TMI Blog2022 (8) TMI 1265X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee on the reason that this has not been claimed in the original return of income filed by the assessee - CIT(A) confirmed the disallowance - HELD THAT:- As held by Hon ble Supreme Court in the case of Goetz (India) Ltd. [ 2006 (3) TMI 75 - SUPREME COURT] wherein the assessee filed the return of income for the relevant assessment year without claiming a particular deduction, later on, it sought to claim the deduction by way of a letter addressed to the AO the deduction disallowed by the AO on the ground that there was no provision under the Act to make amendment in the return of income by making an application at the assessment stage without revising the return of income. However, the same is allowed by the Hon ble Supreme Court. Being so, the Tribunal being the second appellate authority in this case and there is no restriction on the power of Tribunal to entertain such claim. Accordingly, we direct the AO to allow this claim as claimed by assessee. This ground of appeal of assessee is allowed. Non-granting of deduction u/s 54F in respect of investment in purchase of a residential building in Newton MA, USA - CIT-A observed that the assessee not claimed exemption for inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der JDA dated 31.1.2014 - Since this ground is not related to assessment year 2014- 15, we are declined to entertain these grounds in the assessment year 2014-15. However, the assessee is at liberty to take appropriate remedy in the right assessment year, if so advised. These grounds are disposed of accordingly. - ITA No.892/Bang/2019 - - - Dated:- 18-7-2022 - SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER Appellant by : Shri K.Y. Ningoji Rao, A.R. Respondent by : Shri V.S. Chakrapani, D.R. ORDER PER CHANDRA POOJARI, ACCOUNTANT MEMBER: This appeal by assessee is directed against the order of CIT(A) dated 30.3;2019. The assessee has raised following grounds of appeal:- 1 The impugned order of the Commissioner of Income Tax (Appeals)-12, Bengaluru is liable to set aside in so far as the same is improper, illegal, unlawful and opposed to law and facts of the case. 7,48,46,006/- 2 The Learned CIT(A) erred in upholding the adoption of the Sale Consideration of Rs.18,87,60,552/- for Computing the Long-Term Capital Gains fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Learned CIT(A) erred in confirming the adoption of Rs.40,000/- by the Assessing Officer as the FMV of the Poojanahalli Lands as on 1.4.1981 and in rejecting the Appellant's claim of Rs.25/-per Sq. Ft. as reported by the Registered Valuer without resorting to the Valuation Machinery provided under section 55A of the IT Act. 1,65,47,457/- 9 The Learned CIT(A) erred in rejecting the Appellant's claim for adoption of FMV of Rs.1,70,00,00/- per acre as on the date on which the Lands at Poojanahalli was permitted to be put to non-agricultural Residential purposes for deduction u/s 48(ii) of the Act in assessing the Long- Term Capital Gains as per principles laid down by the Supreme Court in the case of CIT v. BAI SHIRIN K. KOOKA reported in 46 ITR 86. 2,64,93,506/- 10 The Learned CIT(A) erred in upholding the assessment of the Long-Term Capital Gains arising out of the Joint Development Agreement dated 31.1.2014 for the A.Y.2014-15 even though the possession of the property bearing No.123, Infantry Road, Bengaluru was delivered on 16.6.2014 and with co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment dated 31.1.2014 which is invested in construction of the Residential Building. 1,00,14,091/- 15. The Learned CIT(A) erred in disregarding the fact that what was received by the Appellant in return is only the Non- Refundable Deposit and the construction of the Land Owners area apartment and thus even if the consolidated rate of Rs.8,550/- per square feet of his share apartment area is adopted, the value of the proportionate land of 2549.75 Sq. Ft. valued @ Rs.12,600/- per Sq. ft. will have to be deducted there from. 72,79,944/- 16. The Learned CIT(A) erred in upholding the refusal of AO to give deduction u/s 54 of the Income Tax Act to the extent of the Consideration under the Joint Development Agreement dated 31.1.2014 which is invested in construction of the Residential Building with complete disregard to the decisions of the Jurisdictional High Court and also to the provisions of Section 54 of the Act 1,00,14,091/- 17, The Learned CIT(A) erred in failing to direct the Assessing Officer to gi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of the whole land (7 acres 16.88 guntas) was agreed to sale on 3.2.2014 and consideration of Rs.18,54,25,000/- was received during the previous year 2013-14. Though this agreement was subsequently cancelled, the consideration amount is received and the possession is handed over during the previous year 2013-14 itself, the assessee declared this amount to taxation in assessment years 2014-15 itself. The balance amount of (Rs.20,16,17,000/- minus Rs.18,54,25,000/-) equal to Rs.1,61,92,000/- is taken to the previous year