TMI Blog2022 (12) TMI 302X X X X Extracts X X X X X X X X Extracts X X X X ..... search. The section does not use the word incriminating document, it is the various judicial decisions which have brought in the expression incriminating documents based on the facts specific to the case. However while determining whether a document seized is discriminating or not, the words used in the section need to considered i.e. if the documents seized have a bearing on the determination of the total income of such other person. In our considered view, if the document has a bearing on the determination of the total income of the assessee, then the same can be considered as incriminating. In assessee s case, the JDA is a document seized and is the basis on which the taxability of capital gain in the year under consideration is decided by the assessee. The claim of the ld AR that the amount of advance is already reflected in the books of accounts and that the amount is offered to tax in the subsequent years will not have a bearing since the question is whether for particular AY 2010-11, the JDA is an incriminating material with regard to the undisclosed income i.e. the capital gain on transfer of land. We see merit in the contention of the ld DR that if the said JDA has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital gain at the time of sale of flats at which time the gain already taxed i.e. the guideline value would be considered as the cost of acquisition. In the light of these discussions and considering the decision in the case CPC Logistics Ltd (supra) we uphold the decision of CIT(Appeals) in directing the AO to recompute the capital gain by adopting the guideline value @ Rs.520 per Sq.ft. We also see no reason to interfere with the order of the CIT(Appeals) in directing the AO to consider the built up area for the purpose of computing capital gains and to re-compute the capital gain for AY 2013-14 to 2017-18. The revenue appeal is therefore dismissed. - ITA No.54/Bang/2020 And CO No.2/Bang/2022 [in ITA No.54/Bang/2020] - - - Dated:- 13-10-2022 - Shri George George K., Judicial Member And Ms. Padmavathy S, Accountant Member For the Revenue : Dr. Manjunath Karkihalli, CIT(DR)(ITAT), Bengaluru For the Assessee : Shri Narendra Sharma, Advocate O R D E R PER PADMAVATHY S., ACCOUNTANT MEMBER This appeal of the revenue and cross objection by the assessee is against the order of CIT(Appeals)-11, Bangalore dated 14.10.2019 passed for the assessment year 2010- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in completing the assessment u/s.144. Without prejudice, the assessee prayed that the credit for the taxes paid during the subsequent years towards capital gain to be given against the tax liability of the impugned assessment year. 4. The CIT (Appeals) dismissed the legal grounds raised by the assessee and confirmed the order of the AO with regard to the year of transfer of the property. However, the CIT (Appeals) directed the AO to consider the guideline value of the property as the sale consideration to re-compute the capital gain and also to re-compute the capital gain of AY 2013-14 to 2017-18. The revenue and the assessee are in cross appeals before the Tribunal against the impugned order of the CIT(Appeals). 5. The issues contended by the revenue through various grounds raised is with regard to the CIT(Appeals) considering the Guideline Value @ Rs.520 per sq.ft. as the sale consideration instead of the estimated cost of construction @ Rs.2505 per sq.ft., for the purpose of determining the capital gain. The issues contended by the assessee through cross objections are with regard to :- i. Initiation of proceedings by the AO u/s. 153C instead of the proceedings u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see and the developer had concluded that the year under consideration is a year of transfer. In this regard, the AO relied on the decision of jurisdictional High Court in the case of Dr. T.K. Dayalu, (2011) 14 taxmann.com 120 (Kar) . The relevant extract from the AO s order is reproduced below:- 3.2. As per the Hon'ble High Court of Karnataka's decision in the case of Dr. T.K. Dayalu, 14 Taxmann.com 120 (2011) (Kar), capital gains arises at the time of execution of Joint Development Agreement, when possession of property is handed over to the Developer due to the concept of Part Performance. The judgement of the Hon'ble High Court of Bombay in the case of M/s. Chaturbhuj Dwarkadas Kapadia vs CIT (2003) 260 ITR 491 has been relied upon by the Hon'ble Karnataka High Court in the T.K. Dayalu decision. The Chaturbhuj decision lists out 6 conditions for satisfaction of Part Performance as per Section 2(47)(v) of Income Tax Act, 1961 and Section 53A of Transfer of Property Act, 1882. The conditions specified in the said case law and their satisfaction in the present case are tabulated below: S. No. Conditions S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Gains arises in the hands of the assessee R Muniraju HUF in F.Y. 2009-10 i.e. A.Y. 2010-11. However, the assessee has not offered the capital gains arising from the Joint Development Agreement with M/s. Brundavan Constructions in A.Y. 2010-11. 