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TMI Blog2024 (11) TMI 867X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO of the Delhi. The law is fairly settled that the forum in whose jurisdiction the situs is situated and where the necessary documents / information is available should be the appropriate forum for adjudication. Section 127 of the Act will only come into play when there is some transfer of jurisdiction from one authority / office to the other. In the present case, the assessee has not filed the return of income and has not assessed at the Delhi ITO / Assessing Officer and therefore, there is no question of transfer of jurisdiction of the Assessing Officer from ITO, Delhi to ITO, Hyderabad. In view of the above, we are of the considered opinion that the jurisdiction invoked by the Assessing Officer at Hyderabad is in accordance with law - this ground is decided against the assessee. Whether the transfer took place on account of JDA entered on 30.12.2015 or not? - Undoubtedly, as per the JDA, both parties agreed to raise the construction and share the built-up area - CIT(A) had captured the various clauses of the JDA which clearly shows the respective transfer of rights by one party to the other in respect of land share. Assessee before us, pursuant to the construction was also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is situated, we do not find any reason to interfere with the same as the assessee failed to point out the peculiarity of the location, status and construction of the property for fetching more price in comparison to the guidance value. In view of the above, this ground of the assessee is dismissed. Accordingly, the appeal of the assessee is dismissed. - Shri Laliet Kumar, Hon ble Judicial Member And Shri G. Manjunatha, Hon ble Accountant Member For the Assessee : Shri K.C. Devdas, C.A. And Ms. S. Divya, C.A. For the Revenue : Shri Srinath Sadanala, Sr.A.R. ORDER PER LALIET KUMAR, J.M. The appeal of the assessee for A.Y. 2016-17 arises from the order of Commissioner of Income Tax (Appeals) 10, dated 09.02.2024 under section 153C r.w.s.144C(3) of the Income Tax Act, 1961 (in short, the Act ). 2. The grounds raised by the assessee read as under : Under the facts and circumstances of the case, 1. The order of the Commissioner of Income Tax Appeals -10, Hyderabad (The Ld.CIT(A)') in confirming the taxation of long-term capital gains arising on the development agreement under section 153C r.w.s 144C(3) of the Income Tax Act 1961 (the Act') in the subject AY is unsustainable b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 2016-17, assessee had entered into a Development Agreement cum General Power of Attorney (GPA) with M/s. Giridhari Homes Pvt. Ltd. As per the said GPA, assessee was entitled to Rs. 36,440/- per s.f.t. and the market value of the proposed project was Rs. 10,22,88,000/-. Though the said transaction was taxable, assessee has not offered the same for taxation and hence, notice u/s 142(1) of the Act was issued. After verifying the claim and submissions of the assessee along with valuation report issued by the SRO and the material available on record, Assessing Officer did not accept the claim of the assessee and thus, calculated the capital gains of the assessee at Rs. 5,73,96,907/-. Thus, Assessing Officer completed the assessment u/s 153C r.w.s. 144C(3) of the Act dt.06.05.2022 and initiated penalty proceedings separately u/s 271(1)(C) of the Act. 3.1 Feeling aggrieved with the order of Assessing Officer, assessee filed an appeal before the ld.CIT(A), who granted part relief to the assessee. 4. Before us, ld.AR has made four arguments. Firstly, the assessee, being an NRI, was assessed to have no source of income in India and therefore, was taxable under the residu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 [Principal Commissioner or Commissioner] to whom such Assessing Officers are subordinate are in agreement, then the 1[Principal Director General or Director General] or 2 [Principal Chief Commissioner or Chief Commissioner] or 3 [Principal Commissioner or Commissioner] from whose jurisdiction the case is to be transferred may, after giving the assessee a reasonable opportunity of being heard in the matter, wherever it is possible to do so, and after recording his reasons for doing so, pass the order; (b) where the 1 [Principal Directors General or Directors General] or 2 [Principal Chief Commissioner or Chief Commissioner] or 3 [Principal Commissioner or Commissioner] aforesaid are not in agreement, the order transferring the case may, similarly, be passed by the Board or any such 1 [Principal Director General or Director General] or 2 [Principal Chief Commissioner or Chief Commissioner] or 3 [Principal Commissioner or Commissioner] as the Board may, by notification in the Official Gazette, authorise in this behalf. (3) Nothing in sub-section (1) or sub-section (2) shall be deemed to require any such opportunity to be given where the transfer is from any Assessing Officer or Ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e AO was not in conformity with the Fair Market Value of the property as per SRO s letter dt.01.04.2001. It was submitted that the amendment in the Act mandates the AO to consider the SRO value, came in subsequent years and hence, the same is not