SUVARNA NAGAR CO OPERATIVE HOUSING SOCIETY LTD, MUMBAI v. CIT 21, MUMBAI

ITA 3658/MUM/2014 | 2004-2005
Pronouncement Date: 28-09-2016

Appeal Details

RSA Number 365819914 RSA 2014
Assessee PAN AAAAT3055F
Bench Mumbai
Appeal Number ITA 3658/MUM/2014
Duration Of Justice 2 year(s) 4 month(s) 6 day(s)
Appellant SUVARNA NAGAR CO OPERATIVE HOUSING SOCIETY LTD, MUMBAI
Respondent CIT 21, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 28-09-2016
Appeal Filed By Assessee
Bench Allotted F
Tribunal Order Date 28-09-2016
Date Of Final Hearing 17-02-2016
Next Hearing Date 17-02-2016
Assessment Year 2004-2005
Appeal Filed On 22-05-2014
Judgment Text
F IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES F MUMBAI BEFORE SHRI AMIT SHUKLA JUDICIAL MEMBER AND SHRI ASHWANI TANEJA ACCOUNTANT MEMBER ITA NO.3656/MUM/2014 ASSESSMENT YEAR: 2004-05 VITHAL NAGAR CO. OPERATIVE HOUSING SOCIETY LTD. 51 N.S.S. RD NO.11 JIA HIND CLUB JVPD SCHEME MUMBAI-400056 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAT3055F ITA NO.3655/MUM/2014 ASSESSMENT YEAR: 2004-05 THE NAVYUG CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAT0325L ITA NO.3657/MUM/2014 ASSESSMENT YEAR: 2004-05 CO.OP. HOUSING SOCIETIES 2 NUTAN LAXMI CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAT1208J ITA NO.3658/MUM/2014 ASSESSMENT YEAR: 2004-05 SUVARNA NAGAR CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAS4938E ITA NO.3659/MUM/2014 ASSESSMENT YEAR: 2004-05 VALLABHNAGAR CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAVO288J ITA NO.2363/MUM/2014 ASSESSMENT YEAR: 2004-05 CO.OP. HOUSING SOCIETIES 3 JAI HIND CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAJ2782R ITA NO.3883/MUM/2014 ASSESSMENT YEAR: 2004-05 FRIENDS CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAT9169N ITA NO.3882/MUM/2014 ASSESSMENT YEAR: 2004-05 THE PRESIDENCY CO. O PERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAT4479M ITA NO.3881/MUM/2014 ASSESSMENT YEAR: 2004-05 CO.OP. HOUSING SOCIETIES 4 THE AZAD NAGAR CO. OPERATIVE HOUSING SOCIETY LTD. PLOT NO. 51 JAIN HIND CLUB GLDG. N.S. RD NO.11 JAI HIND SOCIETY JVPD SCHEME VILE PARLE (W) MUMBAI-400049 / VS. CIT - 21 PRATYAKSHKAR BHAVAN BKC BANDRA (E) MUMBAI- 400050 (REVENUE ) (RESPONDENT ) P.A. NO. AAAAA1983F ASSESSEE BY M S . ARTI VISSANJI SHRI RAJESH SHAH & SHALIN S. DIVATIA (ARS) REVENUE BY SHRI G.M. DOSS ( CIT - DR) / DATE OF HEARING: 29/07/2016 / DATE OF ORDER: 28/09/2016 / O R D E R PER BENCH: THESE APPEALS HAVE BEEN FILED BY THE ABOVE MENTIONE D APPELLANTS AGAINST RESPECTIVE ORDERS PASSED BY THE COMMISSIONER OF INCOME TAX-21 MUMBAI {(IN SHORT L D. CIT} U/S 263 OF THE INCOME TAX ACT 1961. IN THESE APPEA LS THE ISSUES HAVE ARISEN OUT OF COMMON SUBJECT MATTER GI VING RISE TO IDENTICAL ISSUES AND THEREFORE THESE WERE HEARD TOGETHER AND BEING DISPOSED OF BY THIS COMMON ORDER. 2. DURING THE COURSE OF HEARING ARGUMENTS WERE MADE B Y MS ARTI VISSANJI SHRI RAJESH SHAH & SHALIN S. DIVA TIA AUTHORISED REPRESENTATIVES (AR) ON BEHALF OF THE AS SESSEE AND BY SHRI G.M. DOSS DEPARTMENTAL REPRESENTATIVE (CIT -DR) ON BEHALF OF THE REVENUE. CO.OP. HOUSING SOCIETIES 5 FIRST WE SHALL TAKE UP APPEAL OF M/S VITHALNAGAR COOPERATIVE HOUSING SOCIETY LTD. IN ITA NO.3656/MUM/2014 FOR A.Y. 1995-96: THE ASSESSEE HAS FILED ITS APPEAL ON FOLLOWING GROU NDS: 1.THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN EXERCISING JURISDICTION AND PASSING ORDER U/S 263 O F THE ACT IN RESPECT OF THE ORDER U/S. 143(3) R.W.S.147 WHICH WAS HAD IN LAW AS NOTICE U/S. 147 WAS NOT SERVED UP ON THE ASSESSEE. 2. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN EXERCISING JURISDICTION UNDER THE PROVISIONS OF SEC TION 263 OF THE ACT. 3. THE LEARNED COMMISSIONER OF INCOME TAX ERRED IN HOLDING THAT THE PROVISIONS OF SECTION 50C WERE NOT APPLIED BY THE ASSESSING OFFICER. 4. THE LEARNED COMMISSIONER OF INCOME TAX MUMBAI ERRED IN EXERCISING JURISDICTION REGARDING THE APPLICABILITY OF SECTION 50C WHEN THE ISSUE OF COMPUTATION OF CAPITAL GAINS IN RESPECT OF THE SAME TRANSACTION HAD BEEN ADJUDICATED UPON BY THE CIT (A )-32 MUMBAI. 5. THE ASSESSEE CRAVES LEAVE TO ADD TO OR AMEND THE GROUNDS OF APPEAL AND FILE A DETAILED STATEMENT OF FACTS AT THE TIME OF THE HEARING. 3. THE BRIEF FACTS AS CULLED OUT FROM THE ORDERS OF T HE LOWER AUTHORITIES AND SUBMISSIONS MADE BY THE ASSESSEE AR E THAT THE ASSESSEE SOCIETY ALONG WITH 13 OTHER HOUSING SO CIETIES (IN ALL 14 SOCIETIES) WERE OWNING A PLOT AT JUHU MUMBA I UNDER JUHU VILE PARLE DEVELOPMENT SCHEME. THE SAID PLOT WAS MANAGED BY THE ASSOCIATION (M/S JUHU VILE PARLE DEVELOPMENT COOPERATIVE HOUSING ASSOCIATION L TD.) WHICH WAS FORMED BY AFORESAID 14 SOCIETIES TO PROVI DE SUITABLE UTILITIES AND AMENITIES FOR THEIR COMMON B ENEFITS. CO.OP. HOUSING SOCIETIES 6 ORIGINALLY THE INCOME TAX DEPARTMENT HAD ASSESSED INCOME ON SALE OF PLOT IN THE HANDS OF ASSOCIATION WHICH HAD SOLD THE PLOT TO A COOPERATIVE SOCIETY FO RMED FOR THE BENEFIT OF INDIAN POLICE SERVICE OFFICERS. THE MATTER WENT TO THE COMMISSIONER OF INCOME TAX-(APPE ALS) AND HE HELD THAT THE IMPUGNED TRANSACTION RESULTED INTO CAPITAL LOSS ON SALE OF THE PROPERTY AND THEREFORE THE QUESTION OF MAKING AN ADDITION DOES NOT ARISE. THER EAFTER THE MATTER REACHED BEFORE THE INCOME TAX APPELLATE TRIBUNAL AND THE TRIBUNAL HELD THAT SINCE THE PLOT DID NOT BELONG TO THE ASSOCIATION THE QUESTION OF ANY TRAN SFER BY THE ASSOCIATION DOES NOT ARISE AND HENCE NO CAPITAL GAIN CAN BE ASSESSED IN THE HANDS OF ASSOCIATION. IN PUR SUANCE TO THE ABOVE ORDER THE ASSESSING OFFICER REOPENED THE ASSESSMENT OF ASSESSEE (WHICH IS ONE OF THE 14 SOCI ETIES) TO ASSESS AFORESAID INCOME IN THE HANDS OF THE ASSESSE E. 3.1. THEREAFTER THE AO PASSED THE ASSESSMENT ORDER IN THE NAME OF ASSESSEE SOCIETY AND BROUGHT TO TAX IN ITS HANDS THE AMOUNT OF CAPITAL GAINS ARISING ON ACCOUNT OF TRANS FER OF IMPUGNED PLOT OF LAND FOR THE PROPORTIONATE SHARE O F THE ASSESSEE IN THE TOTAL SALES CONSIDERATION AFTER TA KING COST OF ACQUISITION AS NIL. THE ASSESSEE SOCIETY FILED AN APPEAL BEFORE THE CONCERNED COMMISSIONER OF INCOME TAX-(APPEALS) CHALLENGING THE COMPUTATION OF CAPITAL GAINS DONE B Y THE ASSESSEE ON THE GROUND THAT NO INDEXATION WAS GRANT ED BY THE AO AND COST OF ACQUISITION WAS WRONGLY TAKEN AT NIL . 3.2. IN THE APPEAL ORDER PASSED BY THE CONCERNED COMMISSIONER OF INCOME TAX-(APPEALS) THE GROUNDS R AISED BY CO.OP. HOUSING SOCIETIES 7 THE ASSESSEE WERE DISMISSED AND AOS ACTION IN TAKI NG COST OF ACQUISITION AT NIL WAS UPHELD. ON THE OTHER HAND I N THE MEANWHILE LD. CIT ISSUED SHOW CAUSE NOTICE U/S 263 TO THE ASSESSEE AFTER GOING THROUGH THE AFORESAID ASSESSM ENT ORDER PASSED U/S 147/143(3) AS WELL AS ASSESSMENT RECORDS OF THE ASSESSEE. 'ON VERIFICATION OF THE RECORDS IT IS OBSERVED THA T STAMP DUTY WAS PAID ON A VALUATION OF RS. 11 88 43 200/- AS DETERMINED BY THE STAMP DUTY AUTHORITIES. AS PER THE PROVISIONS OF 50C THIS VAL UE SHOULD HAVE BEEN CONSIDERED AS THE SALE VALUE. THUS THE AMOUNT TAXABLE AS 'CAPITAL GAINS' IN THE HAND O F THE ASSESSEE WOULD STAND AT RS.1 18 84 320/- AS AGAINST THE AMOUNT OF RS. 7 41 789/- AS DETERMINED BY THE ASSESSING OFFICER'. 3.3 . THE ASSESSEE CONTESTED THE SHOW CAUSE NOTICE OF L D. CIT AND FILED DETAILED SUBMISSIONS CHALLENGING THE VALI DITY OF AFORESAID SHOW CAUSE NOTICE. THE RELEVANT PART OF S UBMISSIONS FILED BY THE ASSESSEE IN RESPONSE TO SHOW CAUSE NOT ICE VIDE ITS LETTER DATED 02.01.2014 IS REPRODUCED HEREUNDER: 3. IT IS SUBMITTED THAT THE VALUATION OF RS. 11 88 43 200/- AS DETERMINED BY THE STAMP DUTY AUTHORITIES CANNOT BE THE BASIS FOR DETERMINING THE SALE CONSIDERATION AS RS. 1 18 84 320/-FOR SAID COMPUTAT ION OF CAPITAL GAIN FOR THE FOLLOWING REASONS: A) THIS PLOT WAS UNDER ACQUISITION BY THE GOVERNMENT OF MAHARASHTRA AS THE SAME WAS RESERVED FOR RECREATION GROUND GARDEN POLICE QUARTERS AS P ER TABLE 41(G) OF THE DEVELOPMENT CONTROL REGULATIONS (DCR) 1991. THE OWNERS OF 14 SOCIETIES WERE THEREF ORE ABLE TO DEVELOP THE PLOT FOR ITS OWN OR THE SOCIETY MEMBERS' USE. PLEASE FIND ENCLOSED LETTER DT.21.04.2003 OF THE CHIEF ENGINEER (9 DEV. PLAN) MUNICIPAL CORPORATION OF GREATER MUMBAI CONFIRMING RESERVATION OF PLOT FOR PUBLIC PURPOSE INTER ALIA POLICE QUARTERS. FURTHER THE HOME DEPT. OF THE GOVERNMENT OF MAHARASHTRA HAD TAKEN THE POSSESSION OF THIS CO.OP. HOUSING SOCIETIES 8 PLOT IN 1975 ISSUED BY THE PUBLIC WORKS AND HOUSING DEPARTMENT OF THE GOVT. OF MAHARASHTRA. IT IS SUBMITTED THAT THE PROVISION OF SECTION 50C C ANNOT APPLY TO SALE OF PLOT OF LAND TO THE GOVERNMENT OR WHERE THE PLOT IS RESERVED FOR A PARTICULAR PURPOSE BY TH E GOVERNMENT AND POSSESSION THEREOF TAKEN BY THE GOVT . OF MAHARASHTRA. THE OFFICERS OF THE POLICE DEPARTMENT PROPOSED TO F ORM A COOPERATIVE HOUSING SOCIETY. THE PROPOSED SOCIETY ENTERED INTO A MEMORANDUM OF UNDERSTANDING ON 2510112000 WITH 14 SOCIETIES. AS PER THIS MOU A SU M OF RS. 14 19 670/- WAS PAID AS AN ADVANCE BY THE PROPO SED SOCIETY. THE CONVEYANCE DEED WAS EXECUTED BETWEEN T HE SAID PROPOSED SOCIETY OF THE POLICE OFFICIAL AND TH E 14 SOCIETIES ON 14.05.2003 FOR A TOTAL CONSIDERATION O F RS. 77 14 920/- AS AGAINST THE CONSIDERATION OF RS. 70 98 350/ - PROPOSED IN THE MOU DATED 25.01.2000. THE MOU IN RESPECT OF THE SALE TO THE PROPOSED SOCI ETY OF OFFICERS OF THE INDIAN POLICE SERVICE (IPS) WAS ENT ERED INTO ON 25.01.2000 WHEREAS SECTION 50C OF THE ACT W AS INTRODUCED