Coromandel Cables P. Ltd., CHENNAI V. ACIT, CHENNAI

MA 42/CHNY/2017

• Counselvise Citation: [2017] 124 COUNSELVISE.COM (IT) 5553 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 29 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 12-05-2017
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 05-05-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 13-02-2017
• Court: TRIBUNAL
• Department Lawyers: GOPI KRISHNA
• Assessee Lawyers: S SRIDHAR
• Keywords: Capital asset
• Section: 15

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . ! ' , # '$ BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI G. PAVAN KUMAR, JUDICIAL MEMBER M.A. NOS. 39,40,41,42 & 43/MDS/2017 (IN ITA NOS. 1780, 1781,1782, 1783 & 1784/MDS/2013 ASSESSMENT YEARS : 2007-08, 2008-09, 2009-10,2010-1 1 & 2011-12) M/S. COROMANDEL CABLES P. LTD . A-7, 6 TH CROSS STREET, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AAACC7190E ( /APPLICANT) V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, COMPANY CIRCLE-I(3), CHENNAI. RESPONDENT) / APPLICANT BY : SHRI S. SRIDHAR, ADVOCATE / RESPONDENT BY : SHRI GOPI KRISHNA, JCIT / DATE OF HEARING : 05.05.2017 / DATE OF PRONOUNCEMENT : 12.05.2017 % / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER BY THESE MISCELLANEOUS APPLICATIONS, THE ASSESSEE SEEK CERTAIN CLARIFICATIONS ON COMPUTATION OF CAPITAL GA INS IN THE CONSOLIDATED ORDER OF THE TRIBUNAL IN ITA NOS. 1779 TO 1788, 1944 TO 1949/MDS/2013 DATED 04.03.2016 WHEREIN THE TRIBUNAL - - MA 39 TO 42/MDS./17 2 SET ASIDE THE ORDER OF THE ASSESSMENT FOR ASSESSME NT YEAR 2006-07 AND FOR THE REST OF THE ASSESSMENT YEARS 20 07-08 TO 2011-12, THE PROTECTIVE ASSESSMENTS OF COMPUTATION OF CAPITAL GAINS WAS CONVERTED INTO SUBSTANTIVE ASSESSMENTS AND THE TRIBUNAL HAD GIVEN DIRECTIONS TO THE AO TO COMPUTE THE CAPITAL GAINS ACCORDINGLY. 2. FIRSTLY, THE ASSESSEE FILED M.A. NOS. 41 & 42/MDS/2016 IN ITA NOS. 1780 & 1781/MDS/2013 FOR THE ASSESSMENT Y EARS 2007-08 & 2008-09 WHEREIN THE ASSESSEE RAISED CERTA IN ISSUES WHICH ARE DISPOSED OF BY THE TRIBUNAL IN ITS ORDER DATED 20.05.2016 AS FOLLOWS:- 2. THE LD. AR SUBMITTED THAT IN PARA 20 OF THE CO MMON ORDER AT PAGE 73, THE COST OF IMPROVEMENT AT ` 68,99,590/- CONSIDERED AN-D REJECTED BY THE ASSESSING OFFICER I N THE COMPUTATION OF LONG TERM CAPITAL GAINS WAS WRONGLY TYPED AS ` 8,99,590/-. IT IS PRAYED FOR RECTIFICATION OF THE SAID MISTAKE IN PASSING THE RECTIFICATION/AMENDMENT ORDER FOR THE A SSESSMENT YEAR 2007-08 IN DISPOSING OFF THE APPEAL IN I.T.A.NO.1780/MDS/2013. 3. WE HAVE GONE THROUGH THE ORDER OF THE TRIBUNAL. ADMITTEDLY, THERE IS A MISTAKE IN MENTIONING THE FIGURE AS ` 8,99,590/- INSTEAD - - MA 39 TO 42/MDS./17 3 OF ` 68,99,590/-. IT IS A TYPOGRAPHICAL MISTAKE AND IT SHOULD BE READ AS ` 68,99,590/- IN PARA 20 AT PAGE 73. 