TaxTMI 
TaxTMI 
2025 (5) TMI 2057
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....the impugned Common Order dated 04.03.2016 passed by the Income Tax Appellate Tribunal (hereinafter referred to as "ITAT") in Appeal in I.T.A.Nos.1779- 1788/Mds/2013 filed by the Assessee and Appeal in I.T.A.Nos.1944- 1949/Mds/2013 filed by the Income Tax Department for the respective Assessment Years viz., Assessment Years 2006-2007 to 2011-2012. 3. For the sake of clarity, instead of refererring the parties as Appellant and Respondent, we shall use the expression, 'Assessee' and 'Income Tax Department' as both of them are Appellants and Respondents in these batch of appeals. 4. The dispute in these appeals pertain to the Assessment Years 2006-2007 to 2011-2012. Some of the appeals have been filed by the Income Tax Department against Miscellaneous Orders passed by the Appellate Tribunal. Details of the Appeals filed by the Assessee and the Income Tax Department are tabulated below:- Table I Sl. No. Assessee's Appeal in TCA.Nos. Assessment Years Impugned Order of ITAT against which Appeal in column No.(iii) have been filed Income Tax Department's Appeal in TCA.Nos. Impugned Orders of ITAT against which Appeal in Column No.(v) have been filed ....
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....the joint development in the status of AOP? 6. In the appeals filed by the Income Tax Department as detailed in Column (v) to above Table I in Paragraph No.4, no questions of law were framed by this Court at the time of their admission. They were admitted during the period when the Country was still under lockdown due to the outbreak of Covid-19 Pandemic. 7. In these appeals, the Income Tax Department has raised identical substantial questions of law which are as follows:- 1. Whether on the facts and in the circumstance of the case, the Tribunal was right in holding that the transaction emanating from the Joint Development Agreement dated 23.11.2005 by which 62.46% of land was transfered cannot be liable to tax in Assessment Year 2006-07 as per Section 2(47)(v) of the Income Tax Act, 1961 r/w. 53A of the Transfer of Property Act, 1882? 2. Whether reasoning and finding of the Tribunal is proper by holding that no transfer took place in the previous year relevant to the Assessment Year 2006-07 when all the conditions stipulated under Section 53A on the T.P.Act were satisfied and the Transferee had also taken possession of the property and the Transferee was ready and willing to....
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....are pending? 10. Whether on the facts and circumstance of the case the Tribunal was right in setting aside the levy of penalty when the act of concealment of income had been substantiated beyond doubt especially in a situation where the return of income was not filed within the due date and the Original JDA was found during survey operation and return was filed in response to Section 148 notice issued thereafter only?" 8. At the time of the disposal of the main appeal by ITAT vide Impugned Common Order dated 04.03.2016 which was heard on 29.12.2015, the Assessee had taken an alternative plea that the Assessee was entitled to the benefit of Section 80IB(10) of the IT Act which according to the Assessee was not considered by the ITAT while passing the Impugned Common Order dated 04.03.2016. 9. The learned counsel for the Assessee submitted that the Assessee will be satisfied, if the below mentioned substantial question of law is decided. It reads as under:- 4. Whether the Appellate Tribunal is correct in Law in rejecting the alternate grounds for computing such surplus/profits from the housing project pertainng to the share of Appellant Company under the head - "Income from Bus....
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....ssee who was a partner of the Developer Firm. This was not reflected in the Returns that were filed by the Assessee. 18. Assessment was also completed based on the Returns filed by the Assessee on the capital gains declared by the Assessee Company on account of the Joint Venture Development Agreement and Agreement For Sale [JVDA & AOS] both dated 23.11.2005. 19. The capital gain was confined to the indexed value of the land and was calculated on the Guideline Value of the land. The difference between the Market Value and the Guideline Value of the land was to be paid directly to the son of the Managing Director of the Asseesse. 20. Meanwhile, a Survey was conducted under Section 133A of the IT Act during the year 2012 by the Income Tax Department. During the survey, statements were also recorded from the Managing Director of the Assessee Company on 24.01.2012, wherein, it was confirmed that the share in the profit from the venture was partly given as a consideration to the son of the Managing Director of the Assessee who was introduced as a Partner in the Developer Firm, viz., M/s.Doshi Housing. 21. Thus, assessments were completed for the respective Assessment Years under Sect....
