TMI Blog2021 (9) TMI 860X X X X Extracts X X X X X X X X Extracts X X X X ..... and or building and the same were not attracted in respect of transfer of development rights in land - HELD THAT:- Assessee has not brought out any cogent reason or any logical basis for such determination of the fair market value. Alternatively, it was prayed by the Ld. AR for the assessee that the issue may be restore to the file of the Assessing Officer for fresh determination of the fair market value and that the assessee may be given another opportunity in this regard.DR did not raise any objection with regard to the submissions put forth by the Ld. AR of the assessee. We are of the considered view, in the interest of justice that the fair market value of the land has to be adopted on a reasonable basis and it must be reflected from the order of the Assessing Officer itself. Reasons behind such determination of the fair market value should be clearly spelled out in the order. Therefore, we set aside the order of the Ld. CIT(Appeal) on this issue and restore the same to the file of the Assessing Officer for adjudication as per law. Recalculate LTCG by applying provisions of Section 50C of the Act by adopting sale consideration as determined by DVO in his valuation report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2014. She was in mourning. The detailed affidavit with prayer to condone delay will be filed later. The assessee-appellant therefore requests to condone the delay and admit appeal for adjudication in accordance with the provisions of law. 5) The appellant craves/leave to add, amend or alter any of the above grounds of appeal. 2. At the very outset, the Ld. Counsel for the assessee submitted that there is a delay of 121 days in filing the appeal for which he has filed an affidavit along with condonation petition for delay. The contentions of the assessee is that the delay was caused because of factors which were not attributable to any direct conduct or mala-fide motive of the assessee. Rather, they were all circumstantial and unavoidable in nature. The assessee is an old lady of 62 years having no knowledge of income tax proceedings. She is illiterate and the income tax matters were looked after by her husband. That before the schedule date of filing appeal before the Tribunal, husband of the assessee died due to heart attack for which relevant certificate has also been annexed. The Ld. DR did not raise any objection regarding condonation of delay and hence, delay of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sel for the assessee submitted that in this case, the assessment has been completed u/s.144 of the Income Tax Act, 1961 (hereinafter referred to as the Act‟) on the basis of incriminating materials unearthed at the time of search action in the premises of a third party. That it is settled position of law whenever incriminating materials are found in consequent of search proceedings in the premises of a third party in relation to the assessee, in such scenario, assessment for the assessee should be completed u/s.153C of the Act and not u/s.144 of the Act. In this case, the Assessing Officer resorted to best judgment assessment u/s.144(1)(a) of the Act wherein if any person fails to make the return required under sub section (1) of section 139 and has not made a return or a revised return under sub section (4) or sub section (5) of that section .. In the instant case, the assessee has not filed any return of income and the Assessing Officer had resorted to best judgment assessment. 7. Now referring to the submissions made by the Ld. Counsel for the assessee, the Ld. DR submitted that there is letter from ADIT, Nashik to Assessing Officer of the assessee that c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Shri Abhijit D. Nagpure on 18.04.2006 for development of her immovable property at Survey No.14/1A/3, Anandwalli for ₹ 36 Lacs. There was search action u/s.132 of the Act against one Shri Bhupendra Shah, Proprietor of M/s. Bhavik Developers, Nashik on 08.02.2008. From such seized documents, the aforesaid transactions of the assessee entering into development agreement with Shri Nagpure was evident. That Shri Nagpure is an employee of M/s. Bhavik Developers, Proprietor of Shri Bhupendra S. Shah. The Assessing Officer examined development agreement which was registered with the Sub-registrar, Nashik-3 and found that as per the said development agreement, more particularly as per Clause-4, the assessee had given the possession of the land/property to the developer i.e. Shri Abhijit Deelip Nagpure on 18.04.2006. The Assessing Officer, therefore, concluded that the capital gain on the transfer of the rights in the said property as per the registered agreement was liable to be taxed in the assessment year 2007-08. 