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IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JULY, 2018 PRESENT: THE HON’BLE Dr.JUSTICE VINEET KOTHARI AND THE HON’BLE MRS.JUSTICE S.SUJATHA INCOME TAX APPEAL NO.570 OF 2015 BETWEEN:
The Commissioner of Income-tax,
C.R.Building, Queens Road,
Bengaluru.
The Joint Commissioner of
Income-Tax (OSD), Circle -11(2),
Rashtrothana Bhavan,
Nrupathunga Road,
Bengaluru – 560 001.
…Appellants
(By Sri.K.V.Aravind, Advocate)
AND:
M/s.Chaitanya Properties Private Limited, No.17, Sankey Road, Bengaluru.
…Respondent
(By Sri.A.Shankar and Sri.M.Lava, Advocates)
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This Income Tax Appeal is filed under Section 260-A of Income Tax Act, 1961, arising out of order dated 27.03.2015 passed in ITA No.125/Bang/2013, for the assessment year 2009-2010.
This Appeal, coming on for Admission, this day, VINEET KOTHARI, J., delivered the following:
JUDGMENT
Mr.K.V.Aravind, Advocate for the appellants Mr.A.Shankar and Mr.M.Lava, Advocates for the Respondent
The Revenue has filed this appeal against the order of the learned Income-tax Appellate Tribunal dated 27.03.2015 passed in I.T.A.No.125/Bang/2013, Joint Commissioner of Income Tax (OSD) Vs. M/s.Chaitanya Properties Private Limited.
Both the learned counsels for the Revenue as well as the Assessee have brought to our notice, the
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conclusions of the learned Tribunal in 11.6.1, which we quote here for ready reference:
11.6.1: We have heard the rival submissions of both parties and perused and carefully considered the material on record. We have also perused the decision rendered by a co- ordinate bench of this Tribunal in the assessee’s own case for Assessment Year 2005-06 in ITA No.557/Bang/2014. From the material on record the following facts emanate:-
i) The lands which are subject matter of the JDA dated 05.02.2005, between the assessee and PEPL, are stock-in-trade of the assessee at the time of JDA was entered into. There is a finding to this effect, rendered by a co-ordinate bench of this Tribunal in its order in ITA No.557/Bang/2014 in the assessee’s own case for Assessment Year 2005-06;
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ii) As observed by the co-ordinate bench of this Tribunal in its order in ITA No.557/Bang/2014 in the assessee’s own case for Assessment Year 2005-06, the point in time when the tax will arise is only in the year in which the stock-in-trade is sold;
iii) No sale of such stock-in-trade has been reported to have taken place during the year under consideration i.e., Assessment Year 2009-10;
iv) The assessee has reportedly been consistently following the completed contract method of accounting and the same appears to have accepted by revenue;
v) The Assessing Officer has not brought on record any material evidence to demonstrate that the system of accounting followed by the assessee does not show a true and correct picture of income, which in turn would warrant rejection of the books of account. The Assessing Officer has not
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rejected the books of account maintained by the assessee in the year under consideration;
vi) The assessee is basically a landlord simpliciter as far as the JDA between the assessee and PEPL is concerned;
vii) There is no requirement in law that the assessee ought to adopt the percentage completion method of accounting merely because PEPL, the developer in the JDA, in following the said method.
In the light of the above facts, it would be incorrect to conclude that the assessee has earned any income out of the JDA in the period relevant to the impugned assessment year 2009- 10;
11.6.2: On a careful perusal, we find that the judicial pronouncement rendered by the Chennai Bench of the ITAT in the case of R.Gopinath (HUF) Vs. CIT in ITA Nos.29 & 30/Mad/2008 dated 24.07.2009 and relied on
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by the assessee, does apply to the facts of the case of the assessee in the case on hand. We concur with the above said decision of the Chennai Bench of the ITAT (supra) in holding that when an immovable property is held as stock-in- trade, the same is to be considered as sold only when the sale is conveyed by means of a registered sale deed and not before that. The learned CIT(A) has also expressed the same view in the impugned order in the case on hand and the said view, in our considered opinion, is in order. No interference is therefore called for with the finding of the learned CIT(A) which are rendered at paras 5.6 to 5.17 of the impugned order.
They submitted that in view of the finding given in para 11.6.1(iii) quoted above since the learned Tribunal has held and has given a finding that there was no sale of such stock-in-trade, which has taken
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place during the relevant Assessment Year 2009-10 concerned in the present appeal, therefore, the observations made in para 11.6.2 quoted above to the extent, the learned Tribunal following the view of the Chennai Bench of the ITAT in the case of R.Gopinath (HUF) Vs. CIT in ITA Nos.29 & 30/Mad/2008 decided on 24.07.2009 to the effect that “We concur with the above said decision of the Chennai Bench of the ITAT (supra) in holding that when an immovable property is held as stock-in-trade, the same is to be considered as sold only when the sale is conveyed by means of a registered sale deed and not before that, are not germane to the issue for Assessment Year 2009-10 and therefore, the said question raised by the Revenue in
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the present appeal is academic and leaving the said question open, the present appeal may be disposed of.
Mr.K.V.Aravind, learned Counsel for the Revenue, however, submitted that for the next Assessment Year 2010-11 also and other subsequent years, some appeals are pending before the learned Tribunal and therefore, these observations of para 11.6.2 quoted above, a sale being made only on registered sale deed may come in the way of the Revenue and adversely affect the interest of Revenue.
To this argument, learned counsel for the Assessee, Mr.A.Shankar fairly submitted that the Tribunal may decide those appeals un-influenced by
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these observations and all contentions of the parties may be kept open.
In view of the aforesaid submissions, we are of the opinion that no substantial question of law in the present appeal filed by Revenue for Assessment Year 2009-10 would arise for our consideration and we dispose of the present appeal, leaving the said question open, to be decided in the appropriate case.
Sd/- JUDGE
Sd/- JUDGE dh