TaxTMI 
TaxTMI 
2023 (10) TMI 620
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....nd construction of residential flats. It filed its return of income for the A.Ys 2008-09 belatedly on 30.03.2010 declaring total income of Rs. Nil. The assessee firm is a partner of M/s. SMR SAI TEJA ESTATES which is in the business of construction of residential flats. 3. The Assessing Officer during the course of assessment proceedings noted that the assessee had acquired 2.0 acres of land vide sale deed dated 9.10.2006 at Survey No.202/1/A situated at Madenaguda Village, Seralingampalli Mandal, R.R. Distt. Subsequently on 26.10.2007, the assessee along with 5 others formed a separate partnership firm under the name and style of "SMR Sai Teja Estates" and entered into a MOU with above five others for construction of multi-storied residential apartment complex. As per page 3 of above MOU, the assessee has transferred 2.0 acres of land as capital of Rs. 6,00,00,000/- into the partnership firm of "SMR SAI TEJA ESTATES". The Assessing Officer referred to provisions of section 45(3) of the I.T. Act, 1961 according to which any contribution by the partner of a firm by way of capital asset shall be chargeable to tax as his income of the previous year in which such transfer takes plac....
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....ed by the assessee. He noted that the assessee had introduced the land as capital contribution and not stock-in-trade. Therefore, as per the provisions of section 45(3), any transfer of a capital asset by a person to a firm or other Association of Persons or body of individuals in which he becomes a partner or member, by way of capital contribution or otherwise shall be chargeable to tax as his income of the precious year in which such transfer takes place and, for the purpose of section 48, the amount recorded in the books of the firm shall be deemed to be the full value of consideration received or accrued as a result of such transfer. The Assessing Officer referred to the decision of the Hon'ble jurisdictional High Court in the case of P. Nageswara Rao vs. Dy. CIT vide ITTA No.245 of 2014, according to which capital gain arises in the year of transfer irrespective of consideration accrued in the year of transfer. It has been held that as per section 53A of the Transfer of Property Act, 1882 and section 2(47)(iv) of the I.T. Act, 1961, capital gain arises in the year of transfer irrespective of consideration accrued in the year of transfer. Further transfer shall take place o....
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....has also raised the following additional ground: "As an alternative, the appellant pleads that the income of the assessee be allowed as a deduction u/s 80IB of the I.T. Act". 9. After hearing both the sides and considering the facts that the additional ground raised by the assessee is purely legal in nature and all material facts necessary for adjudication of the issue are already available on record, therefore, following the decisions of the Hon'ble Supreme Court in the case of NTPC Ltd reported in (1997)229 ITR 383 and Jute Corporation of India Ltd reported in 187 ITR 688, the additional ground raised by the assessee is admitted. 10. Grounds of appeal No.1 & 4 being general in nature are dismissed. 11. The learned Counsel for the assessee did not make any argument on ground of appeal No.2. Even in the written synopsis also there is no mention about the validity of the re-assessment proceedings. Under these circumstances, ground of appeal No.2 is dismissed as not pressed. 12. So far as ground of appeal No.3 is concerned, the same relates to the order of the learned CIT A) in confirming the addition of Rs. 4,80,00,000/- made by the Assessing Officer. The le....
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....t credited was withdrawn immediately by the partners whereas, in the case of the assessee there was no such withdrawal of any capital introduced by way of stock-in trade by the assessee in the firm. He submitted that the Special Bench at Page 31 of the order has held that introduction of stock in-trade is not real but a devise as ruse adopted by the assessee to convert stock-in-trade into money for its own benefit. Therefore, this decision is not applicable to the facts of the present case. He submitted that when the issue has already been decided by the Calcutta High Court and the Revenue has not filed any appeal against the said decision and has accepted the same, therefore, the addition made by the Assessing Officer and sustained by the learned CIT (A) is not justified. He also relied upon the following: 17. The learned DR, on the other hand, strongly supported the order of the Assessing Officer and the learned CIT (A). He submitted that the assessee in the instant case has transferred 2.0 acres of land as capital contribution of Rs. 6.00 crores into the firm SMR SAI TEJA ESTATES, whereas the cost of the land as shown in the books of account was only Rs. 1.20 crores and there....
