TaxTMI 
TaxTMI 
TaxTMI 
2018 (5) TMI 1772
X X X X Extracts X X X X
X X X X Extracts X X X X
...., St. Mary's Road, Secunderabad and for construction of a multi-storeyed commercial complex consisting of shops, showrooms, offices, parking places and other commercial units etc., vide 'Agreement for Developmentcum- GPA' that was got registered vide document No. 40/2000 dated 10/01/2000. 2.1 As per the above agreement cum GPA it was agreed that the developer would bear all the expenses including construction and other costs that may arise from time to time. It was agreed that after completion of the said construction the land lords would get 45% of the built-up area, as earmarked in the sanctioned plan, free of cost in lieu of utilisation of the land owned by landlord. The Developer would retain the remaining 55% of the built-up area. As per the terms and conditions of the Agreement for Development-cum-GPA and subsequent Supplementary Agreement dated 17/01/2000 and other oral settlements the landlords were supposed to receive the constructed area of their share in the financial year 2009- 10 relevant to the A.Y. 2010-11. Though the original agreement had been entered into on 10/01/2000 and token amounts of advances was received as per clause-30(a) to (e) of the Agreement,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....(III) That a notice was issued u/s. 133 (6) dtd.16/08/2013 for the A.Y. 2007-08 in which the Assessing Officer had observed that though the development agreement was entered into in the year 2000, the effective transfer of Capital asset was made in the year 2006 And hence, the assessee was liable for capital gains in that year. Thereafter, on the same issue, notice u/s. 147/148 was issued for the assessment year under consideration. Mere readiness of the builder to hand over built up area to the Property owner would not amount to transfer by the owner of the property. (IV) The property owners till date had not taken possession of the built up area as the builder has not fulfilled his responsibilities/terms as per the Development Agreement dated 10/01/2000 viz. the builder had not constructed the building as per Municipal sanction; the builder had not obtained completion certificate nor occupancy certificate from the concerned authorities; the portion falling to the property owner was isolated and did not have access to corridor/lifts etc. The matter was settled in Arbitration and final award was passed on the 15/10/2016. (V) Plain reading of the Final award passed by the Sole- ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 5.10 crore, the Assessing Officer calculated the Long Term Capital Gains by adopting Rs. 5.98 crore as full value of consideration. After deducting indexed cost of acquisition of Rs. 47,28,055/- and cost of the structure in the year 2000 of Rs. 12,00,000/- as given by the assessee (Telukunta's share 50% of 12 lakhs : Rs. 6,00,000/-) which after indexation came to Rs. 9,74,808/-, long term capital gains were taken at Rs. 5,41,45,937/-. As the assessee's share was 4.16%, long term capital gains falling to its share were computed at Rs. 22,52,470/-. The assessee had filed Rs. 1,14,025/- return of income. After allowing the basic exemption, the total income was assessed at Rs. 22,06,495/-. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. The CIT(A) upheld the validity of reopening of assessment made by the AO u/s 147 of the Act as well as upheld the computation of long term capital gains done by the AO. As regards the contention of the assessee that the fair market value of the superstructure as on 01/04/1981 should have been adopted and indexed, was accepted by the CIT(A) and directed the AO to take 1981 as base year and recalculate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ransfer by the owner of the property. Further, he submitted that capital gains arises in the case of development agreement in the year of execution of the development agreement and not in the year of handing over possession of the property as per subsection (1) of section 45 which is the charging section read with section 2(47(v) of the Act. 6.1 Ld. AR submitted that various judicial rulings support the above view. Bombay High Court in the case of Chaturbhuj Dwarkadas Kapadia (2003) (260 ITR 491), Jasbir Singh Sarkaria (2007) 294 ITR 196 (AAR), Potla Nageshwar Rao Vs. DClT (2014) 365 ITR 249 (AP). This contention was already accepted by the department as mentioned above, wherein the proceedings were dropped against the notices issued by the intelligence wing and under 133(6) of the Act based on the same facts. Hence, there is no transfer in AY 2010-11. 6.2 He submitted that re-opening the assessment again on the same facts by another AO amounts to change of opinion and is bad in law. There are various judicial pronouncements which state that a mere change of opinion cannot be a basis for issuing notice under section 148 of the Act. Vijay Power Generators Ltd. v. ACIT (Delhi)(Trib....
X X X X Extracts X X X X
X X X X Extracts X X X X
....construction space to the land lords in the FY 2009-10 relevant to the AY 2010-11. Therefore there was simultaneous transfer of possession of 55% of land by the assessee to the builder and possession of 45% of built-up are by the builder to the assessee in FY 2009- 10 in terms of section 2(47) of the Income Tax Act, 1961 read with section 53A of the Transfer of property Act. On verification, it is noticed that the assessee has not filed his ROI for the A. Y 2009-10. In the view of the above, the income under the head Capital Gains chargeable to tax on account of transfer of the said land has escaped assessment within the meaning of Sec.147 of the Income Tax Act, 1961". It is clear that the main reason for reopening/initiating the proceedings are the letter of the builder, in which, it is stated that the buildings are ready for occupation as per the Joint Development Agreement (JDA). It was also brought to the notice in the initial state itself that the building constructed by the developer are not as per the norms agreed and subsequently subject to litigation. The final order of the Arbitral award was also submitted before the AO. It clearly shows that the building constructed by ....