BABUSHA HARIBHAU GADE,PUNE vs. INCOME-TAX OFFICER, PUNE

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ITA 1084/PUN/2017Status: DisposedITAT Pune29 April 2022AY 2012-1318 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that no capital gains are chargeable in AY 2012-13 on the impugned Joint Development Agreement. The Tribunal noted that the Joint Development Agreement (JDA) only granted the developer the right to enter the property for development and that the owner had only agreed to transfer the property by sale deed in the name of a co-operative society or prospective buyers. Crucially, no actual transfer of land occurred, and the assessee had not received any consideration in AY 2012-13. The Tribunal observed that the assessee had shown Long Term Capital Gains (LTCG) in subsequent years as and when consideration was received and had paid tax on it. Therefore, Ground No. 1 was allowed. Regarding the applicability of Section 45(2), the Tribunal found that the assessee failed to demonstrate the conversion of land into stock-in-trade by showing entries in the books of accounts. The assessee admitted to not maintaining books of accounts and that no closing stock was shown in the Profit and Loss account for AY 2012-13 and 2013-14. Consequently, the assessee's claim that the land was converted into stock-in-trade was rejected, and this ground was dismissed. Ground No. 3, concerning double taxation, was deemed academic as LTCG was held not to arise in AY 2012-13. The appeal was partly allowed.

What were the facts?

The assessee, Babusha Haribhau Gade, filed an appeal against the order of the CIT(Appeals)-10, Pune, for Assessment Year 2012-13. The assessee had declared capital gains from the sale of agricultural land on September 28, 2011, under a Joint Venture Agreement (JDA) with M/s. Vyankatesh Developers. The assessee claimed a deduction under Section 54F for reinvestment. The Assessing Officer (AO) restricted the deduction to one flat, while the CIT(Appeals) allowed it for six flats. However, the assessee also raised grounds before the ITAT arguing that no capital gains were chargeable in AY 2012-13 as no transfer had occurred, no possession was given, and no sale consideration was received. The assessee also argued that taxing the gains in AY 2012-13 would lead to double taxation, as gains were declared in subsequent years (2013-14 to 2017-18).

What were the issues?

1. Whether capital gains are chargeable in Assessment Year 2012-13 on the transfer of land under the Joint Venture Agreement dated 28.09.2011, considering that no possession was given, no sale consideration was received, and no final sale deed was executed in that year, as envisaged under Section 2(47) of the Income Tax Act. Assessee's Contention: No transfer of a capital asset occurred in AY 2012-13, hence no capital gains are chargeable. Reliance was placed on the fact that possession was not transferred, sale consideration was not received, and no sale deed was executed. The assessee also argued that capital gains were declared and taxed in subsequent assessment years (2013-14 to 2017-18), making taxation in AY 2012-13 amount to double taxation. Revenue's Contention: Not recorded in the judgment. 2. Whether the land was converted into stock-in-trade, making Section 45(2) of the Income Tax Act applicable. Assessee's Contention: The assessee claimed the applicability of Section 45(2) before the CIT(Appeals), arguing that capital gains should be taxed in the year of sale of stock-in-trade. However, this ground was not raised before the AO. Revenue's Contention: Not recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 2(47),Section 45(2),Section 54F,Section 48

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “A” BENCH,

Before: SHRIS.S.VISWANETHRA RAVI,

For Respondent: Shri S.P. Walimbe - DR, Shri Hari Krishnan - AR
Hearing: 17.02.2022Pronounced: 29.04.2022

Revenue by : Shri S.P. Walimbe - DR Assessee by : Shri Hari Krishnan - AR सुनवाई क" तारीख / Date of Hearing : 17.02.2022 घोषणा क" तारीख / Date of Pronouncement : 29.04.2022 आदेश / ORDER

PER DR. DIPAK P. RIPOTE, AM:

1.

This is an appeal filed by the Assessee directed against the order of ld.Commissioner of Income Tax(Appeals)-10, Pune dated 20.02.2017 for the Assessment Year 2012-13.

2.

The Assessee raised following grounds of appeal: “1. The Ld. Commissioner of Income Tax (Appeals) has erred in rejecting the contention raised by the assessee in ground number 3 to 10 before the Commissioner of Income Tax (Appeals) that no Capital Gains were chargeable in Assessment Year 2012-13. The Ld. Commissioner of Income Tax (Appeals) should have held that no transfer of a capital asset has taken place as envisaged u/s 2(47) of the Income Tax Act, in the previous year relevant to Assessment Year 2012-13 under consideration and no Capital BabushaHaribhauGade Gains have arisen in Assessment Year 2012-13 in respect of the Joint Venture Agreement dated 28-09-2011.

2. The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that nopossession of the land was given, and no sale consideration was received and no final sale deed was executed in the previous year relevant to Assessment Year 2012-13 under consideration.

3. As the assessee has duly declared the Capital Gains, arising in respect of land given for development under the Joint Venture Agreement, in Assessment Years 2013-14 to 2017-18, subjecting the Capital Gains to tax in Assessment Year 2012-13 also, amounts to double taxation. Accordingly without prejudice, if the contention raised by the assessee that Capital Gains on transfer of land has not arisen and is accordingly not taxable in Assessment Year 2012-13, is not accepted by the Hon’ble Income Tax Appellate Tribunal it may issue directions to the Assessing Officer to exclude the Capital Gains from the income assessed for Assessment Years 2013-14 to 2017-18 in respect of the transfer of the land under Joint Venture Agreement dated 28-09-2011 and to refund the tax paid by the assessee on the said Capital Gains, alongwith the interest due thereon.

4. The appellant craves leave to add to or amend/modify or delete any or all of the above grounds of appeal. The above concisegrounds were filed during theproceedings by the appellant’s AR and he stated that these grounds may be adjudicated and not the one which have been filed along with the appeal memo.Accordingly, these grounds are considered.

3.

Brief facts of the case are that the appellant-assessee filed return of income for A.Y. 2012-13 on 25.03.2014 showing following computation of total income :-

Particulars Rs. Rs. Rs. Income from Profit/Gains of Business/Profession Income from Business/Profession 1. Capital Gain 0 0 Net Profit (Loss) Income from Capital Gains Long Term 0 1. Sale of Agricultural Land Gat No.743 14044595 Date of Sale :28/09/2011 Fair Market Value as on 2 BabushaHaribhauGade 01/04/2001 Rs.466620/-, Purchase Date : 01/04/1981 with Indexation @ 785/100 Capital Gain 3662967 Investment of Rs.14688000 u/s 54 10381628 F-Reinvestment within 1 year from 10381628 or to date of transfer towards purchase of residential property, hence deduct Gross Total Income Nil Total Income Nil Thus, the appellant claimed in the return of income that the appellant had sold land at Survey No.743, Wagholi, Tal. Haveli, Pune on 28.09.2011. Accordingly, the appellant had shown capital gain in the return of income. However, appellant and other co-owners had entered into a registered joint development agreement on 28.09.2011 with M/s. Vyankatesh Developers. The said joint development agreement was duly registered on 28.09.2011 before the Sub-

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