4. FURTHER, THE LD. AR SUBMITTED THAT WHILE CONSIDE RING THE APPEAL IN I.T.A.NO.1781/MDS/2013 RELATING TO THE ASSESSMEN T YEAR 2008- 09, THE HONBLE BENCH IN PARAGRAPH 23 AT PAGE 75 HA D WRONGLY DIRECTED THE AO WHILE CONVERTING THE PROTECTIVE ASS ESSMENT INTO SUBSTANTIVE ASSESSMENT FOR COMPUTING LONG TERM CAPI TAL GAINS AS WELL AS SHORT TERM CAPITAL GAINS IN VIEW OF THEI R DECISION IN CANCELLING THE SUBSTANTIVE ASSESSMENT FRAMED FOR TH E ASSESSMENT YEAR 2006-07 IN I.T.A.NO.1779/MDS/2013. THE MENTIO NING OF COMPUTATION OF SHORT TERM CAPITAL GAINS IN THE 6 TH LINE OF THE SAID PARA 23 MAY BE DELETED TO GIVE CLARITY AND CONSISTE NCY TO THE DECISION RENDERED FOR THE AY2006-07 IN THE INTEREST OF JUSTICE. 5. WE HAVE HEARD BOTH THE PARTIES. IN OUR OPINION FOR THE ASSESSMENT YEAR 2008-09, THE ASSESSMENT IS TO BE TR EATED AS SUBSTANTIVE ASSESSMENT AND THE INCOME HAS TO BE COM PUTED AS SHORT TERM CAPITAL GAINS OR LONG TERM CAPITAL GAINS AS THE CASE MAY BE. THUS, THE AMENDED PARA 23 READS AS FOLLO WS: 23.SINCE, WE HAVE VACATED THE FINDING OF THE CIT(A PPEALS), FOR THE ASST. YEAR 2006-07 BY OBSERVING THAT THERE IS N O TRANSFER U/S.2(47)(V) OF THE ACT, THE ASSESSMENT FOR THE ASS T. YEAR 2008- 09 IS TO BE TREATED AS SUBSTANTIVE AS DISCUSSED IN EARLIER PARAGRAPH FOR THE ASST. YEAR 2007-08 AND THE INCOME HAS TO BE COMPUTED AS LONG TERM CAPITAL GAINS OR SHORT TERM C APITAL GAINS, AS THE CASE MAY BE, AFTER GIVING AN OPPORTUNITY OF HEARING TO THE ASSESSEE AND THE AO SHALL WORK OUT THE CAPITAL GAIN S AFRESH. ACCORDINGLY, THE LEVY OF INTEREST U/S.234A FOR THE ASST. YEAR 2008-09 IS TO BE COMPUTED, WHICH IS MANDATORY IN NA TURE. 6. ACCORDING TO THE LD. A.R., IN PARA 25 OF THE SAI D COMMON ORDER AT PAGE 77, THE ASSESSMENT YEAR WAS WRONGLY MENTION ED AS 2009-10 INSTEAD OF 2008-09 AND FURTHER IN THE SAID PARAGRAPH, THE - - MA 39 TO 42/MDS./17 4 DIRECTION WAS WRONGLY GIVEN TO INCLUDE THE COMPUTAT ION OF SHORT TERM CAPITAL GAINS FROM THE SALE OF FLATS WHICH WAS NOT THE ORIGINAL COMPUTATION AS COMPUTED BY THE ASSESSING O FFICER PROTECTIVELY IN THE ASSESSMENT ORDER FOR THE ASSESS MENT YEAR 2008-09. 6.1 THEREFORE, THE LD. AR PRAYED FOR CORRECTING THE ASSESSMENT YEAR IN THE SAID PARAGRAPH AS ASSESSMENT YEAR 2008-09 AND ALSO DELETE THE FOLLOWING PORTION OF TH E SAID PARAGRAPH GIVING CLARITY AS WELL AS TO GIVE CONSIST ENCY TO THE DECISION RENDERED IN THE DISPOSAL OF THE APPEAL FOR THE ASSESSMENT YEAR 2008-09 IN I.T.A.NO. 1781/MDS/2013 FOR ASSESSMENT OF LTCG ON THE PROPORTIONATE LAND TRANSF ER : CORRESPONDING TO THE FLATS ALLOTTED TO THE ASSESSEE S SHARE AND SALE OF FLATS CONSTRUED THEREON TO BE ASSESSED AS L ONG TERM CAPITAL GAINS IN SALE