TaxTMI 
TaxTMI 
2025 (5) TMI 2057
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....Common Judgment. 2. The dispute in these appeals arise out of 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.....
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....ng the Appellant Company as a Joint Developer? (iii) Whether the Appellate Tribunal is correct in not deleting the share of profit from the housing project taxed based on the execution of the transaction through the unregistered JDA despite the tacit acceptance of the taxation of the financial results from 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 ....
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.... of such building through joint development agreement was not brought to tax in the Assessment Year 2006-07 and the said direction of the Tribunal is perverse? 9. Whether on the facts and circumstance of the case the Tribunal was correct and justified in cancelling the penalty levied u/s.271(1)(c) especially when the quantum assessment had not attained finality as appeals 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....
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....er, the Assessee was entitled to sell 37.54% of the built up area. 16. The son of the Managing Director of the Assessee Company was introduced as a partner of the Developer Firm which was engaged to develop the land which belonged to the Assessee under these Agreements. 17. A part of the sale consideration from the transfer of the land to the Developer was upfront paid to the son of the Managing Director of the Assessee 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 t....
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....nce amount was diverted to Shri.Surendernath's account as share profit in the Doshi Housing, the developer. The AO could orchestrate the facts in this case successfully within the frame work of law. In view of the matter, the assessments done by AO are upheld for all the assessment years. However, the sale proceeds for the projects 'Etopia-I' started reaching the appellant with regard to its share of built up area for AY 2009-10 onwards, there was no capital gain arisen 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 t....
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....356 of 2021 arise out of Impugned Common Order dated 12.05.2017 in M.A.Nos.41&43/Mds/2017 in I.T.A.Nos.1782 &1783/Mds/2013. 37. The Assessee had earlier filed M.A Nos.39 to 43/Mds/2017 to modify Impugned Common Order dated 04.03.2016 of the ITAT in I.T.A.Nos.1779 to 1788/Mds/2013 which were disposed of along with the Appeals of the Income Tax Department in I.T.A.Nos.1944 to 1949/Mds/2013. 38. T.C.A.No.396 of 2021, T.C.A.No.390 of 2021 and T.C.A.No.411 of 2021 have been filed by the Income Tax Department 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 impose....
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....the assessment for the assessment year 2008- 09 is to be treated as substantive as discussed in earlier paragraph for the assessment year 2007-08 and the income has to be computed as long term capital gains or short term capital gains, as the case may be, after giving an opportunity of hearing to the assessee and the AO shall work out the capital gains afresh. Accordingly, the levy of interest u/s.234A for the Assessment Year 2009-09 is to be computed, which is mandatory in nature." 6. ..... 7. In our opinion, the assessment year in para 25 was wrongly mentioned as 2009-2010 instead of Assessment Year 2008-2009 and it should be 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., whi....
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.... "23. Since, we have vacated the finding of the CIT (Appeals) for the Assessment Year 2006-07 by observing that there is no transfer u/s. 2(47)(v) of the Act, the assessment for the assessment year 2008-09 is to be treated as substantive as discussed in earlier paragraph for the Assessment Year 2007-08 and the income has to be computed after giving an opportunity of hearing to the assessee and the AO shall work out the capital gains afresh. Accordingly, the levy of interest u/s. 234A for the Assessment Year 2008-09 is to be computed, which is mandatory in nature." 4.2 In other words, the Assessment Orders which were already passed for the Assessment Years 2007-08 to 2011-12 to be considered as substantive 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 ....
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....aleable value of property in constructed area for exchange of 62.46% area of land. So, the sale of constructed area of 37.54% of total area of constructed area was sold by the assessee in these assessment years viz., 2007-08, 2008-09, 2009-10, 2010- 11 and 2011-12. Being so, it is to be taxed. In our opinion, the Tribunal has given findings on the basis of JDA entered by the assessee on 23.11.2005. Hence, consideration for transfer of 62.46% of area of land transferred by the assessee to the Developer under JDA would be the constructed area allotted to the assessee under the JDA. It was also given findings that there was no transfer in terms of Section 2(47)(v) of the Act in the A.Y 2006-07 in view of the no action by Developer in this assessment year, though the 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 ass....
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....e Respondent-Income Tax Department has thus filed T.C.A.Nos.355 of 2021 & 356 of 2021 as detailed in Sl.Nos.4 & 6 of Table I to Paragraph No.4 of this Order against the Impugned Common Miscellaneous Order dated 12.05.2017 passed by the Tribunal under Section 254 (2) of the IT Act. Submission of the Appellant: 55. The learned counsel for the Assessee submitted that the issue is no longer res-integra and is covered by a plethora of decisions of the Courts. Particularly, our attention was drawn to the decision of this Court rendered in "Commissioner of Income Tax Vs. Sanghvi & Doshi Enterprise", (2013) 255 CTR (Mad) 156 and "Commissioner of Income Tax Vs. M/s.Ceebros Property" in T.C.A.No.137 & T.C.A.No.138 of 2009 dated 02.11.2012. It is submitted that the Appellant was entitled to the 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 ....
