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Income Tax Appellate Tribunal, BANGALORE BENCH ‘B’, BANGALORE
Before: SHRI A. K. GARODIA & SHRI VIJAY PAL RAO
IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH ‘B’, BANGALORE
BEFORE SHRI A. K. GARODIA, ACCOUNTANT MEMBER AND SHRI VIJAY PAL RAO, JUDICIAL MEMBER
ITA No.206(Bang) 2012 (Assessment year : 2006-07) The Asst. Commissioner of Income Tax, Central Circle-1(4), Bangalore Appellant Vs Shri N.Manjesh, Legal heir of late C Narasimhaiah 11, Dwaraka Nilaya, 7th Phase, JP Nagar, Near Nataraja Layout, Bangalore-560 078 PAN No.ABXPN4318C Respondent And C.O. No.4(Bang)/2015 (Assessment year 2006-07) (By Assesseee) Revenue by : Shri M.V.Seshachala, Advocate Assessee by : Mrs. Neera Malhotra, CIT Date of hearing : 20-06-2016 Date of pronouncement : 30-06-2016 O R D E R PER SHRI A. K. GARODIA, AM: This appeal is filed by the revenue whereas the cross objection is filed
by the assessee which are directed against the order of the ld. CIT(A)-IV,
Bangalore dated 15-11-2011 for the assessment year 2006-07.
In this appeal, the Revenue has raised the following grounds;
“1. The order of the ld.CIT(A) is opposed to law facts and facts of the case. 2. The CIT(A) ought to have deleted the additions of TCG income of Rs.2,15,97,770/- as the assessee himself had admitted the undisclosed income vide his letter dated 09-3-2009.
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The CIT(A) ought to have confirmed the addition as the assessee had given possession of the property to M/s Renaisance and received the sale consideration and also there was no evidence to prove that the amount received in lieu of the above land transaction was returned back. 4. The CIT(A) ought to have deleted the additions f STCG made by the AO since the issue o validity of the transaction decided by the Hon’ble High Court is still alive and is pending before the Hon’ble Supreme Court. 5. The appellant craves leave to add, alter ad substitute any or all grounds of appeal urged above”. .
The assessee has raised the following grounds in its Cross Objection: “1. The learned CIT(A) erred in not considering whether the capital gains in the case of the Respondent were long Term Capital Gains or Short Term Capital Gains. 2. The learned CIT(A) erred in not appreciating whether the possession of the property given pursuant to the agreement dated 27.11.1997 should be considered as relevant for the purpose of computation of capital gains or not. 3. The learned CIT(A) erred in not appreciating the fact that the Respondent having spent huge monies towards development of the property in question pursuant to the agreement dated 27.11.1997, which was much prior to the date of registration on 29.10.2005, the capital gains are liable to be assessed as long term in terms of Section 53(A) of Transfer of Property Act, 1882. 4. The CIT(A) erred in not considering that since the assessee took bonafide possession and enjoyment of the property pursuant to the agreement dated 27.11.1997 he was able to spend a sum of Rs.1.05 crores towards improvements of the property in question, however the learned AA has
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erroneously restricted the said expenses to an extent of Rs.90 lakh. 5. The CIT(A) erred in not allowing the brokerage and commission paid to an extent of Rs.30 lakh by the respondent which was denied by the learned AA without any valid reason. 6. The learned CIT(A) erred in not appreciating the fact that a sum of Rs.1 ,06,81 ,200/ - which is reinvested by the respondent shall be allowed while computing Long Term Capital Gains. 7 .The learned CIT(A) erred in not reversing the determination of Short Term.,Capital Gains in the case of the respondent by the learned AA which was based on the statement given by Sri. V.Doddappa, the co-owner who admitted for payment of short terms capital gains.
The authorities blow ought to have considered the case of the respondent based on the facts and circumstances of the case. 9. For these and other grounds that may be urged at the time of hearing, the cross objections filed y the respondent be allowed. 10. An opportunity of personal hearing e granted to the cross objector before disposal of the cross objection to meet the ends of justice.
The assessee has also raised some additional grounds before CIT (A)
which are available on pages 11 to 15 of the paper book and the same are as
under; 1. The order passed u/s 153A read with Section 143(3) by the Deputy Commissioner of Income Tax, Circle 1(4), Bangalore is opposed to Law and Facts and Circumstances of the case. Hence, the Assessee has come up with this appeal. 2. The moot question to be decided and answered in this appeal
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- whether gains arisen is "Long term Capital, Gains" or "Short term capital gains"? 3. The Assessing Officer erred while computing gains as "Short term Capital gains" as against eligible "long term capital gains". 4. The Assessing Officer failed to admit & recognize the fact, "unregistered Agreement Document dated 27.11.1997 as basic Evidence instead the Assessing Officer relied on registered document dated 29.10.2005 to err on revenue side. 5. The Assessing Officer failed to appreciate the fact that the registration is procedural aspect in accordance with law and also to make more clear and secure the title of property. 6. The Assessing Officer failed to appreciate the fact that the Assessee was in deemed possession and enjoyment of the property right from the beginning of the day of agreement dated 27.11.1997. Hence, the Assessee is governed by 53A of transfer of Property Act 1882. 7.The Assessing Officer failed to cross-examine Smt.Rathnamma before he came to drastic conclusion. 8. The Assessing Officer has not verified, the genuineness of the agreement dated 27.11.1997 entered with Smt.Rathnamma but disqualified on sum arise. 9. The Assessing Officer failed to appreciate the fact that the Assessee would not have spent huge money Rs.1.05 crores in improvements unless the Assessee is bonafide possession and enjoyment of the property.
