ITO 18(1)(3), MUMBAI v. TILAK KUNVERJI GADA, MUMBAI

ITA 5437/MUM/2009 | 2004-2005
Pronouncement Date: 22-07-2011 | Result: Allowed

Appeal Details

RSA Number 543719914 RSA 2009
Assessee PAN AADPG3736G
Bench Mumbai
Appeal Number ITA 5437/MUM/2009
Duration Of Justice 1 year(s) 9 month(s) 22 day(s)
Appellant ITO 18(1)(3), MUMBAI
Respondent TILAK KUNVERJI GADA, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 22-07-2011
Appeal Filed By Department
Order Result Allowed
Bench Allotted E
Tribunal Order Date 22-07-2011
Date Of Final Hearing 05-07-2011
Next Hearing Date 05-07-2011
Assessment Year 2004-2005
Appeal Filed On 30-09-2009
Judgment Text
1 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI E BENCH MUMBAI BENCHES MUMBAI BEFORE SHRI PRAMOD KUMAR AM & SHRI VIJAY PAL RAO JM ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) THE INCOME TAX OFFICER WARD 18(1)(3) MUMBAI VS SHRI TILAK KUNVERJI GADA C/O SHANTI GENERAL STORES BDD CHAWL NO. 49 WORLI MUMBAI 18 (APPELLANT) (RESPONDENT) PAN NO. AADPG3736G ASSESSEE BY SHRI B V JHAVERI REVENUE BY SHRI C G K BNAIR PER VIJAY PAL RAO JM THESE APPEAL BY THE REVENUE ARE DIRECTED AGAINST TW O SEPARATE ORDERS BOTH DATED 8.7.2009 OF THE CIT(A) FOR THE AYS 2003-04 AN D 2004-05 RESPECTIVELY. 2 THE ONLY GROUND RAISED BY THE REVENUE FOR AY 2003 -04 READS AS UNDER: THE CIT(A) ERRED IN DELETING AN ADDITION OF RS. 29 20 533/- MADE BY THE ASSESSING OFFICER AS SHORT TERM CAPITAL GAIN IN ASSES SMENT YEAR 2003-04 WITHOUT APPRECIATING THE FACT THAT THE CAPITAL GAIN HAD ACTU ALLY ARISEN IN 2003-04 2.1 THE ONLY GROUND RAISED BY THE REVENUE FOR AY 20 04-05 READS AS UNDER: THE CIT(A) ERRED IN DIRECTING THAT THE ASSESSEE IS LIABLE TO LONG TERM CAPITAL GAIN IN ASSESSMENT YEAR 2004-05 ON SUBSTANTIVE BASI S WITHOUT APPRECIATING THE FACT THAT EH CAPITAL GAIN HAD ACTUALLY ARISEN IN 20 03-04 2 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 3 THE ONLY ISSUE ARISES IN THESE APPEALS OF THE REV ENUE IS WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE THE TRANSFER OF LAND IN QUESTION IS TREATED AS COMPLETED DURING THE FINANCIAL YEAR 2002-03 OR 2003 -04 AND CONSEQUENTLY THE CAPITAL GAIN ARISING FROM SUCH TRANSFER IS ASSESSAB LE IN THE AY 2003-04 OR 2004-05. 4 BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE H AS ACQUIRED IMMOVEABLE PROPERTY BEING LEASE HOLD PLOT BEARING NO.63 SECTOR 21 NERUL NAVI MUMBAI ADMEASURING 353.040 SQ.MTRS VIDE THE LEASE AGREEME NT DATED 20.9.2000 EXECUTED BY THE CIDCO. THE ASSESSEE ENTERED INTO MOU DATED 2 5.10.2002 WITH M/S SUYASH CONSTRUCTION (HEREINAFTER CALLED AS CONTRACTORS). AS PER THE TERMS OF MOU A SUM OF RS. 60 LACS WAS DEPOSITED IN ESCROW ACCOUNT WITH M/ S HARAKHCHAND & CO. CONSEQUENTLY THE ASSESSEE ENTERED INTO TRIPARTITE AGREEMENT DT 27.11.2002 FOR TRANSFER OF ITS RIGHTS TO M/S UDHYAN CO-OPERATIVE H SG SOC