ACIT, CHENNAI vs. MADHU PARASURAM, CHENNAI

आदेश / O R D E R PER MANJUNATHA.G, AM: These two appeals filed by the Revenue are directed against separate,

but identical orders of the Commissioner of Income Tax (Appeals)-15,

Chennai, both dated 28.10.2016 and pertains to assessment year 2012-13.

Since, the facts are identical and issues are common, for the sake of

convenience, these appeals are being heard together and disposed off, by

this consolidated order.

which necessary petition for condonation of delay explaining reasons for

delay has been filed, for which, the ld.Counsel for the assessee did not raise

any objection. Having heard both sides and considered petition filed by the

Revenue for condonation of delay, we are of the considered view that

reasons given by Revenue for not filing the appeals within the time allowed

under the Act, comes under reasonable cause as provided under the Act for

condonation of delay and hence, delay in filing of above appeals are

condoned and appeals filed by the Revenue are admitted for adjudication.

both the assessment years. Therefore, for the sake of brevity, grounds of

appeal filed in ITA No.292/Chny/2017 for the AY 2012-13, are re-produced

as under:

ITA Nos.292 & 293/Chny/2017

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2.1 The Ld.CIT (A) failed to appreciate that the assessee has not disclosed the full consideration receivable by him as per the development agreement.

2.2 The Ld.CIT (A) failed to appreciate that the assessee is one of the co-owner of a land with equal rights along with Mrs.Maduu Parusaram and Mrs Kalyani Subash. All the owners of the land have executed a IDA on 18/06/2011 with M/s.Adroit Urban Developers Pvt Ltd and Mrs Siddharthan Apparels Pvt Ltd.

2.3 The Ld.CIT (A) failed to appreciate that the sale consideration as estimated by the original agreement dated 18/06/2011 Rs.7,76,27,999/- was the market value for the l/3rd share of the assessee's sister Madhu Parusuram & Mrs Kalyani Subash (other co-owners). Considering market value of Rs.7,76,27,999/- as sale consideration received to the assessee.

2.4 The Ld CIT (A) ought to have appreciated that the decision of Karnataka HC in the case of CIT Vs T.K.Dayalau (114 Taxman 120 Kar) where in it was clearly ruled that in cases of JD agreements the transfer is complete, the moment the possession of the property is handed over to the developers.

2.5 The Ld CIT (A) failed to appreciate that -

Section 54F of the IT Act 1961

"" As per the provisions of section 54F the assessee is entitled to claim exemption on the cost of a residential house either purchased within a period of one year before or two years after the date on which the transfer took place or has within period of three years after than constructed residential house""

The above exemption is available only in respect of one residential house and not two houses that too situated at different location. In this case flats are situated at difference places one at Sholinganallur and another at Adayar.

2.6 The Ld CIT (A) has erred in accepting a fresh claim by the assessee instead of following the cardinal principle laid by the Honorable SC in the case of Goetz (India) Ltd where and which it is held that new claim shall not accepted by the AO when made by the assessee through a letter if the same is not claimed in the RO or revised ROI filed as per the law.

2.7 The Ld CIT (A) failed to appreciate that the Honorable SC in the case of Goetz (India) Ltd., has observed that

"The decision in Question is that the power of the Tribunal u/s.254 of the IT Act, 1961, is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before of the Tribunal. The decision does not in any way related to the power of the AO to entertain claim for deduction otherwise than by filing a revised return. In this circumstance of the case we dismiss the civil appeal. However, we make it clear that the issue in this case is limited to the power of the assessing authority and does not impinge on the power of ITAT u/s.254 of the IT Act

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1961. Hence, it is clear CIT(A) does not have power to entertain a new claim, further even the Tribunal has power to entertain the fresh claim of law only if the facts are already available before the ITAT. 2.8 Without prejudice to the aforesaid, the Ld.CIT(A) has also violated the principles of natural justice enshrined in Rule 46A by not remanding the matter to the AO for examining fresh evidence. 3. Hence, it is clear that C1T(A) does not have power to entertain a new claim, further even the Tribunal has the power to entertain the fresh claim of law only if the facts are already available before the ITAT. 4. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT (A) may set aside and that of the Assessing Officer restored.

her return of income for the AY 2012-13 on 31.08.2012 admitting total

income of Rs.2,18,80,850/-, which includes a sum of Rs.2 Crs. offered

under the head ‘long term capital gains’. During the Financial Year relevant

to the AY 2012-13, the assessee along with his siblings entered into

agreement for joint development of property with M/s.Adroit Urban

Developers Pvt. Ltd., and M/s.Siddhartha Apparels Pvt. Ltd., vide

agreement dated 18.06.2011. As per said agreement, the first land owner,

Mrs. Madhu Parsuram, shall receive the monetary consideration and the

second land owner, Mr.Gopinath Ramakrishnan, shall receive 15000 Sq.ft

of super built up area and the third land owner, Mrs.Kalyani Subash, shall

exchange the flats equivalent to super built up area of 5778 sq.fts. at the

project ‘THE ORIGIN’. A Supplementary Agreement was entered on

01.11.2011 and as per said agreement, the land owners agreed to sell

13243 sq.ft. for a consideration of Rs.5.76 Crs. Further, they agreed to

convert 706 sq.ft. of land in exchange of flat of area of 2000 sq.ft. and also

retain 571 sq.ft. proportionate to area of flat to be converted. The parties

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have also entered into a revised agreement for joint development of

property dated 06.10.2015.

