MURUGANAND SWARNAMALA, COIMBATORE V. ITO, INT. TAXATION WARD, COIMBATORE

ITA 82/CHNY/2023

AI Insights

The case involves Mrs. Muruganand Swarnamala, the appellant, contesting the final assessment order for the Assessment Year 2015-16, which added back Rs.8,32,89,990 as Long Term Capital Gains to her taxable income. This addition was based on the directions from the Dispute Resolution Panel-2, Bengaluru, which the appellant argued was contrary to previous Tribunal directions and lacked proper justification. The primary contention was whether the gains from a Joint Development Agreement (JDA) and subsequent agreements were correctly assessed under the applicable sections of the Income Tax Act, particularly section 2(47)(v). The Tribunal found factual discrepancies in the lower authorities' understanding of the agreements and the timing of the asset transfer, leading to the decision to remand the case for a fresh assessment.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 134377 (ITAT-CHENNAI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 04-07-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 23-01-2023
• Other Referred Cases: ITA No. 183/CHNY/2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Principle of natural justice; TDS; Capital Gains
• Section: 2; 143(3); 144C

Judgement Text

आयकर अपीलीय अिधकरण “सी” ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, CHENNAI माननीय ी महावीर िसंह, उपा एवं माननीय ी मनोज कु मार अ%वाल ,लेखा सद( के सम । BEFORE HON’BLE SHRI MAHAVIR SINGH, VP AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ ITA No.82/Chn y/2023 (िनधा)रण वष) / As sessment Year: 2015-16) Mrs. Muruganand Swarnamala 48, West Ponnurangam Road, R.S. Puram, Coimbatore-641 002. बनाम / V s . ITO International Taxation Ward, Coimbatore. थायीलेखासं./जीआइआरसं./PAN/GIR No. A G VP S- 95 13- R (अपीलाथ /Appellant) : ( थ / Respondent) अपीलाथ की ओर से/ Appellant by : Shri S.Sridhar, (Advocate)- Ld.AR थ की ओर से/Respondent by : Shri R.Clement Ramesh Kumar (CIT)- Ld. DR सुनवाईकीतारीख/Date of Hearing : 05-07-2023 घोषणाकीतारीख /Date of Pronouncement : 31-07-2023 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2015-16 arises out of final assessment order dated 10-01-2023 passed by Ld. Assessing Officer (AO) u/s 143(3) r.w.s. 263 pursuant to the directions of Ld. Dispute Resolution Panel-2, Bengaluru (DRP) u/s 144C(5) on 27-12- 2022. The assessee has taken following grounds of appeal: “1. The order of the ITO, INT TAXN WARD, Coimbatore dated 10.01.2023 vide DIN & Order No. ITBA/ AST /S/143(3)/2022-23/1048583444(1) for the above assessment year is contrary to law, facts, and in the circumstances of the case. 2. The ITO, INT TAXN WARD, Coimbatore erred in adding back Rs.8,32,89,990/- as Long Term Capital Gains as part of computation of taxable total income in implementing the order of the DRP dated 27.12.2022 without assigning proper reasons and justification. 2 ITA No.82/Chny/2023 3. The ITO, INT TAXN WARD, Coimbatore / DRP erred in ignoring and brushing aside/ overruling the modified directions of Income Tax Appellate Tribunal in their order dated07.09.2022 in ITA No. 183/CHNY /2022, wherein the Income Tax Appellate Tribunal in para 5 of the said order had directed no additions were to be made in the assessment year under consideration if income had already been offered by the appellant in the other assessment years, thereby vitiating the findings in para 6.0 of the impugned order. 4. The ITO, INT TAXN WARD, Coimbatore/ DRP failed to appreciate that the capital gains were computed and reported in the other assessment years, namely assessment year 2015-16 to 2018-19, confirmed by him in the remand order furnished to the DRP and further ought to have appreciated that the provisions of section 2(47)(v) of the Act had no application to the facts of the case, thereby vitiating the related finding thereto in the impugned order. 5. The ITO, INT TAXN WARD, Coimbatore / DRP erred in assuming the documents executed for completion of transactions as emanated from Joint Development Agreement dated 24.07.2013, the 'Development Agreement' dated 07.04.2014 and the 'Supplementary Agreement' dated 14.08.2014 and ought to have appreciated that in the process the decision of the jurisdictional bench of Income Tax Appellate Tribunal as sale document simplicitor was overruled by defying the principles of Judicial Discipline. 6. The ITO, INT TAXN WARD, Coimbatore/ DRP erred in assuming that the possession of disputed land was handed over to the developer /builder on 25.03.2015 and further erred in assuming that transfer of capital asset in terms of Section 2 (47) (v) of the Act had taken place during the assessment year under consideration for the purpose of justifying the assessment of capital gains in relation thereto. 7. The ITO, INT TAXN WARD, Coimbatore/ DRP failed to appreciate that restricted scope of proceedings before the DRP in view of the intervening order of the Income Tax Appellate Tribunal dated 07.09.2022 was completely overlooked and ought to have appreciated that the objections from the draft assessment order originally proposed, which draft assessment order prepared and circulated prior to the order of the Income Tax Appellate Tribunal would get automatically modified for adjudication for the DRP, thereby establishing excessive and wrong use of the powers vested under Section 144C of the Act. 8. The ITO, INT TAXN WARD, Coimbatore/ DRP failed to appreciate that there was no proper opportunity before passing of the orders and ought to have appreciated that any order passed in violation of principles of natural justice would be nullity in law. 9. The ITO, INT TAXN WARD, Coimbatore/ DRP failed to appreciate that the re- computation of Long-Term Capital Gains based on the non - existent/modified revisional order on various facets was wrong, erroneous, incorrect, invalid, unjustified and not sustainable both on facts and in law. As is evident, the assessee is aggrieved by confirmation of certain addition under the head Long-Term Capital Gains. 