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2016 (10) TMI 529 - ITAT HYDERABAD

2016 (10) TMI 529 - ITAT HYDERABAD - TM - Capital gains brought to tax on sale of certain lands claimed to be agricultural lands - Held that:- The contention of AO that he has received full amount cannot be accepted. Even the sale deed indicate separate payments. Therefore, considering the entire amount may not be correct. However, these aspects can again be examined since the nature of ownership itself requires examination. In case assessee has not purchased lands but acquired certain rights by .....

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sessee should be given due opportunity in the proceedings. - I.T.A. No. 12/HYD/2014 - Dated:- 19-8-2016 - SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER For The Assessee : Shri V. Raghavendra Rao, AR For The Revenue : Shri A. Seetharama Rao, DR ORDER PER B. RAMAKOTAIAH, A.M. : This is an appeal by assessee against the order of the Commissioner of Income Tax (Appeals)-VI, Hyderabad, dated 29-08-2013 on the issue of capital gains brought to tax during the year on sale .....

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12,41,930/-, with a note in return of income indicating that he received a sale consideration of ₹ 61,00,000/- towards sale of agricultural land, and his share has been utilized in house construction/repairs. However, the profits on sale of such lands were not included in total income holding that the lands under sale are agricultural lands and as such do not constitute capital assets. During the course of the assessment proceedings, the Assessing Officer (AO) found that assessee purchase .....

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sessee objected on two counts, viz., (i) the said lands are agricultural lands; (ii) only a minor part of the sale consideration was received by him, with major portion of such consideration going to the consenting party with whom he entered into an oral agreement earlier; The AO brushed aside such contentions on the ground that the lands under reference fall in HMDA jurisdiction as per G.O. No. 274, as such said lands are no more agricultural lands, and there is no agreement in writing with the .....

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- as per the sale deeds can only be brought to tax under the head capital gains . 5. On considering the detailed submissions and remanding the matter to the AO, Ld. CIT(A) confirmed the action of AO with certain directions to modify the cost of acquisition. His order is as under: 5.2 The appellant's objections are on two counts. One is regarding the treatment of agricultural land as capital asset, within the definition of Sec. 2(14)(iii) of I.T.Act, holding that the lands under reference are .....

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e consenting parties as indicated in sale deed with a reference to the oral agreement and such consideration was: also confirmed by the consenting parties, which was shown to have been taken for their tax purpose. It was further submitted that both the right holders viz. the assessee and consenting party have registered sale deeds for consideration of ₹ 41,00,000/- and ₹ 20,00,000/-, out of which the share of the appellant is to the extent of ₹ 6,15,000/- and ₹ 3,00,000/r .....

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te these facts . 5.3 Perused the submissions of the appellant and the observations of the A.O along with the other facts that have been brought on record. As could be seen from the facts, the appellant's main contention was the lands under reference were agricultural lands and cannot be considered as the capital asset within the purview of provisions of Sec. 2(14)(iii) of I.T. Act. Rest of the arguments are only alternative in nature. As regard to the treatment of land as capital asset, it w .....

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er the agreement for sale cum GPA and was disposed as same right in the said property, along with the consenting party, for a consideration which has been shared by them on the basis of ratios, which is only known to them. This fact of sale of rights in the land under reference, was referred to in the submissions of the appellant reflecting the true nature of asset under reference. Under the circumstances, I have no hesitation in holding that the property under reference is a capital asset and t .....

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the major portion of the sale proceeds, finding a mention in the sale deeds on sharing and confirmed by consenting party, is only liable for taxes on the sale consideration of ₹ 9,15,000/-. Indeed, this fact has a mention in the sale deeds and confirmed by the consenting party. But, the missing link in these transactions is how the consenting party has acquired the rights in the said property from the appellant, without any written deed/agreement and without payment of any consideration. I .....

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greement in writing. It is also relevant to mention here that the appellant voluntarily mentioned in the return of income, indicating the sale consideration received by him for sale of lands, was ₹ 61,00,000/- and the same was shown to have been invested in the specified asset, i.e., the existing property of the appellant located at H.No. 16-11-739, Gaddiannaram, Dilsukhnagar, Hyderabad. It is also a fact that the appellant neither denied such investment nor explained the alternate sources .....