assessment proceedings, the AO by taking into account, the Joint

Development Agreement (in short “JDA") dated 18.06.2011, computed

‘long term capital gains’ derived from sale of property of Rs.7,76,27,999/-

after disallowing the claim of exemption u/s.54F of the Act. The assessee

carried the matter in appeal before the First Appellate Authority and before

the Ld.CIT(A), the assessee argued the issue in light of JDA dated

18.06.2011, and subsequent Supplementary Agreement dated 01.11.2011,

and submitted that the assessee has rightly computed ‘long term capital

gains’ derived from transfer of property in pursuant to JDA. The assessee

had also substantiated with necessary evidences to prove the claim of

deduction u/s.54F of the Act. The Ld.CIT(A) after considering relevant

submissions of the assessee and also taken note of certain judicial

precedents opined that the AO is erred in computing ‘long term capital

gains’ by taking into account JDA, because, requirement of part

performance as envisaged u/s.53A of Transfer of Property Act, have not

been fulfilled. Therefore, directed the AO to accept computation of ‘long

term capital gains’ declared by the assessee in her return of income.

Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeals before

us.

ITA Nos.292 & 293/Chny/2017 :: 6 ::

that the issue involved in Revenue appeals is with regard to computation

of ‘long term capital gains’ in pursuant to JDA dated 18.06.2011 and also

claim of deduction u/s.54F of the Act. The Ld.DR further submitted that as

per settled position of law before amendment to sec.45(5A) of the Act,

‘capital gains’ should be levied when the JDA is entered. Therefore, the AO

taking into account the JDA dated 18.06.2011 has rightly computed ‘capital

gains’ and also rejected deduction u/s.54F of the Act, because, the assessee

could not satisfy the conditions prescribed therein. However, the Ld.CIT(A)

without appreciating the facts simply deleted the additions made by the

AO.

the AO has computed ‘long term capital gains’ from transfer of property in

pursuant to JDA dated 18.06.2011, whereas, the Ld.CIT(A) has allowed

relief by taking into account only JDA dated 18.06.2011, and subsequently

Supplementary Agreement dated 01.11.2011. But, facts remain that the

assessee had entered into a revised JDA on 06.10.2015 and the gain arising

out of said agreement has been offered to tax for the AY 2016-17. Since,

there are three agreements in respect of one property at different

assessment years, the matter requires to be re-examined by the AO to

verify the year in which ‘capital gains’ from said agreement is taxable.

Therefore, submitted that the appeals may be set aside to the file of the

AO for de-novo consideration of the issue.

ITA Nos.292 & 293/Chny/2017 :: 7 ::

record and gone through orders of the authorities below. The assessee had

entered into a JDA with builders on 18.06.2011 and said agreement has

been revised by way of Supplementary Agreement dated 01.11.2011. The

assessee has computed ‘long term capital gains’ from transfer of property

on the basis of agreement dated 18.06.2011 & 01.11.2011. Further, there

is one more agreement dated 06.10.2015, where the parties have entered

into revised JDA specifying certain terms and conditions and said

agreement was neither with AO at the time of assessment proceedings nor

with the Ld.CIT(A) at the time of appellate proceedings. It was the

arguments of the Ld.Counsel for the assessee that because of subsequent

development by way of revised JDA dated 06.10.2015, the issue of

computation of ‘long term capital gains’ from transfer of property in

pursuant to JDA dated 18.06.2011 & 01.11.2011, needs to be re-examined

by the AO to ascertain correct facts with regard to year in which such

‘capital gains’ is assessable to tax, more particularly, keeping in mind, the

assessee being offered ‘capital gains’ for the AY 2016-17 pursuance to

subsequent revised JDA dated 06.10.2015. The Ld.DR present for Revenue

fairly agreed that the matter may be set aside to the file of the AO for de-

novo consideration in light of subsequent development. Therefore, we are

of the considered view that the issue needs further examination from the

AO in light of all three agreements, including revised JDA on 06.10.2015

and thus, we set aside the order of the Ld.CIT(A) in both cases and restore

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the issue to the file of the AO and direct the AO to re-do the assessment

de-novo in accordance with law after considering all three agreements

entered into by the assessee with the developer dated 18.06.2011,

01.11.2011 & 06.10.2015. The AO is also directed to take into account

‘capital gains’ offered by the assessee in pursuant to revised JDA on

06.10.2015 while considering the issue.

statistical purposes.

Order pronounced on the 08th day of March, 2023, in Chennai.

Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 08th March, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�/CIT 2. ��यथ�/Respondent 5. िवभागीय �ितिनिध/DR 3. आयकर आयु� (अपील)/CIT(A) 6. गाड� फाईल/GF