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TMI Blog2025 (3) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, Accountant Member And Shri Keshav Dubey, Judicial Member For the Assessee : Shri Siva Prasad Reddy, ITP And Shri Balachandran, Advocate, For the Revenue : Ms. Nandini Das, CIT (DR) ORDER PER WASEEM AHMED, ACCOUNTANT MEMBER: This appeal filed by the Revenue is against the order passed by the ld. CIT(A) - 15 in DIN No. ITBA/APL/M/250/2023-24/ 1063325080(1), Bangalore dated 30/03/2024 for the assessment year 2011-12. 2. The interconnected issue raised by the Revenue is that the learned CIT(A) erred in deleting the addition made by the AO on wrong assumptions of facts. 3. The necessary facts are that the assessee, a private limited company, is engaged in the business of property development. In the Return of Income (ROI) filed under section 139(1) on 30-09-2011 for the year under consideration, the assessee declared a business loss of Rs. 13,98,37,03/- only. 4. Subsequently, a search proceeding under section 132 of the Act was conducted at Srinivasa Trust on 06-08-2012, during which a Joint Development Agreement (JDA) dated 05-02-2005 between the assessee (Chaitanya Properties Pvt. Ltd.) and M/s Prestige Estate Projects Ltd. was found and marked as Annexure 14/ST/132. Addit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the capital gain on conversion of a capital asset into stock-in-trade is taxable only in the year in which such stock-in-trade is actually sold or otherwise transferred. The Tribunal had followed its own decision in ITA Nos. 52 & 125/Bang/2013, dated 23-07-2015, which was further upheld by the Hon'ble High Court in ITA No. 570 of 2015, dated 10-07-2018. Therefore, the AR submits that the appeal of the Revenue is not maintainable as the issue has already attained finality through these judicial precedents. Accordingly, it is prayed that the appeal of the Revenue be dismissed. 14. We have heard the rival contentions of both the parties and perused the materials on record. At the outset, we note that the issue of capital gains arising from the transfer of capital assets into stock-in-trade for the JDA, as well as business income, has already attained finality through the Tribunal's order in the first round of litigation in ITA No. 618/Bang/2017, dated 23-05-2022. The findings of the Hon'ble Bench in the first round of litigation are extracted as follows: On merits 18. Further, the ld. DR submitted that in view of ground No.9, he may be permitted to argue that the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same is income in the hands of the Respondent for the A.Y. 2010-11 as the sum of Rs. 100 crores is received during the previous year relevant to the said A.Y. He therefore proceeded to assess the Income from Business at Rs. 75,83,01,870/- & income from Long Term Capital Gains at Rs. 9,92,46,023 & income from Short Term Capital Gains at Rs. 11,72,12,043/-. 23. The assessee has during the course of the assessment proceedings submitted that the supplemental agreement dated 15/5/2009 no doubt confers PEPL to receive a larger portion of the commercial area to be built up but however PEPL will get the absolute rights to the same only after PEPL hands over Our Share of Built up area only after the Construction of which is complete in all respects and duly certified to be so by the Architect of the Project. 24. The sum of Rs. 100 crores is not consideration but represents Non Refundable Deposit & will remain as Non refundable Deposit till such time the Developer completes his part of the contract. In the event the Developer is not able to perform & is forced to abandon the contract for any reason what so ever the Non-Refundable Deposit would then remain with the assessee & would p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asis of the value attributed to the building in the office of the sub - registrar for purposes of stamp duty at the time of registration of the sale deed of an apartment. The Sale deed for an apartment will consist of two components namely Value of the undivided interest in land & Value of building. The purchaser of the apartment will pay a composite price which will be split up into the above two components for purpose of registration. If one were to study the Sale deeds executed by PEPL transferring ownership of the apartment to the purchasers, one can find out the value per sft of land and the value per sft of building. Both these components are to be taxed in the assessment year relevant to the previous year in which the undivided interest in land is actually conveyed and to the limited extent of the land actually conveyed by the process of registration. 28. It is submitted that the property being held by way of stock in trade, the sale of the same will have to be recognised only when the same is actually conveyed by a registered sale deed. This principle which is applicable to stock in trade has been upheld by the Jurisdictional Bangalore Bench of the ITAT in the assessee's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se, arising out of the Project is also filed separately before this Tribunal. This proves that there is no intention on the part of the assessee not to disclose income from the JDA but that the assessee is declaring the same in accordance with law. Any addition made in A.Y. 2010- 11 & 2011-12 would amount to double addition & double collection of taxes on the very same income. Addition of Rs. 6,33,414/-/- & 7,91,031/- made by way of disallowance u/s 14A of the Act: 34. It is submitted that there is no incriminating seized material which has bought to the notice of the AO that income has escaped assessment on this count. The addition made by the AO is purely based on information available in the assessment records of the assessee and not based on any incriminating seized material which leads to an inference of undisclosed income. The Addition thus fails on this ground. The fact that these assessments do not abate is an important aspect & hence an addition u/s 14A cannot be made in the absence of incriminating material. 35. There is no proper satisfaction arrived at by the AO to come a conclusion that disallowance of expenses is indeed warranted. Several Appellate authorities h ..... 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