Appeal details
Counselvise Citation
[2016] 124 COUNSELVISE.COM (IT) 4175 (ITAT-AHMEDABAD)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
7 month(s) 22 day(s)
Appellant
Respondent
Appeal Type
Miscellaneous Application
Pronouncement Date
11-04-2016
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
A
Assessment Year
misc
Appeal Filed On
20-08-2015
Judgement Text
, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER MA NO.62/AHD/2015 FOR BLOCK PERIOD 1/4/1996 TO 2/07 /2002 (SS) ./ I.T.(SS)A. NO.3/AHD/2006 ( BLOCK PERIOD 1/4/1996 TO 02/07/2002) THE ITO WARD-2(1)(3) VADODARA (ORIGINAL RESPONDENT) / VS. M/S.SWASTIK ENGG.MFG.CO.PVT.LTD. 03, RBG COMPLEX KARELIBAUG, BARODA (ORIGINAL APPELLANT) ' ./ ./ PAN/GIR NO. : AADCS 9480 L ( '% / APPLICANT ) .. ( &''% / RESPONDENT ) APPLICANT BY : SHRI S.N. SOPARKAR, AR RESPONDENT BY : SHRI DINESH SINGH, SR.DR ( ) / DATE OF HEARING 01/04/2016 *+,- ) / DATE OF PRONOUNCEMENT 11/04/2016 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THIS MISCELLANEOUS APPLICATION HAS BEEN FILED BY TH E REVENUE ON 20.08.2015 (ARISING OUT OF IT(SS)A NO.3/AHD/2006 FO R BLOCK PERIOD 1.4.96 TO 2.07.02) FOR RECALLING THE TRIBUNALS ORD ER (ITAT A BENCH, AHMEDABAD) DATED 04/04/2014 ON THE GROUND THAT THE MISTAKE IS CREPT INTO THE ORDER WHICH REQUIRES RECTIFICATION BY THIS TRIBUNAL. MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 2 - 2. THE LD.SR.DR REITERATED THE SUBMISSIONS AS WERE MADE IN THE MISCELLANEOUS APPLICATION. THE LD.SR.DR SUBMITTED THAT THE TRIBUNAL WHILE DECIDING THE ISSUE HAS FOLLOWED THE JUDGEMENT OF THE HONBLE HIGH COURT OF MUMBAI IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT REPORTED AT 260 ITR 491(BOM.) THE LD.SR.DR SUBMITT ED THAT THE FACTS OF THE CASE ARE DISTINGUISHABLE FROM THE FACTS OF THE PRESENT CASE IN AS MUCH THERE WAS NO ISSUE OF CONVERSION OF CAPITAL ASSET, I.E. LAND AND BUILDING INTO STOCK-IN-TRADE, WHEREAS IN THE INSTANT CASE, I T IS NOT SO. HE SUBMITTED THAT THE CONVERSION OF SOCK-IN-TRADE IS GOVERNED BY THE PROVISIONS OF SECTION 45(2) OF THE ACT AND HAS BEEN DEALT WITH IN DETAIL IN THE ASSESSMENT ORDER. 3. ON THE CONTRARY, LD.SR.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE REVENUE IS TRYING TO INSIST ON REVIEWING THE ORDER PASSED BY THIS TRIBUNAL AS THERE IS NO MISTAKE APPARENT FROM RECORDS. ALL FACTS HAVE BEEN DULY CONSIDERED IN THE ORDER SOUGHT TO BE RECTIFIED. IF THE PRAYER OF THE REVENUE IS ACCEPTED, IT WOULD TANTAMOUNT TO REVIEW THE TRIBUNALS ORDER WHICH IS NOT PERMISSIBLE UNDER THE LAW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT TH E TRIBUNAL HAS FOLLOWED THE JUDGEMENT OF THE HONBLE HIGH COURT OF BOMBAY REPORTED AT 260 MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 3 - ITR 491(BOM.). THE ISSUE BEFORE THE HONBLE HIGH C OURT OF MUMBAI WAS IN RESPECT OF YEAR OF TAXABILITY OF THE GAIN AR ISING OUT OF TRANSFER OF A CAPITAL ASSET. 