OF LAND AND SHORT TERM CAPITA L GAINS IN SALE OF FLATS 7. IN OUR OPINION, THE ASSESSMENT YEAR IN PARA 25 WAS WRONGLY MENTIONED AS 2009-10 INSTEAD OF ASSESSMENT YEAR 200 8-09 AND IT SHOULD BE READ AS ASSESSMENT YEAR 2008-09 ONLY. AF TER THIS CORRECTION, PARA 25 TO BE READ AS FOLLOWS : 25. BEFORE US, THE LD. AR SUBMITTED THAT REPORT AS WELL AS DOCUMENT HAVE NO RELEVANCE WITH THE ASSESSM ENT OF THE ASSESSEE. HOWEVER, THE ASSESSEE HAS NOT PRODUCED ANYTHING TO PROVE THE COST OF CONSTRUCTION . IT IS THE DUTY OF THE ASSESSEE TO PRODUCE NECESSARY EVIDE NCE TO SHOW THAT THE ASSESSEE ACTUALLY INCURRED TOWARDS IMPROVEMENT OF CAPITAL ASSET. HOWEVER, THE ASSESSE E ASKED ONE MORE OPPORTUNITY TO SEE THE DOCUMENT COLL ECTED BY THE A.O., WHICH WAS RELIED UPON BY HIM, AT THE B ACK OF THE ASSESSEE. IN VIEW OF THIS, WE REMIT THIS ISSUE TO THE FILE OF THE AO FOR FRESH CONSIDERATION AND THE ASSESSEE IS DIRECTED TO PRODUCE NECESSARY EVIDENCE IN SUPPORT OF THE CLAIM OF THE ASSESSEE, AS THE AO USED THE REPORT CO LLECTED FROM THE COMMERCIAL DEPARTMENT, MAHARASHTRA VIZ. MAHAVAT WITHOUT PROVIDING THE SAME TO THE ASSESSEE. - - MA 39 TO 42/MDS./17 5 ACCORDINGLY, IN THE ASSESSMENT YEAR 2008-09, THE I NCOME HAS TO BE COMPUTED AS SHORT TERM CAPITAL GAINS OR L ONG TERM CAPITAL GAINS, AS THE CASE MAY BE. 7.1 FURTHER, WE MAKE IT CLEAR THAT THERE IS NO CHAN GE IN FINAL RESULT OF THE APPEALS. 8. IN THE RESULT, THE MISC. APPLICATIONS ARE PARTLY ALLOWED. 3. ONCE AGAIN, THE ASSESSEE FILED M.A. NOS.264 TO 268/MDS./2016 FOR THE ASSESSMENT YEARS 2007-08 & 20 11-12 AND THE TRIBUNAL DISPOSED OFF THOSE M.AS VIDE ORDER DATED 20.01.2017. IN THESE M.AS, THE ASSESSEE STATED THA T ONCE THE PROTECTIVE ASSESSMENTS HAVE BECOME SUBSTANTIVE ASS ESSMENTS, THERE IS NO FURTHER DIRECTIONS REQUIRED FROM THE TR IBUNAL SO AS TO COMPUTE CAPITAL GAINS, AS THE TRIBUNAL HAD GIVEN D IRECTION THAT PROTECTIVE ASSESSMENT AUTOMATICALLY CONVERTED INTO SUBSTANTIVE ASSESSMENT FOR ASSESSMENT YEARS 2007-08 TO 2011-12 . THESE ARGUMENTS BRUSHED ASIDE BY THE TRIBUNAL IN PARA NO. 4 TO 4.2 OF TEAT ORDER AS FOLLOWS:- 4. WE HEARD BOTH THE PARTIES AND PERUSED THE MATE RIAL ON RECORD. WE FIND FORCE IN THE ARGUMENT OF THE LD. AR . ADMITTEDLY, THIS TRIBUNAL VACATED THE ASSESSMENT ORDER FOR THE ASSESSMENT YEA R 2006-07 HOLDING THAT THERE ARE NO TRANSFER SO AS TO ATTRACT TAX ON CAPITAL GAI NS, THEREAFTER OBSERVED THAT ASSESSMENT ORDERS FROM THE ASSESSMENT YEARS 2007-08 TO 2011-12 TO BE CONSIDERED AS SUBSTANTIVE ASSESSMENTS. BEING SO, THERE IS NO N ECESSITY OF GIVING FURTHER FINDING - - MA 39 TO 42/MDS./17 6 BY THE TRIBUNAL WITH REGARD TO COMPUTATION OF LONG TERM CAPITAL GAIN AND SHORT TERM CAPITAL GAIN IN THESE ASSESSMENT YEARS. 