TaxTMI 
TaxTMI 
2023 (11) TMI 932
X X X X Extracts X X X X
X X X X Extracts X X X X
....h the sides, the delay in filing of the appeal by the Revenue is condoned and the appeal filed by the Revenue is admitted for adjudication. 3. Facts of the case, in brief, are that the assessee is an individual and engaged in the business of trading of shares. She filed her return of income electronically for the A.Y 2014-15 on 28.9.2014 declaring total income of Rs. 2,21,25,630/- and agricultural income of Rs. 50,000/-. The said return was processed under section 143 (1) of the I.T. Act, 1961 and subsequently, the case was selected for scrutiny under CASS. The Assessing Officer thereafter vide order dated 28.9.2016 passed the order u/s 143(3) of the Act accepting the returned income. 4. Subsequently, it was noticed that the assessee offered Long Term Capital Gain (LTCG) from the sale proceeds of 2.92 acres of land in Sy. No.83/1B to 83/3H in Varadarajapuram, Kanchipuram Distt Chennai which was sold on 28.03.2014 and the same was accepted during the scrutiny assessment. It was noticed from the sale deed that an amount of Rs. 3.10 crore was received towards sale proceeds of the said land and the SRO value of the said land was not placed on record. However, the SRO value of the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Ltd. for sale of the properties of 8.66 acres. 7. Out of above land, an extent of 5.74 acres (Survey No. 72, 73/1A1, 73/2 74/1, 75, 76, 77/1 to 77/3, 78/1 (part) and 84) was finally handed over to M/s Tatia Developer Pvt. Ltd. on 10.11.2012 on receipt of sale consideration of Rs. 6,05,00,000. The same was offered for taxation in AY 2013-14 corresponding to FY 2012-13 and was accepted by the department u/s 143(1) of the Act. 8. For the remaining extent of 2.92 acres (Survey No. 83/1B to 83/3H), a GPA was executed on 10.01.2013 between the assessee and M/s Tatia Developer Pvt. Ltd. and the property was finally handed over to M/s Tatia Developer Pvt. Ltd. on 28.03.2014 on receipt of sale consideration of Rs. 3,10,00,000. 9. During the re-assessment proceedings, the assessee submitted that since the MoU was signed on 16.12.2011 for sale of the property, the said value should be taken as sale consideration. For this purpose, the assessee submitted a letter from the SRO dated 26.03.2018 showing that the guideline value is Rs. 3,90,500 per acre for the year 2011. The assessee also submitted a letter from the SRO dated 28.11.2019 showing that the guideline value is Rs. 90,000 per....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntentions with regards to the area that was transferred and the consequent sale of which is chargeable to capital gains are reiterated once again for the sake of clarity. 9.3 The 8.66 acres of land which is subject to capital gains during the assessment years 2013-14 and 2014-15 is part of a layout made by Tatia development corporation in an extent of 66,591 Sq.Mts{ Approximately 16.45 acres). This was approved as layout on 21.09.2012. 9.4 Out of the above extent of 66,591 sq.mts 43,099 sq.mts constituted plotted area where as 19,726 sq.mts constituted roads and 4766 sq.mts constituted park area. The road and park areas are pledged to the Government, prior to plan approval and they cannot be sold. Thus, when I transferred the land in March 2014 it was only 64.72% of 2.92 acres of land which was actually transferred to the buyer and not entire 2.92 acres. Thus, accepting for a while the Sub registrar's valuation the capital gain works out as under: Total Area sold 2.92 acres which is equal to 14,132 sq.yds which is equal to 1,27,195 sq. ft. Actual plotted area available for sale, after providing roads etc being 64.72 % of 2.92 acres or 1,27,19....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ggrieved with such part relief granted by the learned CIT (A), the assessee as well as the Revenue are in appeal before the Tribunal by raising the following grounds: 14. Grounds raised by the assessee are as under: "1. The entire reopening of assessment U/s. 148 of the Income Tax Act, 1961 by issue of notice U/s. 148 dated 2/8/2018 on a Scrutiny assessment completed U/s. 143(3) on 26/09/20166 which is the within the period of four years and without there being any nexus between the reasons recorded and income escaping assessment the entire reassessment proceedings are totally invalid, bad in law, without jurisdiction and therefore the entire reassessment proceedings U/s. 143(3) r.w.s 147 of the Income Tax Act, 1961 (Act) passed on 30/12/2019 must be quashed. 