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....Kunhayammed Vs. State of Kerala", 2001(129) ELT 11(SC). 62. Explaining the case, the learned Senior Standing Counsel for the Income Tax Department submitted that the Assessee Company's profit pertaining to the sale of land for approximately Rs. 25 Crores was channelized through the son of the Managing Director as a partner in the Developer Firm who did not contribute anything for developing the project and earned share in the profits alone which was actually the suppress sale consideration of the Assessee Company. 63. It is submitted by the learned Senior Standing Counsel for the Income Tax Department that the suppression of capital gains in the form of re-routing the profits to the son of the Managing Director of the Assessee Company who was a partner of the Developer Firm, the Assessee Company concealed the capital gains and reduced the profit 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 rej....
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....tively retracted. 69. It is also submitted by the learned Senior Standing Counsel for the Income Tax Department that the ITAT failed to note that in respect of bogus cost of improvement which was clearly proved by the Income Tax Department that the claim was bogus in nature and the bills were supplied by a Hawala Operator in Bombay and the disallowance made by the Assessing Officer was therefore proper and it has been wrongly set aside by the Tribunal without any rhyme or reason. 70. It is submitted by the learned Senior Standing Counsel for the Income Tax Department that all the conditions are satisfied for levying capital gains for the Assessment Year 2006-2007 and possession was given and also conditions stipulated by Section 53A of the Transfer of Property Act, 1882 was satisfied. Therefore, it is submitted that the ITAT erred in holding that the substantive 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....
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....nd also the partner did not pay taxes since the claim of the firm was exempt under Section 10(2A) of the IT Act. 74. It is submitted that the essential documentary evidence to prove the genuineness of the expenditure incurred was never produced by the Assessee nor it was shown that the Assessee has funds to support the said expenditure and had claimed it as a current liability in Schedule - H which payment had not been squired with the creditors and after a passage of six years, no tax has been deducted on the said claim of expenditure towards the cost of improvement. 75. The learned Senior Standing Counsel for the Income Tax Department submitted that the claim for deductions by the Assessee is fully covered as per the settled law of the Hon'ble Supreme Court in the case of "Goetze (India) Limited Vs. Commissioner of Income Tax", (2006) 284 ITR 323 / 2006 SCC Online SC 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 Commis....
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....ncome Tax Department, it clearly indicates that since the possession of the land was transferred to the Partnership concern, there was income the hands of the Assessee during the Assessment Year 2006-2007. 78. Secondly, it was contested by the Income Tax Department that the ITAT erred in remitting the case back to the Assessing Authority whose decision was affirmed by the Appellate Commissioner. 79. It is submitted that the ITAT failed to note that the bogus cost of improvement has been well established in the Assessment Order and the bills were supplied by the Hawala Operator in Bombay. It is the case of the Income Tax Department that a sum of Rs. 25 Crores was paid to the Assessee's Managing Director's son who was introduced as a partner in the Joint Venture between the Assessee and the said Partnership Firm. 80. It is submitted that during the course of survey, statement was recorded from the Managing Director of the Assessee Company, wherein, the Managing Director offered 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.....
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....period in dispute covered by the appeal for Assessment Year 2011-2012. 88. Sub-section (10) to Section 80IB of the IT Act as it stood with effect from 01.04.2005 is relevant from 01.04.2005 for the Assessment Year 2006-2007. Sub-section (10) to Section 80IB of the IT Act as it stood amended with effect from 01.04.2010 is relevant from 01.04.2010 for the Assessment Year 2011-2012. Following table gives the snapshot of Sub-section (10) to Section 80IB of the IT Act with the above amendments:- Table VI Section 80IB(10) of the IT Act with effect from 01.04.2005 Section 80IB(10) of the IT Act with effect from 01.04.2010 "10. The amount of deduction in the case of an undertaking developing and building housing projects approved before the 31^st day of March, [2007] by a local authority shall be hundred per cent of the profits derived in the previous year relevant to any assessment year from such housing project if, --- (a) such undertaking has commenced or commences development and construction of the housing 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 ....
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....s not exceed five per cent. of the aggregate built-up area of the housing project or two thousand square feet, whichever is less. The word 'five' per cent was substituted by the word 'three' per cent vide Finance Act, 2010 with effect from 01.04.2010. (e) not more than one residential unit in the housing project is alloted to any person not being an individual; and Inserted by the Finance Act, 2010 with effect from 01.04.2010. (f) in a case where a residential unit in the housing project is allotted to a person being an individual, no other residential unit in such housing project is allotted to any of the following persons, namely: (i) the individual or the spouse or the minor children of such individual, (ii)the Hindu undivided family in which such individual is the karta, (iii) any person representing such individual, the spouse or the minor children of such individual or the Hindu undivided family in which such individual is the karta.] [Explanation. - For the removal of doubts, it is hereby declared that nothing contained in this sub-section shall apply to any undertaking which executes the housing projec....
