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TMI Blog2015 (1) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... ) - Held that:- The stand of CIT cannot be supported. First of all, the agreement with VAPL is a GPA agreement without handing over possession. This stand gets support by the stamp duty paid and accepted by Registration authority. The agreement was registered as GPA agreement and not as a sale agreement. Thus on facts the agreement cannot be considered as sale agreement so as to bring entire capital gain tax in the impugned year. Moreover, there was a statement from Manager of VAPL recorded by A.O. during survey which indicate that there were lot of unsold plots and detailed statement was recorded about sale of various plots and how the monies are accounted. This indicates that the said VAPL is only acting as an agent in sale of property and it did not acquire the property. Therefore, stand of CIT that the land/property in question was sale cannot be accepted. Lastly, the CIT himself accepted that gains on sale of Medchal land has to be assessed under the head “Long term capital gains”. The gain is taxable at the rate of 20% only. Whether it is taxed in A.Y. 2007-08 or in later years, the tax rate is at 20% only. Thus, there is no prejudice caused to Revenue. Therefore, the twin co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yds) (iv) Other customers (834 sq. yds) ₹ 5,35,00,000 39496 Mortgaged to HUDA 2.1. Survey operation under section 133A were conducted in the business premises of M/s. Victory Transformers and Switchgears Ltd., and group on 28.02.2008. During that it was found that assessees herein had derived gains by sale of lands which they admitted to tax later. Accordingly, assessees herein have filed return of income, admitting long term capital gains. A.O. has examined the claim and assessed the same by stating the same as under : 2. Long Term Capital Gains derived from the sale of lands at Medchal : The assessee along with (i) Shri Mahindra Vaddineni, (ii) Smt.Devasena Vaddineni and (iii) M/s.Victory Alloy Steels Limited own lands admeasuring Ac. 85 - 28 Gts. located on the Medchal- Shamirpet road. The details of the ownership of the lands are as under : SI. No. Name of the Person Extent of Ownership l. Shri Venkatappaiah Naidu Vaddineni, 13.21% Prop: Victory Enterprises. 2. Shri Mahindra Vaddieni 37.73% ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ements cannot be considered for allowance u/s.48(ii) and the long term capital gains chargeable to tax are recomputed as under:- F.Yr. during which sold Extent of land sold Sale consideration Cost of acquisition Long term capital gain (without indexation) Assessee s share of capital gains. 2004-05 900 2,70,000 67,500 2,02,500 1,06,900 2005-06 12184 35,93,000 9,13,800 26,79,200 14,14,350 2006-07 3585 19,12,500 2,68,800 16,43,700 8,67,709 2007-08 0 0 0 0 0 Unsold Land 1331 0 0 0 0 Total 57,75,500 12,50,100 45,25,400 23,88,959 3. Ld. CIT, having noticed the assessment orders and documents, has issued notices under section 263 asking assessee why the capital gain should not be taxed as business income and why the gain on agreement with M/s Victory Avenues Ltd., (VAPL) should not be taxed entirely in the year under consideration as against the income offered to the extent of sales made by VAPL. Even though ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the alternate would receive part or whole consideration in the form of developed plots of land. However, the assessee as stated earlier, has on the date of agreement decided the consideration to be received which is ₹ 1800 per sq. yd end hence the assessee has transferred his capital asset being his share in 60742 sq. yds of [end to VAPL. The assessee and his group has however offered surplus from sale of only 19574 sq. yds of land instead of the entire sales consideration for 60742 sq. yds of lend, The' Assessing Officer has accepted this computation of capital gains and hence his order is held to be erroneous in as much as it is prejudicial to the interests. of revenue. The assessment order dt.29.11.201O is hence set-aside with a direction to the Assessing Officer to compute the capital gains arising from sale of 60743 sq. yds of land to VAPL by holding that the capital gains on the entire parcel of land has arisen in AY 2007-08 and hence the entire sales consideration of ₹ 10,93,55,600 should be brought to tax in AY 2007-08. In the case of the assessee, his proportionate share out of total sales consideration of ₹ 10,93,55,600 should be adopted against w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... earned Commissioner of Income-Tax is erroneous both on facts and in law. 2. The learned Commissioner of Income-Tax erred in holding that there is any error in the order of assessment passed u/s 143(3) r.w.s. 147 of the I.T. Act by the Deputy Commissioner of Income- Tax, Circ1e-3(3), Hyderabad. The learned Commissioner of Income-Tax ought to have seen that there is neither an error nor any prejudice caused to the department so as to enable him to invoke the provisions of Sec.263 of the I.T. Act. 3. The learned Commissioner of Income-Tax erred in holding that there was under assessment of the sale consideration received during the year under consideration and further erred in directing the Assessing Officer to determine the sale consideration at ₹ 10,93,55,600/-. 4. The learned Commissioner of Income-Tax erred in holding that the gain on sale of land at Dommara Pochampally Village, Quthbullapur Mandal, Ranga Reddy Dist., is assessable under the head Business or Profession . 5. The learned Commissioner of Income-Tax ought to have seen that the Commissioner of Income-Tax (Appeals) after duly considering the facts on record arrived at the conclusion that the said gain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of CIT on merits is not correct. Coming to the issue of gains on Dommara Pochampally lands in the case of Mahindra, it was submitted that the stand of CIT is contradictory. It was submitted that the Ld. CIT accepted the gain under the head Capital Gains and such Medchal lands as capital assets but took a different stand on these lands that too only in this year, whereas, as can be seen from the order of A.O. the gains arose in earlier years also and no gain in later year. Lastly, it was submitted that the gains having been offered at 20% in later year, CIT has not justified how the order of A.O. is prejudicial to the interest of Revenue, a condition to be satisfied along with erroneous in nature. 6. Ld. D.R. supported the order of Ld. CIT on this issue. 7. We have considered the rival contentions and perused the documents on record. As seen from the order of A.O. and statements recorded during the survey, the aspect of gains on sale of lands was thoroughly examined by A.O. Therefore, the prima facie objection that it is change of opinion by the Ld. CIT on the given set of facts has to be accepted as a valid one. A.O. not only accepted the capital gain but also denied cost ..... X X X X Extracts X X X X X X X X Extracts X X X X
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