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TMI Blog2014 (12) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... he land was purchased and sold by the assessee and two other co-owners for and on behalf of VEPL - Therefore, the income thereof was not liable to be assessed in the hands of the assessee – thus, the order of the CIT(A) is upheld – Decided against revenue. - ITA No. 2119/PN/2013 - - - Dated:- 30-10-2014 - Shri G. S. Pannu And Ms. Sushma Chowla,JJ. For the Petitioner : Shri P. S. Naik For the Respondent : Shri V. L. Jain ORDER Per G. S. Pannu, AM. The captioned appeal by the Revenue is directed against an order of the Commissioner of Income Tax (Appeals)-II, Nashik dated 19.09.2013 which, in turn, has arisen from an order dated 30.12.2008 passed by the Assessing Officer u/s 143(3) r.w.s. 147 of the Income-tax Act, 1961 (in short the Act ) pertaining to the assessment year 2004-05. 2. In this appeal, although the Revenue has raised multiple Grounds of Appeal but essentially the grievance is directed against the decision of the CIT(A) in holding that the transaction in respect of sale of lands at Survey No.21/1B and 23/1B, Deolali, District- Nashik is not assessable in the hands of the assessee but in the hands of M/s Viraj Estates Pvt. Ltd.. 3. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s per the Assessing Officer a development agreement dated 30.12.2013 was executed by assessee and two other persons with Shri Rajesh Patharkar with respect to the aforesaid property for a consideration of ₹ 38,00,000/-. The said agreement has formed the basis for the Assessing Officer to infer that assessee earned long term capital gain on sale of such property which has been computed at ₹ 26,02,681/-. In computing such capital gain, the Assessing Officer considered the consideration in terms of section 50C of the Act at ₹ 99,66,000/- and after reducing the indexed cost of acquisition, total capital gain was worked out at ₹ 79,13,291/- and assessee s share came to ₹ 26,02,681/-. 4. The assessee has resisted the assessability of such gain in his hands on the plea that the transaction did not belong to him, but to one M/s Viraj Estate Pvt. Ltd. (i.e. VEPL), a concern who has duly reflected the entire transactions in its books of account and returns of income. In order to support his plea that the income arising from the said transaction is not assessable in his hands, assessee referred to a chronology of events starting from the acquisition of land in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th assessee and two other co-owners. It was, thus, the case of the Assessing Officer that by way of sale-deeds dated 06.09.2000 and 16.12.000, assessee and two other co-owners had acquired the property and the subsequent Development Agreement dated 30.12.2003 executed by assessee and two others with Shri Rajesh Patharkar for a consideration of ₹ 38,00,000/- gave rise to capital gains in the hands of the assessee and two other persons. 7. The CIT(A) has accepted the plea of the assessee that the transaction in question does not belong to the assessee inasmuch as the land in question has been purchased and sold for and on behalf of VEPL, having regard to the facts and circumstances of the case. Against such a decision of the CIT(A), Revenue is in appeal before us. 8. Before us, the learned Departmental Representative has primarily relied upon the order of the Assessing Officer in support of the case of the Revenue whose reasoning, we have already adverted to in earlier paras 5 6 above, and the same are not being repeated for the sake of brevity. 9. On the other hand, the learned Representative for the respondent-assessee pointed out that the CIT(A) came to a factual ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epted these facts in his remand report that the purchase consideration had been paid by M/s. Viraj Estate Pvt. Ltd. 4.1 On further perusal of the sale deeds, it is noticed that the M/s. Viraj Estate Pvt. Ltd. was a confirming party and two clauses of the Agreement as mentioned at para 4 thereof clearly established that the appellant and two other co-owners were the nominees of M/s. Viraj Estate Pvt. Ltd. Both the clauses of Sale Agreement are reproduced as under:- The vendors have entered into agreement of sale in favour of the confirming party with rights given for development and sale of the property with a right to nominate a person for the completion of the conveyance or sale deed. The confirming party has nominated the purchaser and for the sake of this the confirming party has joined in this deed. AND WHEREAS in pursuance of the agreement in favour of the confirming party, and the request of the confirming party and as nominated by the confirming party and vendors also agreed to execute the Sale Deed in favour of the purchaser as requested and nominated by the confirming party. Further in the Balance Sheet of M/s. Viraj Estate Pvt. Ltd., the lands in question are sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aforesaid discussion, it is evident that the CIT(A) noticed that the land in question was indeed acquired by VEPL vide two agreements to sale dated 05.01.1993; and, on 21.08.2000 VEPL entered into a Development Agreement with S/Shri Sampurnanad Keshav Gavande and Shri Bharat V. Shah and assessee before us i.e. Shri Manohar Shridhar Patil for development of land. Accordingly, the sale-deeds dated 16.09.2000 and 16.12.2000 were entered into between original land owners and the aforesaid three co-owners. As per the CIT(A), the said sale-deeds showed that payments for acquisition of land were made by VEPL through their bank accounts. It is also noticed by the CIT(A) that payments have been recorded in the books of account of M/s VEPL. The Assessing Officer is stated to have accepted the position in his remand report that the purchase consideration has been paid by VEPL. Before us, there is no material lead by the Revenue to negate the aforesaid findings of the CIT(A). In the course of hearing before us, the learned counsel has furnished a Paper Book which, inter-alia, contains the material relied upon by the CIT(A) in coming to his conclusion. It is quite clear that the finding of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with regard to the present controversy before us. In ITA No.1022/PN/209 (supra), the Tribunal dealt with an appeal of the Revenue whereby similar addition on account of long term capital gain based on the Development Agreement dated 30.12.2003 was deleted by the CIT(A) in the hands of another co-owner. The Tribunal noted that the CIT(A) had allowed relief on the ground that the property in question did not qualify to be a capital asset and thus the transaction thereof did not give rise to capital gains and therefore, the question of invoking section 50C of the Act did not arise. However, the Tribunal noted that while allowing relief in the hands of the coowner, the CIT(A) did not determine the preliminary issue raised before him which was to the effect that the gain arising in terms of the Development Agreement dated 30.12.2003 was not at all assessable in the hands of the assessee as the transaction did not belong to him, rather it belonged to VEPL. The said pertinent issue was not adjudicated by the CIT(A) and the Tribunal concluded that the CIT(A) ought to have adjudicated the preliminary ground and only thereafter considered the alternative plea of non-applicability of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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