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g party who has acquired the rights in the said property prior to the sale deeds dated 30.09.2007. It was not the case of the appellant to prove that the rights, that too major rights in the property under reference were transferred to the consenting party without any consideration and also invested the amounts in the properties as specified. Under the circumstances, it proves that the appellant received the entire consideration of ₹ 61,00,000/- towards the sale/transfer of his rights over .....

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ion under reference. Further, the A.a has taken the cost 'of acquisition of Ac5.02 Guntas, as the cost of Ac 3.02 Guntas, in computing the capital gains which appears not factually correct. Accordingly, the addition of ₹ 44,18,960/- stand sustained/confirmed, subject to verification of proportionate cost of acquisition of property under reference and the status of remaining two acres of land purchased by appellant in the year 2005. Accordingly, this ground of appeal is treated as Partl .....

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h reference to the contention that the municipal limits of Hyderabad does not extend to the HMDA limits, he relied on the following Co-ordinate Bench decisions: i. Smt. C. Vijay Kumari Vs. ITO, in ITA No. 1797/Hyd/14, dt. 05-06-2015; ii. Smt. R. Uma Devi Vs. DCIT, in ITA No. 350/Hyd/14, dt. 11-03-2015; iii. Smt. N. Sarojini Vs. DCIT in ITA No. 226/Hyd/14, dt. 11-03-2015; iv. Harniks Park (P) Ltd. Vs. ITO [41 taxmann.com 109] (Hyderabad) dt. 27-09-2013; v. M/s. Goutham Constructions Vs. ITO in IT .....

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used the documents placed on record and various case law. Application of various case law will arise only when the facts are clear. In the instant case, AO and CIT(A) has gone on presumption that assessee is owner of agricultural lands which are within the HMDA limits. Ld. CIT(A) tried to modify the above stating that he was only holding rights in property but ultimately confirmed the stand of AO. As seen from the two sale deeds, the following are stated in the recitals: 1. The deed of sale is m .....

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r s successor s executors, administrators, legal representatives, nominees, and assignees etc., AND M/S SAI CHAITANYA HOUSING (P) Ltd (registered and incorporated under company s act 1956) Flat No: 311, Annapurna Block, Aditya Enclave, Ameerpet, Hyderabad represented by its Chairman Sri Dhulipalla Samba Siva Rao, S/o. Satyanarayana, Age: 48 Years, R/o. Ameerpet, Hyderabad. Herein after called the CONSENTING PARTY / AGREEMENT HOLDERS which expression of the vendor shall mean and include all their .....

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N. DESYA, aged about 20 Years, Occupation: Agriculture, All are residents of Uppugadda Thanda, Mansunpally Village, Maheshwaram Mandal, Ranga Reddy District, Represented by AGPA holder: Sri P. Venkat Reddy, S/o. P. Kanakal Reddy, aged about: 56 Years, Occupation: Business, R/o. H.No. 739/A/1/1, Gaddi Annaram Dilsukh Nagar, Hyderabad District. Through vide AGPA Document No. 6729/2005, dated 11th day of November, 2005 of SRO, Maheshwaram. AND M/S SAI CHAITANYA HOUSING (P) Ltd (registered and inco .....

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e has acted in representative capacity as a General Power of Attorney holder and not as owner of the land. The exact relationship and appropriation of funds require verification. The so called AGPA by which assessee came into possession of land/right, if any, was not placed on record, so as to examine this aspect. 10.1. The sale deeds clearly indicate that Sai Chaitanya Housing (P) Ltd., also has certain rights by virtue of agreements. Whether the agreement is with assessee as GPA holder or with .....

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untas was parted with is not clear. Ld. CIT(A) has already directed AO to examine this aspect and rework the cost of acquisition to 3.02 Acres only. But the impugned land is not clearly demarcated and whether assessee holds the balance or not require examination. 10.3. Unless assessee owns the land, the issue whether the sale of agricultural land will give rise to capital gain or not cannot be examined. Moreover, the applicability of HMDA Act also depends on owning the land. If assessee has only .....

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