MANUBHAI A. SHETH-LARGER HUF, MUMBAI v. ADDL CIT RG 12(1), MUMBAI

ITA 5641/MUM/2008 | 2005-2006
Pronouncement Date: 12-01-2011 | Result: Allowed

Appeal Details

RSA Number 564119914 RSA 2008
Assessee PAN AAAHM5487K
Bench Mumbai
Appeal Number ITA 5641/MUM/2008
Duration Of Justice 2 year(s) 4 month(s) 3 day(s)
Appellant MANUBHAI A. SHETH-LARGER HUF, MUMBAI
Respondent ADDL CIT RG 12(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 12-01-2011
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 12-01-2011
Date Of Final Hearing 07-04-2010
Next Hearing Date 07-04-2010
Assessment Year 2005-2006
Appeal Filed On 08-09-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI B BENCH BEFORE SHRI N.V.VASUDEVAN JUDICIAL MEMBER & SHRI T.R.SOOD ACCOUNTANT MEMBER I.T.A.NO.5775/MUM/2008 A.Y 2005-06 & ASST. COMMISSIONER OF I.T. 12(1) MUMBAI. VS. M/S MANUBHAI A. SHETH LARGER HUF 501 JANMABHOOMI CHAMBERS 21 WALCHAND HIRACHAND MARG MUMBAI 400 038. PAN: AAAHM 5487 K (APPELLANT) (RESPONDENT) AND I.T.A.NO.5641/MUM/2008 A.Y 2005-06 M/S MANUBHAI A. SHETH LARGER HUF MUMBAI VS. ASST. COMMISSIONER OF I.T. 12(1) MUMBAI. (APPELLANT) (RESPONDENT) REVENUE BY : MR. NARENDRA SINGH. ASSESSEE BY : MR. VINOD KUMAR BINDAL. O R D E R PER T.R.SOOD AM: THESE CROSS APPEALS ARE HEARD TOGETHER AND ARE DIS POSED OF BY THIS COMMON ORDER. 2. I.T.A.NO.5641/M/2008 [ASSESSEES APPEAL] : IN THIS APPEAL THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS- 1. THE CIT[A] ERRED IN LAW AND ON FACTS IN DIRECTING T HE ASSESSING OFFICER TO ADOPT THE TRANSFER CONSIDERATION U/S.50C OF THE ACT AT ` .281 LACS FOR COMPUTING THE CAPITAL GAIN ON A PROPE RTY TRANSFERRED BY THE APPELLANT IN TERMS OF A DEVELOPM ENT AGREEMENT DURING THE YEAR FOR ` .90 LACS AS AGAINST THE CONTENTION OF THE APPELLANT THAT NO CAPITAL GAIN AT ALL THEREON WAS TAXABLE DURING THE RELEVANT YEAR. THUS THIS DIR ECTION IGNORING THE SUBMISSIONS PARTICULARLY OF NON-APPLI CATION OF THE SAID SECTION 50C AND OF THE RESTRICTIVE INTEREST IN THE PROPERTY MUST BE REVERSED. 2 2. THE CIT[A] ERRED IN LAW AND ON FACTS IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN ADDING U/S.41(1) OF THE ACT A SUM OF ` `` ` .1 40 000/- ON ACCOUNT SECURITY DEPOSITS RECEIVED B Y THE APPELLANT IN EARLIER YEAR AND WHICH WERE NEVER CLAI MED AS EXPENDITURE ANY TIME WHILE COMPUTING THE ASSESSABLE INCOME. THUS THE ADDITION MUST BE DELETED. 3. 3. GROUND NO.1 : BRIEF FACTS ARE THAT ASSESSEE IS OWNER OF A PIECE OF LAND MEASURING ABOUT 7326.14 SQ.MTS. ON WHICH A HOUSE WAS ALSO BUILT. THE HOUSE HAS BEEN LET OUT TO ONE SHRI VINOD P. PATEL AND SHRI RAJESH P. PATEL HIS BROTHER AND THE TENANCY WAS D ULY RECORDED IN THE REVENUE RECORDS. THIS PROPERTY WAS SOLD THROUGH TRI PARTITE AGREEMENT TO M/S ABHILASHA BUILT-ART. THE CONSIDERATION PAYAB LE TO THE ASSESSEE BY M/S.ABHILASHA BUILT-ART FOR THE PROPERTY WAS STA TED TO BE ` `` ` .90 LAKHS AND THE CONSIDERATION PAID TO SHRI VINOD P. PATEL A ND SHRI RAJESH P. PATEL WHO WERE THE CONFIRMING PARTY IN THIS TRIPAR TITE AGREEMENT THROUGH WHICH THEY HAD AGREED TO RELEASE RELINQUIS H AND SURRENDER THEIR RIGHTS TITLE POSSESSION AND INTEREST IN THE PROPERTY IN FAVOUR OF THE DEVELOPER WAS STATED TO BE RS.30 LAKHS PLUS TWO 2 BHK FLATS. DURING ASSESSMENT PROCEEDINGS AO NOTED THAT MARKET/ GOVERNMENT VALUE FOR THE PURPOSE OF STAMP DUTY WAS SHOWN AT ` `` ` .4.37 CRORES AND EVEN STAMP DUTY AMOUNTING TO ` `` ` .4.37 LAKHS WAS PAID AND THEREFORE HE REQUESTED THE ASSESSEE TO SHOW WHY THE MARKET RA TE AS PER STAMP DUTY AMOUNTING TO ` `` ` .4.37 LAKHS COULD NOT BE ADOPTED AS SALE CONSIDERATION. HE ALSO MADE ENQUIRIES WITH THE REVE NUE AUTHORITIES AND FOUND THE MARKET RATES FOR THE PROPERTY AND THE SE DETAILS WERE ALSO INTIMATED TO THE ASSESSEE ALONG WITH THE QUERY . HE HAS STATED IN THE ASSESSMENT ORDER THAT ASSESSEE DID NOT REPLY TO THESE QUERIES AND 3 THEREFORE HE INVOKED SEC.50C AND DETERMINED THE SA LE CONSIDERATION AT ` `` ` .4.37 CRORES. OUT OF THIS HE REDUCED THE SUM OF ` `` ` .30 LAKHS STATED TO HAVE BEEN PAID TO SHRI VINOD P. PATEL AND SHRI RAJE SH P. PATEL. HE FURTHER ALLOWED REDUCTION OF ` `` ` .15 LAKHS TOWARDS THE FLATS TO BE GIVEN TO THE CONFIRMING PARTY THEREAFTER HE REDUCED THE LE GAL FEES AND BROKERAGE ETC. CLAIMED BY THE ASSESSEE AND DETERMI NED THE NET CONSIDERATION OF ` `` ` .3.89 CRORES FOR THE PURPOSE OF LEVY OF CAPITAL GAI NS AND COMPUTED THE CAPITAL GAINS ACCORDINGLY. 4. BEFORE THE CIT(A) IT WAS MAINLY ARGUED THAT SEC. 50C WAS ONLY A DEEMING PROVISION AND THEREFORE IT CANNOT BE EXTE NDED TO ALL KINDS OF RIGHTS BECAUSE SEC. 50C APPLIES ONLY IN RESPECT OF LAND AND BUILDING. IT WAS ARGUED THAT THE ASSESSEE BAS BARELY SOLD THE TI TLE OF THE PROPERTY AS POSSESSION ETC. WAS WITH THE TENANTS I.E. SHRI VINOD P. PATEL AND SHRI RAJESH P. PATEL WHO HAVE BECOME CONFIRMING PA RTY AND THEREFORE THE PROVISIONS OF SEC. 50C COULD NOT BE EXTENDED TO SUCH RIGHTS. IT WAS FURTHER SUBMITTED THAT IN THE LIGHT OF THE DECISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CHATRABHUJ DWARKADAS KAPADIA VS. CIT [260 ITR 491] A DEVELOPMENT AGREEME NT IS DIFFERENT FROM THE SALE AGREEMENT AND EVEN GOVERNMENT OF MAHA RASHTRA HAS RECOGNIZED THIS BECAUSE THE STAMP DUTY IN THE CASE OF DEVELOPMENT AGREEMENT IS MUCH LESS THAN THE NORMAL SALE. IT WAS EMPHATICALLY ARGUED THAT FULL STAMP DUTY VALUATION OF UN-ENCUMBE RED PROPERTY COULD NOT BE COMPARED WITH ENCUMBERED TENANTED PROPERTY B ECAUSE ASSESSEE HAS SOLD THE ENCUMBERED PROPERTY. ALTERNAT IVELY IT WAS ALSO ARGUED THAT IN ANY CASE AO WAS DUTY BOUND TO REFER THE MATTER TO THE 4 DVO IN VIEW OF THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF MEGHRAJ BAID VS. ACIT [114 TTJ 841]. 5. THE LD. CIT(A) AFTER CONSIDERING THESE SUBMISSIO NS FOUND THAT NAMES OF THE CONFIRMING PARTIES HAD BEEN INCORPORAT ED IN THE TRIPARTITE AGREEMENT AND IT IS RECORDED THAT WITH THE CONFIRMA TION OF THE PARTIES WHO WERE IN EXCLUSIVE UNINTERRUPTED PHYSICAL POSSES SION WOULD ALSO HAND OVER THEIR RIGHTS. HE ALSO NOTED THAT FACT OF TENANCY HAS BEEN RECORDED IN THE REVENUE RECORDS. THE LD. CIT(A) AGR EED THAT WHAT ASSESSEE HAS SOLD IS HIS ENCUMBERED PROPERTY AND T HEREFORE FULL VALUE OF CONSIDERATION FOR UNENCUMBERED PROPERTY COULD NO T BE ADOPTED BECAUSE IT WAS A WELL KNOWN FACT THAT TENANTED PROP ERTIES FETCH SUBSEQUENTLY LOWER PRICES. HE FURTHER OBSERVED AT T HE SAME TIME SEC. 50C WAS MANDATORY DURING THE RELEVANT PERIOD AND T HEREFORE ITS APPLICATION COULD NOT BE TOTALLY IGNORED. HE FURTHE R OBSERVED THAT THE ENTIRE CONSIDERATION COULD NOT BE ASSESSED IN THE H ANDS OF THE ASSESSEE BECAUSE THERE WERE TWO SELLERS OF THE SAME PROPERTY AS THE ASSESSEE HAS SOLD THE TITLE WHEREAS THE TENANTS HA S SOLD THE POSSESSION AND THEIR RIGHTS AND ACCORDINGLY HE WA S OF THE VIEW THAT PROPORTIONATE AMOUNTS SHOULD BE ASSESSED WHICH HAVE BEEN WORKED OUT VIDE PARAS 2.19 AND 2.20 OF HIS ORDER WHICH ARE AS UNDER: 2.19 SINCE THE APPELLANT GOT ` `` ` .90 LAKHS (64.2857%) OUT OF THE TOTAL CONSIDERATION OF ` `` ` .140 LAKHS (90 LAKHS + 35 LAKHS + 15 LAKHS FOR 2(22)(E) BHK FLAT) GIVEN BY THE BUYER FOR THE PROPE RTY THE SAME PROPORTION NEED TO BE APPLIED TO THE VALUE DETERMIN ED FOR STAMP DUTY PAYMENT PURPOSE. THUS THE PROPERTY SOLD BY THE APPE LLANT HIMSELF IS RESTRICTED TO 64.2857% OF THE TRANSFER VALUE FOR TH E PURPOSE OF STAMP DUTY PAYMENT. THIS COMES TO A FIGURE OF ` `` ` .2.81 CRORES [ROUNDED OFF FIGURE FOR ` `` ` .2.8092 CRORES] AS AGAINST ` `` ` .4.37 CRORES TAKEN BY THE AO [I.E. 100% FOR THE APPELLANT]. HENCE THE SAME SHOUL D BE SUBSTITUTED FOR THE PURPOSE. SIMILARLY THE AMOUNT OF ` `` ` .45 LAKHS ON ACCOUNT OF COST OF 5 EVICTION OF THE TENANTS FROM THE PROPERTY REDUCED B Y THE AO IN THE COMPUTATION SHALL ALSO BE IGNORED HERE FOR THE PURP OSE OF THIS COMPUTATION. 