TaxTMI 
TaxTMI 
2015 (3) TMI 935
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....pen land measuring 4702.52 Sq. Yds., (excluding the property having bearing No.8-3-483 comprising of 250 sq. Yds.), at Yellareddiguda, Hyderabad. Consequent to the information that these assessees have entered into a development agreement with M/s. Sun Mark Builders on 04-11-2003 for development of property for construction of residential flats sharing the built up area in the ratio of 39:61, assessing Officer initiated proceedings u/s.147 of the Income Tax Act (Act) in order to consider the capital gains arising to the assessees. Assessing Officer was of the opinion that assessees have received refundable security deposit which was not repaid, also received further amounts from the said developer as confirmed by them and further assessees have given possession of the property for development, therefore, capital gains arise on the day of agreement i.e., 04-11-2003 relevant to the impugned assessment year. 4. In the course of assessment proceedings after issuance of notices u/s.148 dt.29-03-2011, assessees were asked to file returns of income again vide letter dt.05-10-2011 as there were no compliances, summons u/s.131 of the Act were issued and assessees have promised to file retu....
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....ned residential flats in lieu of the residential building parted with. Assessees filed detailed submissions before the Ld.CIT(A) including reliance on various case laws, which was extracted by the Ld.CIT(A) in the order. 6. Ld.CIT(A) however, did not agree with assessee's contentions. On the issue of year of taxability, Ld.CIT(A) noticed that assessee has handed over possession and also received deposits and further surrender of tenancy letters indicate that tenants have vacated before 14th March, 2003. Relying the above facts and also relying on the decision of the Hon'ble Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia Vs. CIT [260 ITR 491] and analysing the provisions of Section 2(47)(v) of the Act, confirmed the action of the Assessing Officer by holding that Assessing Officer is justified in bringing to tax the capital gain during the year on entering the development agreement. With reference to the cost of construction, CIT(A) did not accept the evidence submitted by assessee and as Assessing Officer requested the details from SRO, office for the fair market value, she confirmed the adoption of cost of construction. However, there is no finding on the issue of ....
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....he project as per the terms and non-filing of returns admitting capital gains even at a later point of time to confirm the action of AO. 11. Before us, Ld.Counsels urged that before entering this agreement, assessees herein have entered into many joint development agreements at various points of time which have not been fructified. In support they filed various copies of the agreements in the Paper Book as under : 1. Copy of the Joint Development entered into between the applicants & 7 others and Mohd. Maher alam Khan dated 30.8.1994. 2. Irrevocable General Power of Attorney executed by the appellants in favour of Mohd. Mahel Alam Khan executed on 30.8.1994. 3. Deed of cancellation of Irrevocable GPA mentioned at S.No.2 above executed on 16.10.1997. 4. Deed dated 23.6.2000 for effecting cancellation of Development Agreement executed on 28.9.1995 in favour of N. Ravi Kumar. 5. Development Agreement executed on 28.6.2000 by the appellants in favour of Sri Dwarakamai Estates P. Ltd., 6. Development Agreement entered into between the appellants and Smt. P. Chandramathi executed on 24.11.2000. 12. It was submitted that after cancelling the earlier agreements, assessee entered in....
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....greed and declare that the Developer shall construct and completely utilizing fully entitlement areas as sanctioned by the Municipal Corporation of Hyderabad. (c) That since the portion of the Schedule property is in occupation of tenants, the first party owners shall get them evicted immediately at their cost and accord permission to the Developer to commence the Development work after demolishing the existing structures. 5(a) The Developer hereby agree, covenant and undertakes to handover or deliver 39% of the constructed area i.e., super-built areas which include all shareable areas in common passaged, basement, sewage lines, electrical lines, balconies etc., in all floors of the proposed complex or mutually agreed between the parties to the owners free of cost in lieu of utilisation of their land comprised in the schedule mentioned property for the above said development and construction. The remaining 61% of the constructed area would be retained by the Developer. The earmarking of the portions shall be made after receipt of the approved plans. (b) The developer shall have the rights over the site and terrace floors of the proposed residential complex to the extent of 61%. ....
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....der to do, execute and carry out any or all of the following acts as stated therein. One of the conditions was also for payment of rent per month from the date of dismantling of house and if project was not in stipulated time of 3 ½ years, then a penalty of Rs. 10,000/- per month shall be paid till the completion of construction. However, six months grace period was allowed. By perusing the above terms of the agreement and the fact that the receipts obtained from the tenants indicate that most of the tenants have been settled and paid by the time agreement was entered into, we are of the opinion that assessees did give possession of the property to the said developer at the time of entering into agreement and the terms of agreement have been fulfilled. 16. The Hon'ble A.P. High Court in the case of Potla Nageswara Rao vs. DCIT [365 ITR 249] held as under: "Each and every individual case stands on its own footing. Before admitting an appeal the High Court must examine the issue before it on its own merits. The pendency of another matter cannot be a ground to proceed with the matter. On March 7, 2003, the assessee entered into an agreement with a developer and the plan of t....
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....ions in question cannot fall within the scope of deemed transfer under section 2(47)(v) of the I.T. Act. As briefly stated above, the parties have performed the contract as per the terms of the contract. Therefore, the principles laid down in the above case, does not apply to the facts of the present case. Therefore, we are of the opinion that capital gains is correctly imposed in the order under consideration. The action of the Assessing Officer in levying capital gains in the impugned year is consequently upheld. B. Sale Consideration to be adopted 19. As briefly stated above, the A.O. while considering the sale consideration has taken two amounts for consideration, one amount is 'sale consideration received under the guise of refundable deposit' of Rs. 11,00,165 and other 'value of constructed area of flats received in lieu of asset given for development' at Rs. 63,71,290 in each case. assessee did contest that both the amounts cannot be taken and value of cost of construction for the builder has to be adopted and not the market price of sale value. As already stated above, Ld. CIT(A) did not adjudicate this issue at all. 20. After considering the rival contentions, we are of....
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....claim which Ld. CIT(A) rejected on the reason that provisions of section 54F are not applicable. Ld. CIT(A) ignored the fact that alternate contention under section 54 is eligible to the assessee. Since we are setting aside the entire computation of capital gains to the file of Assessing Officer, he is directed to examine the aspect of claim of deduction under section 54/54F, keeping in view the judicial pronouncements on the issue by the ITAT/High Court. Assessee should be given due opportunity for making necessary claims. Assessees who have not filed returns i.e., Mohd. Naseer, Mohd. Qaiser, Mohd. Sabir, have filed computation of capital gains as part of paper book, which indicate that there is no capital gains or marginal capital gain which may become less than taxable income. However, this aspect can be examined by the A.O. in the proceedings consequent to this order. All the expenditure claimed by the assessee should be considered and detailed discussion may be made if they are not accepted by the A.O. so that the appellate authorities can examine the correctness of the contentions. 23. With these observations/directions entire computation of capital gain in all the seven cas....