LTD. THE ASSESSEE HAS ALSO ENTERED INTO AN ARTICLES OF AGREEMENT DATED 9.12.20 03 WITH THE CONTRACTOR. THE ASSESSEE HAS OFFERED LONG TERM CAPITAL GAINS ON TRA NSFER OF THE PLOT OF LAND IN QUESTION IN THE AY 2004-05. THE ASSESSING OFFICER OBTAINED THE COPIES OF THE AGREEMENT TO LEASE DATED 10.05.2000 TRIPARTITE AGR EEMENT DATED 27.11.2002 TRANSFER ORDER DATED 27.11.2002 AND LEASE DEED DT 2 2.2.2005 FROM CIDCO AND OBSERVED THAT THE PLOT OF LAND IN QUESTION HAS BEEN TRANSFERRED BY THE ASSESSEE ON 27.11.2002 CORRESPONDING TO ASSESSMENT YEAR 2003-0 4. ACCORDINGLY THE ASSESSING OFFICER ASSESSED THE CAPITAL GAINS ON PROTECTIVE BA SIS FOR THE ASSESSMENT YEAR 2004-05 AND ASSESSED THE SHORT TERM CAPITAL GAINS O N SUBSTANTIVE BASIS FOR ASSESSMENT YEAR 2003-04 IN REOPENING ASSESSMENT. 3 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 4.1 THE ASSESSEE CHALLENGED THE ACTION OF THE ASSES SING OFFICER IN ASSESSING THE CAPITAL GAINS ARISING FROM THE TRANSFER OF PLOT OF LAND IN QUESTION FOR ASSESSMENT YEAR 2003-04. THE CIT(A) HELD THAT MOU DT 25.10.2002 RE AD WITH TRIPARTITE AGREEMENT DT 27.11.2002 CANNOT BE HELD TO BE TRANSFER WITHIN TH E MEANING OF SEC. 2(4)(V) OF THE I T ACT R.W.S 53A OF TRANSFER OF PROPERTY ACT. ACCORDI NGLY THE CIT(A) HAS HELD THAT TRANSFER WITHIN THE MEANING OF SEC. 2(47)(V) R.W.S 53A THE PROVISIONS OF PROPERTY ACT TOOK PLACE VIDE AGREEMENT DT 9.12.2003 I.E. ASSESSM ENT YEAR 2004-05. 5 BEFORE US THE LD DR HAS SUBMITTED THAT THE ASSES SEE HAS ENTERED INTO TRIPARTITE AGREEMENT FOR TRANSFER OF PLOT OF LAND IN QUESTION IN FAVOUR OF M/S UDHYAN CHS LTD AND IN PURSUANT TO THE SAID AGREEMENT DT 27.11.2002 THE CIDCO HAS PASSED TRANSFER ORDER DT 27.11.2002 AND FINALLY EXECUTED THE LEASE DEED ON 22.2.2005 IN FAVOUR OF THE UDHYAM CHS LTD. THUS THE LD DR HAS SUBMITTED THAT THE TRANSACTION OF TRANSFER OF LEASE HOLD PLOT OF LAND IN QUESTION HAS BEEN COM PLETED ON 27.11.2002 WHICH FALLS IN THE ASSESSMENT YEAR 2003-04. HE FURTHER SUBMITT ED THAT THE CIT(A) HAS HEAVILY RELIED UPON THE ARTICLES OF AGREEMENT DATED 4.12.20 03 BETWEEN THE ASSESSEE AND THE CONTRACTOR WHEREAS THE PLOT OF LAND IN QUESTION HAS BEEN TRANSFERRED IN FAVOUR OF THE UDHYAN HOUSING SOCIETY. THEREFORE THE CIT(A) S RELIANCE ON THE SAID ARTICLES OF AGREEMENT IS MISPLACED. THE LD DR HAS TOOK US TO VARIOUS CLAUSES OF MOU TRIPARTITE AGREEMENT AS WELL AS ARTICLES OF AGREEMENT AND CONT ENDED THAT AS FAR AS THE TRANSFER OF PLOT OF LAND IN QUESTION IS CONCERNED ONLY THE MOU DATED 25.10.2002 AND TRIPLICATE AGREEMENT DT 27.11.2002 AS WELL AS THE O RDER OF THE TRANSFER ISSUED BY CIDCO IN FAVOUR OF THE SOCIETY ARE RELEVANT. HE HAS RELIED UPON THE ORDER OF THE ASSESSING OFFICER. 