SRI. D. K SHIVAKUMAR,BANGALORE V. THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(4), BENGALURU

MA 20/BANG/2025

AI Insights

The case revolves around a Miscellaneous Application filed by Shri. D. K. Shivakumar against an order passed in ITA No.1064/Bang/2024. The application sought to correct the omission of certain facts related to the Joint Development Agreement (JDA) from the earlier tribunal order. The JDA, dated 12/10/2005, involved M/s. Davanam Constructions Private Limited and M/s. Sobha Developers Private Limited, where the assessee and Sri. Kempegowda [HUF] were landowners. The Tribunal acknowledged the oversight and incorporated the facts regarding the assessee's possession of the property as per the JDA, confirming the extent of possession held by the assessee and Sri. Kempegowda [HUF] as of the date of the JDA.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 633271 (ITAT-BANGALORE)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-06-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Other Referred Cases: PCIT vs CPC Logistics
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: Y.V. RAVIRAJ; STANDING COUNSEL
• Assessee Lawyers: CHANDRASEKHAR
• Keywords: Capital asset; Sale consideration of property below Jantri Value; Fair market value
• Section: 50C

Judgement Text

"IN INCOME TAX APPELLATE TRIBUNAL “B” BENCH : BANGALORE BEFORE SHRI. LAXMI PRASAD SAHU, ACCOUNTANT MEMBER AND SHRI. SOUNDARARAJAN K, JUDICIAL MEMBER MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Assessment Year : 2018-19 Shri. D. K. Shivakumar, No.252, “Kenkkeri” 18th Cross, Upper Palace Orchards, Sadashivanagar, Bangalore – 560 080. PAN : AKKPS 1306 F Vs. DCIT, Circle – 1(4), Bangalore. APPELLANT RESPONDENT Assessee by : Shri.Chandrasekhar, Advocate Revenue by : Shri.Y. V. Raviraj, Sr. Standing Counsel. Date of hearing : 06.06.2025 Date of Pronouncement : 10.06.2025 ORDER Per Laxmi Prasad Sahu, Accountant Member : This Miscellaneous Application (MA) filed by the assessee is against the Order passed in ITA No.1064/Bang/2024, Order dated 21.02.2025 by the Co-ordinate Bench. The learned Counsel submitted that during the course of hearing appeal in ITA No.1064/Bang/2024, the arguments were made in respect of JDA which is placed at Paper Book Vol.2 page Nos.423 to 525 and the said JDA has been observed by the AO as well as CIT(A) and hence certain facts from the JDA which were argued during the course of hearing before the Bench was not brought in the Order passed dated 21.02.2025 which needs to be incorporated and learned Counsel further submitted that the assessee had complete possession of 69% of the property at CTS I and II which comes to MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Page 2 of 6 about 3,81,715 sft and that Sri. Kempegowda [HUF] had complete possession of 10% of the property at CTS I Et II which comes to about 55,321 sft, as on 12/10/2005, as evidenced by the Registered Joint Development Agreement [JDA], dated 12/10/2005, entered into by M/s. Davanam Constructions Private Limited [i.e. M/s. DCPL], the assessee Et Sri. Kempegowda [HUE], as Land Owners, with M/s Sobha Developers Private Limited as a Developer. The JDA being a registered document Et M/s. DCPL being a party to the same, it can be said that possession to the extent stated i.e. 3,81,715 sft to the assessee Et 50,834 sft to Sri. Kempegowda [HUF], thus stands confirmed on 12/10/2005. M/s. DCPL can be said to be in possession of only balance 21 of the land at CTS I Et II, which comes to about 1,16,176 sft. 2. The learned Standing Counsel submitted that there is no mistake in the Order passed by the Hon’ble Bench. Therefore, it need not be incorporated in the Order. 3. It is evident from the JDA that the assessee was clearly in possession to the extent stated i.e. 3,81,715 sft, at least on and from 12/10/2005 and this fact was inadvertently not brought out in our order dated 21/02/2005 in ITA No. 1064/Bang/2024. 4. We accordingly incorporate this fact in paras 41, 42 & 43 of the said order, which upon the said incorporation, shall read as under: “41. We have considered the rival submissions and perused the materials available on records and order of the authorities below. We find that the AO is correct in holding that the assessee did not have possession of the entire property at CTS I and II ever since 10/10/2004. The Sale Agreements dated 10/10/2004 as well as MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Page 3 of 6 09/09/2005, in respect of properties at CTS I and II, respectively clearly state that possession will be given only upon execution of Sale Deed. We also find from the Agreement of Sale, dated 10/10/2004, entered into between the assessee and DCPL, that the assessee had acquired right to purchase 69% of the property at CTS II, coming to about 3,50,758 sft. The assessee got 45% of this 69% registered in his name by way of a sale deed rights in his name by a Registered Sale Deed dated 21/02/2005, coming to about 1,57,841 sft of land. Thus, the assessee had possession of only 1,57,841 sft of land at CTS II and did not have possession of the balance portion of 1,92,917 sft of land. We also find from the Agreement of Sale, dated 09/09/2005, entered into between the assessee and DCPL, that the assessee had acquired right to purchase 69% of the property at CTS I, coming to about 30,958 sft. There is no doubt that the agreements dated 10/10/2004 and 09/09/2005 are not registered, but the same are not denied either by the assessee or by DCPL. We are also of the view that the agreements