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Income Tax Appellate Tribunal, CUTTACK BENCH, CUTTACK
Before: SHRI CHANDRA MOHAN GARG & SHRI LAXMI PRASAD SAHU
This appeal filed by the assessee is directed against the order of CIT(A) – 2, Bhubaneswar, dated 12/02/2018
:- 2 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar for AY 2011-12 wherein the assessee has raised the following grounds of appeal:
“1. That, the learned CIT(A) has committed serious error in not quashing the assessment order which is unjust, illegal, arbitrary, without jurisdiction, contrary to the provisions of the Income-tax Act,1961 (Hereinafter referred as the Act) contrary to the facts and circumstances of the case and has been made in gross violation to the principles of natural justice.
That, the learned CIT(A) has committed serious error in not quashing the assessment order as the notice under section 148 issued by the learned DCIT, Cirlce- 2(1), Bhubaneswar is without jurisdiction and contrary to the provisions of the Act.
3. That, the learned CIT(A) has committed serious error in not allowing expenses of Rs.95,63,963/- while computing the total income at Rs.34,35,000/- under capital gains.
4. That, the learned CIT(A) has committed serious error by not deleting the addition made by the learned Assessing Officer which has been passed ignoring the written submission made by the appellant regarding the agreement made with the MIs Trident Properties Limited with the appellant and for which the same is liable to be set aside.
5. That, the learned CIT(A) has committed serious error in upholding the order of the learned Assessing Officer which is based on extraneous reason of direction given by unknown person which is contrary to the provisions of the Act and the assessment order made thereunder is liable to be quashed and/or annulled.
:- 3 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar
That, the appellant may add, alter, delete or amend any of the grounds with the leave of Hon'ble ITAT at the time of hearing of the matter.”
and treated as AOP/BOI had never filed return of income.
Therefore, the case was reopened u/s 147 of the Act on 10/03/2016 after recording the following reason:
"The assessee has entered an agreement for development of properties with a developer during F.Y 2010-11. On perusal of the developmental agreement between the said assessee and the developer company it is found that assessee had purchased lands to the tune of Rs.18.426 Acres by various registered sale deeds from various parties. Later along with this above mentioned 18.426 Acres and a further piece of land measuring 4.786 Acres had been transferred by the assessee to the developer for construction of residential-cum- commercial complex and flats.”
2.1 In response to the notice dated 10/03/2016 u/s 148 of the Act, the assessee filed its return of income for AY 2011-12 on 08/04/2016. Due to change of incumbent, the case was transferred to the jurisdictional AO and statutory notices were issued to the assessee fixing compliance on 29/11/2016, against which, the assessee furnished the details. During the assessment proceedings, it was noticed
:- 4 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar by the AO that the assessee had entered into an agreement with M/s Trident Properties Pvt. Ltd., Hyderabad for construction of residential-cum-commercial complex or bungalows or condominiums and EWS & LIG flats over acres of land owned by the assessee on sharing basis.
Notices were issued to the said construction company u/s 133(6) calling for information about the agreement and its project to which he replied. The assessee also filed the details as required by the AO and the assessee also filed written submission dated 28/12/2016 before the AO, which was extracted by the AO in his order at pages 4 & 5. The assessee also filed Joint Development Agreement dated 30/04/2010 registered in office of the Sub-Registrar, Khandagiri, Bhubaneswar. The subsequent document dated 13/07/2016 meant to rectify the original document dated 30/04/2016, was not registered in the office of the Sub- Registrar, Khandagiri, Bhubaneswar but the same was notarized. The AO opined that document involving transfer of immovable property exceeding Rs. 100/- is required to be registered in the office of the Sub-Registrar and,
:- 5 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar therefore, the notarized document is not acceptable in terms of section 17 of the Registration Act, 1908. He observed that the document dated 30/04/2010 between the assessee society and M/s Trident Properties Ltd. was registered and, therefore, capital gains arises in the year of execution of Joint Development Agreement. AO noted that as per section 2(47(v) of the Act, to determine the capital gain as arisen to the tax payer, there are three ingredients, Viz., i) there must be capital asset, ii) it must have been transferred during the relevant year and, iii) capital gain must have arisen to the tax payer of such an asset. He relied on the following cases:
ACIT Vs. GM Omarkhan, 116 ITR 950 (AP) 2. Potla Nageswara Rao, 365 ITR 269 (AP) 3. TK Dayalu Taxman 531 (KAR) 4. Chaturbhuj, 260 ITR 491 (Bom.)