2. The Ld. AR submitted that lower authorities have not followed the directions given by Tribunal in ITA No.183/Chny/2022 dated 07.09.2022 wherein the assessee had challenged the validity of jurisdiction u/s 263. The Ld. AR submitted that the subsequent / 3 ITA No.82/Chny/2023 supplementary agreements were not acted upon and except for consideration of sale of land, the assessee did not receive any other consideration either in cash or in kind. The Ld. AR submitted that the factual findings rendered by lower authorities, in this regard, are erroneous. The Ld. CIT-DR submitted that the fact of subsequent agreement or supplementary agreement was not brought to the knowledge of the bench. Having heard rival submissions and upon perusal of case records, the appeal is disposed-off as under. 3. From the record it emerges the assessee was assessed u/s 143(3) on 20.11.2017 accepting returned income of Rs.462.73 Lacs. This order was subjected to revision by revisionary authority on the ground that the assessee entered into development agreement on 07.04.2014 with M/s R.R. Housing India P. Ltd. , Coimbatore for sale of assessee’s property for a consideration of Rs.1350 Lacs. However, the assessee admitted income of Rs.484.02 Lacs only on accrual basis and therefore, the balance amount of Rs.865.97 Lacs was to be brought to tax. At the time of hearing, Ld. AR submitted that full sale consideration was offered to tax in various years as under: - AY Sale consideration admitted as Receipts Long Term capital gain for which tax is paid 2015-16 4,84,02,710 4,56,00,754 2016-17 2,42,01,360 2,2,54,850 2017-18 3,34,82,537 3,11,08,307 2018-19 2,46,26,009 2,28,30,310 13,07,12,616 12,17,94,221 It was also submitted that the purchaser had deducted applicable TDS on these transactions. Accordingly, the revision of the order was opposed. Accepting the plea of the assessee, the bench observed that it 4 ITA No.82/Chny/2023 did not appear to be a case of Joint Development Agreement but a case of sale agreement simplicitor wherein the developer has developed the property and passed on sale consideration to the assessee. Based on sale deeds, the assessee already offered to tax full capital gains to tax. Accordingly revisionary order was modified and it was directed that if the income was offered by the assessee in various years, no further addition would be called for. The assessee was directed to demonstrate the same before lower authorities in consequential proceedings which, at that time, were pending before Ld. DRP. 4. The Ld. DRP observed that the assessee entered into joint development agreement on 24.07.2013. However, supplementary agreements were entered into on 07.04.2014 as well as on 14.08.2014. In the agreement dated 14.08.2014, out of 628 flats in the project, promoter/builder got around 450 flats whereas the owner / assessee got around 178 flats. Considering these facts, Ld. DRP held the transaction to be in the nature of JDA only. In such a case, the provisions of section 2(47)(v) would apply and the gains would be fully taxable in this year. In the present case, the assessee delivered the possession on 25.03.2015 and received part payment. It was thus held that full consideration would be taxable in this year only. Pursuant to the same, Ld. AO has passed an assessment order on 10.01.2023 bringing to tax differential gains of Rs.832.89 Lacs. Aggrieved, the assessee is in further appeal before us. 5. We find that there is factual difference as noted by Tribunal vis-à- vis as noted by Ld. DRP in its order. The same stem from the fact that supplementary agreements executed subsequently by the assessee were not brought to the knowledge of the Tribunal. Nevertheless, it is the 5 ITA No.82/Chny/2023 submissions of Ld. AR that the supplementary agreements were not acted upon and the assessee has not received any other consideration either in cash or in kind except sale consideration for land. It has further been submitted that the gains thus arising to the assessee has already been offered to tax in various years as tabulated above and there remain nothing to be brought to tax. Therefore, to resolve conflict of facts, we set aside the impugned order and restore the assessment back to the file of Ld. AO for fresh assessment. If the submissions of Ld. AR are found to be correct, the directions given in ITA No. ITA No.183/Chny/2022 dated 07.09.2022 shall be followed. The assessee is directed to substantiate its stand. 6. The appeal stand allowed for statistical purposes. Order pronounced on 31 st July, 2023. Sd/- Sd/- (MAHAVIR SINGH) (MANOJ KUMAR AGGARWAL) उपा / VICE PRESIDENT लेखा सद( / ACCOUNTANT MEMBER चे4ई Chennai; िदनांक Dated : 31-07-2023 DS आदेश की Aितिलिप अ %ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आय ु त/CIT 4. वभागीय त न ध/DR 5. गाड फाईल/GF