4 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 5.1 ON THE OTHER HAND THE LD AR HAS SUBMITTED THAT T HE ASSESSEE ENTERED INTO MOU ON 25 TH OCTOBER 2002 WITH M/S. SUYASH CONSTRUCTION AS CON TRACTORS PURSUANT TO WHICH A SUM OF RS.60 LAKHS WAS DEPOSITED WITH M/ S. HARAKCHAND & CO. ADVOCATES & SOLICITORS AS A SECURITY DEPOSIT AGAINS T (A) AN UNAUTHORIZED CONSTRUCTION (B) NON-COMPLIANCE OR BREACH OF ANY R ULES REGULATIONS AND BYE-LAWS OF CIDCO/NMMC (C) AGAINST INCURRING OF ANY UNAUTHO RIZED LIABILITY DURING THE COURSE OF CONSTRUCTION BY THE CONTRACTORS. THE SAID SUM OF RS.60 LAKHS WERE TO BE KEPT IN FIXED DEPOSIT FOR AND ON BEHALF OF THE CONT RACTORS AND THE INTEREST THEREOF SHOULD BELONG TO THE CONTRACTORS AND THE SAID SUM O F RS.60 LAKHS CANNOT BE PARTED WITH UNLESS AND UNTIL AN INTIMATION IN WRITING TO T HAT EFFECT IS GIVEN BY THE CONTRACTORS TO M/S. HARAKCHAND & CO. 5.2. AS PER THE AFORESAID MOU THE ASSESSEE HAS RESE RVED HIS RIGHT TO DETERMINE THE PRICE OR CONSIDERATION FOR TRANSFER OF THE PLOT OF LAND IN FUTURE AND ALSO RESERVED HIS RIGHT TO TRANSFER OR NOT TO TRANSFER THE SAID PLOT OF LAND TO THE CONTRACTORS. THE MOU ENVISAGES BOTH THE SITUATIONS NAMELY THE ASSESSEE AGREES TO TRANSFER THE PLOT OF LAND TO THE CONTRACTORS AND IN SUCH EVENT THE SAID DEPOS IT OF RS.60 LAKHS IS TO BE UTILIZED IN MAKING PAYMENT TO THE ASSESSEE AS A CONSIDERATION. IN CLAUSE 17 THE MOU ENVISAGES THE SITUATION THAT THE ASSESSEE MAY DECID E NOT TO TRANSFER THE PLOT OF LAND TO THE CONTRACTORS AND IN SUCH EVENT THE ASSESSEE A GREES TO PAY THE COST OF CONSTRUCTION INCURRED BY THE CONTRACTORS PLUS 15% O F THE COST OF CONSTRUCTION AS THE PROFIT TO THE CONTRACTORS. THUS THE MOU CLEARLY PRO VIDES THAT ON EXECUTION OF THE MOU THE CONTRACTOR WAS A PURE AND SIMPLE CONTRACTOR AND HE HAS TO CONSTRUCT THE BUILDING FOR AND ON BEHALF OF THE ASSESSEE. ONLY ON COMPLETION OF THE CONSTRUCTION 5 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . THE ASSESSEE WAS TO TAKE A DECISION TO TRANSFER THE PLOT OF LAND TO THE CONTRACTORS OR NOT AND AT THAT POINT OF TIME THE PRICE WOULD BE DE CIDED. ACCORDINGLY THE ARTICLES OF AGREEMENT WERE EXECUTED ON 4 TH DECEMBER 2003 BETWEEN THE ASSESSEE AND THE CONTRACTORS WHEREBY THE PRICE WAS DETERMINED AT RS. 63 LAKHS AND THE ASSESSEE HAD EXERCISED HIS RIGHT TO TRANSFER THE PLOT OF LAND IN FAVOUR OF THE CONTRACTORS. 5.3 IT WAS FURTHER SUBMITTED THAT CLAUSE 11 OF THE MOU CLEARLY SPELLS OUT THE FACTS THAT THE TRIPARTITE AGREEMENT WILL BE EXECUTED WITH THE CIDCO ONLY FOR THE LIMITED PURPOSE TO GET THE APPROVAL OF BUILDING PLANS AND N ECESSARY PERMISSION FOR CONSTRUCTION OF THE PROPOSED BUILDING ON THE SAID P LOT OF LAND AND TO PROMOTE AND TO FORM A CO-OPERATIVE SOCIETY. HOWEVER IN THE SAI D CLAUSE IT IS PROVIDED THAT IF THE ASSESSEE DECIDED TO EXERCISE HIS OPTION NOT TO TRAN SFER THE SAID PLOT OF LAND THEN IN THAT EVENT THE SAID TRIPARTITE AGREEMENT SHALL STAN D CANCELLED TERMINATED AND REVOKED AND IN THAT EVENT THE ASSESSEE