TaxTMI 
TaxTMI 
2015 (4) TMI 100
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....enged the order of the Commissioner of Income-tax (Appeals) in sustaining reopening of assessment under section 147 as valid. 3. Apart from questioning validity of reassessment, the assessee also raised following grounds on merits : "4. The Commissioner of Income-tax (Appeals) erred in ignoring the binding decision of the Madras High Court with regard to application of provisions of section 53A of the Transfer of Property Act read with section 2(47)(v) of the Income-tax Act, 1961. 5. The Commissioner of Income-tax (Appeals) erred in concluding that transfer of property took place in the assessment year 2003-04. 6. The Commissioner of Income-tax (Appeals) erred in confirming the stand of the Assessing Officer that section 50C is applicable and that the sale consideration for the land foregone to the developer is the guideline value of the property as on April 1, 1981 instead of taking the cost of construction of 9 flats allotted to the appellant as t....
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....ome. The Assessing Officer completed the assessment for the assessment year 2003-04 under section 143(3) read with section 147 of the Act assessing long-term capital gains on the transfer of the said land made by virtue of agreement of sale and joint development. The Assessing Officer while computing the long-term capital gains adopted the guideline value of the registration department for the property for the undivided share of the land at Rs. 1,41,10,304 and computed the long-term capital gains accordingly invoking the provisions of section 50C of the Act. The Assessing Officer also denied indexation on the cost of building while computing the capital gains. 5. The assessee filed an appeal before the Commissioner of Income-tax (Appeals) contending that the reopening under section 147 is bad in law. The assessee contended that the fact regarding entering into agreement of sale and joint development agreement with Golden Constructions in respect of the property at 29, Cenotaph II Lane, Chennai had already been furnished at the time of filing of return of income on March 28, 2003 by way of note and therefore reopening of assessment is bad since primary facts were already availabl....
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....ent was made under section 143(3) of the Act, reopening of assessment under section 147 is bad in law in the absence of any tangible material before the Assessing Officer suggesting escapement of income. Counsel submits that assessee has disclosed the fact of entering into agreement of sale and development agreement by way of note along with the return filed. Counsel therefore, submits that all the information necessary are available at the time of processing the return and therefore, the assessment made under section 147 is bad in law. Counsel submits that it is only a mere change of opinion and no new information has come on record suggesting escapement of income so as to invoke the provisions of section 147 of the Act. 9. The Departmental representative placing reliance on the decision of the hon'ble Supreme Court in the case of Asst. CIT v. Rajesh Jhaveri Stock Brokers Pvt. Ltd. [2007] 291 ITR 500 (SC) submits that the Assessing Officer processed the return under section 143(1) without any scrutiny and therefore, the Assessing Officer is right in invoking the provisions of section 147 as he has come to the conclusion that the assessee had transferred the property by ente....
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....made under section 143(3) of the Act and the Assessing Officer came to possession of information of escapement of income during the course of assessment proceedings for the assessment year 2006-07. Therefore, the grounds of appeal Nos. 1 and 2 raised by the assessee are dismissed. 11. The assessee raised ground No. 3 stating that the Commissioner of Income-tax (Appeals) erred in not recognising the fact that the procedure laid down under the proviso to section 151(1) for issue of notice has not been complied with. Ongoing through the provisions of section 151(1), we find that the said provisions have no application to the facts and circumstances of the case as the said provisions of section 151(1) applies only to cases where assessments were completed either under section 143(3) or 147 of the Act. Therefore, this ground of appeal No. 3 of the assessee is rejected. 12. In respect of the issue of whether there is a transfer within the meaning of section 2(47) or not in respect of property given for development, the Commissioner of Income-tax (Appeals) had considered the submissions of the assessee and held that there is a transfer within the meaning of section 2(47) after exami....