WITH EFFECT FROM 01.04.2003. THE SUBSEQUENT DEED OF CONVEYANCE DATED 14.05.2003 CONVEYANCE DATED 14.05.2003 CONVEYING THE PLOT WAS ONLY THE FULFILLMENT OF A PRE-EXISTING OBLIGATION AND HE NCE CANNOT POSSIBLY BE SUBJECTED TO THE RIGORS OF SECTI ON 50C OF THE ACT WHICH DOES NOT HAVE RETROSPECTIVE EFFECT. THE PURPOSE BEHIND THE ENACTMENT OF SECTION 50-C WA S SET OUT IN DEPARTMENT CIRCULAR NO.5/2010 DATED 03.06.20 10- '23.2. WITH A VIEW TO PREVENTING THE LEAKAGE OF REVENUE SECTION 50C IS AMENDED SO AS TO PROVIDE T HAT WHERE THE CONSIDERING RECEIVED OR ACCRUING AS A RES ULT OF TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSES SABLE BY AN AUTHORITY OF THE STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADOPTED OR ASSESSED OR ASSES SABLE SHALL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER F OR COMPUTING CAPITAL GAIN' (EMPHASIS SUPPLIED) IT IS HUMBLY SUBMITTED THAT WHERE A RESERVED PLOT IS SOLD PURSUANT TO POSSESSION BEING TAKEN BY A GOVERNMENT AUTHORITY AND / OR WHERE IT CAN BE SUED CO.OP. HOUSING SOCIETIES 9 ONLY FOR A PUBLIC PURPOSE LIKE PROVIDING HOUSING FO R GOVERNMENT EMPLOYEES (IN THE INSTANT CASE FOR POLIC E QUARTERS) THERE CANNOT BE ANY LEAKAGE OF REVENUE. UNDER THE SAID CIRCUMSTANCES AND GOING BY THE MISCH IEF SOUGHT TO BE ADDRESSED THE PROVISION OF SECTION 50 C OF THE ACT CANNOT BE MADE APPLICABLE ON THE INSTANT CA SE. D) THE INDENTURE DATED 14 TH MAY 2003 CLEARLY SPECIFIES THAT THE SAID PLOT WAS SOLD ON 'AS IS WHERE BASIS I S'. IN THE ALTERNATIVE AND WITHOUT PREJUDICE IT IS SUBM ITTED THAT THE VALUE ADOPTED OR ASSESSED BY THE STAMP VALUATIO N AUTHORITY UNDER SUB SECTION (2) EXCEEDS THE FAIR MA RKET VALUE OF THE PLOT ON THE DATE OF TRANSFER A PLOT OF LAND SUBJECT TO RESERVATION WITHOUT ENCUMBRANCES. FURTHE R IN THE INSTANT CASE THE ENCUMBRANCE WAS USE OF PLOT F OR POLICE QUARTERS. HENCE THE SAID PLOT OF LAND HAD N O VALUE FOR ANYBODY OTHER THAN THE EMPLOYEES OF THE P OLICE DEPARTMENT AND WAS SUBJECT TO NECESSARY APPROVALS F ROM THE GOVERNMENT OF MAHARASHTRA. THE POSSESSION THERE OF HAD BEEN HANDED OVER TO THE GOVT. OF MAHARASHTRA IN 1975. UNDER THE CIRCUMSTANCES WE HAVE TO REQUEST YOU TO KINDLY REFER THE VALUATION OF THE PLOT TO UNDER THE PROVISIONS OF SECTION 50C (2) OF THE ACT. THE ASSESSEE ALSO PLACES RELIANCE ON THE ORDER DATE D 03.03.2009 BEARING REFERENCE CIT (A)XXI/DCIT-21(1)/ IT- 359/06-07 PASSED BY THE CIT(A)-XXI WHEREIN RESPECT OF THE SAME TRANSACTION IT HAS BEEN HELD THAT THE PROVISIONS OF SECTION 50C ARE NOT APPLICABLE UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE. THE SAME WAS PASSED WHEN PROTECTIVE ASSESSMENT WAS MADE IN CASE OF JVPD ASSOCIATION. IT MAY BE NOTED THAT THE DEPARTMENT HAS NOT GONE IN FURTHER APPEAL AGAINST THE SAID ORDER OF THE CIT(A) BUT NOT ON THE ISSUE OF APPLICABILITY OF THE PROVIS ION OF SECTION 50C; (COPY OF ITAT ORDER IN ITA 3132/MUM. 2 009- 10 ENCLOSED). HENCE THE ASSESSEE STAND ON THE APPLICABILITY OF SCHEME 50C TO THE ABOVE TRANSACTIO NS HAS ALREADY BEEN ACCEPTED BY THE DEPARTMENT. 6. WE THEREFORE HUMBLY SUBMIT THAT PROCEEDINGS U/S 263 OF THE IT ACT BE DROPPED IN THE ABOVE MATTER. 3.4. LD. CIT CONSIDERED SUBMISSIONS OF THE ASSESSEE BUT WAS NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE AND IT WAS CO.OP. HOUSING SOCIETIES 10 HELD BY HIM THAT THE IMPUGNED ASSESSMENT ORDER PASS ED BY THE AO WAS ERRONEOUS AND PREJUDICIAL TO THE INTERES T OF THE REVENUE SINCE THE AO DID NOT APPLY THE PROVISIONS O F SECTION 50C OF THE ACT AND DID NOT EXAMINE THE IMPUGNED TRA NSACTION THROUGH PARAMETERS OF THESE PROVISIONS IN THIS CASE INSPITE OF THE FACT THAT CAPITAL GAINS HAD ARISEN TO THE ASSES SEE AS A CO- OWNER OF THE IMPUGNED PLOT OF LAND TRANSFERRED DURI NG THE YEAR. ACCORDINGLY THE ASSESSMENT ORDER U/S 143(3) R.W. SECTION 147 DATED 29.12.2011 PASSED BY THE AO WAS S ET ASIDE U/S 263 OF THE ACT AND MATTER WAS SENT BACK TO THE FILE OF THE AO FOR DECIDING THE ISSUE AFRESH AFTER DUE VERIFICA TION AND AFTER GIVING ADEQUATE OPPORTUNITY OF HEARING TO THE ASSES SEE BEFORE THE FINALIZING FRESH ASSESSMENT. 3.5. BEING AGGRIEVED THE ASSESSEE HAS BROUGHT THIS MAT TER BEFORE THE TRIBUNAL BY FILING AN APPEAL AGAINST THE IMPUGNED ORDER PASSED U/S 263 BY THE CIT. DURING THE COURSE OF HEARING EXHAUSTIVE SUBMISSIONS WERE MADE BY MS. AR TI VISSANJI LD. COUNSEL APPEARING ON BEHALF OF THE FO LLOWING APPELLANTS: 1. THE VITHALNAGAR CO-OPERATIVE HOUSING SOCIETY LTD . 3656/MUM/2014 2. THE NUTAN LAXMI CO-OPERATIVE HOUSING SOCIETY LTD . 3655/MUM/2014 3. THE NAVYUG CO-OPERATIVE HOUSING SOCIETY LTD. 3655/MUM/2014 4. VALLABHNAGHAR CO-OPERATIVE HOUSING SOCIETY LTD. 3659/MUM/2014 5. THE SUVARNAGAR CO-OPERATIVE HOUSING SOCIETY LTD. 3658/MUM/2014 3.6. SIMILARLY DETAILED ARGUMENTS WERE MADE BY SHRI S. DIVATIA ON BEHALF OF M/S JAI HIND COOPERATIVE HOUSI NG SOCIETY CO.OP. HOUSING SOCIETIES 11 LTD. (ITA NO.2363/MUM/2014). ON THE OTHER HAND ARG UMENTS WERE MADE BY MR. G.M. DOSS (CIT-DR) ON BEHALF OF TH E REVENUE. THE ARGUMENTS MADE BY THE COUNSELS APPEARING ON BEH ALF OF THE APPELLANTS CAN BE SUMMARIZED AS UNDER: (I). IT HAS BEEN FIRSTLY ARGUED THAT IN THIS CASE THE IMPUGNED ASSESSMENT ORDER HAD MERGED INTO THE ORDER OF THE L D. CIT(A) AND THEREFORE APPLYING THE DOCTRINE OF MERGER LD. CIT HAD NO JURISDICTION FOR INVOKING PROVISIONS OF SECTION 263 . IT COULD NOT HAVE HELD THE ASSESSMENT ORDER TO BE ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFOR E IT COULD NOT HAVE BEEN SET ASIDE. IT HAS BEEN SUBMITTED THAT ISS UE OF SECTION 50C WAS INVOLVED BEFORE THE CIT(A) IN THE A PPELLATE PROCEEDINGS OF THE ASSOCIATION I.E. M/S JUHU VILE P ARLE DEVELOPMENT CO-OPERATIVE HOUSING ASSOCIATION LTD. WHEREIN IT WAS INTER-ALIA HELD THAT SECTION 50C WAS NOT APPLICABLE. IT WAS FURTHER CONTENDED THAT EVEN IN THE PROCEEDINGS BEFO RE THE AO THE QUESTION OF COMPUTATION OF CAPITAL GAIN WAS INV OLVED AND COMPLETE FACTS WERE THERE BEFORE THE AO. FURTHER W HEN THE ASSESSEE HAD FILED AN APPEAL BEFORE THE CONCERNED COMMISSIONER OF INCOME TAX-(APPEALS) AGAINST THE AS SESSMENT ORDER THE ISSUE OF COMPUTATION OF CAPITAL GAIN WAS OPEN BEFORE THE COMMISSIONER OF INCOME TAX-(APPEALS). IT WAS FU RTHER SUBMITTED THAT THE COMMISSIONER OF INCOME TAX-(APPE ALS) HAD POWER OF ENHANCEMENT AND THEREFORE EVEN IF NO GROU ND WAS RAISED WITH REGARD TO SECTION 50C BUT STILL THE IS SUE WAS WELL WITHIN THE JURISDICTION OF THE COMMISSIONER OF INCO ME TAX- (APPEALS). RELIANCE IN THIS REGARD WAS PLACED ON TH E JUDGMENTS CO.OP. HOUSING SOCIETIES 12 IN THE CASE OF CIT VS. NIRMA CHEMICALS WORKS P. LTD . 309 ITR 67 (GUJARAT HIGH COURT) MS. PUSHPA DEVI TIBREWALA V. ITO (HYD)( ORDER DATED 7 TH JUNE 2013) SONAL GARMENTS VS. JCIT 95 ITD 363(ITAT MUMBAI) AND MERICO INDUSTRIES LTD. VS. ACIT 115 TTJ 497(ITAT MUMBAI). (II). IT HAS BEEN ARGUED BY THE LD. COUNSEL THAT SE CTION 50C IS NOT APPLICABLE UPON THE IMPUGNED TRANSACTION. IT WA S SUBMITTED THAT IN THIS CASE POSSESSION WAS HANDED O VER ON 29 TH JULY 1975 TO THE PUBLIC WORKS AND HOUSING DEPART MENT THE GOVERNMENT OF MAHARASHTRA AND THEREAFTER A MEMORANDUM OF UNDERSTANDING DATED 25.01.2000 WAS EN TERED BETWEEN THE 14 CO-OPERATIVE SOCIETIES JVPD CO-OPER ATIVE HOUSING SOCIETIES ASSOCIATION LTD. AND VASUNDHARA C .S.H. LTD. (I.E. A SOCIETY OF IPS OFFICERS OF MAHARASHTRA ). IT WAS FURTHER STATED THAT PAYMENT WAS FULLY RECEIVED UP T O 11 TH FEBRUARY 2003 AND THEREFORE TRANSACTION WAS COMPL ETED BEFORE THE IMPUGNED FINANCIAL YEAR. UNDER THESE CIRCUMSTANCES THE CONVEYANCE DEED DATED 14.05.2003 BETWEEN AFORESAID 14 COOPERATIVE HOUSING SOCIETIES ASSOCIATION AND VASUNDHARA CHS LTD. WAS JUST A LEGA L FORMALITY FOR EXECUTING THE TRANSACTION IN THE IMPU GNED YEAR. IT WAS FURTHER SUBMITTED THAT IN ANY CASE THE AGREE MENT FOR SALE WAS DONE ON 25.01.2000 AND THEREFORE SALES CONSIDERATION CANNOT BE DEEMED AS PER RATES PREVAIL ING ON 14.05.2003. THE LD. COUNSEL(S) PLACED RELIANCE IN T HEIR SUPPORT UPON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF SHINDHU MEHAR 236 TAXMAN 561. RELIAN CE WAS ALSO PLACED UPON THE DECISION OF HYDERABAD BENCH IN THE CASE CO.OP. HOUSING SOCIETIES 13 OF SHRI MOHD. IMRAN BAIG ORDER DATED 27.11.2015 (IT A NO.194/HYD/2014 AND OTHERS) AND SMT. D. ANITHA V. I TO 55 TAXMANN.COM 538(HYD). (III). IT HAS BEEN ALSO ARGUED BY THE LD. COUNSELS ON BEHALF OF THE ASSESSEE THAT IN THIS CASE LD. CIT HAS PASSED T HE IMPUGNED REVISION ORDER WITHOUT ANY INDEPENDENT APP LICATION OF MIND. IT WAS SUBMITTED THAT THE REVISION ORDER H AS BEEN PASSED BY THE LD. CIT WITHOUT GIVING ANY REASONING AND IT IS VERY BRIEF AND CRYPTIC AND THEREFORE IT IS ILLEGAL IN THE EYES OF LAW. IN NUTSHELL LD. COUNSELS VEHEMENTLY SUBMITTED THAT ORDER PASSED U/S 263 IS NOT VALID IN THE EYES OF LA W AND THEREFORE IT SHOULD BE QUASHED. 