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1 IN THE HIGH COURT OF KARNATAKA, BANGALORE
DATED THIS THE 19TH DAY OF NOVEMBER 2013
PRESENT:
THE HON'BLE Mr.JUSTICE N.KUMAR
AND
THE HON'BLE Mrs.JUSTICE RATHNAKALA
I.T.A. No.290/2007
BETWEEN:
THE COMMISSIONER OF INCOME TAX, MANGALORE.
THE ASST COMMISSIONER OF INCOME-TAX CIRCLE-2(1), MANGALORE. ...APPELLANTS
(By Sri.K.V.ARAVIND, Adv.)
AND:
SRI BERNARD MATHIAS PRABHU D.NO.15-23-1421, LOWER BENDORE, MANGALORE. ... RESPONDENT
(By Sri.S.PARTHASARATHI, Adv.)
2 This ITA is filed u/S.260-A of I.T.Act, 1961 arising out of order dated 16-10-2006 passed in ITA 3831/Bang/2004 for the Assessment Year 2001-02, praying that for the reasons stated therein this Hon'ble Court may be pleased to:
i. formulate the substantial questions of law stated therein,
ii. allow the appeal and set aside the order passed by ITAT Bangalore Bench-B in ITA 3831/Bang/2004 dated 16-10-2006 and confirm the order passed by the Assessing Officer -vide Annexure-A, in the interest of justice and equity.
This appeal coming on for hearing, this day, N.KUMAR, J., delivered the following:
J U D G M E N T
This appeal was admitted to consider the following substantial question of law:
“Whether the Tribunal was correct in treating the income of the assessee under the head “income from capital gains” instead of “income from business” includes adventure in the nature of trade vide Section 2(13) of the Income Tax Act?”
3 2. The assessee acquired a plot of land with an old house in it measuring 43.5 cents in Anegundi, Bijai, Mangalore on 19.12.1996 for a consideration of Rs.39,17,517/-. On the very same day, he entered into a ‘Joint Development Agreement’ with M/s.Designer Homes, a partnership firm. In terms of the Joint Development Agreement, the assessee is entitled to 30% of the super built up area out of the 70% of the total area of land. In lieu of 30% of built up area, the assessee is entitled to 14 flats. Accordingly, in April 2000, the developer handed over 14 flats to the assessee. The assessee had sold 13 flats for a sum of Rs.82,17,700/. In terms of the Joint Development Agreement, there was a delay in completing the construction. Therefore, the assessee was also paid Rs.8 Lakhs as compensation, total amounting to Rs.90 Lakhs. The Assessing Authority treated the said amount as short term capital gain as
4 against long term capital gain claimed by the assessee. Aggrieved by the said order, the assessee preferred an appeal before the Income Tax Commissioner (Appeals). The Commissioner of Income tax set aside the order of the Assessing Authority and treated the income as a long term capital gain. However, he also held that the assessee has to offer trading amount for transfer of the and on the date of execution of the Joint Development Agreement. The assessee accepted the said finding. However, it is the Revenue who preferred the appeal before the Tribunal. Before the Tribunal, for the first time, it was contended that the said income is to be assessed as “income from business”. The Tribunal declined to entertain the said ground, on the ground that, that was not the case of the Revenue either before the Assessing Authority or before the First Appellate Authority and thus, it dismissed the appeal.
5 Aggrieved by the said order, the present appeal is filed.
As is clear from the aforesaid material on record, the Assessing Authority assessed the said income as a short term capital gain. It is the assessee who preferred an appeal to the Appellate Authority contending that it is a long term capital gain, which case was accepted by the Appellate Authority. Therefore, the Revenue neither before the Assessing Authority nor before the First Appellate Authority claimed it as business income. Therefore, for the first time, before the Tribunal without any factual foundation, the said contention could not have been raised. The Tribunal is justified in declining to entertain the appeal on that ground. In that view of the matter, we do not see any merit in this appeal. In the facts of this case, there is no need to answer the substantial question of law as that question did not
6 arise for consideration before the Assessing Authority or before the First Appellate Authority. No merits, appeal is accordingly dismissed.
Sd/- JUDGE
Sd/-
JUDGE
dh*