ITO, Ward-10(1), Hyd, Hyderabad V. Bongu Janardhan Rao, Sec'bad, Secunderabad

ITA 914/HYD/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2258 (ITAT-HYDERABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-B
• Next Hearing Date: 04-06-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 06-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y V S T SAI; NILANJAN DEY DRS
• Assessee Lawyers: C P RAMASWAMY
• Keywords: Revised return
• Section: 54F; 143(1); 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B , HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY , ACCOUNTANT MEMBER ITA NO .914 /HYD/ 2015 ASSESSMENT YEAR: 20 08 - 09 INCOME TAX OFFICER, WARD - 10(1), HYDERABAD. VS. BONGU JANARDHAN RAO, SECUNDERABAD. PAN: AHCPB 5096 J (APPELLANT) (RESPONDENT) ASSESSEE BY: SRI C.P. RAMASWAMY REVENUE BY: SRI Y.V.S.T. SAI & NILANJAN DEY, DRS DATE OF HEARING: 04/06/2019 DATE OF PRONOUNCEMENT: 21 /0 6 /2019 ORDER PER SMT. P. MADHAVI DEVI, J.M.: THIS IS REVENUES APPEAL AGAINST THE ORDER OF THE CIT(A) - 4, HYDERABAD DATED 23/03/2015 FOR THE ASSESSMENT YEAR 2008 - 09 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, FILED HIS RETURN OF INCOME FOR THE A.Y. 2008 - 09 ON 31/03/2010 DECLARING TOTAL INCOME OF RS. 2,94,057/ - WHICH WAS PROCESSED U/S 143(1) OF THE ACT. CONSEQUENT TO THE SURVEY IN THE BUSINESS PREMISES OF M/S. VERMONT PROJECTS, CONDUCTED ON 29/08/2011, THE ASSESSEE FILED REVISED RETURN OF INCOME DECLARING TOTAL INCOME OF RS. 3,30,607/ - . DURING THE SURVEY PROCEEDINGS IT WAS FOUND THAT THE ASSESSEE ALONG WITH 10 OTHERS HAD 2 ENTERED INTO A DEVELOPMENT AGREEMENT WITH A BUILDER BUT THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS THEREFROM TO TAX IN THE ORIGINAL RETURN OF INCOME. THE A.O. OBSERVED THAT THE ASSESSEE HAS FILED THE REVISED RETURN OF INCOME ON 02/12/2011 OFFERING THE CAPITAL GAINS TO TAX, BUT THAT IS A BELATED ONE AND THAT THE ASSESSEE HAS ALSO MADE A CLAIM OF EXEMPTION OF CAPITAL GAIN U/S 54F OF THE ACT. OBSERVING THAT THE ASSESSEE IS NOT ENTITLED FOR SUCH EXEMPTION , THE A.O. REOPENED THE ASSESSMENT BY ISSU ANCE OF NOTICE U/S 148 ON 07/02/2012. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSEE SUBMITTED THAT THE ASSESSEE H ELD 20% SHARE IN THE PROPERTY ALONG WITH OTHER CO - OWNERS, WHO ARE THE 80% SHAREHOLDERS, AND THAT THEY HAVE ADMITTED CAPITAL GAINS CONSIDER ING THE DATE OF AGREEMENT AS DATE OF TRANSFER FOR THE PURPOSE OF CAPITAL GAIN S . THE ASSESSEE HOWEVER ALSO SUBMITTED THAT HE HAS NOT RECEIVED ANY KIND OF POSSESSION OF THE DEVELOPED PROPERTY FROM THE DEVELOPER AND THE CAPITAL GAINS COMPUTATION WAS BASED ON THE SFT RECEIVABLE ON ACCOUNT OF AGREEMENT AND HAS CLAIMED EXEMPTION U/S 54F IN RESPECT OF THE HOUSES WHICH WERE TO BE RECEIVED BY HIM. THE ASSESSEE ALSO STATED T HAT THE PROPERTY WAS PURCHASED OUT OF COMMON POOL OF FUNDS OF THE HUF , BUT THE PROPERTY WAS PURCHASED IN HIS NAME ONLY FOR THE SAKE OF CONVENIENCE AND THAT PROPERTY WAS APPORTIONED AMONGST THE LARGER AND SMALLER HUF AND THE CAPITAL GAINS HAS BEEN OFFERED B Y THE INDIVIDUALS IN THEIR RESPECTIVE RETURNS. THE A.O HOWEVER, DID NOT ACCEPT THAT THE PROPERTY BELONG ED TO THE HUF BECAUSE THE DEVELOPMENT AGREEMENT WAS 3 ENTERED INTO ONLY BY THE ASSESSEE AND THE PROPERTY WAS ALSO REGISTERED IN HIS NAME. IN THE CASE OF INDIVIDUALS OF THE HUF , PROTECTIVE ASSESSMENT WAS MADE WHEREAS, SUBSTANTIVE ASSESSMENT WAS MADE IN THE HANDS OF THE ASSESSEE BEFORE US IN HIS INDIVIDUAL CAPACITY. 