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....(Supra) and various other decisions upheld the action of the Assessing Officer. It is the contention of the learned Counsel for the assessee that there was no consideration derived in the case of the assessee for keeping the stock-in-trade of land into the joint venture and therefore, the decision of the jurisdictional High Court in the case of Potla Nageswara Rao (Supra) is not applicable to the facts of the case. It is also his submission that no consideration is received by the partner within the meaning of section 48 nor does any profit or gain accrue to him in commercial sense and therefore, no capital gain chargeable u/s 45 arises. Further, it is the submission of the learned Counsel for the assessee that in the absence of decision of the jurisdictional High Court on this issue and when there are conflicting decisions, the decision which is favourable to the assessee should be adopted. 19. We do not find any merit in the above arguments of the learned Counsel for the assessee. Admittedly, the assessee has acquired 2.0 acres of land at Madenaguda Village on 26.10.2007 for a consideration of Rs. 1.20 crores which was transferred by the assessee to a partnership firm under th....
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....been upheld by the Hon'ble Calcutta High Court. However, in the instant case, the valuation of land was done by the assessee himself at Rs. 6.0 crores as against the cost price of Rs. 1.20 crores and the same has not been revalued by the joint venture or the firm. The assessee in that case has transferred the land at cost to the firm and the firm has revalued the land in question and the amounts were transferred to the current account of the partners. Therefore, on the face of it, the facts of the case decided by the Hon'ble Calcutta High Court are different from that of the assessee and therefore, cannot be applicable to the facts of the present case. We further find the learned CIT (A) has given a finding that the assessee was following method of valuation of closing stock of its business at cost or market price, whichever is lower, as per settled and accepted principles of accountancy. Accordingly, the land in question as well as of other plots of land held by the assessee as stock-in-trade were used to be valued as per the method of valuation at the end of the year when accounts of the assessee were made out. However, in the current year under consideration, the assesse....
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....within four years from the end of the financial year in which the housing project is approved by the local authority; Explanation.-For the purposes of this clause,- (i) in a case where the approval in respect of the housing project is obtained more than once, such housing project shall be deemed to have been approved on the date on which the building plan of such housing project is first approved by the local authority; (ii) the date of completion of construction of the housing project shall be taken to be the date on which the completion certificate in respect of such housing project is issued by the local authority; (b) the project is on the size of a plot of land which has a minimum area of one acre: Provided that nothing contained in clause (a) or clause (b) shall apply to a housing project carried out in accordance with a scheme framed by the Central Government or a State Government for reconstruction or redevelopment of existing buildings in areas declared to be slum areas under any law for the time being in force and such scheme is notified by the Board in this behalf; (c) the residential unit has a maximum built-up area ....
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....ficer in passing consequential order without providing property opportunity to the appellant. 3. The learned Commissioner of Income-Tax (Appeals) erred in confirming the action of the Assessing Officer in not granting deduction u/s 80IB(10) of the Income-Tax Act as directed by the appellate authorities. 4. The learned Commissioner of Income-Tax (Appeals) ought to have seen that the income derived by the appellant is different from the income assessed in the assessment of SMR Sai Teja Estates and, therefore, deduction u/s 80IB(10) is allowable to the appellant. 5. Any other ground that may be urged at the time of hearing." 26. So far as A.Y 2010-11 is concerned, the learned Counsel for the assessee at the time of hearing did not press ground of appeal 1, 2 & 5 for which the same are dismissed as not pressed. So far as the remaining grounds are concerned, the same are basically non-granting of deduction u/s 80IB(10). In view of our discussion in the preceding paragraphs, we hold that the assessee is not entitled to deduction u/s 80IB(10) since the assessee is merely a partner in SMR Sai Teja Estates and deduction, if any, can only be claimed by the said ....