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TMI Blog2015 (3) TMI 935X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to be adopted - A.O. while considering the sale consideration has taken two amounts for consideration, one amount is ‘sale consideration received under the guise of refundable deposit’ and other ‘value of constructed area of flats received in lieu of asset given for development’ in each case. - Held that:- A.O. cannot take both the amounts into consideration as it will be a double addition. To that extent, A.O. action cannot be upheld. It is also assessee’s contention that value of constructed area adopted by the A.O. is on the basis of the sale price of certain apartments and assessee’s were not given any opportunity to place their submissions. Since most of the orders are exparte, the assessee’s contentions that cost of construction of the builder should be adopted has not been examined at all. Therefore, in the interest of justice, we set aside this issue to the file of A.O. with a direction to adopt value of constructed area of flats in view land parted with, after giving due opportunity to the assessee. Assessees contention should be considered in its correct perspective and should not be brushed aside without any valid reason. With this direction, the issue of adopting v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ever, they have not filed returns of income as promised. Since the A.O. issued notice under section 148 calling for return and issued a show cause notice on 30.03.2011 and further also summons under section 131 but, there is no compliance by the assessees in filing the returns of income. We are of the opinion that A.O. is well within his rights to complete assessment exparte. Assessee was informed that capital gain will be levied and asked to explain under the provisions of Sec.131 itself. Eventhough a separateshow cause was not issued giving final opportunity this may at best be a procedural lapse. Since we are setting aside the assessments to the A.O. for redoing it, on the issue of computation of capital gains on merits, we are of the opinion that there is no merit in these contentions, as assessee themselves have not filed returns of income in spite of so many notices issued to the assessee. Accordingly, this issue is rejected. - I.T.A. No. 666/HYD/14, I.T.A. No. 667/HYD/14, I.T.A. No. 668/HYD/14, I.T.A. No. 669/HYD/14 , I.T.A. No. 718/HYD/14, I.T.A. No.719/HYB/14 , I.T.A. No. 720/HYB/14 - - - Dated:- 20-3-2015 - Shri B. Ramakotaiah And Shri Saktijit Dey JJ. For the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11th portion of the security deposit received to an extent of ₹ 11,00,165/- each and also considered the value of constructed area of flats to be received in lieu of area given for development and arrived at the value, based on the SRO, Valuation multiplied by the area totally received by the group (41,226 sq. Ft., X 1700). Sale consideration in each hand was arrived at ₹ 63,71,290/-. The cost of acquisition was arrived at ₹ 60/- per sq. Yd, on the basis of values obtained from SRO, Secunderabad and since assessees have not informed any other details, took the indexed cost at ₹ 1,18,835/-, thereby, arriving at the capital gains as mentioned above. 5. Before the Ld.CIT(A), it was contended that assessees have entered into agreements and cancelled in earlier period also and therefore till the final handing over of the developed area, there is no capital gains arising to the assessees. In addition to the year of taxability of capital gains, assessees also brought to the notice of CIT(A) the various litigations, the permission granted by municipality subsequently in year 2006 and actual handing over in 2011. While contending that capital gains does not arise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of capital asset being used for the residential purposes by assessee, therefore, provisions of Section 54F are not applicable. Ld CIT(A) held that the facts of the cases relied upon are distinguishable, without specifying the distinguishing factors. In the result, assessee s appeals were dismissed by the Ld.CIT(A). 7. In all the appeals, the common issue contested by assessees is with reference to: a. Year of taxability; b. Sale consideration to be adopted; c. Cost of acquisition to be considered; d. Claim of deduction u/s.54 or 54F 8. In addition to the above four common issues, the three assessees who have not filed returns before the Assessing Officer also raised issue of jurisdiction in passing the order u/s.144 ex-parte. These issues are considered as under. A: Year of Taxability: 9. With reference to the year of taxability of capital gains, there is no dispute with reference to the fact that assessees hereinabove entered into an agreement for development on 04-11-2003. It is also agreed upon by both the parties that construction shall be completed within 42 months from the date of agreement. Assessing Officer while completing the assessment has take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayments listed in annexure before the CIT(A). It was submitted that implementation of the development agreement started only after 22-11-2006 when municipal permission was granted. Till then, the developer could not commence any construction. The construction was completed after March, 2010. In the interregnum period, the developer s activity was only clearing the legal impediments. Therefore, assessees are under the impression that they are not liable to tax in the impugned assessment year. Further, it was submitted that assessees were semi-illiterate and having no other incomes, being working as small car mechanics etc., and they are not fully conversant with the legal proceedings. It was also further submitted that the developer had spent lot of amounts on behalf of assessees and therefore according to them, there was no capital gains arising in the transaction. It was submitted that relying on various case laws, the mere permission for development does not attract the provisions of Section 2(47) so as to impose the capital gains tax in the impugned year. 13. Ld. DR, however, supported the orders of the authorities. 14. We have considered the issue and perused the various ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculate at the cost of rate. The said cash compensation shall be paid at the time of delivery of constructed areas. (d) It is also hereby specifically agreed and declared that the flats constructed areas to be allotted to the owners shall be completed in all respected and the possession of the said flats or constructed areas shall be handed over to the owners. (e) Any deposits and expenses payable to APSEB Transformer, Services Lines, Sewerage Boards, Water Departments, Generator and Erection charges will be borne by the owners to the extent their share of the property. (f) It is further agreed that the owners shall pay all the amounts for any extra works such as lofts, shelves, racks and extra-electrical points to the extent of their allotted flats and other built up areas. 8. That the owners hereby undertake to demolish the existing building in the schedule property at their cost and place the developer in actual possession or the schedule mentioned property within a period of one month for the purposes of carrying on the works or constructions and for the purpose of fulfilling the obligations in terms of this agreement. The owners hereby agree not to interfere in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exigibility to tax on capital gains during the year 2003- 04. On appeal: Held, dismissing the appeal that the element of factual possession and agreement are contemplated as transfer within meaning of the section 2(47) of the Income Tax Act, 1961. When the transfer is complete, automatically, consideration mentioned in agreement for sale had to be taken into consideration for purpose of assessment of income for the assessment year when agreement was entered into and possession was given. In the case of the assessee, factually it was found that both the aspects took place in the previous year relevant to the assessment year 2003-04. Hence, the assessee was liable to pay tax on the capital gains for the assessment year 2003- 04. 17. Considering the judgment of the jurisdictional High Court and the facts of the case, we are of the opinion that the agreement entered into by assessees also satisfies the provisions of Section 53A of Transfer of Property Act, and therefore, the said transaction attracts the provisions of Section 2(47) ie. definition of transfer so as to attract capital gains during the impugned year. 18. In the case of Mr. R. Srinivasarao and others ITA.No.1786 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the orders are exparte, the assessee s contentions that cost of construction of the builder should be adopted has not been examined at all. Therefore, in the interest of justice, we set aside this issue to the file of A.O. with a direction to adopt value of constructed area of flats in view land parted with, after giving due opportunity to the assessee. Assessees contention should be considered in its correct perspective and should not be brushed aside without any valid reason. With this direction, the issue of adopting value of sale consideration is restored to the file of A.O.. Assessees grounds on that are accordingly allowed for statistical purposes. C. Cost of Acquisition : 21. This issue also require re-examination by the Assessing Officer. Assessing Officer adopted amount of ₹ 1,18,835 in each case as cost of acquisition. It was the contention of the assessee that there were buildings on the said land which were demolished and the cost of which was also to be adopted. Therefore, cost of land alone cannot be adopted. Cost of buildings at the time of entering into agreement should be considered. In addition, assessee also claims to have paid lot of amounts to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Sabir these three assessees have not filed returns of income. Additional contention in these appeals was that the A.O. has not given any notice under section 142(1) before completing the assessments to the best of his judgment with the proposed additions. The Ld. Counsel made elaborate arguments on the issue and relied on various case law including Hon ble Supreme Court Judgment in the case of Blue Moon Hotels 321 ITR 364. We are afraid that we cannot accept assessees contentions on the issue. First of all, in spite of receiving notices from the A.O. these three assessees have not filed any returns of income. Therefore, failure of filing return of income itself will call for best judgment assessment. Moreover, A.O. has issued notice on 30.03.2011 for which assessees were filed their letter dated 03.05.2011. Since no returns of income were filed by these assessees summons under section 131 dated 15.11.2011 were issued and served on the assessees. Assessees did appear on 22.11.2011 and while recording the statement they were asked why capital gain should not be assessed. Assessee have admitted that they will obtain the PAN and file returns of income. However, they have not filed re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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