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2014 (8) TMI 828 - AT - Income Tax


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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