3. AGGRIEV ED, ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) ALONG THE PARTITION DEED DATED 01/05/1983 WHICH WAS STAMPED BY THE REGISTRATION AUTHORITIES ON 04/01/1995. TAKING THE SAME INTO CONSIDERATION, THE CIT(A) ACCEPTED THE ASSESSEES CONTENTION THAT THE PROPER TY BELONG ED TO THE HUF AND THAT THE INDIVIDUAL MEMBERS WERE LIABLE TO CAPITAL GAIN TAX . THUS, HE PARTLY ALLOWED THE APPEAL. AGGRIEVED BY THE DECISION OF THE CIT(A), REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT TH E INDIVIDUAL OWNERS , IN WHOSE HANDS THE PROTECTIVE ASSESSMENT HAS BEEN MADE , HAVE ACCEPTED THE ASSESSMENTS AND HAVE NOT CHALLENGED THE DECISION OF BRINGING OF CAPITAL GAINS TO TAX IN THEIR INDIVIDUAL HANDS AND THEREFORE, TAXING THE SAME IN THE HANDS OF THE ASSESSEE WOULD RESULT IN DOUBLE TAXATION. 5. ON THE OTHER HAND, LD. DR SUPPORTED THE ORDER OF THE A.O. AND SUBMITTED THAT THE PROPERTY BELONG ED TO THE INDIVIDUAL ONLY BECAUSE THE PROPERTY WAS REGISTERED ONLY IN THE NAME OF THE INDIVIDUAL AND THERE WAS N O MENTION OF HUF AT ANY TIME AND EVEN IN THE DEVELOPMENT AGREEMENT , THERE WAS NO MENTION OF THE HUF BUT IT IS ONLY THE 4 INDIVIDUALS WHO HAD ENTERED INTO DEVELOPMENT AGREEMENT. IT WAS FURTHER SUBMITTED THAT THE ASSESSEES CLAIM OF LARGER HUF ALONG WITH THE M EMBERS IS NOT ACCEPTABLE SINCE AT THE TIME OF PURCHASE OF PROPERTY , THE ASSESSEES FATHER WAS NO LONGER ALIVE. LD DR ALSO POINTED OUT THAT THE PARTITION DEED IS A MERE FAMILY ARRANGEMENT AND NOT A PARTITION OF THE HUF BECAUSE FEMALE MEMBERS OF THE FAMILY WERE ALSO MADE PARTIES OF THE PARTITION DEED. 6. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THERE WAS N O PROHIBITION IN MAKING THE FEMALE MEMBERS OF THE FAMILY AS PART IES OF THE PARTITION DEED AND THEREFORE THAT CANNOT BE A GROUND FOR STATING THAT IT IS NOT A PARTITION DEED OF THE HUF. HE ALSO SUBMITTED THAT EVEN IF THE PROPERTY BELONG ED TO THE INDIVIDUAL, THE SAME CAN BE PUT INTO COMMON HOTCHPOTCH OF THE HUF AND IT BECOM ES A HUF PROPERTY FROM THAT DATE. HE SUBMITTED THAT THE PARTITION DEED CLEARLY PROVES THAT VARIOUS PROPERTIES WERE PURCHASED IN THE NAME S OF ONE OF THE MEMBERS OF THE HUF AND ALL SUCH PROPERTIES HAVE BEEN PARTITIONED AMONGST ALL THE MEMBERS OF HUF BY WAY O F PARTITION DEED. HE ALSO SUBMITTED THAT THE SCHEDULE D PROPERTY WAS PART OF THE COMMON HOTCHPOTCH OF PROPERTIES WHICH HA VE BEEN PARTITIONED IN THE RATIO OF THEIR RIGHT IN THE HUF. 7. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FI ND THAT THE PROPERTY WAS PURCHASED IN THE YEAR 1964 IN THE NAME OF THE ASSESSEE AND HIS FATHER WAS NO LONGER ALIVE AT THAT TIME. FROM 5 THE PARTITION DEED , IT IS SEEN THAT VARIOUS PROPERTIES WERE PURCHASED IN THE NAME S OF VARIOUS PERSONS OF THE HUF. ALL TH OSE PROPERTIES HAVE BEEN PUT INTO COMMON HOTCHPOTCH , AND LIKEWISE , THE PROPERTY PURCHASED IN THE NAME OF THE ASSESSEE ALSO HAS BEEN PUT INTO THE COMMON POOL OF PROPERTIES AND IT HAS BEEN PARTITIONED IN FAVOUR OF THE BIGGER AS WELL AS THE SMALLER HUFS. THE PARTITION DEED WAS ALSO STAMPED IN THE YEAR 1995 WHICH IS PRIOR TO THE SURVEY IN 2011. THEREFORE, IT CANNOT BE CONSIDERED TO BE AN AFTER - THOUGHT. THE FACTUM OF THE PAR TITION DEED WAS ALSO BROUGHT TO THE NOTICE OF ULC AUTHORITIES AND ALSO TO THE INCOME TAX AUTHORITIES 269 U A PROCEEDINGS , BY ONE OF THE COPARCENERS SRI SANJEEVA RAO BONGU . THUS, THE FACTUM OF PARTITION HAS BEEN BROUGHT TO THE NOTICE OF THE DEPARTMENT AS WEL L IN 1997 ITSELF . THEREFORE , IN VIEW OF THESE DOCUMENTS , WHICH HAVE BEEN CONSIDERED BY THE CIT(A) FOR GRANTING RELIEF, WE SEE NO REASON TO INTERFERE WITH THE SAME PARTICULARLY WHEN THE PROTECTIVE ASSESSMENTS IN THE HANDS OF INDIVIDUAL CO - PARCENERS HAVE BE COME FINAL. . ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 21 ST JUNE , 2019 . SD/ - SD/ - ( A. MOHAN ALANKAMONY ) (P. MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 21 ST JUNE , 2019 6 OKK COPY TO: - 1) SRI BONGU JANARDHAN RAO, H.NO.3 - 118, ALWAL, SECUNDERABAD. 2) ITO, WARD - 10(1), ROOM NO.516, A.C. GUARDS, I.T. TOWERS, HYDERABAD. 3) THE CIT(A) - 4 , HYDERABAD 4) THE PR. CIT - 4 , HYDERABAD 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE