TMI Blog2021 (2) TMI 1144X X X X Extracts X X X X X X X X Extracts X X X X ..... rises out of the impugned JDA/GPA during Asst. Year 2012-13. Grant of deduction 54G - since the investment is required to be done within 3 years from the date of deemed sale of factory and shifting the factory and since as per the AO, the capital gains has arisen due to registration of Sale Deed on 18.07.2011 i.e. FY 2011-12, and hence, according to the AO, the assessee is not eligible for any deduction - HELD THAT:- This ground is only academic in view of our findings with regard to nontaxability of capital gain in this assessment year i.e. AY 2012-13, however, for the purpose of completeness, we make it clear that assessee could claim deduction u/s. 54G in the appropriate assessment year when the capital gain is subject to tax. It is ordered accordingly. Applicability of section 50C - assessee objected for adopting value of 50C as per guidance value - HELD THAT:- Since while adjudicating ground No.1, we have already held that capital gain is to be taxed not in this assessment year 2012-13, being so, there is no question of application of section 50C of the Act and the registration of Sale Deed was only for the limited purpose of formalizing the bank request, who finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... executing Sale Deed. 5. The learned Commissioner of Income Tax vas wrong in confirming that the capital gain arises during Asst. Year 2012-13 based on the fact that the Sale Deed was registered with the Sub- Registrar during the year under consideration. 6. The learned Assessing Officer should have re-opened the assessment for Asst. Year 2008-09 because as per the order of Hon'ble High Court of Karnataka in Dr. Dayalu's case, since irrevocable Power of Attorney together with the possession was handed over to the Developer during Asst. Year 2008-09 and the Appellant shifted their manufacturing unit to a rural place, which is near Harohalli on Kanakapura Road, Bangalore, for which the Appellant was eligible for rebate under Section 54G of Income Tax Act. 7. For the above and any other grounds that may be advanced at the time of hearing, the Appellant prays that, Appeal be allowed. 2. The assessee is a Private Limited Company, engaged in manufacture of Engineering Products. It filed return of income declaring net taxable income of Rs.(-)55,39,774 on 30.09.2012. The assessment order was passed by the AO with a net taxable income of ₹ 3,34,65,142 , ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cution of Joint Development Agreement. 6. Therefore, the assessee submitted that the capital gains should have been taxed in the year of commencement of construction after registering the Joint Development Agreement. The Guideline value prevailing as on that date is much lower than the value adopted by the assessee for determining the Capital Gain. The assessee objected to the Assessing Officer's adopting the higher value as per Guidelines assessed by the Stamp Valuation Officer. The assessee contended that on receipt of the objection from the assessee, the AO should have referred the matter to the Valuation Cell to determine fair market value of the property as on date of registration of Sale Deed. This is without prejudice of the contention to the assessee that that the Capital Gains should have been taxed in the year of sanction of Plan under Joint Development Agreement. However, the AO did not refer the matter to the Valuation Officer. 7. Further, the assessee submitted that it was entitled for deduction u/s.54G of the Act, in respect of the reinvestment in the factory land building near Harohally, which the assessee is rightly entitled to, which was not allowed by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the jurisdiction High Court order in the case of CIT v. Dr. Dr. T.K. Dayalu, (2011) 202 Taxman 531 (Kar), the capital gains would arise only during Asst. Year 2009-10. The property, after development, was handed over to the assessee Company during financial year 2011-12. The assessee while submitting the return of income, had included 50% of the cost of construction of the assessee s portion as sale consideration, based on that fact, developed property was handed over to the assessee during the financial year under consideration. However, the legal position of taxing the capital gains as per provisions of section 2(47)(v) and the jurisdiction High Court Order, the capital gains should have been brought to tax during Asst. Year 2009-10, based on the guideline value prevailing at that point of time and not at the time of taking possession of the property. 12. The ld. AR relied on the following judgments:- (1) ITO v. Shafiq Mohammed Shah, 82 taxmann.com 6 (Chennai Trib.) (2) Pr. CIT v. Dr. Amrik Singh Basra, 82 taxmann.com 186 (P H) (3) Pr. CIT v. Dr. Charanjit Singh, 85 taxmann.com 144 (P H) (4) Hussan Lal Puri v. ITO, 38 taxmann.com 7 (Chandigarh Trib) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the authority to appear before various authorities so as to get the required permission for construction. By Clause 9 of GPA, assessee has given right to the developer to sell or dispose by way of sale, lease, mortgage, exchange or otherwise 50% undivided share, right, title, interest and ownership in the land in the schedule property or such proportional undivided share proportionate to the super built up area that will be allotted to the share of the aforesaid developers in accordance with Agreement dated 24.10.2007. The other clauses of the GPA authorizes the Developer to do the following:- 10. To received advances and balance of sale price from any Purchaser/s and issue proper and valid receipts and discharges therefor in respect of undivided share in the schedule property. 13. To deliver possession of the portion/s of the schedule property; with or without building to the nominee/s and assignee/s o the Developer and/or Purchasers of land share and/or built-up areas to the extent referred to in clause 9. 14. To sign and execute necessary documents, declarations, affidavits, undertakings and other documents required for completion of sale and/or transfer and/or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rty referred to in para-9 with or without building thereof enforcing the rights under Lease Deeds if any and/or enforce rights of a Lessor under Transfer of Property Act or under any other Rent Control and other enactments including for his eviction and to repair or abate any nuisance and enforce all remedies open in respect thereto. 23. To raise, borrow funds from banks, bankers, financial institutions and other public by creating equitable or other mortgages on security of the said 50% undivided share in the Schedule Property referred to in Para-9 above with or without built areas therein and Development Rights in the Agreement dated 24/10/2007, sign and execute requisite mortgage deeds and other conveyances required therefor on such terms and conditions as our attorney deems it fit and get the same registered before the jurisdictional Sub-Registrar in the manner prescribed under law, and for the said purposes sign and execute necessary forms, declarations and affidavits etc., but without involving us or our successors or balance share in the land and building in the Schedule Property in any liability in respect of the said borrowing, mortgages or other commitments. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oversee the construction which is only to the limited extent, compared to the Developer s rights. Exclusive possession is not necessary for the purpose of satisfying the condition laid down in section 2(47)(v) of the Act. In our opinion, the registered GPA executed by the assessee along with JDA in favour of the Developer must be regarded as a transaction in the eye of law, which allows not only possession of the property, but also various rights as mentioned above and it could be rightly considered as part performance of the contract as per section 53A under the Transfer of Property Act. In other words, JDA along with GPA which grants to the Developer overall control of the property in his hands, even if that means no exclusive possession by the Developer, still it could be construed as possession in terms of clause (v) of section 2(47) of the I.T. Act. 18. In the instant case, having regard to the terms of the JDA and GPA executed on 24.10.2007, it could be regarded as transaction involving the allowing of the possession of land to be taken in part performance of the contract and therefore, the transfer within the meaning of section 2(47)(v) of the Act must be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he year 2003-04 as contended by the assessee. Accordingly, we answer the substantial questions of law framed in ITA No.3209/2005 in favour of the revenue and substantial questions of law framed in ITA No.3105/2005 against the assessee 22. The Hon'ble Bombay High Court in Chaturbhuj Dwarkadas Kapadia v. CIT [2003] 260 ITR 491/ 129 Taxman 497 held that the date relevant for attracting capital gain having regard to the definition under section 2(47) of the Act is the date on which possession is handed over by the developer and has observed as follows:- Under section 2(47)(v), any transaction involving allowing of possession to be taken over or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act would come within the ambit of section 2(47)(v). That, in order to attract section 53A, the following conditions need to be fulfilled. There should be a contract for consideration; it should be in writing; it should be signed by the transferor; it should pertain to transfer of immovable property; the transferee should have taken possession of the property; lastly, the transferee should be ready and willing to per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f is due to him. This attitude would, in the long run, benefit the department, for it would inspire confidence in him that he may be sure of getting a square deal from the department. Although, therefore, the responsibility for claiming refunds and reliefs rests with the assesses on whom it is imposed by law, officers should - (a) draw their attention to any refunds or reliefs to which they appear to be clearly entitled but which they have omitted to claim for some reason or other; (b) freely advise them when approached by them as to their rights and liabilities and as to the procedure to be adopted for claiming refunds and reliefs . 25. Further, the Hon ble Delhi High Court in the case of CIT v. Bharat General Reinsurance Co. Ltd., 83 ITR 303 (Del) held as follows:- It was true that the assessee itself had included that dividend income in its return for the year in question, but there was no estoppel in the Income-tax Act and the assessee having itself challenged the validity of taxing the dividend during the year of assessment in question, it must be taken that it had resiled from the position which it had wrongly taken while filing the return. Quit apart fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt ground is with regard to grant of deduction 54G of the Act. The facts are that the assessee company in order to shift the factory from the present place, which is almost in the heart of the city, entered into Development Agreement for constructing commercial complex. But to continue manufacturing activity, the assessee purchased an industrial land near Harohalli Village on Kanakapura Road and invested substantial amount in constructing the factory and shifted their manufacturing unit into the rural area, which is eligible for deduction u/s.54G of Income Tax Act. The investment made in the new factory premises is as under: Purchase of land during FY 2007-08 ₹ 62,40,740 Investment made to building during FY 2007-08 ₹ 25,86,571 Further additions during FY 2008-09 ₹ 1,02,09,523 Investment made during FY 2009-10 ₹ 15,93,449 Investment made during FY 2010-11 ₹ 2,08,042 Total cost of construction: S ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