3.7. PER CONTRA LD. CIT-DR APPEARING ON BEHALF OF THE REVENUE VEHEMENTLY ASSAILED ALL THE ARGUMENTS OF T HE COUNSELS OF THE ASSESSEE AND HIS ARGUMENTS ARE BRIE FED HEREUNDER: (I) WITH REGARD TO THE ARGUMENT OF THE ASSESSEE ON THE MERGER OF THE ORIGINAL ASSESSMENT ORDER WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX-(APPEALS) BY APPLYING D OCTRINE OF MERGER IT HAS BEEN SUBMITTED BY THE LD. CIT-DR TH AT THE SAID DOCTRINE IS NOT APPLICABLE HERE UPON THE GIVEN FACT S OF THIS CASE. IT WAS SUBMITTED THAT DURING THE COURSE OF AS SESSMENT PROCEEDINGS NO ISSUE WITH REGARD TO APPLICABILITY OF SECTION 50C WAS EVER RAISED BY THE AO AT ALL. THE LIMITED I SSUE RAISED IN THE ASSESSMENT ORDER WAS WITH REGARD TO DETERMIN ATION OF COST OF THE IMPUGNED PROPERTY. THE SOCIETY HAD CLAI MED TOTAL COST OF ACQUISITION OF THE IMPUGNED PLOT OF LAND AT RS.60 01 030/- WHEREAS THE AO DETERMINED THE SAME AT NIL CO.OP. HOUSING SOCIETIES 14 VALUE. THUS WHEN ASSESSEE FILED APPEAL BEFORE THE CONCERNED COMMISSIONER OF INCOME TAX-(APPEALS) IT WAS AGGRIE VED ONLY WITH REGARD TO ASPECT OF TAKING COST OF ACQUISITION AT NIL AND THEREFORE ONLY THIS ISSUE WAS RAISED BEFORE THE COM MISSIONER OF INCOME TAX-(APPEALS). OUR ATTENTION HAS BEEN DRA WN ON THE GROUNDS RAISED BEFORE THE COMMISSIONER OF INCOME TA X- (APPEALS) IN THE FIRST APPEAL FILED BY THE ASSESSEE AGAINST THE ORIGINAL ASSESSMENT ORDER DATED 29.12.2011 AS WELL AS STATEMENT OF FACTS THEREIN WITH A VIEW OF EMPHASIZE UPON THE POINT THAT NO OTHER ISSUE WAS RAISED BEFORE THE COM MISSIONER OF INCOME TAX-(APPEALS). OUR ATTENTION WAS ALSO DRA WN UPON THE APPEAL ORDER PASSED BY THE COMMISSIONER OF INCO ME TAX- (APPEALS) TO SHOW THAT NO SUCH ISSUE HAS BEEN DEALT BY HIM. THUS IT WAS ARGUED THAT NEITHER THE ISSUE WAS RAIS ED IN THE ASSESSMENT PROCEEDINGS NOR IN THE ASSESSMENT ORDER NOR IN THE GROUNDS OF APPEAL NOR WRITTEN SUBMISSIONS FILED BY THE ASSESSEE AND NOR EVEN BY THE COMMISSIONER OF INCOME TAX- (APPEALS) IN THE APPEAL ORDER PASSED BY HIM. THUS THE ISSUE HAS NOT BEEN ADJUDICATED AT ALL BY THE COMMISSIONER OF INCOME TAX-(APPEALS) AND THEREFORE THERE CANNOT BE MERGER OF ASSESSMENT ORDER WITH THE ORDER OF THE COMMISSIONER OF INCOME TAX-(APPEALS) QUA THIS ASPECT. OUR ATTENTION WAS DRAWN ON EXPLANATION 1(C) OF SECTION 263 TO ARGUE T HAT IT WAS WELL WITHIN THE POWERS OF THE CIT TO PASS REVISION ORDER ON SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN THE APPEAL BY THE COMMISSIONER OF INCOME TAX-(APPEALS). RELIANCE WAS PLACED IN THIS REGARD UPON THE JUDGMENT OF HON BLE SUPREME COURT IN THE CASE OF CIT V. SHRI ARBUDA MIL LS LTD. CO.OP. HOUSING SOCIETIES 15 231 ITR 50 (SC) WHICH WAS SUBSEQUENTLY FOLLOWED BY THE SUPREME COURT IN ANOTHER JUDGMENT IN THE CASE OF CI T V. JAY KUMAR B. PATIL 236 ITR 469. THE RELIANCE WAS ALSO P LACED ON THE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE MEHRA BORTHERS V. CIT ORDER DATED 11.03.2015 IN WRIT TAX NO. 185 OF 2015 FOR THE PROPOSITION THAT DOCTRINE OF MERGER CO ULD NOT HAVE BEEN APPLIED TO THAT PART OF ASSESSMENT ORDER WHICH WAS NOT SUBJECT MATTER OF APPEAL. IT WAS THUS ARGUED BY HIM THAT SINCE ASPECT OF APPLICATION OR EXAMINATION OF SECTI ON 50C HAD NEVER BEEN SUBJECT MATTER OF ASSESSMENT ORDER NOR O F APPEAL BEFORE THE COMMISSIONER OF INCOME TAX-(APPEALS) AND THEREFORE TO THIS EXTENT THE IMPUGNED ASSESSMENT ORDER WAS OPEN FOR REVISION BY LD. CIT AND HAS BEEN RIGHTLY D ONE SO. (II) WITH REGARD TO THE SECOND ARGUMENT OF THE LD. COUNSELS THAT SECTION 50C WAS NOT APPLICABLE IN THIS CASE AS TRANSFER HAD ALREADY TAKEN PLACE LD. CIT-DR DREW OUR ATTENT ION UPON THE ASSESSMENT ORDER TO SHOW THAT THE POSITION OF T AXABILITY OF CAPITAL GAIN ON TRANSFER OF PLOT OF LAND ARISING IN THE IMPUGNED YEAR HAS BEEN ACCEPTED BY THE ASSESSEE. THUS THE O NLY DISPUTE WAS WITH REGARD TO DETERMINATION OF COST OF ACQUISITION AND THEREFORE ASSESSEE IS NOT ALLOWED NOW TO TAKE U-TURN AT THIS STAGE. WITHOUT PREJUDICE TO THESE SU BMISSIONS LD. CIT-DR DREW OUR ATTENTION ON THE MEMORANDUM OF UNDERSTANDING DATED THE 25.01.2000 AND SUBMITTED TH AT IT WAS MERELY AN AGREEMENT TO SALE WHICH DID NOT GIVE RISE TO ANY TRANSFER OF THE IMPUGNED PROPERTY. IT WAS SUBMITTED THAT THIS AGREEMENT WAS ENTERED INTO FOR SALE OF IMPUGNED PLO T OF LAND SUBJECT TO FULFILLMENT OF VARIOUS CONDITIONS AS WER E NARRATED IN CO.OP. HOUSING SOCIETIES 16 DETAIL IN THE SAID AGREEMENT. OUR ATTENTION WAS DRA WN MORE SPECIFICALLY UPON CERTAIN CLAUSES OF THE SAID MOU WHEREIN NUMEROUS CONDITIONS HAVE BEEN DESCRIBED. IT WAS SUB MITTED THAT IT WAS CLEARLY STIPULATED IN THE SAID AGREEMEN T THAT TRANSFER OF THE IMPUGNED PLOT OF LAND SHALL TAKE PL ACE ONLY SUBJECT TO FULFILLMENT OF THESE CONDITIONS AS WELL AS PAYMENT OF TOTAL CONSIDERATION. IT WAS SUBMITTED THAT FULFILLM ENT OF THESE CONDITIONS WERE DEPENDENT UPON VARIOUS OTHER AGENCI ES AND THEREFORE UNLESS THESE CONDITIONS WERE FULFILLED O R COMPLIED WITH THE ASSESSEE WAS NOT IN A POSITION TO AFFECT THE TRANSFER. IT WAS FURTHER SUBMITTED THAT THE PURCHASER WAS ALS O NOT IN A POSITION TO USE ON THIS PLOT IN ITS OWN RIGHT UNTIL AND UNLESS THESE CONDITIONS WERE FULFILLED AND TRANSFER WAS AF FECTED. IT WAS FURTHER SUBMITTED THAT IN CASE OF NON-FULFILLMENT O F THESE CONDITIONS THE AMOUNT OF SALE CONSIDERATION WAS TO BE REFUNDED. IT WAS FURTHER SUBMITTED THAT AS PER THE MOU (AGREEMENT) TOTAL AMOUNT OF CONSIDERATION AGREED W AS FOR RS.70 98 350/- WHEREAS IN THE CONVEYANCE DEED ENTER ED ON 14.05.2003 THE AMOUNT OF SALES CONSIDERATION WAS R EVISED TO A SUM OF RS.77 14 920/- WHICH CLEARLY SHOWS THAT TH ERE WAS SOME KIND OF REVISION OR RE-NEGOTIATION ON THE PRIC E. IT WAS THUS ARGUED THAT THE IMPUGNED MOU COULD NOT HAVE GI VEN EFFECT TO ANY TYPE OF TRANSFER OF TITLE AND THATS WHY THE ASSESSEE HAD DISCLOSED THE AMOUNT OF CAPITAL GAIN I N THE YEAR UNDER CONSIDERATION. UNDER THESE CIRCUMSTANCES PRO VISIONS OF SECTION 50C ARE MANDATORILY TO BE APPLIED WHILE ASS ESSING CORRECT AMOUNT OF CAPITAL GAIN TO BE TAXED IN THE H ANDS OF ASSESSEE. THE RELIANCE WAS ALSO PLACED ON THE JUDGM ENT OF CO.OP. HOUSING SOCIETIES 17 HONBLE SUPREME COURT IN THE CASE OF SANJIV LAL V. CIT 46 TAXMAN.COM 300 AS WELL AS PODDAR CEMENT (P) LTD. 22 6 ITR 625 (SC). IT WAS THUS SUMMARIZED THAT SECTION 50C HAS BEEN RIGHTLY DIRECTED TO BE INVOKED BY THE LD. CIT IN TH E YEAR UNDER CONSIDERATION FOR DETERMINATION OF SALES CONSIDERAT ION IN ACCORDANCE WITH LAW. (III) WITH REGARD TO THE ARGUMENT OF THE LD. COUNSE L FOR ALLEGED NON-APPLICATION OF MIND BY THE LD. CIT IT HAS BEEN SUBMITTED BY THE LD. CIT-DR THAT PERUSAL OF THE IMPUGNED REVI SION ORDER CLEARLY REVEALS THAT LD. CIT HAD CALLED FOR THE REC ORDS AND AFTER GOING THROUGH THE ASSESSMENT RECORDS AS WELL AS ORD ER U/S 143(3) SHOW CAUSE NOTICE U/S 263 WAS ISSUED BY LD CIT. IN RESPONSE OF THE SAME ASSESSEE HAD SUBMITTED ITS RE PLY WHICH WAS DULY CONSIDERED BY LD. CIT BEFORE REACHING ON T HE CONCLUSION THAT ASSESSMENT ORDER PASSED BY THE AO W AS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENU E ON THE GROUND THAT MANDATORY PROVISIONS OF SECTION 50C WER E OMITTED TO BE APPLIED BY THE AO WHILE COMPUTING TAXABLE AMO UNT OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE. IT WAS LASTLY SUBMITTED BY THE LD. CIT-DR THAT LD. CIT HAS MERELY DIRECTED THE AO TO EXAMINE THE PROVISIONS OF SECTION 50C AND THUS OBJECTIONS ON DETERMINATION OF CORRECT SALE VALUE R AISED BY THE ASSESSEE BEFORE THE TRIBUNAL CAN VERY WELL WE RAISE D WHILE THESE PROVISIONS ARE APPLIED BY AO/CIT(A). THUS IN PRINCIPLE THE PROVISIONS OF SECTION 50C MUST BE APPLIED AND T HE ISSUES REGARDING THE VALUE TO BE ADOPTED AND OTHER SIMILAR OBJECTIONS CAN VERY WELL BE ADJUDICATED WHILE APPLYING THE PRO VISIONS OF SECTION 50C. BUT IN ABSENCE OF ANY EXAMINATION OF APPLICATION CO.OP. HOUSING SOCIETIES 18 OF SECTION 50C THE ASSESSMENT ORDER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF REVENUE AND THEREFOR E REVISION ORDER PASSED BY THE LD. CIT WAS PERFECTLY VALID IN THE EYES OF LAW AND FACTS OF THIS CASE. 3.8. IN THE REJOINDER BOTH THE LD. COUNSELS REITERATED THEIR SUBMISSIONS AND ASSAILED THE ORDER OF LD. CIT. 3.9. WE HAVE GONE THROUGH THE ORDERS PASSED BY THE LOWE R AUTHORITIES AS WELL AS SUBMISSIONS MADE BY BOTH THE SIDES BEFORE US. FOR THE SAKE OF BREVITY AND TO AVOID REP ETITION WE ARE NOT AGAIN DISCUSSING HERE THE BACKGROUND AND FA CTS OF THE CASE WHICH WE HAVE ALREADY DISCUSSED IN THE INITIAL PART OF OUR ORDER. THUS PROCEEDING FURTHER WE SHALL DECIDE TH E ISSUES RAISED BY BOTH THE SIDES ON THE VALIDITY OF IMPUGNE D ORDER PASSED U/S 263 BY THE LD. CIT. THE PRIMARY ARGUMENT OF THE LD. COUNSELS APPEARING ON BEHALF OF THE ASSESSEE SO CIETY WAS THAT LD. CIT WAS PRECLUDED FROM EXERCISING HIS JURI SDICTION U/S 263 FOR THE REASON THAT IN VIEW OF DOCTRINE OF MER GER THE ASSESSMENT ORDER HAD GOT MERGED INTO ORDER OF THE COMMISSIONER OF INCOME TAX-(APPEALS) ON THE ASPECT OF TAXABILITY OF CAPITAL GAINS EARNED ON TRANSFER OF I MPUGNED PLOT OF LAND. WE HAVE EXAMINED THIS ARGUMENT VERY CAREFU LLY. THE BRIEF FACTS IN THIS REGARD ARE THAT IN CONSEQUENCE TO THE ORDER PASSED BY THE TRIBUNAL IN THE CASE OF M/S THE JUHU VILE PARLE DEVELOPMENT COOPERATIVE HOUSING ASSOCIATION L TD DT 4 TH NOVEMBER 2010 IN ITA NO 3132/M/2009 THE AO REOPENED/OPENED THE ASSESSMENT OF THESE 14 SOCIETIE S WITH A VIEW TO BRING TO TAX THE AMOUNT OF CAPITAL G AINS IN CO.OP. HOUSING SOCIETIES 19 THE HANDS OF THESE SOCIETIES BY RECORDING FOLLOWING SET OF REASONS ON IDENTICAL BASIS: DURING THE COURSE OF ASSESSMENT IN THE CASE OF M/S JUHU VILE PARLE DEVELOPMENT CO OPERATIVE HOUSING ASSOCIATION LTD. FOR A Y 2004-05 AN AMOUNT OF RS.74 17 895/- WAS TAXED UNDER THE HEAD CAPITAL GAINS. M/S. JUHU VILE PARLE DEVELOPMENT CO OPERATIVE HOUSING ASSOCIATION LTD EXECUTED A DEED FOR TRANSFERRING PLOT NO. A/47 TO THE PROMOTERS OF VASUNDHARA CO. OP HOUSING SOCIETY FORMED BY MAHARASHTRA CADRE OF INDIAN POLICE SERVIC E. THE SAID PLOT WAS UNDER ACQUISITION BY THE GOVT. OF MAHARASHTRA AS THE SAME WAS RESERVED FOR POLICE QUARTERS. THEREFORE NEITHER THE ASSOCIATION NOR THE 14 SOCIETY MEMBERS WERE ABLE TO DEVELOP THE PLOT. THE PROPOSED SOCIETY ENTERED INTO A MOU ON 26.1.2000 WITH 14 SOCIETY MEMBERS INCLUDING THE ASSESSEE. THEREAFTER THE CONVEYANCE DEED WAS EXECUTED BETWEEN THE POLICE OFFICERS AND 14 SOCIETY MEMBERS ON 14.5.2003 RELEVANT TO A Y 2004-05 FOR A CONSIDERATION OF RS.77 14 920/- AND AN AMOUNT OF RS.74 17 695/- WAS CREDITED IN THE RATIO OF THE OWNERSHIP RIGHTS OF THE 14 SOCIETY MEMBERS IN ITS B OOKS OF ACCOUNT. AS THE ASSESSEE IS THE OWNER OF THE SAI D PLOT AND SHARE OF THE ASSESSEE AMOUNTING TO RS.5 93 424/- IS CREDITED TO ASSESSEES ACCOUNT THE SAME HAS ESCAPED ASSESSMENT FOR THE YEAR UNDER CONSIDERATION. THEREFORE I HAVE REASONS TO BELIEVE THAT THE AN AMOUNT OF RS.5 93 424/- HAS ESCAPED ASSESSMENT. 