relevant to assessment year 2015-16 on the strength of the fresh agreement to sell dated 2.4.2014 and relatable capital gain is declared for the assessment year 2015-16. The assessee computed total capital gain on sale value of Rs.18,54,25,000/-, which is sale consideration received in the previous year 2013-14 and arrived at the capital gain for the assessment year 2014-15. According to the A.O., the sale consideration for 7 acres and 12.10 guntas land was Rs.30,94,87,500/-. To come to this conclusion, he relied on the absolute sale deed document bearing No.3570/2014-15 3569/2014-15 dated 20.8.2014. The document No.3570/2014-15 is referring to the agreement to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egard to disallowance of Rs.18,15,000/- paid to Bengaluru Development Authority towards the development charges and Rs.11,54,250/- paid towards brokerage charges paid while computing the capital gain in the hands of the assessee. The AO disallowed this claim of the assessee on the reason that this has not been claimed in the original return of income filed by the assessee. The Ld. CIT(A) confirmed the disallowance. 6.1 We have heard the rival submissions and perused the materials available on record. There is no allegation by the AO or Ld. CIT(A) that the assessee has not incurred this expenditure. The only plea of the Ld. D.R. is that there was no claim by the assessee in the original return of income filed by the assessee. In our opinion, as held by Hon ble Supreme Court in the case of Goetz (India) Ltd. Vs. CIT 284 ITR 323 (SC), wherein the assessee filed the return of income for the relevant assessment year without claiming a particular deduction, later on, it sought to claim the deduction by way of a letter addressed to the AO the deduction disallowed by the AO on the ground that there was no provision under the Act to make amendment in the return of income by making an app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Prema P Shah Sanjiv P Shah (supra) and Or. 6irish M Shah (supra). The provisions of section 54 of the Act which was considered by the Mumbai Benches of the ITAT in the cases of Mrs. Prema P. Shah Sanjiv P Shah (supra) and Dr. 6irish M Shah (supra) are in pari material with section 54F of the Act and therefore these two decisions of the Mumbai Benches of the Tribunal are equally applicable while considering the exemption under section 54F of the IT Act and hence would be applicable to the present case of the assessee. In this view of the matter, we-allow the assessee 's claim for exemption under section 54F of the Act since all conditions laid down in this section are satisfied for availing the said exemption. 5 In the result, the assessee's appeal is allowed 7.2 Further, in the case of Vinay Mishra Vs. ACIT in (2012) 20 ITR (Trib) 129, ITAT Bangalore wherein held as under: 18. On a plain reading of the provisions of section 54F of the Act, we do not find anything therein to suggest that the new residential house acquired should be situated in India. The jurisdictional High Court in the case of Director of Income-tax (International Taxation) v. Mrs. Je ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he opinion that benefit of section 54F before its amendment can be extended to a residential house purchased outside India 11. Considering the facts of the case in totality, in light of the judicial decisions discussed hereinabove, we direct the Assessing Officer to allow the claim of deduction. 7.4 Regarding non-claiming of deduction in the return of income filed by the assessee, in our opinion, judgement of Hon ble Supreme Court in the case of Goetz (India) Ltd. Cited (supra) applied as the Tribunal is not precluded in entertaining the claim of the assessee before the appellate proceedings. Accordingly, we allow the claim of assessee u/s 54F of the Act in respect of investment made in property situated in Newton MA, USA. This ground of appeal of the assessee is allowed. 8. In ground No.8 and 9 the assessee alternatively wants that difference between the indexation cost as at 17.11.2011 and FMV of the land of 17.11.2011 will have to be treated as gains arising from the transfer of agricultural land relying on the decision of Hon ble Gujarat High Court in the case of CIT Vs. B.B. Vyas (261 ITR 73) in respect of sale of property measuring 7 acres and 16.68 guntas of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is deceased father (died on 13.7.2015) had given the possession of the said property for development on 16.6.2014, the Appellant and his father reckoned the date of transfer as 16.6.2014 and offered and declared the Long-Term Capital arising out of the JDA for the A.Y.2015-16. 10.5 Disregarding all the aforesaid facts and the explanations offered by the Appellant the AO held that the date of transfer of old asset under the JDA is the date of JDA and assessed the Long- Term Capital Gains arising from the JDA for the A.Y.2014-15 disregarding the law related and the decisions of the Jurisdictional Hon'ble High Court of Karnataka. 