RAKESH TYAGI,YAMUNANAGAR vs. DCIT, YAMUNANAGAR

PER BENCH

These five appeals of different assessees are being decided by consolidated order as the sole issue raised in the respective appeals is identical. The correctness of the separate orders of CIT(A) Panchkula dated 30.11.2016 has been assailed by the respective assessees in their appeals except for the fact that in ITA 1157/CHD/2017, the assessee assails the order of CIT(A), Karnal dated 23.05.2017 pertaining to 2008- 09 assessment year.

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"M/s Uppal Housing Ltd." by treating it as "transfer" during the year under consideration as per Section 2(47)(ii) being extinguishment of right and holding that the assessee is liable to pay tax on .its share of the resultant capital gains in terms of section 45(1) of the Income Tax Act, 1961 ('the Act'). 2. That the Id. CIT(A) has erred on facts and in law by confirming the addition of Rs. 3,14,34,545/- by not appreciating the fact that the joint owners had merely given possession of the land for specific purpose in terms of clause 15 of the Agreement and the same does not constitute 'transfer' in terms of section 2(47) of the Act as the title in the land, at all times, vested with the joint owners, which is also evident from Clause 12 & 13 of the Agreement, that the consideration will be completed between the parties once the sale proceeds from the project will start, which means that till the project is completed, the consideration between the parties is not possible to be concluded. 3. The Ld CIT(A) has erred on the facts by confirming the addition of Rs. 3,14,34,545/- by ignoring the fact that the said agreement being a Joint Development agreement between the parties, said land is not being sold or transferred as such but a commercial complex is being developed on such land and such build up area is being sold in different years, capital gain on conversion of land computed in the year of conversion shall be chargeable to tax proportionately at the time of transfer of built up area of commercial complex in terms of Section 45(2) of the Act. He has also erred in facts by taking cognizance of the General Power of attorney which had not been executed in the relevant assessment year. 4. The Ld CIT(A) has erred on the facts by confirming the addition of Rs. 3,14,34,545/- by alleging that the aforesaid land has been 'transferred' for a consideration of Rs. 32 crores without appreciating that the said amount was payable towards license fee and other legal charges to enable the developer to carry out the construction and no part of the same was attributable to the 'alleged transfer'. No monetary consideration other than Rs. 5 crores in total to all the joint owners as against the total consideration of Rs. 32 crores, have moved in the relevant year under consideration and that too being a refundable security deposit as specified in clause 5 of the agreement. ' 5. Without prejudice to the above, the Ld CIT(A) has erred on the facts by confirming the addition of Rs. 3,14,34,545/- by erring in law and ignoring the fact that such additions during the relevant year under consideration amounts to double taxation as the appellant subsequently in the Asstt.Yr. 2014-15 have transferred her share in land to M/s BSA Realcon Pvt. Ltd. and duly showed Capital gains in her Income Tax Return and paid taxes accordingly.” 3. The ld. CIT-DR accordingly was required to address whether the revised grounds can be substituted for the original grounds. On considering the same, the ld. CIT-DR posed no objection if the revised grounds are substituted with the original grounds stating that they address the same grievance. Accordingly, with the consent of the parties, the revised grounds in ITA 230/CHD/2017 are substituted with the original grounds raised by the assessee. 4. In ITA 231/CHD/2017 to ITA 232/CHD/2017, identical prayer was made on behalf of the respective assessees considering the similar submissions of the ld. CIT-DR, the Revised Grounds in these two appeals are also substituted for the original grounds. 5. The ld. AR reverting to ITA 230/CHD/2017 submitted that the assessee has filed an additional ground in the respective appeal on