4. MR. R.V. DESAI, LEARNED SENIOR COUNSEL APPEAR ING ON BEHALF OF THE DEPARTMENT CONTENDED THAT IN HIS CASE THE DATE WHICH SHOULD B E TAKEN INTO ACCOUNT FOR DETERMINING THE RELEVANT ACCOUNTING YEAR IN WHICH T HE LIABILITY ACCRUES. IT WAS ARGUED ON BEHALF OF THE ASSESSEE THAT IN THIS CASE, IRREVOCABLE LICENCE WAS GIVEN IN TERMS OF THE CONTRACT ONLY DURING THE FINANCIAL YE AR ENDING 31ST MARCH, 1999 AND, THEREFORE, THERE WAS NO TRANSFER DURING THE FINANCI AL YEAR ENDING 31ST MARCH, 1996. ON THE OTHER HAND, IT WAS ARGUED ON BEHALF OF THE R EVENUE THAT ONE HAS TO GO BY THE DATE ON WHICH THE DEVELOPER SUBSTANTIALLY PERFORMED THE CONTRACT. IT WAS ARGUED ON BEHALF OF THE DEPARTMENT THAT SINCE SUBSTANTIAL PAY MENTS WERE MADE DURING THE FINANCIAL YEAR ENDING 31ST MARCH, 1996 AND SINCE MA JORITY OF PERMISSIONS WERE OBTAINED DURING THAT YEAR, THE LIABILITY TO PAY CAP ITAL GAINS TAX ACCRUED DURING ASSESSMENT YEAR 1996-97. IN THIS CASE, THE AGREEMEN T IS A DEVELOPMENT AGREEMENT AND IN OUR VIEW, THE TEST TO BE APPLIED TO DECIDE T HE YEAR OF CHARGEABILITY IS THE YEAR IN WHICH THE TRANSACTION WAS ENTERED INTO. WE HAVE TAKEN THIS VIEW FOR THE REASON THAT DEVELOPMENT AGREEMENT DOES NOT TRANSFER THE IN TEREST IN THE PROPERTY TO THE DEVELOPER IN GENERAL LAW AND, THEREFORE, SECTION 2( 47)( V) HAS BEEN ENACTED AND IN SUCH CASES, EVEN ENTERING INTO SUCH A CONTRACT COUL D AMOUNT TO TRANSFER FROM THE DATE OF THE AGREEMENT ITSELF. WE HAVE TAKEN THIS VIEW FO R A PRECISE REASON. FIRSTLY, WE FIND IN NUMEROUS MATTERS WHERE THE ASSESSING OFFICER AND THE DEPARTMENT GENERALLY PROCEED ON THE BASIS OF SUBSTANTIAL COMPLIANCE OF T HE CONTRACT. FOR EXAMPLE, IN THIS VERY CASE, THE DEPARTMENT HAS CONTENDED THAT BECAUS E OF SUBSTANTIAL COMPLIANCE OF THE (CONTRACT DURING THE FINANCIAL YEAR ENDING 31ST MARCH, 1996, THE TRANSFER IS DEEMED TO HAVE TAKEN PLACE IN THAT YEAR. SUCH INTER PRETATION WOULD RESULT IN ANOMALY BECAUSE WHAT IS SUBSTANTIAL COMPLIANCE WOULD DIFFER FROM OFFICER TO OFFICER. THEREFORE, IF ON A BARE READING OF A CONTRACT IN IT S ENTIRETY, AN ASSESSING OFFICER COMES TO THE CONCLUSION THAT IN THE GUISE OF AGREEM ENT FOR SALE, A DEVELOPMENT AGREEMENT IS CONTEMPLATED, UNDER WHICH THE DEVELOPE R APPLIES FOR PERMISSIONS FROM VARIOUS AUTHORITIES, EITHER UNDER POWER OF ATTORNEY OR OTHERWISE AND IN THE NAME OF THE ASSESSEE. THEN THE ASSESSING OFFICER IS ENTITLE D TO TAKE THE DATE OF THE CONTRACT AS THE DATE OF TRANSFER IN VIEW OF SECTION 2(47)( V). IN THIS VERY CASE, THE DATE ON WHICH THE DEVELOPER OBTAINED A COMMENCEMENT