11. The Assessing Officer completed ex-parte assessment u/s.144 of the Act by invoking provisions of Section 50C of the Act by adopting the value of the propert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e land was given to Shri Nagpure on the very date of registration of the development agreement and Shri Abhijit D Nagpure had also furnished a ledger account of the assessee in the books of account of M/s. Bhavik Developers, Prop. Shri Bhupendra S. Shah and bank statement of M/s. Bhavik Developers in Pimpalgaon Merchants Co-op Bank Ltd. which showed the details of payment of all cheques during the assessment year 2007-08 only. 12.3 The Ld. CIT(Appeal) referred the matter also to DVO for proper valuation who had valued the property at ₹ 64,50,000/-. In the valuation report dated30.04.2011, the valuation officer had also given complete details of the various objections raised by the assessee and the reply furnished to the assessee with regard to the said objections. After taking into consideration, all the relevant facts and objections of the assessee, the DVO valued the property at ₹ 64,50,000/- and the Assessing Officer was directed by the Ld. CIT(Appeal) to recalculate LTCG by applying the provisions of section 50C of the Act by taking sale consideration of ₹ 64,50,000/- as determined by the DVO and not at ₹ 70 lacs which was the value of the property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and ownership rights of the second party vested therein. Furthermore, Clause 4 of the said development agreement which deals with possession of the property on the basis of which addition of capital gain has been initiated by Sub-ordinate Authorities u/s.50C of the Act, it clearly states that the owner i.e. the assessee has handed over the actual possession of the said property to the developer for the purposes of carrying out development work on the said property on license basis. That it is also mentioned, the owner has given the developer the right to develop the property and undertake construction on the said property. 16. We find this clause does not say anything about any change of ownership from the assessee to the developer. There is also no mention of any registered documents with the concerned authority being filed to suggest that ownership has been transferred by the assessee in favour of the developer. It is merely a transfer of development rights to the developer and that to on license basis. The characteristic of license in legal jurisprudence is one that it can be cancelled and terminated at any point of time by the owner and it does not confer permanent right o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... out development work on the said property. 19. The Ld. AR for the assessee has also cited the judgment of the Hon‟ble Karnataka High Court in the case of V.S. Chandrashekhar Vs. ACIT, ITA No.70/2015 dated 02.02.2021 wherein at Para 11 of the said judgment, the Hon‟ble High Court has discussed the circumstances of applicability of Section 50C of the Act. The relevant portion is extracted as follows: 11. Thus, from perusal of the aforesaid provisions, it is axiomatic that explanation 1 to Section 2(47) uses the term 'immovable property whereas, Section 50C uses the expression 'land' instead of immovable property. It is also pertinent to mention that wherever the legislature intended to expand the meaning of the land to include rights or interests in land, it has said so specifically viz., Section 35(1)(a), Section 54G(1), Section 54GA(1) and Section 269UA(d) and Explanation to Section 155(5A). Thus, Section 50C applies only in case of a transferor of land which in the instant case is M/s Namaste Exports and not the assessee who was only a consenting party and not a transferor / co-owner of the property. Undoubtedly, the assessee had certain rig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ir market value. Alternatively, it was prayed by the Ld. AR for the assessee that the issue may be restore to the file of the Assessing Officer for fresh determination of the fair market value and that the assessee may be given another opportunity in this regard. 23. The Ld. DR did not raise any objection with regard to the submissions put forth by the Ld. AR of the assessee. 24. Having heard the parties, we are of the considered view, in the interest of justice that the fair market value of the land has to be adopted on a reasonable basis and it must be reflected from the order of the Assessing Officer itself. Reasons behind such determination of the fair market value should be clearly spelled out in the order. Therefore, we set aside the order of the Ld. CIT(Appeal) on this issue and restore the same to the file of the Assessing Officer for adjudication as per law complying with the principles of natural justice. Thus, Additional Ground No.3 raised in appeal by the assessee is allowed for statistical purposes. 25. Coming to the grounds of appeal in the appeal memo filed by the assessee, at the very outset, the Ld. AR for the assessee submitted that Ground No.5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount in the year when she had transferred ownership rights to the developer in the financial year 2008-09 relevant to assessment year 2009-10. Now we find that for a land owner there are always two components i.e. (i) ownership rights and (ii) development rights in respect of the land. 31. We have examined that development rights were parted away with by the assessee through development agreement dated 18.04.2006. Admittedly, the assessee received only ₹ 36 lakhs which covered not only the consideration for transfer of development rights on 18.04.2006 but also for transfer of ownership rights in the year 2009. The year under consideration has only relevance with the transfer of development rights, in respect of which section 50C of the Act has been held supra to be not applicable. In that view of the matter, the computation of capital gain for the extant year has to be done u/s 48 of the Act sans provisions of section 50C of the Act. As regards the transfer of ownership rights in the year 2009, the capital gains on such transfer can be the subject matter of consideration by the AO only for such later year and not under the year in question. Thus, the ground No.1 taken ..... X X X X Extracts X X X X X X X X Extracts X X X X
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