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....for AY 2007- 08 and 2008-09. Therefore, the protective assessments made by the AO for these two years are deleted. Relief given to this extent." 25. Since the Assessee received income with regard to its share of the built up area only from the Assessment Year 2009-2010 onwards, it was held that there was no capital gain during the Assessment Years 2007-2008 and 2008-2009. 26. Therefore, the Protective Assessments for these Assessment Years were deleted. Thus, the appeals were partly allowed and were partly dismissed by the Appellate Commissioner. 27. On further appeal before the ITAT in appeals as specified in Column Nos. (iv) & (vi) of Table I to Paragraph No. 4 of this Order, the ITAT passed the Impugned Common Order dated 04.03.2016 which are the subject matter of these appeals. 28. The Appellate Commissioner had partly allowed the appeals filed by the Assessee against penalty that was earlier imposed by the Assessing Officer under Section 271(1)(c) of the IT Act pursuant to Assessment Orders dated 14.05.2012, 14.06.2012 and 15.06.2012 for these Assessment Years. The Appellate Commissioner had partly allowed the appeal by restricting the penalty to 100% from 300% for these A....
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....against Impugned Common Order dated 04.03.2016 of the ITAT in the following Appeals whereby penalty imposed were dropped / modified. The other surviving appeals of the Income Tax Department insofar as reduction in penalty imposed under Section 271(1)(c) of the IT Act from 300% to 100%. 39. The Income Tax Department had filed I.T.A.Nos.1945 & 1946/Mds/2013 for the Assessment Year 2007-2008 and the Assessment Year 2008-2009 against the cancellation of protective demand for these Assessment Years. 40. I.T.A.Nos.1944, 1947, 1948 & 1949/Mds/2013 were filed before the ITAT against the Order of the Appellate Commissioner by the Income Tax Department, whereby 300% penalty imposed by the Assessing Officer for the Assessment Year 2006-2007, 2009-2010, 2010- 2011 and 2011-2012 under Section 271(1)(c) of the IT Act was reduced to 100%. 41. These Appeal in I.T.A.Nos.1944, 1947, 1948 & 1949/Mds/2013 were filed by Income Tax Department before the ITAT. 42. Details of these Appeals are as under:- Table III Sl.Nos.in Table -1 in Para 4 of this Order. T.C.(A).Nos. Assessment Year Impugned Order dated 04.03.2016 in the Asseesse's Appeal before the ITAT 3 393 of 2021 2006-2007 I.T....
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....e read as Assessment Year 2008-09 only. After this correction, para 25 to be read as follows: "25. Before us, the ld. AR submitted that report as well as document have no relavance with the assessment of the assessee. However, the assessee has not produced anything to prove the cost of construction. It is the duty of the assessee to produce necessary evidence to show that the assessee actually incurred towards improvement of capital asset. However, the assessee asked one more opportunity to see the document collected by the A.O., which was relied upon by him, at the back of the assessee. In view of this, we remit this issue to the file of the AO for fresh consideration and the assessee is directed to produce necessary evidence in support of the claim of the assessee, as the AO used the report collected from the Commercial Department, Maharashtra viz. MahaVat without providing the same to the assessee. Accordingly, in the assessment year 2008-09, the income has to be computed as short term capital gains or long term capital gains, as the case may be." 7.1. Further, we make it clear that there is no change in final result of the appeals. 8. In the result, the Miscellaneous Ap....
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....ubstantive assessments and it is to be enforced subject to out findings with reference to other grounds raised by the assessee in its appeals for these Assessment Years. There are no other changes in the Order of the Tribunal cited supra, other than findings in our Order in M.A.Nos.41 & 42/Mds/2016 dated 20.05.2016." 49. The Assessee thereafter once again filed fresh application for Rectification of the Impugned Common Order dated 04.03.2016 in I.T.A.Nos.1779 to 1788, 1944 to 1949/Mds/2013 vide following Miscellaneaous Applications as detailed below:- Table V Assessment Year Miscellaneous Application No. Impugned Order dated 04.03.2016 in the Asseesse's Appeal before the ITAT 2007-2008 39/Mds/2017 1780/Mds/2013 2008-2009 40/Mds/2017 1781/Mds/2013 2009-2010 41/Mds/2017 1782/Mds/2013 2010-2011 42/Mds/2017 1783/Mds/2013 2011-2012 43/Mds/2017 1784/Mds/2013 50. The ITAT disposed of the above Miscelleneous Applicaiton Nos.39-43/Mds/2017 vide Common Order dated 12.05.2017. The ITAT concluded that there was no development activity in the Assessment Year 2006-2007 in terms of Section 2(47)(v) of the Act. Therefore, capital gain was to be computed only from the As....