The AO also referred to the Circular issued by the CBDT dated 29/02/2016 regarding taxability of Joint Development Agreement and land share transfer and also referred to section 53A of the Transfer of property Act, 1882. Further, he observed that the provisions of section 45(1) of the Act read with section 2(47(v) of the Act, will be :- 6 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar applicable to the case of the assessee and short term capital gain arises on the transfer of the said property for construction of the building on sharing basis. Accordingly, he computed the short term capital gain as under:
The fair market value of 23.212 Rs. 3,48,18,000 acre of land in question @ Rs. 15,00,000/- per acre Less: cost of acquisition ( as Rs. 3,13,83,000 furnished by the A/R of the assessee) stamp duty and registration expenses is not included in the cost of acquisition as the same is supposed to have been borne by the transferor and not by the assessee Short term capital gain Rs. 34,35,000 Since the assessee did not claim the development expenses in the return of income filed on 08/06/2016, the AO did not allow the deduction of the same relying on the decision of the Hon’ble SC decision in the Goetz (India) Ltd. Vs. CIT, 285 ITR 323 (SC) and computed the short term capital gains at Rs. 34,35,000/-.
Aggrieved by the order of the AO, the assessee preferred an appeal before the CIT(A) and filed details of expenses incurred by it before him.
:- 7 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar
The ld. CIT(A) observed that there was no evidence filed by the assessee to substantiate its claim of expenses incurred towards stamp duty, registration charges and development expenses. He, therefore, did not entertain the additional evidence filed by the assessee before him and confirmed the order of the AO.
Aggrieved by the order of the CIT(A), the assessee is in appeal before the Tribunal.
6. Before us, the ld. AR submitted that the reopening of assessment made by the AO u/s 147 of the Act was without jurisdiction and contrary to the provisions of the IT Act and he has not followed prescribed procedures as per the IT Act. He further submitted that the AO/CIT(A) have not considered the written submissions along with development agreement and related documents, filed by the assessee before them. Hence, he requested the Bench to remit the matter back to the file of AO for considering the written submissions.
:- 8 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar
On the other hand, the ld. CIT-DR relied on the orders of the revenue authorities and submitted that the assessee has not filed the return of income, which was liable to be filed under the Act and, therefore, the designated authority has rightly opened the case of the assessee after following the prescribed procedure as per section 147 of the Act for reopening of the case of the assessee. He submitted that there is no ambiguity to reopen the case of the assessee and all the statutory notices were issued to the assessee, but the assessee is not willing to complete its case with credible evidence. He, therefore, prayed that the order of the CIT(A) should be confirmed.
We have heard both the parties and perused the material on record as well as gone through the orders of the authorities below. From the orders of the authorities below, we find that the assessee had never filed its return of income for the respective AY and, therefore, the AO after recording the reasons, reopened the case of the assessee.
:- 9 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar Therefore, the allegations made by the AR of the assessee before us regarding reopening of the assessment, are dismissed. Further, we observe from the paper book containing written submissions, development agreement and related documents, filed by the ld. AR of the assessee before the lower authorities to substantiate its claim, which have not been considered by both the authorities and, therefore, we direct the AO to accept documents/evidences after verification. Therefore, in the interest of justice, we deem it fit and proper to remit the issue back to the file of the AO with a direction to re-adjudicate the case of the assessee after examining the documents filed by the assessee and in decide the issue in accordance with law after providing reasonable opportunity of hearing to the assessee. The assessee is also directed to submit the documentary evidence to substantiate its claim before the AO and not to seek unnecessary adjournments for early disposal of the case. Accordingly, grounds raised by the assessee on this issue are treated as allowed for statistical purposes.
:- 10 -: SBI Employees Housing Building Coop. Society Ltd., Bhubaneswar
In the result, appeal of the assessee is treated as allowed for statistical purposes.