Income Tax Officer, Chandigarh V. Sh.Sukhdev Singh Dhindsa, Chandigarh

ITA 812/CHANDI/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7546 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 1 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 14-11-2017
• Assessment Year: 2007-2008
• Appeal Filed On: 12-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MANJIT SINGH
• Keywords: Capital asset
• Section: 54F

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBE AND MS. ANNAPURNA GUPTA, ACCOUNTANTMEMBER ITA NO. 812/CHD/2017 ASSESSMENT YEAR : 2007-08 THE ITO, WARD-1(3), SH. SUKHDEV SINGH DHINDSA, CHANDIGARH , VS. S/O SH. RATTAN SINGH, #9, SECTOR 2, CHANDIGARH (PAN NO. AEZPD2048G) (APPELLANT) (RESPONDENT) APPELLANT BY : SH. MANJIT SINGH, SR.DR RESPONDENT BY : NONE DATE OF HEARING : 09.07.2018 DATE OF PRONOUNCEMENT : 09.07.2018 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE CAPTIONED APPEAL PREFERRED BY THE REVENUE IS AG AINST THE ORDER DATED 28.2.2017 OF THE COMMISSIONER OF INCOME TAX (APPEALS)- 1, CHANDIGARH [HEREINAFTER REFERRED TO AS CIT(A)]. NONE HAS COME PRESENT ON BEHALF OF THE ASSESSEE DESPITE NOTICE. I T SEEMS THAT THE ASSESSEE IS NOT INTERESTED IN PURSUING THE PRESENT APPEAL. HOWEVER, THE LD. DR, ON THE OTHER HAND, HAS STATED THAT THE APPEAL CAN BE DISPOSED OF ON MERITS AND THE ISSUE RAISED IN THIS APPEAL IS COVERED BY THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. BALBI R SINGH MAINI (2017) 86 TAXMAN. 94 (SC) / 398 ITR 531 2. THE REVENUE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS OF APPEAL:- ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 2 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN ALLOWING THE APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 1,83,75,000/- MADE ON ACCOUNT OF LONG TERM CAPITAL GAIN. WHEN THE ASSESSEE HAD NOT FULLY DISCLOSED THE ACCRUED CAPITAL GAIN AND THE APPEAL AGAINST THE CAS E RELIED BY THE LD. CIT(A) WAS PENDING BEFORE THE HO N'BLE SUPREME COURT. 2. BRIEF FACTS OF THE CASE ON THIS ISSUE ARE THAT A S PER INFORMATION RECEIVED, A HOUSING SOCIETY, NAMED AS T HE PUNJABI CO-OPERATIVE HOUSE BUILDING SOCIETY LTD., MOHALI (HEREINAFTER REFERRED TO AS 'SOCIETY') CONSISTING OF 95 PRESENT AND EX-MLAS OF PUNJAB LEGISLATIVE ASSEMBLY WAS FORMED, WHICH WA S THE OWNER OF 21.2 ACRES OF LAND IN VILLAGE KANSAL, DIST RICT MOHALI. THIS SOCIETY ENTERED INTO A TRIPARTITE JOINT DEVELO PMENT AGREEMENT (HEREINAFTER REFERRED TO AS 'AGREEMENT') ON 25.02.2007 WITH M/S HASH BUILDERS PVT. LTD., CHANDIGARH (HEREI NAFTER REFERRED TO AS 'HASH) AND M/S TATA HOUSING DEVELOP MENT COMPANY LTD., MUMBAI (HEREINAFTER REFERRED TO AS T HDC), BY VIRTUE OF WHICH THE SOCIETY WOULD TRANSFER ITS LAND FOR DEVELOPMENT IN LIEU OF MONETARY CONSIDERATION AND A LSO CONSIDERATION IN KIND TO THE MEMBERS