3.10. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSEE SUBMITTED FOLLOWING REPLY (TAKING A SAMPLE REPLY IN THE CASE OF M/S. VITHALNAGAR COOPERATIVE HOUSING SO CIETY LTD.): THE ASSESSMENT IN THE AFORESAID CASE IS PROPOSED T O BE MADE PURSUANT TO THE NOTICE ISSUED UNDER SECTION 14 8 DATED 28.03.2011. THE AFORESAID NOTICE HAS BEEN ISSUED PU RSUANT TO THE DECISIONS OF THE HON'BLE ITAT BENCH J' MUMBAI IN ITA NO.3232/MUM/2009 FOR A. Y. 2004-05 IN THE CASE OF A CIT CO.OP. HOUSING SOCIETIES 20 CIR.21(1) VS. JUHU VILE PARLE DEVELOPMENT HOUSING ASSOCIATION LTD. THE ISSUE IN THE ABOVE MATTER WAS PERTAINING TO THE ASSESSMENT OF THE CAPITAL GAINS O N SALE OF THE COMMON PLOT WHICH IS NOT THE SUBJECT MATTER OF ASS ESSMENT IN THE HANDS OF THE SOCIETY TO THE EXTENT OF ITS S HARE IN THE SAID POT. THE AREA OF THE LAND COMPRISING THE AGGRE GATE OF THE BUILDING PLOTS AND THE AREA OF THE COMMON AMENI TIES AND PUBLIC UTILITIES WERE CONVEYED TO THE SOCIETIES BY THE BOMBAY HOUSING BOARD VIDE INDENTURE DATED 261H DAY OF APRIL 1960. WE WOULD LIKE TO DRAW YOURKIND ATTENTIO N TO THE RECITAL AT PAGE NOS. 4 AND 5 OF THE INDENTURE CONVE YING THE SAID PLOT: AND WHEREAS ON THE BASIS OF THE TOTAL COST OF COMP LETING THE SCHEME ON THE LEFT BANK OF THE IRLA NALLA INCLU DING THE COST OF EARTH FILLING AND CONSTRUCTION FOR ROADS AND CAN ALIZATION THE COST PAYABLE BY EACH SOCIETY WORKS OUT TO ABOUT RS10.00 PER SQUARE YARD OF THE BUILDING PLOTS TO BE ALLOTTED TO EACH SOCIETY INCLUDING THE PROPORTIONATE COST OF ACQUISITION AND DEVELOPMENT OF COMMON AMENITY AND UTILITY PLOTS ROADS AND CANALIZATION AND WHEREAS ALL THE FOURTEEN SOCIE TIES HAVE PAID THE PROPORTIONATE COSTS PAYABLE BY THEM A MOUNTING IN ALL TO RS.60 01 030 WHICH IS THE TOTAL ESTIMATE COST OF ACQUISITION AND DEVELOPMENT OF THE WHOLE AREA (EMPH ASIS SUPPLIED). THE ASSESSEE PLACES RELIANCE ON THE SUPREME COURT' JUDGEMENT IN CASE OF B.C. SRINIVASA SHETTY 1981 128 ITR 294 AND HUMBLY SUBMITS THAT IF THE COST OF ACQUISITION OF THE ABOVE MENTIONED ASSET IS TAKEN AS 'NIL' THEN THE RE CEIPT OF MONEY IN THE HANDS OF THE ASSESSEES CAPITAL RECEIP T WITHOUT ANY COST AND THE SAME CANNOT BE TAXED AS LONG TERM CAPITAL GAINS.' 3.11. THEREAFTER THE AO CONCLUDED THE ASSESSMENT WITHOU T ACCEPTING AFORESAID SUBMISSIONS OF THE ASSESSEE WIT H REGARD TO ADOPTION OF THE COST AT RS.60 01 030/- AND ADOPTED COST AT NIL AND TAXED THE CAPITAL GAIN WORKED OUT ACCORDINGLY. IN THE ASSESSMENT ORDER DATED 29.12.2011 PASSED U/S 143(3) R.W. SECTION 147 WHICH SUBSEQUENTLY BECAME SUBJECT MATT ER OF REVISIONS IN THE IMPUGNED REVISIONS ORDER PASSED BY THE LD. CIT U/S 263 THE ASSESSEE HAD FILED AN APPEAL AGAIN ST THE CO.OP. HOUSING SOCIETIES 21 AFORESAID ASSESSMENT ORDER BEFORE THE CONCERNED COMMISSIONER OF INCOME TAX-(APPEALS) WHEREIN FOLLOW ING GROUNDS WERE TAKEN: (1) THE LEARNED ASSESSING OFFICER ERRED IN TAKING THE COST OF ACQUISITION OF THE COMMON PLOT SOLD DURING THE Y EAR AS RS. NIL AND IN CONSEQUENTLY CALCULATING LONG TERM C APITAL GAIN OF RS.7 41 789/- INSTEAD OF LOSS OF RS.5 92 34 5/- AS CLAIMED BY THE ASSESSEE. (2) IN ALTERNATIVE AND WITHOUT PREJUDICE THE LEARNE D ASSESSING OFFICER ERRED IN CHARGING TO TAX RS.7 41 789/- AS LONG TERM CAPITAL GAINS EVEN THOUGH THE COST OF ACQ UISITION WAS TAKEN AS NIL. 3.12. THEREAFTER THE SAID COMMISSIONER OF INCOME TAX- (APPEALS) CONSIDERED THE SUBMISSIONS OF THE ASSESSE E WITH RESPECT TO DETERMINING APPROPRIATE AMOUNT OF COST A ND ACCEPTED THE SUBMISSIONS OF THE ASSESSEE AND DELETE D THE ADDITION MADE BY THE AO VIDE HIS APPEAL ORDER 27.1 1.2012 WITH FOLLOWING OBSERVATIONS: 3.3. I HAVE CONSIDERED THE ARGUMENTS OF LD. AR AND PERUSED THE ASSESSMENT ORDER. THE INDENTURE DATED 26.4. 1960 BY WHICH ALL THE 14 SOCIETIES WERE ALLOTTED PLOT BY BOMBAY HOUSING BOARD ON PAYMENT OF CERTAIN AMOUNTS BY ALL THE 14 SOCIETIES WAS AVAI LABLE BEFORE THE AO. IT WAS AS PER THE SAID INDENTURE DAT ED 26/4/1960 THAT THE OWNERSHIP OF THE PLOT TO ALL 14 SOCIETIES WAS CONFERRED. THE SAID INDENTURE IS A REGISTERED AGREEMENT WHICH IS A VALID EVIDENCE INDICATING THE OWNERSHIP BY 14 SOCIETIES. EVEN IN T HE CONVEYANCE DEED DATED 14/5/2003 THERE IS MENTION O F THE INDENTURE DATED 26/4/1960 BY WHICH THE 14 SOCIETIES HAD BECOME THE OWNER OF THE SAID PLOT. HE NCE THE CLAIM OF THE AO THAT THERE WAS NO EVIDENCE OF P AYMENT OF COST TO ACQUIRE THE OWNERSHIP IS MISPLACED. ON PAGE 3 OF THE SAID INDENTURE DATED 26/4/1960 IT IS CLEARLY MENTIONED THAT THE SAID PLOT WAS ALLOTTED T O COOPERATIVE HOUSING SOCIETIES WHICH HAD AGREED TO P AY THE COST OF ACQUISITION AND DEVELOPMENT OF THE SAID LAND AND THE CONVEYANCE WAS EXECUTED IN FAVOUR OF SOCIETIES CO.OP. HOUSING SOCIETIES 22 SUBJECT TO PAYMENT OF BALANCE COST AND LIABILITIES. PAGE 4 & 5 OF THE SAID INDENTURE READS AS UNDER: 'AND WHEREAS ON THE BASIS OF THE TOTAL COST OF COMPLETING THE SCHEME ON THE LEFT BANK OF THE IRLA NALLA INCLUDING THE COST OF EARTH FILLING AND CONSTRUCTION OF ROADS AND CANALIZATION THE COST PAYABLE BY EACH SOCIETY WORKS OUT TO ABOUT RS.10.00 PER SQUARE ! A1D OF THE BUILDING PLOTS TO BE ALLOTTED TO EACH SOCIETY INCLUDING THE PROPORTIONATE COST OF ACQUISITION AND DEVELOPMENT OF COMMON AMENITY AND UTILITY PLOTS ROADS AND CANALIZATION AND. WHEREAS ALL THE FOURTEEN SOCIETIES HAVE PAID THE PROPORTIONATE COSTS PAYABLE BY THEM AMOUNTING IN ALL TO RS.60 01 030.00 WHICH IS THE TOTAL ESTIMATED COST OF ACQUISITION AND DEVELOPMENT OF THE WHOLE AREA'. (EMPHASIS SUPPLIED) THIS CLEARLY SHOWS THAT THE SOCIETIES WERE ALLOTTED THE LAND IN 1960 ON PAYMENT OF COST AND HENCE THE COST OF ACQUISITION CANNOT BE NIL. IT DOES NOT MAKE ANY DIF FERENCE WHETHER THE COST IS PAID TOWARDS THE EARTH FILLING OR ROAD OR CANALIZATION WORK IF THE ALLOTMENT OF PLOT IS I N LIEU OF PAYMENT OF SUCH CHARGES BY 14 SOCIETIES AS EVIDENT FROM THE INDENTURE DATED 26/4/1960. ONCE THE PROPERTY HAS BEEN ACQUIRED PRIOR TO 1/4/1981 FOR A COST THEN AS PER THE PROVISIONS OF SECTION 48 & 49 THE COST OF ACQUISITION SHALL BE TAKEN TO BE INDEXED COST OF THE FMV AS ON 1/4/1981. THE VALUATION REPORT OF THE REGISTE RED VALUER DATED 26/7/2006 VA1UING THE TOTAL COMMON PLO T AT RS 28 81 500 WAS BEFORE THE AO BUT THE AO HAS NOT POINTED OUT ANY MISTAKE OR OR DISCREPANCY IN THE SA ID VALUATION REPORT. IN FACT WHILE DELETING THE ADDITI ON OF CAPITAL GAINS FOR AY 2004-05 ON PROTECTIVE BASIS IN HANDS OF JVPD ASSOCIATION THE THEN CIT(A) ALSO BA SED ON THE SAME VALUATION REPORT HAD HELD THAT THE FMV AT RS 28 81 800 AS ON 1/4/1981 WAS REQUIRED TO BE ALLOWED AFTER INDEXATION. SINCE THE ITAT MUMBAI HAS HELD THAT THE CAPITAL GAINS IF ANY ON TRANSFER OF THE COMMON PLO T IS ASSESSABLE IN HANDS OF 14 SOCIETIES AND NOT IN HAND S OF JVPD ASSOCIATION THEN IT IS LOGICAL TO APPLY TH E SAME COST IN HANDS OF THE 14 SOCIETIES ALSO IN THE RATIO OF THEIR CO.OP. HOUSING SOCIETIES 23 RESPECTIVE SHARES. HENCE THE ACTION OF THE AO IN TREATING THE COST AS NIL IS ERRONEOUS AND NOT AS PE R LAW AND FACTS. IF THE DEDUCTION OF INDEXED COST AS PER REGISTERED VALUER'S REPORT DATED 26/7/2006 IS ALLOW ED FOR THE SHARE OF APPELLANT IT WILL RESULT IN LONG TERM CAPITAL LOSS. ACCORDINGLY THE ADDITION OF LTCG OF RS 7 41 789 MADE BY AO IS DIRECTED TO BE DELETED. IN THE RESULT APPEAL IS ALLOWED. 3.13 . THUS PERUSAL OF THE REASONS RECORDED BY THE AO REPLY OF THE ASSESSEE FILED IN THE COURSE OF ASSESSMENT P ROCEEDINGS ASSESSMENT ORDER PASSED BY THE AO GROUNDS OF APPEA L FILED BY THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME TAX- (APPEALS) SUBMISSIONS MADE BEFORE THE CIT(A) AS WE LL AS APPEAL ORDER PASSED BY THE LD. CIT(A) REVEAL THAT I SSUE WITH REGARD TO SECTION 50C HAD NEVER BEEN SUBJECT MATTER OF DISCUSSION. IT HAS BEEN FAIRLY ADMITTED BY BOTH THE PARTIES BEFORE US THAT NO QUERY WHATSOEVER WITH REGARD TO A PPLICATION OF SECTION 50C WAS EVER RAISED BY THE AO IN ANY MAN NER AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS ISSUE WITH REGARD TO APPLICATION OF SECTION 50C NEVER CAME UP FOR DISCUSSION. SIMILARLY DURING THE COURSE OF APPELLA TE PROCEEDINGS BEFORE THE CIT(A) ALSO NO INQUIRY WAS MADE WITH RESPECT TO APPLICATION OR EXAMINATION OF PROVISIONS OF SECTION 50C. THE LIMITED ASPECT INVOLVED IN THE PROCEEDINGS BEFORE THE LD. CIT(A) WAS CONFINED TO DETERMINATION OF COST OF ACQUISITION AND COMPUTATION OF LONG TERM CAPITAL GAIN ACCORDIN GLY. THUS DETERMINATION OF THE SALE CONSIDERATION IN THE LIGH T OF MANDATORY PROVISIONS OF SECTION 50C HAS NEVER BEEN SUBJECT MATTER OF INQUIRY OR DISCUSSION. THUS ADMITTED FAC T ON RECORD ARE THAT ISSUE WITH REGARD TO APPLICATION OF SECTIO N 50C AND CO.OP. HOUSING SOCIETIES 24 ADOPTION OF APPROPRIATE AMOUNT OF SALES CONSIDERATI ON AS PER LAW HAD NEITHER BEEN RAISED NOR ADJUDICATED BY THE COMMISSIONER OF INCOME TAX-(APPEALS). 