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Facts
The assessee, along with co-owners, sold immovable property through a Joint Development Agreement. The Assessing Officer (AO) made additions for Long Term Capital Gain (LTCG) in both AY 2012-13 and AY 2014-15 for the same transaction, calculating LTCG based on different events (possession date vs. conveyance deed date) and stamp duty valuation, which the assessee disputed.
Held
The Tribunal allowed the appeal for AY 2014-15, deleting the addition as the AO erred in taxing the same transaction in two assessment years. For AY 2012-13, the case was remanded to the CIT(A) for fresh adjudication on merits, specifically to consider the application of provisos to Section 56(2)(vii)(b) and the Fair Market Value as on 25.05.2007 for LTCG calculation, ensuring a speaking order and proper opportunity of hearing.
Key Issues
1. Whether Long Term Capital Gain on a single property transaction can be taxed in two different assessment years. 2. The correct date for applying Fair Market Value for stamp duty valuation under Section 56(2)(vii)(b) for LTCG calculation, especially when advance payment is received through banking channels.
Sections Cited
250, 144, 147, 56(2)(vii)(b)
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Income Tax Appellate Tribunal, PUNE BENCHES “SMC”, PUNE
Before: DR.MANISH BORAD & MS. ASTHA CHANDRA
आदेश / ORDER
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned two appeals at the instance of assessee pertaining to assessment years 2012-13 and 2014-15 are directed against the separate orders both dated 14.02.2024 passed by National Faceless Appeal Centre, Delhi u/s.250 of the Income Tax Act, 1961 (in short ‘the Act’) which inturn are arising out of the respective Assessment orders passed u/s.144 r.w.s.147 of the Act.
The common grievance in both the instant appeals is firstly against the addition made for long term capital gain of Rs.30,61,600/- and Rs.32,62,366/- for A.Yrs. 2012-13 and 2014- 15 and secondly that the addition on similar ground has been made for both the impugned assessment years and thirdly no fair opportunity was granted by ld.CIT(A).
At the outset, Ld. Counsel for the assessee submitted that the transaction in question is regarding the sale of immovable property held by the assessee and other 16 co-owners. It was submitted that the Joint Development Agreement was entered on 29.05.2007 and advance was paid through cash and cheque modes. Thereafter, Confirmation Deed was firstly entered on 30.11.2010 and then Revised Joint Development Agreement was entered on 09.02.2011 and possession given in the month of July 2011. He also submitted that on 29.09.2013 the Conveyance Deed was finally executed after the completion of Joint Development Agreement. The consideration received by the assessee and other co-owners was Rs.4,65,23,384/- whereas the value adopted by the Stamp Valuation Authority for calculating the stamp duty was Rs.7.19 crore He further stated that firstly the valuation of the property for the purposes of stamp duty should be adopted as prevailing on the date of entering the Joint Development Agreement on 25.05.2007 when the advance was paid through Banking Channel. Secondly, it was contended that the taxability of the transaction could be examined for the year A.Y. 2012-13 but not for A.Y. 2014-15. However, Ld. AO has made addition on the very same ground of calculating the long term capital gain on the alleged transaction for A.Y. 2012-13 as well as A.Y. 2014-15. He also referred to the paper book for both the impugned years placed on record running into 96 pages containing all the necessary details.
On the other hand, ld. Departmental Representative supported the orders of the lower authorities.
