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TMI Blog2012 (7) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 as follows: Sl. No. Name of the assessee Returned income (Rs.) Assessed income (Rs.) 1. Mr. Mirza Iqbal Ahmed 45,47,916 5,26,65,940 2. Mr. Mirza Jameel Ahmed 82,43,000 5,63,00,264 3. Mr. Mirza Jaleel Ahmed 85,38,602 5,64,59,563 4. Smt. Mehmooda Begum 25,41,590 93,01,090 5. Smt. Rahmatunnisa Begum 36,43,344 96,46,970 6. Smt. Rahmatunnisa Begum 25,22,190 96,46,970 3. In the course of the assessment proceedings the Assessing Officer made various additions towards suppression of receipts on relinquishment of rights, additions towards receipt from (1) Radha Realtors, (2) Mr. Karunakar Reddy, (3) Demi Realtors and (4) Amogh Realtors. Further he disallowed deduction u/s. 54B and 54F of the Income-tax Act, 1961. Against this the assessees went in appeal before the CIT(A). The CIT(A) given certain relief. Still aggrieved the assessees are in appeal before us and for granting ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 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 is not justified in restricting the claim of exemption u/s. 54F to the extent of Rs. 35,97,815 as against Rs. 59,89,760 claimed, ignoring the receipts issued by the vendors. 7(b) The learned First Appellate Authority is not justified in confirming the denial of exemption u/s. 54F for the sum of Rs. 50,00,000 being the cost of improvements incurred by the appellant. 8. The learned First Appellate Authority is not justified in ignoring the additional ground that the asset in question does not come within the purview of the capital asset as defined in sec. 2(14) based on the ratio laid down by the Hon'ble Income-tax Appellate Tribunal, Hyderabad in the case of Srinivas Pandit vs. ITO-7(2), Hyderabad. 5. The assessees also raised the additional ground in all the appeals as follows: "Without prejudice to the other grounds, the learned First Appellate Authority having confirmed the Assessing Officer's finding that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 head capital gains if there is no cost of acquisition. In all the decisions, the relevance of charging section u/s 45 and the provisions of computation under sec. 48 were discussed. e) The relevant observations and findings of the Hon'ble Apex Court in the case of Srinivasa Setty (Supra) (at page 300) are as under: "The mode of computation and deductions set forth in section 48 provide the principal basis for quantifying the income chargeable under the head 'Capital gains'. The section provides that the income chargeable under that head shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim 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 Officer. Though, the parties involved stated that there was an advance payment of Rs. 1 lakh by the assessee to the vendor, there was no iota of documentary evidence supporting this other than statement from the parties. Therefore, the amount of Rs. 1.5 crores, though it is a capital receipt, which did not give rise any capital gain because it was received in respect of relinquishment of right of purchase of property, the cost of which was not determined. It was held in the case of B. C. Srinivasa Setty (supra) that in computing the capital gain it is a condition that to determine the cost of acquisit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 here that operations u/s 132 of the !.T. Act were conducted on 17-10-2007, i.e., less than two months from the date of registration of the Agreement of Sale-cum-GPA. And all the bank accounts of the assessee-group were placed under prohibitory orders. The Investigating Officials worked out the probable capital gains and the tax thereon and got the pay orders issued in favour of the Commissioner of Income tax, Central Hyderabad. The assessee-group, in all fairness filed the Returns, accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unds 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 Income Tax Appellate Tribunal, the submissions on the other grounds issue wise are as under. 9. The DR strongly opposed admission of the additional ground. 10. We have heard both the parties on this issue. In our opinion, there is a reasonable cause for raising additional ground by the assessee before us for the first t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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