9911796707
TMI Blog2022 (5) TMI 1083X X X X Extracts X X X X X X X X Extracts X X X X ..... ore as deposit. No other consideration paid. It transpires from the JDA that there is no actual transfer of land and assessee has not received any consideration also. It is also observed from the copies of the returns of Income filed by the assessee in the paper book, that the assessee has shown Long Term Capital Gain from sale of the impugned land in subsequent years as and when the assessee has received consideration. Assessee has also paid Tax on the said Long term capital gain. Therefore, in the facts and circumstances of this case it is held that there is no capital gain chargeable in AY 2012-13 on the impugned Joint Development agreement. Thus ground number 1 is allowed. Whether the appellant has converted the land into stock-in-trade as claimed? - It is an admitted fact that assessee could not demonstrate conversion of land into stock-in-trade by showing entries in the books of accounts. As per accounting, whenever land is converted into stock-in-trade, it shall appear as closing stock at the end of the year in which it was converted into stock-in-trade. In the case of the assessee it should have appeared as closing stock for the A.Y. 2012-13 and 2013-14. However, we have ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as envisaged u/s 2(47) of the Income Tax Act, in the previous year relevant to Assessment Year 2012-13 under consideration and no Capital Gains have arisen in Assessment Year 2012-13 in respect of the Joint Venture Agreement dated 28-09-2011. 2. The Ld. Commissioner of Income Tax (Appeals) has failed to appreciate that nopossession of the land was given, and no sale consideration was received and no final sale deed was executed in the previous year relevant to Assessment Year 2012-13 under consideration. 3. As the assessee has duly declared the Capital Gains, arising in respect of land given for development under the Joint Venture Agreement, in Assessment Years 2013-14 to 2017-18, subjecting the Capital Gains to tax in Assessment Year 2012-13 also, amounts to double taxation. Accordingly without prejudice, if the contention raised by the assessee that Capital Gains on transfer of land has not arisen and is accordingly not taxable in Assessment Year 2012-13, is not accepted by the Hon'ble Income Tax Appellate Tribunal it may issue directions to the Assessing Officer to exclude the Capital Gains from the income assessed for Assessment Years 2013-14 to 2017-18 in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale consideration assessee's share is 1/3rd which works out to Rs.1,40,46,000/-. Since it was ancestral land, for calculating long term capital gain, the assessee had considered cost of acquisition for the said land as fair market value of the land was on 01.04.1981. Appellant-assessee worked out long term capital gain of Rs.1,03,81,628/- and claimed the deduction of Rs.1,03,81,628/- u/s 54F of the I.T. Act.During the assessment proceedings, appellant-assessee submitted that he will be getting 6 flats and accordingly claimed 54F for all the 6 flats. Assessing Officer, in the assessment order, restricted the assessee's claim of deduction u/s 54F for only one flat, as all the 6 flats were separate independent residential units having separate entrances, kitchens and separate electrical supply. 4. Aggrieved by the assessment order, the appellant filed appeal before the Commissioner of Income Tax (Appeals)-10, Pune. For the first time, before the ld. CIT(A), appellant raised the ground of applicability of section 45(2) of the I.T. Act vide ground no.4 to 10. The ld. CIT(A) allowed appellant's claim for deduction u/s 54F for 6 flats as claimed by the appellant in the return of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital gain head and second under the business profit head. For the purpose of claiming this benefit, the appellant was required to make such claim in the return income itself or even by filing revised return of income. However, such claim is made after a gap of three years which is nothing but an apparent case of afterthought, which is fabricated to avoid the tax liability in the year under consideration. The appellant had the knowledge of violation of section 54F with regard to taxation of capital gain on remaining 19 flats hence the impugned method was adopted to defraud the revenue. Further, without prejudice to the above, it is also not ascertainable as to whether even in the year of sale i.e. in subsequent years, capital gain tax as well as tax on business profit have been paid or not in terms of section 45(2) of I.T. Act. In fact, on this issue, the appellant has failed to bring on record any cogent material to justify his claim. Hence, the contention deserves to be rejected. Accordingly, grounds no.4 to 10 are dismissed." 