TMI Blog2014 (8) TMI 754X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. Admission of additional grounds – Held that:- Admission of additional grounds by the CIT(A) involved examination of facts which are not on record - there is no dispute with reference to capital gains being offered by the assessee – relying upon CIT Vs. S.A. Builders Ltd. [2006 (12) TMI 76 - SUPREME COURT OF INDIA] - if the facts are not available on record, additional ground cannot be raised on any legal issue - the facts on the issue of capital gains are obviously not examined by the AO as the assessee himself offered the capital gains - CIT(A) entertained additional ground which involve examination of fresh facts which is not permitted under Law - thus, CIT(A) erred in admitting additional grounds of appeal and also not given the opportunity to the AO to examine under Rule 46A – Decided in favour of Revenue. - ITA. No. 550/Hyd/2014 - - - Dated:- 13-8-2014 - Shri B. Ramakotaiah And Shri Saktijit Dey,JJ. For the Petitioner : Mr. Solgy Jose T. Kottaram For the Respondent : Mr. K. C. Devdas ORDER Per B. Ramakotaiah, A.M. This is Revenue appeal against the Order of Ld. CIT(A)-IV, Hyderabad dated 25.11.2013 for AY 2009-2010. 2. Briefly stated, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fer of impugned property in the hands of appellant falling within the ambit of section 45 of the IT Act. 2. The A.O. ought to have noted the fact that the impugned consideration of ₹ 75,00,000/- was passed on to the appellant by the vendors referred to in the deed dated 22.09.2008 only towards extinguishment of rights to sue , but not towards resale by the appellant and therefore there was no element of capital gain coming into the ambit of section 45 of the IT Act. 2.2. Along with filing of the additional grounds, assessee submitted why gains are not taxable as under: 2.2: The facts of the case which led to the aforesaid addition in the guise of 'capital gains' are briefly brought on record so as to make the Memorandum a self contained one. It is to submit that the appellant purchased a site in plot No. 19, admeasuring about 453 sq. yds situated in Greendale Villas, a Lay-out approved by the Gram Panchayat of Mancherevula village of Rajendranagar Mandal, Ranga Reddy District, Andhra Pradesh (5. No.s. 505 506) from M/s. N.K. Leasing Constructions Ltd., represented by its Director Sri N. K. Agarwal, Hyderabad and M/s. S. D. Investments Pvt. Ltd., repres ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truction work was also entrusted to it as recorded above. But such efforts to hold the dwelling unit therein resulted in VAIN. However, after concerted deliberations, the previous owner ultimately agreed for an amicable settlement and with the object of avoiding protracted litigation in a Court of law, the appellant ultimately agreed for extinguishment of HIS RIGHT TO SUE the previous owner and resultantly, it was agreed interest for 'cancellation of the earlier purchase deed No.10104/2005, dt.16-9-2005' by which the ownership rights over the impugned property were earlier vested with the appellant. 2.4. Giving effect to the aforesaid INTERSE agreement, A CANCELLATION DEED was executed on 22nd September, 2008 (Annexure-C) and the same was registered with the SRO - vide Regd. Doe. No.3952/08 and as per RECITALS recorded therein, the ORIGINAL DEED No. 10104/2005 which conveyed rights over the property to the appellant remain CANCELLED and thereby the rights of ownership and possession were taken over by the PREVIOUS OWNER and this 'CANCELLATION DEED' came into force from the date of execution of the original sale deed bearing Doc.No.10104/2005, i.e., from 16-9-2005 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by means of a REGD. CANCELLATION Dt.22-9- 2008 and though a comparison of those two shows the period of holding exceeded 3 years. 