SBI EMPLOYEES HOUSING BUILDING CO-OPERATIVE SOCIETY LTD.,BHUBANESWAR vs. ITO, WARD-4(1), BHUBANESWAR

PER LAXMI PRASAD SAHU, A.M. :

This appeal filed by the assessee is directed against

the order of CIT(A) – 2, Bhubaneswar, dated 12/02/2018

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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.

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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

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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,

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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:

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

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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/-.

preferred an appeal before the CIT(A) and filed details of

expenses incurred by it before him.

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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.

in appeal before the Tribunal.

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.

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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.

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.

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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.

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allowed for statistical purposes.

Sd/- Sd/- (C.M. GARG) ( LAXMI PRASAD SAHU) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, Dated: 27th January, 2021

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copy to :

1 SBI Employees House Building Cooperative Society Ltd., SBI Main Branch, Unit – 1, Bhubaneswar – 751 009 2 ITO, Ward – 4(1), Bhubaneswar 3 CIT(A) – 2, Bhubaneswar 4 Pr. CIT – 2, Bhubaneswar 5 ITAT, DR, Bhubaneswar 6 Guard File