T. Raj Kumar (HUF), Hyderabad V. Income Tax Officer, Ward-10(5), Hyderabad

ITA 880/Hyd/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 1530 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 07-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S RAMA RAO
• Keywords: Capital asset
• Section: 147; 148; 144

Judgement Text

ITA NO 880 OF 2018 T RAJ KUMAR HUF HYDERABAD PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI S.RIFAUR RAHMAN, ACCOUNTANT MEMBER ITA NO.880/HYD/2018 (ASSESSMENT YEAR: 2010-11) SHRI T. RAJ KUMAR (HUF) HYDERABAD PAN:AADHT0016J VS INCOME TAX OFFICER WARD 10(5) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI S. RAMA RAO FOR REVENUE : SHRI R. MOHAN REDDY, DR O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS ASSESSEES APPEAL FOR THE A.Y 2010-11AGAINS T THE ORDER OF THE CIT (A)-6, HYDERABAD, DATED 26.02. 2018. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 1. THE ORDER OF THE LEARNED CIT (A) IS ERRONEOUS BOTH ON FACTS AND IN LAW. 2. THE LEARNED CIT (A) ERRED IN DECIDING THE APPEAL WITHOUT PROVIDING PROPER OPPORTUNITY; PARTICULARLY WHEN THE APPEALS OF THE OTHER CO-OWNERS WERE ALSO PENDING BEFORE THE LEARNED CIT (A). 3. THE LEARNED CIT (A) ERRED IN HOLDING THAT THERE WAS ANY TRANSFER OF PROPERTY DURING THE YEAR BY THE APPELLA NT IN FAVOUR OF SAPTAGIRI CONSTRUCTIONS WITHOUT CONSIDERI NG THE FACT THAT NO TRANSFER WAS EFFECTED DURING THE YEAR. 4. THE LEARNED CIT (A) OUGHT TO HAVE SEEN THAT THE SALE DEED EXECUTED BY SAPTAGIRI CONSTRUCTIONS WAS A SALE OF T HE DATE OF HEARING : 20.11.2018 DATE OF PRONOUNCEMENT : 28.11.2018 ITA NO 880 OF 2018 T RAJ KUMAR HUF HYDERABAD PAGE 2 OF 5 PROPERTY BY THE SAID CONCERN AS GENERAL POWER OF AT TORNEY ON ITS OWN AND NOT ON BEHALF OF THE APPELLANT. 5. THE LEARNED CIT (A) ERRED IN CONFIRMING DETERMIN ATION OF CAPITAL GAIN AT RS.33,81,122/- WITHOUT CONSIDERING THE FACT THAT THERE WAS NO TRANSFER OF PROPERTY DURING THE Y EAR. 6. ANY OTHER GROUND OR GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE IN THIS APPEAL IS THAT THE CAPITAL GAIN ARISING OUT OF AGREEMENT FOR DEVELOPMENT-CUM-G PA AND SIMILAR ISSUE HAD ARISEN IN THE CASE OF THE CO-OWNE RS OF THE PROPERTY BEFORE THE HON'BLE TRIBUNAL AND THE TRIBUN AL HAS HELD THAT THE CAPITAL GAINS IS NOT CHARGEABLE TO TAX IN THE RELEVANT A.Y. HE HAS FILED A COPY OF THE SAID ORDER BEFORE US. 3. THE LEARNED DR, HOWEVER, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. 4. HAVING GONE THROUGH THE MATERIAL ON RECORD AND A LSO THE DECISION OF THE COORDINATE BENCH TO WHICH BOTH OF US ARE SIGNATORIES, WE ALLOW THIS APPEAL. FOR THE SAKE OF READY REFERENCE, THE RELEVANT PORTION OF THE ITAT ORDER IS REPRODUCE D HEREUNDER: 8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT THE ISSUE IN DISPU TE IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH IN THE OTHER FAMILY MEMBERS CASE (SUPRA) WHEREIN THE COORDINATE BENCH HAS HELD AS UNDER: '8. CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED TH E MATERIAL ON RECORD. WE NOTICE THAT THE ASSESSMENT WAS REOPEN ED BY ISSUE OF NOTICE U/S 148 ON 29/03/2016 AND THE REASO N FOR REOPENING WAS SUBMITTED BY AO VIDE LETTER DATED 20/ 06/2016 ITA NO 880 OF 2018 T RAJ KUMAR HUF HYDERABAD PAGE 3 OF 5 (WE NOTICE THAT THE ASSESSEE LETTER REFERENCE WAS M ENTIONED AS 18/04/2014, WHEREAS THE ACTUAL LETTER REFERENCE WAS 18/04/2016), THERE IS A TYPOGRAPHICAL MISTAKE COMMI TTED BY AO). THE REASONS RECORDED BY AO TO REOPEN THE ASSES SMENT WAS AS UNDER: 'ON VERIFICATION OF THE LETTER OF THE DEVELOPER M/S SAPTAGIRI CONSTRUCTIONS LETTER DT: 22.12.2009 IT IS NOTICED T HAT THE BUILDER WAS READY TO HANDOVER THE POSSESSION OF CON STRUCTION SPACE TO THE LAND LORDS IN THE FY 2009-10 RELEVANT TO THE AY 2010-11. THEREFORE THERE WAS SIMULTANEOUS TRANSFER OF POSSESSION OF 55% OF LAND BY THE ASSESSEE TO THE BU ILDER AND POSSESSION OF 45% OF BUILT -UP ARE BY THE BUILDER T O THE ASSESSEE IN FY 2009 -10 IN TERMS OF SECTION 2(47) OF THE INCOME TAX ACT, 1961 READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT. ON VERIFICATION, IT IS NOTICED THA T THE ASSESSEE HAS NOT FILED HIS ROI FOR THE A. Y 2009-10. IN THE VIEW OF THE ABOVE, THE INCOME UNDER THE HEAD CAPITAL GAINS CHAR GEABLE TO TAX ON ACCOUNT OF TRANSFER OF THE SAID LAND HAS ESC APED ASSESSMENT WITHIN THE MEANING OF SEC.147 OF THE INC OME TAX ACT, 1961'. IT IS CLEAR THAT THE MAIN REASON FOR REOPENING/INIT IATING THE PROCEEDINGS ARE THE LETTER OF THE BUILDER, IN WHICH , IT IS STATED THAT THE BUILDINGS ARE READY FOR OCCUPATION AS PER THE JOINT DEVELOPMENT AGREEMENT (JDA). IT WAS ALSO BROUGHT TO THE NOTICE IN THE INITIAL STATE ITSELF THAT THE BUILDIN G CONSTRUCTED BY THE DEVELOPER ARE NOT AS PER THE NORMS AGREED AND SUBSEQUENTLY SUBJECT TO LITIGATION. THE FINAL ORDER OF THE ARBITRAL AWARD WAS ALSO SUBMITTED BEFORE THE AO. IT CLEARLY SHOWS THAT THE BUILDING CONSTRUCTED BY THE DEVELOPE R IS NOT AS PER APPROVAL AND THE SAME WAS NOT ACCEPTED BY THE A SSESSEE NOR POSSESSION WAS TAKEN. 8.1 BEFORE US, THE QUESTION RAISED IS, IN THE CASE OF 'JDA' TRANSACTION, AT WHAT POINT OF TIME, CAPITAL GAIN AR ISES. IT IS SETTLED LAW THAT IN THE YEAR IN WHICH THE POSSESSIO N OF THE PROPERTY IS PASSED ON TO THE DEVELOPER IS THE YEAR IN WHICH THE PROVISION OF CAPITAL GAINS GET ATTRACTED. IN THE CA SE OF POTLA NAGESWARA RAO (SUPRA) THE HON'BLE AP HIGH COURT HEL D AS UNDER: 'THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT AR E CONTEMPLATED AS TRANSFER WITHIN THE MEANING OF THE AFORESAID SECTION. WHEN THE TRANSFER IS COMPLETE, AUTOMATICAL LY, CONSIDERATION MENTIONED IN THE AGREEMENT FOR SALE H AS TO BE TAKEN INTO CONSIDERATION FOR THE PURPOSE OF ASSESSM ENT OF ITA NO 880 OF 2018 T RAJ KUMAR HUF HYDERABAD PAGE 4 OF 5 INCOME FOR THE ASSESSMENT YEAR WHEN THE AGREEMENT W AS ENTERED INTO AND POSSESSION WAS GIVEN. HERE, FACTUA LLY IT