AI Drafter 
TaxTMI 
TaxTMI 
2022 (5) TMI 1083
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....pital Gains have arisen in Assessment Year 2012-13 in respect of the Joint Venture Agreement dated 28-09-2011. 2. The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that nopossession of the land was given, and no sale consideration was received and no final sale deed was executed in the previous year relevant to Assessment Year 2012-13 under consideration. 3. As the assessee has duly declared the Capital Gains, arising in respect of land given for development under the Joint Venture Agreement, in Assessment Years 2013-14 to 2017-18, subjecting the Capital Gains to tax in Assessment Year 2012-13 also, amounts to double taxation. Accordingly without prejudice, if the contention raised by the assessee that Capital Gains on transfer of land has not arisen and is accordingly not taxable in Assessment Year 2012-13, is not accepted by the Hon'ble Income Tax Appellate Tribunal it may issue directions to the Assessing Officer to exclude the Capital Gains from the income assessed for Assessment Years 2013-14 to 2017-18 in respect of the transfer of the land under Joint Venture Agreement dated 28-09-2011 and to refund the tax paid by the assessee on the sa....
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....8.09.2011 for Rs.4,21,38,000/-. In this sale consideration assessee's share is 1/3rd which works out to Rs.1,40,46,000/-. Since it was ancestral land, for calculating long term capital gain, the assessee had considered cost of acquisition for the said land as fair market value of the land was on 01.04.1981. Appellant-assessee worked out long term capital gain of Rs.1,03,81,628/- and claimed the deduction of Rs.1,03,81,628/- u/s 54F of the I.T. Act.During the assessment proceedings, appellant-assessee submitted that he will be getting 6 flats and accordingly claimed 54F for all the 6 flats. Assessing Officer, in the assessment order, restricted the assessee's claim of deduction u/s 54F for only one flat, as all the 6 flats were separate independent residential units having separate entrances, kitchens and separate electrical supply. 4. Aggrieved by the assessment order, the appellant filed appeal before the Commissioner of Income Tax (Appeals)-10, Pune. For the first time, before the ld. CIT(A), appellant raised the ground of applicability of section 45(2) of the I.T. Act vide ground no.4 to 10. The ld. CIT(A) allowed appellant's claim for deduction u/s 54F for 6 flats as claimed....
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....ble to tax in the year of sale under two heads. First, under the capital gain head and second under the business profit head. For the purpose of claiming this benefit, the appellant was required to make such claim in the return income itself or even by filing revised return of income. However, such claim is made after a gap of three years which is nothing but an apparent case of afterthought, which is fabricated to avoid the tax liability in the year under consideration. The appellant had the knowledge of violation of section 54F with regard to taxation of capital gain on remaining 19 flats hence the impugned method was adopted to defraud the revenue. Further, without prejudice to the above, it is also not ascertainable as to whether even in the year of sale i.e. in subsequent years, capital gain tax as well as tax on business profit have been paid or not in terms of section 45(2) of I.T. Act. In fact, on this issue, the appellant has failed to bring on record any cogent material to justify his claim. Hence, the contention deserves to be rejected. Accordingly, grounds no.4 to 10 are dismissed." 5. Aggrieved by the order of the Ld.CIT(A), the appellant assessee filed appeal befor....
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....s. As per clause (n) on page 10 of the Joint Venture Agreement the developers have been allowed to enter the property only to carry on the development work. (b) As per the Joint Venture Agreement, the co-owners were to receive 53,200 sq. ft. of the constructed area in the shape of flats, as sale consideration for the transfer of land. Subsequently, the constructed area to be received by the co-owners was increased to 57,690 Sq. Ft. The assessee was entitled to receive 19,230 sq. ft. of the constructed area as his 1/3rd share. The sale consideration in the shape of the constructed area was received in Assessment Years 2013-14 to 2017-18. (b) As per clause (k) on page 9 and clause (w) on page 12 of the Joint Venture Agreement, the co-owners were required to finally transfer the property to the prospective buyers of flats/shops or the society formed by them, which has not happened in Assessment Year 2012-13. 4.3 However the assessee has mistakenly declared the Capital Gains of Rs.1,03,81,628/- (before deduction u/s 54F of the Act) in Assessment Year 2012-13. 5. The assessee has received Rs.19,213 sq. ft. constructed area in the shape of 19 ....
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....ed before the Commissioner of Income Tax (Appeals), pleading that the capital gains was wrongly/mistakenly declared in the return of income and that no Capital Gain was chargeable in Assessment Year 2012-13. 8.3 The Ld. Commissioner of Income Tax (Appeals) has rejected these pleas of the assessee and the relevant ground Nos 3 to 10 have been dismissed. 9. The assessee has challenged the impugned order of the Commissioner of Income Tax (Appeals) before the Hon'ble Income Tax Appellate Tribunal, in this regard, by way of very elaborate, descriptive and complex grounds of appeal. 11.1 It is respectfully submitted that there is no estoppel against the law. A rightful claim can be made by the assessee for the first time even before the appellate authorities including the CIT(A). In view of the judgment of the Hon'ble Bombay High Court in the case of Pruthvi Brokers & Shareholders (2012) 349 ITR 336: 23 taxmann.com 23: 208 Taxman 498: 252 CTR 151 (Bombay). The assessee is allowed to make a claim before the appellate authority even if the said claim was not made by filling a revised return before the Assessing Officer. The appellate authorities are entitled to c....
