RAMCHANDRA ESTATE DEVELOPMENT and INVESTMENT CO.PVT.LTD., vs. THE JOINT COMMISSIONER OF INCOME-TAX(ASST.),AND ANR.,

:1: IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 1 OF 2005 Ramchandra Estate Development & Investment Co. Pvt. Ltd., a Company registered under the Companies Act 1956, and having its office at Baralkod, Tinaighat, State of Karnataka, and administrative Office at Salgaocar Chambers, Margao, State of Goa. ... Appellant V e r s u s 1. The Joint Commissioner of Income Tax (Asst.), Sp. Range 26, having his address at Aykar Bhavan, Patto Plaza, Panaji Goa. 2. The Commissioner of Income Tax Goa, having his address at Aykar Bhavan, Patto Plaza, Panaji Goa. ... Respondents Mr. Porus Kaka, Senior Advocate with Mr. D. Chawla, Mr. M. S. Sonak and Mr. J. Supekar, Advocates for the Appellant. Ms. Asha Dessai, Advocate for the Respondents. CORAM : D. G. KARNIK, & F.M. REIS, JJ.

DATE : 25 th OCTOBER, 2010.

ORAL JUDGMENT ( Per D. G. KARNIK, J ) 1. Heard learned Counsel for the parties. 2. By an order dated 28th June, 2005, the appeal was admitted

:2: on eight substantial questions of law mentioned in the order. In the facts and circumstances of the case and the final order proposed to be passed by us it is not necessary to reproduce all the substantial questions of law mentioned in the order dated 28th June, 2005. Suffice it to refer to a few facts stated below. 3. The assessee company was incorporated sometime in the year 1983 or there about with the main objects interalia of carrying on business of civil engineering and as builders. By a sale deed purported to be dated 25th March, 1993, the appellant purchased a plot of land at Altinho, Panaji Goa for Rs.13,90,000/-. It appears that though the sale deed was dated 25th March, 1993, it was lodged for registration only on 5th August, 1993 and was actually registered on 26th February, 1996. In the meanwhile, the appellant submitted the plans for the construction of a residential building in the name of the original owners on 11th December, 1992 and a completion certificate for the building was obtained on 7th July, 1995. By a sale deed dated 12th July, 1996 the appellant sold the entire property i.e. the land with building to Birla AT & T Communications Ltd., for a consideration of Rs.2,75,87,700/-. The consideration for the land as well as building though not bifurcated between land and building i.e. to say the sale deed did not mention what was the consideration of the land and what was the consideration of the building. The appellant filed its return of income for the assessment year

:3: 1997-1998 ( ending on 31st March, 1997 ) declaring the profit i.e. excess amount earned by it on sale over the aggregate of the purchase price of the plot and the cost of construction, as a capital gain. The Assessing Officer held that the amount so earned was a profit in the nature of the business and liable to tax as an income and net capital gain. The decision of the Assessing Officer was confirmed by the Commissioner of Income Tax ( Appeals ) as well as by the Income Tax Appellant Tribunal ( ITAT ). Aggrieved by the decision of the ITAT, the appellant filed this appeal which has been admitted by order dated 28th June, 2005. 4. Ms. Asha Dessai, the learned Counsel for the respondents ( revenue ) submitted that the question whether the profit earned by the appellant was in the nature of business profit or a capital gain would not affect the quantum of tax payable by the appellant in as much as even it is assumed that it was a capital gain as it would be a short term capital gain. She further submitted that the sale deed for the land though executed on 25th March, 1993, was actually registered on 26th February, 1996. She submitted that the date of acquisition of the asset was 26th February, 1996 and the sale deed effected on 12th July, 1996 has been effected within a period of five months giving rise only to a short term capital gain. She submitted that consequently the questions raised in the appeal need not be answered as merely academic.

:4: 5. Mr. Kaka, the learned Senior Counsel appearing for the appellant submitted that there was no material on record to show what was the actual date on which the sale deed was registered. The index No. II extract showing the date of registration of the sale deed was not filed before the tax authorities. The copy of the sale deed which is produced on record shows that the sale deed was lodged for registration on 5th August, 1993 at serial no.486/93 but does not show the date on which the registration was effected by making the necessary entries in the records as per law. On the last page there is an endorsement that no objection certification from the North Goa Planning and Development Authority, Panaji, dated 29th December, 1995 was furnished on 26th February, 1996. It is on this basis that it is submitted by Ms. Dessai that the sale deed was actually registered on or after 26th February, 1996. In the absence of any clear material on record as to the actual date of the registration of the sale deed and in the absence of any finding of the fact about the date of registration having been recorded by any of the authorities below, it would be hazardous for us to record any finding as to the actual date of registration. 6. Ms. Dessai, the learned Counsel appearing for the respondents submitted that the date on which the sale deed is actually registered would be the date of the acquisition of the property and in support she relied upon the following decisions :

:5: (i) Gobardhan Bar V/s Gunadhar Bar, A.I.R. 1941 Calcutta 78. (ii) Ram Saran Lall V/s Domini Kuer, A.I.R. 1961 SC 1747. (iii) Divvi Suryanarayana Murthy V/s Competent Authority & Anr., ( 1976) 102 ITR 19 (AP). 7. Per contra, Mr. Kaka, the learned Senior Counsel appearing for the appellant submitted that the date on which the actually the sale deed was effected and not the date of registration was relevant. In support he relied upon a decision of this Court in Chaturbhuj Dwarkadas Kapadia V/s Commissioner of Income Tax, reported in (2003) 260 ITR 491 (Bom). 8. In our view, since it is the contention of the appellant that the appellant had held the property for a period of more than three years which is disputed by the revenue and since there is no finding as to the date of acquisition by any of the authorities below, it would be appropriate to remand the matter to the ITAT for the purpose of determining the actual date of acquisition of the property and then to decide the matter afresh. The learned Counsel for the parties also state that since we are remanding the matter back the question as to whether the profit arising out of a sale was in the nature of business profit or the capital gain should

:6: also be decided afresh by the ITAT. We agree to the request made by the learned Counsel appearing for the parties. 9. For these reasons, we pass the following order : O R D E R The impugned orders are set aside. The matter is remanded back to the Tribunal for deciding it afresh in the light of what is stated above. All the contentions of the parties are kept open. D. G. KARNIK, J F. M. REIS, J at*