TaxTMI 
TaxTMI 
2024 (11) TMI 867
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....153C r.w.s 144C(3) of the Act is without jurisdiction and invalid as the transfer of the case was made without complying with the provisions of section 127 of the Act. Therefore, erred in confirming the assumption of jurisdiction by the Assistant Director of Income Tax (International Taxation) -1, Hyderabad ('the Ld.AO') u/s section 153C r.w.s 144C(3) of the Act. 3. The assessment framed by the Ld.AO is without complying with the procedures prescribed u/s 153C of the Act. Therefore, the assessment is bad in law and deserves to be quashed. B. FACTUAL GROUNDS 4. Without prejudice to the above legal grounds, the Ld.CIT (A) and the Ld.AO failed to appreciate that there was no "Transfer" within the meaning of section 2(47)(v) of the Act since the possession of the land on the date of the development agreement still vests with the Assessee. Therefore, they erred in taxing the capital gain on the development agreement in the subject AY. 5. Without prejudice to ground no. 4, that there is no transfer within the meaning of section 2(47)(v) of the Act during the subject AY, the Ld.CIT(A) failed to appreciate that the value of the land as per the Sub Registrar Office (SRO) is ....
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....ected to the ground raised by the assessee regarding the transfer of jurisdiction from Delhi to Hyderabad. For this, the ld.AR has drawn our attention to Paragraph 6 on page 3, which states that there was no transfer of jurisdiction under Section 127 of the Income Tax Act, 1961 to the AO at Hyderabad and the said paragraph 6 reads as under : "6. Further, with regard to your objection about the requirement of passing of order under section 127 of Income Tax Act, 1961, it is requested to kindly note that the source of income lies in the territory on which jurisdiction of the undersigned extended hence order u/s 127 of the Income Tax Act, 1961 is not required. Further, you are requested to note that your PAN got migrated from Circle 1(1)(1) (IT), New Delhi which is default circle for all PANs pertaining to the Non Residents and PAN got transferred under section 120 of the Income Tax Act from default circle to respective jurisdiction of the assessee. 4.1. Therefore, the AO at Hyderabad does not have jurisdiction, and the assessment order passed by the AO at Hyderabad is bad in law. The ld.AR has also drawn our attention to Section 127 of the Income Tax Act, which is to the following....
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....fficer or Assessing Officers (whether with or without concurrent jurisdiction) and the offices of all such officers are situated in the same city, locality or place. (4) The transfer of a case under sub-section (1) or sub-section (2) may be made at any stage of the proceedings, and shall not render necessary the re-issue of any notice already issued by the Assessing Officer or Assessing Officers from whom the case is transferred.] Explanation.-In section 120 and this section, the word "case", in relation to any person whose name is specified in any order or direction issued thereunder, means all proceedings under this Act in respect of any year which may be pending on the date of such order or direction or which may have been completed on or before such date, and includes also all proceedings under this Act which may be commenced after the date of such order or direction in respect of any year." 4.2. The second argument of the ld.AR before us is that the JDA, based on which the additions were made in the assessment for 2016-17, though registered, did not result in a transfer of possession. For this purpose, he has drawn our attention to page 26 of the paper book, where the ter....
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.... no material on record to show that any conveyance had taken place in A.Y. 2014-15. Unless, there is material to establish that there was any conveyance, the view taken by the Assessing Officer, is perverse and the said view has rightly been reversed by both CIT(A) and ITAT. 5. The ld.AR in support of his contentions filed written submissions, which is to the following effect : 1. The above Appeal was heard on 24.10.2024 before the I.T.A.T "A" Bench, Hyderabad. (a) Please refer to the written submissions filed before CIT(A)-1. [Pages 1 to 25 Yellow Colour Paper Book filed on 18.07.2024]. 2. The Appellant is a non-resident and does not have a residential house in India except for an inherited dilapidated building which does not satisfying the criteria of a residential house. [Please see the Judgement of the Orrisa High Court in C.W.T vs. K.B. Pradhan [130 ITR 393]. 3. The address given by the Non-Resident was 1194, Valley Quail Circle, Almaden, San Jose, Almaden, 99-Foreign, 2-UNITED STATES OF AMERICA. Please see Page 112 of Paper Book filed on 24.10.2024 for profile. 4. The Appellant being a non-resident with no address in India was assessed for A.Y.N2013-2014 by D.C.I.T....
