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2013 (11) TMI 568 - AT - Income TaxTransfer u/s 2(47)(v)/(vi) of the Income tax act - Taxability in the hands of member or Society - Assessee is a member of the Punjabi Co-op Housing Building Society Ltd. The assessee is owner of a plot measuring 500 sqyd and was entitled to monetary consideration of Rs. 80 lakhs and one furnished flat measuring 2250 sqft which has been valued by the Assessing Officer @ Rs. 4500 sqft - Land was transferred to Tata Housing Development Company Ltd. the Assessing Officer applied to capital gain tax which has been confirmed by the ld. CIT(A) Held that - following the decision in the cae of Shri Charanjit Singh Atwal and others 2013 (8) TMI 364 - ITAT CHANDIGARH , wherein it was held that assessee is liable to be taxed - Decided against the assessee.
Issues Involved:
1. Jurisdiction and legality of the lower authorities' orders. 2. Interpretation of Section 45 of the Income Tax Act. 3. Appreciation of the agreement's contents. 4. Taxation of the entire consideration. 5. Taxability of the transferred portion of land. 6. Correct interpretation of sections and agreement clauses. 7. Inclusion of the cost of flats on an estimation basis. 8. Initiation of penalty proceedings under Section 271(1)(C). Issue-wise Detailed Analysis: 1. Jurisdiction and Legality of the Lower Authorities' Orders: The assessee contended that the orders passed by the lower authorities were erroneous, illegal, and without jurisdiction. However, the Tribunal did not find merit in these contentions and upheld the orders of the lower authorities. 2. Interpretation of Section 45 of the Income Tax Act: The Tribunal examined whether the assessee is liable to capital gain tax in the year under consideration (AY 2007-08) under Section 45, which requires three ingredients: profit, arising from transfer, and transfer of a capital asset. The Tribunal found that the transfer was covered under clauses (ii), (v), and (vi) of Section 2(47), thus making the entire consideration taxable in the year of transfer. 3. Appreciation of the Agreement's Contents: The Tribunal analyzed the Joint Development Agreement (JDA) and the irrevocable Power of Attorney executed by the assessee. It concluded that the possession and control of the property were transferred to the developer, thus constituting a transfer under Section 2(47)(v) and (vi). 4. Taxation of the Entire Consideration: The Tribunal held that the entire consideration, whether received or accrued, must be taxed in the year of transfer as per Section 45 read with Section 48. The Tribunal rejected the assessee's argument that only the received consideration should be taxed, emphasizing that the law mandates taxing the full value of consideration. 5. Taxability of the Transferred Portion of Land: The Tribunal rejected the contention that only the transferred portion of land should be taxed. It held that the entire consideration related to the transfer must be considered, including the value of flats to be received in the future. 6. Correct Interpretation of Sections and Agreement Clauses: The Tribunal upheld the interpretation of clauses (v) and (vi) of Section 2(47) and rejected the argument that the JDA and Power of Attorney only constituted a license. It emphasized that the agreement and Power of Attorney transferred substantial rights and control to the developer, constituting a transfer. 7. Inclusion of the Cost of Flats on an Estimation Basis: The Tribunal upheld the Assessing Officer's valuation of flats at Rs. 4,500 per sq. ft., rejecting the assessee's claim that the cost should be lower. It noted that the valuation was reasonable and supported by market rates and the agreement between the developers. 8. Initiation of Penalty Proceedings under Section 271(1)(C): The Tribunal found that the issue of penalty proceedings was premature as only the initiation of penalty had been challenged. It dismissed this ground as infructuous. Conclusion: The Tribunal dismissed the appeal of the assessee, upholding the orders of the lower authorities and confirming the taxability of the entire consideration, including the value of flats, in the year of transfer. The Tribunal rejected all contentions raised by the assessee, emphasizing the legal provisions and interpretations of the Income Tax Act.
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