Commissioner of Income-tax, Coimbatore v. M/s. Dhandayuthpani Foundry (P) Ltd
[Citation -2014-LL-0916-46]

Citation 2014-LL-0916-46
Appellant Name Commissioner of Income-tax, Coimbatore
Respondent Name M/s. Dhandayuthpani Foundry (P) Ltd.
Court HIGH COURT OF MADRAS
Relevant Act Income-tax
Date of Order 16/09/2014
Judgment View Judgment
Keyword Tags protective assessment • transfer of property • protective basis
Bot Summary: The Assessing Officer, by Proceedings dated 01.12.2011, rejected the explanation and held that the transfer under section 2(47)(v) of the Act should be deemed to have been completed only in the impugned assessment year 2006-2007, since the joint development agreement had been registered on 28.12.2005. At the time of hearing the appeal in relation to the impugned assessment year 2006-2007, the Commissioner of Income Tax relied upon the earlier order in assessee's appeal for assessment year 2008-2009 holding that the long term capital gains are to be substantively assessed in the said 4 assessment year. The specific finding given by the Commissioner of Income Tax to the Assessing Officer is to treat the income offered on capital gains for the assessment year 2008-09 on substantive basis and not on protective basis as mentioned in the assessment order. The Assessing Officer in his order admits that possession of the property was handed over during the assessment year 2008-09. The Assessing Officer is directed to treat the income offered on capital gains for the assessment year 2008-09 on substantive basis and not on protective basis as mentioned in the assessment order. In view of above order, which has become final and not appealed by the Department, the Tribunal held that the Order of the Commissioner insofar as the Assessment Year 2008-09 treating it as substantive assessment and not on presumptive is correct basis and that the Revenue has no justification to claim that the capital gains on transfer of property 6 should be reckoned in respect of assessment year 2006-07. In the course of hearing, the only argument advanced by the Revenue is that the CIT(A) has wrongly held that the long term capital gains assessed by the Assessing Officer, are not liable to be assessed in assessment year 2006-2007, but in 2008-2009 only.


1 IN HIGH COURT OF JUDICATURE AT MADRAS DATED:16.09.2014 CORAM HON'BLE MR.JUSTICE R. SUDHAKAR AND HON'BLE MR.JUSTICE G.M. AKBAR ALI T.C.(A) No.378 of 2014 Commissioner of Income Tax Coimbatore Appellant vs M/s Dhandayuthpani Foundry (P) Ltd 131/4B, Vilankurichi Road, Coimbatore 35 Respondent Appeal filed under Sec.260A of Income Tax Act, 1961 against order passed by teh Income Tax Appellate Tribunal, Madras "D"Bench, dated 29.10.2013 in ITA No.1549/Mds/2012 For Appellant : Mr. T.R. Senthil Kumar JUDGMENT (Judgment of Court delivered by R. SUDHAKAR,J.,) Revenue has filed present appeal, challenging order of 2 Income Tax Appellate Tribunal, which upheld order of Commissioner of Income Tax (Appeal), and held that capital gains on transfer of property through joint development is assessable as income of previous year relevant to assessment year 2008-2009 and rejected contention of Revenue that it should be assessable as income of year relevant to assessment year 2006-2007. 2. respondent/assessee is Company engaged in business of manufacturing and trading. In respect of Assessment Year 2006-2007, returns were filed on 13.04.2007, declaring loss of Rs.19,64,300/-. same was summarily processed on 22.8.2007 and assessee's income was assessed at Rs.10,79,320/-. Thereafter, Assessing Officer was of opinion that income of assessee, liable to be assessed under head long term capital gains of Rs.10,11,12,800/-, had escaped assessment. This prompted him to issue notice under Sec.148 of Income Tax Act dated 24.12.2010 on assessee. 3. assessee pleaded before Assessing Officer that it had owned factory building at Coimbatore, which he intended to transfer through joint development agreement and accordingly on 28.12.2005, he entered into joint development agreement with partnership firm by taking 3 advance of Rs.1.74 crores. Thereafter, Coimbatore Corporation accorded approval to development plan only on 27.09.2007 i.e, relevant to assessment year 2008-2009 and possession was handed over to developer who commenced construction. Since approval was granted on 27.9.2007 and possession was handed over thereafter, assessee claimed long term capital gains in Assessment Year 2008-2009. 4. Assessing Officer, by Proceedings dated 01.12.2011, rejected explanation and held that transfer under section 2(47)(v) of Act should be deemed to have been completed only in impugned assessment year 2006-2007, since joint development agreement had been registered on 28.12.2005. Protective Assessment order was also passed in respect of year 2008-09 including capital gains. 