4.1 ACCORDINGLY, PARA 23 OF THIS TRIBUNAL ORDER CIT ED SUPRA READS AS FOLLOWS: 23. SINCE, WE HAVE VACATED THE FINDING OF THE CIT (APPEALS) FOR THE ASST. YEAR 2006-07 BY OBSERVING THAT THERE IS NO TR ANSFER U/S.2(47)(V) OF THE ACT, THE ASSESSMENT FOR THE ASST. YEAR 2008-09 IS TO BE TREATED AS SUBSTANTIVE AS DISCUSSED IN EARLIER PARAGRAPH FOR T HE ASST. YEAR 2007-08 AND THE INCOME HAS TO BE COMPUTED AFTER GIVING AN O PPORTUNITY OF HEARING TO THE ASSESSEE AND THE AO SHALL WORK OUT T HE CAPITAL GAINS AFRESH. ACCORDINGLY, THE LEVY OF INTEREST U/S.234A FOR THE ASST. YEAR 2008-09 IS TO BE COMPUTED, WHICH IS MANDATORY IN NA TURE. 4.2 IN OTHER WORDS, THE ASSESSMENT ORDERS WHICH WER E ALREADY PASSED FOR THE ASSESSMENT YEARS 2007-08 TO 2011-12 TO BE CONSIDERE D AS SUBSTANTIVE ASSESSMENTS AND IT IS TO BE ENFORCED SUBJECT TO OUR FINDINGS WITH REFERENCE TO OTHER GROUNDS RAISED BY THE ASSESSEE IN ITS APPEALS FOR THESE ASSESSMENT YEARS. THERE ARE NO OTHER CHANGES IN THE ORDER OF THE TRIB UNAL CITED SUPRA, OTHER THAN FINDINGS IN OUR ORDER IN M.A. NO.41&42/MDS/2016 DAT ED 20.05.2016. 4. NOW, THE ASSESSEE ONCE AGAIN FILED THESE PRESEN T M.A.S AND SUBMITTED THE FOLLOWING POINTS FOR OUR CONSIDER ATION. I) THE ASSESSMENT OF LONG TERM CAPITAL GAINS SHOUL D BE BASED ON THE RECKONING OF TRANSFER WITH REFERENCE T O THE SALE DEEDS/AGREEMENTS EXECUTED BY THE PETITIONER IN THE ASSESSMENT YEAR 2007-08 TO ASSESSMENT YEAR 2011-12 AND IN FACT THE PETITIONER REPORTED THE SAID LONG TERM CAP ITAL GAINS IN ACCORDANCE WITH THE SALE DEEDS/AGREEMENTS EXECUTED IN THE - - MA 39 TO 42/MDS./17 7 RESPECTIVE RETURNS OF INCOME FILED FOR THOSE FIVE A SSESSMENT YEARS. THE TRANSACTION WITH THE DEVELOPER WAS NOT B ASED ON JDA AND IT WAS A CASE SALE OF LANDS OWNED. II) IN THE FIRST ROUND ASSESSMENTS FOR THE ABOVE F IVE ASSESSMENT YEARS, THE ORIGINAL AUTHORITY PROCEEDED TO COMPUTE LONG TERM CAPITAL GAINS AS PER THE SALE DEEDS PROTE CTIVELY WITH ADJUSTMENTS RELATING TO MAINLY OF CLAIM OF LAN D DEVELOPMENT EXPENSES. III) APART FROM THE SAID PROTECTIVE COMPUTATION O F LONG TERM CAPITAL GAINS IN VIEW OF THE RECKONING OF TRANSFER IN THE ASSESSMENT YEAR 2006-07 BY THE ORIGINAL AUTHORITY B ASED ON THE JDA ENTERED INTO BY THE PETITIONER WITH THE DEV ELOPER BY BRINGING TO TAX THE LONG TERM CAPITAL GAINS ON THE UDS TRANSFERRED BASED ON POSSESSION AS PER SECTION 2(47 )(V) OF THE ACT SUBSTANTIVELY, THE SHORT TERM CAPITAL GAINS WAS ALSO COMPUTED RELATING TO THE SALE/TRANSFER OF FLATS ALL OTTED TO THE PETITIONER BASED ON JDA IN ALL THESE ASSESSMENT YEA RS. IV) THE SAID ASSESSMENT ORDERS OF THE ORIGINAL AU THORITY WERE IN FACT CONFIRMED BY THE FIRST APPELLATE AUTHORITY AND IN THE SECOND APPEAL BEFORE JURISDICTIONAL BENCH OF THE IN COME TAX APPELLATE TRIBUNAL, THE JDA BASED