OF THE SOCIETY . AS PER THE AGREEMENT, EACH MEMBER OF THE PUNJAB CO-OP. HOUSE B UILDING SOCIETY LTD HAVING A PLOT OF 500 SQ. YDS IN THE SOC IETY SHALL RECEIVE RS. 82,50,000/- AS MONETARY CONSIDERATION. ACCORDINGLY, A TOTAL MONETARY CONSIDERATION OF RS. 1,06,42,50,00 0/- WAS RECEIVABLE BY ALL THE INDIVIDUAL MEMBERS OF THE SOC IETY TAKEN TOGETHER. IN ADDITION TO THIS, AS CONSIDERATION IN KIND, EACH SUCH MEMBER OWING PLOT OF 500 SQ YD. SHALL RECEIVE ONE F URNISHED ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 3 FLAT MEASURING 2250 SQ. FT. TO BE CONSTRUCTED BY TD HC. THE COST OF EACH FURNISHED FLAT @ 4500 SQ FT. HAVING AREA OF 2250 SQ. YD WOULD BE AN AMOUNT OF RS. 1,01,25,000/-. THE MEMBER S OWING PLOT OF 1000 SQ YD. WERE TO GET TWO SUCH FLATS APAR T FROM THE MONEY AS ENTIRE CONSIDERATION. THE INDIVIDUAL ME MBERS OF THE SOCIETY OWING 500 SQ YARD LAND IN THE SOCIETY H AVE RECEIVED RS. 33.00 LACS TILL DATE WHEREAS INDIVIDUAL MEMBER OF SOCIETY OWING 1000 SQ YARD LAND IN THE SOCIETY HAVE RECEIVE D RS. 66.00 LAKH TILL DATE. THE ASSESSEE WAS ALSO A MEMBER OF THE SAID SOCIETY OWNING 500 SQ. YARDS LAND. THE TOTAL CONSID ERATION WAS SETTLED AT RS. 82.50 LACS PLUS ALLOTMENT OF ONE FLA T OF 2250 SQ. FEET TO THE ASSESSEE. THE ASSESSEE HAD ACTUALLY REC EIVED ONLY RS. 32 LACS OUT OF HIS SHARE OF CONSIDERATION RECEIVED BY SOCIETY IN LIEU OF ITS TRIPARTITE AGREEMENT. FOR THE ASSESSMEN T YEAR UNDER CONSIDERATION I.E. ASSESSMENT YEAR 2007-08 THE ASSE SSEE RECEIVED RS. 15 LACS AND ANOTHER SUM OF RS. 18 LACS WAS REC EIVED DURING ASSESSMENT YEAR 2008-09. ON RECEIVING THE ABOVE INF ORMATION THE ASSESSING OFFICER DISCOVERED THAT THE ASSESSEE HAD NOT FILED A RETURN FOR THE ASSESSMENT YEAR UNDER CONSIDERATIO N AND, THEREFORE, AFTER RECORDING REASONS IN WRITING ISSUE D NOTICES U/S 148. IN RESPONSE TO THE NOTICE U/S 148, THE ASSESSE E FILED A RETURN WHEREIN IT WAS EXPLAINED THAT THE ASSESSEE H AD NOT OFFERED ANY CAPITAL GAINS ON THE AMOUNT OF RS. 15 L ACS RECEIVED DURING THE YEAR, HOWEVER, CAPITAL GAINS HAVE BEEN O FFERED ON THE TOTAL AMOUNT ACTUALLY RECEIVED OF RS. 33 LACS IN AY 2008-09 THE ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 4 ASSESSING OFFICER, HOWEVER, MADE AN ADDITION OF RS. 1,83,75,000 ON ACCOUNT OF LONG TERM CAPITAL GAINS ACCRUING TO T HE ASSESSEE. 3. AGGRIEVED BY THE SAME, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT (APPEALS), WHO DELETED TH E ENTIRE ADDITION MADE, FOLLOWING THE JUDGMENT OF THE HON'BL E PUNJAB & HARYANA HIGH COURT IN THE CASE OF C.S. ATWAL VS. CI T, LUDHIANA AND ANOTHER IN ITA NO.200 OF 2013 (O&M) DT.22-07-2 015. 