TaxTMI 
TaxTMI 
2024 (8) TMI 1577
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....s in ITA No. 1298/Bang/2024 for the AY 2017-18, which are as follows: 1. The impugned order u/s 250 of the Act dated 30.6.2024 passed by the ld. CIT (A) Bangalore 15 is opposed to law, facts and circumstances of the case. 2. The Ld. CIT (A) has erred in passing the impugned Appellate order confirming the additions of alleged Business income amounting to Rs. 111,53,50,377/- for the A.Y. 2017-18 on the ground of alleged exchange of asset which is being exploited without appreciating the fact that the income so confirmed is not chargeable to tax for the impugned A.Y. 2017-18 as no asset as transferred except the stock in trade transferred in pursuance of the JDA dated 08-01-2008 entered with M/S. Bridge Enterprises Ltd. 3. The ld. CIT(A) has erred in rejecting the ground adduced relating to limitation of time reckonable from the date of original search in the case of M/s. Brigade Enterprises conducted on 02-11-2017 and alleged seizure of documents on 28-12-2017 from the said premises without appreciating the admitted fact that the AO was he same to the searched case of the Brigade enterprise and the appellant as a result of which he limitation appl....
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....on of built-up rea in the F.Y. 2016-17 relevant to the A. Y. 017-18 cannot be a ground for charging of business income without appreciating the fact that the Stock in trade was already transferred in pursuance of the JDA dated 08-01-2008. 10. Without prejudice to the above ground it is urged that the Ld. CIT (A) has erred in adopting the SR value of the Built up area in view of no clarity of the cost of acquisition which was said to be not discernable without appreciating the fact that the cost of acquisition was debited in the books f Account and same was furnished and alternatively the cost of construction ought to have been determined on the basis of the standard rates as applicable on the basis of either CPWD or State PWD rates. 11. The ld. CIT (A) has erred in not appreciating the fact that the closing stock credited requires to be debited in the P&L account on the basis of double entry system of accounting as a result of which the transaction was Revenue neutral. 12. The ld. CIT (A) has erred in determining the extent of Built up area including the Car parking slots and area attributable to MLCP block situated in the stilt floor which is not saleabl....
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....ntre, Brigade Gateway Campus, 26/ 1 Dr. Rajkumar Road, Malleshwaram, Rajaji Nagar, Bangalore. During the course of the search many Sale deeds, agreements, JDA and other documents were seized from the above premises on 04.11.2017 which are marked as A/BCVDPL/B2/01 to A/BCVDPL/B2/06 and also A'/BEL/OI which was seized on 28.12.2017. The seized material A'/BEL/OI seized on 28.12.2017 as mentioned above, contained Agreements, Memorandums, supplementary agreement, joint Development Agreements other documents pertaining to M/S Nalpad Hotels and Convention Centre. Page No 117 to 160 Joint Development Agreement between Nalapad Hotels and Convention Centre and Brigade Enterprises Ltd. Dated 17.1.2008 Page No 169 to 173 General Power of Attorney dated 17.01.2008 Page No 174 to 179 Supplementary Agreement between Nalapad Hotels and Convention Centre and Brigade Enterprises Ltd. Dated 5.7.2012 Page No 180 General Power of Attorney dated 08.05.2006 3.2 This seized material also contains Joint Development Agreement / Memorandums/ Supplementary agreements/ documents pertaining to the appellant M/S Nalpad Hotels & Convention Centre having bearing on its total inc....
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.... assessee's share at 370074 sq.ft. valuing at Rs. 10681.69 p.sq.ft. total value of Rs. 395,30,15,745/- and given deduction towards cost of land at Rs. 1,45,44,590/- and computed the business income at Rs. 393,84,71,155/-. On appeal, ld. CIT (A) observed that transfer took place in the AY 2017-18 as decided by ld. AO. However, while determining the value of sale consideration, he directed the ld. AO to adopt the value of built up area at Rs. 3085.50 per sq. ft. on the basis of guideline/circle rate. Aggrieved by the above order of the ld. CIT(A), assessee is in appeal before us. The facts of the case and grounds in both assessee's appeals are common. We consider the grounds in ITA No. 1298/Bang/2024. 4. Ground No. 1 is general in nature, which do not require any adjudication 5. With regard to ground No. 2 the ld. A.R. submitted that the assessee firm had owned four acres of land forming a portion of land known as plot No. 1 in Doddanekkundi, IInd Phase Industrial Area, situated in Survey No. 73/1, 73/2, 74(Part), 76/1(Part), 76/2 (Part), 77/1, 78, 79, 80/1, 80/2, 81/1 and 81/2, Mahadevpura Village, Krishnarajpuram Hobli, Bangal....
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....rred by JDA dated 17.01.2008 and coupled with irrevocable power of attorney and therefore the undivided portion of the land according to the law stood transferred in favour of the Developer in view of the irrevocable power of attorney. Thus the right, Title and interest in respect of the 2 Acres undivided portion of the land vested with the developer as on 17.01.2008. In this regard appellant begs place reliance on the Judgement of the Hon'ble High Court of Karnataka in the case of Dr. T.K. Dayalu v/s CIT 60 DTR 403 wherein the Hon'ble High court unambiguously held that the exigibility of capital gains tax as per section 45(1) arises in the same year of JDA and the consideration is required to be computed as per the SR value of the transferred land. The same view was also held by the Hon'ble High Court of Bombay in the case of Chaturbhuj Dwaraka Das Kapadia v/s. CIT (2003) 260 ITR 491. The appellant submits that as per the above judicial decision which have reached the finality the chargeability of capital gains tax arises in the same year as that of the year of JDA and the ratio laid down in the above judicial decision is applicable in respect of the capital asset as per section 2....