AND THE CONT RACTORS OR THE SAID SOCIETY SHALL INTIMATE THE SAME TO CIDCO IN RESPECT THEREOF. IT I S RESPECTFULLY SUBMITTED THAT THE COMPLETE DOMAIN AND CONTROL OVER THE PROPERTY WAS W ITH THE ASSESSEE TILL 4 TH DECEMBER 2003 MORE SO WHEN AS RECORDED IN CLAUSE 1 1 OF THE MOU THE ASSESSEE HAD RESERVED HIS RIGHT TO CANCEL TERMINATE AND REV OKE THE TRIPARTITE AGREEMENT ENTERED INTO WITH CIDCO AND THEREFORE THERE WAS NO TRANSFER PURSUANT TO THE SAID TRIPARTITE AGREEMENT. 5.4. HE HAS REFERRED TO CLAUSE 17 OF THE MOU WHICH PROVIDES THAT AFTER THE COMPLETION OF THE CONSTRUCTION OF THE BUILDING AND DETERMINATION OF THE PRICE IF FOR ANY REASON THE TERMS OF TRANSFER AND ASSIGNMENT AR E NOT FINALIZED AND PRICE IS NOT DETERMINED THEN IN THAT EVENT THE ASSESSEE SHALL RE IMBURSE AND PAY THE COST OF CONSTRUCTION INCURRED BY THE CONTRACTORS PLUS 15% O F THE TOTAL COST OF CONSTRUCTION AS 6 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . THE FEES/CHARGES/PROFITS TO THE CONTRACTORS FOR CAR RYING OUT THE CONSTRUCTION OF THE BUILDING. THEREFORE IT IS CLEAR BEYOND DOUBT THAT EVEN AFTER EXECUTING THE MOU AND EVEN AFTER EXECUTING THE TRIPARTITE AGREEMENT WITH CIDCO WHICH WAS REQUIRED TO GET THE APPROVAL OF THE BUILDING PLANS AND NECESSAR Y PERMISSION FOR CONSTRUCTION OF THE PROPOSED BUILDING THE ASSESSEE HAD A RIGHT NOT TO TRANSFER THE PLOT OF LAND TO THE CONTRACTORS AND THE CONTRACTORS WERE ONLY ENTITLED TO COST OF CONSTRUCTION PLUS 15% PROFIT. 5.5. THE LD AR OF THE ASSESSEE SUBMITTED THAT THE T RIPARTITE AGREEMENT DATED 27 TH NOVEMBER 2002 ENTERED INTO WITH CIDCO HAS TO READ ALONG WITH THE MOU WHICH IS DATED 25 TH OCTOBER 2002. FURTHER IT WAS SUBMITTED THAT ON A JOINT READING OF BOTH THE DOCUMENTS IT IS CLEAR BEYOND DOUBT THAT THE ASS ESSEE HAD NOT TRANSFERRED HIS RIGHT TITLE AND INTEREST IN THE SAID PLOT OF LAND IN FAVOUR OF THE CONTRACTORS EVEN BY EXECUTING THE TRIPARTITE AGREEMENT BECAUSE THE ASSE SSEE HAD A RIGHT TO CANCEL OR REVOKE THE SAID TRIPARTITE AGREEMENT. 5.6. IT WAS FURTHER SUBMITTED THAT EVEN ON EXECUTIO N OF THE TRIPARTITE AGREEMENT ON 27 TH NOVEMBER 2002 THE CONSIDERATION WAS NOT DETERMINE D OR PAID BY THE CONTRACTORS TO THE ASSESSEE AND THEREFORE THE TRAN SFER WAS NOT EFFECTED AS THERE WAS NO CONSIDERATION FOR TRANSFER. IT IS FURTHER RE SPECTFULLY SUBMITTED THAT THE CONSIDERATION FOR TRANSFER OF THE PLOT OF LAND WAS FIXED FOR THE FIRST TIME IN THE MONTH OF DECEMBER 2003 AS RECORDED IN THE ARTICLES OF AG REEMENT DATED 4 TH DECEMBER 2003 AT RS.63 LAKHS AND RS.60/- LAKHS WERE PAID FOR THE FIRST TIME ON 1 ST DECEMBER 2003 AS RECORDED IN THE RECEIPT AT PAGE 43 OF THE P APER BOOK. 5.7. FURTHER IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THAT THE TRIPARTITE AGREEMENT DATED 27 TH NOVEMBER 2002 HAS GOT VALIDATED DUE TO THE EXECUT ION OF 7 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . THE