3.14. THUS IN VIEW OF THE AFORESAID FACT WE SHALL NOW DEAL WITH THE ARGUMENTS MADE BY BOTH THE SIDES. WE SHALL FIRST LIKE TO REFER TO EXPLANATION 1(C) OF SECTION 263(1) WHIC H READS AS UNDER: (C) WHERE ANY ORDER REFERRED TO IN THIS SUB-SECTIO N AND PASSED BY THE ASSESSING OFFICER HAD BEEN THE SUBJEC T MATTER OF ANY APPEAL FILED ON OR BEFORE OR AFTER TH E 1 ST DAY OF JUNE 1988 THE POWERS OF THE PRINCIPAL COMMISSI ONER OR COMMISSIONER UNDER THIS SUB-SECTION SHALL EXTEND AN D SHALL BE DEEMED ALWAYS TO HAVE EXTENDED TO SUCH MAT TERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN SUCH APPE AL . 3.15 . THE PERUSAL OF THE AFORESAID EXPLANATION CLEARLY REVEALS THAT THESE PROVISIONS ARE WIDELY WORDED AND CLEARLY LAY DOWN THAT POWER OF THE COMMISSIONER OF INCOME TAX TO REV ISE AN ASSESSMENT ORDER SHALL CONTINUE TO EXTEND IN ALL TH OSE MATTERS WHICH HAVE NOT BEEN CONSIDERED AND DECIDED IN ANY A PPEAL. IT IS NOT DISPUTED BY ANY PARTY THAT MATTER PERTAINING TO APPLICATION OF SECTION 50C HAS NEITHER BEEN CONSIDE RED NOR DECIDED IN APPEAL BY THE COMMISSIONER OF INCOME TAX - (APPEALS). THUS AS PER PLAIN PROVISIONS OF LAW LD . CIT HAD REQUISITE POWER UNDER THE LAW TO CONSIDER AND EXAMI NE APPLICATION OF SECTION 50C FOR REVISION U/S 263 SI NCE THE DOCTRINE OF MERGER WOULD NOT APPLY UPON SUCH MATT ER. HOWEVER LD. COUNSEL HAS PLACED RELIANCE UPON THE J UDGMENT OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT V. NIRMA CO.OP. HOUSING SOCIETIES 25 INDUSTRIES CHEMICAL WORK (P) LTD. (SUPRA) 309 ITR 6 7. WE HAVE GONE THROUGH THE SAID JUDGMENT. IN THE SAID CASE T HE ISSUE ARISEN WAS WITH RESPECT TO ALLOWBILITY OF DEDUCTION U/S 80I. IT WAS CONTENDED BY THE SAID ASSESSEE THAT ISSUE OF AL LOWBILITY U/S 80I WAS CONSIDERED BY THE AO AND THE CIT(A) HAD GIVEN PART RELIEF TO THE ASSESSEE AND THEREFORE THE ISSU E OF ALLOWBILITY OF DEDUCTION U/S 80I WAS SUBJECT MATTER OF APPEAL A ND THEREFORE DOCTRINE OF MERGER APPLIED UPON THE ASSE SSMENT ORDER. UNDER THESE PECULIAR FACTS OF THE SAID CASE HONBLE HIGH COURT WAS PLEASED TO HOLD THAT ASSESSMENT ORDE R ON THIS ISSUE WAS NOT OPEN FOR REVISION BY THE CIT SINCE TH E CIT(A) HAD EXAMINED AND ADJUDICATED THE ISSUE OF DEDUCTION U/S 80I. SIMILARLY IN THE OTHER JUDGMENT OF SONAL GARMENTS (SUPRA) THE ISSUE INVOLVED WAS THAT OF COMPUTATION OF DEDUC TION U/S 80HHC AND IT WAS HELD BY THE HONBLE BENCH THAT SIN CE THIS ISSUE WAS SUBJECT MATTER OF CONSIDERATION BEFORE TH E CIT(A) THEREFORE IT COULD NOT BE SUBJECT MATTER OF REVISI ON U/S 263. SIMILAR FACTS WERE INVOLVED IN THE CASE OF MERICO I NDUSTRIES LTD. (SUPRA) WHERE THE SUBJECT MATTER UNDER CONSIDE RATION WAS ABOUT ALLOWBILITY OF DEDUCTION U/S 80IB. THUS THES E JUDGMENTS HAVE DIFFERENT FACTUAL SITUATIONS. RELIAN CE WAS ALSO PLACED BY THE LD. COUNSEL ON THE DECISION OF HYDERA BAD BENCH IN THE CASE OF MS. PUSHPA DEVI TIBREWALA. WE HAVE G ONE THROUGH THIS JUDGMENT. IT IS NOTED THAT THE ISSUE U NDER CONSIDERATION IN THE SAID CASE WAS WITH REGARD TO DETERMINATION OF NATURE OF CAPITAL GAINS. IT WAS OB SERVED BY THE BENCH WHILE ANALYZING THE FACTS OF THE SAID CAS E THAT THE WHOLE ISSUE OF CAPITAL GAIN ARISING OUT OF DEVELOPM ENT CO.OP. HOUSING SOCIETIES 26 AGREEMENT AS WELL AS SALE INVOKING OF PLOT WAS NOT ONLY CONSIDERED BY THE AO WHILE COMPLETING THE ASSESSMEN T U/S 143(3) OF THE ACT BUT WAS ALSO SUBJECT MATTER OF A PPEAL BEFORE THE CIT(A) AND IT WAS QUITE EVIDENT FROM THE ASSESS MENT ORDER PASSED THAT THE AO HAD NOT ONLY INQUIRED INTO THE I SSUE AND APPLIED HIS MIND TO THE FACTS AND MATERIALS ON RECO RD BUT ALSO DEALT WITH THE ISSUE OF CAPITAL GAIN IN THE ASSESSM ENT ORDER. IN VIEW OF THE TOTALITY OF THE FACTS IT WAS HELD BY T HE BENCH THAT WHOLE ISSUE OF CAPITAL GAIN WAS SUBJECT MATTER OF A PPEAL BEFORE THE CIT(A) HE HAD DECIDED THE ISSUE MUCH PRIOR TO I SSUANCE OF NOTICE U/S 263 OF THE ACT. THUS FACTS OF THE SAID CASE ARE NOT COMPARABLE WITH THE FACTS OF THE CASE BEFORE US. 3.16. ON THE OTHER HAND WE FIND THAT JUDGMENTS RELIED U PON BY LD. CIT-DR APPEAR TO BE APPLICABLE ON THE FACTS OF THIS CASE. HE RELIED UPON HEAVILY ON THE JUDGMENT OF HO NBLE SUPREME COURT IN THE CASE OF CIT V. SHRI ARBUDA MIL LS LTD. 231 ITR 50 WHEREIN IT WAS HELD THAT POWERS U/S 263 OF THE ACT SHALL EXTEND TO SUCH MATTERS AS HAD NOT BEEN C ONSIDERED AND DECIDED IN ANY APPEAL. HE ALSO DREW OUR ATTENTI ON UPON THE DECISION OF HONBLE ANDHRA PRADESH HIGH COURT I N THE CASE OF CIT V. NEW SRINIVASA CONSTRUCTION CO. 236 ITR 50 3 WHEREIN FOLLOWING THE AFORESAID JUDGMENT OF HONBLE SUPREME COURT HONBLE ANDHRA PRADESH HIGH COURT LAID DOWN THE PRI NCIPLE THAT THE UNTOUCHED PART OF THE ASSESSMENT ORDER WH ICH DID NOT FALL FOR CONSIDERATION BEFORE THE CIT(A) WAS S TILL OPEN FOR REVISION U/S 263 OF THE ACT BEFORE THE CIT. 3.17. UNDER THESE CIRCUMSTANCES AND FACTS OF THE CASE BE FORE CO.OP. HOUSING SOCIETIES 27 US WE FIND FORCE IN THE ARGUMENT OF LD. CIT-DR THA T IN THIS CASE SECTION 50C HAS NOT BEEN TOUCHED AT ALL BY THE AO AND THEREFORE IT WAS NOT SUBJECT MATTER OF APPEAL BEFOR E THE CIT(A). THOUGH THE CIT(A) HAS CO-TERMINUS POWERS WITH THE AO BUT UNLESS AND UNTIL AN ISSUE IS TOUCHED EITHER BY THE AO OR BY THE CIT(A) IT REMAINS OPEN FOR REVISION U/S 263 BY THE CIT SUBJECT TO THE COMPLIANCE OF OTHER CONDITIONS OF SE CTION 263. THE LAW ON THIS ISSUE HAS BEEN PROPERLY EXPLAINED B Y HONBLE SUPREME COURT IN AT LEAST TWO JUDGMENTS AS STATED E ARLIER ALSO. IN THE CASE OF CIT V. SHRI ARBUDA MILLS LTD.( SUPRA) HONBLE SUPREME COURT TOOK NOTE OF EXPLANATION 1(C) TO SECTION 263(1) AND HELD THAT THE POWERS U/S 263 OF THE COMM ISSIONER SHALL EXTEND AND SHALL BE DEEMED TO ALWAYS HAVE EXT ENDED TO SUCH MATTERS AS HAD NOT BEEN CONSIDERED AND DECIDED IN AN APPEAL. THIS JUDGMENT WAS GIVEN BY THE BENCH COMPRI SING OF THREE HONBLE JUDGES HAD COME UP AGAIN FOR CONSIDER ATION BEFORE THE HONBLE SUPREME COURT IN THE CASE OF CIT V. JAYKUMAR B. PATIL WHEREIN THE REVENUE HAD SOUGHT TH E REFERENCE OF FOLLOWING TWO QUESTIONS BEFORE HONBLE SUPREME COURT: (1) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCE S OF THE CASE THE TRIBUNAL WAS RIGHT IN LAW IN HOLDING THAT THE COMMISSIONER OF INCOME TAX HAD NO JURISDICTION AND POWERS TO INITIATE PROCEEDINGS UNDER SECTION 263 OF THE INCOME TAX ACT 1961 IN RESPECT OF ISSUES NOT TOUCH ED BY THE COMMISSIONER OF INCOME TAX (APPEALS) IN THIS AP PELLATE ORDER? (2) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE TRIBUNAL WAS JUSTIFIED IN LAW IN HOLDING THAT NOT ONLY THE ISSUES DEALT WITH IN THE ASSESSMENT ORDER BUT ALSO THE ORDER ISSUES WERE MERGED IN THE COMMISSIONER OF INCOME TAX (APPEAL)S ORDER IGNORING THE PROVISIONS CO.OP. HOUSING SOCIETIES 28 CONTAINED IN CLAUSE (C) OF EXPLANATION TO SUB-SECTI ON (1) OF SECTION 263 OF THE INCOME TAX ACT 1961? 3.18. HONBLE SUPREME COURT AFTER CONSIDERING THESE TWO QUESTIONS HELD AS UNDER: NOTICE ON THE SPECIAL LEAVE PETITION HAS BEEN SERV ED UPON THE RESPONDENT BUT HE HAS NOT CHOSEN TO APPEAR. THE NOTICE STATED THAT THE MATTER MIGHT BE DISPOSED OF AT THE SPECIAL LEAVE PETITION STAGE IN VIEW OF THE JUDGMEN T OF THIS COURT DATED JANUARY 23 1996 IN TRC NO.11 OF 1983 CIT V. SHRI ARBUDA MILLS LTD. (1998) 231 ITR 50. THAT JUDGMENT COVERS THE TWO QUESTIONS THAT WERE SO UGHT TO BE RAISED THEY WERE QUESTIONS OF LAW AND THE HIG H COURT OUGHT TO HAVE CALLED FOR A REFERENCE THEREOF BUT HAVING REGARD TO THE FACT THAT THIS COURT HAS IN THE AFORE MENTIONED CASE SQUARELY DEALT THEREWITH WE SHALL DEEM THIS TO BE A REFERENCE OF THE QUESTIONS TO OURSELVES AND FOLLOW ING THE AFOREMENTIONED CASE ANSWER THE QUESTIONS THUS: IN THE NEGATIVE AND IN FAVOUR OF THE REVENUE. THE APPEAL IS ALLOWED ACCORDINGLY WITH NO ORDER AS TO COSTS. 3.19 . IT MAY BE NOTED FROM THE PERUSAL OF ABOVE JUDGMEN T OF HONBLE SUPREME COURT THAT THE RATIO DECIDENDI IN THE CASE OF SHRI ARBUDA MILLS LTD (SUPRA) HAS BEEN FOLLOWED AND THESE QUESTIONS HAVE BEEN DECIDED IN FAVOUR OF THE REVENU E. IN OTHER WORDS HONBLE SUPREME COURT HELD THAT THE COMMISSI ONER OF INCOME TAX HAD JURISDICTION AND POWERS TO INITIATE PROCEEDINGS U/S 263 OF THE ACT IN RESPECT OF THE IS SUES NOT TOUCHED BY THE COMMISSIONER OF INCOME TAX-(APPEALS) IN HIS APPEAL ORDER IN VIEW OF EXPLANATION (C) TO SUB-SECT ION (1) OF SECTION 263 OF THE ACT. NO OTHER CONTRARY JUDGMENT OF HONBLE SUPREME COURT HAS BEEN BROUGHT TO OUR KNOWLEDGE BY THE ASSESSEE. IT IS FURTHER NOTED THAT LD. CIT-DR HAD R ELIED UPON A DETAILED JUDGMENT FROM HONBLE ALLAHABAD HIGH COURT IN THE CO.OP. HOUSING SOCIETIES 29 CASE OF M/S MEHRA BROTHERS VS CIT DATED 11 TH MARCH 2015 IN WRIT TAX NO. 185 OF 2015. WE HAVE GONE THROUGH THES E JUDGMENTS AND FIND THAT HONBLE HIGH COURT HAS DISC USSED ENTIRE LAW AVAILABLE UP TO DATE ON THE ISSUE OF JUR ISDICTION OF THE CIT TO MAKE REVISION U/S 263 OF THE ISSUES WHIC H WERE NOT SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). HONBL E HIGH COURT INTER-ALIA FOLLOWED THE JUDGMENT OF HONBLE SUPREME COURT IN THE CASE OF CIT V. ARBUDA MILLS LTD.