Rafia Hussian Rep by GPA Adeebunnisa Begum (Alias) Adeeb Ali Khan, Hyderabad, Hyderabad V. ITO, Ward-5(3), Hyderabad, Hyderabad

ITA 817/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2553 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 11-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: N SWAPNA
• Assessee Lawyers: ABU AKARAM
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Gift; Question of law; Cost of acquisition
• Section: 143(3); 50C; 54F; 147; 148; 54

Judgement Text

ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 1 OF 14 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER APPEAL NO APPELLANT RESPONDENT A.Y 816/HYD/2017 MRS. ADEEBUNNISA BEGUM, HYDERABAD PAN:AGPPA5733P INCOME TAX OFFICER WARD 5(3) HYDERABAD 2005-06 817/HYD/2017 MRS.RAFIA HUSSAIN HYDERABAD PAN:AJXPR 4536Q -DO- 2005-06 818/HYD/2017 SRI SYED MAQDOOM MOHIUDDIN, HYDERABAD PAN:AMLPM 6602R -DO- 2005-06 819/HYD/2017 MRS. NAJMA HUSSAIN, HYDERABAD PAN: AJJPN 8340 G -DO- 2005-06 820/HYD/2017 SRI SYED AZIZUDDIN ALI KHAN, HYDERABAD PAN: AICPA 9160B -DO- 2005-06 FOR ASSESSEE : SHRI ABU AKARAM FOR REVENUE : SMT. N. SWAPNA, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. ALL THE APPEALS ARE FILED BY THE RESPECTIVE ASSESS EES AGAINST THE ORDER OF THE CIT (A)-10, HYDERABAD, DAT ED 31.01.2017. SINCE ALL THE ASSESSEES ARE CO-OWNERS OF THE PROPER TY WHICH IS SOLD AND COMMON ISSUES ARE INVOLVED IN ALL THESE APPEALS , THEY WERE HEARD TOGETHER AND ARE DISPOSED OF BY THIS COMMON A ND CONSOLIDATED ORDER. FOR THE SAKE OF CONVENIENCE, THE GROUNDS OF APPEALS RAISED IN THE CASE OF MRS. ADEEBUNNISA BEGU M, IN ITA NO.816/HYD/2017 ARE REPRODUCED HEREUNDER: DATE OF HEARING : 15.09.2017 DATE OF PRONOUNCEMENT : 29.09.2017 ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 2 OF 14 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) FAILED TO APPRECIATE THE FACT THAT THE LEARNED INCOME- TAX OFFICER ERRED IN INVOKING THE PROVISIONS OF SECTION 147 OF THE INCOME- TAX ACT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 3. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE LEARNED INCOME- TAX OFFICER COULD NOT HAVE ISSUED NOTICE UNDER SECTION 148 OF THE INCOME-TAX ACT AFTER 31-03-2012 FOR THIS ASSESSMENT YEAR ,ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 4. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSMENT FOR THE ASSESSMENT YEAR GOT BARRED BY LIMITATION BY 31- 03-2012 AND SUCH THE INCOME-TAX OFFICER COULD NOT HAVE ISSUED A NOTICE UNDER SECTION 148 ON 14-03-2013, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 5. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT NO DIRECTION WAS GIVEN BY THE HON'BLE TRIBUNAL IN THIS CASE FOR REOPENING THE ASSESSMENT FOR THIS YEAR, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 6. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE HON'BLE TRIBUNAL COULD NOT HAVE TRAVELLED BEYOND THE ASSESSMENT YEAR WHICH WAS BEING DECIDED BY IT, I.E.