ARTICLES OF AGREEMENT DATED 4 TH DECEMBER 2003 PURSUANT TO WHICH THE ASSESSEE AGREED TO TRANSFER THE PLOT OF LAND TO THE CONTRACT ORS AND RECEIVE CONSIDERATION OF RS.60 LAKHS OUT OF THE TOTAL CONSIDERATION OF RS.63 LAKHS. THEREFORE THE ARTICLES OF AGREEMENT FURTHER PROVIDES THAT THE ASSESSEE HAD AG REED TO SIGN AND EXECUTE THE APPLICATION TO THE CIDCO FOR ITS PERMISSION TO TRAN SFER THE SAID PLOT OF LAND IN THE NAME OF THE CONTRACTORS OR THEIR NOMINEES. THE ARTI CLES OF AGREEMENT FURTHER PROVIDES THAT ON RECEIPT OF THE PERMISSION FROM CID CO FOR TRANSFER OF THE SAID PLOT OF LAND THE ASSESSEE WOULD ENTER INTO A DEED OF ASSIG NMENT/CONVEYANCE/TRANSFER WITH THE CONTRACTORS OR THEIR NOMINEES AND GET THE SAME REGISTERED. THE AFORESAID ARTICLES OF AGREEMENT FURTHER PROVIDES IN PARA 17 T HAT UPON THE RECEIPT OF FULL CONSIDERATION MONEY THE ASSESSEE SHALL PERSONALLY ATTEND THE OFFICE OF CIDCO NMMC OFFICE OR ANY OTHER CONCERNED AUTHORITY FOR EF FECTIVELY TRANSFERRING THE SAID PLOT OF LAND TOT EH NAMES OF THE CONTRACTORS OR THE IR NOMINEES. 5.8. THE LD AR OF THE ASSESSEE SUBMITTED THAT NEITH ER THE SALE WAS EFFECTED NOR THERE WAS ANY RELINQUISHMENT OF RIGHT OF THE ASSESS EE IN THE SAID PLOT OF LAND BEFORE THE EXECUTION OF ARTICLES OF AGREEMENT DATED 4 TH DECEMBER 2003 AND THE ASSESSEE HAD RECEIVED THE CONSIDERATION ONLY ON EXECUTION OF ARTICLES OF AGREEMENT DATED 4 TH DECEMBER 2003 AND THEREFORE TRANSFER HAD TAKEN P LACE IN THE PREVIOUS YEAR RELEVANT TO A.Y. 2004-05. 8 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 6 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CARE FULLY PERUSED THE RELEVANT MATERIAL ON RECORD. THE RELEVANT PART OF RECITAL OF MOU DT 25.10.2002 IS REPRODUCED AS UNDER: AND WHEREAS THE AID MR MADHUSUDAN NAIR THE PARTNER OF THE CONTRACTORS REQUESTED THE LESSEES TO ALLOW AND PERMIT THE CONTRAC TORS TO DEVELOP THE SAID LOT OF LAND BY CONSTRUCTING A BUILDING THEREON IN ACCORDANCE WITH BUILDING PLANS THAT MAY BE APPROVED BY CIDCO/NMMC AN D PROMOTE A COOPERATIVE SOCIETY AND FOR THE PURPOSE NEGOTIATED W ITH THE LESSEES AS REGARDS TERMS OF THE SAID CONTRACT OF CONSTRUCTION OF THE SAID BUILDING ON THE SAID PLOT OF LAND AND FOR PROMOTING A COOPERATIVE HOU SING SOCIETY. AND WHEREAS PENDING THE FINALISATION OF THE NEGOTIA TIONS AND TERMS OF THE SAID CONTRACT (INCLUDING THE PRICE/CONSIDERATION) AND AT THE STAGE OF NEGOTIATIONS THE CONTRACTORS OFFERED TO DOST WITH M/S HARKHCHAND & CO. ADVOCATES & SOLICITORS A SUM OF RS. 60 00 000/- (RU PEE SIXTY LAKH ONLY) AS AND BY WAY OF SECURITY DEPOSIT TO BE KEPT IN ESCROW SU BJECT TO CERTAIN TERMS AND CONDITIONS. 