2.20 IN BRIEF THE AO IS DIRECTED TO CONSIDER ONLY ` `` ` .2.81 CRORES [AS AGAINST ` `` ` .4.37 CRORES TAKEN BY HIM] FOR COMPUTING THE LONG T ERM CAPITAL GAIN WITH REGARD TO THE APPELLANT AND THUS THE APPE LLANT GETS PART RELIEF IN THESE GROUNDS ON QUANTUM. HOWEVER THE PRINCIPLE OF APPLYING SEC. 50 TO THIS TRANSACTION AS DONE BY THE AO IS CONFI RMED. 6. BEFORE US LD.COUNSEL OF THE ASSESSEE AGAIN CARRI ED US THROUGH THE FACTS FROM ASSESSMENT ORDER AND CIT(A)S ORDER AND EMPHASIZED THAT THE SAID PROPERTY HAD BEEN LET OUT AND THE FAC T OF TENANCY WAS DULY RECORDED IN THE REVENUE RECORDS. THE ASSESSEE WAS RECEIVING RENT OF LESS THAN ` `` ` .4000/- PER YEAR. SINCE THE TENANCY HAS BEEN RECORD ED IN THE REVENUE RECORDS THE ASSESSEE WAS NOT IN A POSI TION TO GET THE PROPERTY VACATED. HE SUBMITTED THAT IF RENT CAPITAL IZATION WAS ADOPTED THEN THE VALUE OF THE PROPERTY WOULD BE APPROXIMATE LY ONLY ABOUT ` `` ` .1 35 000/- IN COMPARISON TO SALE CONSIDERATION OF ` `` ` .90 LAKHS RECEIVED BY THE ASSESSEE. HE ARGUED THAT THE LOWER AUTHORITI ES HAVE FAILED TO UNDERSTAND THE BASIC FACT THAT ASSESSEE WAS NOT COM PLETE OWNER OF THE ASSESSEE AND WAS HAVING ONLY TITLE TO THE PROPERTY WHEREAS PHYSICAL POSSESSION AND OTHER RIGHTS WERE WITH SHRI VINOD P. PATEL AND SHRI RAJESH P. PATEL AND WHEN A BUILDER APPROACHED THE ASSESSEE AND THE PROPERTY WAS SOLD IT WAS RATHER A WINDFALL TO THE ASSESSEE. HE FURTHER SUBMITTED THAT WHAT ARRANGEMENTS THE DEVELOPER HAD MADE WITH THE TENANTS IS NOT KNOWN TO THE ASSESSEE AND ASSESSEE W AS CONCERNED WITH HIS OWN CONSIDERATION. HE ARGUED THAT ASSESSEE HAS SOLD ONLY TITLE OF PROPERTY FOR DEVELOPMENT RIGHTS AND THEREFORE STR ICTLY SPEAKING THE PROVISIONS OF SEC.50C WERE NOT APPLICABLE. IN ANY C ASE THE AO WAS 6 DUTY BOUND TO REFER THE MATTER TO THE DVO FOR VALUA TION OF THE MERE TITLE OF THE PROPERTY WITHOUT PHYSICAL POSSESSION A ND IN THIS REGARD HE SUBMITTED THAT THOUGH SEC. 50C HAS USED THE EXPRESS ION MAY BUT THE SAME HAS BEEN INTERPRETED AS SHALL BY VARIOUS BEN CHES OF THE TRIBUNAL AND IN THIS REGARD HE MAINLY RELIED ON THE DECISION OF THE JODHPUR BENCH OF THE TRIBUNAL IN THE CASE OF MEGHRA J BAID VS. ACIT [SUPRA]. 7. ON THE OTHER HAND LD.DR SUBMITTED THAT FOR THE PURPOSE OF SEC. 50C IT IS ONLY THE ASSESSEE WHO HAS TO BE TREA TED AS THE OWNER AND THE TENANT CANNOT BE CALLED AS THE OWNER. HE AR GUED THAT THE PURPOSE OF SEC.50C WAS TO CHECK THE CASH ELEMENT IN VOLVED IN THE DEALING OF THE PROPERTY. SINCE THE TENANTS HAVE BEE N ALLOTTED ALTERNATIVE FLATS BY THE BUILDER IN ADDITION TO ` `` ` .30 LAKHS THE REST OF CONSIDERATION MUST HAVE GONE TO THE ASSESSEE ONLY. HE ALSO SUBMITTED THAT THE DECISION IN THE CASE OF CHATRABHUJ DWARKAD AS KAPADIA VS. CIT [SUPRA] IS ON A DIFFERENT CONTEXT WHERE THE HONBLE HIGH COURT OBSERVED THAT NORMALLY A DEVELOPER WAS ONLY A CONTR ACTOR AND ULTIMATELY THE FLATS WOULD BE TRANSFERRED BY THE OW NER AND THEREFORE THIS HAS NO RELEVANCE TO THE FACTS BEFORE US. HE FU RTHER SUBMITTED THAT ASSESSEE HAS OFFERED CAPITAL GAINS ON THE BASIS OF SALE CONSIDERATION MENTIONED IN THE TRIPARTITE AGREEMENT WHEREAS THE V ALUATION WAS DIFFERENT FOR THE PURPOSE OF STAMP DUTY AND ASSESSE E HAD NEVER OBJECTED TO THE VALUATION DONE BY THE STAMP DUTY VA LUER AND THEREFORE THERE WAS NO QUESTION OF REFERRING THE S AME TO THE DVO FOR ASCERTAINING THE CORRECT VALUE OF THE PROPERTY. 7 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY. WE FIND THAT ASSESSEE HAS SOLD THE SAID PROPERTY THROUGH TRIPART ITE AGREEMENT ALONG WITH THE TENANTS SHRI VINOD P. PATEL AND SHRI RAJES H P. PATEL. WE FURTHER FIND THAT IT IS NOT DISPUTED THAT THE TENAN CY WAS DULY REGISTERED IN THE REVENUE RECORDS AND THEREFORE ASSESSEE COU LD NOT HAVE POSSIBLY GOT THE PREMISES VACATED. IN THE LIGHT OF THIS FACT WHAT ASSESSEE HAS SOLD IS THE TITLE OF THE PROPERTY. UND ER THE TRANSFER OF PROPERTY ACT A PERSON CAN HAVE A BUNDLE OF RIGHTS IN RESPECT OF A PROPERTY AND IN THIS CASE THE RIGHT OF THE ASSESSEE WAS THAT OF THE OWNER. FURTHER SEC.50C READS AS UNDER: 50C. (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET BEI NG LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURPOSE O F PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER THE VALUE SO ADO PTED OR ASSESSED [ OR ASSESSABLE ] SHALL FOR THE PURPOSES OF SECTION 48 BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER. (2) WITHOUT PREJUDICE TO THE PROVISIONS OF SUB-SECT ION (1) WHERE ( A ) THE ASSESSEE CLAIMS BEFORE ANY ASSESSING OFFICER THAT THE VALUE ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) EXCEEDS THE FAIR MARKET VALUE OF THE PROPERTY AS ON THE DATE OF TRANSFER; ( B ) THE VALUE SO ADOPTED OR ASSESSED [ OR ASSESSABLE ] BY THE STAMP VALUATION AUTHORITY UNDER SUB-SECTION (1) HAS NOT B EEN DISPUTED IN ANY APPEAL OR REVISION OR NO REFERENCE HAS BEEN MAD E BEFORE ANY OTHER AUTHORITY COURT OR THE HIGH COURT THE ASSESSING OFFICER MAY REFER THE VALUATION OF T HE CAPITAL ASSET TO A VALUATION OFFICER AND WHERE ANY SUCH REFERENCE IS M ADE THE PROVISIONS OF SUB-SECTIONS (2) (3) (4) (5) AND ( 6) OF SECTION 16A CLAUSE ( I ) OF SUB-SECTION (1) AND SUB-SECTIONS (6) AND (7) OF SECTION 23A SUB-SECTION (5) OF SECTION 24 SECTION 34AA S ECTION 35 AND SECTION 37 OF THE WEALTH-TAX ACT 1957 (27 OF 1957) SHALL WITH NECESSARY MODIFICA-TIONS APPLY IN RELATION TO SUCH REFERENCE AS THEY APPLY IN RELATION TO A REFERENCE MADE BY THE ASSESS ING OFFICER UNDER SUB-SECTION (1) OF SECTION 16A OF THAT ACT. 8 A PLAIN READING OF THE ABOVE PROVISIONS SHOW THAT W HEREVER A TRANSFER OF CAPITAL ASSET BEING LAND AND BUILDING OR BOTH I S INVOLVED THESE PROVISIONS WOULD BE ATTRACTED. IN THE CASE BEFORE U S ASSESSEE HAS DEFINITELY TRANSFERRED THE TITLE OF THE LAND AND T HEREFORE SECTION 50C WAS APPLICABLE. IT CANNOT BE SAID THAT SINCE LAND W AS GIVEN FOR DEVELOPMENT RIGHTS THEREFORE PROVISIONS OF SEC. 5 0C ARE NOT APPLICABLE. IN THE CASE BEFORE US ASSESSEE HAS HIMS ELF ADMITTED TO THE TRANSFER OF LAND THEREFORE SEC. 50C COULD BE APPL ICABLE. HOWEVER AT THE SAME TIME WHAT ASSESSEE HAS SOLD IS ONLY THE TI TLE OF THE PROPERTY AND THE POSSESSION WAS WITH THE TENANTS WHO HAVE AL SO SOLD THE SAME THROUGH TRIPARTITE AGREEMENT. THE QUESTION IS WHETH ER CIT[A] HAS CORRECTLY VALUED BY RESORTING TO APPORTION OF SHARE . THE ISSUE REGARDING MATTER TO BE REFERRED TO THE DVO CAME UP FOR CONSID ERATION BEFORE THE TRIBUNAL IN THE CASE OF MEGHRAJ BAID VS. ITO [SUPRA ]. IN THAT CASE IT WAS HELD AS UNDER: 4. AFTER EXAMINING THE PROVISION EXTRACTED HEREINA BOVE IN ITS LETTERS AND SPIRIT WE ARE OF THE OPINION THAT IN CASE THE AO DOES NOT AGREE WITH THE EXPLANATION OF THE ASSESSEE WITH REGARD TO LOWER CONSIDERATION DISCLOSED BY HIM THEN HE SHOULD REFER THE MATTER TO DVO FOR GETTING ITS MARKET RATE ESTABLISHED AS ON DATE OF THE SALE TO A RRIVE AT THE CORRECT SALE CONSIDERATION. IF THIS PROVISION IS READ IN TH E SENSE THAT IF THE AO IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE THEN HE MAY OR MAY NOT SEND THE MATTER FOR VALUATION TO THE DVO THEN IN THAT CASE THIS PROVISION WOULD BE RENDERED REDUNDANT. THE WOR D MAY USED IN THIS SUB-SECTION SIGNIFIES THAT IN CASE LEARNED AO IS NOT SATISFIED WITH THE EXPLANATION OF THE ASSESSEE HE SHOULD REFE R THE MATTER TO THE DVO FOR THE MENTIONED PURPOSE. LEARNED AUTHORISED R EPRESENTATIVE HAS RELIED ON THE DECISION OF THE HONBLE SUPREME C OURT RENDERED IN THE CASE OF ASHOK LEYLAND LTD. VS. UNION OF INDIA & ORS. (1997) 105 STC 152 (SC) WHEREIN IT HAS BEEN HELD THAT THE DEEM ING PROVISIONS ARE REBUTTABLE ONE. WE HAVE EXAMINED THE ENTIRE FACTS O F THIS CASE IN THE LIGHT OF THE PROVISIONS AND PRECEDENTS RELIED BEFOR E US. IN OUR CONSIDERED OPINION THE BEFITTING REPLY OF ALL THE Q UERIES AROUSE IN OUR MINDS AS WELL AS RAISED BY THE PARTIES IS THAT THE MATTER SHOULD BE RESTORED BACK TO THE FILE OF THE LEARNED AO WITH A DIRECTION THAT HE SHALL 9 REFER THIS MATTER OF VALUATION IN THE LIGHT OF SUB- S. (2) OF S. 50C TO THE DVO FOR DETERMINING THE CONSIDERATION OF THIS PLOT SOLD BY THE ASSESSEE UNDER S. 50C OF THE ACT. FROM THE ABOVE IT IS CLEAR THAT THOUGH LEGISLATURE HAS USED EXPRESSION MAY BUT THE SAME HAS TO BE CONSTRUED AS SHALL. WE ARE OF THE VIEW THAT THIS IS SO BECAUSE AO IS NOT AN EXPERT IN VALU ATION OF THE PROPERTY AND THAT IS WHY WHENEVER THERE IS A DISPUTE REGARDI NG VALUATION IT HAS BEEN MANDATED THAT THE AO SHOULD REFER THE MATTER T O THE VALUATION OFFICER. SINCE THE ASSESSEE HAS ADOPTED LOWER VALUE AND THE REASON GIVEN WAS THAT ASSESSEE HAS SOLD ONLY THE TITLE AND THAT THE POSSESSION WAS NOT WITH THE ASSESSEE WE ARE OF THE VIEW THAT THE AO SHOULD HAVE REFERRED THE MATTER TO THE DVO FOR VALUATION OF THE PORTION OF THE ASSESSEES RIGHTS I.E. VALUATION OF THE TITLE OF TH E PROPERTY WITHOUT THE POSSESSION. THEREFORE FOLLOWING THE ABOVE DECISION WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND REMIT THE MATTER BACK T O THE FILE OF THE AO WITH A DIRECTION TO FIRST REFER THE MATTER TO THE D VO AND THEREAFTER ASSESS THE CAPITAL GAINS. 