ACIT, Trivandrum v. SHRI P MOHAN KUMAR, Trivandrum

ITA 444/COCH/2011 | 2006-2007
Pronouncement Date: 03-11-2011

Appeal Details

RSA Number 44421914 RSA 2011
Assessee PAN AKAPP2646R
Bench Cochin
Appeal Number ITA 444/COCH/2011
Duration Of Justice 4 month(s) 27 day(s)
Appellant ACIT, Trivandrum
Respondent SHRI P MOHAN KUMAR, Trivandrum
Appeal Type Income Tax Appeal
Pronouncement Date 03-11-2011
Appeal Filed By Department
Bench Allotted SMC
Tribunal Order Date 03-11-2011
Date Of Final Hearing 09-11-2011
Next Hearing Date 09-11-2011
Assessment Year 2006-2007
Appeal Filed On 06-06-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH COCHIN BEFORESHRI N.R.S. GANESAN JM I.T.A NO. 444/COCH/2011 ASSESSMENT YEAR: 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE-1 TRIVANDRUM. VS. SHRI P.MOHANAKUMAR THANKAVILAS CRRA-1 CHALAKUZHY ROAD PATTOM TRIVANDRUM-695004. [PAN:AKAPP 2646R] (REVENUE-APPELLANT) (ASSESSEE - RESPONDENT) REVENUE BY MS. S. VIJAYAPRABHA JR. DR ASSESSEE BY NONE. DATE OF HEARING 03/11/2011 DATE OF PRONOUNCEMENT 03/11/2011 O R D E R THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A)-I TRIVANDRUM DATED 22.3.2011 AND PERTAIN TO THE ASSES SMENT YEAR 2006-07. 2. NO ONE APPEARED ON BEHALF OF THE ASSESSEE INSPI TE OF SERVICE OF NOTICE. THEREFORE THIS APPEAL IS DISPOSED OF ON MERIT AFTER HEARING T HE LD. DEPARTMENTAL REPRESENTATIVE. 3. MS. S.VIJAYAPRABHA THE LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT SUBSTANTIVE ADDITION WAS MADE IN RESPECT OF CAPITAL GAIN FOR TRANSFER OF THE LAND ON THE BASIS OF THE DEVELOPMENT AGREEMENT FOR THE ASSESSME NT YEAR 2005-06. THE ASSESSEE REPRESENTATIVE CONTENDED THAT CAPITAL GAINS HAS TO BE ASSESSED FOR ASSESSMENT YEAR 2005- 06. THE PROTECTIVE ASSESSMENTS FOR ASSESSMENT YEAR 2006-07 AND 2007-08 ARE MADE ON THE BASIS OF CONTENTS OF THE ASSESSEES SALE DEED E XECUTED. THE CIT(A) DISPOSED OFF THE I.T.A. NO. 444/COCH/2011 2 APPEAL FILED BY THE ASSESSEE ON WHICH THE PROTECTI VE ASSESSMENTS WERE MADE. HOWEVER THE APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE ASSESSING OFFICER WHEREIN SUBSTANTIVE ASSESSMENT WAS MADE FOR THE ASSESSMENT YEAR 2005-06 IS STILL PENDING BEFORE THE CIT(A). THE LD. DEPARTMENTAL REPRESENTATIVE SU BMITTED THAT WHEN THE ADDITION WAS MADE ON THE SUBSTANTIVE AND PROTECTIVE BASIS THE C IT(A) OUGHT TO HAVE DISPOSED OFF BOTH THE APPEALS SIMULTANEOUSLY. THE CIT(A) OUGHT NOT T O HAVE KEPT THE APPEAL PENDING WHEREIN THE SUBSTANTIVE ADDITION WAS MADE. ACCORDI NGLY THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE MATTER MAY BE REM ITTED BACK TO THE FILE OF THE CIT(A) TO DISPOSE OF THE APPEAL ALONGWITH THE APPEAL FILED B Y THE ASSESSEE WHEREIN SUBSTANTIVE ADDITION WAS MADE. REFERRING TO THE ORDER OF THE CI T(A) THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT(A) HAS NOT CO NSIDERED THE PROVISIONS OF S. 2(47) (V) & (VI). ACCORDINGLY THE LD. DEPARTMENTAL REPRESEN TATIVE SUBMITTED THAT WHEN THE DEVELOPMENT AGREEMENT WAS EXECUTED FOR DEVELOPMENT THE POSSESSION OF THE LAND WAS HANDED OVER TO THE DEVELOPER. THEREFORE THIS IS A N ARRANGEMENT FOR ALLOWING THE DEVELOPER TO RETAIN THE UNDIVIDED PORTION OF THE LA ND WHICH FALLS IN HIS SHARE AS PER THE DEVELOPMENT AGREEMENT. THEREFORE THERE WAS A TRAN SFER ON THE DATE OF THE EXECUTION OF THE DEVELOPMENT AGREEMENT U/S. 2(47)(V) & (VI) OF T HE ACT. THE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE TOTAL AREA TO BE CONSTRUCTED AND THE AREA TO BE HANDED OVER TO THE LAND OWNER AGAINST THE UNDIVIDED PORTIO N OF THE LAND CAN BE ASCERTAINED FROM THE DEVELOPMENT AGREEMENT. THEREFORE THE COST OF THE CONSTRUCTION OF THE BUILDING THAT WOULD GO TO THE SHARE OF THE ASSESSEE WOULD BE THE COST OF THE UNDIVIDED PORTION OF THE LAND WHICH WOULD GO TO THE DEVELOPER. THEREFORE T HE LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IT IS NOT CORRECT TO SAY THAT THE CO ST OF CONSTRUCTION OR COST OF TRANSFER OF THE LAND CANNOT BE ASCERTAINED DURING THE ASSESSMENT YE AR 2005-06. 4. THE CONTENTIONS OF THE LD. DEPARTMENTAL REPRESEN TATIVE HAVE BEEN CONSIDERED IN THE LIGHT OF THE MATERIAL PLACED ON RECORD. ADMITT EDLY THE DEVELOPMENT AGREEMENT WAS EXECUTED DURING THE ASSESSMENT YEAR 2005-06. SECT ION 2(47) (V) & (VI) OF THE INCOME TAX ACT CLEARLY SAYS THAT WHEN THE DEVELOPMENT OF T HE AREA WAS TRANSFERRED OR HANDED OVER TO THE DEVELOPER ON THE BASIS OF AN AGREEMENT OR ARRANGEMENT THEN THERE WAS A I.T.A. NO. 444/COCH/2011 3 TRANSFER UNDER THE INCOME TAX ACT. REGISTRATION OF SALE DEED MAY BE COMPULSORY UNDER COMMON LAW FOR TRANSFER OF THE LANDED PROPERTIES WH EN THE VALUE EXCEEDED ` 100. HOWEVER UNDER THE INCOME TAX ACT THE TRANSFER HAS BEEN DEFINED SPECIFICALLY IN S. 2(47) OF THE ACT. THEREFORE UNDER THE INCOME TAX ACT T HE REGISTRATION OF SALE DEED IS NOT A NECESSARY PRE-CONDITION FOR CONSIDERATION OF THE TR ANSFER OF LAND. WHEN THE ASSESSEE AGREES TO TRANSFER A PART OF THE LAND FOR A CONSIDE RATION OF THE PART OF THE BUILDING THAT WOULD BE CONSTRUCTED AND HANDS OVER THE POSSESSION OF THE LAND TO THE DEVELOPER THEN THERE WOULD BE A TRANSFER OF PROPERTY UNDER THE INC OME TAX ACT. THE COST OF THE UNDIVIDED PORTION OF THE LAND THAT MAY GO TO THE SH ARE OF THE DEVELOPER WOULD BE THE COST OF THE PORTION OF THE BUILDING THAT WOULD BE ALLOTT ED TO THE ASSESSEE. THEREFORE AS RIGHTLY CONTENDED BY THE LD. DEPARTMENTAL REPRESENTATIVE T HE COST OF THE BUILDING WHICH WOULD BE ALLOTTED TO THE ASSESSEE CAN EASILY BE ASCERTAIN ED ON THE BASIS OF THE DEVELOPMENT AGREEMENT. THE COPY OF THE DEVELOPMENT AGREEMENT I S NOT FILED BEFORE THIS TRIBUNAL. THE FINAL DECISION CAN BE TAKEN ONLY AFTER EXAMININ G THE DEVELOPMENT AGREEMENT. IN THE ABSENCE OF THE COPY OF THE DEVELOPMENT AGREEMENT T HIS TRIBUNAL IS NOT EXPRESSING ANY OPINION ON THE TRANSFER OF LAND. WHAT IS OBSERVED ABOVE IS ONLY A GENERAL PRINCIPLE AND THE FINAL DECISION NEEDS TO BE TAKEN ON THE BASIS O F THE TERMS AND CONDITIONS OF THE DEVELOPMENT AGREEMENT. MOREOVER WHEN THE APPEAL O F THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-06 IS PENDING WHEREIN THE SUBSTANTIVE ADD ITION WAS MADE THIS TRIBUNAL IS OF THE OPINION THAT THE CIT(A) IN ALL FAIRNESS OUGHT T O HAVE DISPOSED OF BOTH THE APPEALS OF THE ASSESSEE TOGETHER INSTEAD OF DISPOSING THE APP EAL FOR THE ASSESSMENT YEAR 2006-07 ALONE WHEREIN PROTECTIVE ASSESSMENT WAS MADE. 5. IN VIEW OF THE ABOVE THIS TRIBUNAL IS OF THE OP INION THAT THE CIT(A) OUGHT TO HAVE DISPOSED OFF THE APPEAL FOR THE ASSESSMENT YEAR 20 05-06 WHERE SUBSTANTIVE ADDITION IS TO BE MADE ALONGWITH APPEAL FOR THE ASSESSMENT YEAR 20 06-07 AND 2007-08 WHERE PROTECTIVE ASSESSMENT WAS MADE. THEREFORE WITHOUT EXPRESSING OF ANY OPINION ON MERIT THE ORDER OF THE CIT(A) FOR ASSESSMENT YEAR 2006-07 IS SET A SIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE CIT(A) TO DECIDE THE SAME A LONGWITH THE ASSESSEES APPEAL FOR 2005-06. IT IS MADE VERY CLEAR THAT THE OBSERVATION MADE IN THIS ORDER IS ONLY A GENERAL I.T.A. NO. 444/COCH/2011 4 PRINCIPLE ON THE BASIS OF THE CONTENTIONS RAISED BY THE LD. DEPARTMENTAL REPRESENTATIVE DURING THE COURSE OF THE HEARING. THE CIT(A) SHALL DISPOSE OF THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2005-06 ALONGWITH THE APPEAL F OR THE YEAR UNDER CONSIDERATION WITHOUT IN ANY WAY BEING INFLUENCED BY THE OBSERVAT ION MADE IN THIS ORDER. 6. IN THE RESULT THE REVENUES APPEAL IS ALLOWED F OR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON THIS DAY OF 3 RD NOVEMBER 2011. SD/- (N.R.S.GANESAN) JUDICIAL MEMBER PLACE: ERNAKULAM DATED: 3 RD NOVEMBER 2011 GJ COPY TO: 1. SHRI P.MOHANAKUMAR THANKAVILAS CRRA-1 CHALAKU ZHY ROAD PATTOM TRIVANDRUM- 695004. 2. THE ASST. COMMISSIONER OF INCOME TAX CENTRAL CI RCLE TRIVANDRUM. 3. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I TRIV ANDRUM 4. THE COMMISSIONER OF INCOME-TAX CENTRAL KOCHI. 5. D.R. I.T.A.T. COCHIN BENCH COCHIN. 6. GUARD FILE .