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....e JDA was entered between the assessee and Developer on 23.11.2005. The capital gains to be computed for assessment years 2007-08 & 2011-12 and not for assessment year 2006-07 and there was no development activity in the assessment year 2006-07 in terms of Section 2(47)(v) of the Act. 7. Now, the contention of the ld. A.R is that in respect of sale of flats i.e., constructed area, it was not sold by the assessee. So, it cannot be brought to tax in the hands of assessee. In our opinion, this facts is required to be verified by the Assessing Officer whether actual sale of assessee's share in constructed area was sold by the assessee or not. In the event of sale of constructed area by assessee, then computation of capital gains on sale of assessee's share of constructed area is to be brought to tax under the head "capital gains" after giving due deduction enumerated u/s. 48 of the Act. The AO has to consider this issue of computation of capital gains on sale of assessee's share of constructed area, along with the undivided share in land, if it was actually transferred by the assessee in these assessment years. In other words, the AO cannot bring into tax the entire share....
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....benefit of Section 80IB(10) of the IT Act. 56. It is submitted that the decision of this Court in "Commissioner of Income Tax Vs. Sanghvi & Doshi Enterprise", (2013) 255 CTR (Mad) 156 has also been affirmed by the Hon'ble Supreme Court in "Commissioner of Income Tax Vs. Sanghvi and Doshi Enterprise", (2017) 84 taxmann.com 241 (SC). 57. That apart, references were also made to few other decisions in the following cases:- i. Commissioner of Income Tax Vs. Shravanee Constructions [81 CCH 253]. ii. Commissioner of Income Tax Vs. Radhe Developers [(2012) 17 Taxman.Com.156 (Gujarat) 341 ITR 403]. iii. The Commissioner of Income Tax Vs. Sri Lakshmi Brick Industries [(17.03.2021-MADHC) TCA.Nos.387 to 394 of 2013:MANU/TN/1844/2021] iv. M/s.Bashyam Constructions P Ltd. Vs. The Deputy Commissioner of Income Tax dated 30.01.2019. v. Astorica Leathers Vs. Income Tax Officer, Business Award III(1) in TCA No.533 & 534 of 2018. 58. On the other hand, the learned Senior Standing Counsel for the Income Tax Department submitted that the benefit of Section 80IB (10) of the IT Act is not available to the Assessee as the Assessee had not claimed benefit under Section 80IB(10) of the IT ....
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....t by introducing a bogus claim for improvement of cost by M/s.Takshil Trading Private Limited, Mumbai which had allegedly undertaken the contract for the value of Rs. 4.52 Crores. The claim of the said M/s.Takshil Trading Private Limited was not established as genuine in nature and therefore, cost of improvement was liable to be rejected. 64. It is also submitted by the learned Senior Standing Counsel for the Income Tax Department that the crucial point to be decided is the year of taxation and as per the original JVDA, by which the Assessee had handed over possession of 62.46% of the total area of land in lieu of Agreement to receive 37.54% of the constructed space and as per the JVDA possession was handed over and the same was accepted during the Assessment Year 2006-2007. Therefore, the long term capital gains on the first transaction between the Assessee Company and the Developer is to be taxed in the Assessment Year 2006-2007 and the subsequent gains when the flats are allotted to the Assessee Company and sold in the market and the year of such flat is to be taxed accordingly. 65. It is submitted that provisions of Section 2(47)(v) of the IT Act are attracted in view of the ....
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.... assessment to be made during the Assessment Years 2007-2008 and 2008-2009 which is not proper. 71. It is also submitted by the learned Senior Standing Counsel for the Income Tax Department that the ITAT erred in remitting the claim pertaining to the cost of improvement for the Assessment Year 2007- 2008 to the file of Assessing Officer without recording any reason to differ from the finding rendered by the Assessing Officer and that of the Appellate Commissioner, especially when all the materials were available before the ITAT. Therefore, it is submitted that remand itself is bad, which is contrary to the Judgment of this High Court in Cholamandalam MS General Insurance Company Limited Vs. Royal Sundaram Alliance General Insurance Company Limited reported in (2013) 357 ITR Page 0597 (Mad.). 72. It is submitted by the learned Senior Standing Counsel for the Income Tax Department that the ITAT did not take into account the fraudulent act done and the transaction from M/s.Takshil Trading Private Limited who is a dealer from Maharashtra was suspicious, who issued false bills without delivery of goods and that the Assessing Officer had issued Notice under Section 133(6) of the IT Act....