4. BEFORE US, THE LD. DR RELIED UPON THE ORDER OF T HE ASSESSING OFFICER THOUGH AT THE SAME TIME, THE LD. DR FAIRLY CONCEDED THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF T HE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF C.S. ATWAL (SUPRA). HOWEVER, NO ONE HAS APPEARED ON BEHALF OF THE ASSES SEE. 5. WE HAVE HEARD THE CONTENTIONS OF THE LD. DR AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND ALS O THE JUDGMENT OF THE HON'BLE PUNJAB & HARYANA HIGH COURT IN THE C ASE OF C.S.ATWAL (SUPRA). WE FIND NO INFIRMITY IN THE ORD ER OF THE LD.CIT(APPEALS) TO THE EXTENT IT HAS HELD THAT THE ISSUE IS IDENTICAL AND, THEREFORE, SQUARELY COVERED BY THE D ECISION IN THE CASE OF C.S.ATWAL (SUPRA). EVEN THE LD. DR HAS CON CEDED ON THIS POINT AND THUS THERE IS NO DISPUTE WITH REGARDS TO THE FACTS OF BOTH THE CASES BEING IDENTICAL. BUT AT THE SAME TIME WE FIND THAT THE LD.CIT (APPEALS) HAS NOT CORRECTLY APPLIED THE PROP OSITION LAID DOWN BY THE HON'BLE HIGH COURT, IN THE FACTS OF THE CASE BEFORE US. THE HON'BLE HIGH COURT IN THE CASE OF C.S.ATWA L (SUPRA) HAD SUMMARIZED ITS CONCLUSION ON THE ISSUE OF TAXABILIT Y OF CAPITAL ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 5 GAINS EARNED ON TRANSFER OF PLOT VIDE THE JOINT DEV ELOPMENT AGREEMENT ENTERED INTO, THE OPERATING PART OF THE O RDER OF THE HON'BLE HIGH COURT IS REPRODUCED AS UNDER:- ' 46. WE SUMMARISE OUR CONCLUSIONS AS UNDER:- 1. PERUSAL OF THE IDA DATED 25.02.2007 READ WITH SALE DEEDS DATED 02.03.2007 AND 25.04.2007 IN RESPECT OF 3.08 ACRES AND 4.62 ACRES RESPECTIVELY WOULD REVEAL THAT THE PARTIES HAD AGREED FOR PRO- RATA TRANSFER OF LAND. 2. NO POSSESSION HAD BEEN GIVEN BY THE TRANSFEROR TO THE TRANSFEREE OF THE ENTIRE LAND IN PART PERFORMANCE OF JDA DATED 25.02.2007 SO AS TO FALL WITHIN THE DOMAIN OF SECTION 53A OF 1882 ACT. 3. THE POSSESSION DELIVERED, IF AT ALL, WAS AS A LICENSEE FOR THE DEVELOPMENT OF THE PROPERTY AND NOT IN THE CAPACITY OF A TRANSFEREE. 4. FURTHER SECTION 53A OF 1882 ACT, BY INCORPORATION, STOOD EMBODIED IN SECTION 2(47)(V) OF THE ACT AND ALL THE ESSENTIAL INGREDIENTS OF SECTION 53A OF 1882 ACT WERE REQUIRED TO BE FULFILLED. IN THE ABSENCE OF REGISTRATION OF JDA DATED 25.02.2007 HAVING BEEN EXECUTED AFTER 24.09.2001, THE AGREEMENT DOES NOT FALL UNDER SECTION 53A OF 1882 ACT AND CONSEQUENTLY SECTION 2(47)(V) OF THE ACT DOES NOT APPLY. 5. IT WAS SUBMITTED BY LEARNED COUNSEL FOR THE ASSESSEE-APPELLANT THAT WHATEVER AMOUNT WAS RECEIVED FROM THE DEVELOPER, CAPITAL GAINS TAX HAS ALREADY BEEN PAID ON THAT AND SALE DEEDS HAVE ALSO BEEN EXECUTED. IN VIEW OF CANCELLATION OF JDA DATED 25.02.2007, NO FURTHER AMOUNT HAS BEEN RECEIVED AND NO ACTION THEREON HAS BEEN TAKEN. IT WAS URGED THAT AS AND WHEN ANY AMOUNT IS RECEIVED CAPITAL GAINS TAX SHALL BE DISCHARGED THEREON IN ACCORDANCE WITH LAW. IN VIEW OF THE AFORESAID STAND, WHILE DISPOSING OF THE APPEALS, WE OBSERVE THAT THE ASSESSEE APPELLANTS SHALL REMAIN BOUND BY THEIR SAID STAND. 