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2014 (8) TMI 828 - AT - Income TaxJurisdiction of CIT(A) u/s 148 Reopening of assessment Held that - Following the decision in Assistant Commissioner of Income-Tax Versus Rajesh Jhaveri Stock Brokers P. Limited 2007 (5) TMI 197 - SUPREME Court - So long as the ingredients of section 147 are fulfilled, the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) - the assessee had not disclosed full capital gain, therefore notice u/s 148 was validly issued - the reopening of the assessment is upheld Decided against Assessee. Addition made by AO Assessee being a member of society Capital gain to be assessed in the hands of society or not Held that - Following the decision in Charanjit Singh Atwal Versus Income-tax Officer, Ward -VI (1), Ludhiana 2013 (8) TMI 364 - ITAT CHANDIGARH - It is the members who are owning the plots and the Society was only a facilitator - payment for consideration was to be made to an individual plot holder and in fact consideration was mentioned in terms of per Member - assessee has filed a return declaring capital gain against part money received against his plot - it is the individual member who are liable to tax in respect of transfer to plots and the Society being only a facilitator or Post office - Decided against Assessee. Transfer of property Application of section 2(47)(ii), (v) and (vi) Estimation of value of flat Held that - Following the decision in Charanjit Singh Atwal Versus Income-tax Officer, Ward -VI (1), Ludhiana 2013 (8) TMI 364 - ITAT CHANDIGARH - As per Section 45 of IT Act, income-tax was to be charged under the head capital gain on transfer of a capital asset and shall be deemed to be the income of the previous year in which transfer took place - The year of transfer was the crucial year and not the time of the receipt - Accrue means to arise or spring as a natural growth or result , to come by way of increase - Arising means coming into existence or notice or presenting itself both the words were used in contradistinction to the word receive and indicate a right to receive - They represent a stage anterior to the point of time when the income becomes receivable and connote a character of the income, which was more or less inchoate and which was something less than a receipt - An unenforceable claim to receive an undetermined or undefined sum does not give rise to accrual - it was not only the money which has been received by the assessee which was required to be taxed but the consideration which had accrued to the assessee was also required to be taxed. section 2(47)(v) r.w. section 45 indicates that capital gains was taxable in the year in which such transactions were entered into even if the transfer of immovable property was not effective or complete under the general law Charging an item of income under the head Capital gains require that there should be some profit, Such profit must be arising on account of transfer and there should be capital asset which has been transferred - There was no dispute that a capital asset was involved and there was some profit also Capital gain would be computed by considering the full value of consideration whether received or accruing as a result of the transfer - relying upon Mysore Minerals Ltd. v. CIT 1999 (9) TMI 1 - SUPREME Court it was not only the consideration received which was relevant but the consideration which had accrued was also relevant - irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer - It can be said that it had to be construed as possession u/s 2(47) Decided against Assessee.
Issues Involved:
1. Jurisdiction under Section 148 and Notice Issuance. 2. Capital Gain Assessment in Hands of Society vs Individual. 3. Addition of Rs. 90,92,604 under Long Term Capital Gains. 4. Transfer of Property during the Year. 5. Application of Provisions of Section 2(47)(ii), 2(47)(v), and 2(47)(vi). 6. Estimation of Flat Value. Detailed Analysis: 1. Jurisdiction under Section 148 and Notice Issuance: The assessee argued that the jurisdiction assumed under Section 148 and the consequent notice issuance was erroneous. The Tribunal noted that the assessee had revised their income declaration, including long-term capital gains. Following the precedent set in Charanjit Singh Atwal & others V ITO, where it was held that non-disclosure of full capital gain justified the notice under Section 148, the Tribunal upheld the reopening of the assessment, referencing the Supreme Court decision in ACIT V Rajesh Jhaveri Stock Brokers P. Ltd. 2. Capital Gain Assessment in Hands of Society vs Individual: The assessee contended that the capital gain should be assessed in the hands of the Society (AOP) rather than the individual. The Tribunal referred to the Charanjit Singh Atwal case, which clarified that the Society acted as a facilitator and the capital gain should be assessed in the hands of individual members who owned the plots. The Tribunal found no merit in the assessee's argument and rejected this ground. 3. Addition of Rs. 90,92,604 under Long Term Capital Gains: The assessee argued that only Rs. 16,00,000 was received during the year under consideration. The Tribunal noted that the Assessing Officer had considered the total consideration, including the cost of the flat to be received, and determined the long-term capital gains accordingly. Following the precedent in Charanjit Singh Atwal, the Tribunal upheld the addition, emphasizing that the entire consideration, whether received or accrued, should be taxed. 4. Transfer of Property during the Year: The assessee contested the finding of property transfer during the year. The Tribunal examined the Joint Development Agreement (JDA) and the irrevocable Power of Attorney executed by the Society, which granted significant control over the property to the developer. The Tribunal concluded that the possession and control given to the developer constituted a transfer under Section 2(47)(v), referencing the principles laid out in Chaturbhuj Dwarkadas Kapadia v CIT and Jasbir Singh Sarkaria cases. 5. Application of Provisions of Section 2(47)(ii), 2(47)(v), and 2(47)(vi): The Tribunal analyzed the applicability of these provisions, noting that the JDA and the irrevocable Power of Attorney effectively transferred possession and control to the developer, fulfilling the criteria under Section 2(47)(v). The Tribunal also considered the developer's rights to amalgamate the project and mortgage the property, reinforcing the transfer under Section 2(47)(vi). The Tribunal emphasized the legislative intent to tax such transactions and rejected the contention that the amended Section 53A of the Transfer of Property Act necessitated registration for the transfer to be recognized under Section 2(47)(v). 6. Estimation of Flat Value: The assessee challenged the valuation of the flat at Rs. 4,500 per sq. ft. The Tribunal referred to the agreement between THDC and HASH, which included a cost of Rs. 2,000 per sq. ft. for construction and noted that the market value of flats in the area ranged from Rs. 4,000 to Rs. 12,000 per sq. ft. The Tribunal found the Assessing Officer's estimate reasonable, considering the market conditions and the agreement terms, and upheld the valuation. Conclusion: The Tribunal dismissed the appeal, upholding the Assessing Officer's actions and confirming the taxability of the entire consideration, including the value of the flats, under the provisions of the Income Tax Act. The Tribunal emphasized the importance of legislative intent and the need to interpret tax provisions in light of their purpose, rejecting the assessee's arguments on various grounds.
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