AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2018 (1) TMI 843
X X X X Extracts X X X X
X X X X Extracts X X X X
.... as under. ITA No. 1353/Bang/2015:- "1. The order of the Learned CIT (Appeals), in so far as it is prejudicial to the interest of revenue, is opposed to law and the facts and circumstances of the case. 2. The CIT(A) erred in holding that the assessees have not parted with possession of the property as contemplated in Section 53A of the Transfer of Property Act without appreciating the fact that the clause X(c) and Para 6.1 of the agreement clearly indicate that constructive possession has been handed over to the builder. 3. The CIT(A) erred in holding that the assessees have not parted with possession of the property by placing reliance on the decision of ITAT, Bangalore in the cases of Sri Nagaraj and Smt. Satyaprema in ITA No.136 & 137/Bang/2012 without appreciating the fact that said decision has not been accepted by the Department and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 4. The CIT(A) has failed to appreciate that the assessee had executed General Power of Attorney in the name of the developer on 27.11.2008 to sell the built-up area of the said property and as per agreement dated 02.02.2009, the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Department and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 4. The CIT(A) has failed to appreciate that the assessee had executed General Power of Attorney in the name of the developer on 27.11.2008 to sell the built-up area of the said property and as per agreement dated 02.02.2009, the refundable deposit was converted into non-refundable deposit which corroborate the fact that the possession was in fact handed over to the developer in pursuance of JDA. 5. The CIT (A) erred in holding that the act of bringing nonrefundable deposit to tax in the impugned asst. year is premature, by placing reliance on the decision of ITAT, Bangalore in the case of M/s. Chaitanya Properties Pvt. ltd., in ITA NO.125/Bang/2013, without appreciating the fact that the said decision has not been accepted by the Department and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 6. The CIT (A) has erred in holding that the decision of the Hon'ble High Court of Karnataka in the case of CIT vs. T.K. Dayalu is not applicable to the facts of the assessee's case. 7. The CIT(A) has erred in holding tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ment and an appeal u/s.260A has been admitted by the Hon'ble High Court of Karnataka. 6. The CIT (A) has erred in holding that the decision of the Hon'ble High Court of Karnataka in the case of CIT vs. T.K. Dayalu is not applicable to the facts of the assessee's case. 7. The CIT(A) has erred in holding that the sources for mutual fund investments and time deposits stand explained without appreciating the fact that no evidence was filed before the AO in this regard and allowed the assessee's claim on the basis of additional evidence, without giving an opportunity to the AO to verify the additional evidence as required under Rule 46A. 8. The CIT(A) erred in deleting the addition made on account of interest income from J & K Bank on the ground that the said income was accrued to the assessee after 31.03.2009 without appreciating the fact that the Form 26AS available on record, clearly indicate that the said income was paid / credited to the assessee on 31.12.2008 and 02.03.2009 of Rs. 76,712/- and Rs. 1,22,740/- respectively. 9. For these and such other grounds that may be urged at the time of hearing, it is humbly prayed that the or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessing Officer be restored. 8. The appellate craves leave to add, to alter, to amend or delete any of the grounds that may be urged at the time of hearing of the appeal." 3. The grounds raised by the assessee in its COs are as under. C.O. No. 93/Bang/2017:- "1. The order of the learned Commissioner of Income-tax [Appeals] in so far it is against the Respondent / Cross Objector is opposed to law, facts, equity, and weight of evidence and circumstances of the case. 2. The Respondent/ Cross objector denies himself liable to be assessed over and above the total income reported by the Respondent/ Cross objector of Rs. 62,50,000/- as on the facts and circumstances of the case. 3. The learned Commissioner of Income-tax (Appeals) is not justified in law in not holding that the order of re-assessment passed by the learned assessing officer under section 143 [3] r.w.s. 147 of the Act is bad in law, since the mandatory conditions for assuming jurisdiction for issuance of a notice under section 148 of the Act did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing that the order of re-assessment passed by the learned assessing officer under section 143 [3] r.w.s. 147 of the Act is bad in law, since the mandatory conditions for assuming jurisdiction for issuance of a notice under section 148 of the Act did not exist or having not been complied with and consequently, the reassessment requires to be cancelled on the facts and circumstances of the case. 4. The learned Commissioner of Income-tax [Appeals] is further not justified in not holding that the order of reassessment is further bad in law and void-ab-initio as the learned Assessing officer had no reasons to believe that the income of the Appellant has escaped assessment under the facts and circumstances of the case. 5. Without prejudice, the learned Commissioner of Income-tax [Appeals] ought to have granted benefit of exemption under section 54F of the Act on the facts and circumstances of the case. 6. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the learned assessing officer has erred in the calculation of cost of acquisition of the property on the facts and circumstances of the case. 7. Without prej....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ought to have granted benefit of exemption under section 54F of the Act on the facts and circumstances of the case. 6. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the learned assessing officer has erred in the calculation of cost of acquisition of the property on the facts and circumstances of the case. 7. Without prejudice, the learned Commissioner of Income-tax [Appeals] failed to appreciate that the values adopted by the learned assessing officer in the entire computation of capital gains are wrong and the capital gains require to be recomputed on the facts and circumstances of the case. 8. Without Prejudice, the learned Assessing Officer is not justified in law in charging the interest under section 234 A and 234 B of the Act and further the calculation of interest under section 234 A and 234 B of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the Order of assessment on the facts and circumstances of the case. 9. The Respondent / Cross Objector craves leave to add, alter, delete, substitute or modify any of the grounds urged above.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he Act and further the calculation of interest under section 234 A and 234 B of the Act is not in accordance with law since the rate, method of calculation, quantum is not discernable from the Order of assessment on the facts and circumstances of the case. 9. The Respondent / Cross Objector craves leave to add, alter, delete, substitute or modify any of the grounds urged above. 10. For the above and other grounds that may be urged at the time of the hearing of the appeal, the Respondent / Cross Objector prays that the appeal may be allowed in the interest of equity and justice." 4. The ld. DR of revenue supported the assessment order. He also submitted that this issue is covered in favour of the revenue and against the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Dr. T.K. Dayalu as reported in 202 Taxman 531. He also drawn our attention to Para no. 9.5 of the assessment order and pointed out that it is noted by the AO in this Para of the assessment order that as per Rider-2 dated 02.02.2009, all the four parties to the JDA namely Mrs. Margrit Goverdhan, Dr. Arvind Goverdhan, Dr. Anita Goverdhan and Mrs. Monica Gov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....me Tax Act, 1961 and the possession was given only to develop the property. Thereafter, he drawn our attention to Para no. 15 of the JDA and pointed out that the land owners had handed over all the original document of title to M/s. AKS Law Associates, Advocate who shall hold the same in ESCROW on behalf of the owners till the completion of the entire project and on formation of an Association of owners of all the apartments in the building to be constructed on the SCHEDULE A PROPERTY, the ESCROW Agent shall hand over the original documents of title to such Association / Organisation of owners as the case may be. Thereafter he drawn our attention to Para no. 19 of the JDA and pointed out that as per this Para of JDA, the owners have to pay all the taxes, levies and cess in respect of the SCHEDULE PROPERTY up to the date of the completion of the developed area and up to the date when the proportionate undivided interest in land in the SCHEDULE PROPERTY is handed over to the developer. He pointed out that this Para of the JDA shows that ownership right was with the owners of the land only and not with the developer. Then he drawn our attention to page nos. 44 to 66 of paper book and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e remaining in the COs of the assessee that the assessee is eligible for deduction u/s. 54F of the IT Act. He submitted that this issue was not decided by the CIT(A) on this basis that he has held that capital gain is not taxable in the present year because no transfer is taking place in the present year. He submitted that if the order of CIT(A) is confirmed on that aspect, then this ground of assessee in CO will become infructuous but if the order of CIT(A) is reversed on that aspect regarding taxability of capital gain in the present year then this issue regarding allowability of deduction u/s. 54F is to be decided. He submitted copy of Tribunal order rendered in the case of Shri K.G. Adaveeshaiah Vs. ITO in ITA No. 2043/Bang/2016 dated 23.03.2017 and drawn our attention to Para nos. 7&8 of this Tribunal order and pointed out that in that case, the same issue regarding allowability of deduction u/s. 54 / 54F was restored back to the file of AO and therefore, in the present case also, this issue may be restored back to the file of AO. The ld. DR of revenue submitted that the same may be restored back to the file of CIT(A). 