(SUPRA) AS WELL AS CIT V. JAYKUMAR B. PATIL. HONBLE HIGH COURT ALSO DISCUSSE D AND FOLLOWED VARIOUS OTHER JUDGMENTS IN THIS CASE. THE FACTS WERE THAT THE ASSESSEE HAD CLAIMED DEDUCTION U/S 10B OF THE ACT. THE AO GRANTED THE BENEFIT OF DEDUCTION U/S 10B PAR TLY BY REDUCING AMOUNT OF EXPORT TURNOVER SHOWN BY THE ASS ESSEE AGAINST WHICH THE ASSESSEE FILED AN APPEAL BEFORE T HE CIT(A). SUBSEQUENTLY NOTICE U/S 263 WAS ISSUED BY THE LD. CIT QUESTIONING THE VERY ELIGIBILITY OF DEDUCTION U/S 1 0B IN THE IMPUGNED ASSESSMENT ORDER. THE ASSESSEE FILED WRIT AGAINST THE NOTICE U/S 263 BEFORE THE HONBLE HIGH COURT ON THE GROUND THAT IN VIEW OF DOCTRINE OF MERGER LD. C IT WAS OUSTED FROM ITS JURISDICTION TO INVOKE PROVISIONS O F SECTION 263 WITH REGARD TO CLAIM OF DEDUCTION U/S 10B. ON THE O THER HAND THE REVENUE PLEADED THAT IN THE GIVEN FACTS DOCTRI NE OF MERGER DID NOT APPLY BECAUSE THE ISSUE OF VERY APPLICABILITY/ELIGIBILITY OF DEDUCTION U/S 10B WAS NOT EXAMINED BY THE AO AND WAS THEREFORE NOT SUBJECT MA TTER OF APPEAL BEFORE THE LD. CIT(A). HONBLE HIGH COURT AF TER ANALYZING AFORESAID TWO JUDGMENTS OF HONBLE SUPREM E COURT OBSERVED AS UNDER: CO.OP. HOUSING SOCIETIES 30 29. IN EIMCO K.C.P. LTD. VS. C.I.T. [(2000) 242 IT R 659 (SC)] A QUESTION AROSE WHETHER COMMISSIONER CAN EX ERCISE POWER UNDER SECTION 263 OF ACT 1961 WHILE AGREEIN G WITH THE ORDER OF ASSESSMENT AGAINST WHICH APPEAL IS PEN DING BEFORE COMMISSIONER (A) INVOLVING THE POINT UPON W HICH NOTICE UNDER SECTION 263 IS ISSUED THE COURT UP HE LD THE NOTICE ISSUED UNDER SECTION 263 AND HELD THAT SUCH NOTICE CAN BE ISSUED. 30. THE DECISION IN CIT VS. ABUDA MILLS LTD. (SUPRA ) HAS ALSO BEEN FOLLOWED BY THIS COURT IN CIT VS. DHAMPUR SUGAR MILLS CO. LTD. [(2004) 270 ITR 576 (ALL)] CIT VS. INDO PERSIAN RUGS [(2008) 299 ITR 300 (ALL)] AND CIT VS. SPAN INTERNATIONAL [(2004) 270 ITR 538 (ALL)]. 31. IN CIT VS. AMRIT BANASPATI CO. LTD. [(2005) 277 ITR 559 (ALL)] COURT HELD THAT IN RESPECT OF ITEMS WHI CH HAVE NOT BEEN CONSIDERED IN APPEAL POWER OF COMMISSIONE R UNDER SECTION 263(1) SHALL BE EXTENDED TO THAT EXTE NT. 32. NOW LOOKING TO THE FACTS OF PRESENT CASE IN TH E LIGHT OF EXPOSITION OF LAW DISCUSSED ABOVE WE FIND THAT CLA IM OF ASSESSEE SEEKING EXEMPTION UNDER SECTION 10B OF ACT 1961 FOR ASSESSMENT YEAR 2011-12 WAS NOT DOUBTED B Y ASSESSING OFFICER. APPLICABILITY OF SECTION 10B OF ACT 1961 FOR ASSESSMENT YEAR 2011-12 AS CLAIMED BY ASSESSEE WAS ACCEPTED BY HIM. THUS THIS ASPECT WAS NOT IN A PPEAL AT ANY STAGE. IT IS ONLY ON THE QUESTION OF 'QUANTU M OF PROFIT' FOR WHICH EXEMPTION WAS CLAIMED THAT THE AP PEAL WAS FILED. THE ASSESSING OFFICER DISCUSSED THE MATT ER AND FOUND THAT INSTEAD OF RS.4 97 28 163.45 WHICH WAS CLAIMED BY ASSESSEE IT WAS ENTITLED TO EXEMPTION T O THE EXTENT OF RS.4 61 90 179.58 UNDER SECTION 10B AND T HERE IS TAXABLE INCOME OF RS.3537980/-. ON TAXABILITY OF AFORESAID AMOUNT ASSESSEE PREFERRED APPEAL AND ONL Y THAT ASPECT WAS CONSIDERED BY CIT(A) AS ALSO TRIBUN AL. AT NO STAGE THE ISSUE WHETHER ASSESSEE WAS ENTITLED T O CLAIM EXEMPTION UNDER SECTION 10B AT ALL OR NOT HAVING A LREADY EXHAUSTED BEYOND THE PERIOD OF EXEMPTION PERMISSIBL E UNDER SECTION 10B WAS NOT A SUBJECT MATTER OF CONSIDERATION BEFORE APPELLATE AUTHORITIES. HENCE THIS CO.OP. HOUSING SOCIETIES 31 QUESTION WAS OPEN TO BE LOOKED INTO BY COMMISSIONER . IN OUR VIEW HE HAS RIGHTLY EXERCISED POWER UNDER SECT ION 263 OF ACT 1961 BY TAKING AFORESAID VIEW WE FIND SUPPORT FROM A DECISION IN CIT VS. RATILAL BACHARILAL AND S ONS [(2006) 282 ITR 457 (BOM.)] WHEREIN ALMOST IN SIMI LAR CIRCUMSTANCES THE COURT SAID AS UNDER :- '........... AT THE INSTANCE OF THE ASSESSEE THE A LLOWANCE ON THE SUM OF RS. 5 63 350 COULD NOT HAVE BEEN THE SUB JECT MATTER OF APPEAL BEFORE THE COMMISSIONER OF INCOME- TAX (APPEALS) AS THE ASSESSEE WAS NEVER AGGRIEVED WITH THAT PART OF THE ORDER. IN OTHER WORDS SO FAR AS WEIGHT ED DEDUCTION UNDER SECTION 35B IN THE SUM OF RS. 5 63 350 IS CONCERNED THE SAME WAS NOT A SUBJECT MATTER OF THE APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEA LS). FACTUALLY IN THIS CASE THE DOCTRINE OF MERGER COU LD NOT HAVE BEEN APPLIED BY THE TRIBUNAL TO THAT PART OF T HE ORDER WHICH WAS NOT A SUBJECT MATTER OF APPEAL AS INDICAT ED SO AS TO EXCLUDE REVISIONAL JURISDICTION OF THE COMMIS SIONER OF INCOME-TAX UNDER SECTION 263 OF THE ACT.' 33. ON BEHALF OF PETITIONER RELIANCE HAS BEEN PLAC ED ON A DIVISION BENCH DECISION OF KARNATAKA HIGH COURT IN CIT VS. TATA ELXSI LTD. [2012 (247) CTR 334] BUT HAVIN G GONE THROUGH THE AFORESAID DECISION WE FIND NO APPLICAT ION THEREOF TO THE ISSUES WHICH WHICH WE ARE CONCERNED IN THIS WRIT PETITION. THE AFORESAID DECISION THEREFORE REN DERS NO HELP TO PETITIONER AT ALL. 34. IN THE CIRCUMSTANCES QUESTIONS NO. 1 AND 2 AR E ANSWERED AGAINST PETITIONER. THE QUESTION NO. 3 IS RETURNED IN FAVOUR OF REVENUE HOLDING THAT NOTICE ISSUED BY COMMISSIONER UNDER SECTION 263 OF ACT 1961 IMPUGNED IN THIS WRIT PETITION IS PERFECTLY VALID A ND IN ACCORDANCE TO LAW. 35. IN THE RESULT WRIT PETITION LACKS MERIT DISMISS ED. 3.20. FROM THE ABOVE ANALYSIS IT IS NOTED THAT HONBLE ALLAHABAD HIGH COURT TOOK NOTE OF JUDGMENT OF HONB LE BOMBAY HIGH COURT IN THE CASE OF CIT VS. RATILAL BA CHARILAL CO.OP. HOUSING SOCIETIES 32 AND SONS (SUPRA) WHEREIN IT WAS HELD THAT DOCTRIN E OF MERGER COULD NOT HAVE BEEN APPLIED BY THE TRIBUNAL TO THAT PART OF THE ORDER WHICH WAS NOT A SUBJECT MATTER OF APPEAL SO A S TO EXCLUDE REVISIONAL JURISDICTION OF THE COMMISSIONER OF INCOME TAX UNDER SECTION 263 OF THE ACT. IN THE GIVEN FAC TS OF THE SAID CASE IT WAS HELD THAT SINCE AT NO STAGE THE ISSUE WHETHER ASSESSEE WAS ENTITLED TO CLAIM EXEMPTION U/S 10B AT ALL OR NOT WAS SUBJECT MATTER OF CONSIDERATION BEFORE THE APPE LLATE AUTHORITIES THEREFORE THIS QUESTION WAS OPEN TO B E LOOKED INTO BY THE COMMISSIONER BECAUSE IT IS ONLY ON THE QUES TION OF QUANTUM OF PROFIT UPON WHICH EXEMPTION WAS CLAIME D AN APPEAL WAS FILED AND ONLY TO THAT EXTENT ALLOWBILIT Y OF EXEMPTION U/S 10B WAS SUBJECT MATTER OF APPEAL AND NOT IN ITS ENTIRETY. ON THE SIMILAR LINES JUDGMENT RELIED UPON BY LD. COUNSEL IN THE CASE OF CIT VS FORTELEZA DEVELOPERS 374 ITR 510 (BOM) IS NOT APPLICABLE ON THE FACTS OF THE CAS E BEFORE US. IN THE SAID CASE ALSO ISSUE INVOLVED BEFORE THE AO AS WELL AS LD CIT(A) WAS COMPUTATION OF AMOUNT OF DEDUCTION AL LOWABLE U/S 80IB. HONBLE HIGH COURT PRIMARILY AND SUBSTANT IALLY DECIDED THE CASE IN FAVOUR OF THE SAID ASSESSEE ON MERITS OF THE ISSUE. IT WAS OBSERVED BY HONBLE HIGH COURT THAT T HE AO HAD EXAMINED ALL THE CONDITIONS PRESCRIBED UNDER THE LA W BEFORE ALLOWING DEDUCTION U/S 80IB(10) AND THAT VIEW WAS T AKEN BY THE AO AFTER DELIBERATIONS AND THAT INTERPRETATION PLACED BY THE ASSESSEE WAS CORRECT ON FACTS AND LAW. IT WAS B RIEFLY OBSERVED WHILE CONCLUDING THE JUDGMENT IN ADDITION TO THE ABOVE OBSERVATIONS THAT ORDER PASSED U/S 263 WAS HE LD TO BE INVALID APPLYING DOCTRINE OF MERGER FOR THE REASON THAT ALL THE CO.OP. HOUSING SOCIETIES 33 FACETS OF THE DEDUCTION U/S 80IB WERE UNDER CONSIDE RATION BEFORE THE AO/CIT(A) AND THAT IS WHY ORDER OF AO HA D MERGED INTO ORDER OF CIT(A). BUT IN THE CASE BEFORE US I SSUE OF SECTION WAS 50C WAS NOT TOUCHED BY ANY OF THE AUTHORITIES. 3.21. TURNING BACK TO THE FACTS OF THE CASE BEFORE US I T IS NOTED THAT AO HAD TOUCHED THE ISSUE OF COMPUTATION OF CAPITAL GAINS WITH RESPECT TO ASCERTAINING THE COST OF ACQU ISITION OF THE PLOT OF LAND SOLD BY THE ASSESSEE ON WHICH CAPITAL GAIN WAS ASSESSED BY THE AO AGAINST WHICH THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE CONCERNED CIT(A) AND THUS ONLY T HIS ISSUE I.E. ASCERTAINING THE CORRECT AMOUNT OF COST OF ACQ UISITION WAS SUBJECT MATTER OF APPEAL BEFORE THE CIT(A). THE AO DID NOT TOUCH AT ALL THE APPLICABILITY OF MANDATORY PROVISI ONS OF SECTION 50C NOR WAS SO DONE BY THE CIT(A). THUS MA NDATORY PROVISIONS OF SECTION 50C WERE NOT SUBJECT MATTER O F APPEAL BEFORE THE CIT(A). IT IS NOTED BY US THAT PROVISION S OF SECTION 50C ARE DEEMING PROVISIONS AND STAND ON AN INDEPEND ENT BASIS DE-HORSE THE ASPECT OF DETERMINATION OF COST OF ACQUISITION ALSO BECAUSE DETERMINATION OF SALES CO NSIDERATION IN ACCORDANCE WITH THE PROVISIONS OF THE STATUTE I S A DISTINCT EXERCISE. UNDER THESE CIRCUMSTANCES IT WOULD BE TO O FAR TO STRETCH THE ARGUMENT BASED UPON AN IMAGINATION THAT SINCE COST OF ACQUISITION HAS BEEN DETERMINED BY THE AO AND THEN IT SHOULD BE PRESUMED THAT AO HAS DETERMINED THE SALES CONSIDERATION ALSO IN ACCORDANCE WITH LAW. NO SUCH EXERCISE WAS SHOWN TO HAVE BEEN DONE BY THE AO. THE RECORDS ALSO DID NOT INDICATE ANY SUCH EXERCISE HAVING BEEN DONE BY THE AO. CO.OP. HOUSING SOCIETIES 34 UNDER THESE CIRCUMSTANCES THERE COULD NOT HAVE BEE N ANY APPEAL ON THIS ASPECT BEFORE THE CIT(A). THE CIT(A) HAD ALSO NOT TOUCHED THE ISSUE OF APPLICATION OF SECTION 50C . IN OUR OPINION ACCORDING TO THE DOCTRINE OF MERGER JU DGMENTS OF LOWER COURTS MERGE INTO JUDGMENTS OF HIGHER COURT A ND AFTER THE MERGER THERE REMAINS NO JUDGMENT OF THE LOWER C OURTS AND THEREFORE OBVIOUSLY AND ADMITTEDLY THERE CAN BE N O REVISION OF THE JUDGMENT WHICH DOES NOT EVEN EXIST. HOWEVER IN TAX STATUTES LIKE INCOME TAX ACT 1961 THE LEGISLATURE HAS NOT THOUGHT IT FIT TO APPLY DOCTRINE OF MERGER BUT DOCTRINE OF PARTIAL MERGER HAS BEEN ADOPTED. THUS ONCE THE ISSUE OF MERGER IS GOVERNED BY THE PROVISIONS OF THE STATUTE THEN OBVIOUSLY UNDER THE INCOME TAX PROCEEDINGS IT IS TH E STATUTE WHICH SHALL PREVAIL OVER GENERAL DOCTRINE OF MERGE R. THE DOCTRINE OF PARTIAL MERGER WOULD APPLY FOR THE PU RPOSE OF SECTION 263 OF THE ACT TO THE EXTENT AS EXPLAINED