DEEMED TRANSFER COMPUTATION OF LONG TERM CAPITAL GAINS PERTAINING T O THE ASSESSMENT YEAR 2006-07 WAS KNOCKED OFF IN THE COMM ON - - MA 39 TO 42/MDS./17 8 ORDER APPELLATE TRIBUNAL FROM PARA 13 TO PARA 19 OF THE IMPUGNED ORDER. V) IN SO FAR AS THE COMPUTATION OF LONG TERM CAPI TAL GAINS PERTAINING TO THE LAND SUBJECT TO THE ISSUE RELATIN G TO THE ADJUSTMENT OF LAND DEVELOPMENT EXPENSES IN THE SAID COMPUTATION FOR THE SUBSEQUENT FIVE ASSESSMENT YEARS/ASSESSMENT YEARS UNDER CONSIDERATION, THE APP ELLATE TRIBUNAL CONSEQUENTLY ORDERE TO REVISE THR THE PROTECTIVE ASSESSMENTS INTO SUBSTANTIVE ASSESSMENT SUBJECT TO THE ISSUE OF LAND DEVELOPMENT EXPENSES W HICH ISSUE WAS DIRECTED TO BE RECONSIDERED IN THE EFFECT GIVIN G PROCEEDINGS. VI) IN THE PROCESS, THE APPELLATE TRIBUNAL IN THE SUBSEQUENT TWO ORDERS HAD CLARIFIED FURTHER THAT IN THE LIGHT OF THE TRANSFER RECKONED BASED ON JDA FOR THE PURPOSE OF COMPUTING LONG TERM CAPITAL GAINS WAS KNOCKED OFF IN THE ASSESSMEN T YEAR 2006-07, THE QUESTION OF COMPUTATION OF SHORT TERM CAPITAL GAINS FOR FLATS ALLOTTED BASED ON THE JDA WAS ACCOR DINGLY REMOVED INASMUCH AS THE WORDS SHORT TERM CAPITAL G AINS AS WELL AS THE WORD FLATS WERE APPROPRIATELY DELETED FOR GIVING MORE CLARITY TO THE DECISION RENDERED IN THE COMMON ORDER DATED 4.3.201 6. VII) THE FIRST CLARIFICATION ORDER OF THE JURISDICT IONAL BENCH OF THE INCOME TAX APPELLATE TRIBUNAL WAS PASSED ON 20-05-2 016 AND - - MA 39 TO 42/MDS./17 9 THE SECOND CLARIFICATION ORDER WAS PASSED SUBSEQUEN TLY ON 20- 01-2017. IN THE MEANTIME, THE EFFECT GIVING ORDER S FOR THE SUBSEQUENT ASSESSMENT YEARS WERE PASSED ON 23-01-20 17 BY RECKONING TRANSFER BASED ON SALE DEEDS/AGREEMENTS A ND HOWEVER WHILE PLACING STRONG RELIANCE ON SUCH TRANS FER ON THE PRESUMPTION OF THE JDA BASED TRANSACTION BETWEEN TH E PETITIONER AND THE DEVELOPER, THE STCG COMPUTATION WAS ALSO MAINTAINED RELATING TO THE FLATS ALLOCABLE TO THE P ETITIONER AS PER NON-EXISTENT JDA IN THE EFFECT GIVING ORDERS. VIII) THE DEEMED TRANSFER INVOKED ORIGINALLY BY TH E REVENUE BASED ON THE JDA IS ADMITTEDLY NO MORE VALID AS PER THE COMMON ORDER OF THE JURISDICTIONAL BENCH OF THE INC OME TAX APPELLATE TRIBUNAL DATED 4.3.2016 AND THE TRANSFER BASED ON JDA READ WITH THE PROVISIONS OF SECTION 2(47)(V) OF THE ACT SHOULD BE RECKONED ONLY ONCE AND THE TRANSFER AT MU LTIPLE PLACES UNDER JDA IS NOT LEGALLY POSSIBLE. THEREFORE , THE DECISION RENDERED IN FAVOUR OF THE PETITIONER BY TH E JURISDICTIONAL BENCH OF THE INCOME TAX APPELLATE TR IBUNAL FOR THE ASSESSMENT YEAR 2006-07 WOULD CLEARLY INDICATE THAT THE TRANSFER SHOULD BE RECKONED IN THE RESPECTIVE ASSES SMENT YEARS BASED ON THE SALE DEEDS/AGREEMENTS EXECUTED A ND HENCE THE REFERENCE TO THE JDA HAD NO RELEVANCE. TH