9. GROUND NO.2 : AFTER HEARING BOTH THE PARTIES WE FIND THAT DURI NG THE ASSESSMENT PROCEEDINGS AO OBSERVED THAT IN THE BALANCE-SHEET A SUM OF ` `` ` .1.4 LAKHS WAS BEING SHOWN AS SECURITY DEPOSITS. HE THEN REFERRED TO THE STATEMENT RECORDED DURING SURVEY PR OCEEDINGS WHICH IS AS UNDER: AS PER THE RETURN OF INCOME FILED FOR AY 2005-06 THE DEPOSITS FROM THE FOLLOWING QUARRY LESSEES ARE SHOWN AS OUTSTANDI NG . S.NO. NAME OF THE PARTY AMOUNT IN RS. 1 A MAHENDRA & CO. 35 000 2 BHARAT STONE & METAL SUPPLY CO. 10 000 3 GULATI CONSTRUCTION CORPORATION 10 000 4 PATEL QUARRIES 5 000 10 5 CHANDIVALI QUARRIES 10 000 6 H.N.SOMAIYA & CO. 7 000 7 MAHARASHTRA CONST. CO. 10 000 8 DECCAN STONE INDUSTRIES 10 000 9 DHANJI JETHABHAI & CO. 10 000 10 KALYAN STONE QUARRIES 10 000 11 SWWHNEY CONST. CORPN. 3 000 12 SHALIR STONE QUARRIES 10 000 13 DESAI & CO. 10 000 ARE THE LEASE AGREEMENTS WITH REFERENCE TO THE ABOV E PARTIES REGARDING QUARRY OF LANDS TILL IN VOGUE ? ANS: NO.LEASE AGREEMENTS ARE OVER. THOSE LANDS ARE SOLD TO SUMER CORPORATION. QUARRIES ARE CLOSED DOWN. AS THE ASSESSEE HIMSELF HAS AGREED THAT THE LEASE AGREEMENTS ARE ALREADY OVER AND THOSE LANDS WERE SOLD TO SUMER CORPORATION AND EVEN THE QUARRIES WERE ALSO CLOSED DOWN AND THAT TH ERE IS NO CLAIM FROM THOSE PARTIES FOR REFUND OF THESE AMOUNTS THI S AMOUNT IS TREATED AS AND TAXED AS INCOME OF THE ASSESSEE FROM OTHER S OURCES. THIS INCOME IS TREATED AS INCOME FROM OTHER SOURCES. ON THE BASIS OF THE ABOVE AO CONCLUDED THAT ASSESS EE HAS HIMSELF ADMITTED THAT AS THE AGREEMENTS ARE OVER AND THE QU ARRIES WERE ALSO CLOSED THEREFORE NO CLAIMS WERE OUTSTANDING IN RE SPECT OF SECURITY DEPOSITS AND ACCORDINGLY THIS AMOUNT WAS TREATED AS TAXABLE U/S.41(1). 10. ON APPEAL ACTION OF THE AO WAS CONFIRMED BY TH E CIT[A]. 11. BEFORE US LD. COUNSEL OF THE ASSESSEE MADE TWO FOLD SUBMISSIONS. FIRSTLY HE ARGUED THAT LIABILITY IN R ESPECT OF SECURITY DEPOSITS IS IN THE CAPITAL FIELD AND SINCE NO DEDUC TION HAS ALREADY BEEN ALLOWED THEREFORE THIS SUM COULD NOT BE TREATED A S TAXABLE U/S.41(1). SECONDLY HE SUBMITTED THAT THIS AMOUNT WAS NEVER C REDITED TO PROFIT & LOSS ACCOUNT IN THIS YEAR AND FURTHER THE SAME HAS ALREADY BEEN OFFERED FOR TAXATION IN A.Y 2006-07 AND THEREFORE SAME CA NNOT BE TAXED IN THIS YEAR. 11 12. ON THE OTHER HAND LD. DR STRONGLY RELIED ON TH E ORDER OF THE CIT[A]. 13. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY. WE FIND THAT LD. CIT[A] HAS CONFIRMED THE ADDITION ON THE BASIS OF DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. CH OWGULE & CO. PVT. LTD. 92 CTR 5. HOWEVER AT THE SAME TIME IF THE AMO UNT WAS NOT CREDITED TO THE PROFIT & LOSS ACCOUNT IN THIS YEAR AND THE SAME WAS OFFERED VOLUNTARILY BY THE ASSESSEE FOR TAXATION IN A.Y 2006-07 THEN SAME COULD NOT HAVE BEEN SUBJECTED TO TAX IN THIS Y EAR BECAUSE THERE IS NO FINDING THAT THE AMOUNT WAS TRANSFERRED TO TH E PROFIT & LOSS ACCOUNT IN THIS YEAR. AT THE SAME TIME LD. COUNSEL OF THE ASSESSEE COULD NOT FILE COPY OF ACCOUNTS FOR A.Y 2006-07 TH EREFORE WE SET ASIDE THE ORDER OF THE LD. CIT[A] AND REMIT THE MATTER BA CK TO THE FILE OF THE AO WITH A DIRECTION TO VERIFY IF THIS AMOUNT HAS AL READY BEEN OFFERED FOR TAX IN A.Y 2006-07 THEN IT SHOULD BE ASSESSED IN A .Y 2006-07 OTHERWISE AO MAY DECIDE THE ISSUE IN ACCORDANCE WIT H THE LAW. 14. IN THE RESULT ASSESSEES APPEAL IS ALLOWED FOR STATISTICAL PURPOSES. 15. I.T.A.NO.5775/M/08 [REVENUES APPEAL] : IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS: (A) CAPITAL GAIN ARISING OUT OF TRANSFER OF IMMOVAB LE PROPERTY TO M/S ABHILASHA BUILT ART: AREA: 7326.14 SQ.MTS. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT[A] FAILED TO APPRECIATE THAT THE AO HAD CORRECTLY WORK ED OUT THE DEDUCTION/CONSIDERATION TO BE ALLOWED TOWARDS REMO VAL OF IMPEDIMENT/SOLVING OF LITIGATION REGARDING TRANSFE R OF IMMOVABLE PROPERTY. 12 (B) CAPITAL GAIN ARISING OUT OF TRANSFER OF IMMOVAB LE PROPERTY TO M/S UNIQUE ESTATE DEVELOPMENT CO. LTD: AREA: 66984.84 S Q.MTS. 1) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT[A] FAILED TO APPRECIATE THE JUDGMENT IN THE CASE OF K. JEELANI BASHA 256 ITR 282 (MAD) AGREEMENT TO SELL ENTERED FOR TRANSFE R OF LAND IN STAGES CAPITAL GAIN TO BE WORKED OUT ON THE BASIS OF SALE CONSIDERATION ACTUALLY RECEIVED DURING THE YEAR. 2) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT[A] FAILED TO APPRECIATE THAT AS PER ASSESSEES OWN SUBMISSION AND AS PER THE RETURN OF INCOME FILED T HE TRANSFER OF IMMOVEABLE PROPERTY TOOK PLACE IN A.Y 2005-06 AND A S SUCH THE PROVISIONS OF SECTION 2(47) WILL APPLY. 3) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT[A] FAILED TO APPRECIATE THAT GOING BY THE SEQUE NCE OF EVENTS AS PER THE AWARD OF ARBITRATION BETWEEN TRAN SFEROR AND TRANSFEREE WHICH WAS ACCEPTED BY BOTH THE PARTIES THE TRANSFER OF IMMOVEABLE PROPERTY CRYSTALLIZED IN A.Y 2005-06 AND AS SUCH THE PROVISIONS OF SECTION 2(47) OF THE INCOME TAX ACT WILL APPLY. 4) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT[A] FAILED TO APPRECIATE THAT AS THE TRANSFER OF IMMOVABLE PROPERTY TOOK PLACE DURING THE A.Y 2005-06 THE PRO VISION OF SECTION 50C APPLICABLE FROM A.Y 2003-04 WILL BE A TTRACTED WHENEVER CONSIDERATION SHOWN BY THE ASSESSEE IS LES S THAN THE VALUE AS PER THE RECORDS OF STAMP DUTY AUTHORITY. 5) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT[A] FAILED TO APPRECIATE THAT FROM THE A.Y 2003- 04 REGARDING TRANSFER OF IMMOVEABLE PROPERTY AS PER P ROVISIONS OF SECTION 50C WHEREVER THE CONSIDERATION FOR TRANSFER SHOWN BY THE ASSESSEE IS LESS THAN THE VALUE AS TO BE ADOPTE D FOR STAMP DUTY PURPOSES TO ARRIVE AT THE CAPITAL GAIN FORME R CONSIDERATION/VALUE AUTOMATICALLY GETS SUBSTITUTED BY THE LATER ONE AS PER THE PROVISIONS OF SECTION 50C. 6) ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE T HE LD. CIT[A] ERRED IN NOT APPRECIATING THE JUDGMENT GIVEN IN THE CASES OF (I) RAZA SUGAR CO. LTD. 130 ITR 421 (DEL) (II) HANEMP PROPERTY LTD. 101 ITD 19 [DEL] WHEREIN IT IS HELD T HAT IN THE CASES OF TRANSFER OF IMMOVEABLE PROPERTY THE VALUE NEED NOT BE TAKEN AS DECLARED BY THE ASSESSEE. BASED ON THOSE J UDGMENTS VALUATION AS PER STAMP DUTY AUTHORITY WHICH IS PRES CRIBED AS PER PROVISIONS OF SECTION 50C CAN BE ONE OF THE PAR AMETER TO ARRIVE AT THE FULL VALUE OF THE PROPERTY THAT IS TO BE TRANSFERRED. 16. GROUND (A) : AS FAR AS ISSUE RAISED IN THIS GROUND IS CONCERNE D THIS ISSUE HAS BEEN ADJUDICATED BY US WHILE ADJUDIC ATION ASSESSEES GROUND NO.1 OF ASSESSEES APPEAL IN THE ABOVE NOTED PARA-8 WHEREBY THE MATTER HAS BEEN REMANDED TO THE FILE OF THE AO FOR MAKING 13 REFERENCE TO THE DVO AND THEREFORE THIS GROUND HA S BECOME INFRUCTUOUS AND THE SAME IS DISMISSED ACCORDINGLY. 