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....C 1446 which held that restrictions under Section 80A(5) of the IT Act was limited to the power of the Assessing Authority to entertain new claim other than by a Revised Return and certainly did not impinge upon the power of the Appellate Commissioner and the Tribunals. Therefore, the learned Appellate Commissioner is fully empowered to admit the additional grounds as per the settled law. 76. It is submitted that the decision of the Bombay High Court in "EBR Enterprises Vs. Union of India", (2019) 107 Taxman.com 220, was not applicable to the facts and circumstances of the Assessee's case since the issue was confined to revisional power of the Commissioner under Section 264 of the IT Act with attendant restrictions. It was further submitted that the above position of law has been upheld in the following decisions:- i. Anchor Pressing Private Limited Vs. Commissioner of Income Tax, (1986) 161 ITR 159 SC. ii. NTPC Limited Vs. Commissioner of Income Tax, (1988) 229 ITR 383 SC. iii. Commissioner of Income Tax Vs. Sam Global Securities Limited, (2014) 360 ITR 682 (Delhi). iv. Commissioner of Income Tax Vs. Jai Parabolic Springs Limited, (2008) 306 ITR 42, Delhi HC. v. Com....
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....ed to pay tax on capital gains based on the value which was to be substituted as per the terms of the Joint Venture Development Agreement (JVDA) between her son who was present during the survey. 81. Further, it is the case of the Income Tax Department that by virtue of original Joint Venture Development Agreement (JVDA) dated 23.11.2005, the Assessee had agreed to hand over possession of 62.46% of the total land area in lieu of the Agreement to receive 37.54% of the constructed space and that the said Joint Venture Development Agreement (JVDA) clearly stated possession was handed over the same which was accepted. 82. We have considered the arguments advanced by the learned counsel for the Assessee and learned Senior Standing Counsel for the Income Tax Department. 83. Basically there are four sets of appeal before us. As far as the Assessee is concerned, the Assessee has confined the scope of its appeal with regard to benefit under Section 80IB(10) read with Section 80AC of the IT Act. As far as the appeals of the Income Tax Department are concerned, there are three categories of appeals which arise out of miscelleanous orders and order dropping penalty in view of the reward ord....
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....ousing project on or after the 1st day of October, 1998 and completes such construction, --- (i) in a case where a housing project has been approved by the locak authority before the 1st day of of April, 2004, on or before the 31st day of March, 2008; (ii) in a case where a housing project has been, or, is approved by the local authority on or after the 1st day of April, 2004, [but not later than the 31st day of March, 2005] 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,- '31st day of March, 2007' was substituted with '31st day of March, 2008' vide amendment to the above section vide Finance Act (No.2), 2009 with effect from 01.04.2009. Inserted by the Finance Act, 2010 with effect from 01.04.2010. Inserted by the Finance Act, 2010 with effect from 01.04.2010. (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 complet....
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....tion shall apply to any undertaking which executes the housing project as a works contract awarded by any person (including the Central or State Government)." Inserted by the Finance Act, 2010 with effect from 01.04.2010. 89. The Joint Development Agreement and Agreement for Sale are dated 23.11.2005. Therefore, permission of the local authority would have been after 01.04.2004. Therefore, Clause(a)(ii) to Sub-Section 10 to Section 80IB of the IT Act is relevant. There are also indication that the sale from the individual apartments also started flowing to the Assessee from the year 2009-2010. 90. It has to be noted that the benefit of Section 80IB of the IT Act was linked for the first time to Section 80AC of the IT Act with effect from 01.04.2006 vide Finance Act, 2006 as Section 80AC of the IT Act was inserted by Finance Act, 2006. Section 80AC of the IT Act was not there in the IT Act when Joint Development Agreement and Agreement for Sale dated 23.11.2005 were signed with the Developer. 91. Section 80AC of the IT Act as inserted by Finance Act, 2006 with effect from 01.04.2006 read as under:- Section 80AC. Deduction not to be allowed unless return furnished.- Where in ....
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.... Income Tax Appellate Tribunal (ITAT) under Section 254 of the Act. The Hon'ble Supreme Court has clearly held that limited to the power of the Assessing Authority and does not impinge on the power of the Income Tax Appellate Tribunal under Section 254 of the Income Tax Act, 1961. ... 24. The Hon'ble Supreme Court in Formica India Division, Bombay, Burma Trading Corporation Limited Vs. Collector of Cenral Excise and others, 1995 Supp (3) SCC 552/1995 (77) ELT 511, had held as under:- "When it was found that they were liable to pay duty on the intermediary product and had not paid the same, but had paid the duty on the end product, they would not ordinarily have complied with the requirements of Rule 56A. Once the Tribunal took the view that they were liable to pay duty on the intermediary product and they would have been entitled to the benefit of the notification had they met with the requirement of Rule 56A, the proper course was to permit them to do so rather than denying to them the benefit on the technical ground that the point of time when they would have done so had clapsed and they would not be permitted to comply with Rule 56A after that stage had passed. We ....