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....lity of tax would not arise for the assessment year 2017-18 as has been held by the A.O in Para 37 of the assessment order based on the occupancy certificate 21.07.2016 which was not the date of either transfer or exchange of assets. The A.O has considered the chargeability of tax arising in the scheme of JDA for the assessment year 2017-18 on wrong premises presuming the exchange of asset in the financial year 2016-17 relevant to the assessment year 2017-18. The A.O's view as to the assessability or exigibility of tax for the assessment year 2017-18 is opposed to law, Facts and Judicial Decisions and it is only to save the limitation of time which was expired in the assessment year 2008-09 itself. The A.O in the assessment order has canvassed his arguments based upon the judgment of the Hon'ble supreme Court in the case of M/s. Orient Trading Company v/s. CIT 224 ITR 371 and also in the case of CIT v/s Mrs. Grace Collis and others (2001) 248 ITR 323 (SC). The appellant submits that the facts and circumstances of the above cases are not identical and not squarely applicable since the facts are completely distinguishable. The decision in the above cases were rendered in the context ....
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.... 5.3 The ld. A.R. submitted that the Ld. CIT (A) for the reasons stated in Para 32 to 36 has held the Year of Chargeability arose in the A.Y. 2017-18 based on the decision of the Honourable Supreme Court in the case of M/s. Orient Trading Co. Ltd., Vs. CIT - 224 ITR 371 (SC) without appreciating the fact that the said decision was distinguishable and not applicable to the facts and circumstances of the case of the Assessee. Further the Ld. CIT (A) in Para 36 has held that the asset transferred was Stock in Trade and in exchange received the Builtup area and the same was put to exploitation in the F.Y. 2016-17 relevant to the A.Y. 2017-18 as per the Occupation Certificate/Completion Certificate. 5.4 He submitted that the Ld. CIT (A) was not justified to hold that the income arising out of the deemed transfer of land was assessable for the A.Y. 2017-18 without appreciating the fact that the deemed transfer of land took place in pursuance of JDA dated 17-01-2008 relevant to the A.Y. 2008-09. The Ld. CIT (A) has not appreciated the citations relied upon by the assessee in the following cases: a) CIT vs. Dr. T.K. Dayalu - (202 taxman 531) (Karn.) Judgement of Jurisdiction....
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....er the impugned property when he received possession of the property during the impugned assessment year along with the occupancy certificate/CC and let the property out on rent in the same assessment year earning rental income. In this case what the appellant has got is not the right to sell his portion of the constructed area but rather full possession of the development plot in the form of commercial property and has also put it to use. 6.2 Further, he submitted that the ITAT in the very same order has also discussed the modality for calculating business profits and the same is reproduced here under for our reference: "The business transaction entered into assessee, in our humble understanding, is this. The assessee has contributed a trade asset consisting of a piece of land, admeasuring 1 acre and 96.22 cents, on which a group housing project by the name of Alexandria was to be constructed, and what he got in consideration of this transfer is the Tight to sell 1,28,940.26 sq. ft. constructed area in this project. In his closing stock, even if he is to substitute the part ownership of the land transferred with the value of this right to sell 1,28,940.26 square feet c....
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....tion, if it is so applicable the assessment year in which it is to be taxed? 7.1 The contention of the ld. A.R. is that the assessee entered into JDA on 17.1.2008 with M/s. Brigade Enterprises for development of above property. The capital gain accrued on the said JDA subject to provisions of section 45(2) of the Act and it should be taxed in the assessment year 2009-10 and not in the assessment year 2017-18. In the present case, assessee converted the capital asset into stock in trade by entering into JDA on 17.1.2008 with M/s. Brigade Enterprises. The ld. AO of the opinion that assessee got Occupancy Certificate on 21.7.2016 and by taking the clue from section 45(5A) of the Act, he brought the income arising out of this transaction in the assessment year 2017-18 and applicable for AY 2018-19 only. We note that the ld. AO cannot invoke provisions of section 45(5A) of the Act, which was introduced by Finance Act, 2017 w.e.f. 1.4.2018. Further, it is applicable to an assessee who is an individual or Hindu Undivided Family from the transfer of capital asset being land and building or both under the specified agreement for the purpose of obtaining of capital gain. In the present ca....
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....haturbhuj Dwarkadas Kapadia of Bombay v. CIT 260 ITR 491 (Bombay High court)observed that in order to attract Section 53A of TOPA, the following conditions need to be fulfilled: 1. There should be a contract for consideration; 2. It should be in writing; 3. It should be signed by the transferor; 4. It should pertain to transfer of immovable property; 5. The transferee should have taken possession of the property; 6. The transferee should be ready and willing to perform his part of the contract. Date of execution of the JDA must be taken as the date of transfer 7.5 The Hon'ble Bombay High Court in Chaturbhuj Dwarakadas Kapadia of Bombay (2003) 260 ITR 491 dealt with an issue as to whether the transfer of an immovable property took place on the date of execution of the JDA or in the year in which substantial compliances were carried by the developer as per the JDA. In the present case, the assessee entered into a JDA with a developer on 18 August 1994 and executed a limited power of attorney in favour of the developer on the same day. The developer had made substantial payments and obtained two permissions for the constructi....