5. Aggrieved by the order of the Ld.CIT(A), the appellant assessee filed appeal before this Tribunal. 6. The Ld.AR filed a written submission which i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carry on the development work. (b) As per the Joint Venture Agreement, the co-owners were to receive 53,200 sq. ft. of the constructed area in the shape of flats, as sale consideration for the transfer of land. Subsequently, the constructed area to be received by the co-owners was increased to 57,690 Sq. Ft. The assessee was entitled to receive 19,230 sq. ft. of the constructed area as his 1/3rd share. The sale consideration in the shape of the constructed area was received in Assessment Years 2013-14 to 2017-18. (b) As per clause (k) on page 9 and clause (w) on page 12 of the Joint Venture Agreement, the co-owners were required to finally transfer the property to the prospective buyers of flats/shops or the society formed by them, which has not happened in Assessment Year 2012-13. 4.3 However the assessee has mistakenly declared the Capital Gains of Rs.1,03,81,628/- (before deduction u/s 54F of the Act) in Assessment Year 2012-13. 5. The assessee has received Rs.19,213 sq. ft. constructed area in the shape of 19 flats [wrongly mentioned as 25 flats by the CIT(A)]in Assessment Years 2013-14 to 2017-18. The assessee has considered that the land in the shape of stock-in- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 8.3 The Ld. Commissioner of Income Tax (Appeals) has rejected these pleas of the assessee and the relevant ground Nos 3 to 10 have been dismissed. 9. The assessee has challenged the impugned order of the Commissioner of Income Tax (Appeals) before the Hon'ble Income Tax Appellate Tribunal, in this regard, by way of very elaborate, descriptive and complex grounds of appeal. 11.1 It is respectfully submitted that there is no estoppel against the law. A rightful claim can be made by the assessee for the first time even before the appellate authorities including the CIT(A). In view of the judgment of the Hon'ble Bombay High Court in the case of Pruthvi Brokers & Shareholders (2012) 349 ITR 336: 23 taxmann.com 23: 208 Taxman 498: 252 CTR 151 (Bombay). The assessee is allowed to make a claim before the appellate authority even if the said claim was not made by filling a revised return before the Assessing Officer. The appellate authorities are entitled to consider the claim and adjudicate the same. In this case the additional claim u/s 43B of the Act, which was not made before the Assessing Officer was made before the CIT(A), which was allowed. The Hon'ble Tribunal also upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Page 20 of the Paper Book. The returns of income for A. Ys. 2016-17 and 2017-18 were filed subsequently to the proceedings before the CIT(A). The copies of these returns are placed from Page No. 21 to 30 of the Paper Book. 11.3 Although the value of the land converted into / treated as stock in trade exceeded Rupees One Crore, the assessee had not filed the Tax Audit Report u/s 44AB of the Income Tax Act as he was not properly advised in this regard. It is further respectfully submitted that the provisions of section 44AB are applicable only if the assessee was carrying on business and his total sales / turnover or gross receipts as the case may be in business, exceeded Rupees One Crore. In the case of the assessee however, no stock was sold in A. Y. 2012-13. Thus, there was no sales, turnover or gross receipts. Therefore, the assessee was exempted from obtaining and filling the Tax Audit Report. In its judgment in the case of B. K. Jhala & Associates (1999) 69 ITD 141: 64 TTJ 514 (Pune), (copy enclosed), the Hon'ble Pune Bench of the Income Tax Appellate Tribunal has held that the stock in trade / work in progress does not constitute "turnover" as used in Section 44AB of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if any remains available will arise only after completion of the project as per the aforementioned regulations. Moreover, the clause concerning the consent given by the assessee to the builders for sale of the F.S.I / T.D.R. is a standard clause in all the Joint Development Agreements. This cannot be taken to mean that the sale or otherwise transfer of the land has taken place in A. Y. 2012-13. 