TMI Blog2022 (5) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... International Airport Ltd. cited [ 2021 (11) TMI 928 - KARNATAKA HIGH COURT] do not come into assistance of assessee since there is seized material. Accordingly, the issue of framing of assessment u/s. 153C of the Act is upheld and order of the CIT(Appeals) is reversed on this issue. Capital gain - land which is subjected to Joint Development is Stock In Trade of the assessee - when the ownership in these lands held as stock in trade gets actually transferred from the Respondent? - The Respondent has so far declared a Total Taxable income of Rs. 435,43,56,426/- which includes a sum of Rs. 310,96,66,066/-as Income from Business Rs.124,46,90,420/- as Income from Long Term Capital Gain which are income arising out of the JDA on upto A.Y. 2020-21. The assessee has paid the due taxes assessments are completed for most of the years except A.Y. 2020-21, which is in progress. The details of the Returns filed for the A.Y s 2012-13 to 2020-21 a consolidated chart showing income declared under the heads Business Income Long Term Capital Gains, year wise, arising out of the Project is also filed separately before this Tribunal. This proves that there is no intention on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same. 4. The learned C.I.T.(Appeals) failed to appreciate that the same person i.e. when the .AO of the searched person and the Other Person are one and the same, cannot have contradictory views about satisfaction or about belongingness of the seized material. 5. The CIT(Appeals) erred in not taking into cognizance the decision of the Hon'ble Delhi ITAT in the case of M/s. Super Malls Pvt. Ltd. (76 Taxmann.com 267) dated 22.11.2016 wherein the order of the ITAT in ITA Nos.1693-1696/2015 dated 11.12.2015 was set aside. The ITAT, Delhi, had held that recording of satisfaction by the AO of the searched person was required even if the AO for the searched person and the Other Person are one and the same. 6. The learned C.I.T.(Appeals) erred in relying on the decision of the Karnataka high Court in the case of CIT Vs. IBC Knowledge Park P Ltd. (385 ITR 346)(Karnataka H.C.) allowing the appeal of the assessee stating that only when incriminating material belonging to the assessee is available, there is a case for issue of notice u/s.153C of the Income Tax Act, 1961. 7. The CIT(Appeals) erred in failing to take into account the decision rendered the Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t incriminating material was sine qua non for invocation of provisions of section 153C. 5. The CIT(Appeals) erred in allowing the appeal of the assessee relying on the decision of the Hon'ble Supreme Court in the case of M/s.Calcutta Knitwears (362 lTR 673)(SC), Karnataka High Court Judgment in the case of CIT Vs. IBC Knowledge Park P Ltd. (385 ITR 346)(Kar) stating that only when incriminating material belonging to the assessee is available, there is a case for issue of notice u/s.153C of the Income Tax Act, 1961 and also relying on the Boards Circular 24/2015 dated 31.12.2015. The ld. DR brought to our notice the decision of the Karnataka High Court in the case of M/s. Canara Housing Development Corporation (49 Taxmann.com 98) wherein it was held that total income and not merely undisclosed income that is required to be assessed in proceedings u/s 153A which are applicable in proceedings u/s 153C also. He therefore prayed for allowing the appeals filed by the revenue. 6. The ld. AR submitted that the AO has not discharged the burden of proving that there is a valid initiation of proceedings u/s 153C to assume jurisdiction to make an assessment under section 153C of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in any manner constitute incriminating material. He submitted that that for a material to be labelled as incriminating, the same should have not been disclosed to the department and must also indicate income which a person has neither disclosed, nor has the intention to disclose ever and unearthed during the search proceedings. In the present case, the materials relied upon to initiate proceedings u/s 153C are not only known to the department long before proceedings being initiated u/s 153C, but also income from the same sought to be brought to tax even before they actually accrue to the assessee. In the light of these facts these impugned materials namely 14/ST/132 18/ST/132 cannot be labelled as incriminating material which is a sine qua non for initiating proceedings u/s 153C of the Act. 10. He further submitted that the assessee was once again taxed on the income from the said JDA for the A.Y. 2009-10 by an order u/s 143(3). The addition made in this order was deleted by the CIT(Appeals) in his appellate order holding that the lands which formed the subject matter of JDA were being held as Stock in Trade and the same can be taxed only when sold/transferred by a regist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the search. He relied on the decision of the coordinate bench of this ITAT in the case of Sree Lakshmi Venkateshwara Minerals vs DCIT 123 taxmann.com 255 (Bang Trib). 15. He thus pleaded that the decision of the CIT(Appeals) cancelling the assessment orders passed u/s 153 C r.w.s. 143(3) of the Act is to be upheld. 