What did the Tribunal hold?

The Tribunal upheld the order of the CIT(Appeals) and dismissed the Revenue's appeal. The decision was based on maintaining consistency in treatment between co-owners, as the co-owner uncle's return was processed under Section 143(1) without scrutiny.

The Revenue appealed against the CIT(Appeals) order concerning the computation of capital gains for the assessment year 2012-13. The assessee entered into a joint venture agreement for developing a property with his co-owner uncle.

What were the issues?

The primary issue was the computation of capital gains arising from a joint venture agreement. A secondary issue was the consistency in assessment proceedings between co-owners of a property.

DCIT vs Shri Soundaram Raghuraman… | ITAT Chennai 2018

Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI

Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY

For Respondent: Shri P.S. Prabhakar, CA

Hearing: 27.06.2018Pronounced: 17.07.2018

आदेश /O R D E R

PER N.R.S. GANESAN, JUDICIAL MEMBER:

This appeal of the Revenue is directed against the order of the Commissioner of Income Tax (Appeals) -3, Coimbatore, dated 27.05.2016 and pertains to assessment year 2012-13.

The only issue arises for consideration is computation of capital gain.

Shri M. Mathivanan, the Ld. Departmental Representative, submitted that the assessee along with his uncle Shri C.

Thyagarajan, who is the co-owner of the property, entered into a joint venture agreement with M/s Pricol Properties Ltd. for promoting residential apartments and commercial area at Ramanathapuram Village, Coimbatore. As per the agreement, according to the Ld. D.R., the developer has to take 70% of undivided portion of land in lieu of cost of construction of 30% of constructed area. According to the Ld. D.R., when the assessee handed over 70% of undivided portion of land to the developer, namely, M/s Pricol Properties Ltd. for the cost of construction of 30% of the building which is to be allotted to the assessee, there was a capital gain in respect of 70% of the undivided share of the land. Again, the assessee has sold the constructed area. Hence, according to the Ld. D.R., there was another capital gain in respect of the building. The CIT(Appeals), however, allowed the claim of the assessee on the ground that the demarcation of constructed area was not done. According to the Ld. D.R., since the building was held by the assessee for less than three years, short term capital gain has to be assessed. On a query from the Bench whether there was scrutiny assessment of co-owner Shri Thiagarajan, the Ld. D.R. submitted that Shri Thiagarajan’s return was not taken for scrutiny and it was processed under Section 143(1) of the Income-tax Act, 1961 (in short 'the Act') on 26.12.2013 accepting the returned income.

We heard Shri P.S. Prabhakar, the Ld. representative for the assessee also. Admittedly, there are two co-owners of the property, which is the subject matter of discussion. The assessee is one of the co-owners and his uncle is another co-owner. In respect of Shri C. Thyagarajan, one of the co-owners, the Department accepted his case while processing the return under Section 143(1) and it was not taken up for scrutiny. It is not known why the return of the assessee was selected for scrutiny. This Tribunal is of the considered opinion that consistency is hallmark of judicial decisions.

The proceeding before the Assessing Officer is a judicial proceeding as provided in Section 136 of the Act. Therefore, consistent view shall be taken in respect of both the co-owners. This Tribunal is of the considered opinion that the power to determine or adjudicate the litigation, even though technically flows from the provisions of Income-tax Act, in fact, it flows from the confidence reposed by the people of this country on the authorities who are empowered to adjudicate the matter. Therefore, the confidence of citizens of this country is more important and it has to be preserved at all cost. If the case of the co-owner is not taken up for scrutiny and the assessee’s case is taken up for scrutiny, for whatever may the reason, this Tribunal is of the considered opinion that the people would lose confidence on the judicial system of this country which cannot be allowed to happen. To preserve the integrity and the confidence of the people on the judicial system, we uphold the order of the CIT(Appeals). Accordingly, the appeal of the Revenue is dismissed.

In the result, the appeal filed by the Revenue stands dismissed.

Order pronounced on 17th July, 2018 at Chennai.

DCIT, COIMBATORE vs. SHRI SOUNDARAM RAGHURAMAN, COIMBATORE

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