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....sed 2. Daeshana Anand Damle vs. Dy.C.I.T 459 ITR 60 Bombay High Court Please See Pages 9 to 12 of Precedents-P.B-III 3. Pr.C.I.T vs. Emporis Properties (P) Ltd 458 ITR 68 Calcutta High Court Please See Pages 13 to 16 of Precedents-P.B-III 4. Mrs. Margrit Goverdhan vs. I.T.O 458 ITR 91 Karnataka High Court Please See Pages 17 to 25 of Precedents-P.B-III 8.2. As no possession was given the capital gains arising on of the Development Agreement was disclosed voluntarily by the Appellant in the assessment year 2019-2020 as the Developer gave possession of two flats during the financial year 2018-2019 relating to A.Y. 2019-2020 which were sold and entire capital gains for other flats was also shown in the A.Y.2019-2020. 8.3. Thus the capital gains was disclosed in the Assessment Year 2019-2020 when the capital gains is assessed in 2016-2017 and 2019-2020 and the rate of tax being same the revenue effect is neutral Reliance is placed on the following decisions that when the Tax Rates are the same the tax is neutral: - S.No: Name of the Case Citation Court Page No's: of Precedents Paper Book 1. C.I.T vs. Nagri Mills Co. Ltd 33 ITR 681 Bombay Hi....
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....as adopted by the Regd. Valuer whose report has been ignored without any reasons." 6. On the other hand, ld.DR for the Revenue has relied upon the orders of lower authorities. 6.1 Regarding the first ground, the ld.DR relied on Point No.6 in the show cause notice issued by the Assessing Officer placed at page 3 of the assessment order, wherein the AO addressed the transfer of jurisdiction. It was also submitted by the ld.DR that the jurisdiction of the departmental ITO in the case of non-residents is residual and applies only if the PAN was issued in the name of the assessee, having no dwelling unit in India. Furthermore, it was submitted that, according to the assessee, the JDA mentions that the assessee is the owner of a residential house bearing no.6-1-134, land measuring 3112.23 square yards, situated at Sy.No.29, Padma Rao Nagar, Secunderabad, by virtue of Will executed by her mother Smt. M. Kamala Bai, who passed away on 13-10-2003, leaving the property to the assessee. 6.2 It was submitted that the assessee appears to be the natural successor of the property left by her mother, and therefore, the property was available to the assessee for dwelling and therefore, the resid....
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....ssessee to the developer. It was further submitted that it is not possible for the developer to construct the building unless possession of the property was transferred to him. The ld.DR referred to the law discussed and decided by the Hon'ble Supreme Court in the case of CIT Vs. Balbir Singh Maini reported in (2018) 12 SCC 354, wherein the Hon'ble Supreme Court held as follows : "20. The effect of the aforesaid amendment is that, on and after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in the present case, is not registered, then it shall have no effect in law for the purposes of Section 53A. In short, there is no agreement in the eyes of law which can be enforced under Section 53A of the Transfer of Property Act. This being the case, we are of the view that the High Court was right in stating that in order to qualify as a "transfer" of a capital asset under Section 2(47)(v) of the Act, there must be a "contract" which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance ....
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....ot adverted to the expression "or in any other manner whatsoever" in sub-clause (vi), which would show that it is not necessary that the transaction refers to the membership of a cooperative society. We have, therefore, to see whether the impugned transaction can fall within this provision. 22. The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression "enabling the enjoyment of" takes color from the earlier expression "transferring", so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof. 1 The idea is to bring within the tax net, transactions, where, though title may not be transferred in law, there is, in substance, a transfer of title in fact. 23. A reading of the JDA in the present case would show that the owner continues to be the owner throughout the agreement, and has at no stage purported to transfer rights akin to The maxim "noscitur a sociis" has been repeatedly applied by this Court. A recent application of the maxim is contained in Coastal Paper Limited v. Commissioner of Central Excise, Visakhapatnam, (2015....