6.1 IT IS CLEAR FROM THE MOU THAT THE COOPERATIVE H OUSING SOCIETY WAS TO BE FORMED FOR THE PURPOSE OF NEGOTIATION ON THE TERMS OF THE CONTRACT OF CONSTRUCTION OF THE BUILDING ON THE SAID PLOT OF LAND. IN THE ME ANWHILE THE CONTRACTOR WAS REQUIRED TO DEPOSIT A SUM OF RS. 60 LACS IN ESCROW ACCOUNT WITH M/S HARAKHCHAND & CO. 6.2 AS PER THE CLAUSE 2 OF THE MOU M/ HARKHCHAND & CO SHALL INVEST THE SAID SUM OF RS. 60 LACS IN FD WITH HDFC BANK LTD FOR A PER IOD OF 13 MONTHS UNDER REINVESTMENT DEPOSIT SCHEME WITH COMPOUND INTEREST QUARTERLY RE ST. 9 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 6.3 AS PER CLAUSE 4 OF THE MOU BY DEPOSITING THE SAID SUM OF RS. 60 LACS THE ASSESSEE SHALL PERMIT THE CONTRACTORS TO OBTAIN AP PROVAL OF THE BUILDING PLANS FOR THE PURPOSE OF CONSTRUCTION OF THE PROPOSED BUILD ING ON THE SAID PLOT OF LAND. THEREAFTER ON 27.11.2002 A TRIPARTITE AGREEMENT WAS ENTERED INTO BETWEEN THE ASSESSEE CIDCO AND M/S UDHYAN CO-OPERATIVE HSG SOC LTD. WHEREBY THE ASSESSEE REQUESTED THE CIDO TO GRANT PERMISSION TO TRANSFER AND ASSIGN ITS RIGHTS AND INTEREST/BENEFITS PERTAINS TO THE SAID PLOT OF LAND IN QUESTION TO THE NEW LICENSEE I.E. M/S UDHYAN CO-OPERATIVE HSG SOC LTD. THE RELEVAN T PART OF THE RECITALS OF THE TRIPARTITE AGREEMENT REPRODUCED HEREUNDER: 2. THE NEW LICENSEE SHALL BE SUBSTITUTED FOR THE ORIG INAL LICENSEE IN THE SAID AGREEMENT AND SHALL HAVE ALL THE RIGHTS OBLIGATION S LIABILITIES BENEFITS AND EQUITIES ACCORDINGLY THERE UNDER 3. THE ORIGINAL LICENSEE RELINQUISH AND RELEASE ALL HE R/HIS RIGHTS TITLES BENEFITS INTEREST CLAIMS OR DEMANDS WHATSOEVER IN THE SAID A GREEMENT AND DISCHARGES IN CORPORATION FROM ALL OBLIGATIONS OR LIAB ILITIES REQUIRED TO BE PERFORMED TO HIM BY THE CORPORATION UNDER THE SAID AGREEMENT. 6.4 IT IS DISCERNIBLE FROM THE ABOVE RECITALS AS WE LL AS L CLAUSES OF TRIPARTITE AGREEMENT THAT THE ASSESSEE TRANSFERRED AND RELINQU ISHED/RELEASED ALL THEIR RIGHTS TOTAL BENEFITS INTEREST CLAIM OR DEMAND WHATEVER I N THE SAID AGREEMENT WHEREBY THE LEASE RIGHTS WERE GIVEN TO THE ASSESSEE IN RESP ECT OF THE PLOT OF LAND IN QUESTION. AS PER CLAUSE 2 OF THE TRIPARTITE AGREEMENT IT IS EVIDENT THAT THE CO-OPERATIVE HSG SOCIETY SHALL BE SUBSTITUTED FOR THE ASSESSEE IN TH E SAID LEASE AGREEMENT AND SALE OF RIGHTS/OBLIGATIONS LIABILITIES BENEFITS AND EQUIT IES THEREON. THUS THE UNAMBIGUOUS TERMS OF TP AGREEMENT THE ASSESSEE HAS TRANSFERRED ITS RIGHTS BENEFITS INTEREST CLAIM IN THE SAID LAND IN FAVOUR OF THE SOCIETY VIDE TRIP ARTITE AGREEMENT DT 27.11.2002. 10 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . FURTHER IN PURSUANCE TO THE TRIPARTITE AGREEMENT CIDCO PASSED TRANSFER ORDER ON 27.11.2002 WHICH HAS BEEN REPRODUCED BY THE ASSESS ING OFFICER AT PAGE 4 &5 OF THE ASSESSING OFFICER AS UNDER: LETTER DATE 27.11.2002 ADDRESSED TO (I) SHRI HARAKCHA ND K GADA &TILAKCHAND K GADA AND (II) M/S UDYAN CHS LTD BY CIDCO REGARDING TRANSFER OF PLOT NO.63 SECTOR 21 AT NERUL. THE CONTENTS OF THE SAID LETTER AR E REPRODUCED HEREUNDER: TRIPARTITE