11.5 Even if it is considered that the land was not converted / treated as stock in trade and therefore subsection (2) of Section 45 is not to be applied in this case and section 45(1) r.w.s. 2(47)(iv) is to be applied, it is respectfully submitted that even then the capital gains have not arisen in A. Y. 2012-13, as held by the Hon'ble Income Tax Appellate Tribunal, Pune in the case of Smt. Rajeshwari Surshprasad Tiwari ITA No. 330/PUN/2017, (Annexure T of the compilation of Judgments). In this case the question before the Hon'ble Tribunal was whether the income from Capital Gains in respect of development agreement dated 01-10- 2011, is to be assessed in the A. Y. 2012-13. The assessee was entitled to receive certain constructed portion after development of the project. The assessee has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wner. The Hon'ble Income Tax Appellate Tribunal, Pune has taken similar view in the case of Shri Deepak Shivram Pathare ITA No. 779/PUN/2014, (Annexure R of the compilation of the Judgments) and Dr. Arvind S. Phadke (2014) 46 taxmann.com 335 (Pune - Trib.) (Annexure I of the compilation of the Judgments), which have been approved by the Hon'ble Bombay High Court in the case of Dr. Arvind S. Phake (2018)89 taxmann.com 307 (Bombay)(Annexure H of the compilation of the Judgments). In its judgment in the case of Sadik Sheikh (2019) 106 taxmann.com 334 (SC) (Annexure V of the compilation of the Judgments), the Hon'ble Supreme Court has held the provisions of section 2(47) would not apply to transfer of flats by merely entering into an agreement to sell the flats, which were yet to be constructed and possession was yet to be given. 12. PRAYER FOR AVOIDING DOUBLE TAXATION As the assessee has duly declared the Capital Gains, arising in respect of land given for development under the Joint Venture Agreement, in Assessment Years 2013-14 to 2017-18, subjecting the Capital Gains to tax in Assessment Year 2012-13 also, amounts to double taxation. Accordingly without prejudice, if th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see. The ld.DR submitted that the profit and loss account does not contain any closing stock for A.Y. 2012-13, A.Y. 2013-14, if assessee has converted land as stock-in-trade, then it should have appeared as closing stock. But there is no closing stock. The ld.DR further submitted that since value of the land is more than Rs.1 crore, which should have appeared as closing stock and assessee should have submitted Audit Report. However, new Audit Report has been submitted by the assessee. He further submitted that the return of income for A.Y. 2012-13, 2013-14, 2014-15, 2015-16 are all belated returns. The ld.DR submitted that since land does not appear as stock-in-trade, it proves that assessee has not converted the land into stock-in-trade. Therefore, this claim of assessee is incorrect. FINDINGS: 8. We have considered submission of both the parties and perused the material available on record. 8.1 As per the concise grounds filed by the appellant assessee, there are two main questions to be decided. i) Whether capital gain arisen in A.Y.2012-13 with reference to Joint-Venture agreement dated 28.09.2011. ii) Whether the land was converted into stock-in-trade and accordingly Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee in the paper book, that the assessee has shown Long Term Capital Gain from sale of the impugned land in subsequent years as and when the assessee has received consideration. Assessee has also paid Tax on the said Long term capital gain. Therefore, in the facts and circumstances of this case it is held that there is no capital gain chargeable in AY 2012-13 on the impugned Joint Development agreement. Thus ground number 1 is allowed. 8.3 Another issue for consideration is whether the appellant has converted the land into stock-in-trade as claimed. It is a fact that this issue was not raised before the AO. Therefore, the AO had no opportunity to verify the assessee's said claim. This Bench made a specific query to the Authorized Representative(AR) of the assessee to demonstrate assessee's claim of conversion of land into stockin- trade by showing the entries in the relevant books of accounts. The AR admitted that no books of accounts have been maintained as the assessee is not aware of accounting. The AR was requested by the Bench to show closing stock in A.Y.2012-13 & 2013-14 in the profit and loss account submitted by the assessee in the paper book. The AR admitted that no closi ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