E CONSEQUENCE OF THE SAID UNDERSTANDING OF THE COMMON ORDER DATED 4.3.2016 READ WITH THE TWO SUBSEQUENT CLARIFI CATORY ORDERS OF THE BENCH WOULD LEAD TO THE UNDISPUTED PO SITION OF THE INCLUSION OF THE SALE PROCEEDS OF THE BUILDING CONS TRUCTED/FLAT - - MA 39 TO 42/MDS./17 10 SHOULD BE ACCOUNTED ONLY IN THE HANDS OF THE DEVELO PER WHICH IN FACT WAS ACCOUNTED FOR BY THE DEVELOPER IN THE R ESPECTIVE ASSESSMENT YEARS. IX) IN OTHER WORDS, IT IS SUBMITTED THAT IN THE CL ARIFICATORY ORDERS DATED 20.05.2016 AND 20.01.2017,THE HONBLE TRIBUNAL HAVE, TAKING INTO ACCOUNT OF THE FACTUAL MATRIX OF THE CASE EMERGING FROM THE COMMON ORDERS, CLEARLY DIRECTED & ORDERED THAT THE INCOME HAS TO BE COMPUTED ON SUBSTANTIVE A SSESSMENT BASED ON THE SALE OF LAND(UDS) IN THE RELEVANT YEAR S FROM AY 2007-2008 TO 2011-2012.ON THE OTHER HAND, IN THE EF FECT GIVING ORDERS DATED 23.01.2017,THE AO HAS COMPUTED THE INC OME ON THE BASIS OF SHORT TERM CAPITAL GAINS (STCG) FOR AY 2009 TO 2011-12 ON THE SALE OF FLATS. THIS EFFECT GIVING OR DERS HAVE THUS ONCE AGAIN RESTORED THE ORDER OF THE ORIGINAL AUTHO RITY AND THUS CREATED CONFUSION IN UNDERSTANDING THE ORDERS OF TH E HONBLE TRIBUNAL DATED 04.03.2016 FOR IMPLEMENTATION,ESPECI ALLY ON PARAS 23 AND 25 RESPECTIVELY WITH REFERENCE TO THE CLARIFICATORY ORDERS THAT WERE NOT FULLY UNDERSTOOD FOR COMPUTING THE INCOME.HENCE THIS CLARIFICATORY PETITION. FURTHER, LD.A.R PLEADED FOR NECESSARY CLARIFICATIO N TO INDICATE/FORTIFY THEIR CONCLUSIONS ON COMPUTATION O F LONG TERM CAPITAL GAINS BASED ON THE SALE DEEDS/AGREEMENTS EX ECUTED FOR THE ENTIRE LAND WHICH WAS SUBJECTED TO THE DEVE LOPMENT AND TO NULLIFY THE WRONG PERCEPTION/STAND ON THE APPLIC ABILITY OF JDA BY THE REVENUE FOR TAXING STCG ON FLATS IN THE INTE REST OF JUSTICE. - - MA 39 TO 42/MDS./17 11 5. ON THE OTHER HAND, LD.D.R SUBMITTED THAT IT IS CLEAR FROM THE TRIBUNAL ORDER DATED 04.03.2016, THAT FOR Y 20 06-07 THERE IS NO CAPITAL GAINS BUT FOR Y 2007-08, THE ASSESSM ENT HAS TO BE MADE ON THE SHORT TERM CAPITAL OR LONG TERM CAP ITAL. ESPECIALLY, FOR AYS 2008-09 TO 2011-12, TRIBUNAL HA D DIRECTED THE AO TO RE-COMPUTE THE CAPITAL GAIN ON SALE OF SU CH FLATS. ASSESSMENT OF CAPITAL GAINS IS MADE BY FOLLOWING TH E PRINCIPLES THAT IN THE CASE OF JOINT DEVELOPMENT AGREEMENT, DE EMED TRANSFER UNDER SECTION 53A OF THE TRANSFER OF PROPE RTY ACT R.W. SEC.2(47)(V) OF THE ACT TAKES PLACE WHEN THERE IS A WRITTEN AGREEMENT AND POWER OF ATTORNEY IS GIVEN TO THE DEV ELOPER. ACCORDING TO LD.D.R, VIDE PARA NO 23,25,26 & 28 OF THE TRIBUNAL ORDER DATED 04.03.2016 MENTIONED BOTH SHOR T TERM OR LONG TERM CAPITAL GAINS AS THE CASE MAY BE; IT IS UNDERSTOOD THAT FLATS CONSTRUCTED IN THE LAND SHOULD BE ASSESS ED UNDER SHORT TERM CAPITAL GAINS BECAUSE THE WORD GIVEN IS SHORT TERM OR LONG TERM AS THE CASE MAY BE. - - MA 39 TO 42/MDS./17 12 5.1 FURTHER, LD.D.R SUBMITTED THAT THERE IS NO SP ECIFIC MENTION IN THE ORIGINAL TRIBUNAL ORDER DATED 04.03. 