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....efore the ITAT was to decide whether there was a valid transfer of property on the date of executing the JDA. The assessee contended that since it was specifically agreed between the parties that possession would be handed over only on 30 November 2007 or earlier if the balance of the refundable deposit was made, there was no transfer of possession contemplated on or before 30 March 2007. The assessee further contended that the developer had not carried out any construction activity during the said period and therefore, there was no performance of the contract by way of development of the property during the relevant year. Therefore, the assessee took a stand that there was no transfer of property to the developer in AY 2007-08 as the conditions stipulated under Section 53A of TOPA were not satisfied. On the other hand, the Department contended that by virtue of the JDA, the assessee granted the developer the right of development of the site and that such right was irrevocable. Since, the assessee had also executed an irrevocable GPA in favour of the developer to develop, alienate, sale, convey and lease the constructed area, there was a valid transfer as per Section 2(47)(v) of th....
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....e ITAT observed that usually in cases where an assessee enters into a contract which is a development agreement, in the garb of agreement of sale, it is the date of the development agreement which is material to decide the date of transfer. However, it was further observed that by no stretch of logic, this legal precedent can support the proposition that all development agreements, in all situations, satisfy the conditions of Section 53A which is a sine qua non for invoking Section 2(47)(v). The ITAT observed that a plain reading of the Section 53A shows that for a contract to fall under the ambit of Section 53A, it is necessary that transferee should have or is willing to perform his part of the contract. Therefore, it is clear that willingness to perform for the purposes of Section 53A is something more than a statement of intent and it is the unqualified and unconditional willingness on the part of the vendee to perform its obligations. Thus, unless the party has performed or is willing to perform its obligations under the contract, and in the same sequence in which these are to be performed, it cannot be said that the provisions of Section 53A will come into play on the facts o....
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....o be taxed in AY 2012-13 since there was a transfer under Section 2(47)(v) as on the date of executing the JDA. The ITAT observed that as per the JDA, the possession had not been handed over to the developer as the assessee had only granted a right to enter into the premises for the purposes of demolition and re-construction. Additionally, it was observed that the POA granted in favour of the developer specifically barred the developer from selling or executing any deed for any portion of the property. Thus, it was observed that neither the JDA nor the POA complied with the conditions specified in Section 53A of TOPA. The ITAT held that the transfer in the present case took place only after execution of the POA dated 17 August 2012 in favour of the developer granting the authority to convey, sell, transfer the property. Therefore, the capital gain, if any was leviable only in AY 2013-14 and not during AY 2012-13 when the JDA was executed. 7.11 In a JDA, since the developer takes the possession of the property to execute the project and is willing to conclude the project, it was held in certain judgments that the execution of JDA would amount to transfer and the owner will be lia....
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....ciety of 95 members entered into a JDA in February, 2007 with developers to develop 21.2 acres of land owned by the society and the consideration was payable to the members in cash and as flats. As per the agreement, the sale deeds had to be registered and consideration was be paid in 4 instalments. The developers made the first two payments and the members offered the capital gains to the extent of land conveyed in the first two instalments. The developers could not proceed with the project due to necessary approvals being not granted. 7.16 The Assessing Officer held that the entire consideration receivable in the project would be assessed to capital gains in the A.Y 2007-08 and he completed the assessment. The first two appellate authorities concurred with the view of the AO and upheld the addition made. 7.17 However, the Hon'ble Punjab & Haryana High Court reversed the decisions of lower authorities and allowed the appeal of the members. On appeal by the revenue, the Supreme Court CIT v. Balbir Singh Maini [2017] 86 taxmann.com 94/251 Taxman 202 along with several other appeals confirmed the view of the High Court stating that the terms 'being in the na....
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.... a contract with the developer viz., on 17-01-2008 This section says "to transfer" means the said contract is in respect of a transfer and not for any other purpose. The term "transfer" is to be read along with the s. 45 and s. 2(47)(v) of IT Act. It is pertinent to clarify that one must not mistake to identify the issue of capital gain with the term "transfer" as defined in s. 54 of Transfer of Property act. At the cost of elaboration, we may like to add that in the past there was a long line of pronouncements; while deciding income tax cases, that unless and until a sale deed is executed and that too it is registered, transfer cannot be said to have been effected. The consequence of said catena of decisions was that no capital gain tax was directed to be levied so long as "transfer" took place as per the generally accepted connotation of the term under Transfer of Property Act. The resultant position was that the levy of capital gain tax thus resulted in major amendments in the income-tax statute. The main objective of those amendments was to enact that for the purposes of capital gains, the transaction involving transfer of the nature referred are not required to be registered u....
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.... 531) (SC), is directly applicable, wherein held that 7.25 The last noticeable ingredient is, "the transferee has performed or is willing to perform his part of the contract". To ascertain the existence of willingness on the part of the transferee one must not put stop at one event but willingness is to be judged by the series of action of the transferee/transferee. It is evidently clear from the contents of the JDA and POA dated 17.1.2008 that the Assessee has provided to the purchaser M/s. Brigade Enterprises Ltd. all facilities of entry, development and even sale of the constructed built-up area. Such unhindered access provided to the purchaser is very much in the nature of possession, even if the word as such has not been mentioned in the JDA. It would be appropriate in this context to extract the relevant clause of the JDA, which gives irrevocable right of development to the Developer as follows: 7.26 As seen from the above, the second party shall develop the scheduled property at their own cost into commercial building with internal and external walkways, including compound and passages and it was the responsibility of the second party to complete the proposed buildi....