9. We have considered the rival submissions. First we d....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uilder will give possession to the land owner after payment of maintenance charges, it is implied that the builder was in the possession of the constructed area i.e. flats to be received by the land owners i.e. the present assessees. It also means that valid possession was given by these assessees to the builder in the present year because in the present year, the JDA talks about handing over of possession and there is no other document shown as per which, the possession was handed over to the developer in any subsequent year. This is also noted by the AO on page no. 7 of the assessment order in Para no. 9.5 that as per Rider -2 dated 02.02.2009, the parties to the JDA being these four assessees before us had renegotiated clause 13 of the JDAs dated 27.11.2008 and had received a sum of Rs. 2.5 Crores as non-refundable deposit. Since in the present case, not only JDA was executed, but possession was also handed over to the developer and non-refundable deposit was received by the assessee to the extent of Rs. 2.50 Crores, in our considered opinion, this judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Dr. T.K. Dayalu 9Supra) is squarely applicable. 12. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as Mantri Developers P. Ltd.) on 26.10.1994 and as per the said agreement, the developers agreed to construct apartments on the property and retain 70% of the undivided share of land of the property and 70% of the super structure as and towards developer's share and the remaining 30% of the built-up area and proportionate undivided share of land of the property was to be given to the share of the assessees. The Tribunal also noted that the developers did not comply with the JDA till the year 2000 and in the year 2000, the developers intended to start construction as per the JDA. The Tribunal also noted that at that point of time, the assessees agreed to sell their 30% of the share of the built-up area and proportionate undivided share of land of 30% of the property to M/s. Glory Estate P. Ltd., for a sum of Rs. 8.35 Crores and the agreement dated 11.11.2000 was accordingly entered into between the parties and the developers agreed to pay the sale consideration in 35 instalments over a period of 36 months, from the date of agreement of sale as per the installment schedule annexed to the agreement of sale. For Assessment Year 2001-02, the notices u/s. 148 was issued on 28.03.2008 to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....herefore, the conclusions of the CIT are contrary to facts. Hence it is seen that in that case, the JDA was entered in the year 1994 and in that year the possession was given and in Assessment Year 2001-02, the built up area was converted into money. On this aspect also, query was made by the AO and reply was given by the assessee before the AO and the AO took a view that no capital gain has arisen in the present year. This is settled law that the CIT cannot substitute his view in place of AO while exercising revisionary powers u/s. 263. In our considered opinion, this Tribunal order is also not applicable in the facts of the present case. 16. As per the above discussion, we find that this issue is squarely covered in favour of the revenue and against the assessee by the judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Dr. T.K. Dayalu (supra) and the two tribunal orders cited by ld. AR of assessee are not applicable in the present case. Hence by respectfully following this judgment of Hon'ble Karnataka High Court rendered in the case of CIT Vs. Dr. T.K. Dayalu (supra), we reverse the order of CIT(A) on this issue and restore that of the AO. 17. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ake up the COs filed by the assessee. As per these COs, two issues are raised by the assessee. The first issue is regarding validity of reassessment proceedings and in course of hearing before us, it was submitted by ld. AR of assessee that this issue is not pressed and accordingly, the grounds pertaining to this issue is rejected as not pressed. 22. The second issue raised is regarding assessees' claim for deduction u/s. 54F of IT Act. We find that this issue was not decided by CIT(A) because he has decided the issue in favour of the assessee on the main issue that capital gain is not liable to tax in the present year. Once it is held that the capital gain is not liable to tax in the present year then there is no question of allowability of deduction u/s. 54F and therefore, this aspect was not decided by CIT(A). Now we have reversed the order of CIT(A) on that aspect and we have held that capital gain is liable to tax in the present year and therefore, now this issue regarding allowability of deduction u/s. 54F has to be decided. Hence we restore this issue to the file of CIT (A) for decision. 23. Regarding the contention of the learned AR of the assessee that as per the Tri....