2. The Ld. CIT (A) failed to note that the reopening of the assessment was on the basis of an Audit objection and the Assessing Officer merely on the basis of the objection without the assessment and proper application of mind reopened the assessment and therefore the entire reassessment proceedings being on borrowed satisfaction has no legs to stand and therefore the entire assessment order passed U/s. 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nce with the aforesaid statutory provision. 7. The Ld. CIT (A) failed to note that the entire land of 2.92 Acres was subject matter of sale prior to its development by the developer from 21/09/2012 onwards and therefore the Ld. CIT(A) erred in adopting the SRO value as on 28/3/2014 which was the rate prevailing after development of land by the developer. 8. The Ld. CIT (A) failed to note that the entire sale price was only Rs. 3,10,00,000/- as supported by documents and receipts and that there was no evidence to adopt any figure to the contrary. 9. The Ld. CIT (A) failed to note that on 10/1 1/2012 relevant to the Assessment Year 2013-14 land admeasuring 5.74 Acres belong1ng Rs. to the appellant in the same area was transferred for Rs. to 6,05,00,000/- which gives a rate of Rs. 1,05,40,069/- per Acre which was accepted in an intimation passed U/s. 143(1). 10. Any other ground or grounds that may be urged at the time of hearing". 15. The learned Counsel for the assessee did not press grounds of appeal No. 1 & 2 challenging the validity of reopening for which the learned DR has no objection. Accordingly, grounds of appeal No. 1 & 2 are dismissed....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the CIT (A) he submitted that it is incorrect on their part to hold that the property was transferred and handed over only on 28.03.2014 based on the routine recitals in the agreement and final receipt whereas there is undisputed evidence to the fact that there is development of land subsequent to the MOUs and the registered GPA in favour of Tatia Developer (P) Ltd who claimed the development cost in their books. Referring to the copy of the MOUs/GPA copies of which are placed at Page No.39 to 65 of the paper book, he submitted that the assessee had no role in development and it is the buyer who has obtained approvals of layout from CDMA and taken up for plotting and development. He submitted that it is also incorrect to take Rs. 2,89,400/- as development cost of the layout as incurred by the assessee while the amount is petty and spent for fencing etc., 19. The learned Counsel for the assessee submitted that it is the guideline value applicable to the GPA (Deed No.167/2013 dated 10.01.2013) that needs to be adopted in the present case as value u/s 50C because the GPA is the basis on which further sales are effected by the buyer on square foot basis as per the guideline valuati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in 429 ITR 97, he submitted that the Hon'ble Madras High Court in the said decision has held that the Assessing Officer could not have based his conclusion solely on guideline value which has been held to be only a prima facie rate prevailing in area to ascertain true or correct market value. 23. Referring to the decision of the Ahmedabad Bench of the Tribunal in the case of Rahul G. Patel vs. Dy.CIT, reported in 67 ITR 280, he submitted that the Tribunal has held that in view of proviso to section 50C, stamp duty valuation of property for purpose of stamp duty payment on date of agreement can be deemed as full consideration of capital asset. 24. Referring to the decision of the Allahabad Bech of the Tribunal in the case of Hari Mohan Das Tandon (HUF) vs. PCIT, reported in 169 ITD 639, he submitted the Tribunal in the said case has held that for sale of property in September, 1966, agreement to sell of September 1966 though registered on 29.11.2010 would have to be considered. 