17. AS FAR AS OTHER GROUNDS RAISED UNDER CAPTION (B ) ARE CONCERNED THEY REVOLVE AROUND TWO DISPUTES NAMELY [I] DISPU TE REGARDING TRANSFER OF PROPERTY AND [II] APPLICATION OF SECTIO N 50C. 18. BRIEF FACTS REGARDING TRANSFER OF PROPERTY ARE AS UNDER: THE ASSESSEE HAS THROUGH MEMORANDUM OF UNDERSTANDI NG [FOR SHORT MOU] AGREED TO TRANSFER A LAND IN VILLAGE CHA NDIVILI MEASURING APPROXIMATELY 66984 SQ.MTS. TO M/S. UNIQUE ESTATES DEVELOPMENT CO. LTD. [FOR SHORT UNIQUE]. VIDE MOU DATED 24-4-1992 T HE LAND WAS AGREED TO BE SOLD THROUGH DEVELOPMENT AGREEMENT FOR SALE CONSIDERATION @ ` `` ` .185 PER SQ.FT. OF AVAILABLE FSI FOR A TOTAL CONSIDERATION OF ` `` ` .13.34 CRORES. THERE WERE SOME ENCROACHMENTS AND OTHER DISPUTES ON THE LAND AND THE BUYER HAD AGREED TO RESOLVE THE SAME AT ITS OWN COST BUT FOR SOME OF THE ISSUES FOR WHICH THE COST WAS TO BE BORNE BY THE ASSESSEE. AS REQUIRED U/S.269UL AN APPLICATION FOR PERMISSION FROM THE APPROPRIATE AUTHORITY IN FORM N O.37I WAS MADE AND THE APPROPRIATE AUTHORITY GRANTED THE NO OBJECT ION CERTIFICATE [NOC] ON 16-7-1992. THEREAFTER AN IRREVOCABLE POWER OF ATTORNEY IN FAVOUR OF THE BUYER WAS EXECUTED ON 18-5-1992. THE DEVELOPMENT AGREEMENT WAS REGISTERED WITH THE LOCAL STAMP DUTY OFFICER-CUM- SUB REGISTRAR ON 27-1-1999. SOME OTHER DOCUMENTS WERE A LSO EXECUTED INCLUDING THE POWER OF ATTORNEY. LATER ON DEED OF D ECLARATION-CUM- INDEMNITY AND DEED OF CONFIRMATION WERE ALSO EXECUT ED ON 4-2-2000. THE DISPUTE REGARDING ENCROACHMENTS ETC. IS SAID T O HAVE BEEN SETTLED 14 ON 23-12-1999 AND ULTIMATELY EVEN THE BOMBAY MUNICI PAL CORPORATION ISSUED COMMENCEMENT CERTIFICATE ON 28-4-2000. THE C ONSIDERATION RECEIVED AS NOTED BY THE AO VIDE PARA-7 IS AS UNDER : FINANCIAL YEAR AMOUNT 1992-93 36.36 LAKHS 1999-2000 52.5 LAKHS 2000-01 127.5 LAKHS 2001-02 107.5 LAKHS 2002-03 120 LAKHS 2003-04 577.26 LAKHS 2003-04 REBATE GIVEN BY ASSESSEE 22.62 LAKHS 2004-05 233.32 LAKHS 2004-05 REBATE GIVEN BY THE ASSESSEE 28.58 LAKHS 2004-05 REBATE GIVEN BY THE ASSESSEE TOWARDS LITIGATION CHARGES 27.67 LAKHS ` .25 LAKHS WAS RETAINED BY M/.UEDCL AND WAS PAID ONLY ON 17.04.2006 THE ASSESSEE DECLARED CAPITAL GAINS AFTER CLAIMING CERTAIN EXPENSES AND BROKERAGE ETC. AT ` `` ` .11.595 CRORES. HOWEVER LATER ON IT WAS CLAIMED THAT SINCE TRANSFER DID NOT TAKE PLACE IN T HIS YEAR THEREFORE CAPITAL GAINS COULD NOT BE CHARGED IN THIS YEAR. AO DID NOT ACCEPT THIS POSITION BECAUSE OF THE FOLLOWING REASONS: 1) THE ASSESSEE HAS HIMSELF OFFERED THE CAPITAL GAINS IN THE RETURN OF INCOME FOR THE YEAR UNDER CONSIDERATION. 2) THE MOU DATED 24-4-1992 IS ONLY A MOU AND THE SAME COULD NOT BE CONSIDERED AS DEVELOPMENT AGREEMENT. THIS MO U PROVIDED THAT ASSESSEE WAS REQUIRED TO SIMULTANEOUS LY EXECUTE IRREVOCABLE POWER OF ATTORNEY IN FAVOUR OF THE UNIQ UE WHICH CLEARLY SHOWS THAT MOU HAS TO BE FOLLOWED BY OTHER DOCUMENTS. THE ASSESSEE COULD NOT PRODUCE ANY DEVELOPMENT AGRE EMENT AND EVEN DURING THE SURVEY CONDUCTED ON 12-12-2007 IN REPLY 15 TO QUESTION NO.21 SHRI JITENDRA A. SHETH DID NOT RE FER TO ANY SUCH DEVELOPMENT AGREEMENT. 3) THE MOU WAS REGISTERED NOT IN 1992 BUT ON 27-1-1999 . 4) FROM THE LETTER OF UNIQUE DATED 8-10-2007 ADDRESSED TO THE ASSESSEE IT EMERGED THAT DEED OF CONFIRMATION AND MODIFICATIONS DATED 4-2-2000 WAS REGISTERED WITH TH E SUB REGISTRAR MUMBAI ON 10-2-2000. THIS SHOWS THAT THER E WAS A SECOND REGISTRATION ALSO. 5) THOUGH TWO POWER OF ATTORNEYS DATED 4-2-2000 WERE S IGNED AND THE SAME WERE STATED TO BE IRREVOCABLE BUT SAM E WERE SUBJECT TO SOME OTHER CONDITIONS AS PER DEED OF CON FIRMATION AND MODIFICATIONS DATED 4-2-2000 WHICH HAVE BEEN EX TRACTED AT PAGES 15 & 16 OF THE ASSESSMENT ORDER AND READS AS UNDER: M/ UEDCL SHALL ATLEAST 7 DAYS BEFORE THE COMMENCE MENT OF CONSTRUCTION OF EACH BUILDING INFORM THE OWNERS ABOUT THE SAME. SIMILARLY WITHIN 7 DAYS OF OBTAINING OCCUPATION CERTIFICATE IN RESPECT OF A NY BUILDING THE DEVELOPERS SHALL INFORM THE OWNERS OF THE SAME AND WILL GIVEN TO THE OWNERS TRUE COPY OF SUCH OCCUPATION CERTIFICATE [POINT C OF PAGE 5] IN RESPECT OF ANY BUILDING OR BUILDINGS CONSTRUCTIO N WHERE OF IS COMMENCED BY DEVELOPERS WITHIN A PERIOD OF TWO YEARS FROM THE DATE HEREOF M/ UEDCL SHALL BEFORE COMMENCEMENT OF CONSTRUCTION OF EACH B UILDING PAY TO THE OWNERS 20% OF THE CONSIDERATION [I.E. ` `` ` .37/- PER SQ.FT.] IN RESPECT OF THE TOTAL FSI TO BE UTILISED IN SUCH BUILDING. [PARA 6(O) OF PAGE 8] M/ UEDCL WILL NTO FOR A PERIOD OF TWO YEARS FROM TH E DATE HEREOF PERMIT ANY PERSON TO OCCUPY/GIVE POSSESSION OF PREMISES IN ANY BUILDING CONSTRUCTED BY THEM AND THE SAID LANDS AS AFORESAID UNTILL M/ UEDC L SHALL HAVE PAID TO THE OWNERS CONSIDERATION IN RESPECT OF TOTAL FSI UTILIS ED IN SUCH BUILDING @ RS.185/- PER SQ.FT. [PARA 6(P) OF PAGE 8] M/ UEDCL SHALL DEVELOP THE LAND PHASE WISE BY APPLY ING AND OBTAIN SANCTION OF BMC AFTER OBTAINING FROM THE OWNERS THE CONVEYANCE M/ UEDCL SHALL HOWEVER EXERCISE SUCH POWER OF ATTORNE Y ONLY UPON COMPLIANCE OF TERMS OF PAYMENT. [PARA 7 OF PAGE 10 & 11]. ON THE EXECUTION OF CONVEYANCE THE OWNER SHALL HAN DOVER TO M/ UEDCL ALL TITLE DEEDS IF ANY OF OR EXCLUSIVELY RELATING TO THE SAID LANDS [POINT Z OF PAGE 11]. 16 THE ABOVE SHOWS THAT POWER OF ATTORNEYS EXECUTED BY THE ASSESSEE WOULD NOT HAVE ANY VALUE WITHOUT FULFILLIN G THE CONDITIONS. 6) AS A RESULT OF ENQUIRIES MADE WITH UNIQUE U/S.133[6 ] IT TRANSPIRED THAT MOU OF 1992 WAS NOT THE ONLY FINAL DOCUMENT AND THE DEED OF CONFIRMATION DATED 4-2-2000 FINALLY GOVERNED THE AGREEMENT AND NOT THE ORIGINAL MOU ALONE. 7) THE PAYMENTS HAVE BEEN RECEIVED IN VARIOUS YEARS IN CLUDED THE YEAR UNDER CONSIDERATION. 8) ASSESSEE HAD FINALLY FULFILLED ALL THE OBLIGATIONS AND ENCUMBRANCES WERE FINALLY REMOVED ONLY IN F.Y 2004- 05. 9) THE AO HAS FURTHER CONSIDERED THE DECISION OF THE H ON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATRBHUJ DWARKADA S VS. CIT [SUPRA] AND OBSERVED THAT NECESSARY CONDITIONS PRES CRIBED IN THE DECISION HAVE NOT BEEN FULFILLED. 19. ON THE ABOVE OBSERVATIONS AO HELD THAT CAPITAL GAINS WERE ASSESSABLE ON THE SALE OF THE SAID PROPERTY IN THE YEAR UNDER CONSIDERATION. 20. BEFORE THE CIT[A] IT WAS MAINLY SUBMITTED THAT ASSESSEE ENTERED INTO MOU ON 24-4-1992 THROUGH WHICH SALE CONSIDERA TION @ ` `` ` .185/- PER SQ.FT. ON THE BASIS OF FSI WAS AGREED. SINCE TH E LAND HAD SOME ENCROACHMENTS AS WELL AS OTHER DISPUTES THE BUYERS AGREED TO RESOLVE THE SAME AT ITS COST BARING FEW EXCEPTIONS. HOWEVER THE SALE CONSIDERATION REMAINED FIXED AT ` `` ` .185/- PER SQ.FT. AND ASSESSEE WAS NOT TO GET ANY FURTHER BENEFIT AFTER RESOLUTION OF THE DISPUTE. NECESSARY 17 CLEARANCE OF APPROPRIATE AUTHORITY U/S.269UC IN FOR M NO.37I WAS OBTAINED ON 16-7-1992 AND POSSESSION OF THE LAND WA S ALSO HANDED OVER TO THE DEVELOPER BEFORE MAY 2000. FINALLY DEE D OF DECLARATION- CUM-INDEMNITY AND DEED OF CONFIRMATION-CUM-MODIFICA TIONS WERE ALSO EXECUTED BEFORE 4-2-2000. THE DEVELOPER MADE APPLIC ATION FOR THE COMMENCEMENT CERTIFICATE TO THE BOMBAY MUNICIPAL CO RPORATION WHICH WAS ACCORDINGLY ISSUED ON 28-4-2000. IN RESPECT OF THE OBSERVATION OF THE AO THAT ASSESSEE HAS ITSELF OFFERED THE CAPITAL GAINS FOR TAXATION IT WAS CONTENDED THAT MISTAKEN VIEW ADOPTED BY THE ASS ESSEE IN OFFERING THE CAPITAL GAINS IN THE RETURN OF INCOME WAS NOT A DETERMINATIVE FACTOR BECAUSE SEC.45 PROVIDES THAT AN AMOUNT SHOULD BE CH ARGED UNDER THE HEAD CAPITAL GAINS ONLY IN THE YEAR WHEN TRANSFER O F SUCH CAPITAL ASSETS TAKE PLACE. IT WAS ARGUED THAT THERE CANNOT BE ANY ESTOPPEL AGAINST THE LAW AND ADMISSION OF THE ASSESSEE CANNOT CONVER T NON TAXABLE EVENT INTO TAXABLE. IN THIS REGARD RELIANCE WAS PLA CED ON VARIOUS CASE LAWS ESPECIALLY ON THE DECISION OF THE BOMBAY BENC H OF THE TRIBUNAL IN THE CASE OF SRIKANT G. SHAH VS. ITO 300 (AT) 324 (M UM) AND IN THE CASE OF M/S VASCON ENGINEERS PVT. LTD. VS. CIT IN I.T.A.NO.5829/MUM/2002. 21. IN RESPECT OF THE OBSERVATIONS THAT DEED DATED 24-4-1992 IS ONLY MOU IT WAS SUBMITTED THAT THIS WAS TREATED AL L THROUGH AS A DEVELOPMENT AGREEMENT AND THIS FACT BECAME CLEAR FR OM THE DEED OF CONFIRMATION-CUM-MODIFICATIONS DATED 4-2-2000 AND T HAT IS WHY NO DEVELOPMENT AGREEMENT WAS FOUND DURING THE SURVEY. IN FACT NOTHING CONTRARY TO THE RECORD WAS FOUND DURING THE SURVEY. HOWEVER MERELY 18 BECAUSE THIS MOU WAS REGISTERED ON 27-1-1999 NO ADV ERSE INFERENCE COULD BE TAKEN IN THE ABSENCE OF ANY CONTRARY EVIDE NCE. AS FAR AS THE OBSERVATION OF SIGNING FRESH DEED OF CONFIRMATION-C UM-MODIFICATIONS WHICH WAS AGAIN REGISTERED ON 10-2-2000 IT WAS EXP LAINED TO THE AO VIDE LETTER DATED 14-12-2007 THAT SINCE VARIOUS OBS TACLES AROSE IN THE DEVELOPMENT OF THE SAID LAND AND RESOLUTION OF SETT LEMENT OF REMOVING ALL SUCH OBSTACLES TOOK SOME TIME THEREFORE IT WA S DEEMED NECESSARY TO SIGN A FRESH DEED OF CONFIRMATION-CUM-MODIFICATI ONS. IT WAS POINTED OUT THAT ASSESSEE HAD ALREADY SIGNED AN IRREVOCABLE POWER OF ATTORNEY AND IF SOME CONDITIONS WERE TO BE FULFILLED THAT P ERIOD HAD EXPIRED ON 4-2-2002 I.E. WITHIN TWO YEARS FROM THE DEED OF CON FIRMATION. IT WAS CONTENDED THAT DEED OF CONFIRMATION-CUM-MODIFICATIO NS WAS EXECUTED ON 4-2-2000 WHICH FINALLY GOVERNED THE MOU IS REQUI RED TO BE RELATED TO YEAR 1992-93 AND IN ANY CASE EVEN THAT PERIOD DO ES NOT FALL WITHIN THE PRESENT YEAR. IN RESPECT OF THE STAGGERED PAYME NT SCHEDULE IT WAS ARGUED THAT WAS NON MATERIAL AND THE PAYMENT HAD BE EN AGREED TO BE MADE OVER A PERIOD OF TIME DEPENDING ON THE PARTICU LAR STEPS WHICH WERE REQUIRED FOR SUCCESSFUL COMPLETION OF THE PROJ ECT AND THE DATE OF TRANSFER IS NOT DEPENDENT ON THE DATE OF PAYMENT AN D IN ANY CASE SUBSTANTIAL PAYMENTS HAVE BEEN RECEIVED BEFORE THE RELEVANT YEAR. IT WAS ARGUED THAT THERE IS NO FORCE IN THE ALLEGATION THAT ENCUMBRANCES WERE FINALLY REMOVED IN F.Y 2004-05 BECAUSE OF SERI ES OF DOCUMENTS MENTIONED IN PARA-8 OF THE ASSESSMENT ORDER ITSELF SHOWS THAT VARIOUS STEPS WERE TAKEN MUCH BEFORE THE PRESENT YEAR. 19 22. THEN RELIANCE WAS PLACED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATRABHUJ DWARKADAS KAPA DIA [SUPRA] WHEREIN IT WAS HELD THAT IN THE CASE OF DEVELOPMENT AGREEMENT WHERE CONSIDERATION HAS BEEN AGREED AND THE POSSESSION OF THE LAND HAS BEEN GIVEN THEN SUCH TRANSFER OF DEVELOPMENT RIGHT S IS REQUIRED TO BE TREATED AS TRANSFER. SOME OTHER DECISIONS WERE ALSO RELIED BEFORE HIM FOR VARIOUS PURPOSES. THE LD. CIT[A] AFTER CONSIDER ING THE SUBMISSIONS DECIDED THE ISSUE VIDE PARAS 3.15 TO 3.21 WHICH ARE AS UNDER: 3.15 THE UNDERSIGNED HAS CAREFULLY PERUSED THROUGH THE RIVAL CONTENTION S. ON A CAREFUL CONSIDERATION OF THE FACTS AND LEGAL P OSITION AS ESTABLISHED BY THE ABOVE MENTIONED CASE LAWS THE UNDERSIGNED IS O F THE CONSIDERED VIEW THAT THE APPELLANT HAD MADE A VALID POINT THAT THE DEVELOPMENT AGREEMENT BETWEEN IT AND UNIQUE WAS ENTERED INTO BY WAY OF A MOU DATED 24-04-1992 AND HAS BEEN ACTUALLY ACTED UPON SUBSEQUENTLY THOU GH THERE HAVE BEEN DIVERSE OBSTACLES AND DISPUTES DURING THE INTERVENI NG 13 YEARS. NO OBJECTION CERTIFICATE IN THE FORM 37-I OF THE IT ACT WAS OBTA INED URBAN LAND CEILING AUTHORITIES APPROACHED ENCROACHMENT DISPUTE WITH M R. MAQBUL DADAMIA SETTLED DEVELOPMENT AGREEMENT GOT REGISTERED WITH PAYMENT OF THE STAMP DUTY AMOUNTING TO RS.7 40 000/- SEVERAL POWER OF A TTORNEYS EXECUTED DECLARATION CUM INDEMNITY & DEED OF CONFIRMATION CU M MODIFICATION ETC WERE EXECUTED. IT IS ON RECORD AND AN UNDISPUTED FA CT THAT THE FIRST APPLICATION TO BMC FOR DEVELOPMENT OF THE LAND WAS MADE BY UNIQ UE ON 18-04-2000 AND THE FIRST COMMENCEMENT CERTIFICATE WAS ISSUED BY BM C ON 28-04-2000. THE DEVELOPER MADE PAYMENTS TO THE APPELLANT IN 1992-93 THEN 1999-2000 2000- 01 2001-02 2002-03 2003-04 AND FINALLY IN 2004-0 5. AS IS CLEAR FROM THE PAYMENT DETAILS GIVEN ON PAGE 17 OF THE ASSESSMENT ORDER THAT APPROXIMATELY RS.10 CRORES OUT OF THE TOTAL PAYABLE AMOUNT OF RS. 13.584 CRORES WERE RECEIVED BY THE APPELLANT BEFORE THE IMPUGNED ASSES SMENT YEAR. NOTHING HAPPENED IN THE F.Y. 2004-05 EXCEPT THE RECEIPT OF THE FINAL BALANCE PAYMENT. IT IS AN ESTABLISHED LAW THAT U/S.45 THE RELEVANT PREVIOUS YEAR FOR ASSESSING THE TAX UNDER THE HEADING CAPITAL GAINS IS THE YE AR IN WHICH OWNERSHIP OF THE CAPITAL ASSET IS TRANSFERRED THE DATES OF PAYM ENT OF THE CONSIDERATION WHETHER AT ONE TIME ONLY OR IN INSTALMENTS BEING A LWAYS IRRELEVANT. 3.16 THE AUTHORITY FOR ADVANCE RULINGS IN JASBIR SINGH SARAKARIA (2007) 294 ITR 196 (AAR) WAS CONSIDERING SIMILAR QUESTION ABOUT YEAR OF TAXABILITY FOR DEVELOPMENT AGREEMENT AND AFTER EXTENSIVE EXAMINATION IT HELD.:- SUMMARY OF CONCLUSIONS :- 1. WHERE THE AGREEMENT FOR TRANSFER OF IMMOVABLE PROPE RTY BY ITSELF DOES NOT PROVIDE FOR IMMEDIATE TRANSFER OF P OSSESSION THE DATE OF ENTERING INTO THE AGREEMENT CANNOT BE CONSIDERED TO BE THE DATE OF TRANSFER WITH THE MEANING OF CLAUSE (V) OF SECTION 2(47) OF THE INCOME-TAX ACT. 20 2. TO ATTRACT CLAUSE (V) OF SECTION 2(47) IT IS NOT NE CESSARY THAT THE ENTIRE SALE CONSIDERATION UP TO THE LAST INSTALMENT SHOULD BE RECEIVED BY THE OWNER. 3. IN THE INSTANT CASE HAVING REGARD TO THE TERMS OF THE TWO AGREEMENTS AND THE IRREVOCABLE GPA EXECUTED PURSUAN T TO THE AGREEMENT THE EXECUTION OF THE GPA SHALL BE REGARD ED AS THE TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSI ON OF LAND TO BE TAKEN IN PART PERFORMANCE OF THE CONTRACT AND THEREFORE THE TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) MUST BE DEEMED TO H AVE TAKEN PLACE ON THE DATE OF EXECUTION OF SUCH GPA. THE IRREVOCABLE GPA WAS EXECUTED ON MAY 8 2006 I.E. DURING THE PREVIOUS YEAR RELEVANT TO THE AS SESSMENT YEAR 2007-08 AND THE CAPITAL GAINS MUST BE HELD TO HAVE ARISEN DURING THAT YEAR. INCIDENTALLY IT MAY MENTIONED THAT DURI NG THE SAID YEAR I.E. FINANCIAL YEAR 2006-07 A FINAL LICENCE WAS GRANTED AND THE APPLICANT/OWNERS RECEIVED NEARLY 2/3RDS OF THE CONS IDERATION. 4. ONCE IT IS HELD THAT THE TRANSACTION OF THE NATURE REFERRED TO IN CLAUSE (V) OF SECTION 2(47) HAD TAKEN PLACE ON A PARTICULA R DATE THE ACTUAL DATE OF TAKING PHYSICAL POSSESSION NEED NOT BE PROBED IN TO. IT IS ENOUGH IF THE TRANSFEREE HAS BY VIRTUE OF THAT TRANSACTION A RIGH T TO ENTER UPON AND EXERCISE THE ACTS OF POSSESSION EFFECTIVELY. 3.17 CLINCHING EVIDENCE IS FOUND AVAILABLE IN FAVOU R OF THE APPELLANT BY WAY OF THE LETTER DATED 26-12-2007 SENT DIRECTLY BY UNIQUE TO THEIR ASSESSING OFFICER WHICH WAS PLACED ON THE PAPER BOOK IN WHICH IT WAS STATED BY M/S. UNIQUE THAT THE ABOVE SAID PROJECT IS OFFERED BY UNIQUE ESTATE IN A.Y. 2003-04 FOR TAXATION. WHEN THE DEVELOPER HIMSELF DECLARED THIS PROJECT I N A.Y. 03-04 ON ITS COMPLETION THEN HOW CAN THE ASSE SSEE BE TAXED FOR THE SAME IN THE A.Y. 05-06? FACTUM OF THE DEVELOPER OFF ERING THIS PROJECT IN THE A.Y. 2003-04 FOR TAXATION ITSELF IS THE SUFFICIENT PROOF FOR THE CLAIM THAT THE POSSESSION WAS HANDED OVER TO THE DEVELOPER MUCH EA RLIER OTHERWISE HOW CAN A PROJECT BE COMPLETED WITHOUT POSSESSION. THE AO H AS NOT BROUGHT ON RECORD ANY EVIDENCE OF ANY NATURE TO CONTROVERT THE CLAIM OF THE APPELLANT ON MOU APPLICATION TO ULC COMMENCEMENT CERTIFICATE ISSUED BY BMC DATE OF PAYMENTS BY UNIQUE AND CLAIMS MADE BY UNIQUE IN LET TER DATED 26-12-2007. 3.18 IN DHAKESWARI COTTON MILLS LTD. VS. CIT 26 ITR 775 (SC) OMAR SALAY MOHAMED SAIT VS. CIT 37 ITR 151 (SC) LALCHAN D BHAGAT AMBICA RAM VS. CIT 37 ITR 288 (SC) RAJESH MAHAJAN AND OTH ERS VS. CIT 257 ITR 577 (P & H) PHULCHAND RATANLAL VS. CIT 103 ITR 174 (GAUHATI) IT WAS HELD THAT THERE MUST BE SOMETHING MORE THAN THE MER E SUSPICION IN SUPPORT OF AN ASSESSMENT AND THE MERE SUSPICION CANNOT TAKE TH E PLACE OF PROOF FOR THE PURPOSE OF PASSING AN ORDER OF ASSESSMENT. 3.19 THE DELHI HIGH COURT IN VINAY KUMAR MODI VS. C IT 272 ITR 91 (DELHI) OBSERVED WE FIND AT SEVERAL PLACES THE ASS ESSING OFFICER HAS USED THE EXPRESSION MUST HAVE BEEN OR MUST BE TH IS CLEARLY DISPLAYS THAT THE ASSESSMENT WAS BASED ON NOTHING BUT SURMISE AND CONJECTURE. THERE IS LONG DISTANCE TO BE TRAVELLED BETWEEN MAY BE AND MUST BE. HERE WITHOUT MOVING AN INCH THE FINDING IS RECORDED. ASSESSING OFFICER CANNOT ALLOWED TO SUBSTITUTE REQUIREMENTS OF LAW BY IMAGINING STRANGE CONCEPTS LIKE THAT WHEN LAND BECAME FIT FOR TRANSFER ETC. SUCH STRANGE CONCEPTS ARE UNKNOWN TO LAW. EVERY PIECE OF LAND IN ANY CONDITION ENCUMBRANCE E TC. IS FIT FOR TRANSFER UNLESS PROHIBITED BY LAW. HE APPEARS TO HAVE DECIDE D THE ISSUE AGAINST ASSESSEE OUT OF ANGER AND ANNOYANCE AFTER REALIZIN G THAT CAPITAL GAINS WAS ACTUALLY TAXABLE IN EARLIER YEAR AND IT MAY NOT BE POSSIBLE FOR HIM NOW TO TAX IT IN APPROPRIATE ASSESSMENT YEAR. BUT THAT IS NO GROUND IN LAW. TAXABILITY IN ANY PARTICULAR YEAR IS NOT A MATTER OF BARGAIN OR C ONVENIENCE AND IS SOLELY 21 GOVERNED BY STATUTORY PROVISIONS. LACK OF ASSESSMENT IN THE EARLIER YEAR IS NO REASON TO IMPOSE TAX IN THE SUBSEQUENT YEAR . IT WAS HELD IN VIMAL CHAND GAUTAM CHAND VS. UNION 267 ITR 377 (RAJ) THAT ANNOYANCE SHOULD NOT DISTURB THE JUDICIAL COMPOSURE OF AO. 3.20 CONSIDERING THE ABOVE FACTS AND CIRCUMSTANCES IN THEIR TOTALITY THE UNDERSIGNED IS OF THE OPINION THAT NO CAPITAL GAINS ACCRUED TO THE APPELLANT OUT OF THIS TRANSACTION IN LAND WITH M/S. UNIQUE IN THE A.Y. 2005-06. 3.21 THE AO IS THEREFORE ACCORDINGLY DIRECTED TO EX CLUDE THE ENTIRE CAPITAL GAINS IN RESPECT OF THE TRANSACTION WITH UNIQUE FOR M THE ASSESSABLE INCOME OF THE A.Y. 2005-06 INCLUDING THE AMOUNT OFFERED BY TH E APPELLANT ITSELF IN THE IMPUGNED RETURN OF INCOME. 23. BEFORE US LD. DR SUBMITTED THAT ONCE ASSESSEE HAD HIMSELF OFFERED THE CAPITAL GAINS FOR TAXATION HE COULD NO T BACKTRACK AND TAKEN BENEFIT OF HIS OWN MISTAKE. HE THEN REFERRED TO THE COPY OF STATEMENT OF SHRI JITENDRA A. SHETH RECORDED DURING THE SURVE Y CONDUCTED ON 12- 12-2007. IN PARTICULAR HE INVITED OUR ATTENTION TO PAGE 135 OF THE PAPER BOOK WHEREIN THROUGH QUESTION NO.21 ASSESSEE WAS CONFRONTED WITH THE DIFFERENCE IN AREA MENTIONED IN VARIOUS AG REEMENTS AND IN REPLY THE ASSESSEE ALSO CLEARLY MENTIONED DIFFERENT AREAS. THIS POSITION BECAME FURTHER CLEAR FROM THE LETTER WRITTEN BY M/S . KAPADIA CONSULTANTS ON 5-2-2004 TO THE ASSESSEE COPY OF WH ICH IS AVAILABLE AT PAGES 150 TO 151 OF THE PAPER BOOK WHEREIN DIFFEREN T AREAS HAVE BEEN MENTIONED. THIS ONLY SHOWS THAT IT WAS NOT CLEAR AS TO HOW MUCH AREA IS BEING SOLD THROUGH MOU AND THE DEAL WAS FINALISE D ONLY MUCH LATER. HE FURTHER SUBMITTED THAT THE DECISION RELIED ON BY THE ASSESSEE IN THE CASE OF VASCON ENGGS. PVT. LTD. VS. ACIT [SUPRA] C OPY OF WHICH IS AVAILABLE AT PAGE 315 OF THE PAPER BOOK IS TOTALLY DISTINGUISHABLE ON FACTS. 24. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE MAINLY REITERATED THE SUBMISSIONS MADE BEFORE THE CIT[A] A ND ALSO STRONGLY 22 SUPPORTED THE ORDER OF THE FIRST APPELLATE AUTHORIT Y. HE FURTHER EMPHASISED THAT CAPITAL GAINS TAX COULD NOT BE CHAR GED IN THIS YEAR SIMPLY BECAUSE ASSESSEE HIMSELF HAS OFFERED THE SAM E FOR TAX BECAUSE DURING THE YEAR TRANSFER OF THE CAPITAL ASSETS NEVE R TOOK PLACE. HE ALSO URGED THAT THERE CANNOT BE ANY ESTOPPEL AGAINST THE LAW AND IF SOME ITEM OF INCOME IS NOT TAXABLE THEN A PLEA CAN BE T AKEN LATER ON AND IN THIS REGARD HE PARTICULARLY RELIED ON THE DECISION IN THE CASE OF SHRIKANT G. SHAH VS. ITO 300 ITR (AT) 324 (MUM). HE SUBMITTE D THAT THE PLOT WAS MAINLY SOLD VIDE MOU DATED 24-4-1992 FOR WHICH THE CONSIDERATION WAS FIXED AT ` `` ` .185/- PER SQ.FT. [COPY OF THE SAME IS AVAILABLE AT PAGES 57 TO 74 OF THE PAPER BOOK] AND THIS CONSIDERATION REMAINED SAME EVEN WHEN LATER ON DEED OF CONFIRMATION-CUM-MODIFIC ATIONS WAS EXECUTED. NO NEW BENEFITS WERE RECEIVED WHEN DEED O F DECLARATION- CUM-INDEMNITY AND DEED OF CONFIRMATION-CUM-MODIFICA TIONS WERE SIGNED LATER ON AND THE CONSIDERATION REMAINED THE SAME. THE PERMISSION OF APPROPRIATE AUTHORITY U/S.269UL WAS D ULY OBTAINED ON 16-7-1992 COPY OF THE SAME IS AVAILABLE AT PAGE 73 OF THE PAPER BOOK. THE MOU DATED 24-4-1992 WAS REGISTERED ON 27-1-1999 AND THIS FACT CAN BE VERIFIED FROM THE BACKSIDE OF THE PAGE 58 OF THE PAPER BOOK. THEN HE REFERRED TO VARIOUS DOCUMENTS THROUGH WHICH OBSTACLES ETC. WERE REMOVED AND POWER OF ATTORNEYS WERE EXECUTED I N FAVOUR OF THE DEVELOPER. HE ARGUED THAT ALL THESE DOCUMENTS CLEAR LY SHOW THAT THE DELAY IN REGISTRATION OF MOU WAS BECAUSE THERE WERE VARIOUS HURDLES WHICH GOT REMOVED OVER A PERIOD OF TIME. HE ALSO AR GUED THAT EVEN COMMENCEMENT CERTIFICATE WAS ISSUED ON 28-4-2000 WH ICH IS CLEAR 23 FROM PAGE 156 OF THE PAPER BOOK. THIS CLEARLY SHOWS THAT CONSTRUCTION ACTIVITY COMMENCED IN THE YEAR 2000 AND THEREFORE SUGGESTIONS MUST HAVE BEEN GIVEN TO THE BUILDER IN ANY CASE BEFORE T HIS DATE. THEREFORE NO EVENT TOOK PLACE IN THE PRESENT YEAR WHICH WOULD SHOW THAT TRANSFER TOOK PLACE IN THE YEAR UNDER CONSIDERATION AND ONLY SOME BALANCE INSTALMENTS OF PAYMENTS WERE RECEIVED BUT THAT IS N OT DETERMINATIVE OF THE DATE OF TRANSFER. 25. HE FURTHER ARGUED THAT THE AO HIMSELF RAISED CE RTAIN QUERIES FROM UNIQUE AND VIDE THEIR LETTER DATED 26-12-2007 IT WAS CLEARLY STATED BY THE SAID PARTY THAT THEY HAVE ALREADY OFF ERED THE ABOVE PROJECT FOR TAXATION IN A.Y 2003-04 WHICH MAKES IT CLEAR THAT PROJECT WAS COMPLETE BY THAT TIME. THIS FINDING HAS BEEN RE CORDED BY THE LD. CIT[A] AT PARA 3.17. THIS CLEARLY SHOWS THAT THERE IS NO QUESTION OF TRANSFER OF LAND IN THE YEAR UNDER CONSIDERATION WH EN THE PROJECT ITSELF WAS COMPLETED BY THE DEVELOPER UNIQUE AND EVEN OFFE RED FOR TAXATION IN A.Y 2003-04. 26. HE POINTED OUT THAT THE LD. DR HAS REFERRED TO THE DIFFERENCE IN AREAS BY REFERENCE TO THE STATEMENT OF THE ASSESSEE RECORDED DURING THE SURVEY. HE SUBMITTED THAT ORIGINALLY THE AREA O F 105826 MTS. WAS SHOWN IN THE MOU DATED 24-4-1992 BUT CERTAIN LANDS WERE UNDER ENCROACHMENTS AND SOME OTHER PORTION WAS MEANT FOR ROADS ETC. THE AREA KEPT ON CHANGING AFTER REMOVAL OF INDIVIDUAL O BSTACLES BUT THIS WILL NOT CHANGE THE SITUATION BECAUSE THE CONSIDERATION WAS DETERMINED IN TERMS OF PER SQUARE FEET OF BUILT UP AREA ON THE BA SIS OF FSI AND NOT IN TERMS OF LAND AREA. THE AO HAD ENQUIRED REGARDING T HE AREA OF LAND 24 FROM THE DEVELOPER I.E. M/S UNIQUE AND THEY HAD FUR NISHED DETAILED REPLY VIDE LETTER DATED 14-12-2007 WHICH IS PLACED AT PAGES 135 TO 139 OF THE PAPER BOOK. WHILE CONCLUDING HE SUBMITTED TH AT CASE LAW RELIED BEFORE THE CIT[A] MAY ALSO BE CONSIDERED AND AGAIN STRONGLY RELIED ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TH E CASE OF CHATRABHUJ DWARKADAS KAPADIA [SUPRA] AND SUBMITTED THAT ALL THE CONDITIONS LAID DOWN BY THE HON'BLE COURT HAVE BEEN FULFILLED AND THE PROPERTY SOLD WAS TRANSFERRED MUCH EARLIER THAN THE YEAR UNDER CONSIDERATION. 27. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY IN THE LIGHT OF MATERIAL ON RECORD AND THE DECISIONS CITED BY TH E PARTIES. THE MOST IMPORTANT OBJECTION RAISED BY THE REVENUE IS THAT A SSESSEE HAS HIMSELF RETURNED THE INCOME FROM CAPITAL GAINS AND THEREFO RE ASSESSEE CANNOT BACKTRACK. THIS FLOWS FROM THE LEGAL DOCTRINE KNOWN AS DOCTRINE OF ESTOPPEL WHICH IN SIMPLE WORDS MEAN IF MR. A MAKE S REFERENCE TO CERTAIN SET OF FACTS THEN HE CANNOT LATER ON ALLOW ED TO SAY THAT SUCH FACTS DO NOT EXIST. HOWEVER IT IS ALSO WELL SETTLE D THAT DOCTRINE OF ESTOPPEL DOES NOT APPLY AGAINST THE LAW AS ADMISSIO N IS ALWAYS SAID TO BE BEST EVIDENCE BUT THERE IS OTHER IMPORTANT EXCEP TION AND THAT IS THAT SUCH ADMISSION CAN BE REBUTTED IF IT CAN BE PR OVED THAT THAT ADMISSION WAS MADE ON AN ERRONEOUS PRESUMPTION OF L AW OR FACT. THIS BECOMES VERY CLEAR FROM THE DECISION OF THE TRIBUNA L IN THE CASE OF SHRIKANT G. SHAH VS. ITO [SUPRA]. IN THAT CASE ASSE SSEE HAS RECEIVED CERTAIN AMOUNTS IN HIS CAPACITY AS A SOLICITOR FOR THE PURPOSES OF DISCHARGING VARIOUS OBLIGATIONS OF THE CLIENTS. IT WAS CLAIMED THAT SUCH 25 AMOUNTS WERE RECEIVED ONLY IN THE NATURE OF DEPOSIT S HELD ON BEHALF OF THE CLIENTS. A SEPARATE BANK ACCOUNT WAS MAINTAINED FOR THE SAME AND SOME DEPOSITS WERE MADE OUT OF THIS ACCOUNT ON WHIC H ASSESSEE EARNED SOME INTEREST. THIS INTEREST INCOME WAS NOT DECLARED BY THE ASSESSEE IN THE ORIGINAL RETURN. SOME TDS WAS DEDUC TED BY THE BANK ON THE INTEREST INCOME AND THOUGH ASSESSEE HAS NOT DECLARED THIS INTEREST INCOME BUT HAD CLAIMED THE CREDIT FOR TDS RETURNS WERE PROCESSED U/S.143[1] IN WHICH CREDIT FOR TDS WAS AL LOWED. LATER ON NOTICE U/S.148 WAS ISSUED WHEREIN INTEREST INCOME W AS ALSO OFFERED FOR TAXATION AFTER A RIDER THAT THOUGH THIS INTEREST IN COME WAS NOT ASSESSABLE BUT TO AVOID LITIGATION THE SAME WAS BEI NG OFFERED FOR TAXATION WITH A CLEAR UNDERSTANDING THAT NO PENALTY OR INTEREST WOULD BE LEVIED. THE AO BROUGHT THIS INTEREST INCOME TO T AX AND ALSO INITIATED PENALTY PROCEEDINGS U/S.271[1][C] AND ALSO LEVIED I NTEREST UNDER SECTIONS 234A 234B AND 234C. APPEAL FILED BEFORE T HE CIT[A] WAS REJECTED BY OBSERVING THAT ASSESSEE HIMSELF HAS DEC LARED THE INTEREST INCOME. WHEN THE MATTER TRAVELLED UPTO THE TRIBUNAL THE PRELIMINARY OBJECTION OF THE REVENUE WAS REJECTED THAT GROUNDS RAISED IN THE APPEAL THAT SUCH INTEREST INCOME IS NOT TAXABLE CAN NOT BE ENTERTAINED AND ORIGINAL GROUNDS WERE ADMITTED. THE TRIBUNAL AF TER DETAILED DISCUSSION AND FOLLOWING THE DECISION OF THE HON'BL E BOMBAY HIGH COURT IN THE CASE OF NIRMALA L. MEHTA VS. CIT [269 ITR 1] HELD THAT THE INTEREST INCOME IS NOT TAXABLE. THUS IT IS CLEAR T HAT EVEN IF SOME ITEM OF INCOME IS OFFERED FOR TAX AND IF THE SAME IS NOT TAXABLE THEN ASSESSEE CAN STILL MAINTAIN THAT SUCH ITEM IS NOT T AXABLE. THIS POSITION 26 FURTHER BECOMES CLEAR FROM THE DECISION OF THE HON' BLE HIGH COURT IN THE CASE OF NIRMALA L. MEHTA VS. CIT [SUPRA]. IN TH AT CASE THE FACTS WERE AS UNDER: THE ASSESSEE WAS A RESIDENT OF MUMBAI. IN THE MONTH OF AUGUST 1987 SHE WON A LOTTERY OF THE GOVERNMENT OF SIKKIM HAVIN G A PRIZE MONEY OF RS. 6 30 000. THE GOVERNMENT OF SIKKIM DEDUCTED INCOME-TAX IN THE SUM OF RS. 62 088 AS PER SIKKIM TAX LAWS FROM T HE PRIZE MONEY OF RS. 6 30 000 AND THE BALANCE AMOUNT OF RS. 5 67 912 WAS PAID. IN HER RETURN CLAIMED DEDUCTION OF RS. 62 088 ON THE GROUN D THAT THE SAID SUM WAS DEDUCTED AS INCOME-TAX AT SOURCE WHILE MAKING T HE PAYMENT OF RS. 5 67 912. THE ASSESSING OFFICER HOWEVER DID NOT GIVE CREDIT FOR THE SAID SUM OF RS. 62 088 AS THE TAX DEDUCTED FROM THE PRIZE MONEY OF THE LOTTERY BY THE SIKKIM STATE GOVERNMENT WAS NOT PAID TO THE INDIAN TREASURY AND TAX WAS NOT DEDUCTED AS PER SECTION 19 9 OF THE INCOME TAX ACT 1961. IN THE REVISION FILED BY THE ASSESSE E BEFORE THE COMMISSIONER CHALLENGING THE ASSESSMENT ORDER HER CASE WAS THAT SHE SHOULD HAVE BEEN GIVEN CREDIT FOR TDS CERTIFICATE O F RS. 62 088. AT THE TIME OF HEARING THE ASSESSEE RAISED ADDITIONAL GRO UNDS INTER ALIA THAT NO TAX WAS PAYABLE BY THE ASSESSEE ON THE PRIZE MON EY OF THE SIKKIM LOTTERY UNDER THE INCOME TAX ACT 1961. THE COMMISS IONER MODIFIED THE ORDER OF THE ASSESSING OFFICER ONLY TO EXTENT HOLDING THAT THE PRIZE MONEY OF THE LOTTERY NEEDED TO BE REDUCED BY RS. 62 088 AS THE ASSESSEE DID NOT RECEIVE THE SAID AMOUNT. THE COMMI SSIONER HELD THAT THE ADDITIONAL GROUND REGARDING TAXABILITY UNDER TH E INDIAN INCOME TAX ACT COULD NOT BE PERMITTED TO BE RAISED AT THE STAG E OF HEARING OF THE REVISION. ON THE ABOVE FACTS THE HON'BLE HIGH COURT MADE THE FOLLOWING OBSERVATIONS: THERE CANNOT BE ANY ESTOPPEL AGAINST THE STATUTE. ARTICLE 265 OF THE CONSTITUTION OF INDIA IN UNMISTAKABLE TERMS PROVIDE S THAT NO TAX SHALL BE LEVIED OR COLLECTED EXCEPT BY AUTHORITY OF LAW. ACQUIESCENCE CANNOT TAKE AWAY FROM A PARTY THE RELIEF THAT HE IS ENTITL ED TO WHERE THE TAX IS LEVIED OR COLLECTED WITHOUT AUTHORITY OF LAW. SO LO NG AS THE INCOME TAX ACT 1961 DID NOT BECOME APPLICABLE TO THE STATE O F SIKKIM INCOME TAX ACT 1961 COULD NOT BE APPLIED TO THE INCOME E ARNED IN SIKKIM. THE PRESIDENT OF INDIA IN EXERCISE OF HIS POWERS CO NFERRED BY CL. (N) OF ARTICLE 371F OF THE CONSTITUTION EXTENDED TO THE S TATE OF SIKKIM THE INCOME-TAX ACT 1961 BY NOTIFICATION NO. S.O. 1028 (E) NOVEMBER 7 1988 WITH EFFECT FROM 1ST APRIL 1989. HOWEVER THE COMMENCEMENT OF THE INCOME-TAX ACT 1961 WAS DEFERRED FOR ONE YEAR MAKING IT EFFECTIVE FROM APRIL 1 1990 APPLICABLE FROM THE ASST. YR. 1990-91 AND ONWARDS. THE LEGAL POSITION THAT EMERGES THUS IS TH AT THE IT ACT 1961 WAS MADE APPLICABLE AND CAME INTO FORCE IN THE STAT E OF SIKKIM FROM THE ASST. YR. 1990-91 (PREVIOUS YEAR 1989-90) AND O N THE COMING INTO 27 FORCE OF THE INCOME-TAX ACT 1961 THE SIKKIM INCOM E-TAX MANUAL 1948 STOOD REPEALED. ULTIMATELY IT WAS HELD BY THE HON'BLE COURT AS UND ER: HELD (I) THAT MERELY BECAUSE THE ASSESSEE OFFERE D THE PRIZE MONEY WON IN THE LOTTERY OF THE SIKKIM GOVERNMENT TO TAX UNDER THE INCOME- TAX ACT 1961 THAT WOULD NOT TAKE AWAY HER RIGHT T O CONTEND THAT THE PRIZE MONEY WAS NOT CHARGEABLE AND ASSESSABLE TO TA X UNDER THE INCOME-TAX ACT IN THE REVISIONAL JURISDICTION. (II) THAT PRIZE MONEY WON BY THE ASSESSEE FROM THE LOTTERY OF THE GOVERNMENT OF SIKKIM COULD HAVE BEEN CHARGED TO TAX ONLY IN ACCORDANCE WITH THE THEN EXISTING INCOME-TAX LAWS I N THE STATE OF SIKKIM AND COULD NOT BE CHARGED TO TAX UNDER THE IN COME-TAX ACT 1961. IT WOULD BE FURTHER PERTINENT TO NOTE THAT THE HON' BLE HIGH COURT AT PAGE 11 OF THE REPORT REFERRED TO THE DECISION OF T HE CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF AMALGAMATED COA LFIELDS LTD. VS. JANAPADA SABHA AIR 1961 SUPREME COURT IN THE CASE OF 964 HELD THUS: THE PROBLEM AROSE BECAUSE THE PETITIONER IN HER RE TURN FOR THE ASST. YR. 1988-89 FILED ON JUNE 30 1988 OFFERED THE PRIZE M ONEY OF THE LOTTERY TO TAX RATHER A FUNDAMENTAL ERROR OF LAW ON THE PA RT OF THE ASSESSEE BUT THAT ERROR OF LAW ONCE DETECTED BY THE PETITIONER IT WAS URGED BEFORE THE COMMISSIONER OF INCOME-TAX THAT THE PRIZE MONEY EARNED BY THE PETITIONER COULD NOT BE TAXED UNDER THE INCOME-TAX ACT 1961. IT IS TRUE THAT IT WAS AT A LATER STAGE THAT SUCH CONTENTION W AS RAISED BY THE PETITIONER BUT THE SAID CONTENTION WAS A PURE QUES TION OF LAW AND THE COMMISSIONER OF INCOME-TAX OUGHT TO HAVE CONSIDERED THE SAID CONTENTION ON ITS MERITS AND OUGHT NOT TO HAVE DECL INED TO ENTERTAIN IT ON THE GROUND OF DELAY. THERE CANNOT BE ANY ESTOPPE L AGAINST THE STATUTE ARTICLE 265 OF THE CONSTITUTION OF INDIA I N UNMISTAKABLE TERMS PROVIDES THAT NO TAX SHALL BE LEVIED OR COLLECTED E XCEPT BY AUTHORITY OF LAW. ACQUIESCENCE CANNOT TAKE AWAY FROM A PARTY THE RELIEF THAT HE IS ENTITLED TO WHERE THE TAX IS LEVIED OR COLLECTED WI THOUT AUTHORITY OF LAW. THE CONSTITUTION BENCH OF THE SUPREME COURT IN AMAL GAMATED COALFIELDS LTD. VS. JANAPADA SABHA AIR 1961 SC 964 HELD THUS: 'IT MAY BE STATED AT THE OUTSET THAT THE TAX NOW IM PUGNED HAS BEEN IMPOSED BY THE LOCAL AUTHORITY FROM MARCH 12 1935 AND THAT THE FIRST OCCASION WHEN ITS VALIDITY WAS ATTACKED WAS I N ONLY 1957 THOUGH IF THE PETITIONERS ARE RIGHT IN THEIR SUBMIS SIONS THEIR ACQUIESCENCE MIGHT NOT ITSELF BE A GROUND FOR DENYI NG THEM RELIEF. BEFORE HOWEVER WE SET OUT THE POINTS URGED BY THE L EARNED ATTORNEY 28 GENERAL IN SUPPORT OF THE PETITION IT WOULD BE CON VENIENT IF WE NARRATE BRIEFLY THE HISTORY OF THE LEVY OF THIS TAX .' THE SUPREME COURT THUS HELD THAT ACQUIESCENCE TO AN ILLEGAL TAX FOR A LONG TIME IS NOT A GROUND FOR DENYING THE PARTY THE RELIEF THAT HE IS ENTITLED TO. IN THE INSTANT CASE THEREFORE IT MAY BE HELD THAT MERELY BECAUSE THE PETITIONER OFFERED THE PRIZE MONEY WON IN THE LOTTERY OF THE SIKKIM GOVERNMENT TO TAX UNDER THE INCOME-TAX ACT 1961 THAT SHALL NOT TAKE AWAY HER RIGHT IN CONTENDING THAT THE SAID PRIZE MONEY WAS NOT CHARGEABLE AND ASSESSABLE TO TAX UNDER THE INCOME-T AX ACT IN THE REVISIONAL JURISDICTION. THE SAID PRIZE MONEY WAS C HARGEABLE TO INCOME-TAX UNDER THE SIKKIM INCOME-TAX MANUAL THAT HELD THE FIELD AT THE RELEVANT TIME AND THE INCOME-TAX FROM THE PRIZE MONEY AS PER THE THEN EXISTING SIKKIM INCOME-TAX MANUAL WAS DEDUCTED . THE ORDER DATED JUNE 25 1991 PASSED BY THE COMMIS SIONER OF INCOME-TAX BOMBAY CITY IV BOMBAY THEREFORE CANN OT BE SUSTAINED AND IN THE LIGHT OF WHAT WE HAVE OBSERVED ABOVE TH E ASSESSMENT ORDER DATED NOVEMBER 29 1989 FOR THE ASSESSMENT YEAR 19 88-89 SHALL HAVE TO BE REWORKED OUT AS PER THIS ORDER. THUS IT IS VERY CLEAR FROM THE ABOVE DECISION THAT EVEN IF AN ITEM OF INCOME HAS BEEN OFFERED BUT THE SAME IS NOT CHARGEA BLE TO TAX THEN THE SAME CANNOT BE CHARGED TO TAX. 28. IN THE CASE BEFORE US THE ASSESSEE HAD ENTERED INTO A MOU ON 24-4-1992 THROUGH WHICH ASSESSEE HAD GRANTED DEVELO PMENT RIGHTS TO UNIQUE AND THE CONSIDERATION WAS FIXED AT ` `` ` .185/- PER SQ.FT. OF THE BUILT UP AREA WHICH WAS TO BE APPROXIMATELY 7 00 000 SQ.F T. SINCE VARIOUS OBSTACLES WERE THERE BEFORE STARTING THE PROJECT I T WAS AGREED THROUGH MOU ITSELF THAT THE DEVELOPER WOULD REMOVE THOSE OB STACLES AND WHICH WERE REMOVED OVER A PERIOD OF TIME. ASSESSEE SOUGHT APPROVAL OF THE APPROPRIATE AUTHORITY U/S.269UL AND THE SAME WAS GR ANTED VIDE SANCTION LETTER DATED 16-7-1992 AND THE COPY OF THE SAME IS PLACED AT PAGE 73 OF THE PAPER BOOK. THE MOU WAS REGISTERED O N 27-1-1999 WITH THE SUB REGISTRAR BOMBAY AND STAMP DUTY WAS PA ID ACCORDINGLY. VARIOUS POWER OF ATTORNEYS WERE ALSO EXECUTED IN FA VOUR OF THE 29 DEVELOPER AND IN THE POWER OF ATTORNEY DATED 15 TH SEPTEMBER 1999 EVEN POWER TO EXECUTE DOCUMENTS IN FAVOUR OF ULTIMA TE PURCHASER WAS ALSO GRANTED VIDE CLAUSE [3]. THIS REALLY SHOWS THA T THE DEVELOPER HAD RIGHT TO SELL THE PROPERTY. THE PROJECT COULD NOT C OMMENCE FOR SOMETIME BECAUSE SOME AREA WAS FALLING IN THE SLUM AREA AND THIS SLUM AREA WAS REMOVED ON 8-10-1997. THE CONVERSION OF LAND FROM AGRICULTURAL TO NON AGRICULTURAL WAS DONE BY THE OR DER OF THE COLLECTOR ON 10-6-1998. THE ADDL. COLLECTOR WHO IS A COMPETEN T AUTHORITY EXEMPTED THE LAND FROM URBAN LAND CEILING REGULATIO NS ON 7-1-1999 AND THE DISPUTE WITH MR. MAQBOOL AHMED DADAMIYA SHA IKH WAS SETTLED ON 23-12-1999. ALL THESE FACTS WERE MADE CLEAR TO T HE AO BY M/S UNIQUE VIDE LETTER DATED 26-12-2007 COPY OF WHICH IS AVAILABLE AT PAGES 166 TO 167 OF THE PAPER BOOK. BECAUSE OF THES E OBSTACLES FRESH DEED OF CONFIRMATION-CUM-MODIFICATIONS WAS SIGNED O N 4-2-2000 BUT NOTHING IMPORTANT HAS HAPPENED IN THE YEAR UNDER CO NSIDERATION. IN FACT PAYMENT OF CONSIDERATION HAS BEEN RECEIVED IN STAGGERED FASHION AND WAS NOTED BY THE AO AS UNDER: FINANCIAL YEAR AMOUNT 1992-93 36.36 LAKHS 1999-2000 52.5 LAKHS 2000-01 127.5 LAKHS 2001-02 107.5 LAKHS 2002-03 120 LAKHS 2003-04 577.26 LAKHS 2003-04 REBATE GIVEN BY ASSESSEE 22.62 LAKHS 2004-05 233.32 LAKHS 2004-05 REBATE GIVEN BY THE ASSESSEE 28.58 LAKHS 2004-05 REBATE GIVEN BY THE ASSESSEE TOWARDS LITIGATION CHARGES 27.67 LAKHS ` .25 LAKHS WAS RETAINED BY M/.UEDCL AND WAS PAID ONLY ON 17.04.2006 30 FROM THE ABOVE IT IS CLEAR THAT EVEN THE MAJOR AMO UNT OF PAYMENT WAS ALSO RECEIVED MUCH EARLIER THAN THE YEAR UNDER CONSIDERATION. THE LD. DR COULD NOT POINT OUT TO ANY MAJOR HAPPENING O R EVENT BEFORE US WHICH SHOWS THAT TRANSFER TOOK PLACE DURING THE YEA R. THEREFORE WE CAN CONCLUDE THAT TRANSFER OF THE LAND TOOK PLACE D URING THE YEAR BEFORE US. 29. BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE CAS E OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT [SUPRA] THE ISSUE FOR CON SIDERATION CAME WHETHER DEVELOPMENT AGREEMENT ITSELF WOULD CONSTITU TE TRANSFER AND WHAT SHOULD BE THE DATE ON WHICH SUCH TRANSFER CAN BE SAID TO HAVE TAKEN PLACE. THE HON'BLE HIGH COURT HELD THAT SEC.2 (47)(V) R.W.S. 53A OF TRANSFER OF PROPERTY ACT INDICATES THAT CAPITAL GAIN WAS TAXABLE IN THE YEAR IN WHICH TRANSACTIONS WERE ENTERED INTO EV EN IF THE TRANSFER OF AN IMMOVABLE PROPERTY IS NOT EFFECTED OR COMPLETED UNDER THE GENERAL LAW. THE COURT FURTHER OBSERVED AT PAGE 499 AS UNDE R: THE ABOVE TWO CLAUSES WERE INTRODUCED W.E.F. APRIL 1 1988. THEY PROVIDE THAT 'TRANSFER' INCLUDES (I) ANY TRANSACTIO N WHICH ALLOWS POSSESSION TO BE TAKEN/RETAINED IN PART-PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN S. 53A OF THE TRANSFER OF PRO PERTY ACT AND (II) ANY TRANSACTION ENTERED INTO IN ANY MANNER WHICH HAS TH E EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOV ABLE PROPERTY [SEE S. 269UA(D)]. THEREFORE IN THESE TWO CASES CAPITAL GAINS WOULD BE TAXABLE IN THE YEAR IN WHICH SUCH TRANSACTIONS ARE ENTERED INTO EVEN IF THE TRANSFER OF IMMOVABLE PROPERTY IS NOT EFFECTIVE OR COMPLETE UNDER THE GENERAL LAW. THE COURT FURTHER LAID DOWN THE FOLLOWING TESTS: 1. THERE SHOULD BE A CONTRACT FOR CONSIDERATION. 2. IT SHOULD BE IN WRITING. 3. IT SHOULD BE SIGNED BY THE TRANSFEREE. 31 4. IT SHOULD PERTAIN TO TRANSFER OF IMMOVABLE PROPERTY . 5. THE TRANSFEREE SHOULD HAVE TAKEN THE POSSESSION OF THE PROPERTY. 6. THE TRANSFEREE SHOULD BE READY AND WILLING TO PERFO RM HIS PART OF THE CONTRACT. THUS FROM ABOVE IT IS CLEAR THAT EVEN ANY TRANSACT ION INTO ANY MANNER WHICH HAVE THE EFFECT OF TRANSFERRING OR ENABLING T HE ENJOYMENT OF ANY IMMOVABLE PROPERTY U/S.269UA (D) WOULD ALSO AMOUNT TO TRANSFER. IN THE CASE BEFORE US THE DEVELOPMENT AGREEMENT DATED 24-4-1992 WAS MADE THE BASIS FOR SEEKING APPROVAL OF APPROPRIATE AUTHORITY AND THE SANCTION WAS DULY GIVEN BY THE APPROPRIATE AUTHORIT Y IN FORM NO.37I ON 16-7-1993. THUS ON THE TOUCHSTONE OF THIS MAJOR TE ST ITSELF THE DEVELOPMENT AGREEMENT ENTERED INTO BY THE ASSESSEE ON 24-4-1992 WOULD CONSTITUTE TRANSFER. IN ANY CASE IF WE REFER TO THE OTHER CONDITIONS ALL SUCH CONDITIONS HAVE ALSO BEEN COMP LIED WITH NAMELY [I]DEVELOPMENT AGREEMENT WAS A CONTRACT FOR CONSIDE RATION [II] IT WAS IN WRITING [III] IT HAS BEEN SIGNED BY THE TRANSFE ROR [IV] IT PERTAINED TO THE TRANSFER OF THE IMMOVABLE PROPERTY AND [V] THE TRANSFEREES HAVE TAKEN POSSESSION THOUGH AFTER THE DEVELOPMENT AGREE MENT BUT IN ANY CASE BEFORE 4-2-2000 AND THIS FACT IS FURTHER COLLA BORATED BY THE FACT THAT EVEN COMMENCEMENT CERTIFICATE WAS ISSUED BY TH E BOMBAY MUNICIPAL CORPORATION ON 28-4-2000 AND IN ANY CASE EVEN THE DEVELOPER M/S UNIQUE HAS COMPLETED THE PROJECT AND EVEN OFFERED THE CAPITAL GAINS FOR TAXATION DURING THE A.Y 2003-04 W HICH CLEARLY SHOWS THAT THE POSSESSION MUST HAVE BEEN TAKEN MUCH EARLI ER AND THAT IS WHY PROJECT MUST BE COMPLETED IN A.Y 2003-04. THE REVEN UE HAS NOT 32 SHOWN US ANY DOCUMENT WHICH WOULD SHOW THAT POSSESS ION WAS TAKEN DURING THE YEAR OR ANY OTHER EVENT WHICH WOULD LEAD TO THE CONCLUSION THAT THE TRANSFER TOOK PLACE DURING THE YEAR. 30. THE LD. CIT[A] HAS ALSO REFERRED TO THE DECISIO N OF AUTHORITY FOR ADVANCE RULING IN THE CASE OF JASBIR SINGH SARKARIA IN RE 294 ITR 196. ON PERUSAL OF THIS JUDGMENT WE FIND THAT MORE OR LE SS SAME PRINCIPLES HAVE BEEN TAKEN INTO CONSIDERATION WHICH WERE LAID DOWN BY THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CHATURBHUJ DWARKADAS KAPADIA VS. CIT [SUPRA]. IT WAS FURTHER OBSERVED IN THIS CASE THAT IT IS NOT NECESSARY THAT ENTIRE SALE CONSIDERATION UPTO T HE LAST INSTALLMENT SHOULD BE RECEIVED BY THE OWNER. AS OBSERVED EARLIE R THAT CONSIDERATION WAS AGREED TO BE PAID OVER A PERIOD O F TIME ON THE CONCLUSION OF PARTICULAR EVENT AND MAJOR CONSIDERAT ION HAS ALREADY BEEN RECEIVED BY THE ASSESSEE UPTO A.Y 2003-04. MER ELY BECAUSE SOME INSTALMENTS WERE RECEIVED LATER ON IT WOULD NOT MA KE MUCH DIFFERENCE. IN OTHER WORDS THE TRANSACTIONS CANNOT BE TREATED AS TRANSFER ONLY ON THE DATE OF RECEIPT OF LAST INSTALLMENT OF CONSIDER ATION. 31. IN VIEW OF THE ABOVE DISCUSSION WE ARE OF THE VIEW THAT THE LD. CIT[A] HAS DECIDED THE ISSUE CORRECTLY AND ACCORDIN GLY WE CONFIRM HIS ORDER. 32. THE NEXT DISPUTE RELATES TO INVOCATION OF SEC.5 0C. THE AO WAS OF THE VIEW THAT SINCE TRANSFER TOOK PLACE IN A.Y 2 004-05 THEREFORE THE MARKET VALUE OF THAT YEAR SHOULD HAVE BEEN ADOPTED AND ACCORDINGLY HE APPLIED FOR RATE FOR A.Y 2004-05 AND DETERMINED THE SALE CONSIDERATION AT ` `` ` .56.43 CRORES. 33 33. THE LD. CIT[A] ON APPEAL WAS OF THE VIEW THAT S INCE THE TRANSACTION WAS ALREADY REGISTERED ON 27-1-1999 TH EREFORE SEC.50C WAS NOT APPLICABLE BECAUSE SAME COULD BE APPLIED O NLY WHEN THE STAMP AUTHORITIES THEMSELVES HAVE VALUED THE PROPER TY AT A HIGHER FIGURE. 34. BEFORE US LD. DR STRONGLY RELIED ON THE ORDER OF THE AO. 35. ON THE OTHER HAND LD. COUNSEL OF THE ASSESSEE DID NOT MAKE MUCH ARGUMENTS BUT SIMPLY RELIED ON THE ORDER OF TH E LD. CIT[A]. 36. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFU LLY AND FIND THAT SEC.50C CANNOT BE APPLIED IN THIS CASE BECAUSE OF T HE FOLLOWING REASONS. FIRSTLY THE MOU DATED 24-4-1992 WAS REGISTERED WIT H THE SUB REGISTRAR BOMBAY ON 27-1-1999 AND THIS FACT BECOMES CLEAR FROM PAGE 58 OF THE PAPER BOOK [BACK SIDE] WHERE SAME HAS BEEN NOTED FOR REGISTRATION BY THE OFFICE OF DY. INSPECTOR GENERAL OF REGISTRATION AND DY. COLLECTOR OF STAMPS BOMBAY AND THE STAMP DUTY HAS BEEN SHOWN AT ` `` ` .7 40 000/- ON 27-1-1999. SECONDLY SEC.50C WAS INTRODUCED INTO THE STATUTE B Y FINANCE ACT 2002 WITH EFFECT FROM 1-4-2003 AND THEREFORE IN A CASE WHERE THE DOCUMENT HAS ALREADY BEEN REGISTERED BEFORE THE INSERTION OF THIS PROVIS ION THIS SECTION CANNOT BE APPLIED. THIRDLY IN THIS CASE THE MOU WAS EXECUTED ON 24-4- 1992 AND CONSIDERATION WAS AGREED ON PER SQUARE FEET ON THAT 34 DATE ITSELF THEREFORE IT MAY NOT BE PROPER TO APP LY THE RATES OF LATER DATE. IN VIEW OF THESE REASONS WE ARE OF THE VIEW THAT THE LD. CIT[A] HAS CORRECTLY HELD THAT THE PROVISIONS OF SEC 50C ARE N OT APPLICABLE. 37. IN THE RESULT REVENUE APPEAL IN I.T.A.NO.5775/ M/08 IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 12 TH DAY OF JANUARY 2011. SD/- SD/- (N.V.VASUDEVAN) (T.R.SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 12 TH JANUARY 2011. P/-*