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....p; 'The above observation makes it clear that the agreement, read as a whole, was taken to have passed complete control over the property in favour of the developer. In such a case, the date of the contract alone was held to be relevant to decide the year of chargeability. (emphasis1 supplied).' 4.4 The authorised representative placed reliance on the jurisdictional High Court decision in the case of CIT v. G. Saroja T. C. A. 217 of 2004 [2008] 301 ITR 124 (Madras) to argue that no sale consideration was received during the year in the case of the appellant and hence provision of section 53A of the Transfer of Property Act is not attracted. The arguments of the authorised representative are reproduced hereunder : Section 2(47)(v) of the Income-tax Act can be invoked only upon satisfaction of the ingredients of section 53A of the Transfer of Property Act. The ingredients of section 53A of the Transfer of Property Act require that the transferor should have received consideration either in part or in full for transfer of the property. In the above case, the consideration is 65 per cent. of plinth area....
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....und No. 7, it was submitted that the planning permit itself had been issued only on May 26, 2003, construction approval on July 7, 2003, work permit issued on July 4, 2003 and hence none of the conditions laid in the Transfer of Property Act is satisfied for invoking the provisions of sec tion 2(47)(v)/(vi) for the assessment year 2003-04. The Assessing Officer relied on the provisions of section 2(47)(v) and highlighted the clauses in agreement for sale and for joint development in paragraph 5 and furnished points in paragraph 6 of the assessment order to hold that the transaction entered into by the appellant with the promoter M/s. Golden Constructions, amounted to 'deemed transfer' and capital gain is taxable this year. On careful consideration, I find that the judgment of the Bombay High Court in Chaturbhuj Dwarkadas Kapadia reported in [2003] 260 ITR 491 (Bom) has clearly held that chargeability to tax arises on the date agreement is entered into and on execution of agreement, the appellant obtained right to receive consideration and hence respectfully following the judgment I con firm the stand of the Assessing Officer that transfer of the property in question has tak....
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....f entering into an agreement of sale and joint development by the assessee with Mr. J. Rajkumar Balsingh in the assessment year 2003-04. In the circumstances, we uphold the order of the Commissioner of Income-tax (Appeals) in holding that there is a transfer within the meaning of section 2(47) of the Act in respect of the property. Thus, grounds of appeal Nos. 4 and 5 are decided against the assessee. 14. As far as ground of appeal No. 6 is concerned, i.e., invoking the provisions of section 50C and considering the guideline value of registration department for the purpose of computing capital gains, we are unable to endorse the view of the Commissioner of Income-tax (Appeals) in accepting the decision of the Assessing Officer in invoking the provisions of section 50C of the Act. The Jodhpur Bench of the Tribunal in the case of Navneet Kumar Thakkar v. ITO [2008] 298 ITR (AT) 42 (Jodhpur) held that unless the property transferred has been registered by sale deed and for that purpose value has been assessed and stamp duty has been paid by the parties section 50C inserted by the Finance Act, 2002 with effect from April 1, 2003 cannot come into operation. Similar view has been take....
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....the cost of any improvement thereto. Therefore I hold that though as per the agreement of sale and joint development what is transferred is only the land, but the fact that on executing the said agreement the appellant also cedes right over the building located on the said land and hence for the purpose of working out capital gain the cost of the building and indexation of benefit thereon should also to be deducted to arrive at the cost for the purpose of computing taxable capital gain. Capital gain tax is assessed in the hands of the transferor and the transfer' is to be seen from the point of view of transferor and statutory deductions are to be provided. This ground of appeal is allowed." 20. Ongoing through the order of the Commissioner of Income-tax (Appeals), we do not find any good reason to interfere with the findings of the Commissioner of Income-tax (Appeals) on this issue. We, therefore, confirm the order of the Commissioner of Income-tax (Appeals) on this issue and reject the grounds of appeal raised by the Revenue. 21. In the result, the appeal of the Revenue is dismissed. I. T. A. Nos. 616 and 617/Mds/2012 22. These two appeals are filed by the assesse....