applicable in this case. 4.4. The ld.AR relied on the decision of the Hon'ble Karnataka High Court in the case of PCIT Vs. Sri Sai Lakshmi Industries (P) Ltd. Reported in (2023) 157 taxmann.com 172 (Karnataka) where the Hon'ble Karnataka High Court decided the issue in favor of the assessee. The relevant portion of the Hon'ble Karnataka High Court's decision read as under : 14. In clause No.13.1, it is clarified that the powers vested are only administrative in nature. Clause 13.2 shows that power of attorney shall permit the developer to enter into agreement to sell, construction agreements and sale deeds with the prospective third party purchaser. It is also clarified that the GPA shall become effective only upon approval of developmental plan and installment being paid. 15. A combined reading of Clause 3.1 and 13 shows that parties have specifically agreed that assessee shall continue to own entire JD property until conv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 wherein it was held that change of address of Records and migration of PAN are not strictly relevant where the jurisdiction is governed by the statutory provisions. (b) The Appellant commends the acceptance of the precedents on Section 127 order which is mandatory to be passed on transfer from New-Delhi to Hyderabad. Please see Dy.C.I.T vs. Sunil Kumar Sharma (Pages 98 to 123) of green plastic cover filed on 24.10.2024. 7. All the other judgments are on the same plane from serial no s 1 to 11 except S.No. 2. Please consider the challenge to jurisdiction of assessment u/s. 127 of the I.T Act, 1961 in view of the written submissions filed before C.I.T(A) at pages 1 to 25 of the Paper Book filed on 24.10.2024. 8. Ground Relating to assessment of Development Agreement :- Development Agreement was entered on 30.12.2015 but no possession was given by the Appellant. The Developer was only given permissive possession for entry and exit for the limited purpose of development. 8.1. Reliance is placed on the following Decisions:- S.No: Name of the Case Citation Court Page No s: 1. Pr.C.I.T vs. Sri Sai Lakshmi Industries (P) Ltd 458 ITR 373 Karnataka High Court Please See pages 1 to 4 of Pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee in deleting the addition made by the CIT(A). [Please see pages 5 to 8 of precedents Paper Book-III or pages 12 to 17 of P.B-II filed on 24.10.2024]. 8.4. Since the Appellant before your honours has already offered the capital tax in the assessment year 2019-2020 the question by assessing the capital gains for A.Y. 2016-2017 does not arise as no possession was given and the basis of D.A of 30.12.2015. Please also see the judgement of Bombay High Court in C.I.T vs. Aditya Builders reported in 378 ITR 75 at Para 9 of the judgement at page no. 74 of precedents paper book-III. 9. Adopting of F.M.V of land as on 01.04.2001. The learned Assessing Officer adopted the S.R.O value which is the guideline value and not market value at Rs. 5000/- per sq.yrd as against Rs. 8000 per Sq.Yrd as per the valuation of Registered valuer which has been ignored on the ground that no comparable cases was cited by the Registered valuer. The Appellant adopted the value at Rs. 7000 per sq.yrd as a via media. At any rate the Assessing Officer ought to have adopted the value of land as on 01.04.2001 at Rs. 8000 per sq.yrd as adopted by the Regd. Valuer whose report has been ignored without any reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the assessee and the developer are mentioned. The relevant clause reads as under : AND WHEREAS the DEVELOPER / SECOND PARTY herein are the Builders and having come to know the intention of the OWNER / PRINCIPLE / FIRST PARTY have approached the OWNER / PRINCIPLE / FIRST PARTY and offered to render their services in getting necessary permissions from the competent authorities and to develop the schedule of property into residential apartments / multi storied building as per the scheme by investing and to share the developed area into 53:47 ratio, as the DEVELOPER / SECOND PARTY would retain 53% of the developed area and the remaining 47% developed area will be allotted to the plot OWNER / PRINCIPLE / FIRST PARTY. Both parties deem it expedient to reduce the terms and conditions governing the development of the schedule property into writing hence, this Development Agreement cum General Power of Attorney. 6.4. The ld.DR further submitted that the sum and substance of the clauses reproduced by the ld.CIT(A) in the development agreement clearly show that there was a transfer of possession by the assessee to the developer. It was further submitted that it is not possible for the devel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as never registered, since the JDA has no efficacy in the eye of law, obviously no transfer can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or were not ready and willing to carry out their part of the bargain. Since we are of the view that sub-clause (v) of Section 2(47) of the Act is not attracted on the facts of this case, we need not go into any other factual question. 21. However, the High Court has held that Section 2(47)(vi) will not apply for the reason that there was no change in membership of the society, as contemplated. We are afraid that we cannot agree with the High Court on this score. Under Section 2(47)(vi), any transaction which has the effect of transferring or enabling the enjoyment of any immovable property would come within its purview. The High Court has not adverted to the expression or in any other manner whatsoever in sub-clause (vi), which would show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... body. There must be as is otherwise expressed debitum in presenti, solvendum in futuro; See W.S. Try Ltd. v. Johnson (Inspector of Taxes) [(1946) 1 AER 532 at p. 539], and Webb v. Stenton, Garnishees [11 QBD 518 at p. 522 and 527]. Unless and until there is created in favour of the assessee a debt due by somebody it cannot be said that he has acquired a right to receive the income or that income has accrued to him. 26. This Court, in Commissioner of Income Tax v. Excel Industries, (2014) 13 SCC 459 at 463-464 referred to various judgments on the expression accrues , and then held: 14. First of all, it is now well settled that income tax cannot be levied on hypothetical income. In CIT v. Shoorji Vallabhdas and Co. [CIT v. Shoorji Vallabhdas and Co., (1962) 46 ITR 144 (SC)] it was held as follows: (ITR p. 148) Income tax is a levy on income. No doubt, the Income Tax Act takes into account two points of time at which the liability to tax is attracted, viz., the accrual of the income or its receipt; but the substance of the matter is the income. If income does not result at all, there cannot be a tax, even though in bookkeeping, an entry is made about a hypothetical income , which does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . This being the case, it is clear that there is no profit or gain which arises from the transfer of a capital asset, which could be brought to tax under Section 45 read with Section 48 of the Income Tax Act. 28. In the present case, the assessee did not acquire any right to receive income, inasmuch as such alleged right was dependent upon the necessary permissions being obtained. This being the case, in the circumstances, there was no debt owed to the assessee s by the developers and therefore, the assessee s have not acquired any right to receive income under the JDA. This being so, no profits or gains arose from the transfer of a capital asset so as to attract Sections 45 and 48 of the Income Tax Act. 29. We are, therefore, of the view that the High Court was correct in its conclusion, but for the reasons stated by us hereinabove. The appeals are dismissed with no order as to costs. 6.5. It was submitted that the decision of the Hon'ble Karnataka High Court on this issue is not applicable to the facts of the case. On the valuation of the property, the ld.DR submitted that, as per law, the valuation report of the assessee does not inspire confidence, and the valuation report ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer had issued notice u/s 153C of the Act. The contention of the assessee that he was having a PAN issued by Delhi Assessing Officer meant for non-resident, and therefore, the transfer of jurisdiction u/s 127 is essential, cannot be sustained for the reason that the assessee has not filed the return of income from the Delhi PAN and has also not disclosed that assessee was also having a dwelling house / property which is the subject matter of JDA falling within the territorial jurisdiction of the Assessing Officer. In the present case, the documents were found during the course of search belonging to the assessee and notice u/s 153C was issued by the Assessing Officer having the territorial jurisdiction where the property is situated. The contention of the assessee that the notice should have been issued by the Assessing Officer at Delhi will lead to lot of complications as there is no record available at the Assessing Officer of Delhi nor the documents were available at the Assessing Officer of the Delhi. The law is fairly settled that the forum in whose jurisdiction the situs is situated and where the necessary documents / information is available should be the appropriate fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e construction and share the built-up area. The ld.CIT(A) at page 31 and 32 had captured the various clauses of the JDA which clearly shows the respective transfer of rights by one party to the other in respect of land share. The assessee before us, pursuant to the construction was also entitled to receive the built-up flats as per the Annexure to the JDA. We are unable to comprehend as to how the assessee will receive the possession of built-up flats when the assessee has not allegedly transfer the possession. In fact, the ld.CIT(A) in para 6.3.1. at page 33 of the order has categorically mentioned that no document has been produced by the assessee to separate transfer of possession to the developer. We do not find any error in the decision of ld.CIT(A) on this aspect as the fact speaks for itself. The Developer was under obligation to construct the property after receiving due sanctions from various authorities as per the specification and cost of construction agreed between it and the assessee. For all purposes, there is a transfer of land / capital asset within the meaning of law and for the above said purposes, we may rely upon the decision of Hon'ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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