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TMI Blog2015 (9) TMI 267X X X X Extracts X X X X X X X X Extracts X X X X ..... in accrue or arise or not in the present AY or not - Transfer u/s 2(47) - Held that:- In the present case, the assessee has not offered the capital gain in any year i.e. A.Y. 2000 – 01 being the year of initial agreement or in A.Y. 2002 – 03 being the year in which possession was given as per the assessee and transfer has taken place as per the judgment of Hon’ble High Court [2014 (12) TMI 686 - ALLAHABAD HIGH COURT ] or in A.Y. 2003 – 04 i.e. the present year when supplementary agreement was executed or in A.Y. 2006 – 07 when completion agreement was executed. This is also very important that even as per the judgment of Hon’ble High Court, this does not come out that there is any clear cut evidence about handing over of possession in F.Y. 2001 – 02 relevant to A.Y. 2002 – 03 but the claim of the assessee was accepted by Hon’ble High Court on the basis of surrounding circumstances. In view of these facts, we feel it proper to give consequential direction to the A.O. to tax this capital Gain in A.Y. 2002 – 03 being the year in which the transfer has taken place as per the judgment of High Court. Accordingly Assessing Officer is directed to compute the capital gain in assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer being still of the view that event of transfer had taken place in the assessment year 2006-07 (as stood mentioned in the reasons recorded also), in pursuance of which even an appeal under section 260A has been filed before the Hon'ble High Court, initiation of proceedings under section 147 for the assessment year 2003-04 was not valid and the same could not have been upheld by the CIT(A) . 4. BECAUSE event of transfer as envisaged in section 2(47) of the capital asset as belonging to the appellant did not take place in the year under appeal and accordingly no income chargeable to tax had escaped assessment so as to confer upon the Assessing Officer, jurisdiction to initiate proceedings under section 147. 5. BECAUSE initiation of proceedings under section 147 is, inter alia, based on change of opinion which is not permissible in law. 3. It was submitted by Learned A.R. of the assessee that the reasons recorded by the Assessing Officer for reopening are available on page No. 104 of the paper book. He also submitted that the assessment order for assessment year 2006-07 is also available on pages 80 to 94 of the paper book and this assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 30.4.2005, when the respective shares were also handed over and taken over by M/s. Shilpi Builders and the assessee. Further, the chargeability of capital gain tax requires three basic ingredients. Ownership of capital asset. Here the assessee is in ownership of plot No. 14/138 14/143, Chunniganj, Kanpur. Transfer of capital asset. The assessee so sold/transferred part of his land to M/s. Shilpi Builders as per its completion agreement dated 30.04.2005 as discussed above. Receipt of consideration. The assessee also received consideration in the form of constructed area on 30.04.2005 as per the completion agreement discussed above. The condition of chargeability of capital gain tax were satisfied as on 30.04.2005 only i.e. in the F.Y. 2005-06 relevant to A.Y. 2006-07. Accordingly, the capital gain was assessed in the A.Y. 2006-07 only. The assessee argued that he had transferred land on 24.06.1999, which is not tenable in any way because on 24.06.1999, the assessee has simply given a license to the developer i.e. M/s. Shilpi Builders for development of a residential cum commercial complex on its land within a period of three years from the date of possession or f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the actual, physical and vacant possession of the Premises No. 14/143 Chunniganj, Kanpur to the second party on 01.05.2002 except one shop to the second party who hereby acknowledge and confirm that the possession of the premises has been delivered to him and he shall be entitled to act in accordance of the Principal Agreement as well as this Supplementary Agreement. The first party also confirm that he shall take action to get the shops vacated from the occupiers at his own risk and cost. 5.2 Hence, it is seen that the reopening of the present year is on the basis of material available on record in the form of supplementary agreement dated 29/04/2002 and it is also very important to notice that the assessee has not taken any stand as to in which year the transfer has taken place. In fact the assessee has not offered capital gain in any of the assessment year i.e. 2000- 2001 or present year or assessment year 2006-07. Hence, even if the Assessing Officer has made substantive addition in assessment year 2006-07, protective addition in present year can be made to protect the interest of the Revenue because the same is on the basis of cogent material on record in the form of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the notices under section 148 dated 30.3.2009 31.3.2009. 7. BECAUSE notice under section 143(2) dated 06.07.2009 as has been referred to by the authorities below, was with reference to the return filed by the appellant under section 139 (as mentioned in the said notice itself, and there being no notice as such with reference to the return filed on 13.04.2009 (in compliance with the notices dated 30.03.2009 and 31.03.2009 under section 148) the assessment order dated 30.12.2009 was liable to be declared as void ab-initio. 