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.... the returns of income have been filed for A. Ys. 2013-14 to 2015-16, and the details of the assessment year wise taxes paid on the business income and the capital gains, were furnished before the CIT(A). The copies of his returns of income are placed from Page 4 to Page 20 of the Paper Book. The returns of income for A. Ys. 2016-17 and 2017-18 were filed subsequently to the proceedings before the CIT(A). The copies of these returns are placed from Page No. 21 to 30 of the Paper Book. 11.3 Although the value of the land converted into / treated as stock in trade exceeded Rupees One Crore, the assessee had not filed the Tax Audit Report u/s 44AB of the Income Tax Act as he was not properly advised in this regard. It is further respectfully submitted that the provisions of section 44AB are applicable only if the assessee was carrying on business and his total sales / turnover or gross receipts as the case may be in business, exceeded Rupees One Crore. In the case of the assessee however, no stock was sold in A. Y. 2012-13. Thus, there was no sales, turnover or gross receipts. Therefore, the assessee was exempted from obtaining and filling the Tax Audit Report. ....
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....of the Development Control Rules and Regulations, the Bombay Provisional Municipal Corporations Act, 1949 and the Maharashtra Regional Town Planning Act 1966, (reference clause A and E of the terms and condition of the Joint Development Agreement). The eventuality of selling the F.S.I. / T.D.R. if any remains available will arise only after completion of the project as per the aforementioned regulations. Moreover, the clause concerning the consent given by the assessee to the builders for sale of the F.S.I / T.D.R. is a standard clause in all the Joint Development Agreements. This cannot be taken to mean that the sale or otherwise transfer of the land has taken place in A. Y. 2012-13. 11.5 Even if it is considered that the land was not converted / treated as stock in trade and therefore subsection (2) of Section 45 is not to be applied in this case and section 45(1) r.w.s. 2(47)(iv) is to be applied, it is respectfully submitted that even then the capital gains have not arisen in A. Y. 2012-13, as held by the Hon'ble Income Tax Appellate Tribunal, Pune in the case of Smt. Rajeshwari Surshprasad Tiwari ITA No. 330/PUN/2017, (Annexure T of the compilation of Judgments). In t....
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.... some real income should have arisen to the land owner. The Hon'ble Supreme Court has further held that in order to constitute transfer under a joint development agreement, there should be a transfer of title in substance in favour of the developer and the developer should be able to enjoy the property as its owner. The Hon'ble Income Tax Appellate Tribunal, Pune has taken similar view in the case of Shri Deepak Shivram Pathare ITA No. 779/PUN/2014, (Annexure R of the compilation of the Judgments) and Dr. Arvind S. Phadke (2014) 46 taxmann.com 335 (Pune - Trib.) (Annexure I of the compilation of the Judgments), which have been approved by the Hon'ble Bombay High Court in the case of Dr. Arvind S. Phake (2018)89 taxmann.com 307 (Bombay)(Annexure H of the compilation of the Judgments). In its judgment in the case of Sadik Sheikh (2019) 106 taxmann.com 334 (SC) (Annexure V of the compilation of the Judgments), the Hon'ble Supreme Court has held the provisions of section 2(47) would not apply to transfer of flats by merely entering into an agreement to sell the flats, which were yet to be constructed and possession was yet to be given. 12. PRAYER FOR....
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....efore, ld.DR submitted that assessee's claim cannot be entertained. 7.1 The ld.DR submitted regarding the claim of the assessee about conversion of land into stock-in-trade that assessee has never made his claim before the AO. The ld.DR invited our attention to the return of income, profit and loss account filed by the assessee which was part of the paper book of the assessee. The ld.DR submitted that the profit and loss account does not contain any closing stock for A.Y. 2012-13, A.Y. 2013-14, if assessee has converted land as stock-in-trade, then it should have appeared as closing stock. But there is no closing stock. The ld.DR further submitted that since value of the land is more than Rs.1 crore, which should have appeared as closing stock and assessee should have submitted Audit Report. However, new Audit Report has been submitted by the assessee. He further submitted that the return of income for A.Y. 2012-13, 2013-14, 2014-15, 2015-16 are all belated returns. The ld.DR submitted that since land does not appear as stock-in-trade, it proves that assessee has not converted the land into stock-in-trade. Therefore, this claim of assessee is incorrect. FINDINGS: 8. We hav....
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....ner has only granted right to Developer to enter the impugned property for the purpose of development. As per JDA, the developer has given Rs.1 crore as deposit. No other consideration paid. It transpires from the JDA that there is no actual transfer of land and assessee has not received any consideration also. It is also observed from the copies of the returns of Income filed by the assessee in the paper book, that the assessee has shown Long Term Capital Gain from sale of the impugned land in subsequent years as and when the assessee has received consideration. Assessee has also paid Tax on the said Long term capital gain. Therefore, in the facts and circumstances of this case it is held that there is no capital gain chargeable in AY 2012-13 on the impugned Joint Development agreement. Thus ground number 1 is allowed. 8.3 Another issue for consideration is whether the appellant has converted the land into stock-in-trade as claimed. It is a fact that this issue was not raised before the AO. Therefore, the AO had no opportunity to verify the assessee's said claim. This Bench made a specific query to the Authorized Representative(AR) of the assessee to demonstrate assessee's clai....