may be registered or unregistered. In any case the agreements are binding on both the parties. The position regarding possession as observed above holds good only till 11/10/2005, in view of the fact that the Joint Development Agreement entered into on 12/10/ 2015, by M/s. Davanam Constructions Private Limited [i.e. M/s. DCPL], the assessee & Sri. Kempegowda [HUF], as Land Owners, with M/s Sobha Developers Private Limited as a Developer, clearly states that the assessee is in possession of 3,81,715 sft of land at the time of entering this JDA. This JDA being a registered document & M/s. DCPL being a party to the same, it is clear that possession to the extent stated i.e. 3,81,715 sft to the assessee & 50,834 sft to Sri. Kempegowda [HUF], thus stands confirmed at least on & from 12/10/2005 & M/s. DCPL can be said to be in possession of only balance 21% of the land at CTS I & II, which comes to about 1,16,176 sft on & from 12/10/2005.” MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Page 4 of 6 42. It is also an undisputed fact that the assessee has paid in all an amount of Rs.42,54,93,889/- as advance towards purchase of properties from DCPL.As per the agreements dated 10/10/2004 and 09/09/2005, these advances are paid only towards properties at CTS I and II. The agreements are no doubt for 79% of the properties at CTS I and II ( ie. 69% for the assessee and 10% for DK Kempegowda HUF, of which the assessee is a coparcener). There is no document to show that any part of the advance is for property at CTS 1297.The Revenue is not correct in presuming that the balance advance is to be held to be paid for property at CTS 1297. Since there is no document giving any rights to the assessee or the Kempegowda HUF on any portion/part of the property at CTS 1297, held by DCPL, it cannot be said that there is an exchange between the assessee and DCPL in terms of Section 2(47)(i) of the Act. The AO is not correct in coming to the conclusion that the assessee and the HUF parted with 79% share in CTS 1297 to acquire, by way of exchange, 21% of properties at CTS I and II when admittedly the assessee as well the HUF has no share in the properties in CTS 1297.The assessee cannot be said to be in possession of any extent of land in excess of 1,57,841 sft at CTS II as on the date of MOU. The assessee is in possession of 3,81,715 sftof land in CTS I by virtue of the recitals in the registered JDAdated 12/10/2005. Similarly, D.K. Suresh who had succeeded to the rights of the Kempegowda HUF as on the date of the MOU, is in possession of 50,834 sftof land in CTS Iby virtue of the recitals in the registered JDAdated 12/10/2005. Having decided that the transaction is not clearly in the nature of an Exchange, we need to now look at the fact, whether any income arises out of the same or not and if it does, what would be the nature of income and under what head should it be taxed. 43. The AO states that the section that is to be applied is Section 50D of the Act as it is not possible to ascertain the full value of consideration and hence fair market value of the consideration is to be adopted. The AO has adopted MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Page 5 of 6 the market value of land at Rs.14,000/- per sft and the market value of the Building at Rs.4390/- per sft. The assessee on the other hand states that section 50D is not to be applied to this transaction. The assessee’s case is that if the position of the assessee that the Sale Deeds dated 12/04/2017, by which 39,688sft of land is registered in the name of the assessee is only a formality to confer title to the assessee as he had been in possession of the same since 10/10/2004 and 09/09/2005 is not acceptable, then the correct section to determine, income if any, arising out of this transaction is Section 50C of the Act and not Section 50D as has been erroneously done by the AO. The stand of the assessee that he has all along been in possession has been accepted by us, at least from 12/10/2005, by virtue of the recitals in the registered JDAdated 12/10/2005. In our opinion despite the fact that the assessee was in possession on & from 12/10/2005, the provisions of section 50C applies on registration of the Sale Deed by DCPL in favour of the assessee & whether any income arises out of the same or not is to be determined keeping in view the Provisos to Section 50C in as much as the date of agreement where the consideration is fixed and the date of transfer of the property are not the same & different.The stand of the AO that the income from the transaction has to determined, by applying Section 50D is not correct. Reliance was also placed on the judgement of the Jurisdictional Karnataka High Court in the case of PCIT vs CPC Logistics reported in 134 taxmann.com 197 (Kar) (2022) where the High Court held that Guidance value of land should be considered to arrive at full value of consideration. 5. There is no other change in the order passed by us, other than what is brought out above, and we also need to state the fact that this change does not affect the decision rendered by us earlier in the order dated 21/02/2025. MP No.20/Bang/2025 (in ITA No.1064/Bang/2024) Page 6 of 6 6. In the result, MA filed by the assessee is allowed. Pronounced in the court on the date mentioned on the caption page. Sd/- Sd/- (SOUNDARARAJAN K) (LAXMI PRASAD SAHU) Judicial Member Accountant Member Bangalore, Dated : 10.06.2025. /NS/* Copy to: 1. Appellant 2. Respondent 3. Pr.CIT4.CIT(A) 5. DR, ITAT, Bangalore. By order Assistant Registrar ITAT, Bangalore. "