SMT. GEETA TARLOK SINGH LAMBA,MUMBAI vs. ITO 26 (1)(5), MUMBAI

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ITA 4610/MUM/2019Status: DisposedITAT Mumbai31 October 2022AY 2013-145 pages

In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the execution of the GPA, which enabled the developer to take possession of the property, constituted a transfer under Section 2(47)(v) read with Section 45(1) of the Act. Therefore, the levy of long-term capital gains was justified.

What were the facts?

The assessee entered into a development agreement through an irrevocable General Power of Attorney (GPA) for a piece of land. The Assessing Officer (AO) treated this GPA as a transfer under Section 2(47)(v) of the Income Tax Act, levying long-term capital gains. The CIT(A) upheld the AO's decision.

What were the issues?

Whether the execution of a General Power of Attorney for development, which includes handing over possession, amounts to a 'transfer' for the purpose of capital gains tax. Whether the AO was justified in calculating capital gains based on ready reckoner rates when a formal sale deed was yet to be executed.

Which sections of the Income-tax Act were involved?

Section 45,Section 2(47)(v)

AI-generated summary — verify with the full judgment below

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Income Tax Appellate Tribunal, MUMBAI BENCH “SMC”, MUMBAI

Before: SHRI KULDIP SINGH

For Respondent: Shri Anil Gupta, D.R

Per : Kuldip Singh, Judicial Member:

1.

The appellant, Smt. Geeta Tarlok Singh Lamba (hereinafter referred to as ‘the assessee’) by filing the present appeal, sought to set aside the impugned order dated 11.01.2019 passed by Commissioner of Income Tax (Appeals), Mumbai [hereinafter referred to as the CIT(A)] qua the assessment year 2013-14 on the grounds inter alia that :- “1. On the facts and in the circumstances of the case and in law, the Ld. C1T(A) erred in confirming the addition of Rs.11,18,234/- being long term capital gain chargeable u/s 45 r.w.s 2(47)(v) of the IT Act on the ground that the appellant has entered into general power of attorney. The reasons assigned by him are unjust and insufficient. 2 Smt. Geeta Tarlok Singh Lamba

2.

On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the action of the Ld. AO in taking the rate of Rs.7,900/- per m2 while calculating the sale consideration of the Development rights and treating pro rata the sale consideration. 3. a. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in confirming the addition made by the Ld. AO. of Rs.1,68,000/- on account of deemed rental income. b. On the facts and in the circumstances of the case and in law, without prejudice to the earlier ground filed, the Ld. CIT(A) erred in confirming the notional rent of Rs,20,000/- per month to arrive deemed rental income. 4. The appellant craves leave to add, alter or delete all or modify any or all the above grounds of appeal.”

2. Briefly stated facts necessary for adjudication of the issues at hand are: assessee’s return of income declaring total income at Rs.3,42,160/- was subjected to scrutiny. Assessing Officer (AO) noticed that the assessee had entered into development agreement of piece and parcel of land measuring 10,000 sq. ft. bearing survey number 154/1, measuring 4000 sq. ft. bearing survey No.154/4 with M/s. Fortune Developers through the ‘Irrevocable General Power of Attorney dated 19.03.2013. Assessee was called upon to explain as to why he should not be made to pay capital gain on the value of the year in which the development agreement was entered into. AO after declining the contentions raised by the assessee, who has also invoked provisions contained under section 133(6) of the Income Tax Act, 1961 (for short ‘the Act’) by issuing a notice to the partner of M/s. Fortune Developers who has sent the letter but it was not taken on record by the AO by disputing its authenticity being not in acceptable confirmation, proceeded to invoke the provisions contained under section 45(1) read with section 2(47)(v) of the Act made an addition of Rs.11,18,234/- on account of long term capital 3 Smt. Geeta Tarlok Singh Lamba gain and thereby framed the assessment under section 143(3) of the Act.

3. Assessee carried the matter before the Ld. CIT(A) by way of filing appeal who has confirmed the addition by way of partly allowing the appeal. Feeling aggrieved assessee has come up before the Tribunal by way of filing present appeal.