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....impugned transaction to be taxed in the AY 2008-09 only and not in AY 2017-18. In our opinion, had it been considered as a transfer of capital asset in terms of section 2(47)(v) of the Act, then there is a transfer of capital asset in AY 2008-09 and not in AY 2017-18 as held by lower authorities. However, in the present case, it is not a case of transfer u/s 2(47)(v) of the Act since there was conversion of capital asset into stock in trade by assessee vide entering into JDA on 17.1.2008 and there is no dispute regarding these facts and both the parties are admitted that there was a conversion of capital asset into stock in trade vide JDA dated 17.1.2008. This also confirmed by Shri N.A. Haris, Managing Director of the firm in his statement recorded u/s 131 of the Act and he also confirmed that the purpose of floating the firm is for real estate and development business and as per balance sheet for financial year 2006-07, the land was revalued at Rs. 1,45,44,590/-. Hence. there is no dispute between the assessee and department to the fact that the assessee has converted the capital asset into stock in trade vide entering into JDA dated 17.1.2008 with developers M/s. Brigade En....
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.... r.w.s. 2(47)(iv) of the Act. It has to be considered as business income as generated from said transaction on transfer of property by applying section 45(2) of the Act. Even before us, the assessee not objected for considering the income generated from these projects as business income of assessee in the relevant assessment year when the assessee's share of constructed area sold wholly or partly as the case may be. In case of partial share of the constructed area in any assessment year, the proportionate income generated from such sale to be taxed in that particular assessment year. However, on application of section 45(2) of the Act, income on transfer of property up to the date of conversion of capital asset into stock in trade has to be assessed under the head capital gain in AY 2008-09 and the gain from the present property after the date of conversion into stock in trade has to be assessed as business income by applying section 45(2) of the Act on sale of assessee's share of constructed area in its hand. For clarification, we reproduce the section 45(2) of the Act: "S. 45(2) - Not withstanding anything contained in sub-section(1), the profits or gains arising from th....
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.... acquisition and improvement will be done by considering the cost of indexation in the year of conversion while calculating the capital gain or loss relevant to the assessment year 2008-09. Now the question arises with regard to sale consideration which is to be computed while calculating the capital gain or loss. As per section 45(2) of the Act for computing the capital gain, the sale consideration will be equivalent to the fair market value of such asset as existing on the date of conversion and FMV has been considered in terms of section 2(22B) of the Act. 7.34 Now the next question is with regard to computation of business income after conversion of capital asset into stock in trade. 7.35 After conversion of capital asset into stock in trade of business of assessee then the fair market value on the date of conversion is considered as full sale consideration of such capital asset for the purpose of capital gain or loss, such fair market value is considered as cost of such asset as converted into stock in trade and at the time of sale of such stock in trade, the same price i.e. as realized from the sale of such stock in trade wholly or partially as the case may be will be d....
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....n the stock in trade has been actually sold by the assessee and not in the assessment year when the developer has got the OC/CC from the BBMP. At this time it is appropriate to take support from the judgement of Kolkata High Court in the case of CIT Vs. Dhanuka & Sons 124 ITR 1, where it has been held that profit & gains arising from shares transferred from trading account to investment account at prevailing market rate is not a transaction at all because a person have a transaction with himself and in turn such profit cannot be taxed. If such shares can be disposed at a value other than the value at which it was transferred from the business stock the question of capital loss or capital gain would arise. Being so, in the present case, on applying the section 45(2) of the Act the income to be charged to tax in the year of sale of stock in trade as follows: (A) Taxation at the time of conversion of capital asset into stock in trade: 1. Sales consideration at the time of entering in to JDA on 17.1.2008 by transferring the land as a capital asset; The fair market value of capital asset on the date of conversion shall be deemed to be the sale consideration. 2....
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..... Brigade Enterprises Ltd and in the course of Examination of the documents relating to the searched assessee M/S. Brigade Enterprises Ltd that he was satisfied as regards the determination of income in the assessment to be made u/s 153C of the Act in the case of the appellant. In this regards the appellant submit that the Jurisdictional A.O or the A.O to whom the case was notified (Central Circle 2(3)) have not mentioned the date of drawing of the satisfaction note in the context of the limitation of time as prescribed U/s 153B of the Act. The Impugned assessment order is barred by limitation of time as provided u/s 153B of the Act, according to which the A.O having jurisdiction over the case is required to complete the assessment u/s 153C within 12 Months from the end of the financial year in which the records and seized documents are handed over to him. The search U/s 132 of the Act was admittedly completed on 28.11.2017 in the case of M/S. Brigade Enterprises Ltd and the said case was notified to the A.O and Central Circle 2(3). The case of the appellant was also notified to the same A.O U/s 127 vide notification bearing F. No. 29/Centralisation/PCIT-5/2018-19 dated 17....
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.... Order that the AO has not mentioned the date on which the alleged Satisfaction was recorded and therefore the impugned Notice u/s. 153C stated to have been issued on 24-03-2020 was invalid, improper and illegal since the assessment proceedings were already initiated by issue of Notice u/s. 143(2) of the Act dtd: 24-092018 followed by five 142(1) Notices issued later. In this context it is submitted that the assessment proceedings consequent upon the search were already initiated as admitted in the 142(1) Notices dtd: 08-01-2019, 28-01-2019 and 01-03-2019 and therefore the contention of the AO that a Notice u/s. 153C was issued on 24-03-2020 after recording the alleged satisfaction Notice is factually incorrect. The AO's contention that a Notice u/s. 153C issued on 24-03-2020 is a misleading factor. The AO is aware that the Assessment Proceedings were already initiated and relevant notices u/s. 143(2) and 142(1) were already issued and the assessment proceedings were in progress and therefore it is not justifiable for the AO to say that a Notice u/s. 153C dtd: 24-03-2020 was issued. The AO even though aware that the Assessment proceedings were in-progress he has made an attempt to ....
