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Facts
The assessee, Buhari Hotels and Motels Pvt. Ltd., entered into a Joint Development Agreement (JDA) with Chaitanya Developers Pvt. Ltd. for developing land. A dispute arose regarding the Long-Term Capital Gain (LTCG) on the sale of a plot of land. The assessee contended that the sale was effected by the developer and not by them.
Held
The Tribunal held that the First Appellate Authority (FAA) erred in dismissing the second appeal as infructuous without adjudicating Ground No. 5, which raised the issue of whether the addition made as LTCG for the sale of the plot was correctly attributed to the assessee. The matter was restored to the FAA for adjudication.
Key Issues
Whether the FAA erred in dismissing the second appeal as infructuous without adjudicating the assessee's ground regarding the sale of a plot of land.
Sections Cited
Section 250 of the Income Tax Act, 1961
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K & SHRI INTURI RAMA RAO
आदेश/ O R D E R
PER GEORGE GEORGE K, VICE PRESIDENT:
This appeal filed by the assessee is directed against the order of Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi dated 30.062025 passed under section 250 of the Income Tax Act, 1961 (hereinafter called ‘the Act’). The relevant Assessment Year is 2011-12.
There is a delay of 4 days in filing this appeal. The assessee has filed an application for condonation of delay stating therein the reason for delay. On perusal of the reasons stated in the condonation application, we are of the view that there is reasonable cause for the delay in filing this appeal and no latches can be attributed to the assessee. Hence, we condone the delay of 4 days in filing this appeal and proceed to dispose off the case on merits.
The grounds raised
read as follows:-
1. The learned CIT (A) has erred in not considering the fact that the assessee did not derive any income the sale of apartment. The apartment was in fact sold by the developer.
2. The learned CIT (Appeals) erred in not considering the evidence filed by the appellant with regard to the sale of apartment by the developer.
3. The learned CIT (A) has erred in stating that nothing credible has been furnished before him to counter the AO.
4. The order passed by the learned CIT(A) is erroneous and bad in law.”
Brief facts of the case are as follows: The assessee is a company. It had entered into a Joint Development Agreement (JDA) with Chaitanya Developers Pvt., Ltd., on 16.08.2007. As per the terms of the JDA, the developer (Chaitanya Developers Pvt., Ltd.,) would develop its land of 43,200 Sq.ft., at Sastri Nagar, Adyar into residential apartments. The agreed share ratio was 60% to the assessee and 40% to the developer. The total number of apartments proposed to be constructed was 30 units, of which 18 units would belong to the assessee and balance 12 units belong to the developer.
The Long-Term Capital Gain (LTCG) arising out of the transfer of land through JDA was assessed at Rs.19,69,50,417/- in the assessment year 2008-09. The assessment was contested by the assessee in appeal before the CIT(A). When the appeal was pending, the Revenue had introduced VSVS scheme and assessee availed the same by withdrawing the appeal and paying the due taxes under the VSVS Scheme. Accordingly, the issue raised as regards the LTCG arising on account of transfer of land through JDA which was assessed in the assessment year 2008-09 was thereby settled.
For the assessment year 2011-12, assessee filed its return of income declaring loss of Rs.21,71,420/-. During the previous year relevant to assessment year 2011-12, a plot of land extended to 1440 sq.ft. (Undivided share of land pertaining to one 4 -: apartment) was sold to Shri Sugumar Rajah. It is stated that Chaitanya Developers Pvt. Ltd., had sold the property to Shri Sugumar Rajah through Power of Attorney granted by the assessee in favour of developer. It is further stated that assessee had wrongly presumed it as its sale and offered LTCG arising from sale of the said plot after claiming incidental expenses in the form of vacating charges and OSR charges. It is further submitted that assessee for the relevant year had erroneously offered said LTCG in its hand even though the income belongs to the developer. The AO however, disallowed the expenses mentioned above (vacating charges and OSR charges) and arrived at the LTCG of Rs.77,01,735/- from the sale of the said plot vide assessment order dated 13.03.2014. The assessee company filed appeal against the said assessment order on 15.04.2014 contesting the disallowance of expenses.
7. Subsequently, the Revenue reopened the assessment resulting in increase of LTCG to Rs.1,60,73,360/- by reducing the indexed cost of indexation. The reassessment order passed was on 12.03.2016. The assessee filed an appeal against the said reassessment order on 30.06.2016. The FAA disposed of both the appeals on 30.06.2025. The FAA presumed one appeal to be 5 -: duplicate appeal. The FAA disposed of the first appeal and dismissed the second appeal as infructuous. The relevant finding of the FAA reads as follows:- “6. I have examined the assessment order, the submissions made by the appellant and the judicial decisions relied upon by the parties. In this case the appellant has filed two appeals for the same AY against the same assessment order. The appellant preferred first appeal u/s 246A of the Act, and filed Form 35 on 15/04/2014. And again, another Form 35 was filed on 30/06/2016. This is the 2nd appeal. Main appellate order has been passed in the appeal filed on 15/04/2014.
This 2nd appeal is dismissed as infructuous.”
Aggrieved by the dismissal of appeal by the FAA as infructuous, assessee has filed the present appeal before the Tribunal. The Ld.AR submitted that in the second appeal filed before FAA (as against reassessment order), assessee had contented the very assessability of LTCG on the sale of plot to the extent of 1440 Sq.ft. The assessee has placed on record a paper- book enclosing the letter of the developer namely Chaitanya Developers Pvt. Ltd., stating therein the land sold to Shri Sukumar Rajah is the sale of its property and does not belong to the assessee. The Ld.AR by referring to Ground No.5 in the second appeal filed before the FAA submitted that the above ground has not been adjudicated by the FAA. Hence, the matter requires to be restored to the files of the AO for fresh consideration.
The Ld.DR on the other hand submitted that LTCG has been computed based on the return of income filed by the assessee on the sale of plot of 1440 Sq.ft. Therefore, assessee at the time of reassessment proceedings cannot take up the contention that it is not liable to tax.
We have heard rival submissions and perused the material on record. As against the original assessment order, assessee had filed appeal on 15.04.2014 contesting the disallowance made on the expenses claimed while computing LTCG. In the second appeal filed against the reassessment order, assessee has raised many grounds. On the ground namely, ground No.5, reads as under:- “5. The Appellant submits that the addition made for the 1440 sqft (3.33% of the UDS) sold is only out of 40% of the builder, and therefore has to be deleted)”
It is apparent from the grounds raised before the FAA in the first appeal are different from those raised in the second appeal. Therefore, the FAA has erred in dismissing the second appeal as infructuous. In the second appeal, assessee has contested the addition made as LTCG for the sale of 1440 Sq.ft., (which is claimed to be the sale effected by the builder / developer). The 7 -:
FAA needs to adjudicate the above ground No.5. Since there has been no adjudication on Ground No.5 (supra), we deem it appropriate to restore the matter to the files of the FAA. The FAA is directed to adjudicate the above ground and take a decision in accordance with law. It is ordered accordingly.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 13th February, 2026 at Chennai.