8. BECAUSE the CIT(A) has erred in holding that there was merely a typographical error in noting down the date of return in the notice under section 143(2), as has been referred to in the assessment order and such a typographical error being of curable nature under section 292B, there was no infirmity in issuance and service of notice under section 143(2). 9. BECAUSE on a correct interpretation of law relating to issuance and service of notice under section 143(2), vis-a-vis section 292B of the Act, the position that emerges is that there was no-notice issued by the Assessing Officer in relation to the return filed by the appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his case, it was held by Hon'ble Apex Court that in case, where it appears to the income tax authorities that certain income has been received during the relevant year but it is not clear who has received that income and, prima facie, it appears that the income may have been received either by A or by B or by both together, it would be open to the income-tax authorities to determine the question who is responsible to pay tax by taking assessment proceedings both against A and B. In fact, this supports the case of the Revenue because a corollary can be drawn that when it is not clear that the income as a result of transfer of capital asset has accrued in which year, the Department can undertake the assessment proceedings in both the years. Hence, this judgment is of no help to the assessee. As per the above discussion, we reject these grounds also. 11. The remaining grounds being ground No. 10 to 14 on the merit of the issue are as under: 10. BECAUSE the issue of transfer of Capital Assets stood compressively decided by the Hon'ble ITAT from all angles, in terms of its order dated 5.3.2010 as passed in the appellant's own case in ITA No.499/LUC/09 relevant t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s handed over by the assessee. By making these observations, it was held by Hon'ble High Court that capital gain tax is not chargeable in assessment year 2006-07. He further submitted that since Hon'ble High Court has decided that the possession was handed over in assessment year 2001-02 and capital tax is chargeable in the year of handing over possession, no capital gain tax is chargeable in the present year. 13. As against this, Learned D.R. of the Revenue submitted that when it is held that no capital gain tax is chargeable in the present year, suitable direction should be given to Assessing Officer to charge tax in assessment year 2002-03 being the year in which possession was handed over as per this judgment of Hon'ble Allahabad High Court. 14. We have considered the rival submissions. First of all, we reproduce the relevant portion of the judgment of Hon'ble Allahabad High Court as under: We have heard both the parties at length and perused the material available on record. From the record, it appears that there was a succession on death of assessee's father Late Khaliiuddin Ahmad thereafter by partition with his brother became the owner of follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's plea is that the possession of the land was handed over latest by 23.11.2001 is liable to be accepted. From the record, it also appears that the land was transferred in all manner except title to the builder by the assessee. The word transfer has been defined in Section 2(47) of the Income Tax Act. The clause (v) and (vi) were introduced in Section 2(47) of the Income Tax Act, 1961, with effect from April 1, 1988. They provided that transfer includes (i) any transaction which allows possession to be taken/retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882. The Tribunal in its impugned order has observed that as per terms and conditions of the agreement date 24.06.1999 the transfer was effective from that very day and not in the year of 2005 as wrongly observed by the A.O. We are of the view that the capital gain is applicable in the year when the possession was handed over by the assessee. In the present case, the assessee's all other rights, except title, stood transferred and therefore, the capital gain was to be computed on the basis of transfer and in the year of the transfer. It is ev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present year on the basis of supplementary agreement dated 29/04/2002 or in the assessment year 2006-07 on the basis of completion agreement dated 30/04/2005. Now we find that this aspect of the matter has attained finality as per the judgment of Hon'ble High Court as per which it is held that the possession is accepted to have been handed over by the assessee to the builder on 23/11/2001 relevant to assessment year 2002-03. By respectfully following this judgment of Hon'ble High Court, we hold that capital gain tax is not chargeable in the present year because as per this judgment, the transfer had not taken place in financial year 2002-03 but it has actually taken place in F.Y. 2001-02 relevant to A.Y. 2002 03 and therefore, capital gain tax is chargeable in A.Y. 2002-03. We direct the Assessing Officer accordingly that he should bring this income to tax in assessment year 2002-03 when the transfer has taken place as per the judgment of Hon'ble High Court. The issue regarding the year of transfer has now attained finality, as per this judgment of Hon'ble Allahabad High Court, as per which it is held that the transfer has taken place in financial year 2001-2002 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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