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....If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a 'hypothetical income', which does not materialise. Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable. Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though an entry to that effect might, in certain circumstances, have been made in the books of account." 15. The above passage was cited with approval in Morvi Industries Ltd. v. CIT [Morvi Industries Ltd. v. CIT, (1972) 4 SCC 451 : 1974 SCC (Tax) 140 : (1971) 82 ITR 835] in which this Court also considered the dictionary meaning of the word "accrue" and held that income can be said to accrue when it becomes due. It was then observed that: (SCC p. 454, para 11) "11. ... the date of payment ... does not affect the accrual of income. The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be immediately." 16. This Court further held, and in our opinion m....
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....s of the case. On the valuation of the property, the ld.DR submitted that, as per law, the valuation report of the assessee does not inspire confidence, and the valuation report relied upon by the assessee is insufficient and do not support the argument of the assessee. For this purpose, attention was drawn to page 86 of the paper book. Furthermore, the ld.DR submitted that in the case of the JDA, the valuation of the transfer of land should be determined based on the cost of construction as reflected in the JDA agreement and its annexure. The ld.DR has drawn our attention to pages 72 and 74 of the paper book, where the distribution of shares between the owner and the developer was provided. The owner's share is 25 square yards with an undivided share of land amounting to 1,426 square yards, while the developer is entitled to 28 flats with an undivided share of land totaling 1,574 square yards. It was submitted that a supplementary agreement, available from pages 66 to 76, was entered into on 29-04-2016, in addition to the original agreement. Both the original and supplementary agreements clearly demonstrate the respective shares of land allocated. It was submitted that the demarca....
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....elhi. The law is fairly settled that the forum in whose jurisdiction the situs is situated and where the necessary documents / information is available should be the appropriate forum for adjudication. 7.1. Furthermore, Section 127 of the Act will only come into play when there is some transfer of jurisdiction from one authority / office to the other. In the present case, the assessee has not filed the return of income and has not assessed at the Delhi ITO / Assessing Officer and therefore, there is no question of transfer of jurisdiction of the Assessing Officer from ITO, Delhi to ITO, Hyderabad. In view of the above, we are of the considered opinion that the jurisdiction invoked by the Assessing Officer at Hyderabad is in accordance with law. The reliance of the ld.AR in the case of J. Keerthana Reddy, Mumbai Vs. ITO in ITA No.3224/Mum/2023 dt. 15.01.2024 is not applicable to the facts of the case as in that case, the said assessee was initially assessed from 2008 to 2012 at Mumbai and thereafter, the assessee was reallocated to Bangalore. Thereafter, the assessee was carrying out his profession at Bangalore. The question came up before the Hon'ble co-ordinate Bench of the Tribu....
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.... all purposes, there is a transfer of land / capital asset within the meaning of law and for the above said purposes, we may rely upon the decision of Hon'ble Supreme Court in the case of Balbir Singh Maini (supra). In the light of the above, this ground of the assessee is dismissed. 9. Now coming to the argument of the assessee that the assessee has disclosed his capital gains in the assessment year 2019-20 and therefore, it should not have been assessed in A.Y. 2016-17. In our view, the law is settled that the tax has to be levied in the year when it is due and payable. In the present case, the taxable event as per the judgment in the case of Potla Nageswara Rao and Balbir Singh Maini happened in the year 2016-17 and therefore, it is to be charged in the said assessment year only. In case, as claimed by the assessee, the income has been offered in 2019-20, then the Assessing Officer may verify and pass rectification order, otherwise, it amounts to double taxation. In view of the above, the argument of the assessee is unsustainable. 10. The last argument raised by the assessee was with respect to the value of Rs. 5,000/- per sq.yd taken by the Assessing Officer as against Rs....