WAS FOUND THAT BOTH THE AFORESAID ASPECTS TOOK PLACE IN THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 2003- 04.' FROM THE ABOVE DECISION, WHEN THE TRANSFER IS COMPL ETE, AUTOMATICALLY, CONSIDERATION MENTIONED IN THE AGREE MENT FOR SALE HAS TO BE TAKEN INTO CONSIDERATION FOR THE PUR POSE OF ASSESSMENT OF INCOME FOR THE AY WHEN THE AGREEMENT WAS ENTERED INTO AND POSSESSION WAS GIVEN. THEREFORE, I N THE GIVEN CASE, THE ASSESSEE HAS ENTERED INTO 'JDA' IN THE YEAR 10/01/2000 AND POSSESSION WAS HANDED OVER FOR DEVEL OPMENT. BUT DUE TO OCCUPATION OF THE PROPERTY BY THE TENANT S, THE DEVELOPER WAS ABLE TO VACATE THE TENANTS ONLY IN TH E YEAR 2003. HENCE, IT CAN BE CONSTRUED THAT THE ACTUAL VA CANT POSSESSION WAS HANDED OVER TO THE DEVELOPER ONLY IN 2003. THEREFORE, THE ACTUAL TRANSFER TOOK PLACE IN THE YE AR 2003. THE PROVISIONS OF CAPITAL GAINS ARE ATTRACTED IN THE YE AR 2003. HENCE, THE STAND OF THE AO TO CHARGE THE CAPITAL GA INS IN THE YEAR 2010-11 IS NOT PROPER. SECONDLY, THE REASON FO R BRINGING TO TAX IN THE YEAR 2010 -11 WAS THE LETTER OF THE D EVELOPER TO ANNOUNCE THAT THE BUILDING IS READY FOR OCCUPATION WITHOUT COMPLYING TO THE 'JDA' AND APPROVAL NORMS. EVEN THO UGH THE SAME WAS BROUGHT TO THE NOTICE OF THE AO, ACCORDING TO US, THE REASON FOR REOPENING THE ASSESSMENT IS ON FAULT Y GROUND. 8.2 IN OUR CONSIDERED VIEW, THE INCOME CHARGEABLE T O TAX FALLS ONLY IN THE AY 2003-04 AND NOT IN AY 2010-11. THERE FORE, THE ASSESSMENT COMPLETED U/S 144 R.W.S. 147 IS HELD TO BE NOT IN ACCORDANCE WITH LAW, HENCE, THE SAME IS QUASHED. 8.3 SINCE, THE ASSESSMENT ITSELF IS QUASHED, THE OT HER GROUNDS RAISED BY THE ASSESSEE ARE NOT REQUIRED TO BE ADJUD ICATED AT THIS STAGE. THEREFORE, THE GROUND RAISED BY THE ASS ESSEE IN THIS REGARD IS ALLOWED. ' AS THE ISSUE IN DISPUTE IS MATERIALLY IDENTICAL TO THAT OF THE SAID CASES, FOLLOWING THE DECISION DRAWN THEREIN, W E SET ASIDE THE ORDER OF CIT(A) AND ALLOW THE GROUNDS RAISED BY THE ASSESSEE. 8.1 AS THE FACTS AND GROUNDS RAISED IN ALL OTHER AP PEALS ARE IDENTICAL TO THAT OF ITA NO. 981/HYD/2018 IN THE CA SE OF T. SRINIVASA RAO (HUF), FOLLOWING THE CONCLUSIONS DRAW N THEREIN WE ALLOW THE GROUNDS RAISED IN THESE APPEAL S AS WELL. ITA NO 880 OF 2018 T RAJ KUMAR HUF HYDERABAD PAGE 5 OF 5 9. IN THE RESULT, ALL THE APPEALS UNDER CONSIDERATI ON, ARE ALLOWED. 5. SINCE THE FACTS AND CIRCUMSTANCES IN THIS CASE A RE ALSO SIMILAR, RESPECTFULLY FOLLOWING THE SAME, ASSESSEE S APPEAL IS ALLOWED. 6. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH NOVEMBER, 2018. SD/- SD/- (S.RIFAUR RAHMAN) ACCOUNTANT MEMBER (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 28 TH NOVEMBER, 2018. VINODAN/SPS COPY TO: 1 SRI T. RAJ KUMAR (HUF) 3-37-18 RADHIKA COLONY, WE ST MARREDPALLY, HYDERABAD 500026 2 ITO WARD 10(5) IT TOWERS, AC GUARDS, HYDERABAD 3 CIT (A)-6 HYDERABAD 4 PR. CIT 6 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER