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2022 (12) TMI 302 - AT - Income TaxInitiation of proceedings u/s. 153C instead of the proceedings u/s. 153A - capital gain - Joint Development Agreement (JDA) Entered - AR submitted that the AO in his order has admitted that there was a search in the residence of the assessee and that when the assessee is searched the assessment should have been done u/s.153A and not u/s.153C -HELD THAT:- We notice that the CIT (Appeals) has considered this contention of the assessee and held that though the place of the assessee was also searched, the warrant is in the name of M/s.Trans Global Power Pvt Ltd., and therefore the assessee cannot be considered as the person searched. We see merit in the observations of the CIT (Appeals) and see no reason to interfere with the decision of the CIT(Appeals). Whether the JDA found during the course of search is an incriminating material? - As if the AO is satisfied that if the documents seized have a bearing on the determination of the total income of such other person for the six assessment years preceding the year of search. The section does not use the word incriminating document, it is the various judicial decisions which have brought in the expression incriminating documents based on the facts specific to the case. However while determining whether a document seized is discriminating or not, the words used in the section need to considered i.e. if the documents seized have a bearing on the determination of the total income of such other person. In our considered view, if the document has a bearing on the determination of the total income of the assessee, then the same can be considered as incriminating. In assessee’s case, the JDA is a document seized and is the basis on which the taxability of capital gain in the year under consideration is decided by the assessee. The claim of the ld AR that the amount of advance is already reflected in the books of accounts and that the amount is offered to tax in the subsequent years will not have a bearing since the question is whether for particular AY 2010-11, the JDA is an incriminating material with regard to the undisclosed income i.e. the capital gain on transfer of land. We see merit in the contention of the ld DR that if the said JDA has not been seized the capital gain would not have been taxed on the correct assessment year i.e. in AY 2010-11 and to that extent it is an incriminating material. In view of the above discussion and considering the decision of the coordinate bench in the case of M/s. Chaitanya Properties [2022 (5) TMI 1487 - ITAT BANGALORE] we are of the view that the JDA is an incriminating material. Year of assessability of capital gains arising on the property - whether it is assessable in the year in which the development agreement entered into or in the relevant subsequent year in which the area duly developed and constructed coming to the share of the assessee-land owner has been handed over to the assessee? - In assessee’s case there is no mention in the JDA to this effect and as per Clause 1 extracted here the possession is given irrevocably by the assessee to the developer and the developer is given the irrevocable power of attorney to transfer or sell the developer’s share in the undivided share of land which would mean that the developer is given the absolute possession of the land which in our considered view amounts to transfer within the meaning of section 2(47)(v) of the Act. One of the contentions of the Ld AR is that the plan approval for development of the property came only in the subsequent assessment year. According to section 53A whereby the transferee has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. During the year under consideration the developer has made an application for plan approval which is an act in furtherance of the contract and that he is willing to perform his part of the contract. In view of the above discussion and based on the facts of the present case we are of the considered view that the CIT(Appeals) is correct in upholding the order of the AO whereby the capital gain is to be taxed in AY 2010-11 i.e. the year in which the JDA is entered into. Capital gain computation - adopting the guideline value @ Rs.520 per Sq.ft. - HELD THAT:- As perused the material on record In assessee’s case the amount of Rs.2505/- per Sq.ft. is an estimated cost construction given by the developer and in our view the same cannot considered for the purpose of computation of capital gains. Further there is no loss to the revenue since the assessee would be paying the capital gain at the time of sale of flats at which time the gain already taxed i.e. the guideline value would be considered as the cost of acquisition. In the light of these discussions and considering the decision in the case CPC Logistics Ltd (supra) we uphold the decision of CIT(Appeals) in directing the AO to recompute the capital gain by adopting the guideline value @ Rs.520 per Sq.ft. We also see no reason to interfere with the order of the CIT(Appeals) in directing the AO to consider the built up area for the purpose of computing capital gains and to re-compute the capital gain for AY 2013-14 to 2017-18. The revenue appeal is therefore dismissed.
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