Income Tax Officer (IT)-II, Hyderabad, Hyderabad v. Raicur Sridhar,, Hyderabad

ITA 1725/HYD/2014 | 2006-2007
Pronouncement Date: 19-10-2016 | Result: Allowed

Appeal Details

RSA Number 172522514 RSA 2014
Assessee PAN ATPPR9241L
Bench Hyderabad
Appeal Number ITA 1725/HYD/2014
Duration Of Justice 1 year(s) 11 month(s) 8 day(s)
Appellant Income Tax Officer (IT)-II, Hyderabad, Hyderabad
Respondent Raicur Sridhar,, Hyderabad
Appeal Type Income Tax Appeal
Pronouncement Date 19-10-2016
Appeal Filed By Department
Order Result Allowed
Bench Allotted B
Tribunal Order Date 19-10-2016
Date Of Final Hearing 08-08-2016
Next Hearing Date 08-08-2016
Assessment Year 2006-2007
Appeal Filed On 10-11-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SMT. P. MADHAVI DEVI JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH ACCOUNTANT MEMBER ITA.NO.1725/HYD/2014 ASSESSMENT YEAR 2006-2007 THE INCOME TAX OFFICER (I.T.)-II HYDERABAD. VS. MR. RAICHUR SRIDHAR HYDERABAD. PAN ATPPR9241L (APPELLANT) (RESPONDENT) FOR REVENUE : MR. K.J. RAO FOR ASSESSEE : MR. A.V. RAGHURAM DATE OF HEARING : 16.08.2016 DATE OF PRONOUNCEMENT : 19.10.2016 ORDER PER SMT. P. MADHAVI DEVI J.M. THIS IS REVENUES APPEAL FOR THE A.Y. 2006-07. IN THIS APPEAL THE REVENUE IS AGGRIEVED BY THE ORDER OF THE C IT(A) DATED 04.08.2014 ALLOWING THE ASSESSEES APPEAL BY DELETIN G THE ADDITION OF RS.1 38 59 788 MADE BY THE ASSESSING OFFI CER TOWARDS CAPITAL GAINS ARISING FROM THE EXECUTION OF THE DEVELOPMENT AGREEMENTS CUM- IRREVOCABLE GPA BY THE AS SESSEE DURING THE RELEVANT PREVIOUS YEAR. IT IS THE GRIEVANCE OF THE REVENUE THAT THE CIT(A) HAS NOT TAKEN INTO CONSIDERATION THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESWARA RAO REPORTED IN 365 ITR 249. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE AN INDIVIDUAL AND AN NRI DID NOT FILE ANY RETURN OF IN COME FOR THE 2 ITA.NO.1725/HYD/2014 MR. RAICHUR SRIDHAR HYDERABAD. RELEVANT A.Y. 2006-07. IN RESPONSE TO THE NOTICE ISSU ED UNDER SECTION 148 FOR THE A.Y. 2006-07 THE ASSESSEE FILED RETURN OF INCOME ON 13.03.2013 ADMITTING NIL INCOME. THE ASSES SING OFFICER CALLED FOR CERTAIN INFORMATION AND THE ASSESSE E SUBMITTED THE SAME. FROM THE PERUSAL OF THE SAID INFORMATION FIL ED BY THE ASSESSEE THE ASSESSING OFFICER NOTICED THAT THE ASSESSE E HAD ENTERED INTO TWO DEVELOPMENT AGREEMENTS WITH THE DEVELO PER M/S. SRI ADITYA HOMES P. LTD. FOR DEVELOPMENT OF THE ASSESSEES PLOTS OF LAND. HE OBSERVED THAT BOTH THE DEVELOPMENT AGR EEMENTS ARE DATED 08.08.2015 IN RESPECT OF TWO PROPERTIES AND THAT THE ASSESSEE HAS NOT OFFERED ANY CAPITAL GAINS IN THE RETU RNS OF INCOME FILED ON 13.03.2013 FOR THE RELEVANT ASSESSME NT YEARS IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. TAKING NOTE OF JUDGMENT OF THE HONBLE MUMBAI HIGH COURT IN THE CASE O F CHATHURBUJA DWARAKA DAS KAPADIA REPORTED IN 260 ITR 491 (BOM.) THE ASSESSING OFFICER CAME TO THE CONCLUSION T HAT THERE IS A TRANSFER OF CAPITAL ASSET DURING THE RELEVANT PREVIOU S YEAR ON ACCOUNT OF DEVELOPMENT AGREEMENT AND THAT THE ASSESSEE IS LIABLE TO PAY CAPITAL GAINS ON THE SAME DURING THE RELEVANT ASS ESSMENT YEAR ITSELF. 