10.6 The said decision of the AO was upheld by the Appellant Commissioner vide para (31) of his Appellate Order stating Therefore, in this case transfer is to be taken on the date of JDA i.e., 31.01.2014. Hence, the taxability for the same arises in FY 2013-14 pertaining to AY 201415. for the reasons stated in para (26) viz., For this, the appellant has submitted a transfer of possession document. Here it is to be noted that this document is an unregistered document whereas JDA is a registered document. Thus, in the eyes of law the validity of a reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate to the year of assessability of capital gain arising on the transfer of property vide JDA dated 31.1.2014 i.e. whether it is assessable in the year in which the development agreement entered into or in the relevant subsequent year in which the area duly developed and constructed giving the share of the assessee and land ownership has been handed over to the assessee. In this case, JDA has been entered on 31.1.2014 in respect of property No.123, Infantry Road, Bengaluru. However, gain on this transaction was not declared during the previous year relevant to assessment year in respect this transaction. According to the assessee, the possession of property was agreed to give to the developer on 16.6.2014, hence, the long term capital gain to be taxed in the assessment year 2015-16. However, the contention of Ld. D.R. is that in view of judgement in the case of T.K. Dayalu cited (supra), the capital gain to be taxed in this assessment year 2014-15 only. We have carefully gone through the JDA dated 31.1.2014. Clause Nos.2.1 2.2 of the JDA reads as follows:- 2.1 the members of First Party hereby agree and bind themselves to permit the Second party within two (2) months from th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he capital gain into tax in the assessment year 2014-15. Thus, the very foundation of the case of the revenue devoid of merits and more so, there is specific clause in the JDA as enumerated earlier that the assessee has not fully parted with the possession of the impugned property in assessment year 2014-15. Even assessee given the permission to the developer to enter into the property, so as to facilitate the construction activity it cannot lead to conclusion that there is a transfer in the AY 2014-15. It cannot be said that the assessee has parted with the legal possession of the property. When assessee has actually given the possession of property by separate document on 7.6.2014, it cannot be presumed by AO that assessee has given the possession of property on 31.1.2014. Further, we also place reliance on the judgement of Hon ble Supreme Court in the case of CIT Vs. Balbir Singh Maini in 398 ITR 531, wherein it was held as follows:- The JDA was between the housing society, who was referred to as the owner, and two developers. Strewn throughout the agreement is the fact that the owner, being absolutely seized and possessed of the property, was desirous of assigning its d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of section 53A. In short, there is no agreement in the eyes of law which can be enforced under section 53A of the Transfer of Property Act. This being the case, that the High Court was right in stating that in order to qualify as a 'transfer' of a capital asset under section 2(47)(v), there must be a 'contract' which can be enforced in law under section 53A of the Transfer of Property Act. A reading of section 17(1A) and section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in section 53A. The ITAT was not correct in referring to the expression 'of the nature referred to in section 53A' in section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Finance Act of 1987 with effect from 1- 4-1988. All that is meant by this expression is to refer to the ingredients of applicability of section 53A to the contracts mentioned therein. It is only where the contract cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sfer of title in fact. [Para 22] A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to ownership to the developer. At the highest, possession alone is given under the agreement, and that too for a specific purpose - the purpose being to develop the property, as envisaged by all the parties. Therefore, of this clause will also not rope in the present transaction. [Para 23] The matter can also be viewed from a slightly different angle. The assessee is right in referring to sections 45 and 48 and has then argued that some real income must 'arise' on the assumption that there is transfer of a capital asset. This income must have been received or have 'accrued' under section 48 as a result of the transfer of the capital asset. [Para 24] In the facts of the present case, it is clear that the income from capital gain on a transaction which never materialized is, at best, a hypothetical income. It is admitted that, where for want of statutory permissions, the entire transaction of development of land envisaged in the JDA fell through ..... X X X X Extracts X X X X X X X X Extracts X X X X
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