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....atories Ltd. Vs. Commissioner of Central Excise", 2002 (145) E.L.T. 502 (S.C.) wherein the Hon'ble Supreme Court held as under:- "13......There can be no doubt that the authorities functioning under the Act must, as are in duty bound, protect the interest of the Revenue by levying and collecting the duty in accordance with law - no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly." 99. The Hon'ble Supreme Court in "Formica India Division, Bombay, Burma Trading Corporation Ltd. Vs. Collector of Central Excise and Others.," 1995 Supp (3) SCC 552, held as under:- "2. The High Court, however, took note of the fact that no contention had been raised before the Tribunal that the appellants should be permitted to meet the requirements of Rule 56-A of the Central Excise Rules and, therefore, they cannot be permitted to avail of that benefit in a writ petition brought under Article 266 of the Constitution. That indeed was a technical view to take because if the appellants were entitled to the benefit of the No....
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....he IT Act as inserted by the Finance Act, 2006 with effect from 01.04.2006 cannot be made applicable to the Assessment Year 2006-2007. 104. Therefore, failure on the part of the Assessee to make a claim on the income earned during the Previous Year 2005-2006 i.e., between 01.04.2005 and 31.03.2006 which income was assessable during the Assessment Year 2006-2007 cannot be denied even if no claim was made in the Return of Income that was filed under Section 139(1) of the IT Act in view of Para 4 of the decision of the Hon'ble Supreme Court in Goetze (India) Ltd. (cited supra) and other decisions of the Hon'ble Supreme Court referred to supra. 105. In these cases, the Assessee is however claiming the benefit of Section 80IB(10) of the IT Act for the entire period in dispute between Assessment Years 2006-2007 to 2011-2012 in the light of the decision of this Court in "Commissioner of Income Tax Vs. Sanghvi & Doshi Enterprise", (2013) 255 CTR (Mad) 156 as affirmed by the Hon'ble Supreme Court in "Commissioner of Income Tax Vs. Sanghvi and Doshi Enterprise", (2017) 84 taxmann.com 241 (SC). 106. In the above case, the Division Bench of this Court in "Commissioner of Income ....
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....tion 80IB of the IT Act shows that the deduction contemplated therein is oriented towards the project and not with reference to an assessee. It is no doubt true that the project has to be done by the assessee, but then, when the deduction is specific enough as regards the particular activity, we fail to see how one should assume any significance in the matter of considering a deduction. 30. As rightly pointed out by the learned senior counsel appearing for the assessee, in the decision in CIT Vs. Radhe Developers (supra), the Gujarat High Court considered the question on ownership as a condition for grant of deduction under Section 80IB(10) of the Act in depth and accepted the case of an assessee similarly placed. It held that the provisions nowhere require that developers who are the owner of the land alone would be entitled for grant of deduction under Section 80IB(10) of the Act. Going through the decision of the Gujarat High Court, we have no hesitation in holding that we are in respectful agreement with the law declared by the Gujarat High Court". 109. The said decision was also affirmed by the Hon'ble Supreme Court in "Commissioner of Income Tax Vs. Sanghvi and Doshi E....
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....do not deal with the cases where there was a failure to make a claim for deduction in the Return of Income filed under Section 139(1) of the IT Act under any of the provisions enumerated in Section 80AC of the IT Act. The cases cited by the Assessee did not deal with a case where statutory requirements in Section 80AC of the IT Act was not observed. Therefore, the decisions referred to by the Assessee, cannot come to the rescue of the Assessee for the rest of the Assessment Years barring Assessment Year 2006-2007. 115. We are therefore of the view that the decision of this Court in "Commissioner of Income Tax Vs. Sanghvi & Doshi Enterprise" (cited supra) and the other decisions of the Hon'ble Supreme Court (cited supra) cannot be applied straight away and blindly to allow the deduction under Section 80IB(10) of the IT Act in view of the express restriction in Section 80AC of the IT Act for the Assessment Years 2007-2008 onwards. 116. The decision of the Hon'ble Supreme Court in "Goetze (India) Ltd. Vs. Commissioner of Income Tax", (2006) 284 ITR 323 / 2006 SCC Online SC 1446 which was referred to supra which has been followed in few other cases cannot be extended to the A....