CERTIFICATE I S NOT WITHIN THE ACCOUNTING YEAR ENDING 31ST MARCH, 1996. AT THE SAME TIME, IF ONE R EADS THE CONTRACT AS A WHOLE, IT IS CLEAR THAT A DICHOTOMY IS CONTEMPLATED BETWEEN LIMI TED POWER OF ATTORNEY AUTHORISING THE DEVELOPER TO DEAL WITH THE PROPERTY VIDE PARA 8 AND AN IRREVOCABLE LICENCE TO ENTER UPON THE PROPERTY AFTER THE DEVELO PER OBTAINS THE REQUISITE APPROVALS OF VARIOUS AUTHORITIES. IN FACT, THE LIMITED POWER OF ATTORNEY MAY NOT BE ACTUALLY GIVEN, BUT ONCE UNDER CLAUSE 8 OF THE AGREEMENT A L IMITED POWER OF ATTORNEY IS MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 4 - INTENDED TO BE GIVEN TO THE DEVELOPER TO DEAL WITH THE PROPERTY, THEN WE ARE OF THE VIEW THAT THE DATE OF THE CONTRACT VIZ., 18TH AUGUS T, 1994 WOULD BE THE RELEVANT DATE OF DECIDE THE DATE OF TRANSFER UNDER SECTION 2(47)( V) AND, IN WHICH EVENT, THE QUESTION OF SUBSTANTIAL PERFORMANCE OF THE CONTRACT THEREAFTER DOES NOT ARISE. THIS POINT HAS NOT BEEN CONSIDERED BY ANY OF THE AUTHORI TIES BELOW. NO JUDGMENT HAS BEEN SHOWN TO US ON THIS POINT. THEREFORE, ALTHOUGH THER E IS A CONCURRENT FINDING OF FACT IN THIS CASE, WE HAVE ENUNCIATED THE PRINCIPLES OF APP LICABILITY OF SECTION 2(47)( V). WE DO NOT FIND MERIT IN THE ARGUMENT OF THE ASSESSEE T HAT THE COURT SHOULD GO ONLY BY THE DATE OF ACTUAL POSSESSION AND THAT IN THIS PARTICUL AR CASE, THE COURT SHOULD GO BY THE DATE ON WHICH IRREVOCABLE LICENCE WAS GIVEN. IF THE CONTRACT, READ AS A WHOLE, INDICATES PASSING OF OR TRANSFERRING OF COMPLETE CO NTROL OVER THE PROPERTY IN FAVOUR OF THE DEVELOPER, THEN THE DATE OF THE CONTRACT WOULD BE RELEVANT TO DECIDE THE YEAR OF CHARGEABILITY. 7. HAVING LAID DOWN BROAD PRINCIPLES WE NOW COME TO THE FACTS OF THIS CASE. THIS IS NOT THE CASE WHERE THE ASSESSEE DENIES TRANSFER. IN THIS CASE, THE ASSESSEE HAS PAID CAPITAL GAINS TAX FOR ASSESSMENT YEAR 1999-2000. HO W- EVER, THE ASSESSEE IS TOLD THAT THE YEAR OF CHARGEABILITY IS ASSESSMENT YEAR 1996-9 7 AND NOT ASSESSMENT YEAR 1999- 2000. MOREOVER, THIS IS THE FIRST TIME THAT WE HAVE LAID DOWN THE GUIDELINES. FURTHER, THE ASSESSEE HAS PAID THE TAX FOR ASSESSMENT YEAR 1 999-2000. GENERALLY, THIS COURT DOES NOT INTERFERE IN CONCURRENT FINDINGS OF FACTS. HOWEVER, IN THIS CASE-, A SUBSTANTIAL QUESTION OF LAW HAS ARISEN ON INTERPRET ATION OF SECTION 2(47)( V). IT IS FOR THIS REASON THAT WE HAVE GIVEN THE GUIDELINES, WHIC H MAY BE FOLLOWED BY THE DEPARTMENT IN ALL FUTURE CASES. WE HAVE GONE THROUG H THE COMPILATION OF DOCUMENTS AND FROM MERE SUBSTANTIAL COMPLIANCE OF THE AGREEME NT, ONE CANNOT INFER TRANSFER IN THE ACCOUNTING YEAR ENDING 31ST MARCH, 1996. WE MAY ALSO MENTION THAT THERE ARE MISTAKES, APPARENT ON THE FACE OF THE RECORD, IN TH E ORDER OF THE