TMI Blog2012 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... IJAYARAGHAVAN, JJ. Assessee by: Shri K.A. Sai Prasad Revenue by: Shri M.S. Rao O R D E R PER CHANDRA POOJARI, AM: I.T.A. No. 944 to 949/Hyd/2011 are appeals by different assessees and I.T.A. Nos. 902 to 904/Hyd/2011 are appeals by the Revenue directed against different orders of the CIT(A)-I, Hyderabad. Since certain issues in all these appeals are interrelated, all these appeals are clubbed together, heard together and are being disposed of by this common order. 2. Brief facts of the case are that the above assessees are coowners of a piece of land admeasuring 5 acres 6 guntas in Survey Nos. 218 and 219 at Narsing Village Panchayat, Rajendra Nagar Mandal. The said land was sold on 24.8.2007 by all the co-owners to M/s. Demi Realtors Ltd., vide sale deed No. 8314/2007 dated 24.8.2007. There was a search action u/s. 132 of the Income-tax Act, 1961 on 17.10.2007 in the case of all the assessees and purchasers of the said land. In response to the notice u/s. 153A, the assessees herein filed their respective return of income declaring income from capital gains and also claiming exemption u/s. 54B and 54F of the Act. Later, the assessments were completed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... putes. 3(d) Without prejudice to the ground No. 2(a) above the learned First Appellate Authority should have appreciated the alternate claim that the payments to the mediators be treated as outflow in the hands of the appellant group and the net consideration received be taxed in the hands of the appellants groups. 3(e) Without prejudice to the ground Nos. 2(a), (b) and (c0 above the learned First Appellate Authority is not justified in apportioning the alleged additional consideration among the appellant and his two brothers ignoring the shares and ownerships of their three sisters. 4. The learned First Appellate Authority is not justified in rejecting the claim of exemption u/s. 54B to the extent of Rs. 53,57,386 ignoring the receipts issued by the vendors of the land. 6. The learned First Appellate Authority is not justified in confirming that the appellant and his family have only certain disputed rights over the land and therefore, are not eligible for exemption u/s. 54B of the Income-tax Act, ignoring the evidences indicating ownership and active possession of the appellants group for the last several years. 7(a) The learned First Appellate Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of liability occurred during the year under question. 8. The AR advanced strong argument regarding admission of the above additional ground. The AR submitted that since it is now a settled fact that the consideration received is only a for relinquishment of disputed rights over the land in question, the said consideration received cannot be taxed under any head of income for the following reasons: a) Admittedly the assessee is not a dealer in lands/real estate hence the question of taxing the same as business income does not arise and was at least not the case of the department also. b) The consideration received has no cost of acquisition and hence there is no gain on transfer, which is chargeable to tax under the head capital gain u/s 45 of the Income Tax Act. c) Reliance is placed on the ratio laid in the following cases. CIT vs. B.C. Srinivasa Setty (128 ITR 294) (SC) CIT vs.vSmt. M. Agama (165 ITR 386) (AP) B. Ramakrishnaiah vs. ITO (39 SOT 379) (ITAT Hyderabad) d) In all the above cases, the judicial authorities have held that the amounts received in respect of transfer of capital assets, cannot be taxed under the hea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for specific performance. It is also assignable. Therefore, a right to obtain conveyance of immovable property is clearly property contemplated by section 2(14) of the Income-tax Act. With this background, we required to consider the facts of the present case. In the present case what was said to be relinquished or surrender was a right in the asset. The giving up of the right to claim specific performance by conveyance of immovable property held to be relinquishment of capital asset and it was transfer of capital asset within the meaning of the Income-tax Act. The assessee gave up his right to claim specific performance. By the termination of his oral agreement and allowing the vendor to sell the property to any person at any price, the assessee had given up or relinquished his right of specific performance and what he has received is the consideration for relinquishing that right that assessee was paid sum of Rs. 1.5 crores. This transfer attracts the tax on capital gain if there is a cost involve to acquire that right. In the present case, it was not possible to envisage its cost. In any case, such cost has not been specifically determined or brought on record by Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from April 1,2003. Therefore, even if the amendment is taken into consideration section 55 can be invoked in cases on nil cost of acquisition for the purpose of bringing to tax entire sale consideration only in relation to the specified assets. The Legislature having amended the said section from time to time has roped in only specified assets as noted herein before. In the circumstances, the amendment instead of working to the advantage of the Revenue goes to indicate that the Legislature does not want to bring within the purview of the tax net all assets (except the specified assets) which do not have cost of acquisition and the entire sale consideration cannot be treated as profits and gains chargeable under the head "Capital gains" by adopting the cost of acquisition as nil". i) Hence, viewed from any angle it is humbly submitted that the amounts received by assessee for relinquishment of disputed right cannot taxed since the said rights have no cost of acquisition. j) Even though the assessee group had in its returns admitted capital gains, they are not precluded from raising this legal issue which goes to the roots of the case. It is pertinent to submit he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the provisions of the Act, regardless of whether the over-assessment is as a result of the assessee's own mistake or otherwise, the Commissioner has the power to correct such an assessment under section 246(1) of the Income Tax Act, 1961. If the Commissioner refuses to give relief to the assessee, he would be acting de hors the powers under the Act". (Emphasis supplied). m) The assessees' rights/entitlements to raise new grounds which are legal in nature are up held by the Apex Court in the following cases. 1. Jute Corporation of India (187 ITR 688)(SC) 2. National Thermal Power Corporation Ltd (229 ITR 383)(SC) n) In the light of the above submissions, it is prayed that the Hon'ble Income tax Appellate Tribunal be pleased to hold that the amounts received on relinquishment of disputed rights over the assets is not liable for capital gains tax, since there is no cost of acquisition. o) If the Hon'ble Income Tax Appellate Tribunal is pleased to consider this legal issue in favour of the assessee group, the other issues raised by the assessee group need not be adjudicated. In case the additional Ground is not acceptable to the Hon'ble I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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