UNDER THE RELEVANT PROVISIONS CONTAINED IN CLAUSE (C) OF EXPL ANATION 1 OF SECTION 263(1) OF THE INCOME TAX ACT 1961. THIS PRO VISION HAS ALREADY BEEN DISCUSSED IN EARLIER PART OF OUR ORDER WHICH CLEARLY PROVIDE THAT POWERS OF THE COMMISSIONER UND ER THIS SECTION SHALL EXTEND TO SUCH MATTERS AS HAD NOT BEE N CONSIDERED AND DECIDED IN THE APPEAL. THUS GOING B Y COMMON SENSE APPROACH AS WELL AS CARDINAL PRINCIPLES OF LA W AS WELL AS JUDGMENTS OF VARIOUS COURTS IF APPLIED ON THE FACTS OF THIS CASE CLEARLY SUGGEST THAT THE CIT HAD REQUISITE POWERS A ND JURISDICTION U/S 263 TO EXAMINE THE APPLICATION OF PROVISIONS OF SECTION 50C WHICH WERE OMITTED TO BE APPLIED BY THE AO AND CO.OP. HOUSING SOCIETIES 35 THEREFORE THE ARGUMENT OF THE ASSESSEE WITH REGARD TO THE DOCTRINE OF MERGER FAILS IN THE GIVEN FACTS OF TH IS CASE. 3.22. IT WAS ALSO ARGUED BY THE LD. COUNSEL THAT IN THE APPEAL PROCEEDINGS OF JVPD ASSOCIATION I.E. M/S JVP D COOPERATIVE HOUSING ASSOCIATION LTD (WHICH WAS FORMED BY THESE 14 SOCIETIES TO TAKE CARE OF MAINTENANCE OF THE PLOT) THE CONCERNED CIT(A) HAD GIVEN OBSERVATIONS ABOUT THE NON APPLICABILITY OF PROVISIONS OF SECTION 50C UPON THE IMPUGNED TRANSACTION AND THUS IT COULD BE SAID THAT THESE F ACTS WERE THERE BEFORE THE AO WHEN THE IMPUGNED ASSESSMENT ORDER IN THE CASE OF ASSESSEE WAS PASSED . IN THIS REGARD IT IS NOTED BY US THAT IN THE APPEA L FILED BY THE REVENUE AGAINST THE ORDER PASSED BY THE CIT( A) IN THE CASE OF JVPD ASSOCIATION THE REASONING OF T HE CIT(A) ABOUT NON-APPLICABILITY OF PROVISIONS OF SEC TION 50C HAS NOT BEEN EXPRESSLY APPROVED BY THE TRIBUNAL . IN FACT THIS ISSUE WAS NOT TOUCHED BY THE TRIBUNAL. THE TRIBUNAL HAD HELD THAT JVPD ASSOCIATION WAS NOT OWNER OF THE PLOT AND THEREFORE THERE WAS NO QUEST ION OF ASSESSING THE CAPITAL GAIN IN THE HANDS OF JVPD ASSOCIATION. FURTHER ONCE IT WAS HELD THAT JVPD ASSOCIATION WAS NOT OWNER OF THE PLOT THEN WHATEVE R OBSERVATIONS WERE GIVEN BY THE CIT(A) IN THE CASE O F JVPD ASSOCIATION THAT WOULD HAVE NO BEARING IN THE HANDS OF PRESENT ASSESSEE WHO IS ADMITTEDLY LEGAL OWNER OF THE IMPUGNED PLOT OF LAND. EVEN OTHERWISE CO.OP. HOUSING SOCIETIES 36 THE ORDER PASSED BY THE CIT(A) IN THE CASE OF JVPD ASSOCIATION IS NOT PART OF THE PROCEEDINGS BEFORE T HE AO WHO HAD PASSED THE IMPUGNED ASSESSMENT ORDER. FURTHER THERE IS NOTHING ON RECORD TO SHOW THAT TH E ASSESSING OFFICER WHILE PASSING THE IMPUGNED ASSESSMENT ORDER HAD APPLIED HIS MIND AND TOOK CONSCIOUS DECISION FOR NOT APPLYING THE PROVISIONS OF SECTION 50C AND THAT TOO BY RELYING UPON THE ORDER OF THE CIT(A) OF JVPD ASSOCIATION. THEREFORE UNDER TH ESE CIRCUMSTANCES THE JURISDICTION OF CIT IN EXERCISIN G ITS POWER U/S 263 IS NOT EXCLUDED FROM EXAMINING THE APPLICABILITY OF PROVISIONS OF SECTION 50C IN THE H ANDS OF PRESENT ASSESSEE. 3.23. NOW WE SHALL DEAL WITH OTHER ARGUMENTS OF THE ASS ESSEE WITH REGARD TO ITS OBJECTIONS ABOUT APPLICABILITY O F PROVISIONS OF SECTION 50C AND MORE SPECIFICALLY ABOUT SUBSTITUTIO N OF AMOUNT OF SALES CONSIDERATION WITH THE VALUE ADOPTE D BY THE STAMP VALUATION AUTHORITY FOR EFFECTING THE TRANSFE R OF IMPUGNED PLOT OF LAND. THE OBJECTIONS OF THE ASSESS EE IN THIS REGARD ARE TWOFOLD. THE PRIMARY OBJECTION OF THE AS SESSEE IS THAT THE PROVISIONS OF SECTION 50C COULD NOT HAVE B EEN APPLIED IN THE YEAR UNDER CONSIDERATION SINCE THE TRANSACT ION HAD ALREADY TAKEN PLACE AND THE SECOND OBJECTION IS THA T VALUE ADOPTED BY THE STAMP VALUATION AUTHORITY AT THE TIM E OF REGISTRATION OF THE CONVEYANCE DEED COULD NOT HAVE BEEN ADOPTED IN THE YEAR UNDER CONSIDERATION. CO.OP. HOUSING SOCIETIES 37 3.24. WE HAVE CONSIDERED ALL THE OBJECTIONS VERY CAREFUL LY. IT HAS BEEN CONTENDED THAT IMPUGNED PLOT WAS NOT IN TH E EXCLUSIVE POSSESSION OF THE ASSESSEE AND THAT THE A SSESSEE WAS NOT ENJOYING THE USAGE OF THE PLOT FOR ITS OWN PURPOSES FOR THE REASONS THAT ITS POSSESSION WAS HANDED OVER TO THE PUBLIC WORKS AND HOUSING DEPARTMENT GOVERNMENT OF MAHARAS HTRA ON 29 TH OF JULY 1975. IN THIS REGARD IT IS OBSERVED BY U S THAT IT IS ADMITTED CASE OF THE ASSESSEE THAT THE ASSESS EE ALONG WITH OTHER 13 SOCIETY MEMBERS WAS LEGAL OWNER OF TH E SAID PLOT OF LAND; TITLE OF THE SAID PLOT WAS VERY MUCH HELD BY THE ASSESSEE AND THATS WHY THE ASSESSEE HAD LEGALLY EN TERED INTO AN AGREEMENT/MEMORANDUM OF UNDERSTANDING DATED 25.01.2000 WITH THE ASSOCIATION OF OFFICERS OF INDI AN POLICE SERVICES FOR TRANSFER OF IMPUGNED PLOT OF LAND. IT IS IN PURSUANCE OF THE SAID AGREEMENT/MOU THAT THE ASSES SEE WAS ABLE TO EXECUTE A CONVEYANCE DEED DURING THE YEAR U NDER CONSIDERATION ON 14 TH MAY 2003 FOR EFFECTING TRANSFER OF THE LEGAL TITLE OF OWNERSHIP IN FAVOUR OF M/S. VASUNDHA RA C.H.S. LTD. (I.E. SOCIETY OF INDIAN POLICE SERVICE OFFICER S OF MAHARASHTRA CADRE). THE ISSUE WITH REGARD TO THE DI SPUTE IN THE OWNERSHIP AND ASSESSMENT OF CAPITAL GAIN AROSE IN THE HANDS OF JVPD ASSOCIATION I.E. M/S JVPD COOPERATIVE HOUSING ASSOCIATION LTD (WHICH WAS FORMED BY THESE 14 SOCIETIES TO TAKE CARE OF MAINTENANCE OF THE PLOT). THE AO OF JVPD ASSOCIATION HAD ASSESSED THE RESULTANT CAPITAL GAIN IN THE HANDS OF JVPD ASSOCIATION BY TREATING IT AS OWN ER OF PLOT. THE ISSUE HAD REACHED UP TO THE TRIBUNAL AND THE TR IBUNAL DID NOT APPROVE ACTION OF THE REVENUE AND HELD THAT SAI D JVPD CO.OP. HOUSING SOCIETIES 38 ASSOCIATION WAS NOT THE OWNER AND THESE 14 SOCIETIE S WERE CO- OWNERS OF THE PLOT. RELEVANT PART OF THE OBSERVATIO NS OF THE TRIBUNAL CONTAINED IN ITS ORDER DATED 4 TH NOVEMBER 2010 IN ITA NO.3132/M/2009 IS REPRODUCED AS UNDER: ON APPEAL THE CIT(A) NOTICED THAT CONVEYANCE DEED WAS EXECUTED BETWEEN THE PROPOSED SOCIETY OF THE POLICE OFFICERS AND THE 14 SOCIETY MEMBERS ON 14.05.2003 F OR A TOTAL CONSIDERATION OF RS.77 14 920/- AND THAT THE 14 MEMBERS SOCIETIES AGREED TO DEPOSIT THE SALE CONSID ERATION WITH THE ASSESSEE IN PROPORTION TO THEIR OWNERSHIP IN THE PLOT. THE AMOUNT WAS SO DEPOSITED WITH THE ASSESSEE SOCIETY WHICH AFTER DEDUCTING THE EXPENSES INCURRED ON DEVELOPMENT AND MAINTENANCE OF THE PLOT CREDITED TH E BALANCE OF RS.74 17 895/- IN THE RATIO OF THE OWNER SHIP RIGHTS TO THE ACCOUNTS OF THE 14 SOCIETIES MEMBERS IN ITS BOOKS OF ACCOUNT. THE CIT(A) FURTHER FOUND THAT THE MEMORANDUM OF UNDERSTANDING HAD BEEN ENTERED INTO BETWEEN THE 14 MEMBERS SOCIETIES AND THE PROPOSED VASUNDHARA CO-OPERATIVE HOUSING SOCIETY AND FINALLY CONVEYANCE DEED WAS EXECUTED ON 14.05.2003. ON THE SE FACTS HE HELD THAT THE ASSESSING OFFICER WAS RIGHT IN CONSIDERING THE NET SALE PROCEEDS OF RS.74 17 895/- FOR THE PURPOSE OF WORKING OUT THE CAPITAL GAINS BUT H ELD THAT IF THE 1.4.1981 VALUE WAS ADOPTED AS THE COST OF ACQUISITION IN TERMS OF SECTION 48 AND INDEXATION BENEFIT IS ALSO ALLOWED THERE WOULD BE NET CAPITAL LOSS OF RS.57 65 385/-. IN THIS VIEW OF THE MATTER HE DELE TED THE ADDITION OF CAPITAL GAINS ON PROTECTIVE BASIS IN TH E ASSESSMENT OF THE ASSESSEE. 5. THE REVENUE IS IN APPEAL TO CONTEND THAT THE ASS ESSEE IS PRACTICALLY THE OWNER OF THE PLOT AND SINCE THE MON IES ARE STILL LYING WITH IT NOT HAVING BEEN HANDED OVER TO THE 14 SOCIETIES THE ASSESSING OFFICER WAS RIGHT IN HOLDI NG THAT THE ASSESSEE SHOULD BE PROTECTIVELY ASSESSED IN RES PECT OF THE CAPITAL GAINS. ON THE OTHER HAND THE LEARNED C OUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS ME RELY HOLDING POSSESSION OF THE PLOT THAT IT WAS NOT THE OWNER OF THE PLOT AND THERE WAS NO TRANSFER OF THE PLOT BY T HE ASSESSEE AND THEREFORE THERE WAS NO QUESTION OF ANY CO.OP. HOUSING SOCIETIES 39 CAPITAL GAINS BEING ASSESSED IN THE HANDS OF THE AS SESSEE ON PROTECTIVE BASIS. 6. ON A CAREFUL CONSIDERATION OF THE FACTS AND THE RIVAL CONTENTIONS WE ARE INCLINED TO UPHOLD THE DECISION OF THE CIT(A). IT IS NOT THE CASE OF THE DEPARTMENT THAT T HE ASSESSEE WAS THE OWNER OF THE PLOT AND THEREFORE IT SHOULD BE ASSESSED TO CAPITAL GAINS. THERE IS NO DISPUTE T HAT THE PLOT WAS OWNED BY 14 DIFFERENT CO-OPERATIVE HOUSING SOCIETIES IN SPECIFIC SHARES AND THAT THE ASSESSEE WAS MERELY PUT IN POSSESSION OF THE PLOT FOR THE PURPOS E OF COMMON MANAGEMENT. THE PLOT WAS ORIGINALLY ALLOTTED TO THE 14 CO-OPERATIVE HOUSING SOCIETIES BY THE BOMBAY HOUSING BOARD UNDER AN INDENTURE DATED 26.04.1960 (PAGES 47 TO 74 OF THE PAPER BOOK) AND IN THE LIGHT OF THIS INDENTURE IT CANNOT BE SAID THAT THE ASSESSEE BECAM E THE OWNER OF THE PLOT. THE BYELAWS OF THE ASSESSEE SOCI ETY A COPY OF WHICH IS PLACED AT PAGES 105 TO 112 OF THE PAPER BOOK SHOWS THAT THE 14 COOPERATIVE HOUSING SOCIETI ES WERE HOLDING THE RESIDENTIAL PLOT WHICH WAS PART O F THE LAND IN JVPD SCHEME. THE PROPORTIONATE SHARE OF THE SE SOCIETIES IN THE PROPERTY AND THEIR LIABILITY TO PA Y THE COST OF DEVELOPMENT OF THE PROPERTY IS ALSO MENTIONED IN THE BYELAWS. THERE IS NO DOCUMENT TO WHICH OUR ATTENTIO N WAS DRAWN ON BEHALF OF THE DEPARTMENT TRANSFERRING THE OWNERSHIP OF THE PLOT TO THE ASSESSEE SOCIETY. THE FINDING OF THE CIT(A) WHICH IS NOT CHALLENGED BEFORE US IS THAT THE CONVEYANCE DEED WAS EXECUTED BY THE 14 SOCIETIES MEMBERS ON 14.5.2003 IN FAVOUR OF VASUNDHARA CO- OPERATIVE HOUSING SOCIETY LTD. FORMED BY THE MAHARA SHTRA CADRE OF IPS. EARLIER TO THIS CONVEYANCE THERE WAS A MEMORANDUM OF UNDERSTANDING ENTERED INTO BETWEEN THESE PARTIES ON 26.1.2000 A COPY OF WHICH IS AT P AGES 75 TO 104 OF THE PAPER BOOK. A PERUSAL OF THE MEMORAND UM OF UNDERSTANDING SHOWS THAT IT WAS EXECUTED BETWEEN TH E 