TMI Blog2018 (8) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... /HYD/2017 - - - Dated:- 17-8-2018 - SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI INTURI RAMARAO, ACCOUNTANT MEMBER For Assessee : Shri S. Rama Rao, AR For Revenue : Shri M.H. Naik, DR ORDER Per Smt. P. Madhavi Devi, J. M. This is an assessee s appeal for the AY. 2004-05 against the order of the Commissioner of Income Tax (Appeals)-4, Hyderabad, dated 22-03-2016. 2. At the outset, it is seen that there is a delay of Three Hundred and Ten (310) days in filing of the appeal before us and the assessee has filed an application for condonation of the same. The assessee has stated that the CIT(A) has disposed-of the appeal vide order dt. 22-03-2016, whereas the petitioner, Smt. Jahangir Bi, passed away on 11-08-2014 and the order was sent to the petitioner s previous address. It was submitted that the legal-heirs of the deceased, i.e., her three sons were not in the knowledge of the appellate order of the CIT(A) as it was also sent to the address given in Form-35, which is the address of the Chartered Accountant. It is also submitted that all the three legal-heirs of the deceased are uneducated and are carrying on petty businesses and only after coming to know ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d have been taken into consideration. 8. The learned 'Commissioner of Income Tax (Appeals) erred in confirming the capital gain ₹ 75,90,290/- while completing the assessment without granting deduction u/s 54 or 54F of the I.T. Act. The learned Commissioner of the Income Tax (Appeals) ought to have seen that the appellant received as considered constructed area and the said area is residential portion of the building and, therefore, deduction under section 54/54F of the I.T. Act should have been allowed. 9. Any other ground that may be urged at the time of hearing . 4. Brief facts of the case are that the assessee, along with ten other co-owners of a properties bearing House Nos. 8-3-483, 486 to 502 along with open land admeasuring 4702.52 Sq. Yds., excluding property bearing House No. 8-3-483 comprising of about 250 Sq. Yds., situated at Yellareddyguda, Hyderabad, had entered into a development agreement with a firm, M/s. Sun Mark Builders on 04-11- 2003 for development of a property by construction of residential flats, sharing the built-up area in the ratio of 39 : 61%. Observing that the said transaction falls under the purview of Transfer of Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. Jasbir Singh ..in RE AAR (2007) 294 ITR 196 (AAR); iii. Dr. T.Atchuta Rao Vs. ACIT [106 ITD 388 (Hyd)] 10. In view of the facts and the law relied upon by the Assessing Officer, he held that the transaction satisfies the conditions of Section 53A of Transfer of Property Act and therefore, transaction is covered under 2(47)(v)/(vi). Accordingly, the amount is taxable in the year under consideration. The Ld.CIT(A) as briefly stated above relied on the additional fact of tenants being vacated and completion of the project as per the terms and non-filing of returns admitting capital gains even at a later point of time to confirm the action of AO. 11. Before us, Ld.Counsels urged that before entering this agreement, assessees herein have entered into many joint development agreements at various points of time which have not been fructified. In support they filed various copies of the agreements in the Paper Book as under : 1. Copy of the Joint Development entered into between the applicants 7 others and Mohd. Maher alam Khan dated 30.8.1994. 2. Irrevocable General Power of Attorney executed by the appellants in favour of Mohd. Mahel Alam Khan execu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot mean that this agreement also had the same fate. As seen from some of the terms of the agreement placed on the Paper Book, particularly Clause 4, 5, 8 and 20 as under the agreement has special terms: 4 (a) The Developer is hereby permitted by the Owners to develop the Schedule mentioned property by constructing thereon a Residential Complex consisting of Cellor for parking and Ground + Four Upper Floors. The developer shall construct according to the MCH permission cover the entire land or site comprised in the Schedule mentioned property. (b) It is hereby specifically agreed and declare that the Developer shall construct and completely utilizing fully entitlement areas as sanctioned by the Municipal Corporation of Hyderabad. (c) That since the portion of the Schedule property is in occupation of tenants, the first party owners shall get them evicted immediately at their cost and accord permission to the Developer to commence the Development work after demolishing the existing structures. 5(a) The Developer hereby agree, covenant and undertakes to handover or deliver 39% of the constructed area i.e., super-built areas which include all shareable areas in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the terms and conditions incorporated in this agreement. 20. It is mutually agreed upon and always provided that in the event of the works at the schedule mentioned property suffered or otherwise interrupted due to imposition of statutory restrictions, natural calamities, control or ban imposed on construction material i.e., on sale, distribution and procurement etc., prohibitory orders of any court of law or statutory bodies, the time involved in such processes or eventually, shall be excluded from the stipulated period. 15. Subsequently, the owners have appointed the developer as the General Power of Attorney holder to do, execute and carry out any or all of the following acts as stated therein. One of the conditions was also for payment of rent per month from the date of dismantling of house and if project was not in stipulated time of 3 years, then a penalty of ₹ 10,000/- per month shall be paid till the completion of construction. However, six months grace period was allowed. By perusing the above terms of the agreement and the fact that the receipts obtained from the tenants indicate that most of the tenants have been settled and paid by the time agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d others vs. DCIT, Central-II, Hyderabad in ITA.No.208/Hyd/2011, relied on by assessee s counsel the agreements have not been implemented and it was considered that there was no willingness to perform for the purpose of section 53A. In those cases, it was held unless the party has performed or is willing to perform its obligations under the contract and in the same sequence in which these are to be performed, it cannot be said that the provisions of section 53A of the Transfer of Property Act will come into play on the facts of that case. It is further held that unless provisions of section 53A of T.P. Act are satisfied on the facts of case, the transactions in question cannot fall within the scope of deemed transfer under section 2(47)(v) of the I.T. Act. As briefly stated above, the parties have performed the contract as per the terms of the contract. Therefore, the principles laid down in the above case, does not apply to the facts of the present case. Therefore, we are of the opinion that capital gains is correctly imposed in the order under consideration. The action of the Assessing Officer in levying capital gains in the impugned year is consequently upheld. B. Sale Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of cost of acquisition. Subject to verification and furnishing necessary evidences, the A.O. is directed to examine, assessees contentions and allow the indexed cost of acquisition on the basis of facts and law. This issue also accordingly restored to the file of A.O. for fresh consideration. D. Claim of deduction under section 54 and 54F 22. Since assessees have entered into a development agreement of constructing residential properties in lieu of parting with the residential building, they are eligible for deduction under section 54/54F as the case may be. The A.O. had no occasion to examine this aspect as the assessment was completed exparte. Before the Ld. CIT(A), assessee made this claim which Ld. CIT(A) rejected on the reason that provisions of section 54F are not applicable. Ld. CIT(A) ignored the fact that alternate contention under section 54 is eligible to the assessee. Since we are setting aside the entire computation of capital gains to the file of Assessing Officer, he is directed to examine the aspect of claim of deduction under section 54/54F, keeping in view the judicial pronouncements on the issue by the ITAT/High Court. Assessee should be given due op ..... X X X X Extracts X X X X X X X X Extracts X X X X
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