5. Assessee preferred appeals before Commissioner of Income Tax (Appeals) against both orders. Both appeals were disposed of by order dated 16.5.2012 insofar as assessment year 2006-2007. At time of hearing appeal in relation to impugned assessment year 2006-2007, Commissioner of Income Tax (Appeals) relied upon earlier order in assessee's appeal for assessment year 2008-2009 holding that long term capital gains are to be substantively assessed in said 4 assessment year. In order dated 16.5.2012, Commissioner of Income Tax (Appeals) held that capital gains in respect of transfer of property should be assessed during year 2008-09, as it satisfied all conditions required under sec. 53A of Transfer of Property Act as well as under section 2(47)(v) of Act. assessee has complied with requirements of Law during assessment year 2008-09. 6. specific finding given by Commissioner of Income Tax (Appeals) to Assessing Officer is to treat income offered on capital gains for assessment year 2008-09 on substantive basis and not on protective basis as mentioned in assessment order. order reads as follows: 6.13. Assessing Officer in his order admits that possession of property was handed over during assessment year 2008-09. Honourable Madras High Court in case of CIT vs Saroja 301 ITR 124 held that for invoking provisions of Section 53A of Transfer of Property Act handing over possession is very relevant. Chennai Bench of Tribunal in case of C. Venkatachalam vs ACIT by its order dated 31.10.2009 held that in respect of joint development agreement, transfer is complete 5 only when land owner gets built up area in accordance with agreement. Similar decision has been rendered by Delhi High Court in case of CIT vs Atam Prakash & Sons in 219 CTR 164 where it has been held that unless transferor is handed over built up area as per agreement, transfer is not complete. In case of appellant, possession of land was handed over pursuant to joint development agreement, in assessment year 2008-09. Taking into consideration of facts discussed above, in my opinion, appellant is right in offering capital gains for assessment year 2008-09 satisfying all conditions u/s 53A of Transfer of Property Act. Assessing Officer is directed to treat income offered on capital gains for assessment year 2008-09 on substantive basis and not on protective basis as mentioned in assessment order. This ground of appeal is allowed . 7. In view of above order, which has become final and not appealed by Department, Tribunal held that Order of Commissioner (Appeals) insofar as Assessment Year 2008-09 treating it as substantive assessment and not on presumptive is correct basis and that Revenue has no justification to claim that capital gains on transfer of property 6 should be reckoned in respect of assessment year 2006-07. 8. We perused paragraph 5 of Tribunal Order, which reads as follows: 5. In course of hearing, only argument advanced by Revenue is that CIT(A) has wrongly held that long term capital gains assessed by Assessing Officer, are not liable to be assessed in assessment year 2006-2007, but in 2008-2009 only. On this issue, assessee has submitted that in assessment year 2008-2009, Revenue has not filed any appeal. In this view of matter, we once again deem it proper to observe that Assessing Officer had substantively assessed impugned long term capital gains in impugned assessment year. CIT (A) has held that same deserve to be assessed substantively in assessment year 2008-2009. undisputedly, Revenue has not come up in appeal in assessment year 2008-2009. In other words, said findings have attained finality. Therefore, we affirm order of CIT (A). 9. In light of above facts, it cannot be now pleaded by department that capital gains in respect of transfer of property should be made in relation to assessment year 2006-07. department cannot 7 plead that capital gains will be applicable for two different assessment years. Order of Commissioner of Income Tax (Appeals) is binding on Assessing Officer, and is not entitled to take different view. We hold that Tribunal was correct in deciding as above. 10. We find no merit in appeal. No substantial question of law arises in this appeal. 11. In result, appeal is dismissed. No costs. (R.S.J.,) (G.M.A.J.,) 16-09-2014 sr Index:yes website:yes To Commissioner of Income Tax Coimbatore 8 R. SUDHAKAR,J., AND G.M. AKBAR ALI,J., sr T.C.(A) No.378 of 2014 16-09-2014 Commissioner of Income-tax, Coimbatore v. M/s. Dhandayuthpani Foundry (P) Ltd
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