CAME INTO PICTURE AT A LATER STAGE, THE ASSESSEE HAS SOLD THE LAND. MERELY BECAUSE OF THE FACT THAT THE LAND WAS SOLD FOR PROFIT, IT CANNOT BE HELD THAT INCOME ARISING FROM THE SALE OF LAND WAS TAXABLE AS PROFIT ARISING FROM THE ADVENTURE IN THE NATURE OF TRADE. THE PERIOD OF ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 55 HOLDING SHOULD NOT SUGGEST THAT THE ACTIVITY WAS AN ADVENTURE IN THE NATURE OF TRADE. 10.24 FURTHER, WE MAKE IT CLEAR THAT WHEN THE LAND WHICH DOES NOT FALL UNDER THE PROVISIONS OF SECTION 2(14)(III) OF THE IT ACT AND AN ASSESSEE WHO IS ENGAGED IN AGRICULTURAL OPERATIONS IN SUCH AGRICULTURAL LAND AND ALSO BEING SPECIFIED AS AGRICULTURAL LAND IN REVENUE RECORDS, THE LAND IS NOT SUBJECTED TO ANY CONVERSION AS NON-AGRICULTURAL LAND BY THE ASSESSEE OR ANY OTHER CONCERNED PERSON, TRANSFERS SUCH AGRICULTURAL LAND AS IT IS AND WHERE IT IS BASIS, IN SUCH CIRCUMSTANCES, IN OUR OPINION, SUCH TRANSFER LIKE THE CASE BEFORE US CANNOT BE CONSIDERED AS A TRANSFER OF CAPITAL ASSET OR THE TRANSACTION RELATING TO SALE OF LAND WAS NOT AN ADVENTURE IN THE NATURE OF TRADE SO AS TO TAX THE INCOME ARISING OUT OF THIS TRANSACTION AS BUSINESS INCOME. ACCORDINGLY, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT, REVENUE APPEAL IS DISMISSED AND ASSESSEES APPEAL IS PARTLY ALLOWED.' 17.6 BEING SO, TAKING A CONSISTENT VIEW, WE ARE OF THE CONSIDERED VIEW THAT SALE OF LAND IS TO BE CONSIDER ED AS AGRICULTURAL LAND AS THE LAND IS SITUATED BEYOND 8 KM FROM ANY NOTIFIED MUNICIPAL LIMITS AND ALSO THE LAN D IS SUBJECTED TO AGRICULTURAL OPERATIONS AS THE ASSESSE E DECLARED THE AGRICULTURAL INCOME FROM THE SAID LAND . THIS GROUND OF THE ASSESSEE IS ALLOWED. 17.7 IN THE RESULT, ITA NO. 748/HYD/2013 IS ALLOWED. 18. IN THE RESULT, SL. NO. ITA NO. RESULT 1. 734/HYD/2013 DISMISSED 2. 736/HYD/2013 DISMISSED 3. 735/HYD/2013 PARTLY ALLOWED ITA NO. 734/HYD/2013 & ORS SRI G. NARASIMHA YADAV & ORS. ======================== 56 4. 738/HYD/2013 PARTLY ALLOWED 5. 739/HYD/2013 PARTLY ALLOWED 6. 740/HYD/2013 PARTLY ALLOWED 7. 745/HYD/2013 PARTLY ALLOWED 8. 746/HYD/2013 PARTLY ALLOWED 9. 737/HYD/2013 ALLOWED 10. 741/HYD/2013 ALLOWED 11. 742/HYD/2013 ALLOWED 12. 743/HYD/2013 ALLOWED 13. 744/HYD/2013 ALLOWED 14. 747/HYD/2013 ALLOWED 15. 748/HYD/2013 ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 9 TH JUNE, 2014 SD/ - (ASHA VIJAYARAGHAVAN) JUDICIAL MEMBER SD/ - (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED THE 9 TH JUNE, 2014 TPRAO COPY FORWARDED TO: 1. SRI G. NARASIMHA YADAV, 1-8-35, SEETHARAMPURAM, BOWENPALLY, SECUNDERABAD-500 011. 2. SRI G. NARASIMHA YADAV HUF, 1-8-35, SEETHARAMPURAM, BOWENPALLY, SECUNDERABAD-500 011. 3. SMT. G. SAKUNTHALA, 1-8-35, SEETHARAMPURAM, BOWENPALLY, SECUNDERABAD-500 011. 4. SRI G. DURGAIAH YADAV, PLOT NO. 267/1/2, OPP. KVAFS , BOWENPALLY, SECUNDERABAD-500 011. 5. SRI G. JAI KISHAN YADAV, 1-8-35, SEETHARAMPURAM, BOWENPALLY, SECUNDERABAD-500 011. 6. THE ASST. CIT, CENTRAL CIRCLE-1, AAYAKAR BHAVAN, HYDERABAD. 7. THE CIT(A)-I, HYDERABAD. 8. THE CIT (CENTRAL), HYDERABAD. 9. THE DR 'B' BENCH, ITAT, HYDERABAD