The AO erred in deciding the issue of gains towards pro”revenue side”. 11. The assessee spent R.1.05 Crores in improvement of property but the AO restricted to the extent of Rs.90 Lakhs only. This amount of Rs.1.05 Crores expended after the agreement dated 27.11.1997 but before registration date 29.10.2005. Therefore, it implies that the AO admitted the fact that the property in question was in possession and enjoyment of assessee. Hence, the assessee is governed sc.53A transfer of property Act, 1882. Therefore, the actual date of transfer should be taken as 27.11.1997 and NOT 29-10.2005. 12. When the assessee is in possession and enjoyment of property it is
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seemed transfer for the purpose of computing capital gains under the income tax Act, 1961 and accordingly capital gains should have been computed. 13. The AO erred in adopting the formal registration dated 29.10.2005 instead of the correct date 27.11.1997 onwards for the purpose of transfer & improvements for cost indexation. 14.The brokerage and commission paid of Rs.30 lakhs by cheques was denied without cross examination of the parties is against the principle of natural justice. 15. The reinvestment made by the assessee to the tune of Rs.1,06,81,200/- is not considered as required under long term capital gains scheme but the AO treated as short term capital gains, thereby the AO erred on revenue side. 16. The AO generalized by quoting the case of V. Doddappa and stating that he has admitted a short term capital gains hence, Sri C.Narasimhaiah should also admit as short term capital gains. The facts and circumstances of each case will be different from one case to other, the judgment should be on actual position. Hence, the AO erred in quoting the case. 17. As per the order of the High Court of Karnataka, the ownership of the entire subject property of Sri C.Narasimhaiah is struck down and needs to be returned to M/s Renaisance Holding & Developers Pvt. Ltd. on technical grounds therefore, the sale deed itself became null and void or in other word nullified. Therefore, adopting the registration date for computation for short term gains has no basis whatever and it will lead to misleading judgment. 18. Due to nullification of Sale deed executed by Shri C.Narasimhaiah to M/s Renaisance Holding & Developers Pvt.Ltd there is no gains either short terms capital gains or long term capital gains. As a matter of facts, the entire amount of sale consideration received needs to be returned back to M/s renanisance Holding Pvt.Ltd., IN fact, it would result in capital loss. However, the assessee stands to his voluntary admission of ‘long term capital gains” and taxes thereon as admitted in the return of income for the AY: 2006-07 since the assesese wants to buy peace from the department as he cannot afford to litigation due to his poor health – i.e., “blood cancer patient”.
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At the very outset, it was submitted by the ld. AR of the assessee that as per ground no.2 & 3 of additional grounds raised before CIT (A), it is
the contention of the assessee that the main issue in this appeal is
whether the gain arising in the present case is short term capital gain or
long term capital gain but this aspect of the matter has not been decided by the ld. CIT(A) and therefore, the entire matter should go back
to his file for fresh decision after deciding this aspect.
The learned DR of the revenue supported the assessment order.
We have considered the rival submissions. We find that as per
the additional grounds no.2 raised before the ld. CIT(A), the question
raised was this whether the gain in question is long term capital gain or short terms capital gain because the AO assessed this as short term
capital gain whereas as per the assessee the gain is taxable as long term
capital gains. We find that this aspect of the matter has not been
decided by the ld. CIT(A) as per the impugned order and therefore, we find force in the submissions of the ld. AR of the assessee that the
entire matter in the present case should go back to the file of the ld.
CIT(A) for a fresh decision and accordingly, we set aside the order of the
ld. CIT(A) and restore the entire matters back to his file for a fresh
decision on all aspects of the matter including this aspect as to whether
the gain in question is short term capital gain or long term capital gain.
The ld. CIT(A) should decide the issue afresh as per the above
discussion after providing adequate opportunity of hearing to both the
sides.
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In view of our above decision, no adjudication is called for at
this stage in respect of other issues raised by both sides in their
respective appeal/cross objection.
In the result, the appeal of the revenue as well as cross
objection of the assessee are allowed for statistical purposes.
Order pronounced in the open court on the date mentioned on the caption page.
(VIJAY PAL RAO) (A.K. GARODIA) JUDICAL MEMBER ACCOUNTANT MEMBER Bangalore: D a t e d :30.06.2016 am*
Copy to : 1 Appellant 2 Respondent 3 CIT(A)-II Bangalore 4 CIT 5 DR, ITAT, Bangalore. 6 Guard file
By order, AR, ITAT, Bangalore
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Date of Dictation ……………………………………………………….. 2. Date on which the typed draft is placed before the dictating Member …………………………………. 3. Date on which the approved draft comes to the Sr. P. S. ……………………………………………………………….. 4 Date on which the order is placed before the dictating Member for pronouncement ……………….. 5. Date on which the order comes back to the Sr. P.S. ………………………………………………………….. 6. Date of uploading the order on website ………………………………………………………………………….. 7. If not uploaded, furnish the reason for doing so………………. 8. Date on which the file goes to the Bench Clerk …………………………….. 9. Date on which order does for Xerox & endorsement ………………………………. 10. Date on which the file goes to the Head Clerk……………. 11 The date on which the file goes to the Assistant Registrar for signature on the order……………………………. 12 The date on which the file goes to the dispatch section for dispatch of the Tribunal order…… 13 Date of dispatch of order……………