14 CO-OPERATIVE HOUSING SOCIETIES THE ASSESSEE AND TH E PROMOTERS OF VASUNDHARA COOPERATIVE HOUSING SOCIETY LTD. CLAUSE (III) OF THE PREAMBLE STATES THAT THE S OCIETY WAS FORMED BY THE 14 SOCIETIES AND REGISTERED UNDER THE MAHARASHTRA CO-OPERATIVE SOCIETIES ACT TO TAKE POSS ESSION OF THE PROPERTY FROM THE MANAGING COMMITTEES OF THE 14 CO- OPERATIVE HOUSING SOCIETIES AND TO HOLD AND UTILISE THE PROPERTY FOR PROVIDING SUITABLE UTILITIES AND AMENI TIES SUCH CO.OP. HOUSING SOCIETIES 40 AS PLAY GROUND SCHOOLS COLLEGES ETC. AND TO DO AL L SUCH ACTS AND THINGS AS ARE OF COMMON INTEREST TO THE 14 SOCIETIES. THE MEMORANDUM OF UNDERSTANDING DOES NOT SHOW THE ASSESSEE AS A OWNER OF THE PROPERTY. CAPIT AL GAINS CAN ARISE TO A PERSON ONLY IF HE OWNS THE PLO T AND TRANSFERS THE SAME FOR CONSIDERATION. THE ASSESSEE NOT BEING THE OWNER OF THE PLOT BUT MERELY HOLDING POSS ESSION THEREOF ON BEHALF OF THE 14 CO-OPERATIVE SOCIETIES AND MANAGING THE SAME FOR THE COMMON BENEFIT OF THE MEM BER SOCIETIES CANNOT BE CONSIDERED AS THE OWNER OF THE PROPERTY IN ORDER TO BRING THE SALE PRICE TO TAX I N ITS HANDS AS CAPITAL GAINS. THIS IS ALSO SUPPORTED BY THE ACC OUNTING ENTRIES WHICH SHOW THAT THE RESPECTIVE SHARES OF TH E 14 HOUSING SOCIETIES IN THE SALE CONSIDERATION AFTER DEDUCTING THE COMMON EXPENSES HAS BEEN DIVIDED IN PROPORTION TO THEIR RESPECTIVE SHARES IN THE PROPERTY AND CREDITE D TO THEIR ACCOUNTS AND SHOWN AS DEPOSITS IN THE ASSESSEES BALANCE SHEET. IN THE ABSENCE OF ANY TRANSFER BY TH E ASSESSEE NO CAPITAL GAINS CAN BE ASSESSED IN ITS H ANDS EVEN ON PROTECTIVE BASIS. 7. WE THUS AFFIRM THE DECISION OF THE CIT(A) BUT FO R DIFFERENT REASONS AND DISMISS THE APPEAL FILED BY T HE REVENUE WITH NO ORDER AS TO COSTS. 3.25. THUS IT IS NOTED FROM THE OBSERVATIONS OF THE TRI BUNAL THAT IMPUGNED PLOT OF LAND WAS OWNED BY THESE 14 SO CIETY MEMBERS (PRESENT ASSESSEE BEING ONE OF THEM) WITH S PECIFIC SHARES AND SAID JVPD ASSOCIATION WAS FORMED MERELY FOR THE PURPOSE OF COMMON MANAGEMENT OF THE SUBJECT PROPERT Y. SUBSEQUENTLY AFTER THE ORDER OF THE TRIBUNAL THE RESPECTIVE ASSESSING OFFICERS OF THESE 14 SOCIETIES REOPENED T HE ASSESSMENT IN THE HANDS OF THESE SOCIETIES AFTER RE CORDING THE REASONS THAT THE ASSESSEE HAD EFFECTED THE TRANSF ER OF THE IMPUGNED PLOT OF LAND IN A.Y. 2004-05 AND THEREFORE RESULTANT CAPITAL GAIN WAS TO BE ASSESSED AS INCOME UNDER THE HEAD OF CAPITAL GAINS IN THE IMPUGNED ASSESSMENT YEAR. IT I S NOTED CO.OP. HOUSING SOCIETIES 41 THAT DURING THE COURSE OF REASSESSMENT PROCEEDINGS THOUGH THE ASSESSEE FILED DETAILED REPLIES RAISING OBJECTI ON ABOUT THE ADOPTION OF COST OF ACQUISITION AT NIL BUT NO OBJE CTION WAS RAISED WITH REGARD TO THE FACT THAT PLOT WAS OWNED BY THE ASSESSEE AND ITS TRANSFER OF TITLE OF LEGAL OWNERSH IP HAS BEEN EFFECTED DURING THE YEAR UNDER CONSIDERATION AND CO NSEQUENTLY THE CAPITAL GAIN WAS LIABLE TO BE ASSESSED IN THE Y EAR UNDER CONSIDERATION. FURTHER WHEN THE APPEAL WAS FILED B EFORE THE CIT(A) THERE ALSO NO SUCH DISPUTE WAS RAISED. THE DISPUTE WAS CONFINED TO ASCERTAINING THE CORRECT AMOUNT OF COST OF ACQUISITION. THUS THE ISSUE OF OWNERSHIP OF THE PL OT ITS TRANSFER DURING THE YEAR UNDER CONSIDERATION AND AS SESSABILITY OF THE CAPITAL GAIN IN THE HANDS OF ASSESSEE IN THE YEAR UNDER CONSIDERATION HAD ATTAINED FINALITY AND BECAME FAIT ACCOMPLI . THIS ISSUE WAS NO MORE RES-INTEGRA . UNDER THESE CIRCUMSTANCES THE ONLY DISPUTE THAT COULD HAVE BEE N RAISED WAS WITH REGARD TO THE VARIOUS ASPECTS RELATED TO A DOPTION OF CORRECT AMOUNT OF SALES CONSIDERATION COST OF ACQU ISITION OF PLOT AND DETERMINING THE CORRECT AMOUNT OF CAPITAL GAIN TO BE TAXED IN THE HANDS OF THE ASSESSEE. 3.26. IT IS NOTED THAT PROVISIONS OF SECTION 50C ARE DEE MING PROVISIONS AND MANDATORY IN NATURE. THE APPLICATION OF SUCH PROVISIONS IS MADE BY OPERATION OF LAW. EXCEPTION T O THESE PROVISIONS CAN BE MADE ONLY IN ACCORDANCE WITH LAW AS PROVIDED IN SECTION 50C ONLY. IT IS NOTED THAT AO D ID NOT RAISE ANY QUERY WITH REGARD TO APPLICATION OF SECTION 50C AS HAS BEEN FAIRLY ADMITTED BY BOTH THE PARTIES DURING THE COURSE OF CO.OP. HOUSING SOCIETIES 42 HEARING. UNDER THESE CIRCUMSTANCES THE AO COMMITTE D A MISTAKE OF LAW AND THUS IT RENDERED THE ORDER OF T HE AO AS ERRONEOUS AND SINCE NON APPLICATION OF SECTION 50C WOULD ALSO AMOUNT TO UNDER ASSESSMENT OF INCOME AND TAX PAYABL E THEREON THEREFORE IT WAS PREJUDICIAL TO THE INTER EST OF REVENUE. THUS IN THE GIVEN FACTS OF THE CASE IT CAN BE UND OUBTEDLY SAID THAT THE IMPUGNED ASSESSMENT ORDER WAS ERRONEOUS AN D PREJUDICIAL TO THE INTEREST OF REVENUE. 3.27. FURTHER VARIOUS OBJECTIONS HAVE BEEN RAISED BY THE ASSESSEE WITH REGARD TO THE VALUE TO BE ADOPTED FOR THE PURPOSE OF SECTION 50C. IN OUR OPINION THESE OBJEC TIONS ARE TO BE EXAMINED IN THE LIGHT OF MERITS OF THE OBJECTION S AND KEEPING IN VIEW OF FACTS OF THIS CASE AND LAW APPLI CABLE IN THIS REGARD. BUT THAT EXERCISE CAN BE DONE ONLY WHEN THE IMPUGNED TRANSACTION IS EXAMINED THROUGH THE PRISM OF MANDAT ORY PROVISIONS OF SECTION 50C. IT IS ALSO WORTH NOTING THAT THE CASE OF THE ASSESSEE DID NOT FALL IN ANY OF THE EXCEPTIO N ALSO. 3.28. THE ASSESSEE HAD RELIED UPON IN THIS REGARD UPON T HE JUDGMENT OF HONBLE ALLAHABAD HIGH COURT IN THE CAS E OF CIT V. SHIMBU MEHRA (SUPRA) IN ITS SUPPORT. WE HAVE GON E THROUGH THE SAID JUDGMENT AND FIND THAT IN THE SAID CASE THE SAID ASSESSEE HAD DISPUTED THE FACTUM OF TRANSFER O F THE PROPERTY IN THE YEAR UNDER CONSIDERATION. THEREFORE THE APPLICABILITY OF PROVISIONS OF SECTION 50C WAS CHAL LENGED IN THE YEAR UNDER DISPUTE. ON THE OTHER HAND THE FACTS OF THE CASE BEFORE US ARE THAT YEAR OF THE TRANSFER OF THE PL OT AND TAXABILITY OF THE RESULTANT CAPITAL GAIN HAS BEEN A DMITTEDLY TO CO.OP. HOUSING SOCIETIES 43 BE THE YEAR UNDER CONSIDERATION AND ISSUE ON THAT A SPECT HAS ALREADY BEEN SETTLED AS WAS DISCUSSED BY US IN THE EARLIER PART OF THE ORDER. 3.29. IT IS FURTHER NOTED BY US THAT THE ASSESSEE IS HAV ING FEW OBJECTIONS WITH REGARD TO VALUE TO BE ADOPTED VIZ T HE STAMP VALUE AT THE DATE OF AFORESAID MOU SHALL BE TAKEN O R STAMP VALUE AS ON THE DATE OF CONVEYANCE DEED SHALL BE AD OPTED AND ONE MORE OBJECTION THAT SINCE THE PLOT WAS RECEIVED FOR POLICE QUARTERS THEREFORE IT IS FMV CANNOT BE TAKEN AS P ER FREE MARKET VALUE AND ONLY DISCOUNTED VALUE COULD HAVE B EEN TAKEN AS ITS FMV. WE AGREE WITH THE ASSESSEE ON THI S ASPECT TO THIS EXTENT THAT THESE OBJECTIONS NEED TO BE DEALT WITH AS PER LAW BEFORE FINALLY ADOPTING APPROPRIATE VALUE U/S 5 0C. BUT AS STATED BY US EARLIER ALSO THAT ALL THESE OBJECTIONS OR ANY OTHER OBJECTION WITH REGARD TO THE MANNER IN WHICH SECTIO N 50C HAS TO BE APPLIED CAN BE DEALT WITH IN ACCORDANCE WITH LAW AND PROCEDURE AS HAS BEEN LAID DOWN U/S 50C ITSELF. BUT THAT WOULD BE POSSIBLE ONLY WHEN THE PROVISIONS OF SECTI ON 50C ARE APPLIED AND THE IMPUGNED TRANSACTION IS TESTED THRO UGH THE PRISM OF THESE PROVISIONS. UNDER THESE CIRCUMSTANCE S WE UPHOLD THE REVISION ORDER PASSED BY THE CIT ORDER U /S 263 WITH THE LIBERTY TO THE ASSESSEE TO RAISE THESE OBJ ECTIONS ON THE MANNER AND PROCEDURE OF APPLICATION OF SECTION 50C FOLLOWING DUE PROCEDURE PRESCRIBED U/S 50C. IN CASE ASSESSMEN T ORDER HAS ALREADY BEEN PASSED THEN ASSESSEE MAY FILE THE SE OBJECTIONS BEFORE THE CIT(A) WHICH SHALL BE DULY C ONSIDERED BY HIM AND A REMAND REPORT SHALL BE CALLED FROM THE AO IF CONSIDERED APPROPRIATE BY THE CIT(A) SO AS TO MEET PRINCIPLES CO.OP. HOUSING SOCIETIES 44 OF NATURE JUSTICE WHILE FOLLOWING THE MANDATE OF TH E LAW. WE DIRECT ACCORDINGLY. WITH THESE DIRECTIONS THE ORDER PASSED BY THE CIT IS UPHELD AND THE APPEAL OF THE ASSESSEE IS DISMISSED. NOW WE SHALL TAKE UP ITA NO.2363/MUM/2014 IN THE CA SE JAI HIND CO. OPERATIVE HOUSING SOCIETY LTD. OF ASSESSMENT YEAR: 2004-05 4. IN THIS CASE GROUND NO.1 WAS NOT PRESSED BY THE LD . COUNSEL DURING COURSE OF HEARING AND THEREFORE SAME IS DISMISSED. 5. THE REMAINING GROUNDS ARE IDENTICAL TO ITA NO.3656/MUM/2014; NO DISTINCTION HAS BEEN MADE OUT IN FACTS OR IN THE LEGAL POSITION BY EITHER PAR TY THEREFORE WE UPHOLD THE ORDER OF THE CIT U/S 263 A ND DISMISS THE APPEAL OF THE ASSESSEE WITH THE SAME DIRECTIONS AS HAVE BEEN GIVEN IN ITA NO.3656/MUM/2014. THE LOWER AUTHORITIES ARE DIRECTED TO FOLLOW OUR DIRECTIONS GIVEN IN ITA NO.3656/MUM/2014. OTHER APPEALS IN ITA NO.3881/MUM/2014 ITA NO.3882/MUM/2014 ITA NO.3883/MUM/2014 ITA NO.3657/MUM/2014 ITA NO.3658/MUM/2014 ITA NO.3655/MUM/2014 & ITA NO.3659/MUM/2014. 6. IN THESE APPEALS IT WAS INFORMED TO US THAT GROUN DS ARE IDENTICAL. NO DISTINCTION HAS BEEN MADE ON FACT S OR LAW THEREFORE THE LOWER AUTHORITIES ARE DIRECTED TO FOLLOW OUR DIRECTION AS GIVEN IN ITA NO.3656/MUM/2014. ACCORDINGLY THESE APPEALS ARE CO.OP. HOUSING SOCIETIES 45 DISMISSED AND THE ORDER PASSED BY THE LD. CIT IS UPHELD WITH THE DIRECTIONS AS GIVEN ABOVE. 7. IN THE RESULT THE APPEALS FILED BY THE ASSESSEE A RE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH SEPTEMBER 2016. SD/- (AMIT SHUKLA ) SD/- (ASHWANI TANEJA) ! / JUDICIAL MEMBER ' ! / ACCOUNTANT MEMBER MUMBAI; # DATED : 28 /09/2016 CTX? P.S/. .. #$%&'(')% / COPY OF THE ORDER FORWARDED TO : 1. % &' / THE APPELLANT 2. ()&' / THE RESPONDENT. 3. * * ( % ) / THE CIT MUMBAI. 4. * * / CIT(A)- MUMBAI 5. -. / (01 * % 012 / DR ITAT MUMBAI 6. / 34 5 / GUARD FILE. / BY ORDER ) -% ( //TRUE COPY// / (DY./ASSTT. REGISTRAR) / ITAT MUMBAI