25. Referring to the Delhi Bench of the Tribunal in the case of Amit Bansal vs. ACIT, reported in 174 ITD 349, he submitted that the Tribunal has observed that in view of proviso to section 50....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... order. We find the learned CIT (A) while upholding the action of the Assessing Officer in adopting the SRO's stamp duty value of the property @ 1200 per sft, however, directed the Assessing Officer to exclude the area allotted for roads, parks and open places which could not be plotted as they are pledged to the Govt. He accordingly directed the Assessing Officer to recompute the capital gain. 29. It is the submission of the learned Counsel for the assessee that the entire property was covered under agreements of various dates and the amounts have been already decided prior to 28.03.2014. It is submitted that the entire land was to be sold for Rs. 9,14,00,000/- out of which an amount of Rs. 6,05,00,000/- was already received in A.Y 2013-14 and offered to tax and the amount of Rs. 3,10,00,000/- was received in A.Y 2014-15. It is also his submission that the return of income for A.Y 2013-14 was accepted wherein the value of the land was shown at Rs. 1,05,00,000/- per acre as against the guideline value of Rs. 90.00 lakhs per acre and the return was processed u/s 143(1) and no proceedings u/s 147 or 263 have been initiated. It is also his submission that when the assessee has sold....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The property was developed by the Developer in the year 2014. The appellant is not concerned with this development as it had given up all its rights in land on 10.1.2013 itself when the GPA was given to M/s. Tatiya Developers Pvt Ltd and the guideline valuation of Rs. 90 lakhs per acre (Page43 of the paper book). 31. A perusal of the details furnished by the assessee shows that in A.Y 2013-14 the assessee has sold 5.74 acres of land as per sale deed dated 18.12.2012 for a consideration of Rs. 6.05 crores and had declared Long-Term Capital Gain of Rs. 96,61,387/- after deducting the indexed cost of acquisition etc., which has been accepted by the Revenue and no proceedings u/s 147 or 263 have been initiated. We find for the impugned A.Y also, the assessee sold the remaining portion of 2.92 acres of land for a total consideration of Rs. 3.10 crores which comes to Rs. 1,05,00,000/- per acre. However, the Assessing Officer in the instant case on the basis of the SRO's letter dated 17.08.2018, wherein he had given the rate per sft at Rs. 1200/-, adopted the sale consideration at Rs. 15,26,34,240/- and accordingly brought to tax the differential Long-Term Capital Gain of Rs. 12,16,3....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... A perusal of the sale consideration of Rs. 3.10 crores as per the agreement and final receipt dated 28.03.2014 shows that the same was on the basis of earlier agreements which is evident from the agreement and final receipt, copy of which is placed at pages 39 to 44 of the Paper Book. A perusal of the schedule of payment mentioned at Page 40 of the Paper Book shows that the total consideration was paid through Cheque/ RTGS from 10.01.2013 to 28.03.2014 which are as under: 35. The payment of the above amount was on the basis of the MOU agreed upon on 16.12.2011 copy of which is placed at Page Nos.56 to 59 of the Paper Book. The total extent of the land of 8.66 acres was agreed to be sold for Rs. 9,14,00,000/ in two financial years i.e. 2012-13 and 2013-14 respectively. We find the assessee has executed registered GPA on 10th January, 2013 which finds place at Page 43 to 46 of the Paper Book. The consideration of Rs. 3,10,00,000/- is paid on various dates starting from 10.01.2013 to 28.03.2014 and the final receipt was given on 28.03.2014 for the sum of Rs. 3.10 crores. A perusal of the MOU executed at Chennai on 28.5.2010 copy of which is placed at pages 61 to 64 of the Paper Bo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r of the capital assets are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer. Thus, an amendment by insertion of proviso seeks to relieve the assessee from undue hardship. 