TMI Blog2018 (1) TMI 843X X X X Extracts X X X X X X X X Extracts X X X X ..... non-refundable deposit. Since in the present case, not only JDA was executed, but possession was also handed over to the developer and non-refundable deposit was received by the assessee to the extent of ₹ 2.50 Crores, in our considered opinion, this judgment rendered in the case of CIT Vs. Dr. T.K. Dayalu (2012 (6) TMI 405 - Karnataka High Court) is squarely applicable. - Decided against assessee. - ITA No. 1353/Bang/2015, ITA No. 1354/Bang/2015, ITA No. 1355/Bang/2015 And ITA No. 1356/Bang/2015, C.O. No. 93/Bang/2017,C.O. No. 94/Bang/2017, C.O. No. 95/Bang/2017 And C.O. No.96/Bang/2017 - - - Dated:- 13-12-2017 - Shri Arun Kumar Garodia, Accountant Member And Shri Lalit Kumar, Judicial Member For the Assessees : Shri Chandrashekar, Advocate For the Revenue : Shri B.R. Ramesh, JCIT (DR) ORDER PER BENCH: All these four appeals are filed by the revenue assessee s and these four COs are filed by the assessee and these are directed against a combined order of ld. CIT(A) 1, Bangalore dated 24.08.2015 for Assessment Year 2009-10 in respect of four different but connected assessees. All these appeals and COs were heard together and are being disposed of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving an opportunity to the AO to verify the additional evidence as required under Rule 46A. 8. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of the Assessing Officer be restored. 9. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal. ITA No. 1354/Bang/2015:- 1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in holding that the assessees have not parted with possession of the property as contemplated in Section 53A of the Transfer of Property Act without appreciating the fact that the clause X(c) and Para 6.1 of the agreement clearly indicate that constructive possession has been handed over to the builder. 3. The CIT(A) erred in holding that the assessees have not parted with possession of the property by placing reliance on the decision of ITAT, Bangalore in the cases of Sri Nagaraj and Smt. Satyaprema in ITA No.136 137/Bang/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate that constructive possession has been handed over to the builder. 3. The CIT (A) erred in holding that the assessees have not parted with possession of the property by placing reliance on the decision of ITAT, Bangalore in the cases of Sri Nagaraj and Smt. Satyaprema in ITA No.136 137/Bang/2012 without appreciating the fact that said decision has not been accepted by the Department and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 4. The CIT(A) has failed to appreciate that the assessee had executed General Power of Attorney in the name of the developer on 27.11.2008 to sell the built-up area of the said property and as per agreement dated 02.02.2009, the refundable deposit was converted into non-refundable deposit which corroborate the fact that the possession was in fact handed over to the developer in pursuance of JDA. 5. The CIT (A) erred in holding that the act of bringing nonrefundable deposit to tax in the impugned asst. year is premature, by placing reliance on the decision of ITAT, Bangalore in the case of M/s. Chaitanya Properties Pvt. ltd., in ITA NO.125/Bang/2013, without appreciating the fact that the said decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. The CIT(A) has failed to appreciate that the assessee had executed General Power of Attorney in the name of the developer on 27.11.2008 to sell the built-up area of the said property and as per agreement dated 02.02.2009, the refundable deposit was converted into non-refundable deposit which corroborate the fact that the possession was in fact handed over to the developer in pursuance of JDA. 5. The CIT (A) erred in holding that the act of bringing nonrefundable deposit to tax in the impugned asst. year is premature, by placing reliance on the decision of ITAT, Bangalore in the case of M/s. Chaitanya Properties Pvt. ltd., in ITA NO.125/Bang/2013, without appreciating the fact that the said decision has not been accepted by the Department and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 6. The CIT (A) has erred in holding that the decision of the Hon'ble High Court of Karnataka in the case of CIT vs. T.K. Dayalu is not applicable to the facts of the assessee's case. 7. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the order of the CIT(A) be reversed and that of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4 B of the Act and further the calculation of interest under section 234 A and 234 B of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the Order of assessment on the facts and circumstances of the case. 9. The Respondent / Cross Objector craves leave to add, alter, delete, substitute or modify any of the grounds urged above. 