3. DURING THE ASSESSMENT PROCEEDINGS THE ASSESSEE MADE A CLAIM UNDER SECTION 54F OF THE ACT. HOWEVER THE ASSESSING OFFICER REJECTED THE SAID CLAIM HOLDING THA T THE ASSESSEE HAS NOT FILED ANY RETURN OF INCOME FOR THE A. Y. 2006-07 ORIGINALLY OR WITHIN THE PRESCRIBED DUE DATE AND THAT THE ASSESSEE HAS FILED ROI ONLY IN RESPONSE TO NOTICE UNDER SECTION 148 ON 13.03.2013 ADMITTING NIL INCOME FROM ALL THE SOURCES AND FURTHER THAT THE ASSESSEE HAS NOT COMPLIED WITH ANY OF THE 3 ITA.NO.1725/HYD/2014 MR. RAICHUR SRIDHAR HYDERABAD. CONDITIONS PRESCRIBED UNDER SECTION 54F(4) OF THE AC T. FURTHER HE ALSO OBSERVED THAT ASSESSEE HAS RECEIVED A SUM OF RS. 3 LAKHS TOWARDS HIS SHARE AS NON-REFUNDABLE ADVANCE IN RESPE CT OF ONE OF THE DEVELOPMENT AGREEMENTS AND THEREFORE HE BROUGHT THI S ALSO TO TAX IN THE HANDS OF THE ASSESSEE. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME HOLDING THAT ASSESSEE HAS NOT YET RECEIVED THE INCOME BY WAY OF CONSTRUCTED AREA AND THER EFORE ASSESSEE IS NOT LIABLE FOR CAPITAL GAINS TAX. AGAINST T HIS ORDER OF THE CIT(A) THE REVENUE IS IN APPEAL BEFORE US RAISI NG A GROUND THAT THE CIT(A) OUGHT TO HAVE FOLLOWED THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESWAR A RAO 365 ITR 249 AND ALSO THE DECISION OF THE HONBLE MUMBAI HIGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADIA REPORTED IN 260 ITR 491. 5. THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSING OFFICER AND ALSO PLACED RELIANCE UPON THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF POTLA NAGESWA RA RAO (CITED SUPRA). 6. THE LEARNED COUNSEL FOR THE ASSESSEE ON THE OTHER HAND SUPPORTED THE ORDERS OF THE CIT(A). 7. HAVING CAREFULLY CONSIDERED THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD WE FIND THAT THE TWO DEVELOPMEN T AGREEMENTS HAVE BEEN ENTERED INTO BY THE ASSESSEE DUR ING THE RELEVANT PREVIOUS YEAR. THE ASSESSEE HAS ALSO FILED EVIDENCE BEFORE US TO THE EFFECT THAT THE MUNICIPAL AUTHORITIES HAV E 4 ITA.NO.1725/HYD/2014 MR. RAICHUR SRIDHAR HYDERABAD. SANCTIONED THE CONSTRUCTION PLAN ON 25.05.2006 AND THAT THE DEVELOPER HAS COMMENCED THE CONSTRUCTION ONLY THEREAFT ER. WITHOUT PREJUDICE TO THE ASSESSEES CONTENTIONS THAT CAP ITAL GAINS IS NOT TAXABLE DURING THE RELEVANT PREVIOUS YEAR AND TH AT THE ASSESSEE HAS OFFERED THE CAPITAL GAINS TO TAX IN THE YE AR OF SALE OF FLATS RECEIVED BY HIM TOWARDS HIS SHARE THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS ELIGIBLE FOR THE CLAIM OF DEDUCTION UNDER SECTION 54F DURING THE RELEVANT ASSE SSMENT YEAR AND THE ASSESSEE HAS FILED THE RECTIFICATION APPL