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.... that the above judicial decision of the Honourable Supreme Court were followed by the ITAT Bangalore Bench in the following cases: 1. Rajiv Gandhi University of Health Sciences (RGUHS) v/s ACIT Exemption, Circle-1 Bangalore in ITA No. 16/BANG/2023 as dated 16-05-2023. 2. Smt. Arwa Harawala v/s ITO in ITA No. 01/BANG/2020 dated 20-12-2021. 3. Honourable High Court of Karnataka in the case of Nittu Vasanth Kumar Mahesh v/s ACIT (2019) 265 Taxman 277 (Karnataka) 4. The Honourable ITAT's decision in the case of M/s. VVD Constructions v/s DCIT Circle - 7(1)(2) Bangalore in ITA No. 3384 to 3388/BANG/2018 dated 22-03-2021. 8.2 He submitted that the Ld. CIT (A) has not considered the above judicial decisions. However he has relied upon the decision of the Honourable Madras High Court in the case of B. Kubendran vs. DCIT in WP No. 3023 of 2020 dated 09-04-2021 in which the decision of the Honourable Delhi High Court in the case of Ashok Chaddha was relied wherein it held that the Notice u/s 143(2) of the Act was not mandatory in 153A cases. The Ld. CIT (A) in Para 17 on page 47 and 48 held that the ROI filed on 27-02-2021 was not E....
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....he case of Hotel Blue Moon and Laxmandas Khandelwal (Supra). In view of the above judicial decisions he submitted that it is a trite Law that the AO was bound to issue a Notice u/s 143(2) of the Act before completion of the assessment. 8.4 Limitation of Time : The ld. A.R. submitted that the Ld. AO has not considered the Legal submissions of the assessee. It is an undisputed fact that a Search was conducted in the case of M/s. Brigade Enterprises on 02-11-2017 and finally concluded on 2812-2017 and the JDA, GPA, Supplementary Agreement were stated to have been impounded and held that the said documents were relevant for determination of income in the case of the assessee in view of Section 153C of the Act. The AO in Para 8 of the Assessment order has held that the case of the assessee was centralised and notified to him vide Notification bearing F No. 29/Centralisation/PCIT-5/2018-19 dated 17-07-2018. However, the Ld. AO in Para 5 of the assessment order has held that the case was Notified on 18-11-2019 vide Notification bearing F No. 29/Centralisation/PCIT-5/2019-20 which is nothing but a Corrigendum to the earlier Notification dated 17-02-2018. Therefore, he submitte....
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.... Assessment order as under: "7. Hence, the assessing officer of M/s. Brigade Enterprises Ltd who happens to be the undersigned is satisfied that these documents pertain to M/s Nalpad Hotels & Convention Centre and information contains therein relate to the assessee firm and have a bearing on the total income of M/s Nalpad Hotels & Convention Centre. After examining the seized material, the undersigned who is also the assessing officer of M/s Nalpad Hotels & Convention Centre is satisfied that documents pertain to M/s Nalpad Hotels & Convention Centre and information contained therein relates to and have a bearing on the total income of M/s Nalpad Hotels & Convention Centre. 8. Accordingly, the satisfaction note was recorded in the case of assessee, and the notice u/s 153C of the IT Act, 1961 was issued on 24-03-2020 to the assessee requiring the assessee to file the return of income within 30 days from the date of receipt of notice for the A.Y. 2017-18 and this notice was duly served on the assessee." 8.5 The ld. A.R. submitted that it is an admitted fact on record that the Search in the case of M/s. Brigade Enterprises Ltd was commenced on 02-11-2017 and concl....
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....had created a situation to his advantage by defaulting on the requirement to comply with the notice under section 158BC, he should not be permitted to take advantage of such default. It held that the decision in the case of Blue Moon should be seen to come to the aid of a person, who had filed his return within the time stipulated in the statutory notice, and not one who had defaulted. 17. Both decisions, that of the Supreme Court in Blue Moon as well as this Court in Rangroopchand Chordia, are in the context of erstwhile Chapter-XIV B a neither decision comes to the aid of the petitioner in this case, since it would answer the argument in relation to whether the issuance of notice under section 143(2) was mandatory in the context of an assessment under Section 153A/C as well. 18. The Delhi High Court in Ashok Chaddha (supra) had framed a substantial question specifically on whether the issue of a notice under section 143(2) was mandatory for finalisation of assessment under section 153A. This case is thus on point as far as the present writ petition is concerned. The assessee therein relied on a slew of decisions of the Supreme Court and various High Courts the p....
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....events and provisions of law as applicable to re-assessment proceedings under the Act. Learned DR basically argued that assessee has not filed ROI in the stipulated time and therefore AO was correct in law in framing the assessment without issuance of any notice under section 143(2) of the Act and framing the assessment under section 144 of the Act. The above arguments of learned DR look attractive. However, the arguments failed when examined on the touch stone of admitted facts of the present case. For the sake of convenience, the observations of the AO in Para 11 as follows: "11. In response to notice and the show cause the assessee responded and filed the return of income u/s 153C of the Act on 26.2.2021. But it is seen that assessee has not everified the return of income till date. As the return filed by assessee is not e-verified it is as good as invalid and no return filed." 10.1 Further, in para 13 of assessment order ld. AO stated as follows: 10.2 Perusal of lines of the Assessment Orders along with other events happened at the time of assessment would show clearly that Assessment Order was passed under section 143(3) of the Act and not under section 144 of t....