3.4. In light of the above discussion and in the capacity of Assessing of Officer [DCIT, Central Circle-1(3), Bengaluru, in the case of R. Muniraju (HUF), satisfied that the information contained in the said document (Page Nos. 47 to 75 of A/RM/5) pertains to/relates to R.Muniraju (HUF) and has a bearing on the determination of its total income, for the Financial Year 2009-10 relevant to Assessment Year 2010-11. 9. The AO considered clauses 14, 15 19 of the JDA along with clause (m) (n) of GPA to conclude that the transfer as contemplated u/s. 2(47)(v) of the Act r.w.s. 53A of the TP Act, 1961 is the date of the JDA. Before the AO, the assessee contended that the plan sanction for the development of the property was obtained only on 15.6.2010 and therefore the year under consideration cannot be taken as the year of transfer. The assessee also contended that without the plan sanction, the terms of JDA cannot be implemented and there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Shri K. Ramesh Reddy (HUF) v. DCIT (ITA No.1507/Bang/2016). The CIT (Appeals) further directed the AO to re-compute the capital gains of AY 2013-14 to 2017-18. 13. With regard to the legal issue that the AO ought to have assumed jurisdiction u/s.153A and not u/s.153C, the ld AR submitted that the AO in his order has admitted that there was a search in the residence of the assessee i.e., M/s.R.Muniraju (HUF) and that when the assessee is searched the assessment should have been done u/s.153A and not u/s.153C. 14. We heard the DR and perused the materials on record. We notice that the CIT (Appeals) has considered this contention of the assessee and held that though the place of the assessee was also searched, the warrant is in the name of M/s.Trans Global Power Pvt Ltd., and therefore the assessee cannot be considered as the person searched. We see merit in the observations of the CIT (Appeals) and see no reason to interfere with the decision of the CIT(Appeals). 15. The next legal issue contented is whether the JDA found during the course of search is an incriminating material. Before us, the ld. AR submitted that the JDA seized during the course of search is not an incri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that these seized materials are already on record relevant to proceedings u/s 148 of the Act on 6.3.2012 for the assessment year 2005- 06. According to the A.R., they are not incriminating material. In our opinion, this argument of the Ld. A.R. holds no merit since the provisions of section 153C of the Act do not discuss that seized material should be incriminating in nature or undisclosed in nature for pending assessment. It says only about any material, articles, things, books of accounts, documents seized or requisitioned that belongs to or pertains to person other than the searched person. In our opinion, there were seized material procured during the course of search action in the case of Srinivasa Trust on 6.8.2012. Therefore, framing assessment thereafter u/s 153C of the Act is valid and the question of abatement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether a document seized is discriminating or not, the words used in the section need to considered i.e. if the documents seized have a bearing on the determination of the total income of such other person. In our considered view, if the document has a bearing on the determination of the total income of the assessee, then the same can be considered as incriminating. 20. In assessee s case, the JDA is a document seized and is the basis on which the taxability of capital gain in the year under consideration is decided by the assessee. The claim of the ld AR that the amount of advance is already reflected in the books of accounts and that the amount is offered to tax in the subsequent years will not have a bearing since the question is whether for particular AY 2010-11, the JDA is an incriminating material with regard to the undisclosed income i.e. the capital gain on transfer of land. We see merit in the contention of the ld DR that if the said JDA has not been seized the capital gain would not have been taxed on the correct assessment year i.e. in AY 2010-11 and to that extent it is an incriminating material. In view of the above discussion and considering the decision of the coor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment ;] [or] (iva) the maturity or redemption of a zero coupon bond; or] (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882 (4 of 1882) ; or (vi) any transaction (whether by way of becoming a member of, or acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring, or enabling the enjoyment of, any immovable property. [Explanation 1].-******** [Explanation 2.-******** Section 53A of the Transfer of Property Act - Part performance 53A. Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es necessary prior to the commencement of construction. b. The OWNERS have hereby delivered possession and irrevocably permitted and authorized the DEVELOPER to enter upon the Schedule Property and develop the Schedule Property by constructing a multi-storied apartment building thereon. 2. PLANS/ LICENSES a. The DEVELOPER hereby agrees to prepare the necessary plan/drawing/designs for the construction of multi-storied building and submit the same to the Bangalore Mahanagara Palike/BDA or other concerned authorities for sanction of license and plan. The working plan shall be shown to the OWNERS. b. The DEVELOPER shall prepare the plans approval and shall obtain the unction and license with its cost and the OWNERS shall sign necessary documents, affidavits and applications necessary for obtaining plan sanction as and when required. 