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....der Section 254 of the Income Tax Act, 1961 is to entertain for the first time a point of law provided the fact on the basis of which the issue of law can be raised before the Tribunal. The decision does not in any way relate to the power of the assessing officer to entertain a claim for deduction otherwise than by filing a revised return. In the circumstances of the case, we dismiss the civil appeal. However, we make it clear that the issue in this case is 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. There shall be no order as to costs." 95. The aforesaid decision in Goetze (India) Ltd. (cited supra) was also followed by this Court recently in "Sree Venkateswara Educational Trust Vs. The Income Tax Officer" in T.C.A.No.168 & 169 of 2020 vide Order dated 02.09.2024 in T.C.A.No.168 & 169 of 2020 which is as follows:- "18. A reading of the decision of the Hon'ble Supreme Court in Goetze (India) Ltd., (cited supra) makes it clear that it restricts the power of the Assessing Authority and does not impinge on the power of the Income Tax Appellate Tribu....
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....hat sales tax is leviable only on valid transaction. If excess amount is realised, refund is also contemplated by the scheme of the Act. In this case undoubtedly sales tax on forward contracs have been illegally recovered on a mistaken view of law. The same is lying with the government. The assessee or the dealer has claimed for the refund in the revision. In certain circumstances refund specifically has been mentioned. There is no prohibition against refund except the prohibition of two years under the proviso of Section 29. In this case that two years prohibition is not applicable because the law was declared by this Court in Budit Prakash Jai Prakash case on May 3, 1954 and the revision was filed in 1955 and it was dismissed in 1958 on the ground that it had been filed after a long delay. Thereafter, the assessee had filed an application before the Sales Tax Officer for refund. The refund claimed for the first time on May 24, 1959. The Sales Tax Officer had dismissed the application as barred by limitation under Article 96 of the First Schedule of the Indian Limitation Act, 1908." 98. In this connection, attention is also drawn to the decision of the Hon'ble Supreme Court in ....
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....ter that stage had passed. We are, therefore, of the opinion that the appellants should be permitted to avail of the benefit of the notification by complying at this stage with Rule 56-A to the satisfaction of the Department." 100. A reading of Section 80AC of the IT Act as extracted above indicates that to be eligible for deduction under Section 80IB(10) of the IT Act as also the other provisions referred therein, an assessee should have to have filed a Return of Income under Section 139(1) of the IT Act on or before the due date and made a claim. 101. Thus, the restriction to claim the benefit under Section 80IB(10) of the IT Act cannot be imposed on the Assessee for the period prior to 01.04.2006. In other words, the benefit of Section 80IB of the IT Act will be otherwise available to the Assessee for the Assessment Year 2006-2007 on the income earned between 01.04.2005-31.04.2006 [i.e., Previous Year 2005-2006]. 102. Thus, the deduction under Section 80IB(10) of the IT Act has to be restricted when read along with Section 80AC of the IT Act only with effect from 01.04.2006, as it contained a restriction for availing deduction under Section 80IB of the Act. 103. Thus....
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....it under s.80-IB(10) of the IT Act? 2. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee had complied with the condition of submission of completion certificate from local authority within the time-limit as per the provisions of s.80-IB(10)(a) of the IT Act? 3. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the assessee is entitled for the deduction under s.(a) for the housing project with respect to residential flats with built-up area not exceeding 1500 Sq.ft even though in the same housing project, the assessee had constructed flats exceeding builtup area of 1500 Sq.ft? 4. Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of s.(a) provide for partial deduction to the housing project with respect to residential flats with built-up area of less than 1500 Sq.ft where the same project contains flats with built-up area exceeding 1500 Sq.ft?" 108. The Division Bench in "Commissioner of Income Tax Vs. Sanghvi & Doshi Enterprise", (cited supra) held as under:- "29. ...As right....
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....iew of the King's Division Bench has been followed by the Hon'ble Supreme Court in several decisions rendered in the context of tax case laws. Therefore, the benefit of Section 80IB(10) of the Act cannot be straight away extended to the Assessee in the light of the express language in Section 80AC of the IT Act for the rest of the Assessment Years barring Assessment Year 2006-2007. 113. In this case, admittedly, no such deduction was claimed under Section 80IB of the Act by the Assessee in the Return of Income filed under Section 139(1) of the IT Act. Section 80AC of the IT Act makes it expressly clear that the benefit of the aforesaid provision cannot be allowed if no Return of Income was filed before the due date specified under the aforesaid provision of the IT Act. This is the express requirement of Section 80AC of the IT Act and therefore, cannot be read down in a statutory appeal even though, the Assessee would have been otherwise entitled to the benefit of Section 80IB of the Act but for the restriction in Section 80AC of the Act. Since, the scope of Section 260A of the IT Act is limited, we do not have powers similar to the powers vested with the Supreme Court un....