DCIT, Circle-3(1), Hyd, Hyderabad V. Rajwant Hotels Pvt.Ltd., Hyd, Hyderabad

ITA 907/HYD/2015

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 6610 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 12-04-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 03-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G V HEMALATHA DEVI
• Assessee Lawyers: B SHANTHI KUMAR
• Keywords: Capital asset; Reasonable cause
• Section: 133A; 133(6); 148

Judgement Text

ITA NO 907 OF 2015 RAJWANT HOTELS P LTD HYDERABAD. PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD A BENCH, HYDERABAD BEFORE SHRI P.MADHAVI DEVI, JUDICIAL MEMBER & SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.907/HYD/2015 (ASSESSMENT YEAR: 2008-09) DY. COMMISSIONER OF INCOME TAX CIRCLE 3(1) HYDERABAD VS. M/S. RAJWANT HOTELS PRIVATE LIMITED, HYDERABAD PAN: AAECS 2384 M (APPELLANT) (RESPONDENT) FOR REVENUE : SMT. G.V. HEMALATHA DEVI, DR FOR ASSESSEE : SHRI B. SHANTHI KUMAR DATE OF HEARING : 12.04.2016 DATE OF PRONOU NCEMENT : 29.04 .2016 O R D E R PER SMT. P. MADHAVI DEVI, J.M. THIS IS REVENUES APPEAL FOR THE A.Y 2008-09. IN TH IS APPEAL, THE REVENUE IS AGGRIEVED BY THE ORDER OF TH E CIT (A) IN DIRECTING THE AO TO ADOPT THE MARKET VALUE OF THE P ROPERTY AT RS.16,72,80,000 AS AGAINST THE VALUE OF RS.29,27,40 ,000 MENTIONED IN THE REGISTERED DEVELOPMENT AGREEMENT. THE OTHER GROUND RAISED IS ALSO AGAINST THE ORDER OF THE CIT (A) IN ACCEPTING THE EVIDENCE PRODUCED BY THE ASSESSEE OBTAINED THRO UGH RTI, WITHOUT PROVIDING AN OPPORTUNITY TO THE AO AS REQUI RED UNDER RULE 46A OF THE I.T. RULES, 1962. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, W HICH IS ENGAGED IN THE HOTEL INDUSTRY, FILED ITS RETURN OF INCOME FOR THE ITA NO 907 OF 2015 RAJWANT HOTELS P LTD HYDERABAD. PAGE 2 OF 5 RELEVANT A.Y 2008-09 ON 09.06.2009 ADMITTING NIL INCOME. DURING THE SURVEY OPERATIONS CONDUCTED ON THE BUSIN ESS PREMISES OF THE ASSESSEE U/S 133A OF THE ACT ON 19. 03.2012, IT WAS NOTICED THAT THE ASSESSEE COMPANY HAS ENTERED I NTO A REGISTERED DEVELOPMENT AGREEMENT ON 16.04.2007 WITH M/S RRS REALTORS PVT LTD (DEVELOPER), AS PER WHICH THE PREM ISES ADMEASURING 8364 SQ. YARDS LOCATED IN PREMISES NO.6 -3-1237, 1237A AND 1238, RAJBHAVAN ROAD, SOMAJIGUDA, HYDERAB AD BELONGING TO THE ASSESSEE WAS GIVEN FOR DEVELOPMENT FOR CONSTRUCTION OF RESIDENTIAL FLATS AND THE DEVELOPER SHALL MAKE SUCH DEVELOPMENT AT ITS COST AND DELIVER 30% OF THE BUILT UP AREA TO THE LAND OWNER TOWARDS ITS SHARE AND THE DEVELOP ER SHALL RETAIN 70% OF THE BUILT UP AREA TOWARDS ITS SHARE. IT WAS NOTICED THAT IN THE RETURN OF INCOME FILED, THE ASSESSEE CO MPANY HAS NOT OFFERED ANY CAPITAL GAINS ON ACCOUNT OF THE TRANSFE R OF THE CAPITAL ASSET TO THE DEVELOPER. THEREFORE, THE ASSESSMENT W AS REOPENED BY ISSUANCE OF A NOTICE U/S 148 DATED 11.09.2012. I N RESPONSE TO THE SAID NOTICE, THE ASSESSEE FILED A LETTER DATED 28.12.2012 FILED ON 02.01.2013 REQUESTING THE AO TO CONSIDER THE RET URN FILED ON 9.6.2009 AS THE RETURN FILED IN RESPONSE TO THE NOT ICE U/S 148 OF THE ACT. THEREAFTER, THE ASSESSEE COMPANY ALSO REQU ESTED THE AO TO FURNISH THE REASONS RECORDED FOR ISSUANCE OF NOT ICE U/S 148. THE ASSESSEE FURNISHED THE SAME ON 30.07.2013. DURI NG THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE VALUE OF THE TRANSFERRED PROPERTY IS TO BE ADOPTED AT RS.16,72,80,000 I.E. 8364 SQ. YARDS X RS.20,000 PER SQ. YARD, WHICH IS THE VALUE OF THE PROPERTY AS PER REGISTRAT ION AUTHORITIES. AO, HOWEVER, WAS NOT CONVINCED WITH THE CONTENTION AND HELD THAT THE VALUE OF THE PROPERTY AS MENTIONED IN THE REGISTERED ITA NO 907 OF 2015 RAJWANT HOTELS P LTD HYDERABAD. PAGE 3 OF 5 DEVELOPMENT AGREEMENT DATED 16.04.2007 IS RS.29,27, 40,000 WHICH NEEDS TO BE ADOPTED. ACCORDINGLY CAPITAL GAIN S WAS WORKED OUT AT RS.29,27,40,000 AND ACCORDINGLY BROUGHT TO T AX. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A) WHO ALLOWED THE SAME AND AGGRIEVED BY THE RELIEF GR ANTED BY THE CIT (A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DR, WHILE SUPPORTING THE ORDER OF TH E AO, SUBMITTED THAT THE ASSESSEE ITSELF HAS REGISTERED T HE DEVELOPMENT AGREEMENT ON 16.04.2012 AND THE SRO VALUE AS GIVEN IN THE DOCUMENT IS RS.29,27,40,000 AS AGAINST THE SRO VALU E OF RS.16,72,80,000. THEREFORE, SINCE THE MARKET VALUE OF THE PROPERTY WAS MUCH MORE THAN THE SRO VALUE, THE MARK ET VALUE WAS RIGHTLY ADOPTED BY THE AO. 4. THE LEARNED COUNSEL OF THE ASSESSEE, ON THE OTHE R HAND, SUBMITTED THAT THE DEVELOPMENT AGREEMENT WAS ENTERE D INTO ONLY FOR DEVELOPMENT OF THE PROPERTY AND THE CONSIDERATI ON FOR SUCH DEVELOPMENT OF THE PROPERTY WAS ONLY MENTIONED AS T HE PROPORTION OF SHARING OF THE DEVELOPED PROPERTY AND NO MONETARY CONSIDERATION WAS MENTIONED. HE SUBMITTED THAT THE ASSESSEE HAD PAID THE REGISTRATION CHARGES OF RS.50,000 ONLY AND THEREFORE, THOUGH THE SRO HAS MENTIONED THE VALUE O F THE PROPERTY AS RS.29,27,40,000 IN THE DOCUMENT, AT THE TIME OF REGISTRATION, THE ASSESSEE DID NOT OBJECT TO THE SA ME. HE SUBMITTED THAT THERE WAS AN ERROR COMMITTED IN TAKI NG THIS VALUE AS IS EVIDENT FROM THE FACT THAT THE SRO HIMSELF HA S SUBSEQUENTLY CERTIFIED THAT THE CORRECT VALUE OF T HE PROPERTY AS PER ITS RECORDS IS RS.16,72,80,000. HE SUBMITTED TH AT THIS ITA NO 907 OF 2015 RAJWANT HOTELS P LTD HYDERABAD. PAGE 4 OF 5 CLARIFICATION FROM THE SRO WAS GIVEN ON 8.11.2012 D IRECTLY TO THE AO WHEN THE INFORMATION WAS CALLED FOR U/S 133(6) O F THE I.T. ACT AND NOT AT THE BEHEST OF THE ASSESSEE. THUS, THERE IS NO VIOLATION OF RULE 46A AS IT IS NOT THE ASSESSEE WHO HAS FILED THE EVIDENCE AND THE EVIDENCE WAS CALLED FOR BY THE AO. 5. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, WE FIND THAT THE DEVELOPMENT AGREEMENT IS P LACED IN THE PAPER BOOK BEFORE US AND THERE IS NO MONETARY VALUE FOR THE DEVELOPMENT MENTIONED IN THE AGREEMENT, BUT IT IS O NLY THE RATIO OF SHARING OF THE DEVELOPED PROPERTY WHICH IS MENTI NED THEREIN. FURTHER, WE ALSO FIND THAT THE REGISTRATION CHARGES ARE PAID ON THE BASIS OF THE MARKET VALUE OF THE SRO VALUE OF T HE PROPERTY, BUT IN THE CASE BEFORE US, AS IT IS ONLY A DEVELOPM ENT AGREEMENT, A LUMPSUM AMOUNT OF RS.50,000 ONLY WAS PAID. FURTHE R, WE ALSO FIND THAT THE SRO HIMSELF, IN RESPONSE TO THE NOTIC E U/S 133(6) OF THE ACT, HAD VIDE LETTER DATED 22.06.2012 REPLIED T HAT THE SALE CONSIDERATION FOR THE PROPERTY SHOULD BE ADOPTED AT RS.16,72,80,000. FURTHER, SUCH CERTIFICATE WAS FURN ISHED DIRECTLY TO THE AO, AT THE REQUEST OF THE AO AND THEREFORE, THERE IS NO VIOLATION OF RULE 46A OF THE ACT. FURTHER, THE CERT IFICATE WAS GIVEN BY THE SRO, ANOTHER GOVT. AGENCY AND THEREFORE, CAN NOT BE DOUBTED WITHOUT REASONABLE CAUSE. NO SUCH REASONABL E CAUSE HAS BEEN DEMONSTRATED BY THE LEARNED DR. IN FACT, WE FIND THAT THE CIT (A) HAS CORRECTLY CONSIDERED ALL THE NECESS ARY FACTS BEFORE ALLOWING THE ASSESSEES APPEAL. IN VIEW OF THE SAME WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT ( A) AND ACCORDIGLY THE REVENUES APPEAL IS DISMISSED. ITA NO 907 OF 2015 RAJWANT HOTELS P LTD HYDERABAD. PAGE 5 OF 5 6. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DI SMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2016. S D/ - S D/ - (B.RAMAKOTAIAH) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED 29 TH APRIL, 2016. VNODAN/SPS COPY TO: 1. DY. COMMISSIONER OF INCOME TAX, CIRCLE 3(1), 7 TH FLOOR, B BLOCK, IT TOWERS, AC GUARDS HYDERABAD 2. M/S. RAJWANT HOTELS PVT LTD, 6-3-1239/4/1, RAJBHAVA N ROAD, SOMAJIGUDA, HYDERABAD 3. CIT(A) III HYDERABAD 4. CIT III HYDERABAD 5. THE DR, ITAT, HYDERABAD 6. GUARD FILE BY ORDER