10. For the above and other grounds that may be urged at the time of the hearing of the appeal, the Respondent / Cross Objector prays that the appeal may be allowed in the interest of equity and justice. C.O. No. 94/Bang/2017:- 1. The order of the learned Commissioner of Income-tax [Appeals] in so far it is against the Respondent / Cross Objector is opposed to law, facts, equity, and weight of evidence and circumstances of the case. 2. The Respondent/ Cross objector denies herself liable to be assessed over and above the total income reported by the Respondent/ Cross objector of ₹ 62,82,900/- as on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) is not justified in law in not holding that the order of re-assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case. 2. The Respondent/ Cross objector denies herself liable to be assessed over and above the total income reported by the Respondent/ Cross objector of ₹ 74,33,640/- as on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) is not justified in law in not holding that the order of re-assessment passed by the learned assessing officer under section 143 [3] r.w.s. 147 of the Act is bad in law, since the mandatory conditions for assuming jurisdiction for issuance of a notice under section 148 of the Act did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax [Appeals] is further not justified in not holding that the order of reassessment is further bad in law and void-ab-initio as the learned Assessing officer had no reasons to believe that the income of the Appellant has escaped assessment under the facts and circumstances of the case. 5. Without prejudice, the learned Commissioner of Income-tax [Appeals] ought to have granted benefit of exemption under section 54F of the Act on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is further bad in law and void-ab-initio as the learned Assessing officer had no reasons to believe that the income of the Appellant has escaped assessment under the facts and circumstances of the case. 5. Without prejudice, the learned Commissioner of Income-tax [Appeals] ought to have granted benefit of exemption under section 54F of the Act on the facts and circumstances of the case. 6. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the learned assessing officer has erred in the calculation of cost of acquisition of the property on the facts and circumstances of the case. 7. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the values adopted by the learned assessing officer in the entire computation of capital gains are wrong and the capital gains require to be recomputed on the facts and circumstances of the case. 8. Without Prejudice, the learned Assessing Officer is not justified in law in charging the interest under section 234 A and 234 B of the Act and further the calculation of interest under section 234 A and 234 B of the Act is not in accordance with law sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pport of his contention, he submitted that the copy of JDA is available on pages 13 to 43 of paper book and in particular, our attention was drawn to Para no. 1.2 of JDA and it was pointed out that as per this Para, the owners of the land had irrevocably permitted and authorized the developers to enter upon the SCHEDULE B PROPERTY and to develop it along with the remainder portion / share of the SCHECDULE A PROPERTY by constructing a building thereon as per sanctioned plan, subject to the terms of this Agreement and it is made clear that nothing contained in this JDA shall be construed as delivery of possession in part performance of any Agreement of Sale under Section 53-A of the Transfer of property Act, 1908 or Section 2(47)(V) of the Income Tax Act, 1961. He also drawn our attention to Para no. 6.2 of JDA and pointed out that as per this Para of JDA, it was made clear that this handing over possession is not a delivery of possession as part performance of any Agreement of Sale under Section 53-A of the Transfer of property Act, 1908 or Section 2(47) (V) of the Income Tax Act, 1961 and the possession was given only to develop the property. Thereafter, he drawn our attention t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand report from the AO and therefore, this is in violation of Rule 46A of IT Rules, 1962 and hence, this issue should go back to the file of CIT(A) for fresh decision after obtaining remand report from the AO. Learned AR of the assessee supported the order of CIT (A). 7. Learned DR of the revenue further submitted that one more issue is raised as per ground no. 8 in ITA No. 1355/Bang/2015 and on this issue, the order of CIT(A) should be reversed and that of AO should be restored in view of this fact that as per Form 26AS available on record, it is clearly indicated that the said income was paid / credited to the assessee in the present year and therefore, the same is taxable in the present year. The ld. AR of assessee supported the order of CIT(A). 8. Regarding the COs filed by the assessees, the ld. AR of assessee submitted that the ground in respect of validity of reassessment proceedings is not pressed in all these four Cross Objections and therefore, the relevant ground in this regard is rejected as not pressed. He further submitted that there is only one issue remaining in the COs of the assessee that the assessee is eligible for deduction u/s. 54F of the IT Act. He su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Hon'ble Karnataka High Court that the year in which possession of the property has been handed over to the developer as per JDA, capital gain is liable to tax in that year and not in the year in which the project has been completed. 11. Now we examine the facts of the present case. In the present case, the JDA has been executed on 27.11.2008 and as per Para no. 6 of JDA, the owners of the land had handed over the free and vacant possession of land to the developer for the purpose of developing the same along with the remainder portion of schedule A property. As per letter dated 16.04.2013 available on page 63 of the paper book intimating to these assessees about payment of maintenance charges by these assessees w.e.f. 01.04.2013, it is also intimated that the maintenance charges shall be paid on or before handing over possession of the apartment. This goes to show that possession of the constructed area will be given by the builder to the land owners after payment of maintenance charges. No body can give something to anybody what he does not have. Since the builder will give possession to the land owner after payment of maintenance charges, it is implied that the build ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Trade of the Assessee is a very important fact to take note off in order to decide the exact point in time as to when the ownership in these lands held as stock in trade gets actually transferred from the Assessee. 8.13 The application of section 45 is limited to sub section (2) of section 45 in as much as the impugned lands are held as Stock in Trade. The provisions of section 53A of the Transfer of Property Act apply to an asset held as a Capital asset /investment not to Stock In Trade. 13. In the present case, the asset in question is capital asset and not stock in trade and therefore, in our considered opinion, this Tribunal order is not applicable in the present case. 14. The second Tribunal order cited by ld. AR of assessee is the Tribunal order rendered in the case of Shri K.M. Nagaraj and Smt. Sathya Prema Vs. CIT (supra). In that case, the facts are noted by the Tribunal in Para no. 2 of the Tribunal order as per which the assessees were joint owners of the property and the assessees entered into JDA with M/s. Glory Estate P. Ltd., (now known as Mantri Developers P. Ltd.) on 26.10.1994 and as per the said agreement, the developers agreed to construct apartm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 31.12.2008 was erroneous and prejudicial to the interests of Revenue. According to the CIT, the AO ought to have held that there was a transfer of a capital asset by the assessee by virtue of agreement dated 11.11.2000 and capital gain had accrued during the previous year relevant to Assessment Year 2001-02 and the AO ought to have brought to tax the capital gain. Against this order of CIT u/s. 263, the assessee carried the matter before the Tribunal and in Para no. 21 of this Tribunal order, it is noted by Tribunal that by virtue of the agreement for sale dated 11.11.2000, the assessee s right to get 30% built up area of flats got extinguished and therefore, there was a transfer by way of extinguishment of rights over the property and therefore, there was a transfer as per the claim of the department. The claim of the assessee before the Tribunal was this that by the agreement dated 11.11.2000, the consideration for transfer of the property was substituted in terms of money in lieu of getting built up area of flats originally agreed under the JDA dated 26.10.1994 and therefore, the conclusions of the CIT are contrary to facts. Hence it is seen that in that case, the JDA was e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the AO. Ground no. 7 of these three appeals is allowed for statistical purposes. 19. Now, only one issue left in appeals of revenue is. ground no. 8 in ITA No. 1355/Bang/2015. In this regard, we find that as per Para no. 4.3 of the order of CIT(A), the decision of CIT(A) is on this basis that the assessee is consistently following Cash system of accounting but in the assessment order, the AO has stated that the method of accounting followed by the assessee is mercantile. We do not know from where the CIT(A) has found this that the assessee is consistently following Cash system of accounting particularly when the AO has clearly stated in the assessment order that the assessee is following mercantile system of accounting and there is no ground raised by the assessee before the CIT(A) on this aspect. Hence we reverse the order of CIT (A) on this issue and restore that of the AO. Ground no. 8 of revenue s appeal in ITA No. 1355/Bang/2015 is allowed. 20. In the result, all the four appeals of the revenue are allowed in the terms indicated above. 21. Now we take up the COs filed by the assessee. As per these COs, two issues are raised by the assessee. The first issue i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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