6. SHARING OF BUILDT AREA : b. In consideration of the OWNERS agreeing to transfer to the DEVELOPER and or to its nominees, 60% of saleable super built-up area in the said building, including proportionate area in common areas and car park to be constructed by the DEVELOPER on the Schedule Property corresponding undivided share in Sche ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p area as applicable under the Acts. 8. TRANSFER OF DEVELOPER S SHARE c) The constructed area with proportionate undivided share of land, common amenities, together with car parking space-covered or uncovered, falling to the share of the DEVELOPER shall be the absolute property of the DEVELOPER and he shall be entitled to hold, sell, mortgage, gift, lease or otherwise dispose of the same and it shall be entitled to all income, gains, capital appreciation and benefits of all kinds and description accruing, arising and/or flowing there from subject to the terms of this agreement. 14. DOCUMENTS OF TITLE a. The original title deeds of the schedule property are handed over to the DEVELOPER. After completion of the development and sale of undivided share in the schedule property and formation of apartment OWNERS Association/condominium, DEVELOPER shall deliver original documents to such OWNERS Association/ condominium. 19. LOANS AND ADVANCES: The DEVELOPER is entitled to raise the loan from financial institutions, banks, financiers, financial companies by mortgaging the Schedule Property to the extent of 60% undivided share in the land and super built-up area for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the possession is given irrevocably by the assessee to the developer and the developer is given the irrevocable power of attorney to transfer or sell the developer s share in the undivided share of land which would mean that the developer is given the absolute possession of the land which in our considered view amounts to transfer within the meaning of section 2(47)(v) of the Act. One of the contentions of the Ld AR is that the plan approval for development of the property came only in the subsequent assessment year. According to section 53A whereby the transferee has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract. During the year under consideration the developer has made an application for plan approval which is an act in furtherance of the contract and that he is willing to perform his part of the contract. In view of the above discussion and based on the facts of the present case we are of the considered view that the CIT(Appeals) is correct in upholding the order of the AO whereby the capital gain is to be taxed in AY 2010-11 i.e. the year in which the JDA is entered into. ITA No.54/Bang/202 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee did make imports and did derive benefits under the advance licence and the duty entitlement pass book and paid tax thereon. Therefore, it is not as if the Revenue has been deprived of any tax. We are told that the rate of tax remained the same in the present assessment year as well as in the subsequent assessment year. Therefore, the dispute raised by the Revenue is entirely academic or at best may have a minor tax effect. There was, therefore, no need for the Revenue to continue with this litigation when it was quite clear that not only was it fruitless (on merits) but also that it may not have added anything much to the public coffers. Similarly, in the case of CIT v. Bilahari Investment (P.) Ltd. [2008] 168 Taxman 95/299 ITR 1 (SC), the Hon'ble Apex Court has observed thus: 20. As stated above, we are concerned with assessment years 1991-1992 to 1997-1998. In the past, the Department had accepted the completed contract method and because of such acceptance, the assessees, in these cases, have followed the same method of accounting, particularly in the context of chit discount. Every assessee is entitled to arrange its affairs and follow the method of account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Steels (P.) Ltd. v. Asstt. CIT [2020] 115 taxmann.com 5/275 Taxman 187/421 ITR 46 (SC) while considering the provision of section 53 of the TP Act in the context of capital gains under the Income-tax Act, it has been held thus: 11. In order that the provisions of section 53A of the T.P. Act be attracted, first and foremost, the transferee must, in part performance of the contract, have taken possession of the property or any part thereof. Secondly, the transferee must have performed or be willing to perform his part of the agreement. It is only if these two important conditions, among others, are satisfied that the provisions of section 53A can be said to be attracted on the facts of a given case. 12. On a reading of the agreement to sell dated 15-5-1998, what is clear is that both the parties are entitled to specific performance. (See clause 14) 13. Clause 16 is crucial, and the expression used in clause 16 is that the party of the first part hereby gives 'permission' to the party of the second part to start construction on the land. 14. Clause 16 would, therefore, lead to the position that a license was given to another upon the land for the purpose of dev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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