TaxTMI 
TaxTMI 
2018 (1) TMI 697
X X X X Extracts X X X X
X X X X Extracts X X X X
....sh Nagar, Secunderabad for a consideration of Rs. 11 lakhs vide document dtd. 05/09/2006 whereas the market value of the property as per the registration authorities comes to Rs. 53.24 crores. of income, reassessment proceedings u/s 147 of the Income-tax Act, 1961 ( in short 'the Act') were initiated with the prior approval of the Addl. CIT, Range - 3, Hyd. Accordingly, notice u/s 148 was issued on 18/03/2014 and served on the assessee. In response to the said notice, the assessee vide letter 02/04/2014 stated that he had already filed return of income for AY 2007-08 on 01/10/2007 and sought reasons for reopening the assessment. Reasons were accordingly furnished vide letter dated 25/06/2014 along with notice u/s 143(2). series of agreements/sale deeds in respect of the said property under consideration. The details of the agreements in the order of dates in are as follows: "A : DATE: 05-11-1967 Four persons, Viz., Sri Koganti Madhusudhan Rao, Sri Koganti Bhavani Shankar Rao, Sri Jasti Lakshmaiah and Smt.N.Annapurna Devi (herein after referred to as Mr.KMR & 3 others or 4 co-owners, for the sake of convenience) all from Kuchipudi Village, Amrathalur (M), Guntur Di....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a Writ Petition was filed in High Court and ULC Exemption was restored by the Hon'ble High Court. (iv) because of the above legal problems, the earlier agreements were not executed. (v) since the issues are sorted out, the vendors will be obliged to renew the above said agreements in respect of 8 acres of land (vi) that all the vendors admit sale of land 'of 8 acres (vii) that out of 8 acres of land, land of Ac 3.33 cents, the possession of which was already handed-over as recorded and acknowledged in the agreement of sale on 29-09-1980. (viii) that the balance land of Ac 4.67 cents was also delivered to the purchaser and the purchaser in possession of the same. For the sake of convenience, the relevant paras are reproduced: " .... 3. That out of the said extent of Ac.8.00 land in Survey Number 194/1, an extent of Ac.3.33 cents had already been finally made over and possession delivered by the vendors to the purchaser as recorded and acknowledged in the agreement of sale dated 29-9-1980; 4. That the possession of the other extent of Ac. 4.67 cents of land in the Survey Number 194/1 is also being delivered to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 000 (Rupees Two lakhs only) to be paid on or before 30-04-1990; and (b) The balance amount to be paid only after denotification of the said extent of land from the proposed acquisition for Buddha Poornima project sponsored by the Govt. and after the change of purpose in the exemption order viz. G.O. Ms. No. 4586 dated 10-10-1980 in favour of the purchaser and for the purpose he may apply for. The aid amount will be paid within one year from such date; 8. The vendors do hereby declare, agree and covenant that they are delivering the possession to the purchaser of the remaining extent of land which, according to them measures Ac. 4.67 cents subject, however, to actual survey measurement and finding of the said land by such survey and subject to the conditions referred to above. 9. That in order to implement and to fructify this agreement of sale also in respect of this extent of Ac. 4.67 cents of land, the vendors are also executing a General Power of Attorney (a comprehensive one including the power in respect of the said extent of Ac.3.33 cents referred to above) empowering the purchaser to do all things necessary for the purpose of securing permissions....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to be mentioned that this is a first registered document, by which Sri DSR has become GPA holder, this is irrevocable GPA obtained for consideration with all the rights of the owner to sell, to mortgage, to dispose off in any manner. At the cost of repetition, it is to be mentioned that through the registered document dated 05-11-1967, the 4 owners purchased the property from Sri Mirza Ali Moza Raza and there were series of unregistered agreements I POAs followed by registered GPA in favour of Sri DSR, which is irrevocable on 07-03-1990. G: DATE: 20-11-1995 This is a sale agreement between 4 owners represented by GPA holder, Sri DSR and M/s NDL Estates (P) Limited, for sale of Ac.4.16 cents of land (21296 sq.yds), for a consideration of Rs. 1,27,77,600. The amounts were paid as under: (i) Rs. 11 lakhs to the sellers through GPA holder, Sri DSR : An amount of Rs. 11 lakhs was paid by cheque No.682240 dated 04-03-1995 drawn on Allahabad Bank, Hyderabad to DSR. (ii) Rs. 30 lakhs to be paid on or before 30-06-1996, the remaining amount of Rs. 81,77,600 to be paid on or before 30- 11-1996, subject to clearance of lay-out by Hyderabad Urban Developmen....