11. The Hon'ble Supreme Court in Commissioner of Income Tax, Kolkata Vs. Calcutta Export Company [2018 (404) ITR 654(SC)], considered the question as to whether the amendment made by the Finance Act 2010 to Proviso of Section 40(a)(ia) of the Act is curative in nature and it has to be given retrospective operation from the date of insertion of the said proviso i.e., with effect from Assessment Year 2005-06. It was pointed out that the purpose of the amendment made by the Finance Act 2010 is to solve the anomalies with the instrument of Section 40(a)(ia) of the Act, caused to the bona fide tax payer. It was further held that the amendment even if not given any operation retrospectively, may not materially to be of consequence to the Revenue when the tax rates are stable and uniform or in cases of big assesses having substantial turnover and equally....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion of such transfer. Since in the instant case, admittedly, the guideline value on the date of agreement is Rs. 90,000/- per cent i.e. Rs. 90 lakh per acre and the assessee has sold the land @ Rs. 1,05,00,000/- per acre, therefore, the Assessing Officer, in our opinion, is not justified in adopting the guideline value as on 31.3.2014 that to in sq. foot. In view of the above discussion, we set aside the order of the learned CIT (A) and direct the Assessing Officer to accept the sale consideration shown by the assessee at Rs. 3,10,00,000/- only. The grounds raised by the assessee are accordingly allowed. 37. Grounds raised by the Revenue in ITA No.3/Hyd/2021 read as under: "1. The learned CIT (A) erred in directing the Assessing Officer to consider only the saleable area for computation of capital gains as per the SRO value of Rs. 1200/- per sq.ft as against the total area sold of 2.92 acres. 2. The learned CIT (A) failed to appreciate that the fact that assessee is not in the business of development and sale of plots but sold the property as a whole land of 2.92 acres. 3. Any other ground that may be raised at the time of hearing". 38. Since the as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee had handed over the Vacant Possession of the property to the Second Party and also all the original records pertaining to the property. A.Y. 2014-15 Apart from the above it is also observed that the assessee has claimed Rs.2,89,400 /- towards development expenses, while calculating the cost of acquisition. In view of above, the guideline value of Rs.1200 per sft, as provided by the SRO officially vide his letter dated 19.07.2018 is considered for calculation of the Fair Market Value of the land as per the provisions u/s 50C of the Income-tax Act, 1961. Considering the above facts, the computation of Long Term Capital Gain is as under: SRO's stamp duty value of the property Rs. 1200 per sft Cost of acquisition Rs.15,26,34,240/- Rs. 15,50,000/- Less: Indexed cost of acquisition Rs. 29,28,471/- Taxable Long Term Capital Gains Long Term Capital Gains already offered to tax Balance LTCG Rs. 14,97,05,769/- Rs. 2,80,71,529/- Rs.12,16,34,240/- Document 2 SURVEY NUMBER 83/1A 83/1B With reference to the letter cited above, we sent herewith the guideline value for the below me....
X X X X Extracts X X X X
X X X X Extracts X X X X
....FAVOUR OF M/S TATIA DEVELOPER PVT LTD., and M/S TATIA CHEMICAL CORPORATION PVT LTD., both having registered office at No.18, Ritherdon Road, Vepery, Chennai: 600 007 represented by it's Director Mr. Padam Kumar Tatia, Son of Late shri Jawarilal, aged about 53 Years, residing at No.2, Second main road, Vengeswarar Nagar, Vadapalani, Chennai - 600 026 hereinafter called "The Second Party' which term shall wherever the context so admits and permits, means and includes, her heirs, legal and personal representatives, executors, DEVELOPER Nors assigns witnessth as follows: For TATIA CHEMICAL CORPORATION PVT. LTD., Meela Neele Director 10 40 Whereas Party of first part is the absolute owners of lands to an extent of 2.92 Acres, comprised in Survey Nos. 83/1B, 83/1C, 83/1D, 83/3A, 83/3B, 83/3C, 83/3D, 83/3E, 83/3F, 83/3G and 83/3H situated at 111, Varadharajapuram Village, Sriperumbudur Taluk, Kancheepuram District having purchased the same vide Documents No. 5308/05 dt 13.12.2005 registered with SRO, padappai. The First Party has executed Deeds of General Power of Attorney in favour of th....