16. We have heard the rival submissions and perused the record. There was a search in the case of Srinivasa Trust on 6.8.2012. In the course of search documents belonging to the assessee were found. The documents seized and marked as Annexure 14/ST/132 comprised Joint Development Agreement dated 5.2.2005 between the assessee and PEPL and related documents. The related document marked as 18/ST/132 consisted of loan sanction details of the assessee. After duly recording the reasons, notice u/s. 153C of the Act dated 30.8.2013 was issued and served on the assessee requiring the assessee to file return of income in the prescribed form by 10.9.2013. In this case, search took place on 6.8.2012. Now the dispute is with regard to the framing of assessment u/s 153C of the Act. There was seized material marked as 14-ST/132 18-ST/132. The contention of the Ld. A.R. is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,980/- made to Income from Business; (ii) Rs. 325,32,46,980/- made to Income from Business; (iii) Rs.71,90,45,278/- made to Income from Long term Capital Gains (LTCG); (iv) Rs. 84,92,10,510/- made to Income from Short term Capital Gains (STCG). (v) Disallowance u/s 14A Rs.7,91,031/-. 20. He submitted that the AO has in the assessments order concluded that the Developer has completed development and has handed over the Owners constructed Area to the Respondent and has received the Developer s share of land from the Respondent in lieu thereof. The AO having come to the said conclusion proceeded to assess the income of the Respondent on the basis that the Respondent had transferred land to the Developer had received consideration in the form of Built up area during the previous year relevant to the assessment year 2010-11 and assessed the Income from Business at Rs.74,76,30,690/-, Income from Long Term Capital Gains at Rs.9,92,46,023/-, Income from Short Term Capital Gains at Rs.11,72,12,043/- Disallowance u/s 14 A Rs.6,33,414/-. 21. Likewise, for the assessment year 2011-12 he assessed the Income from Business at Rs.325,32,46,980/-, Income from Long Term Capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 25. As a natural corollary since no built-up area is received by us during A.Y. 2010-11 2011-12, no portion of the Non-Refundable Deposit of Rs.100 crores would fructify into income for the said assessment year. 26. The fact that the land which is subjected to Joint Development is Stock In 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 Respondent. 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. 27. It is submitted that from a reading understanding of the JDA what has to be ascertained is the date on which PEPL starting exercising the POA to convey ownership of the undivided interest in the land held as Stock in Trade treat only those portions of undivided interest in land which are actually registered in favour of PEPL or its nominees or any third person for that matter bring to tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the additions made in the order of assessment is not warranted and further the binding decision of the Jurisdictional ITAT, Bangalore Bench in assessee s own case for the AY 2009-10 in ITA No. 52/Bang/2013, order dated 27/03/2015 supports the contention of the assessee, as no income accrues to the assessee either by way of Income from Business and nor by way of Capital Gains whether Long or Short Term Capital gains which has held that when an immovable property is held as stock-in-trade, the same is to be considered as sold only when the sale is conveyed by means of a registered sale deed and not before that. 31. Thus, the additions made by the AO have been rightly deleted by the CIT A for the A.Y. 2010-11 2011-12 the order of the CIT(A) needs to be confirmed in the interest of Justice. 32. The ld. AR also submitted that assessee has started declaring income from the said JDA as when the Sale deeds are actually registered on from A.Y. 2012-13. The Respondent has so far declared a Total Taxable income of Rs. 435,43,56,426/- which includes a sum of Rs. 310,96,66,066/-as Income from Business Rs.124,46,90,420/- as Income from Long Term Capital Gain which are in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on:- CIT vs Cortech Energy Pvt Ltd 372 ITR 97, (Guj); CIT vs Lakhani Marketing 272 CTR 265, (P H); 38. Wherefore in the light of the above facts and circumstances of the case it is prayed that the appeals of the revenue are to be dismissed. 39. We have heard both the parties and perused the material on record. We find that the CIT(Appeals) has passed a cryptic order on merits on the additions made by the AO and his findings are as follows:- 6.3 In view of the answer to question raised in ground no.2 in favour of the appellant, it is not necessary to answer ground No. 4, 5, 6 7 which are on the merits of the addition. In this appeal, however, it would be relevant to state that the issues raised in Grounds No.4, 5 6 are also squarely covered in favour of the appellant by virtue of decision of the Hon ble ITAT Bangalore Bench in the appellant s own case for the AY 2009-10 in I.T.A. No.52/Bang/2013 and I.T.A. No.125/Bang/2013 dated 27.03.2015. 40. We have heard both the parties and perused the material on record. In order to render substantial justice, we deem it appropriate to remand the issues on merits to the CIT(Appeals) to be decided in accordance with law. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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