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce), Hyderabad) had stated that, on 5-9-2009, Sri D.Seshagiri Rao had sent a letter mentioning all the details along with DD drawn on ING Vysya Bank, Hyderabad for Rs. 5,50,000 each in favour of all the 4 owners, however, on 17-9-2009, all the 4 owners returned DDs and cancelled the GPA entered with DSR on 7-3-1990 and sent a legal notice to DSR and also issued a public notice. These averments were also confirmed by Sri K.Bhavani Shankar Rao (in his letter dated 26-2-14 to ITO (Intelligence) Guntur). J : DATE 11-09-2009 The original owners cancelled the GPA given to Sri DSR vide Registered GPA Document No.705 of 1990 dated 07-03-1990. It is mentioned in this document that the GPA holder has misutilised the powers conferred upon him, therefore, the GPA dated 07-03-1990 is cancelled. This cancellation deed is registered. K : DATE: 29-12-2010 An un-registered Tripartite Memorandum of Understanding was entered between original owners, M/s NDL Infratech Ltd (formerly known as NDL Estates (P) Ltd) and Sri DSR. M/s NDL Infratech Ltd paid an amount of Rs. 1.02 crores to the 4 owners. This document is unregistered The details of payment are as under: ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 04/03/1995, which was registered subsequently in February/April, 2009. According to the AO, the land of 4.16 acres which was purchased by the assessee on 29-09- 1980/06-03-1990/07-03-1990 for Rs. 24 lakhs, was sold on 05/09/2006 and was registered by the assessee in February/April, 2009 by way of 4 sale deeds. Further, AO opined that subsequent to balance sale consideration of Rs. 22 lakhs to the 4 co-owners as can be seen from his letter dated 05/09/2009 addressed to one of the coowners. property attracting taxability on the transfer of the said property. He deeds between co-owners and the purchaser of land i.e. M/s NDL Estates Pvt. Ltd treating it as a profit arrangement between the parties which has no locus standi in the eyes of law. 2.2 Further, AO had obtained SRO value from the Stamp Authorities, which was at Rs. 25,000/- per sq.yd. Accordingly, he long term capital gain in the hands of the assessee. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. After considering the submissions of the assessee and various documents placed on record, the CIT(A) allowed the appeal of the assessee by observing as under: 5. I have ca....
X X X X Extracts X X X X
X X X X Extracts X X X X
....from capital gains. 3. The Ld. CIT (A) ignored the various findings given by the Assessing Officer while making the addition. 4. The Learned CIT (A) erred in deleting the addition made in the hands of the assessee, holding that the assessee had never acquired ownership, not considering the fact that an irrevocable GPA was registered in the name of the assessee vide Document No: 708/1990 dated 07/03/1990. 5. Ld. CIT (A) erred in deleting the addition made under the head Long Term Capital Gains, not considering the letter of the assessee dated 05/09/2009 to Sri J. Lakshmaiah, one of the coowners of the property in question, which clearly states that the assessee is in possession of the property in question from 29/09/1980. 6. Any other ground(s) that may be urged at the time of hearing." 6. Ground Nos. 1 & 6 are general in nature and ground Nos. 2 to 5 are directed against the action of the CIT(A) in deleting the addition gain. 7. Considered the rival submissions and material facts on record. assessee with the owners of land from the year 1967 till date. After above agreements are, that four coowners, namely, Shri K. Madhusudhan Rao, Sri K. B....
X X X X Extracts X X X X
X X X X Extracts X X X X
....orded that it is not possible for the assessee to secure the presence of co-owners due to long lapse of time. In the year 2009, four registered sale deeds were entered into between 4 co-owners represented by their GPA holder assessee and M/s NDL Estates Pvt. Ltd. At the same time, assessee had sent letters to the co-owners on 05/09/2009 along with a DD drawn on Ing Vysya Bank, Hyderabad for Rs. 5,50,000/- each in legal notice. These averments were also confirmed by Shri J. Lakshmaiah and Sri K. Bhavani Shankar Rao. 7.2 It is clear from the above events that assessee was in way back in 1990. It is clear from the fact that assessee has to carry on certain obligations agreed with co-owners in between there were to the coowners. The assessee tried to pay the balance sale cancelled. It shows that assessee has never acquired ownership of the property as per the section 53A of the Transfer of Properties Act. "As per section 53A, where any property by writing signed by him or 'transfer' can be ascertained with reasonable certainty and transferee manner prescribed therefor by the law". In the given case, assessee right to the assessee to claim the ownership of the property. It is ownersh....