AGREEMENT HAS BEEN EXECUTED ON 27 TH NOV 2002 BY MR HARAKCHAND KUNVERJI GADA & MR TILAKCHAND KUNVERJI GAD A ORIGINAL LICENSEE IN FAVOUR OF M/S UDHYAN CO-OPERATIVE HOUSIN G SOCIETY LTD. NEW LICENSEE FOR TRANSFERRING THE ABOVE MENTIONED LO T TO THEM. PLOT NO.63 SECTOR 21 AT NERUL IS ACCORDINGLY ORDERED TO BE TRANSFERRED IN THE NAME OF M/S UDHYAN CO-OPERATIVE HOUSING SOCIETY LTD NEW LICENSEE WILL BE LIABLE TO PAY ALL AMOUNTS THAT MAY BE LEGALLY DUE IN RESPECT OF THE SAID PLOT WITH EFFECT FROM NOVEMBER 2 002. 7 ONCE THE CIDCO HAS ACTED UPON THE TRIPARTITE AGRE EMENT BY ISSUING TRANSFER ORDER DT 27.11.2002 WHEREBY THE PLOT OF LAND IN QU ESTION WAS ORDERED TO BE TRANSFERRED IN THE NAME OF M/S UDHYAN HSG SOCIETY L TD . MOREOVER IN PURSUANCE TO THE TRIPARTITE AGREEMENT AND TRANSFER ORDER CIDCO HAS FINALLY EXECUTED THE LEASE DEED DT 22.2.2005 IN FAVOUR OF THE M/S UDHYAN HSG S OCIETY LTD THEN THE TRANSACTION OF THE TRANSFER QUA THE ASSESSEE HAS BEEN COMPLETED WHEN THE TRIPARTIT E AGREEMENT DT 27.11.2002 WAS EXECUTED. 7.1 THE LD AR HAS CITED VARIOUS CLAUSES OF THE MOU AND ARTICLES OF AGREEMENT AND SUBMITTED THAT THE ASSESSEE WAS IN COMPLETE DOMAIN IN TERMS OF AGREEMENT TILL 4.12.2003 WHEN THE ARTICLES OF AGREEMENT WAS EXECUT ED AND THE SALE CONSIDERATION WAS RECEIVED BY THE ASSESSEE. IT IS TO BE NOTED THA T AS PER THE MOU THE TENTATIVE 11 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . SALE CONSIDERATION WAS AGREED BETWEEN THE PARTIES A T RS. 60 LACS WHICH WAS TO BE DEPOSITED IN ESCROW ACCOUNT. IT APPEARS THAT THE D EPOSITED AMOUNT HAS ACCOMMODATED TO RS. 63 LACS OR MORE IN ESCROW ACCO UNT WITH M/S HARAKHCHAND & CO. AS IT WAS KEPT UNDER FD HAVING COMPOUND INTER EST WITH QUARTERLY REST. THEREFORE THE ARTICLES OF AGREEMENT DT 4.12.2003 IS ONLY FOR WITHDRAWAL OF THE AMOUNT FROM ESCROW ACCOUNT AND PAYMENT TO ASSESSEE AND HAS NO C ONSEQUENCE ON THE TRANSACTION OF TRANSFER OF PLOT OF LAND IN QUESTION BY THE ASSESSEE IN FAVOUR OF THE UDHYAN HSG SOCIETY LTD. THE ASSESSEE HAS TRANSFERR ED AND RELINQUISHED AND RELEASED ALL THEIR RIGHTS IN THE PLOT OF LAND IN QUESTION WI TH THE TRIPARTITE AGREEMENT ENTERED INTO BETWEEN THE ASSESSEE CIDCO AND SOCIETY WHICH WAS IN PURSUANCE TO THE MOU BETWEEN THE ASSESSEE AND THE CONTRACTORS. THEREFOR E ONCE THE MOU HAS BEEN ACTED UPON AND THE ASSESSEE RELINQUISHED AND RELEAS ED ALL ITS RIGHTS IN THE PLOT OF LAND BY WAY OF TRIPARTITE AGREEMENT AND THE CIDCO C ONSEQUENTLY PASSED AN ORDER OF THE TRANSFER OF LEASE DEED IN QUESTION IN FAVOU R OF THE UDHYAN HSG SOCIETY THEN NOTHING WAS LEFT WITH THE ASSESSEE IN RESPECT OF TH E PLOT OF LAND IN QUESTION TO BE TRANSFERRED AT THE TIME OF ARTICLES OF AGREEMENT EX CEPT TO BRING ON RECORD THE SETTLEMENT OF ACCOUNT BETWEEN THE ASSESSEE AND THE CONTRACTORS. MOREOVER IT APPEARS THAT THE ARTICLES OF AGREEMENT IS NOTHING B UT AN