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2014 (6) TMI 710 - AT - Income TaxTransfer of land - ownership - Joint development agreement - main plea of the assessee is that the property is a subject matter of transfer u/s. 2(47)(v) does not belong to the assessee and it belongs to the HUF u/s 153A - Already offered for tax in the hands of HUF Held that - Following Narasimha Reddy, Hyderabad And Others Versus The Asst CIT Cent. Circle-1, Hyderabad 2014 (6) TMI 587 - ITAT HYDERABAD - once the Department accepted the return of income declared by the HUF arising out of transfer of capital asset vide development agreement - it is not proper to tax the same in the hands of the assessee in any assessment year which amounts to double taxation - the lower authorities are not justified in taxing the capital gain arising out of transfer of capital asset vide development agreement. The entire control over the property was with the assessee inasmuch as the licence to construct the property was also in the name of the assessee - It was found that execution of the agreement could not amount to transfer as contemplated u/s 53A of the Transfer of Property Act Decided in favour of Assessee. Addition of value of gold and jewellery Held that - Following Narasimha Reddy, Hyderabad And Others Versus The Asst CIT Cent. Circle-1, Hyderabad 2014 (6) TMI 587 - ITAT HYDERABAD assessee rightly contended that the jewellery found at the residence of the assessee is not only belongs to the assessee but also belongs to the family members of the assessee and the same should be considered as per the CBDT circular 1916 dated 11.5.1994 - thus, the matter is required to the be remitted back to the AO to give credit to gold and jewellery to each member of the assessee s family members in terms of CBDT circular No. 1916 dated 11.5.1994 if they are living under single roof as supported by documentary evidence Decided partly in favour of Assessee. Addition of undisclosed consideration Purchase of agricultural land Held that - The addition was made on the basis of a statement recorded from the assessee u/s. 132(4) of the Act at the time of search - the assessee filed a letter dated 15.12.2010 ad stated that the consideration paid was only Rs. 8.92 lakhs - There was no other evidence other than the statement recorded u/s. 132(4) of the Act revenue also examined the vendor who has also confirmed that the consideration received is Rs. 8.92 lakhs only assessee aged about 70 years - the pattern of answering giving minute details with cheque numbers at the odd hours of the day by a person of 70 years old is itself unusual and it cannot be considered as conclusive evidence - The addition cannot be made on presumptive basis thus, the addition cannot be confirmed in the absence of corroborative evidence Decided in favour of Assessee.
Issues Involved:
1. Taxability of sale proceeds of agricultural lands. 2. Taxability of capital gains arising from development agreements. 3. Assessment of income declared versus assessed income. 4. Taxation of unaccounted jewellery. 5. Taxation of undisclosed consideration for the purchase of agricultural lands. 6. Taxation of undisclosed long-term capital gains on the sale of lands. Detailed Analysis: 1. Taxability of Sale Proceeds of Agricultural Lands: - Issue: Whether the sale proceeds of agricultural lands are exempt from tax. - Judgment: The Tribunal dismissed the appeal as not pressed by the appellant, concluding that the sale proceeds of agricultural lands are exempt from tax. 2. Taxability of Capital Gains Arising from Development Agreements: - Issue: Whether the capital gains arising from development agreements should be taxed in the year of the agreement or when the property is sold. - Judgment: The Tribunal ruled that the capital gains should not be taxed in the year of the development agreement if the developer has not performed its obligations. The Tribunal relied on previous judgments, including the Karnataka High Court and the Supreme Court, which emphasized that the willingness to perform obligations and actual performance are crucial for determining the year of taxability. Consequently, the Tribunal allowed the appeals, holding that taxing the capital gains in the year of the development agreement would result in double taxation. 3. Assessment of Income Declared Versus Assessed Income: - Issue: Whether the assessed income should be based on the declared income or the assessment by the AO. - Judgment: The Tribunal dismissed the appeal as not pressed by the appellant, upholding the assessment by the AO. 4. Taxation of Unaccounted Jewellery: - Issue: Whether the unaccounted jewellery found during the search should be taxed. - Judgment: The Tribunal directed the AO to give credit for the gold and jewellery to each family member in terms of CBDT Circular No. 1916 dated 11.5.1994, if they are living under a single roof, and remitted the issue back to the AO for verification. 5. Taxation of Undisclosed Consideration for the Purchase of Agricultural Lands: - Issue: Whether the undisclosed consideration for the purchase of agricultural lands should be taxed. - Judgment: The Tribunal held that the addition based on a statement recorded under section 132(4) alone is not justified without corroborative evidence. The Tribunal deleted the addition, stating that the statement recorded from the assessee at the time of the search cannot be considered conclusive evidence. 6. Taxation of Undisclosed Long-Term Capital Gains on the Sale of Lands: - Issue: Whether the undisclosed long-term capital gains on the sale of lands should be taxed. - Judgment: The Tribunal deleted the addition, stating that the statement recorded under section 132(4) alone cannot be the basis for addition without corroborative material. The Tribunal emphasized that the addition cannot be made on a presumptive basis. Separate Judgments Delivered: - Appeal No. 734/Hyd/2013 (A.Y. 2004-05): Dismissed as not pressed. - Appeal No. 735/Hyd/2013 (A.Y. 2005-06): Partly allowed, deleting the addition of capital gains. - Appeal No. 736/Hyd/2013 (A.Y. 2006-07): Dismissed as not pressed. - Appeal No. 737/Hyd/2013 (A.Y. 2007-08): Allowed, deleting the addition of capital gains. - Appeal No. 738/Hyd/2013 (A.Y. 2009-10): Partly allowed, directing AO to verify the jewellery. - Appeal No. 739/Hyd/2013 (A.Y. 2005-06): Partly allowed, deleting the addition of capital gains. - Appeal No. 740/Hyd/2013 (A.Y. 2005-06): Partly allowed, deleting the addition of capital gains. - Appeal No. 741/Hyd/2013 (A.Y. 2007-08): Allowed, deleting the addition of capital gains. - Appeal No. 742/Hyd/2013 (A.Y. 2006-07): Allowed, deleting the addition for undisclosed consideration. - Appeal No. 743/Hyd/2013 (A.Y. 2007-08): Allowed, deleting the addition for undisclosed consideration. - Appeal No. 744/Hyd/2013 (A.Y. 2008-09): Allowed, deleting the addition for undisclosed long-term capital gains. - Appeal No. 745/Hyd/2013 (A.Y. 2009-10): Partly allowed, directing AO to verify the jewellery. - Appeal No. 746/Hyd/2013 (A.Y. 2005-06): Partly allowed, deleting the addition of capital gains. - Appeal No. 747/Hyd/2013 (A.Y. 2007-08): Allowed, deleting the addition of capital gains. - Appeal No. 748/Hyd/2013 (A.Y. 2009-10): Allowed, holding that the sale of agricultural land is exempt from tax. Conclusion: The Tribunal's judgment addressed multiple appeals involving similar issues of taxability of capital gains from development agreements, undisclosed income, and unaccounted jewellery. The Tribunal consistently ruled in favor of the assessees, emphasizing the need for corroborative evidence and rejecting additions based solely on statements recorded under section 132(4). The Tribunal also directed the AO to verify claims regarding jewellery and agricultural land.
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