- 2007-08 AND GIVE A DIRECTION FOR RE- OPENING THE ASSESSMENT YEAR FOR THE A. Y. 2005-06, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 7. WITHOUT PREJUDICE TO THE ABOVE CONTENTIONS THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 3 OF 14 ERRED IN CONFIRMING THE ORDER OF THE LEARNED INCOME- TAX OFFICER HOLDING THAT THE EXEMPTION UNDER SECTION 54F WAS NOT ALLOWABLE TO THE APPELLANT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 8. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE ORDER OF THE LEARNED INCOME-TAX OFFICER HOLDING THAT THE PROVISIONS OF THE SECTION 50C OF THE INCOME-TAX WERE APPLICABLE FOR DETERMINING AT THE CONSIDERATION, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 9. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING FACT THAT THE LEARNED INCOME-TAX OFFICER DID NOT AFFORD AN OPPORTUNITY TO THE APPELLANT BEFORE APPLYING THE PROVISION OF SECTION 50C OF THE INCOME-TAX ACT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 10. WITHOUT PREJUDICE TO THE ABOVE THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT THE LEARNED INCOME- TAX OFFICER ERRED IN ARRIVING AT THE CONSIDERATION BASED ON VALUE OF THE BUILT UP AREA AGREED TO BE ALLOTTED TO THE APPELLANT, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 11. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE CONSIDERATION AT RS.1,72,32,945 ALLEGEDLY BASED ON THE VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 12. THE LEARNED COMMISSIONER OF INCOME- TAX(APPEALS) ERRED IN CONFIRMING THE MARKET VALUE OF THE PROPERTY TRANSFERRED AS ON 01-04-1981 AT RS.200 PER SQUARE YARD, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 13. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THE FACT THAT ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 4 OF 14 VALUE AS PER THE REGISTRAR AS ON 01-04-1981 CANNOT BE TAKEN AS THE MARKET VALUE OF THE PROPERTY TRANSFERRED. 14. THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN NOT APPRECIATING THAT THE APPELLANT GOT THE PROPERTY VALUE BY AN APPROVED VALUER WHO VALUED THE PROPERTY AT RS.500 PER SQUARE YARD AND AS SUCH HE OUGHT TO DIRECTED THE INCOME TAX OFFICER TO ADOPT THE SAID VALUE, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE. 15. THE APPELLANT CRAVES LEAVE TO ADD TO, ALTER OR AMEND ANY OF THE AFORESAID GROUNDS AS ADVISED ON OR BEFORE THE DATE OF HEARING. 2. GROUNDS 1 AND 15 ARE GENERAL IN NATURE AND NEED NO ADJUDICATION. 3. GROUNDS 2 TO 6 ARE AGAINST THE REOPENING OF THE ASSESSMENT U/S 143(3) R.W.S.147 OF THE ACT. 4. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEES D ID NOT FILE ANY RETURN OF INCOME FOR THE YEAR UNDER CONSID ERATION. THE AO ISSUED NOTICE U/S 148 OF THE ACT ON THE GROUND THAT THE ASSESSEES FATHER, SHRI SYED JAMALUDDIN ALI KHAN, WHO WAS THE OWNER OF THE PROPERTIES BEARING NO.9-1-128 AND 9-1-128/1 SITUATE D AT S.D. ROAD, SECUNDERABAD HAD GIFTED CERTAIN PORTIONS OF H IS PROPERTY TO HIS CHILDREN AND THAT THE FATHER AND HIS CHILDREN B EING JOINT OWNERS AND POSSESSORS OF THE ABOVE PROPERTIES HAD E NTERED INTO A DEVELOPMENT AGREEMENT WITH M/S. SREEJI BUILDERS ON 31.12.2004 BY VIRTUE OF WHICH ALL THE ASSESSEES BEFORE US WERE TO RECEIVE FLATS BUILT ON 44% OF THE SUPER BUILT UP AREA, WHEREAS THE BUILDER ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 5 OF 14 WOULD HAVE RIGHTS TO SELL 55% OF THE AREA. IT WAS ST