ATTEMPT TO POSTPONE THE DATE OF TRANSFER OF PLOT OF LAND IN QUESTION SO THA T THE BENEFIT ARISING FROM THE TRANSFER OF LAND CAN BE ASSESSED AS LONG TERM CAPITAL GAINS AND THE ASSESSEE CAN AVAIL THE DEDUCTION U/S 54EC. 7.2 THE CIT(A) WHILE ALLOWING THE CLAIM OF THE ASS ESSEE HAS HEAVILY RELIED UPON THE ARTICLES OF AGREEMENT EXECUTED ON 4 TH DEC 2003 AS OBSERVED IN THE FOREGOING 12 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . PARAS OF THIS ORDER THAT WHEN THE ASSESSEE HAS A LREADY TRANSFERRED AND RELINQUISHED AND RELEASED ALL THE RIGHTS IN THE PLOT OF LAND IN QUESTION IN FAVOUR OF THE UDHYAN HSG SOCIETY WHILE TRIPARTITE AGREEMENT THEN ARTICLES OF AGREEMENT IS AN EMPTY FORMALITY WITHOUT ANY SUBJECT MATTER TO BE TRANSFERRED. 8 IN VIEW OF THE ABOVE DISCUSSION WE HOLD THAT THE TRANSFER OF PLOT OF LAND IN QUESTION TOOK PLACE WHEN THE TRIPARTITE AGREEMENT DT 27.11.2002 WAS EXECUTED AS WELL AS TRANSFER ORDER DT 27.11.2002 WAS PASSED BY CIDCO IN FAVOUR OF THE UDHYAN HSG SOCIETY. THE CASE IS COVERED U/S 2(47) (I) AND NOT 2(47)(V). HENCE THE CAPITAL GAIN ARISING FROM THE TRANSFER OF PLOT OF LAND IN Q UESTION IS ASSESSABLE IN THE ASSESSMENT YEAR 2003-04. 9 THE LD AR OF THE ASSESSEE HAS POINTED OUT THAT TH E ASSESSEE RAISED ADDITIONAL GROUND OF VALIDITY OF THE ASSESSMENT BEFORE THE CIT (A) AS THE ASSESSMENT HAS BEEN FRAMED WITHOUT ISSUING NOTICE U/S 143(2). THE ASSES SEE HAS FILED AN APPLICATION BEFORE THE CIT(A FOR ADJUDICATION OF THE ADDITIONAL GROUND WHICH IS PENDING FOR DISPOSAL. IN VIEW OF THE ABOVE FACTS THE LD AR O F THE ASSESSEE HAS URGED THAT IF THE TRIBUNAL GOING TO TAKE A VIEW AGAINST THE ASSESSEE ON MERITS OF THE CASE THEN THE MATTER MAY BE KEPT PENDING TILL THE DISPOSAL OF THE ADDITIONAL GROUNDS RAISED BY THE ASSESSEE BEFORE THE CIT(A). 13 ITA NO. 5436 & 5437/MUM/2009 (ASST YEARS 2003-04 & 2004-05) . 10 AS THIS PLEA OF THE LD AR OF THE ASSESSEE DOES NOT BORNE OUT OF THE GROUNDS OF THE APPEALS OF THE REVENUE AND THE ASSESSEE HAS NOT FILED ANY CROSS OBJECTION OR ANY PETITION U/S 27 OF THE ITAT RULES. THEREFORE W HEN THIS ISSUE HAS NOT BEEN RAISED BY THE ASSESSEE THEN SUCH PLEA CANNOT BE ENTERTAINED I N VIEW OF THE FACT THAT THE ASSESSEE HIMSELF HAS MOVED AN APPLICATION BEFORE TH E CIT(A) FOR ADJUDICATION OF THE ADDITIONAL GROUNDS. EVEN OTHERWISE UNTIL AND UNLE SS THE CIT(A) ADJUDICATE THE ADDITIONAL GROUNDS THE SAME CANNOT BE RAISED BEFO RE THE TRIBUNAL. THEREFORE WE DO NOT FIND ANY MERIT OR SUBSTANCE IN THE PLEA OF T HE LD AR OF THE ASSESSEE ON THIS POINT; ACCORDINGLY THE SAME IS REJECTED. 11 IN THE RESULT THE APPEAL FILED BY THE REVENUE A RE ALLOWED. ORDER PRONOUNCED ON THE 22 ND DAY OF JULY 2011. SD/- SD/- ( PRAMOD KUMAR ) ACCOUNTANT MEMBER ( VIJAY PAL RAO ) JUDICIAL MEMBER PLACE: MUMBAI : DATED:22 ND JULY 2011 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI