ACIT vs. Y. Mohan Rao- (Hydbd Tribunal) - 31 July 2017
Question of law discussed/ interpreted- Without any new tangible material whether re-opening of case can be done by AO?, and Transfer of the rights to develop the buildings area where actual work commenced later years?Some major notes/ area of discussions for easy references:
1) As regards the validity of the reopening of the assessment also, the CIT (A) held that the AO, during the original scrutiny proceedings, has considered the agreement and concluded the assessment by accepting the income including the capital gains returned by the assessee and therefore, reopening of the assessment without any fresh tangible material would amount to change of opinion
2) It was further noted by the learned court that " Having gone through the assessment order, we find that the AO, has accepted the assessee’s returned income. For reopening of an assessment even within a period of 4 years, there need to be fresh material for the AO to issue a notice u/s 148. It is not sufficient if the AO believes that there is escapement of income as held by the Hon'ble Supreme Court in the case of Kelvinator India Ltd"
3) Learned court also noted that since all the details and material information were available to the AO while issuing notice of 147 , hence it could have been computed the Capital gain so disputed and hence re-opening of the case about which information are quite visible to compute the additions is considered void,
4) Learned court noted that there are two agreement where the rights have been transferred to the developer however since the first agreement was not registered even though it was to be considered the date of physical possession of the property rights given hence the first such agreement even Unregustered would be the date when capital gain will be computed,
5) The reference of sec 2(47) has been taken to analyse the date of transfer "we are of the view that the language of Section 53-A of the Transfer of Property Act, 1882, which has been engrafted in the aforesaid definition of Section 2(47) of the Income Tax Act, 1961, does not contemplate any payment of consideration. We set out Section 53-A, which reads as under:
Part performance Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can beascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
6) It was noted by referring from an earlier case "Therefore, we are of the view, while upholding the learned Tribunals application of law on this fact, that payment of consideration on the date of agreement of sale is not required, it may be deferred for future date"
Going by the above rationale, we find that the capital gains would not arise in the A.Y 2009-10 as in the present case also the Development Agreement is dated 12.03.2007 and the HUDA building permissions were obtained in the financial year 2007-08 relevant to the A.Y 2008-09 (referring to the requirement of sec 53A of TP act)
for reading full text please refer : https://www.taxpundit.org/phocadownload/Taxpundit_Reporter/Taxpundit_Reporter_2017/August_2017/817Taxpundit58.pdf
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