6. THE ISSUE OF EXIGIBILITY TO CAPITAL GAINS TAX HAVING BEEN DECIDED IN FAVOUR OF THE ASSESSEE, THE QUESTION OF EXEMPTION UNDER SECTION 54F OF THE ACT ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 6 WOULD NOT SURVIVE ANY LONGER AND HAS BEEN RENDERED ACADEMIC. 7. THE TRIBUNAL AND THE AUTHORITIES BELOW WERE NOT RIGHT IN HOLDING THE ASSESSEE-APPELLANT TO BE LIABLE TO CAPITAL GAINS TAX IN RESPECT OR REMAINING LAND MEASURING 13.5 ACRES FOR WHICH NO CONSIDERATION HAD BEEN RECEIVED AND WHICH STOOD CANCELLED AND INCAPABLE OF PERFORMANCE AT PRESENT DUE TO VARIOUS ORDER PASSED BY THE SUPREME COURT AND THE HIGH COURT IN PILS. THEREFORE, THE APPEALS ARE ALLOWED. 47. CONSEQUENTLY, THE SUBSTANTIAL QUESTIONS OF LAW AS REPRODUCED INTEREST HE BEGINNING OF THE JUDGMENT ARE ANSWERED IN THE MANNER INDICATED HEREINBEFORE AND THE APPEALS OF THE ASSESSEE ARE DISPOSED OF ACCORDINGLY. 6. AS PER THE ABOVE CONCLUSION OF THE HON'BLE HIGH COURT THE ASSESSEE WAS LIABLE TO CAPITAL GAINS ON THE AMOUNT ALREADY RECEIVED BY IT ON ACCOUNT OF SALE DEEDS EXECUTED VI S--VIS PORTION OF LAND OWNED BY THE ASSESSEE. THE SAID FINDING OF THE HON'BLE HIGH COURT IS AT PARA 5 & 7 OF THE CONCLUSION. IN THE PRESENT CASE, WE FIND THAT THOUGH THE ADMITTED FACT IS THAT THE ASSESSEE HAD RECEIVED AN AMOUNT OF RS.15 LACS DURING THE YEAR ON ACCOUNT OF SALE AGREEMENT EXECUTED, NO AMOUNT OF CAPITAL GAIN WAS OFFERED FOR TAXATION. IN VIEW OF THE JUDGMENT OF THE HON'B LE HIGH COURT IN THE CASE OF C.S. ATWAL (SUPRA), THE SAID AMOUNT WAS TO BE CONSIDERED FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS EARNED DURING THE YEAR. IT IS PERTINENT TO MENTION HERE T HAT THE ABOVE DECISION OF THE HON'BLE HIGH COURT HAS BEEN FURTHE R UPHELD BY THE HON'BLE SUPREME COURT VIDE JUDGEMENT DATED 4.1 0.2017 WITH THE LEAD CASE CIT VS. BALBIR SINGH MAINI ( SUPRA ). WE, THEREFORE, HOLD THAT THE ASSESSEE IS EXIGIBLE TO TA X TO THE EXTENT OF ITA NO. 812/CHD/2017- SH. SUKHDEV SINGH DHINDSA, CHANDIGARH 7 AMOUNT RECEIVED BY IT DURING THE YEAR FROM THE DEVELOPER, WHILE FOR THE BALANCE PORTION OF LAND FOR WHICH NO CONSIDERATION HAS BEEN RECEIVED, WE UPHOLD THAT THE ORDER OF THE LD.CIT(APPEALS) DELETING THE CAPITAL GAINS COMPUTED BY THE ASSESSING OFFICER ON THAT PORTION. IF THE SAID AMOU NT OF RS. 15 LACS HAS BEEN OFFERED FOR TAXATION IN THE NEXT ASS ESSMENT YEAR I.E. 2008-09, THE ASSESSING OFFICER WILL ADJUST THE TAXE S SO PAID IN THE NEXT YEAR INCLUDING INTEREST ACCRUED THEREUPON AGAI NST THE DEMAND FOR THE YEAR UNDER CONSIDERATION INCLUDING INTEREST ACCRUED THEREON. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS PAR TLY ALLOWED IN THE ABOVE TERMS. ORDER PRONOUNCED IN THE OPEN COURT SD/- SD/- (ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : . 09.07.2018 RKK COPY TO: THE APPELLANT THE RESPONDENT THE CIT THE CIT(A) THE DR