2.3. After submitting why the additional grounds were raised, assessee also contested that there is no transaction coming into the purview of section 45 of the Act and his submissions from (a) to (l) were extracted by the Ld CIT(A) at pages 5, 6 and 7 of the order. Assessee also relied on various case law which were extracted in para 6.2 of the order. Thereafter, Ld. CIT(A) considered the assessee s contentions and allowed the claim of the assessee by stating as under : 7. I have gone through the elaborate submissions made by the appellant. I have also discussed in detail the relevant points with the AR. 7.1. The appellant for the purpose of construction of a residential building purchased a site of 453 sq. yards from M/s.N K Leasing Constructions Co Ltd vide document dated 16.09.2005. Subsequently, the appellant entered into an agreement with the same concern and paid certain amount as advance. By that time itself there was a proposal for laying ring road which would affect the site acquired by the appellant. The appellant unknowingly enter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed assessee contentions. Revenue is aggrieved. 3. Contesting the above, learned D.R. submitted that learned CIT(A) erred in admitting additional ground of appeal that assessee is not in receipt of capital gains even though assessee admitted the same in the return of income. Moreover, Ld. CIT(A) should have called for remand report on the additional grounds/evidence under Rule 46A. It was also contended that Ld. CIT(A) has not decided the issue whether assessee is entitled for deduction under section 54F or not. Learned D.R. brought to our notice that Ld. CIT(A) has considered the issue on new facts brought to his knowledge and referred to the order of the A.O. wherein only issue of 54F was examined by the A.O. and not taxability of capital gains, which was altogether new issue entertained by the Ld. CIT(A). It was the submissions that the order of the Ld. CIT(A) is not correct. Moreover, it was submitted that the order of the Ld. CIT(A) results in refund of tax which was paid by the assessee and as per the directions of the Hon ble Supreme Court in the case of CIT vs. Shelly Products another (2003) 261 ITR 367 (SC), the admitted tax cannot be refunded. This order if approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. N.K. Leasing and Construction Ltd., for construction of 3000 sq. feet villa for a consideration of ₹ 27.15 lakhs to be paid over a period in 7 instalments and assessee admits to have been paid advance amount of ₹ 1,50,000. 5.2. In view of the notification issued, it seems that the said developer could not develop and assessee in fact, entered into an agreement of sale on 3rd December, 2008 placed on record at page No. 35 for re-conveyance of the same plot No.19 for a consideration of ₹ 75,00,000 out of which, advance of ₹ 11,00,000 was received. The balance of ₹ 64,00,000 as per the terms was to be paid on or before 31st September, 2008. In that, it was stated that in pursuance of said agreement, the purchasers doth hereby agree to purchase from the First Part Vendor the 'Said Plot No.19 in lay-out known as Greendale Villas admeasuring 453 sq. yds or 378.90 sq. mtrs. in Sy. Nos. 505 506 situated at Manchirevula Villlage, Rajendranagar Mandal, R.R.Dist more fully described in the Schedule of the Property herein for a consideration of ₹ 75,00,000/- has paid an advance of ₹ 11,00,000/- (Rupees Eleven lakhs only) towards part of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of breach of contract, for not handing over the possession of villa. However, assessee has purchased the plot first and after three months entered into a construction/development agreement separately by which the developer undertook construction of the villa and terms of agreement also indicate that it has undertaken the construction work on behalf of the assessee. What assessee actually intended from the citations of the documents on record is to resell the plot to the original vendor at a consideration of ₹ 75,00,000/- and assessee claimed indexation benefit on the cost of the purchase of plot in 2005. Therefore, the order of the Ld. CIT(A) seems to be devoid of facts. 5.4. Not only that, admission of additional grounds by the Ld. CIT(A) involved examination of facts which are not on record. As can be seen from the order of the A.O. there is no dispute with reference to capital gains being offered by the assessee. The Hon ble Supreme Court in the case of CIT Vs. S.A. Builders Ltd., 289 ITR 26 (SC) has upheld the ITAT order wherein ITAT did not admit assessee s additional ground on the reason that facts were not available on record. The facts in that case are as fol ..... X X X X Extracts X X X X X X X X Extracts X X X X
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