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The ITO Ward-2 (1) (3) , Vadodara Versus M/s. Swastik Engg. Mfg. Co. Pvt. Ltd.

2016 (4) TMI 465 - ITAT AHMEDABAD

Rectification of mistake - capital gain computation - whether there was no sale of property by way of the Developoment agreement? - Held that:- A bare reading of the order which is sought to be rectified it clear that the complete control over the properties was given to the developer. Consideration of the transfer of the rights is fixed and the terms of payment is also fixed. No material is placed before this Tribunal, that the parties did not act upon the development agreement. The only ground .....

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y during block period. In our considered view, the transfer of property was complete by way of the development agreement. The Revenue has not disputed the fact that the assessee had given possession of the property to the developer even if it is assumed that it is in nature of stock-in-trade, there is a change of hands as the assessee had given possession of the property to the developer in consideration as described under the development agreement. It is also not disputed that a sum of ₹ .....

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Judicial Member For the Petitioner : Shri S.N. Soparkar, AR For the Respondent : Shri Dinesh Singh, Sr.DR ORDER Per Shri Kul Bharat, Judicial Member This miscellaneous application has been filed by the Revenue on 20.08.2015 (arising out of IT(ss)A No.3/Ahd/2006 for block period 1.4.96 to 2.07.02) for recalling the Tribunal s order (ITAT A Bench, Ahmedabad) dated 04/04/2014 on the ground that the mistake is crept into the order which requires rectification by this Tribunal. 2. The ld.Sr.DR reiter .....

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the instant case, it is not so. He submitted that the conversion of sock-in-trade is governed by the provisions of section 45(2) of the Act and has been dealt with in detail in the assessment order. 3. On the contrary, ld.Sr.counsel for the assessee submitted that the Revenue is trying to insist on reviewing the order passed by this Tribunal as there is no mistake apparent from records. All facts have been duly considered in the order sought to be rectified. If the prayer of the Revenue is acce .....

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f transfer of a capital asset. 4. Mr. R.V. Desai, learned senior counsel appearing on behalf of the department contended that in his case the date which should be taken into account for determining the relevant Accounting Year in which the liability accrues. It was argued on behalf of the assessee that in this case, irrevocable licence was given in terms of the contract only during the financial year ending 31st March, 1999 and, therefore, there was no transfer during the financial year ending 3 .....

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and in our view, the test to be applied to decide the year of chargeability is the year in which the transaction was entered into. We have taken this view for the reason that Development Agreement does not transfer the interest in the property to the developer in general law and, therefore, section 2(47)( v) has been enacted and in such cases, even entering into such a contract could amount to transfer from the date of the agreement itself. We have taken this view for a precise reason. Firstly, .....

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efore, if on a bare reading of a contract in its entirety, an Assessing Officer comes to the conclusion that in the guise of agreement for sale, a Development Agreement is contemplated, under which the developer applies for permissions from various authorities, either under power of attorney or otherwise and in the name of the assessee. then the Assessing Officer is entitled to take the date of the contract as the date of transfer in view of section 2(47)( v). In this very case, the date on whic .....

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iven, but once under clause 8 of the agreement a limited power of attorney is intended to be given to the developer to deal with the property, then we are of the view that the date of the contract viz., 18th August, 1994 would be the relevant date of decide the date of transfer under section 2(47)( v) and, in which event, the question of substantial performance of the contract thereafter does not arise. This point has not been considered by any of the authorities below. No judgment has been show .....

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n favour of the developer, then the date of the contract would be relevant to decide the year of chargeability. 7. Having laid down broad principles we now come to the facts of this case. This is not the case where the assessee denies transfer. In this case, the assessee has paid capital gains tax for assessment year 1999-2000. How- ever, the assessee is told that the year of chargeability is assessment year 1996-97 and not assessment year 1999- 2000. Moreover, this is the first time that we hav .....

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one cannot infer transfer in the accounting year ending 31st March, 1996. We may also mention that there are mistakes, apparent on the face of the record, in the order of the Tribunal. The Tribunal has relied upon assessee obtaining 7 permissions. We find that item (vi) and item (vii) are mere repetitions of item (iii) and item (i) respectively. Similarly, the Tribunal has referred to permissions obtained during financial years other than the concerned financial year ending 31st March, 1996 to c .....

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led upon the Commissioner of Income-tax (Judicial) to forward to us the R&P. However, learned counsel for the department has informed us the R&P is not available. There are other apparent errors in the Order of the Tribunal. At Page 144 of the Paper Book, the Tribunal has stated as under : "From the dates it is evident that from the very next day i.e., 1-4- 1997 from the end of financial year ending on 31st March 1906, the builder was using the well water against payment of relevant .....

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ould only be read as 1-4- 1996 and if 1-4-1996 is the date on which Floreat/Developer came in possession, then the possession was received by the developer during the financial year 1996-97 corresponding to assessment year 1997-98. Therefore, this finding of the Tribunal is erroneous because in this case we are concerned with assessment year 1996-97 and not the assessment year 1997-98. 8. Taking into account the totality of circumstances, on facts, we allow the appeal of the assessee. 4.1. In th .....

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