TRIBUNAL. THE TRIBUNAL HAS RELIED UPON ASSESSEE OBTAINING 7 PERMI SSIONS. WE FIND THAT ITEM (VI) AND ITEM (VII) ARE MERE REPETITIONS OF ITEM (III) AND I TEM (I) RESPECTIVELY. SIMILARLY, THE TRIBUNAL HAS REFERRED TO PERMISSIONS OBTAINED DURIN G FINANCIAL YEARS OTHER THAN THE CONCERNED FINANCIAL YEAR ENDING 31ST MARCH, 1996 TO COME TO THE CONCLUSION THAT THE TRANSFER HAD TAKEN PLACE DURING THAT YEAR. LASTLY, THE TRIBUNAL HAS REFERRED TO PERMISSION DATED 25TH JUNE, 1995 FOR REDEVELOPMENT OF THE PROPERTY VIDE ITEM (III). HOWEVER, IN THE COMPILATION GIVEN BY THE ' ASSESSEE THERE IS NO SUCH PERMISSION. THE ASSESSEE HAS DISPUTED THE EXISTENCE OF THIS DOCUMEN T. OFFICE IS DIRECTED TO TAKE THE ASSESSEE'S COMPILATION ON RECORD AND MARK 'X'. IT I S FOR THIS REASON THAT VIDE ORDER DATED 29TH JANUARY, 2003, WE CALLED UPON THE COMMIS SIONER OF INCOME-TAX (JUDICIAL) TO FORWARD TO US THE R&P. HOWEVER, LEARNED COUNSEL FOR THE DEPARTMENT HAS INFORMED US THE R&P IS NOT AVAILABLE. THERE ARE OTHER APPARE NT ERRORS IN THE ORDER OF THE TRIBUNAL. AT PAGE 144 OF THE PAPER BOOK, THE TRIBUN AL HAS STATED AS UNDER : 'FROM THE DATES IT IS EVIDENT THAT FROM THE VERY NE XT DAY I.E., 1-4- 1997 FROM THE END OF FINANCIAL YEAR ENDING ON 31ST MARCH 1906, THE MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 5 - BUILDER WAS USING THE WELL WATER AGAINST PAYMENT OF RELEVANT CHARGES TO THE ASSESSEE.' THE ABOVE QUOTED FINDINGS OF THE TRIBUNAL IS APPARENTLY AN ERROR BECAUSE THE FINANCIAL YEAR ENDED ON 31ST MARCH 1996 AND THE FIR ST DAY OF THE NEXT FINANCIAL YEAR WAS 1-4-1996 AND NOT 1-4-1997. ACCORDING TO THE TRI BUNAL, THE LETTER DATED 18-2- 1999 SHOWS THAT FLOREAT CAME INTO POSSESSION ON THE DAY NEXT TO 31-3-1996 I.%., 1-4- 1997. AS STATED ABOVE, THE DAY NEXT TO 31-3-1996 WO ULD BE 1-4-1996 AND NOT 1-4- 1997 AND EVEN IF 1-4-1997 IS TAKEN AS A TYPING MIST AKE, IT COULD ONLY BE READ AS 1-4- 1996 AND IF 1-4-1996 IS THE DATE ON WHICH FLOREAT/D EVELOPER CAME IN POSSESSION, THEN THE POSSESSION WAS RECEIVED BY THE DEVELOPER D URING THE FINANCIAL YEAR 1996-97 CORRESPONDING TO ASSESSMENT YEAR 1997-98. THEREFORE , THIS FINDING OF THE TRIBUNAL IS ERRONEOUS BECAUSE IN THIS CASE WE ARE CONCERNED WIT H ASSESSMENT YEAR 1996-97 AND NOT THE ASSESSMENT YEAR 1997-98. 8. TAKING INTO ACCOUNT THE TOTALITY OF CIRCUMSTANCE S, ON FACTS, WE ALLOW THE APPEAL OF THE ASSESSEE. 4.1. IN THE PRESENT CASE, IT HAS BEEN RECORDED BY T HIS TRIBUNAL IN THE ORDER WHICH IS SOUGHT TO BE RECTIFIED THAT THERE AR E CLEAR TERMS IN THE DEVELOPMENT AGREEMENT WHICH IS REPRODUCED AT PAGE-8 OF THE TRIBUNALS ORDER DATED 04/04/2014. A BARE READING OF THE SAM E MAKES IT CLEAR THAT THE COMPLETE CONTROL OVER THE PROPERTIES WAS GIVEN TO THE DEVELOPER. CONSIDERATION OF THE TRANSFER OF THE RIGHTS IS FIXE D AND THE TERMS OF PAYMENT IS ALSO FIXED. NO MATERIAL IS PLACED BEFOR E THIS TRIBUNAL, THAT THE PARTIES DID NOT ACT UPON THE DEVELOPMENT AGREEMENT. THE ONLY GROUNDS TAKEN BY THE REVENUE FOR SEEKING RECALLING THE ORDE R IS THAT THE ASSESSEE HAD CONVERTED THE PROPERTY IN QUESTION AS STOCK-IN- TRADE AND SUCH STOCK- IN-TRADE WAS DURING THE BLOCK PERIOD. WE ARE UNABL E TO AGREE WITH THE CONTENTION OF THE SR.DR IN THE LIGHT OF THE HONBLE JUDGEMENT OF BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPA DIA VS. CIT (SUPRA) THAT THERE WAS NO SALE OF PROPERTY BY WAY OF THE DE VELOPOMENT AGREEMENT. THE SR.DR HAS PLACED SECTION 45(2) OF T HE ACT TO BUTTRESS THE MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 6 - CONTENTION THAT THE ASSESSEE OUGHT TO HAVE OFFERED FOR TAXATION OF GAIN ARISING OUT OF TRANSFER OF THE PROPERTY DURING BLOC K PERIOD. IN OUR CONSIDERED VIEW, THE TRANSFER OF PROPERTY WAS COMPL ETE BY WAY OF THE DEVELOPMENT AGREEMENT. THE REVENUE HAS NOT DISPU TED THE FACT THAT THE ASSESSEE HAD GIVEN POSSESSION OF THE PROPERTY TO TH E DEVELOPER EVEN IF IT IS ASSUMED THAT IT IS IN NATURE OF STOCK-IN-TRADE, THERE IS A CHANGE OF HANDS AS THE ASSESSEE HAD GIVEN POSSESSION OF THE P ROPERTY TO THE DEVELOPER IN CONSIDERATION AS DESCRIBED UNDER THE D EVELOPMENT AGREEMENT. IT IS ALSO NOT DISPUTED THAT A SUM OF R S.1,00,000/- WAS PAID TO THE ASSESSEE BY THE DEVELOPER AND REST OF THE SA LE CONSIDERATION WAS TO BE PAID INTO INSTALLMENTS. KEEPING THESE FACTS, WE ARE OF THE CONSIDERED VIEW THAT MODIFYING OR RECALLING THE TRIBUNALS ORD ER DATED 04/04/2014 WOULD TANTAMOUNT TO REVIEWING OF THE ORDER. THE REFORE, THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE IS D EVOID OF ANY MERIT. 5. IN THE RESULT, MISCELLANEOUS APPLICATION FILED B Y THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE COURT ON MONDAY, THE 11 TH DAY OF APRIL, 2016 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 11/ 04 /2016 1.., .../ T.C. NAIR, SR. PS MA NO.62/AHD/2015 (IN IT(SS)A NO.3 /AHD/2006) ITO VS. M/S.SWASIK ENGG.MFG.CO.PVT.LTD. BLOCK PERIOD 1.4.1996 TO 2.07.2002 - 7 - !'#$#%! / COPY OF THE ORDER FORWARDED TO : 1. '% / THE APPLICANT 2. &''% / THE RESPONDENT. 3. 234 5 / CONCERNED CIT 4. 5 ( ) / THE CIT(A)-IV, AHMEDABAD 5. 6 7 &34 , 34- , 2 / DR, ITAT, AHMEDABAD 6. 79: ;( / GUARD FILE. / BY ORDER, '6 & //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 10.3.16 (DICTATION-PAD 15 +PAGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.416 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S.11.4.16 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 11.4.16 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER
