Income Tax Appellate Tribunal - Hyderabad
T. Raj Kumar (Huf), Hyderabad vs Income Tax Officer, Ward-10(5), ... on 28 November, 2018
ITA No 880 of 2018 T Raj Kumar HUF Hyderabad
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' A ' Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri S.Rifaur Rahman, Accountant Member
ITA No.880/Hyd/2018
(Assessment Year: 2010-11)
Shri T. Raj Kumar (HUF) Vs Income Tax Officer
Hyderabad Ward 10(5)
PAN:AADHT0016J Hyderabad
(Appellant) (Respondent)
For Assessee : Shri S. Rama Rao
For Revenue : Shri R. Mohan Reddy, DR
Date of Hearing: 20.11.2018
Date of Pronouncement: 28.11.2018
ORDER
Per Smt. P. Madhavi Devi, J.M.
This is assessee's appeal for the A.Y 2010-11against the order of the CIT (A)-6, Hyderabad, dated 26.02.2018. The assessee has raised the following grounds of appeal:
" 1. The order of the learned CIT (A) is erroneous both on facts and in law.
2. The learned CIT (A) erred in deciding the appeal without providing proper opportunity; particularly when the appeals of the other co-owners were also pending before the learned CIT (A).
3. The learned CIT (A) erred in holding that there was any transfer of property during the year by the appellant in favour of Saptagiri Constructions without considering the fact that no transfer was effected during the year.
4. The learned CIT (A) ought to have seen that the sale deed executed by Saptagiri Constructions was a sale of the Page 1 of 5 ITA No 880 of 2018 T Raj Kumar HUF Hyderabad property by the said concern as General Power of Attorney on its own and not on behalf of the appellant.
5. The learned CIT (A) erred in confirming determination of capital gain at Rs.33,81,122/- without considering the fact that there was no transfer of property during the year.
6. Any other ground or grounds that may be urged at the time of hearing".
2. At the time of hearing, the learned Counsel for the assessee submitted that the issue in this appeal is that the capital gain arising out of Agreement for Development-cum-GPA and similar issue had arisen in the case of the co-owners of the property before the Hon'ble Tribunal and the Tribunal has held that the capital gains is not chargeable to tax in the relevant A.Y. He has filed a copy of the said order before us.
3. The learned DR, however, relied on the orders of the authorities below.
4. Having gone through the material on record and also the decision of the Coordinate Bench to which both of us are signatories, we allow this appeal. For the sake of ready reference, the relevant portion of the ITAT order is reproduced hereunder:
"8. Considered the rival submissions and perused the material on record. We find that the issue in dispute is squarely covered by the decision of the coordinate bench in the other family members case (supra) wherein the coordinate bench has held as under:
"8. Considered the rival submissions and perused the material on record. We notice that the assessment was reopened by issue of notice u/s 148 on 29/03/2016 and the reason for reopening was submitted by AO vide letter dated 20/06/2016 Page 2 of 5 ITA No 880 of 2018 T Raj Kumar HUF Hyderabad (we notice that the assessee letter reference was mentioned as 18/04/2014, whereas the actual letter reference was 18/04/2016), there is a typographical mistake committed by AO). The reasons recorded by AO to reopen the assessment was as under:
"On verification of the letter of the developer M/s Saptagiri Constructions letter dt: 22.12.2009 it is noticed that the builder was ready to handover the possession of construction space to the land lords in the FY 2009-10 relevant to the AY 2010-11. Therefore there was simultaneous transfer of possession of 55% of land by the assessee to the builder and possession of 45% of built -up are by the builder to the assessee in FY 2009 -10 in terms of section 2(47) of the Income Tax Act, 1961 read with section 53A of the Transfer of property Act. On verification, it is noticed that the assessee has not filed his ROI for the A. Y 2009-10. In the view of the above, the income under the head Capital Gains chargeable to tax on account of transfer of the said land has escaped assessment within the meaning of Sec.147 of the Income Tax Act, 1961".
It is clear that the main reason for reopening/initiating the proceedings are the letter of the builder, in which, it is stated that the buildings are ready for occupation as per the Joint Development Agreement (JDA). It was also brought to the notice in the initial state itself that the building constructed by the developer are not as per the norms agreed and subsequently subject to litigation. The final order of the Arbitral award was also submitted before the AO. It clearly shows that the building constructed by the developer is not as per approval and the same was not accepted by the assessee nor possession was taken.
8.1 Before us, the question raised is, in the case of 'JDA"
transaction, at what point of time, capital gain arises. It is settled law that in the year in which the possession of the property is passed on to the developer is the year in which the provision of capital gains get attracted. In the case of Potla Nageswara Rao (supra) the Hon'ble AP High Court held as under:
"The element of factual possession and agreement are contemplated as transfer within the meaning of the aforesaid section. When the transfer is complete, automatically, consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of Page 3 of 5 ITA No 880 of 2018 T Raj Kumar HUF Hyderabad income for the assessment year when the agreement was entered into and possession was given. Here, factually it was found that both the aforesaid aspects took place in the previous year relevant to the assessment year 2003-04."
From the above decision, when the transfer is complete, automatically, consideration mentioned in the agreement for sale has to be taken into consideration for the purpose of assessment of income for the AY when the agreement was entered into and possession was given. Therefore, in the given case, the assessee has entered into 'JDA' in the year 10/01/2000 and possession was handed over for development. But due to occupation of the property by the tenants, the developer was able to vacate the tenants only in the year 2003. Hence, it can be construed that the actual vacant possession was handed over to the developer only in 2003. Therefore, the actual transfer took place in the year 2003. The provisions of capital gains are attracted in the year 2003. Hence, the stand of the AO to charge the capital gains in the year 2010-11 is not proper. Secondly, the reason for bringing to tax in the year 2010 -11 was the letter of the developer to announce that the building is ready for occupation without complying to the 'JDA' and approval norms. Even though the same was brought to the notice of the AO, according to us, the reason for reopening the assessment is on faulty ground.
8.2 In our considered view, the income chargeable to tax falls only in the AY 2003-04 and not in AY 2010-11. Therefore, the assessment completed u/s 144 r.w.s. 147 is held to be not in accordance with law, hence, the same is quashed.
8.3 Since, the assessment itself is quashed, the other grounds raised by the assessee are not required to be adjudicated at this stage. Therefore, the ground raised by the assessee in this regard is allowed. "
As the issue in dispute is materially identical to that of the said cases, following the decision drawn therein, we set aside the order of CIT(A) and allow the grounds raised by the assessee.
8.1 As the facts and grounds raised in all other appeals are identical to that of ITA No. 981/Hyd/2018 in the case of T. Srinivasa Rao (HUF), following the conclusions drawn therein we allow the grounds raised in these appeals as well.Page 4 of 5
ITA No 880 of 2018 T Raj Kumar HUF Hyderabad
9. In the result, all the appeals under consideration, are allowed".
5. Since the facts and circumstances in this case are also similar, respectfully following the same, assessee's appeal is allowed.
6. In the result, assessee's appeal is allowed. Order pronounced in the Open Court on 28th November, 2018.
Sd/- Sd/-
(S.Rifaur Rahman) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, dated 28th November, 2018.
Vinodan/sps
Copy to:
1 Sri T. Raj Kumar (HUF) 3-37-18 Radhika Colony, West
Marredpally, Hyderabad 500026
2 ITO Ward 10(5) IT Towers, AC Guards, Hyderabad
3 CIT (A)-6 Hyderabad
4 Pr. CIT - 6 Hyderabad
5 The DR, ITAT Hyderabad
6 Guard File
By Order
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