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.... issued under section 143(2) of the Income-tax Act? 5. Admittedly, the notice was issued by the Assessing Officer under section 148 of the Act on 14-7-2008 requiring the assessee to file a return within thirty days. A return was filed much later on 31-32009, after eight and a half months. 6. On identical facts, in M.A. No. 239 of 2011 titled as Chand Bihari Agrawal v. Commissioner Of Income Tax, Central, Patna decided on 257-2023, this Court considered the issue and held against the revenue. 7. We find that the question of law has to be answered in favour of the assessee and against the revenue. Hotel Blue Moon (supra) governs the issue which has been followed in Chand Bihari Agrawal (supra)." 10.6 We also note the decision rendered by Hyderabad Bench of the Tribunal in the case of Gonuguntla Nirmal Devi in ITA No. 412/Hyd/2022 dated 17.8.2023 for the AY 2012-13 is misplaced because in that case, assessee has not filed any return. For the sake of clarity, we would like to quote the observations of the Hon'ble Bench: "8. We have gone through the record in the light of the submissions made on either side. We shall look at the allegation as to f....
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....he commencement of hearing. It was only when the proceedings are going on, that too without obtaining the permission of the AO, the return was filed online and on the next day the AO was informed of such online filing. 13. For these reasons, we brush aside the contention of the assessee that for want of issuance of notice under section 143(2) of the Act, the assessment is bad under law. Next contention of the assessee is that assessment is bad for want of sanction of the learned PCIT before issuance of notice under section 148 of the Act." 10.7 Perusal of the above observations of the Hyderabad Bench would clearly show that in that case the assessee failed to file any return of income in response to the notice under section 148 of the Act. The assessee has filed only his submissions on merits of the addition and that too during the course of reassessment proceedings, in that case the AR of the assessee contend that submissions made by assessee would be considered as ROI in response to 148 notice. However, in the case at hand the assessee has filed a ROI vide e-filing on 26.22021 as recorded by the ld. AO in para 11 of his order. Further no one from the side of assessee ....
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....t while deciding the above questions of law has observed as under:- ''Merely because the matter was discussed with the Assessee and the signature is affixed it does not mean the rest of the procedure of notice under Section 143(2) of the Act was complied with or that on placing the objection the Assessee had waived the notice for further processing of the reassessment proceedings. The fact that on the notice issued u/s 143(2) of the Act, the assessee had placed its objection and reiterated its earlier return filed as one filed in response to the notice issued u/s 148 of the Act and the Officer had also noted that the same would be considered for completing of assessment, would show that the AO has the duty of issuing the notice under Section 143(2) to lead on to the passing of the assessment. In the circumstances, with no notice issued u/s 143(3) and there being no waiver, there is no justifiable ground to accept the view of the Tribunal that there was a waiver of right of notice to be issued u/s 143(2) of the Act." 10.10 Further, a reference can be made to the following decisions of Co-ordinate Benches of the Bangalore ITAT, wherein after following the mandate ....
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....as filed on 26-03-2021 and the assessment was completed on 12-07-2021 and therefore the AO had sufficient time of more than four months and the decision of the Honourable Madras High Court contrary to the decision of the Honourable Supreme Court in the case of Hotel Blue Moon and Laxmandas Khandelwal (Supra), as a result of which the findings of the Ld. CIT (A) are to be reversed. Further the assessee submits that the ITAT Bangalore Bench in the case of Bangalore Narayan Das vs. ITO in ITA No. 120 and 121/Bang/2020 dated 17-03-2023 held that the issue of Notice u/s 143(2) of the Act was mandatory as per the decisions of the Honourable Supreme Court in the case of Hotel Blue Moon and Laxmandas Khandelwal (Supra). In view of the above judicial decisions he submitted that it is a trite Law that the AO was bound to issue a Notice u/s 143(2) of the Act before completion of the assessment. 10.14 In view of the above position of facts and law, we are of the view that the reassessments (for both years in appeal before us) framed in the present case without issuance of notice under section 143(2) of the Act is bad in law and void ab-initio. 10.15 Now we will deal with grounds rel....
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.... is also submitted that there was further issue of notice u/s 142(1) of the Act on 28.1.2019 and 1.3.2019. Thus, the contention of the ld. A.R. is that records were handed over to the assessee before issue of notice u/s 143(2) of the Act dated 24.9.2018 being the date on which notice u/s 143(2) of the Act was issued. In our opinion, time limit u/s 153B of the Act to be reckoned from this date i.e. 24.9.2018 and if we compute the time limit u/s 153B of the Act from the issue of initial notice u/s 143(2) of the Act, the time available to the ld. AO to pass assessment order u/s 153C of the Act is as per section 153B of the Act. 12. We have heard both the parties and perused the materials available on record. First of all, we will deal with whether assessment completed u/s 153C of the Act is valid without issuing notice u/s 143(2) of the Act after recording satisfaction u/s 153C of the Act, though the said notice u/s 143(2) of the Act was issued before recording satisfaction u/s 153C of the Act on 24.9.2018. 12.1 It is to be noted that originally, the assessee was assessed by ITO Ward 5(2)(4) Bangalore. It is only by way of notification dated 17.7.2018 r.w. notification dated 19.11.....
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....year or years referred to in clause (b) of sub-section (1) of section 153A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed; (b) in respect of the assessment year relevant to the previous year in which search is conducted under section 132 or requisition is made under section 132A, within a period of twenty-one months from the end of the financial year in which the last of the authorisations for search under section 132 or for requisition under section 132A was executed: Provided that in case of other person referred to in section 153C, the period of limitation for making the assessment or reassessment shall be the period as referred to in clause (a) or clause (b) of this sub-section or nine months from the end of the financial year in which books of account or documents or assets seized or requisitioned are handed over under section 153C to the Assessing Officer having jurisdiction over such other person, whichever is later: Provided further that in the case where the last of the authorisations for search under s....