We have heard the rival contentions and perused the record placed before us. Ld. AO has made addition for long term capital gain at Rs.30,61,600/- and Rs.32,62,366/- for A.Yrs. 2012-13 and 2014-15. Both these additions have been made by way of calculating the long term capital gain from the very same transaction wherein the assessee along with other 16 co-owners entered into Development Agreement with Om Ved Turnkey Project Developers on 29.05.2007 for the sale of immovable property situated at Village Mouje Charholi, Taluka Haveli, District Pune. Sale agreement was revised vide Joint Development Agreement dated 09.02.2011 (possession given in the month of July, 2011) for consideration of Rs.4,65,23,384/- but the stamp duty was calculated on the Fair Market Value of the property at Rs.7.91 crore. Details of the documents and payments received by the assessee and other co-owners is as under :
A. Chronology of Events :
Sr. Event Date Remark 1 Token Advance 01/02/2007 Cash as Visar Pavati 2 Token Advance 25/05/2007 Token against Development Agreement 3 Joint Development 29/05/2007 JDA executed for Rs.500.00 Agreement (JDA) lakhs. One Tenant in the Court 4 Confirmation Deed 30/11/2010 Executed after Court settlement of the dispute 5 Revised JDA 09/02/2011 Price revised to Rs.465.23 with the liability of litigant tenant 6 Possession July 2011 Possession after receipt of total consideration 7 Conveyance 29/09/2013 Conveyance executed after completion of JDA. Stamp duty value Rs.791.28 lakhs
B. Detail of Sale Consideration :
Sr. Date Total Assessee’s Cheque Payment share Number for Assessee 1 01/02/2007 3,33,000 6,937 By cash 2 25/05/2007 6,67,000 13,875 Ch.No.032014
3 18/10/2010 1,00,00,000 4,16,567 Ch.No.032081 4 18/02/2011 13,80,846 58,026 Ch.No.032228 5 15/04/2011 1,13,80,846 4,74,202 Ch.No.032221 6 03/06/2011 1,13,80,846 4,74,202 Ch.No.032235 7 30/07/2011 1,13,80,846 4,74,202 Ch.No.032233 Total Rs. 4,65,23,384 19,11,074
From perusal of the above details, we firstly notice for entering into Development Agreement, advance in cash was received on 01.02.2007 and through banking channel vide Cheque bearing No.032014 on 25.05.2007. Therefore, in view of 2nd proviso to section 56(2)(vii)(b) of the Act for the purposes of stamp duty valuation, Fair Market Value as on 25.05.2007 should have been considered by Ld. AO for calculating long term capital gain for the year when the consideration is received and possession is passed on. We further notice that the AO has made the addition for the very same transaction for A.Y. 2012-13 and A.Y. 2014-15. The reason for such addition for A.Y. 2012-13 was the possession given by the assessee and other co-owners in July, 2011 and the reason for making addition for A.Y. 2014-15 is because the Conveyance Deed was executed on 29.09.2013. We however are of the view that ld. AO should have examined the transaction of long term capital from the alleged sale of immovable property by the assessee and other co-owners while calculating the income for A.Y. 2012-13 only and ld. AO grossly erred in making the addition for the very same transaction for A.Y. 2014-15.
We therefore set-aside the impugned order for A.Y. 2014-15 and delete the impugned addition made by Ld. AO.
So far as appeal for A.Y. 2012-13 is concerned, we notice that the impugned order is exparte and ld.CIT(A) has not passed a speaking order. Hon’ble Bombay High Court in the case of PCIT (C) vs. Premkumar Arjundas Luthra (HUF) (2017) 297 CTR 614 (Bombay) has held that ld.CIT(A)/NFAC is obliged to dispose of the appeal on merits even in an exparte order. In view thereof and considering the submissions of the assessee, we deem it proper to restore the issue on merits to the file of ld.CIT(A) for necessary adjudication to be carried out in light of our observations (supra) about application of both the provisos to section 56(2)(vii)(b) of the Act and calculation of Fair Market Value of the immovable property in question as on 25.05.2007 for calculating the Long Term Capital Gain. Ld.CIT(A) shall pass a speaking order as contemplated u/s.250(6) of the Act. Needless to say, the assessee will be given reasonable opportunity of hearing. Assessee is further directed to remain vigilant and not to take adjournment unless otherwise required for reasonable cause, failing which the ld.CIT(A) shall be free to proceed in accordance with law. Findings of ld.CIT(A) is set aside and effective grounds of appeal raised by the assessee on merits in the instant appeal for A.Y. 2012-13 are allowed for statistical purposes.
In the result, the appeal of the assessee for A.Y. 2014-15 is allowed and appeal for A.Y. 2012-13 is allowed for statistical purposes.
Order pronounced on this 25th day of April, 2025.