2016 AND ALSO IN ORDERS FOR MAS DATED 20.05.2016 & 20.01.201 7, THAT FLATS SHOULD NOT BE.ASSESSED IN THE HANDS OF THE AS SESSEE. IN THE ORDER IN ITA NOS. 1780 & 1781/2013 DT. 04.03.20 16, THE TRIBUNAL HAS DIRECTED THE ASSESSING OFFICER TO RE-C OMPUTE THE CAPITAL GAIN ON SALE OF FLATS. VIDE PARA 23, 25, 26 & 28 OF THE ORDER, IT IS MENTIONED THAT BOTH SHORT TERM OR LONG TERM CAPITAL GAINS AS THE CASE MAY BE ARE TO BE WORKED O UT. THE CLARIFICATION IS HEREBY SOUGHT ON WHICH LONG TERM C APITAL GAIN HAS TO BE CALCULATED. THERE IS NO SPECIFIC MENTION IN THE ORIGINAL ITAT ORDER DT 4.3.2016 AND ALSO IN ORDERS OF M.A.S DT 20.5.2016 & 20.1.2017 THAT THE FLATS SHOULD NOT BE ASSESSED I N THE HANDS OF THE ASSESSEE. 6. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. NOW, THE MAIN GRIEVANCE OF THE ASSESSEE IS WITH REGARD TO COMPUTATION OF CAPITAL GAINS FOR ASSESSME NT YEAR 2007-08 TO 2011-12. IT WAS SUBMITTED THAT THE ASSE SSEE HAS NOT EFFECTED ANY SALE OF CONSTRUCTED AREA AND THE A SSESSEE ONLY SOLD THE LAND VIDE SALE AGREEMENT DATED 23.11. 2005 AND - - MA 39 TO 42/MDS./17 13 THERE CANNOT BE ANY CAPITAL GAINS ON SALE OF CONSTR UCTED AREA, WHICH WAS BY THE DEVELOPER ONLY. CONTRARY TO THIS, LD.D.R SUBMITTED THAT THE ASSESSEE HAS RECEIVED 37.54% OF SALEABLE VALUE OF PROPERTY IN CONSTRUCTED AREA FOR EXCHANGE OF 62.46% AREA OF LAND. SO, THE SALE OF CONSTRUCTED AREA OF 3 7.54% OF TOTAL AREA OF CONSTRUCTED AREA WAS SOLD BY THE ASSESSEE I N THESE ASSESSMENT YEARS VIZ. 2007-08, 2008-09, 2009-10, 20 10-11 & 2011-12. BEING SO, IT IS TO BE TAXED. IN OUR OPINI ON, THE TRIBUNAL HAS GIVEN FINDINGS ON THE BASIS OF JDA ENTERED BY T HE ASSESSEE ON 23.11.2005. HENCE, CONSIDERATION FOR TRANSFER OF 62.46% OF AREA OF LAND TRANSFERRED BY THE ASSESSEE TO THE DEV ELOPER UNDER JDA WOULD BE THE CONSTRUCTED AREA ALLOTTED TO THE ASSESSEE UNDER THE JDA. IT WAS ALSO GIVEN FINDINGS THAT THERE WAS NO TRAN SFER IN TERMS OF SEC.2(47)(V) OF THE ACT IN THE A.Y 2006-07 IN VIE W OF THE NO ACTION BY DEVELOPER IN THIS ASSESSMENT YEAR, THOUGH THE JDA WAS ENTERED BETWEEN THE ASSESSEE AND DEVELOPER ON 23.11.2005. THE CAPITAL GAINS TO BE COMPUTED FOR ASSESSMENT YEAR S 2007-08 & 2011-12 AND NOT FOR ASSESSMENT YE AR 2006- - - MA 39 TO 42/MDS./17 14 07 AND THERE WAS NO DEVELOPMENT ACTIVITY IN THE ASS ESSMENT YEAR 2006-07 IN TERMS OF SEC.2(47)(V) OF THE ACT. 7. NOW, THE CONTENTION OF THE LD.A.R IS THAT IN RE SPECT OF SALE OF FLATS I.E. CONSTRUCTED AREA, IT WAS NOT SOLD BY THE ASSESSEE. SO, IT CANNOT BE BROUGHT TO