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.... reassessment of total income in case of other person referred to in section 153C, a reference under sub-section (1) of section 92CA is made, the period available for making an order of assessment or reassessment in case of such other person shall be extended by twelve months: (2) The authorisation referred to in clause (a) and clause (b) of sub-section (1) shall be deemed to have been executed,- (a) in the case of search, on the conclusion of search as recorded in the last panchnama drawn in relation to any person in whose case the warrant of authorisation has been issued; or (b) in the case of requisition under section 132A, on the actual receipt of the books of account or other documents or assets by the Authorised Officer. (3) The provisions of this section, as they stood immediately before the commencement of the Finance Act, 2016, shall apply to and in relation to any order of assessment or reassessment made before the 1st day of June, 2016: Explanation.-In computing the period of limitation under this section- (i) the period during which the assessment proceeding is stayed by an order or injunction of any court; or ....
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....annulment, by the Principal Commissioner or Commissioner; or (ix) the period commencing from the date on which a reference or first of the references for exchange of information is made by an authority competent under an agreement referred to in section 90 or section 90A and ending with the date on which the information requested is last received by the Principal Commissioner or Commissioner or a period of one year, whichever is less; or (x) the period commencing from the date on which a reference for declaration of an arrangement to be an impermissible avoidance arrangement is received by the Principal Commissioner or Commissioner under sub-section (1) of section 144BA and ending on the date on which a direction under sub-section (3) or sub-section (6) or an order under sub-section (5) of the said section is received by the Assessing Officer. Provided that where immediately after the exclusion of the aforesaid period, the period of limitation referred to in clause (a) or clause (b) of this sub-section available to the Assessing Officer for making an order of assessment or reassessment, as the case may be, is less than sixty days, such remaining period sh....
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....eld that assessment order is bad in law in both counts i.e. (i) non issue of notice u/s 143(2) after issuing notice u/s 153C on 24.3.2020. (ii) Issue of notice u/s 143(2) of the Act on 24.9.2018 before recording satisfaction u/s 153C of the Act. In view of these facts we kept it open the time limit u/s 153B of the Act to pass the assessment order u/s 153C of the Act at this stage and the assessee is at liberty to agitate this ground at appropriate stage, if situation warrants. 13. With regard to ground No. 6 the ld. A.R. submitted that the Ld. AO in Para 33 of the assessment order has relied upon the decision of the Honourable Supreme Court in the case of M/s. Orient Trading Co. Ltd, vs. CIT 224 ITR 371 (SC) and the Ld. CIT (A) has upheld the action of the AO without appreciating the fact that the said decision was rendered in the concept of exchange of Low rate share of old company to High rate share of the new company in which the old company was merged. The surrender of old company share in exchange of allotment of High rate new company share was held as a transfer by way of exchange and the difference of the value between the surrendered old shares of the old company in....
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....case of M/s. Oriental Trading Company Ltd. (224 ITR 371) (SC), wherein held that the difference between book value of original asset and market value of new asset received in exchange of original asset held as stock in trade is to be taxed as business income. According to ld. D.R., this judgement is squarely applicable to the case in hand. 15. We have heard the rival submissions and perused the materials available on record. Since we have already held that the assessee's case falls under the purview of section 2(47)(iv) of the Act as the assessee has converted the capital asset into stock in trade vide JDA dated 17.1.2008 and ld. AO has to compute the income of assessee by applying the provisions of section 45(2) r.w.s. 2(22B)of the Act when the assessee has actually sold the stock in trade as discussed in earlier para nos.7.31 to 7.37 while adjudicating ground No. 2 in this order. Accordingly, we hold that this judgement relied by the ld. CIT (A) have no application to the facts of present case. This ground of appeal of the assessee is allowed. 16. With regard to ground No. 7 taxing the income of the assessee as business income in assessment year 2016-17, since we ....
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....Time Limitation as per recitals of JDA cannot be construed as a ground for transfer based on alleged delivery of possession. In this regard the assessee begs to place reliance on the advance Ruling in the case of Jasbir Singh Sarkaria cited (supra) that passing of consideration was of no criterion for exigibility of Capital Gain Tax and the emphasis was laid down that the transfer/deemed transfer of the asset was the criterion for chargeability of Capital Gain Tax and not the passing of consideration. However the Ld. CIT (A) has held that the said Advance Ruling was applicable in the case of transfer of Capital asset chargeable to Tax u/s 45(1) of the Act and said to be not applicable in the case of Stock in Trade. He submitted the relevant portion of the Advance Ruling which was reproduced in Para 11 on page 37 and 38 of the impugned appellate order. However the CIT (A) has not appreciated the Advance Ruling which is squarely applicable to the facts and circumstance of the case of the assessee and therefore the findings of the Ld. CIT (A) needs to be reversed, in view of the fact that as per the Advance Ruling the actual date of taking physical possession need not to probed into. ....
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....determined u/s 45(2) of the Act as discussed in para 7.31 to 7.37 of this order. Accordingly, ground No. 10 of the assessees is allowed. 24. With regard to ground No. 11 the ld. A.R. submitted that the Ld. CIT (A) has held that the closing stock value of the Built up area credited has to be considered to arrive at the consideration. In this regard the Ld. CIT (A) has not appreciated the fact that once the closing stock is credited, a debit entry is to be passed as per the double entry system of Accounting as a result of which the transaction was Revenue Neutral. However the Ld. CIT (A) has not considered the submissions of the assessee and therefore he submitted that the findings being against the Principles of accounts is liable to be reversed. 25. The ld. D.R. relied on the order of lower authorities. 26. We have heard the rival submissions and perused the materials available on record. As discussed in ground No. 2, there is no determination of income in the assessment year under consideration and the income has to be computed on the actual sale of stock in trade as discussed in earlier para 7.31 to 7.37 of this order. Accordingly, this ground of assessees....