ICATIONS UNDER SECTION 154 OF THE ACT BEFORE THE ASSESSING OFFI CER. HE PRAYED THAT THE ASSESSING OFFICER MAY BE DIRECTED TO CO NSIDER THE SAME. 8. WE FIND THAT THE ISSUE BEFORE US IS WHETHER THE CA PITAL GAINS IS TAXABLE IN THE YEAR OF ENTERING INTO THE DEVEL OPMENT AGREEMENT. WE FIND THAT THIS ISSUE IS COVERED BY THE DE CISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF P OTLA NAGESWARA RAO (CITED SUPRA). IN THE SAID DECISION THE HONBLE HIGH COURT HAS FOLLOWED THE JUDGMENT OF THE HONBLE BOM BAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARAKADAS KAPADI A REPORTED IN 260 ITR 491. IN THE CASE OF CHATURBHUJ D WARAKADAS KAPADIA THE ASSESSEE THEREIN HAD ENTERED INTO A DEVEL OPMENT AGREEMENT AND HAD ALSO HANDED-OVER THE POSSESSION OF THE PROPERTY IN THE RELEVANT PREVIOUS YEAR ITSELF AND IN SUCH CIRCUMSTANCES THE HONBLE HIGH COURT HAS COME TO THE CONCLUSION THAT THERE IS A TRANSFER AND THE CAPITAL GAIN S DOES ARISE IN THE RELEVANT PREVIOUS YEAR. IN THE CASE OF PO TLA NAGESWARA RAO (SUPRA) ALSO THE DEVELOPMENT AGREEMENT AND THE SANC TION OF PLAN OCCURRED IN THE SAME PREVIOUS YEAR. IN THE CASE BEFORE US 5 ITA.NO.1725/HYD/2014 MR. RAICHUR SRIDHAR HYDERABAD. THE DEVELOPMENT AGREEMENTS ARE SILENT ON THIS ISSUE. TH E ASSESSEE HAS FILED THE COPIES OF THE DEVELOPMENT AGRE EMENT BEFORE US AND ALSO THE SUPPLEMENTARY DEVELOPMENT AGREEMENTS FO R DEMARCATING THE ASSESSEES SHARE AND ALSO THE SANCTIO NED PLAN WHICH IS DATED 25.05.2006. HOWEVER FROM THE DEVELOP MENT AGREMENT IT IS NOT CLEAR AS TO WHETHER THE ASSESSEE HAS ALSO HANDED-OVER THE POSSESSION OF THE PROPERTY ON THE DATE OF ENTERING INTO DEVELOPMENT AGREEMENT ITSELF OR LATER SINCE SANCTIONED PLAN IS DATED 25.05.2006. IN VIEW OF THE SAME WE DEEM IT FIT AND PROPER TO REMAND THE ASSESSEES APPEAL TO THE FILE OF THE ASSESSING OFFICER WITH A DIRECTION TO VERIFY THE DATE OF HANDING OVER OF POSSESSION OF THE ASSESSEE AND IF I T IS FOUND THAT THE ASSESSEE HAS HANDED-OVER THE POSSESSION OF THE LA ND DURING THE RELEVANT PREVIOUS YEAR WE DIRECT THAT THE CAPITAL G AINS BE BROUGHT TO TAX IN THE RELEVANT ASSESSMENT YEAR ITSELF. SI NCE THE ASSESSEE HAS NOT FILED THE RETURN OF INCOME BUT HAS CLA IMED THE EXEMPTION UNDER SECTION 54F BY VIRTUE OF 154 APPLICATIO N WE DIRECT THE ASSESSING OFFICER TO CONSIDER THE SAME IN AC CORDANCE WITH LAW. 7. IN THE RESULT REVENUE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 19.10.2 016. SD/- SD/- (B. RAMAKOTAIAH) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD DATED 19 TH OCTOBER 2016 VBP/- 6 ITA.NO.1725/HYD/2014 MR. RAICHUR SRIDHAR HYDERABAD. COPY TO : 1. THE INCOME TAX OFFICER (IT)-II 3 RD FLOOR D BLOCK I.T. TOWERS A.C. GUARDS HYDERABAD. 2. MR. RAICHUR SRIDHAR 6-3-347/25 DWARAKAPURI COLONY PANJAGUTTA HYDERABAD. 3. CIT(A)-V HYDERABAD. 4. ADDL. DIT (IT) HYDERABAD. 5. D.R. ITAT B BENCH HYDERABAD. 6. GUARD FILE.