TAX IN THE HANDS OF ASS ESSEE. IN OUR OPINION, THIS FACTS IS REQUIRED TO BE VERIFIED BY THE ASSESSING OFFICER WHETHER ACTUAL SALE OF ASSESSEES SHARE IN CONSTRUCTED AREA WAS SOLD BY THE ASSESSEE OR NOT. IN THE EVENT OF SALE OF CONSTRUCTED AREA BY ASSESSEE, THEN COMPUTATION OF C APITAL GAINS ON SALE OF ASSESSEES SHARE OF CONSTRUCTED AR EA IS TO BE BROUGHT TO TAX UNDER THE HEAD CAPITAL GAINS AFTER GIVING DUE DEDUCTION ENUMERATED U/S.48 OF THE ACT. THE AO HAS TO CONSIDER THIS ISSUE OF COMPUTATION OF CAPITAL GAINS ON SALE OF ASSESSEES SHARE OF CONSTRUCTED AREA, ALONG WITH T HE UNDIVIDED SHARE IN LAND, IF IT WAS ACTUALLY TRANSFERRED BY TH E ASSESSEE IN THESE ASSESSMENT YEARS. IN OTHER WORDS, THE AO CAN NOT BRING INTO TAX THE ENTIRE SHARE OF CONSTRUCTED AREA ALONG WITH THE UNDIVIDED SHARE IN LAND, ONLY ON RECEIPT BASIS OF C ONSTRUCTED AREA AS TRANSFERRED UNLESS THERE IS ACTUAL TRANSFER IN TERMS OF - - MA 39 TO 42/MDS./17 15 SEC.45 OF THE ACT BY THE ASSESSEE. IT IS NEEDLESS TO SAY THAT THE AO HAS TO CONSIDER THE UNDIVIDED SHARE OF COST IN LAND, WHICH IS EMBEDDED WITH FLATS, WHICH WAS SOLD BY THE ASSESSEE WHILE COMPUTING CAPITAL GAINS. THE ASSESSING OFFIC ER HAS TO TAKE NOTE OF THE JUDGEMENT OF THE JURISDICTIONAL HI GH COURT IN THE CASE OF CIT VS. DR.D.L.RACACHANDRA RAO IN [1999] 2 36 ITR 51(MDS.) WHEREIN HELD THAT THE TRIBUNAL WAS RIGHT I N LAW IN DIRECTING BIFURCATION OF THE CAPITAL GAINS INTO LON G TERM CAPITAL GAINS PERTAINING TO LAND AND SHORT TERM CAPITAL GAI NS PERTAINING TO SUPERSTRUCTURE. FOR THE SAME PROPOSITION, THE O RDER OF THE TRIBUNAL IN THE CASE OF STATESMAN LTD. VS. ACIT IN 114 ITD 595(KOL.) WHEREIN HELD THAT ASSESSEE COMPANY HAVING TRANSFERRED OWNERSHIP RIGHTS ONLY IN RESPECT OF 56. 8 PERCENT OF LAND TO THE DEVELOPER UNDER THE DEVELOPMENT AGREEME NT AND RETAINED OWNERSHIP OF 43.2 PER CENT OF LAND, AND LA TER SOLD FOUR FLOORS IN THE NEW MULTI-STOREYED BUILDING CONSTRUCT ED BY THE DEVELOPER ALONG WITH PROPORTIONATE UNDIVIDED SHARES IN LAND TO DIFFERENT PURCHASERS, THE SALE CONSIDERATION HAS TO BE APPORTIONED BETWEEN THE LAND AND SUPERSTRUCTURE, AN D GAIN ARISING AN DISPOSAL OF LAND IS LONG TERM CAPITAL G AIN WHILE THE - - MA 39 TO 42/MDS./17 16 GAIN ON DISPOSAL OF FOUR FLOORS OF THE BUILDING IS TO BE TREATED AS SHORT TERM CAPITAL GAIN. 8. WITH THIS OBSERVATION, THESE MISCELLANEOUS APPL ICATIONS FILED BY THE ASSESSEE ARE DISPOSED OFF ACCORDINGLY. ORDER PRONOUNCED ON 12 TH MAY, 2017 AT CHENNAI. SD/- SD/- ( ! ) ( '#$ % ) & '()(* +,-(./ 01(*2.( '334(.5/ 6 7 89 /JUDICIAL MEMBER 89 :;;3,*<(*< =>-?>. '6 /CHENNAI, @8# /DATED, THE 12 TH MAY, 2017. K S SUNDARAM A8B 7CD ED / COPY TO: 1 . / APPELLANT 3. A A F / / CIT(A) 5. DGH 77IJ / DR 2. / RESPONDENT 4. A A F / CIT 6. HKL M / GF