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Income Tax Appellate Tribunal, BANGALORE BENCH ‘ A ’
Before: SHRI VIJAY PAL RAO & SHRI G. MANJUNATH
This appeal by the assessee is directed against the order dt.31.08.2016 of Commissioner of Income Tax (Appeals) for the Assessment Year 2007-08.
The assessee has raised the following grounds :
3. The assessee is an individual and derived income from business, house property and from other sources. The assessee filed its return of income on 31.03.2008 which was processed under Section 143(1) of the Act. Subsequently, the Assessing Officer reopened the assessment by issuing a Notice under Section 148 dt.28.03.2014 on the ground that the capital gain arising from transfer of land under JDA dt.29.03.2017 assessable to tax has escaped assessment. The reassessment was completed vide order dt.19.02.2015 whereby the Assessing Officer assessed the Short Term Capital Gain (STCG) of Rs.58,51,835. Aggrieved by the order of the Assessing Officer the assessee filed appeal before the CIT (Appeals) but could not succeed. The CIT (Appeals) also rejected the claim of the assessee under Section 54 of the Act.
As regards the issue of assessment of capital gain the learned Authorised Representative of the assessee has fairly submitted that the co-ordinate Bench of this Tribunal vide decision dt.16.06.2017 in the case of other co-owners of the land namely Sri Badrivishal and Sri Ramnath Gupta Vs. ITO in & 1856/Bang/2016 has decided this issue vide order dt.16.06.2017 against the assessee however question of valuation of the full value consideration was remanded to the file of the Assessing Officer for considering the guidance value of the land in question on the date of signing of JDA. 5. On the other hand, the learned Departmental Representative has submitted that the valuation of the land should be exchange value of the super built up area on the date of the agreement instead of guidance value of the land. She has relied upon the orders of the authorities below.
We have considered the rival submissions as well as the relevant material on record. At the outset, we note that an identical issue in respect of the same JDA has been considered by the co-ordinate Bench of this Tribunal in the case of other co-owners of the land namely Sri Badrivishal and Sri Ramnath Gupta Vs. ITO (supra) in paras 7 & 8 as under : “ 7. Regarding ground nos. 3 and 4 in respect of merit of the addition made by the AO in both these cases, it was submitted by the ld. AR of the assessee that as per the Tribunal order rendered in the case of ACIT Vs M/s Shankar Vittal Motor Co. Ltd. in 2015 dated 18.03.2016, it was held that as per the judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs Dr. T.K. Dayalu as reported in 292 taxmann 531, the income on transfer of land by the vendors to the developer as per JDA is taxable in the year when the possession of the property has been handed over by the vendor to the developer at the time of signing of JDA but the capital gain has to be computed only on the guidance value of the land. He further submitted that similar view was taken by the Tribunal in two other cases also i.e. in the case of Shri N.G. Chandra Reddy (HUF) Vs DCIT in ITA No. 390/Bang/2015 dated 20.07.2016 and in the case of Shri K.G. Adaveeshaiah and Shri K.G. Basavaraj Vs ITO in ITA nos. 2043 & 2044/Bang/2016 on 23.03.2017. He submitted that copy of all these three Tribunal orders is available in the compilation of the case laws of 28 pages. The ld. DR of the revenue supported the orders of the authorities below.
We have considered the rival submissions and in the light of this judgment of Hon’ble Karnataka High Court rendered in the case of CIT Vs Dr. T.K. Dayalu (supra), we hold that the income under the head capital gain in respect of the land in question is taxable in the current year because the assessee could not show that the possession of the land was not handed over by the assessee to the developer in the present year when JDA was signed. But in the light of the Tribunal order rendered in the case of ACIT Vs M/s Shankar Vittal Motor Co. Ltd. (supra), we direct the AO to consider the guidance value of the land in question on the date of signing of JDA for the purpose of computing capital gain and with this direction, the matter is restored back to the file of the AO to quantify the amount of capital gain in both the cases.”
Thus when the Tribunal in the co-owners case has considered the identical issue of capital gain arising from the same JDA dt.29.3.2007 then there is no scope of taking any other view. Accordingly following the earlier order of co-ordinate Bench of this Tribunal dt.16.06.2017 (supra), we hold that the income arising from the JDA in question is assessable to tax under the head ‘Capital Gain’ in the current year and the full value consideration has to be computed by considering the guidance value of the land in question on the date of JDA. The Assessing Officer is accordingly directed to recomputed the capital gain by considering the full value consideration as per the guidance value of the land.
As regards the contention of the learned Departmental Representative that the full value consideration should be the exchange Assessing Officer himself has not accepted this and computed the capital gain by taking the market value of the super built up area. Even otherwise when this issue has already been decided by the co- ordinate Bench of this Tribunal therefore we do not find any merit in the contention of the ld. DR.
8. The next issue is regarding the claim of deduction under Section 54 of the Act. The learned Authorised Representative of the assessee has relied upon the decision of the Hon'ble jurisdictional High Court in the case of Fathima Bai Vs. ITO 32 DTR 243 as well as in the case of CIT Vs. Smt. K.G. Rukminiamma 196 Taxmann 87. He has also relied upon the decision of Hon'ble jurisdictional High Court in the case of ACIT & Another Vs. Ananda Basappa 309 ITR 329 and submitted that when the assessee is receiving the built up area in the project then he is eligible for exemption under Section 54 of the Act.
On the other hand, the learned Departmental Representative has objected to the claim of the assessee on the ground that since the assessee has not claimed the deduction under Section 54 in the return of income therefore the same cannot be allowed.
Having considered the rival submissions as well as the relevant material on record, we find that since the assessee did not offer any income under the head ‘Capital Gain’ arising from the JDA in question and objected to the assessment of the capital gain therefore the question of claiming the deduction under Section 54 in the return of income does not arise. Since the Assessing Officer has assessed the JDA therefore, the issue of claiming the deduction under Section 54 is consequential to the assessment of capital gain in the hand of the assessee. Further the assessee raised this issue before the CIT (Appeals) therefore there is no impediment in the jurisdiction of the appellate authority to entertain this issue which is a direct consequential issue of the assessment framed by the Assessing Officer. Therefore we do not find any merit or substance in the objection raised by the ld. DR.
As regards the merits of the claim, we find that neither the Assessing Officer nor the CIT (Appeals) has examined the claim on merits and further when we have set aside the issue of computation of capital gain therefore this issue of claim of exemption under Section 54 is set aside to the record of the Assessing Officer for adjudication as per law after affording an opportunity of hearing to the assessee.
Another issue raised by the assessee in this appeal by way of additional ground is the validity of reopening of assessment under Section 148 being beyond the time limit.
We have heard the learned Authorised Representative as well as learned Departmental Representative and considered the relevant material on record. At the outset, we note that co-ordinate Bench of this Tribunal in the case of S. Badrivishal and Sri Ramnath Gupta Vs. ITO (supra) has considered and decided this issue in paras 4 to 6 as under :
“ 4. Regarding ground no. 2.1 as per which the assessee is disputing the validity of the jurisdiction of AO for initiating the proceedings u/s. 148 of the IT Act, it was submitted that AO for reopening of assessment u/s. 147 is available at pages 16 and 17 of the paper book. It was submitted that as per the reasons, the AO says that the JDA was entered into which M/s. Vaishnavi Infrastructure Private Ltd. on 29.03.2007 as per which the land owned by these two assessees were given for development into residential apartments and the assessee was to receive his share of constructed area in view of the land given to the builder for development. Thereafter the AO assumes that the assessee handed over the possession of the land to the builder on the date of JDA but this assumption of the AO is without any basis and therefore, the reopening is not valid on the basis of such reasons.
At this juncture, the bench wanted to see the JDA dated 29.03.2007 and in reply, it was submitted by the ld. AR of the assessee that the JDA copy is available at pages 23 to 62 of the paper book. The bench pointed out to para 2 of the JDA on internal page 6 of the JDA as per which it is stated that the vendors hereby permit the developers to enter upon the Schedule Property and construct the Residential Complex thereon. The bench pointed out that in the light of this specific agreement as per which the permission was given by the vendors to the developers to enter upon the Schedule Property and do the construction work, on what basis, it is being claimed by the assessee that the possession was not handed over on the date of JDA. In reply, ld. AR of the assessee made various arguments but he could not point out any valid basis for this contention that possession was not handed over on the date of JDA. The ld. DR of the revenue supported the orders of the authorities below.
6. We have considered the rival submissions and gone through the materials available on record and in view of our
observations noted above as per which we found that there is no valid basis of this argument of the assessee that the possession was not handed over by the vendors to the developer on the date of JDA, we hold that there is no merit in this contention and accordingly, we hold that the reopening is valid in the facts of the present case. Ground no. 2.2 is rejected in both the cases.”
Following the earlier order of this Tribunal (supra), this ground of validity of reopening under Section 148 is dismissed. 14. In the result, the appeal of the assessee is partly allowed. Order pronounced in the open court on the 28th day of Sept.,2017.