ATED BY THE ASSESSEE THAT THEY HAD ENTERED INTO AN MOU WITH M/S . SREEJI BUILDERS ON 11.03.2008, ON WHICH DATE THE FLATS WER E HANDED OVER BUT THAT THE MOU WAS NOT A REGISTERED DOCUMENT AND THE ASSESSEES STATED THAT NO CAPITAL GAIN AROSE ON THAT DAY. THE AO, HOWEVER, RELIED UPON THE SALE DEEDS DATED 27.12.200 6 AND 13.11.2006 WHEREBY THE CONSTRUCTED FLATS WERE SOLD AND THE SALE CONSIDERATION WAS RECEIVED TO CHARGE THE CAPITAL GA IN IN THE HANDS OF THE RESPECTIVE ASSESSEES FOR THE A.Y 2007-08. AGG RIEVED, THE ASSESSEES CARRIED THE MATTER IN APPEAL BEFORE THE C IT (A), WHO HELD THAT THAT THE VERY FACT THAT THE ASSESSEE AND THE CO-OWNERS ARE THE MAIN VENDORS INDICATED THAT THEY HAVE SOLD THEIR SHARE OF FLATS AND THAT THE FUNDAMENTAL ISSUE IS WHETHER THE TRANSFER TOOK PLACE IN THE FINANCIAL YEAR RELEVANT TO A.Y 2007-08 OR IN THE LATER YEAR. THE CIT (A) DIRECTED THE AO TO VERIFY THE EXT ENT OF SQUARE YARDS OF LAND OWNED BY THE RESPECTIVE ASSESSEES AND ALSO TO ESTIMATE THE VALUE OF THE LAND AS ON 1.4.1981 FOR T HE PURPOSE OF COMPUTING THE CAPITAL GAINS AND DENIED THE EXEMPTIO N U/S 54F IN RESPECT OF THE FLATS ALLOTTED TO THE RESPECTIVE ASS ESSEES. 5. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE T HE ITAT AND THE ITAT, AFTER CONSIDERING THE DECISION OF THE COORDINATE BENCH IN THE CASE POTLA NAGESWARA RAO VS. DCIT IN I TA NO.1519/HYD/2011 AND OTHERS DATED 22.03.2012 HELD T HAT AS THE DEVELOPMENT AGREEMENT WAS EXECUTED ON 31.12.200 4 BY THE ASSESSEES, THE CAPITAL GAIN CANNOT BE POSTPONED TO THE A.Y 2007- 08. THUS OBSERVING, THE TRIBUNAL DIRECTED THE AO TO DECIDE THE ISSUE DE NOVO IN THE LIGHT OF THE DECISIONS RELIED UPON BY THE TRIBUNAL TO COME TO THE ABOVE CONCLUSION. ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 6 OF 14 6. PURSUANT THERETO, TO GIVE EFFECT TO THE ORDER O F THE TRIBUNAL, THE AO ISSUED NOTICES U/S 148 OF THE ACT TO ALL THE ASSESSEES FOR THE A.Y 2005-06 BEING THE YEAR RELEVAN T TO THE PREVIOUS YEAR IN WHICH THE DEVELOPMENT AGREEMENT WA S EXECUTED. THE ASSESSEE TOOK AN OBJECTION THAT THE NOTICE U/S 148 WAS ISSUED AFTER EXPIRY OF MORE THAN SIX YEARS AND THEREFORE, THE SAME IS NOT SUSTAINABLE. THE ASSESSEE ALSO CHALLENGED THE SAID NOTICE IN THE HON'BLE JURISDICTIONAL HIGH COURT. THE HON'BLE HIGH COURT VIDE ORDER DATED 10.4.2014 DIRECTED THE REVENUE TO SUPPL Y THE REASONS IN WRITING TO THE ASSESSEE WITHIN A PERIOD OF A FOR TNIGHT FROM THE DATE OF COMMUNICATION OF ITS ORDER WHERE THE RETURN S HAVE ALREADY BEEN FILED AND WHERE THE RETURNS ARE NOT FILED, DIR ECTED THE PETITIONERS TO SUBMIT THE SAME AND SIMULTANEOUSLY T HE REASONS IN WRITING SHALL BE SUPPLIED. ACCORDINGLY, THE ASSESSE ES FILED THEIR RETURNS OF INCOME ON 15.5.2014 AND THE REASONS WERE COMMUNICATED VIDE LETTER DATED 18.7.2014. THE ASSES SEES FILED THEIR OBJECTIONS FOR REOPENING OF THE ASSESSMENTS P ARTICULARLY STATING THAT THE TRIBUNAL COULD NOT HAVE TRAVELLED BEYOND THE A.Y UNDER CONSIDERATION AND ALSO THAT UNDER SUB-SECTION (2) OF SECTION 150 OF THE I.T. ACT, THE PROVISIONS OF SUB-SECTION (1) SHALL NOT APPLY IN ANY CASE WHERE ANY SUCH ASSESSMENT, RE-ASS ESSMENT OR RE-COMPUTATION AS IT REFERRED TO, IN THAT SUB-SECTI ON, RELATES TO AN ASSESSMENT YEAR IN RESPECT OF WHICH AN ASSESSMENT O R RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME, THE ORDER WHICH WAS SUBJECT MATTER OF APPEAL, REFERENCE OR RE VISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PROVIS ION LIMITING THE TIME WITHIN WHICH ANY ACTION FOR ASSESSMENT, RE -ASSESSMENT OR RECOMPUTATION MAY BE TAKEN. ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 7 OF 14 7. THE OBJECTIONS OF THE ASSESSEES WERE, OVERRULED BY AN ORDER OF THE AO DATED 5.5.2015 HOLDING THAT THE TRI BUNAL HAS GIVEN A CLEAR DIRECTION TO ASSESS THE CAPITAL GAIN IN THE A.Y 2005- 06 AND IF THE ASSESSEE HAS ANY GRIEVANCE AGAINST TH E ORDER OF THE ITAT, HE OR SHE SHOULD HAVE TAKEN THE MATTER WITH T HE APPROPRIATE AUTHORITIES AND THE AO HAS TO FOLLOW THE DIRECTIONS OF THE HON'BLE TRIBUNAL. FURTHER, WITH REGARD TO THE OBJECTION THA T SUB-SECTION (1) OF SECTION 150 SHALL NOT APPLY AS PER SECTION 1 50(2) OF THE ACT, THE AO HELD THAT IN VIEW OF THE DIRECTIONS OF THE T RIBUNAL, NOTICE U/S 148 SHALL BE ISSUED NOTWITHSTANDING ANYTHING CO NTAINED IN SECTION 149, AND FURTHER THAT AS PER THE PROVISIONS OF SECTION 148, A NOTICE UNDER THAT SECTION CAN BE ISSUED ON OR BEF ORE 31.3.2012 FOR THE A.Y 2005-06 AND AN ORDER U/S 143(3) R.W.S. 1 44 R.W.S. 148 CAN BE PASSED WITHIN ONE YEAR FROM THE END OF THE F INANCIAL YEAR IN WHICH THE NOTICES WERE SERVED. THE AO HELD THAT HE COULD HAVE REOPENED THE ASSESSMENT FOR THE A.Y 2005-06 AT THE T IME OF PASSING THE ORDER BY THE CIT (A) I.E. ON 28.11.2011 FOR THE A.Y 2007-08, WHICH WAS SUBJECT MATTER OF APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL AND HENCE ACCORDING TO HIM, THE PROVISIONS OF SUB SECTION (2) DO NOT APPLY TO THE A SSESSEES CASE. 8. THEREAFTER, THE AO PROCEEDED TO CONSIDER THE ASSESSEES CONTENTION AS TO WHY THE CAPITAL GAIN ON DEVELOPMENT AGREEMENT SHALL NOT BE BROUGHT TO TAX. HE HELD THAT THE ITAT HAS HELD THAT BY VIRTUE OF THE DEVELOPMENT AGREEMENT, T HE CAPITAL GAIN IS LIABLE TO BE TAXED IN THE A.Y 2005-06 AND CANNOT BE POSTPONED TO THE A.Y 2007-08. AS REGARDS THE ASSESSEES OBJECT ION TO ADOPTING THE SALE CONSIDERATION U/S 50C OF THE I.T. ACT, THE AO ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 8 OF 14 CONSIDERED THE CONSTRUCTED AREA TO BE ALLOTTED TO T HE OWNERS AS PER THE MOU AND VALUED THE SAME AS PER THE STAMP DU TY ACT AND ADOPTED IT AS FAIR CONSIDERATION U/S 50C OF THE I.T . ACT. HE ALSO WORKED OUT THE COST OF ACQUISITION OF THE LAND AS O N 1.4.1981 AND COMPUTED THE LTCG. THE ASSESSEES CLAIM OF EXEMPTIO N U/S 54F WAS NOT ACCEPTED ON THE GROUND THAT THE RESPECTIVE ASSESSEES HAVE RECEIVED MORE THAN ONE RESIDENTIAL UNITS AND T HEREFORE, WERE NOT ELIGIBLE FOR EXEMPTION U/S 54F OF THE ACT. AGGR IEVED, THE ASSESSEE PREFERRED APPEALS BEFORE THE CIT (A) WHO R EJECTED THE SAME AND THE ASSESSEES ARE IN SECOND APPEAL BEFORE US. 9. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN O UR ATTENTION TO THE FINDINGS OF THE TRIBUNAL IN THE EA RLIER PROCEEDINGS WHEREBY THE TRIBUNAL HAS ONLY HELD THAT THE CAPITAL GAINS CANNOT BE POSTPONED TO THE A.Y 2007-08 AND HAS DIRECTED THE AO TO CONSIDER THE ISSUE ON MERIT DE NOVO. THIS DIRECTION OF THE TRIBUNAL, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, CANNOT BE CONSIDERED AS A FINDING OR DIRECTION UNDE R SUB SECTION (1) OF SECTION 150 OF THE I.T. ACT. HE SUBMITTED TH AT THE A.Y BEFORE THE TRIBUNAL IN THE EARLIER PROCEEDINGS WAS A.Y 2007 -08 AND THE TRIBUNAL COULD NOT HAVE GIVEN ANY DIRECTION FOR THE A.Y 2005-06 WHICH WAS NOT BEFORE IT. THEREFORE, ACCORDING TO HI M, THE PROVISIONS OF SUB SECTION (1) OF SECTION 150 ARE NO T APPLICABLE TO THE FACTS OF THE CASE BEFORE US. THE LEARNED COUNSE L FOR THE ASSESSEE FURTHER SUBMITTED THAT EVEN IF THE FINDING S OF THE TRIBUNAL IS TO BE CONSIDERED AS A FINDING OR DIRECT ION UNDER SUB SECTION (1) TO SECTION 150 OF THE ACT, IT IS SUBJEC T TO THE LIMITATION PRESCRIBED U/SUB SECTION 2 OF SECTION 150 OF THE I. T. ACT. HE SUBMITTED THAT THE ASSESSMENT COULD NOT BE REOPENED AFTER THE ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 9 OF 14 EXPIRY OF SIX YEARS FROM THE END OF THE RELEVANT A. Y AFTER 31.03.2012 AND HE SUBMITTED THAT IN THE CASE BEFORE US, THE PERIOD OF SIX YEARS HAVE LAPSED BEFORE THE AO ISSUE D NOTICE U/S 148 OF THE ACT ON 14.03.2013. THEREFORE, ACCORDING TO THE LEARNED COUNSEL FOR THE ASSESSEE, RE-ASSESSMENT NOTICES ARE NOT VALID. 10. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED TH E ORDERS OF THE AUTHORITIES BELOW. 11. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT IN THE EARLIER PROCEEDINGS, THE TRIBUNAL HAS HELD THAT THE CAPITAL GAIN WILL ARISE IN THE YE AR OF EXECUTING THE DEVELOPMENT AGREEMENT ALONG WITH HANDING OVER O F THE POSSESSION OF THE PROPERTY TO THE DEVELOPER. ADMITT EDLY, THE DEVELOPMENT AGREEMENT WAS ENTERED ON 31.12.2004 REL EVANT TO THE A.Y 2005-06 AND POSSESSION OF THE PROPERTY WAS A LSO HANDED OVER ON THE SAME DAY. THEREFORE, THE AO HAS ISSUED NOTICE U/S 148 OF THE I.T. ACT ON 14.3.2013. SECTION 149 OF TH E ACT PRESCRIBES THE TIME LIMIT FOR ISSUANCE OF NOTICE U/S 148 WHILE SECTION 150 OF THE I.T. ACT EMPOWERS THE AO TO ISSUE A NOTICE U/S 148, NOTWITHSTANDING ANYTHING CONTAINED IN SECTION 149 O F THE ACT, AT ANY TIME, FOR THE PURPOSE OF MAKING AN ASSESSMENT, REASSESSMENT OR RECOMPUTATION IN CONSEQUENCE OR TO GIVE EFFECT T O ANY FINDING OR DIRECTION CONTAINED IN ANY ORDER PASSED BY ANY AUTH ORITY IN ANY PROCEEDINGS UNDER THE ACT BY WAY OF APPEAL, REFEREN CE OR REVISION. HOWEVER, THIS POWER IS LIMITED BY SUB SECTION (2) O F SECTION 150 OF THE ACT WHICH PROVIDES THAT THE PROVISION OF SUB SE CTION (1) SHALL NOT APPLY WHERE ANY SUCH ASSESSMENT, RE-ASSESSMENT OR ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 10 OF 14 RECOMPUTATION AS IS REFERRED TO IN THAT SUB SECTION RELATES TO ANY A.Y IN RESPECT OF WHICH AN ASSESSMENT, RE-ASSESSMENT OR RECOMPUTATION COULD NOT HAVE BEEN MADE AT THE TIME THE ORDER WHICH WAS SUBJECT-MATTER OF THE APPEAL, REFERENCE O R REVISION, AS THE CASE MAY BE, WAS MADE BY REASON OF ANY OTHER PR OVISION LIMITING THE TIME LIMIT IN WHICH ANY ACTION FOR ASS ESSMENT, RE- ASSESSMENT OR RECOMPUTATION MAY BE TAKEN. THE AMBIT AND SCOPE OF SUB-SECTION 2 OF SECTION 150 HAS BEEN CONSIDERED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. G. VISHWANATHAM (172 ITR 401) AND IT HAS BEEN HELD THA T INITIATION OF RE-ASSESSMENT PROCEEDINGS WOULD BE BANNED EVEN W HEN THEY ARE INITIATED IN CONSEQUENCE OR TO GIVE EFFECT TO A NY FINDING OR DIRECTION CONTAINED IN THE APPELLATE ORDER, IF SUCH INITIATION OF RE- ASSESSMENT PROCEEDINGS IS BARRED BY ANY OTHER PROVI SION OF THE ACT ON THE DATE OF THE ORDER WHICH IS SUBJECT-MATTE R OF APPEAL. APPLYING THE SAID RATIONALE TO THE FACTS OF THE CAS E BEFORE US, IT IS SEEN THAT THE NOTICE U/S 148 WAS ISSUED ON 14.3.201 3 AND THE ORDER WHICH WAS THE SUBJECT-MATTER OF APPEAL BEFORE THE TRIBUNAL WAS DATED 30.06.2011. THE A.Y BEFORE US IS 2005-06 A ND AS PER SECTION 149(1)(B) OF THE ACT, SIX YEARS FROM THE EN D OF THE RELEVANT A.Y IS 31.03.2012 BEYOND WHICH PERIOD A NOTICE U/S 1 48 CANNOT BE ISSUED FOR THE A.Y 2005-06. SINCE AS PER SECTION 2 OF SECTION 150, THE NOTICE U/S 148 CANNOT BE ISSUED IF THE ORD ER UNDER APPEAL BEFORE THE TRIBUNAL, WAS BEYOND THE LIMITATI ON PERIOD PRESCRIBED U/S 149(1)(B) OF THE ACT. HOWEVER, WE FI ND THAT THE ORDER OF THE CIT (A) WHICH IS SUBJECT MATTER OF APP EAL BEFORE THE TRIBUNAL IS DATED 30.06.2011 IS WELL WITHIN THE PER IOD OF SIX YEARS FROM THE END OF THE RELEVANT FINANCIAL YEAR AND THE REFORE, THE PROCEEDINGS INITIATED BY THE AO BY ISSUANCE OF NOTI CE U/S 148 FOR ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 11 OF 14 THE A.Y 2005-06 IN THE CASE OF THE ASSESSEE IS SUSTA INABLE. THEREFORE, WE SEE NO REASON TO INTERFERE WITH THE O RDER OF THE CIT (A) ON THIS ISSUE. THUS, GROUNDS OF APPEAL NOS. 2 T O 6 ARE REJECTED. 12. AS REGARDS GROUND NO.7 IS CONCERNED, THE LEARNE D COUNSEL FOR THE ASSESSEE SUBMITTED THAT BY VIRTUE O F VARIOUS DECISIONS OF THE TRIBUNAL AND ALSO THE JURISDICTION AL HIGH COURT IN THE CASE OF SHRI SYED ALI ADIL (352 ITR 0418) AND A LSO THE DECISION OF THE HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS.V.R. KARPAGAM (373 ITR 0127) AND THE HON'BLE KARNATAKA H IGH COURT IN THE CASE OF CIT VS.SMT. K.G. RUKMINIAMMA (331 IT R 0211), THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 54F OF THE ACT IN RESPECT OF MORE THAN ONE RESIDENTIAL FLATS R ECEIVED BY VIRTUE OF A DEVELOPMENT AGREEMENT. WE FIND THAT THIS ISSUE IS NOW FAIRLY COVERED BY THE DECISION OF VARIOUS HIGH COURTS IN F AVOUR OF THE ASSESSEE. THE RELEVANT PARAGRAPHS ARE REPRODUCED HE REUNDER FOR READY REFERENCE: I) CIT VS. SMT. K.G. RUKMINIAMMA: 12 . IN THE INSTANT CASE, THE FACTS ARE NOT IN DISPUTE. ON A SITE MEASURING 30 X 110, THE ASSESSEE HAD A RESIDENTIA L PREMISES. UNDER A JOINT DEVELOPMENT AGREEMENT, SHE GAVE THAT PROPERTY TO A BUILDER FOR PUTTING UP FLATS. UNDER THE AGREEMENT EIGHT FLATS ARE TO BE PUT UP IN THAT PROPERTY AND FOUR FLATS REPRES ENTING 48% IS THE SHARE OF DIE ASSESSEE AND THE REMAINING 52% REP RESENTING ANOTHER FOUR FLATS IS THE SHARE OF THE BUILDER. SO, THE CONSIDERATION FOR SELLING 52% OF THE SITE IS FOUR FLATS REPRESENT ING 48%. AH THE FOUR FIATS ARE SITUATE IN A RESIDENTIAL BUILDING. T HESE FOUR RESIDENTIAL FLATS CONSTITUTE A RESIDENTIAL HOUSE FOR THE PURPOSE OF SECTION 54. PROFIT ON SALE OF PROPERTY IS USED FOR RESIDENCE. THE FOUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSES FOR THE PURPOSE OF SECTION 545 IT. HAS TO BE CONSTRUED ONLY AS A RESIDENTIAL HOUSE AND THE ASSESSES IS E NTITLED TO THE BENEFIT ACCORDINGLY. ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 12 OF 14 II) CIT VS. V.R. KARPAGAM 9. IT IS RELEVANT TO NOTE HEREIN THAT AN AMENDMENT WA S MADE TO THE ABOVE-SAID PROVISION WITH REGARD TO THE WORD 'A' BY THE FINANCE (NO.2) ACT, 2014, WHICH WILL COME INTO EFFECT FROM 01.04.2 015. THE SAID AMENDMENT READS AS FOLLOWS: ' 32A. WORDS 'CONSTRUCTED, ONE RESIDENTIAL HOUSE IN I NDIA' SHALL BE SUBSTITUTED FOR 'CONSTRUCTED, A RESIDENTIAL HOUSE' BY THE FINANCE (NO.2) ACT, 2014, WITH EFFECT FROM 01.04.2015.' 10. THE ABOVE-SAID AMENDMENT TO SECTION 54F OF THE INC OME TAX ACT, WHICH WILL COME INTO EFFECT ONLY FROM 01.04.2015, M AKES IT VERY CLEAR THAT THE BENEFIT OF SECTION 54F OF THE INCOME TAX A CT WILL BE APPLICABLE TO CONSTRUCTED, ONE RESIDENTIAL HOUSE IN INDIA AND THAT CLARIFIES THE SITUATION IN THE PRESENT CASE, I.E., POST AMENDMENT , VIZ., FROM 01.04.2015, THE BENEFIT OF SECTION 54F WILL BE APPL ICABLE TO ONE RESIDENTIAL HOUSE IN INDIA. PRIOR TO THE SAID AMEND MENT, IT IS CLEAR THAT A RESIDENTIAL HOUSE WOULD INCLUDE MULTIPLE FLATS/RE SIDENTIAL UNITS AS IN THE PRESENT CASE WHERE THE ASSESSEE HAS GOT FIVE RE SIDENTIAL FLATS. WE MAY ALSO MENTION HERE THAT ALL THE AUTHORITIES BELO W HAVE CLEARLY UNDERSTOOD THAT THE AGREEMENT SIGNED BY THE ASSESSE E WITH M/S. MOUNT HOUSING INFRASTRUCTURE LTD., IS THAT THE ASSESSEE W ILL RECEIVE 43.75% OF THE BUILT- UP AREA AFTER DEVELOPMENT, WHICH IS CONS TRUED AS ONE BLOCK, WHICH MAY BE ONE OR MORE FLATS. IN THAT VIEW OF THE MATTER WHAT WAS BEFORE THE ASSESSING OFFICER IS ONLY EQUIVALENT OF 56.25% OF LAND TRANSFERRED, EQUIVALENT TO 43.75% OF BUILT UP AREA RECEIVED BY THE ASSESSEE. THIS BUILT UP AREA GOT TRANSLATED INTO FI VE FLATS. HENCE, WE ARE OF THE OPINION THAT THE TRANSACTION IN THIS CASE WA S NOT WITH REGARD TO THE NUMBER OF FLATS BUT WITH REGARD TO THE PERCENTA GE OF THE BUILT UP AREA, VIS-A-VIS, THE UNDIVIDED SHARE OF LAND. III) CIT VS. SYED ALI ADIL 10. WE SEE NO FORCE IN THE SAID CONTENTION. AS HELD IN D. ANANDA BASAPPA'S CASE (SUPRA) BY THE KARNATAKA HIGH COURT, THE EXPRESSION 'A RESIDENTIAL HOUSE' IN SECTION 54 (1) OF THE ACT HAS TO BE UNDERSTOOD IN A SENSE THAT THE BUILDING SHOULD BE OF RESIDENTIAL NA TURE AND 'A' SHOULD NOT BE UNDERSTOOD TO INDICATE A SINGULAR NUMBER AND WHERE AN ASSESSEE HAD PURCHASED TWO RESIDENTIAL FLATS, HE IS ENTITLED TO EXEMPTION UNDER SECTION 54 IN RESPECT OF CAPITAL GAINS ON SALE OF I TS PROPERTY ON PURCHASE OF BOTH THE FLATS, MORE SO, WHEN THE FLATS ARE SITUATED SIDE BY SIDE AND THE BUILDER HAS EFFECTED MODIFICATION OF T HE FLATS TO MAKE IT AS ONE UNIT, DESPITE THE FACT THAT THE FLATS WERE PURC HASED BY SEPARATE SALE DEEDS. THIS DECISION WAS FOLLOWED BY THE KARNATAKA HIGH COURT IN CIT V. SMT. K.G. RUKMINIAMM A [2011] 196 TAXMAN 87/[2010] 8 TAXMANN.COM 121 (KAR.) WHERE A RESIDENTIAL HOUSE WAS TRANSFERRED AND FOUR FLATS IN A SINGLE RE SIDENTIAL COMPLEX ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 13 OF 14 WERE PURCHASED BY THE ASSESSEE, IT WAS HELD