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....record. In our opinion, the income generated from this transaction to be computed while on actual sale of super built up area allotted to the present assessee along with parking area as discussed in para 7.31 to 7.37 of this order. This ground of appeals of the assessee is allowed. 30. In the result, assessee's appeal in ITA No. 1298/Bang/2024 is allowed. 31. The facts and circumstances in the case of M/s. Nalapad Properties in ITA No. 1297/Bang/2024 for the AY 2017-18 is identical to the facts considered in the case of M/s. Nalapad Hotels & Conventions Centre, Bangalore in ITA No. 1298/Bang/2024, being so, applying the ratio laid down in ITA No. 1298/Bang/2024, the appeal of the assessee in ITA No. 1297/Bang/2024 is also allowed. 32. Since we have disposed of both the appeals itself, the stay petitions filed by the respective assessees in SP Nos. 33 & 34/Bang/2024 are dismissed as infructuous. 33. In the result, ITA Nos. 1297 & 1298/Bang/2024 of the assessee's appeals are allowed and SP Nos. 33 & 34/Bang/2024 filed by the assessees are dismissed. Order pronounced in the open court on 16th Aug, 2024. ============= Document ....
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.... Account - 09-10 363195.00 N.A.Haris 4058500.00 TOS Account - 10-11 230442.00 N.A.Mohammed 955000.00 TDS Account - 11-12 346801.00 TDS Account - 12-13 366649.00 Advance received from TDS Account - 13-14 390747.00 Brigade Properties 30000000.00 Cash at Bank 5374.00 CURRENT LIABILITIES: Audit Fee Payable 12000.00 Cash 560816.00 Profit & loss A/c 78576.00 147992647.00 147992647.00 NALAPAD HOTELS AND CONVENTION CENTRE NO.19, NALAPAD CHAMBERS, K.G.ROAD, BANGALORE - 560 009 BALANCE SHEET AS ON 31.03.2015 SCH AMOUNT LIABILITIES SCH AMOUNT ASSETS Capital Account A 102474312.00 Stock In Trade 100000000.00 Advances & Deposits 51587105.00 Unsecured Loans B 49905540.00 Cash at Bank $294.00 CURRENT LIABILITIES: Cash 620815.00 Audit Foe Payable 14500.00 152394452.00 162394452.00 BALANCE SHEET AS ON 31.03.2015 SCH AMOUNT mi NALAPAD HOTELS AND CONVENTION CENTRE NO. 19, NALAPAD CHAMBERS K.G.ROAD, BANGALORE - 560 009 BALANCE SHEET AS ON 31.03.2016 100000000 00 AMOUNT SCH AMOUNT ASSETS rado 06311272.00 Stock In Trade 55985773.00 3385.00 680816 00 50426640.00 Cash at Bank Casti CURRE....
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....nstructed area of 50% in the completed commercial building for having given the possession the land which the firm had in it's balance sheet as stock in trade. Do you agree to this. Ans Yes. The firm has received 50% of the constructed commercial property in lieu of the land given to the BEL on 31.5.2016 i.e the date of obtaining Occupancy certificate. 16 Please let me know how the figm has accounted the building in its balance sheet after the receipt of building. Please let me know the value. Ans The firm has obtained 50% of the constructed commercial property on 31.5.2016. The firm has treated the commercial property as stock in trade as on 31.3.2017. The value adopted in the balance sheet for the year 31.3.2017 is at Rs. 1000000000/- (Rs. Ten crores only) which is the value of the land adopted by the firm. 17 Please let me know the basis of valuation adopted in firm's balance sheet for the Building as on 31.3.2017 i.e FY 16-17 Ans The value of the property as on 31.3.2006 was RS. 10 crores. "I would like to submit that there is no method adopted for valuing the constructed commercial building received. The value of the building is adopted at the same value of ....
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....rutiny. 2. इस संबंध में, आपको दिनांक 28/09/2018 को 10:12 AM तक साकà¥à¤·à¥à¤¯ पà¥à¤°à¤¸à¥à¤¤à¥à¤¤ करने अथवा साकà¥à¤·à¥à¤¯ पà¥à¤°à¤¸à¥à¤¤à¥à¤¤ कराने का अवसर पà¥à¤°à¤¦à¤¾à¤¨ किया जा रहा है जिस पर आप उकà¥à¤¤ आयकर विवरणी के समरà¥à¤¥à¤¨ में निरà¥à¤à¤° हैं।रहेंगे। 2. In this regard, an opportunity is being given to you to produce or cause to produce any evidence on which you may like to rely in support of the said return of income by 28/09/2018 at 10:12 AM. 3. उपरà¥à¤¯à¥à¤•à¥à¤....
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....¾ (यों) को बाद में जारी किया जाà¤à¤—ा। 4. In course of assessment proceedings, if required, specific questionnaire(s) or requisition(s) for information/document shall be issued subsequently. 5. कृपया धà¥à¤¯à¤¾à¤¨ दें कि यदि आपके पास ई-फाइलिंग खाता है तो आपके लिठपैरा 3 लागू है। आपके दà¥à¤µà¤¾à¤°à¤¾ सà¥à¤µà¤¯à¤‚ अपना खाता न बना लेने Note: If digitally signed, the date of digital signature may be taken as date of document. CENTRAL REVENUE BUILDING, QUEENS ROAD, BENGALURU, Karnataka, 560001 Email: [email protected], 76 C- NALAPAD HOTELS AND CON AY. 201 ITBA/AST/S/143(2)/20....