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25.05.2017. Inviting attention to the assessment order which is an order passed u/s 143(3)/147, the ld. AR submitted that land was transferred located in the Urban Estate of Jagadhri, Chhachhroli-Paonta Sahib Roadm, Yamuna Nagar to M/s Uppal Housing Ltd., Delhi vide collaboration Agreement dated 29.08.2007. It was submitted, that the Tax Authorities have taken note of the fact that no capital gain has been shown by the assessee on the transfer of the said land. The ld. AR submitted that the issue has a background history as a collaboration Agreement dated 29.08.2007 had been made between the following persons : 1. Sh. Rohit Kumar 2. Sh. Ram Niwas Garg 3. Sh. Devi Dayal 4. Ms. Ritu Rani 5. Smt. Rani Devi 6. Sh. Rakesh Kumar 6. The assessee, it was submitted, claimed it to be an AOP. The Tax Authorities did not accept it and considered the transfer of land in the name of individual members. The ld. AR submitted that in the proceedings before AO and the CIT(A), the assessee on account of lack of proper advice, did not raise the jurisdictional issue which on facts ought to have been raised. The following additional ground, accordingly was raised :

"That on law, facts, circumstances and legal position of the case, the initiation, continuation and conclusion of the impugned assessment u/s 147 r.w.s 148 of the Income Tax Act is illegal and deserves to be quashed." 7. In support of admission of the same, it was submitted that the jurisdictional issue going to the root of the matter may be first decided. The ground, it was submitted could not be raised on account of the ignorance of the assessee and lack of proper advise. In the facts of the case, it was submitted that since the assumption of jurisdiction itself is questionable in the circumstances, it was his prayer that the said ground may be admitted in terms of the decision of the Apex Court in the case of NTPC 229 ITR 383 (1998) (S.C). 8. The ld. CIT-DR considering the jurisdictional issue submitted that though it is a legal ground and thus he would have no objection to the admission of the same, however, since the relevant discussions are not in the orders of the Tax Authorities, it was his prayer that in the

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circumstances, it would be appropriate to remand the issue. The ld. AR agreeing with the submissions stated that it was his prayer also that the issue may be remanded to the AO. 9. We have heard the submissions and perused the material available on record. It is seen that the assessment order has been passed considering the merits of the arguments raised by the assessee. The CIT(A) in appeal, it is seen proceeded to partly agree with the assessee, “Therefore, in view of above, 1 am of the view that there is an extinguishment of right in the capital asset by the appellant vide collaboration agreement dated 29.08.2007 as per sub clause (ii) to section 2(47) which is further supported by clarification of word 'transfer' by Explanation (2) below section 2(47). So, there is ‘transfer’ of capital assets as per the inclusive definition u/s 2(47) during the year under consideration.” Since the assumption of jurisdiction itself is questioned, by the assessee which aspect has not been considered by the tax authorities. Accordingly, in these circumstances without getting into the aspect of correctness of the order under challenge which is stated to have not been challenged by the Revenue and thus according to the assessee, the issue which remains open for consideration is only the applicability of Section 2(47)(ii), we deem it appropriate to not get into this debate and set aside the impugned order back to the file of the AO with the direction to pass a speaking order in accordance with law after giving the assessee a reasonable opportunity of being heard. 10. In the result, the appeal of the assessee is allowed for statistical purposes. 11. The facts and circumstances qua the issues in ITA 231, 232, and 233/CHD/2017 continue to remain identical. Accordingly, for identical reasons, the appeals are allowed for statistical purposes. 12. The only distinction in ITA 1157/CHD/2017 is that the assessee while filing the appeal against the order dated 30.11.2016 of CIT(A) raised the jurisdictional issue by way of ground No. 1, however even in the facts of the said case, the issue had not been addressed by the CIT(A) as the ground was not raised before him. Thus, it was his prayer that ground No. 1 may be treated as additional ground and in terms of the arguments in the earlier appeal may be admitted. The ld. CIT-DR considering the record submitted that he has no objection as facts remain the same. Accordingly, the said issue is also restored back to the AO for a decision on the same. Considering the submissions of the

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parties before the Bench, with identical directions back to the file of the CIT(A) with direction to pass a speaking order in accordance with law after giving the assessee reasonable opportunity of being heard.

Order pronounced in the Open Court on 03.04.2018.

Sd/- Sd/-

( Dr.B.R.KUMAR) ( DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ‘Poonam’ Copy to: 1. The Appellant 2. The Respondent 3. The CIT 4. The CIT(A) 5. The DR

Asstt. Registrar ITAT,Chandigarh.