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TMI Blog2016 (5) TMI 767X X X X Extracts X X X X X X X X Extracts X X X X ..... initiated the proceedings u/s. 263 and set aside the assessment of 04-02-2014. The present appeal is on the consequential proceedings passed by the AO u/s. 143(3) r.w.s. 263. Ld. CIT(A) confirmed the action of the AO in treating the capital gains offered as 'income from other sources'. 3. Briefly stated, as submitted by assessee before the Ld. CIT(A), assessee has entered into an agreement for purchase of property from Smt. Kotha Janamma in the year 1994 for purchase of 2.07 guntas situated as part of survey No. 215 of Kondapur Village, Serilingampally. However, this property was registered by Smt. K. Janamma in the names of Shri N. Chandra Sekhar Rao, R. Madhusudhan and N.R. Murali Krishna vide the registered deed dt. 27-03-1995. Subsequently, those three parties along with assessee have entered into an agreement of development with M/s. Team One Builders, a partnership firm and accordingly received an amount of Rs. 1,60,00,000/- by way of cheque ie Rs. 40 lakhs each and constructed area to an extent of Rs. 6050 sq. ft., for each one of them. This is valued at Rs. 60 Lakhs for the purpose of capital gain. Thus, on the transfer of property, assessee has received Rs. 1 Crore and o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property, cannot claim capital gains and further exemptions thereon and treated the amount received as 'income from other sources'. Thus, entire Rs. 1 Crore stated to have been received by assessee was brought to tax as 'income from other sources'. 4. In the appeal before the Ld. CIT(A), assessee submitted as under: "The assessee, Mr. N.R. Krishna Murthy s/o Sri Late N.Rajaiah, N. Chandrasekhar Rao s/o Sri Late N. Rajaiah, Sri R. Madhusudan s/p Sri Late N. RAjaiah, Sri N.R.Murali Krishna s/o Sri Late N. Rajaiah are four brothers owners of the property (only a properiv) of 2.07 guntas situated at forming part of survey No.21S of Kondapur village, Serilingampally MandaI, RR.Dist. The said property was purchased by them from Smt. Kotha Janamma in the year 1994. As per the oral agreement and consent among four of them an "agreement of sale" was entered in the name of Mr. N.R Krishna Murthy S/o Sri Late N. Rajaiah on 4th day of July 1994. At the outset we would like to certify the title rights of the assessee on the property in connection with the doubt expressed by Hon'ble CIT-IV. That the assessee Mr. N.RKrishna Murthy s/o Sri Late N. Rajaiah, N. Chandrasekhar Rao s/o Sri Lat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- the developer promised to give 24,200 sq. feet to the said four parties i.e., 6,050 sq. feet for each individual. This is equivalent to Rs. 60,00,000/-. The assessee Mr. N. R. Krishna Murthy filed his return accordingly and claimed the exemption u/e 54EC & 54F. The observation made by your good office "that the entire capital gain of Rs. 92,40,479/arising out of the transaction is assessable in assessee's hands" is not correct as Mr. NR. Krishna Murthy's share is only 1/4tlt of the total transaction of Rs. 4 crares i.e., Rs. 1 crore only (Rs. 40,00,000/- by cash + Rs. 60,00,000/- in constructed area 6,050 sq. feet). The assessee claimed the total capital gain on the receipt of Rs. 1,00,00,000/- only. It is not correct that the assessee claimed Rs. 92,47,479/- u/s 54F in fact it is only Rs. 54,98,085/-. It is computed as below: Point No.1 :The total capital gain arrived at Rs. 92,40,479/- Point No.2: U/s 54EC Rs. 39,30,000/- U/s 54F Proportionate of Rs. 54,98,085/- (59,50,000 X 92,40,479) 1,00,00,000 Rs. 94,28,085 The assessee claimed capital gain exemption of Rs. 92,40,479/- is lesser than the amount of Point No.2 i.e., 94,28,085/-. One side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee brothers. Since this is a fact that the appellant has received an amount of Rs. 1,00,00,000/- and he himself disclosed in the return of income and claimed only Rs. 39,00,000/- u/s 54EC. In the light of these facts and documentary evidences the amount disclosed by the appellant not to be treated as sale consideration. Therefore, all these facts were also mentioned by the Assessing Officer in his assessment order and thereby the assessment made by the Assessing Officer by treating the said amount under the head "Income from other sources", was confirmed. Hence, all the submissions made by the appellant are rejected". 6. Before us, Ld. Counsel referring to the Paper Book filed in this regard and submissions made before the AO and CIT(A) submitted that it was Mr. Krishna Murthy, who originally entered into an oral agreement of sale and also became a plaintiff in the proceedings before the Addl. District & Session Judge, indicating that assessee is owner of the property. It was further submitted that the Hon'ble High Court also considered assessee as the plaintiff and subsequently, there was a rectification deed between the parties and Team One Builders, which also includes Mr. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... court was only to declare plaintiffs 1 to 3 i.e., i. N. Chandra Sekhar Rao; ii. R. Madhusudhan; and iii. N.R. Murali Krishna; as absolute owners and possessors of suit schedule property. This also indicates that assessee being the 4th plaintiff, did not claim any ownership of the property. Therefore, we are of the opinion that both the authorities are correct in rejecting assessee as owner of the property. Even the rectification deed placed on record no where confers any ownership on assessee except indicating that assessee is also party to the transactions with M/s. Team One Builders. How assessee acquired the ownership was not established either before the CIT during the course of proceedings u/s. 263 or before the other authorities in the course of consequential assessment proceedings. Except the fact that assessee has received the so called 1/4th share out of the total consideration, there is no indication of any assessee's ownership on the property, either to full extent or to 1/4th extent. If one were to consider that assessee entered into agreement of sale in his name, but got the property registered in his three brothers name, the Ld. CIT(A) has made a proposal to assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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