4.

Assessee appeared in the court (through its representative one Mr. Paras Jain on 04.03.2021, 01.12.2021, 12.01.2022, 22.02.2022, 25.08.2022 and thereafter none appeared on behalf of her. It appears that the assessee is not interested in prosecuting the appeal. So we have decided to dispose of the same on the basis of material available on record with the assistance of the Ld. D.R. for the Revenue.

5.

I have heard the Ld. Departmental Representative for the Revenue, perused the orders passed by the Ld. Lower Revenue Authorities and documents available on record in the light of the facts and circumstances of the case and case law relied upon.

6.

The Ld. CIT(A) upheld the findings returned by the AO making addition of Rs.11,18,234/- on account of long term capital gain by invoking the provisions contained under section 2(47)(v) read with section 45(1) by returning following findings: “7.1.1 I have perused the assessment order and considered the submissions of the appellant in this regard and find that the appellant was I/5th owner of land situated at Thane. The appellant granted power of attorney in 19.03.2013 to one, M/s. Fortune developers for the purpose of joint development. The appellant contended that the said power of attorney was executed prior to entering into a formal agreement by the joint owners of the impugned property. I also find that the AO invoked provisions of section 45(1) r.w,s.2(47)(v) of the 4 Smt. Geeta Tarlok Singh Lamba

Income Tax Act 1961 where the land owner has entered into General Power of Attorney for development of land with the developer. Accordingly, the AO observed that the said general power of attorney was in the nature of transfer in part performance of the contract under reference. 7.1.2 I have carefully perused the General Power of Attorney and find that clause No.l at page number two of the general Power of attorney dated 19.03.2013 enabled possession of the said property to the said developer, M/s. Fortune developers. In this regard, I find that the AO has rightly treated the same as transferred within the meaning of section 2(47)(v) r.w.s.45(l) of the Income Tax Act and levied long term capital gain on the same. My above view is also fortified by the judgement of Bombay High Court in the case of Bertha Almeida 53 taxmann.com 522. Accordingly, I uphold the treatment of transfer observed by the AO in respect of general power of attorney executed by the appellant. Ground No. 1 is dismissed. 7.2 Ground number2: under this ground of appeal the appellant has disputed the rate Rs.7900/- per m2 adopted by the AO while calculating the sale consideration of the lot of land under dispute. I have carefully considered the .submissions of the appellant m connection with the contentions of the AO in this regard, On perusal of the same J find the AO adopted ready reckoner rate of open plot at Thane at the rate of Rs.7900/-square metre. I have carefully considered the contention of the appellant that sale deed was yet to be executed in this regard. However, this contention of the appellant is devoid of merit because ground number one, the same transaction is already held by me as transfer. Accordingly, the AO was justified in treating pro rata the sale consideration of the said property as per ready reckoner rate. I therefore find no infirmity in the calculation of LTCG worked out by the AO has aforesaid. Ground number two accordingly stands dismissed.”

7. Bare perusal of the findings returned by the Ld. CIT(A) goes to prove that the issue has been factually and legally thrashed threadbare at the stage of assessment proceedings as well as appellate proceedings. The assessee has not preferred to explain the queries raised by the AO that authenticity of the letter dated 30.03.2016 alleged to have been issued by M/s. Fortune Developers is not a genuine document. When it is proved on record that as per general power of attorney dated 19.03.2013 possession of the said property was handed over to M/s. Fortune Developers the AO as 5 Smt. Geeta Tarlok Singh Lamba well as Ld. CIT(A) has rightly invoked the provisions contained under section 2(47)(v) read with section 45(1) of the Act by levying the long term capital gain on the same. Moreover, power of attorney has specifically enabled M/s. Fortune Developers to take the possession of the property in question. Assessee for the reason best known to him has also not come up before the Tribunal to dispute the findings returned by the AO as well as the Ld. CIT(A). So finding no illegality or perversity in the impugned order passed by the Ld. CIT(A) appeal filed by the assessee is hereby dismissed.

Order pronounced in the open court on 31.10.2022.

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