THAT AL L FOUR RESIDENTIAL FLATS CONSTITUTED 'A RESIDENTIAL HOUSE' FOR THE PUR POSE OF SECTION 54 AND THAT THE FOUR RESIDENTIAL FLATS CANNOT BE CONSTRUED AS FOUR RESIDENTIAL HOUSES FOR THE PURPOSE OF SECTION 54. ADMITTEDLY TH E TWO FLATS PURCHASED BY THE ASSESSEE ARE ADJACENT TO ONE ANOTHER AND HAV E A COMMON MEETING POINT. IN THE IMPUGNED ORDER, THE TRIBUNAL HAS ALSO RELIED UPON THE DECISIONS IN K.G. VYAS'S CASE (SUPRA), P.C. RAM AKRISHNA, HUF'S CASE (SUPRA) AND PREMPRAKASH BHUTANI'S CASE ( SUPRA) WHEREIN IT WAS HELD THAT EXEMPTION UNDER SECTION 54 ONLY RE QUIRES THAT THE PROPERTY SHOULD BE OF RESIDENTIAL NATURE AND THE FA CT THAT THE RESIDENTIAL HOUSE CONSISTS OF SEVERAL INDEPENDENT UNITS CANNOT BE AN IMPEDIMENT TO GRANT RELIEF UNDER SECTION 54 EVEN IF SUCH INDEPEND ENT UNITS WERE ON DIFFERENT FLOORS. THE DECISION IN MS.SUSEELA M.JHAV ERI'S CASE (SUPRA) HOLDING THAT ONLY ONE RESIDENTIAL HOUSE SHOULD BE G IVEN THE RELIEF UNDER SECTION 54 DOES NOT APPEAR TO BE CORRECT AND WE DIS APPROVE OF IT. WE AGREE WITH THE INTERPRETATION PLACED ON SECTION 54 BY THE HIGH COURT OF KARNATAKA IN D. ANANDA BASAPPA'S CASE (SUPRA) AND S MT. K.G. RUKMINIAMMA'S CASE (SUPRA) AND THE DECISIONS OF THE MUMBAI, CHENNAI AND DELHI BENCHES OF THE TRIBUNAL IN K.G. VYAS (SUP RA), P.C. RAMAKRISHNA, HUF (SUPRA) AND PRAKASH BHUTANI (SUPRA ). WE THEREFORE HOLD THAT THE CIT (APPEALS) WAS CORRECT IN SETTING ASIDE THE ORDER OF THE ASSESSING OFFICER AND THE TRIBUNAL RIGHTLY CONFIRME D THE DECISION OF THE CIT (APPEALS). 11 . WE HOLD THAT NO SUBSTANTIAL QUESTION OF LAW ARISE S FOR CONSIDERATION IN THIS APPEAL AND THE SAME IS ACCORDINGLY DISMISSE D. NO COSTS. THEREFORE, THE GROUND OF APPEAL NO.7 IS ALLOWED. 13. AS REGARDS GROUNDS OF APPEAL NOS. 8 TO 14 ARE CONCERNED ON THE APPLICABILITY OF THE PROVISIONS OF SECTION 50C OF THE I.T. ACT, WE FIND THAT THE AO HAS ADOPTED THE S RO VALUE OF FLATS RECEIVED BY THE ASSESSEE AS CONSIDERATION FOR THE TRANSFER OF THE LAND UNDER THE DEVELOPMENT AGREEMENT U/S 50C OF THE ACT. IN OUR OPINION, THIS IS NOT CORRECT. THE COST OF THE C ONSTRUCTED AREA RECEIVED BY THE ASSESSEE SHOULD BE TAKEN AS THE CON SIDERATION RECEIVED BY THE ASSESSEE IN LIEU OF THE DEVELOPMENT AGREEMENT AND NOT THE SRO VALUE. THE SRO VALUE U/S 50C OF THE ACT WOULD COME INTO PLAY WHEN THE ASSESSEES SELL THEIR SHARE OF TH E FLATS AND IF THE SALE CONSIDERATION RECEIVED BY THEM IS LESS THAN TH E SRO VALUE. THEREFORE, THE AO IS DIRECTED TO TAKE THE COST OF C ONSTRUCTION OF ITA NOS 816 TO 820 OF 2017 SYED JAM ALUDDIN ALI KHAN AND OTHERS. PAGE 14 OF 14 THE FLATS BY THE BUILDER AS THE SALE CONSIDERATION RECEIVED BY THE ASSESSEE FOR TRANSFER OF LAND TO THE DEVELOPMENT FO R COMPUTING THE LONG TERM CAPITAL GAIN. 14. IN THE RESULT, ASSESSEES APPEALS ARE PARTLY AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH SEPTEMBER, 2017. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 29 TH SEPTEMBER, 2017. VINODAN/SPS COPY TO: 1 M/S. M.A. MOHIAADDIN & CO. CAS, 307, LENAINE ESTA TE, ABID ROAD, HYDERABAD 500001 2 INCOME TAX OFFICER WARD 5(3) HYDERABAD 3 CIT (A)-10 HYDERABAD 4 PR. CIT IV HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER