For constituting a long-term capital asset, date of allotment of property and not date of registration to be considered. Benevolent approach should be adopted and not a hyper-technical or legalistic one
(i) All the aforesaid judgments relied on by the Revenue are cases arising prior to the amendment to Section 2(47) of the Act. The very same judgments show, in particular the judgment of the Full Bench of the Gujarat High Court, the reasons for amendment i.e., even in the absence of a registered deed of transfer, if the transaction in question demonstrates the intention of the parties and after paying the entire consideration agreed upon, the purchaser enjoys the property. The fact that the transaction is not completed by execution of the registered sale deed makes no difference in the eye of law for the purpose of taxes. If the Revenue is entitled to collect tax on such capital gains, even in the absence of a registered document, on the same analogy, the assessee, who is liable to pay the capital gains, is also entitled to the exemption granted under the very Act on such capital gains. That is precisely what the Apex Court has said in Smt.Saroj Aggarwal's case (supra) that facts should be viewed in natural perspective, having regard to the compulsion of the circumstances of a case. Too hyper technical or legalistic approach should be avoided in looking at a provision which must be equitably interpreted and justly administered. The Courts should place an interpretation making a benevolent and justice oriented inference and the facts must be viewed in the social milieu of a country.
(ii) In that view of the matter, if we look at the facts in a natural perspective, there is no dishonest or improper motive on the part of the assessee in claiming said exemption. The facts seen from the social milieu of our society, it is in natural course of conduct of any law abiding citizen. When capital gain is accrued in him instead of paying tax to the Government, he has invested the money in the aforesaid manner, which gives him the benefit of exemption from payment of capital gains. He satisfies the requirement of the law. By hypertechnical or legalistic approach, such benefit conferred on an assessee cannot be denied. Very fact that the law encourages an assessee to make such investments to avoid payment of tax, such benevolent provision which is meant for such assesses has to be equitably interpreted and justly administered (CIT vs. A. Suresh Rao (Kar HC) followed)
S. 2(47)/ 53A: Mere handing over possession pursuant to development agreement does not result in transfer if developer has not taken steps for development of property
The AO has assessed capital gain in the assessment year for the reason that assessee as per the terms of the development agreement entered with the developer has handed over possession of the property. However, as can be seen from the order of learned CIT(A) as well as other facts and materials on record, there is no evidence that the developer has taken any steps for development towards performance of his part of contract under the development agreement by undertaking any steps for development of the property. On the other hand, facts and materials clearly show that there is complete lack of willingness on the part of the developer in undertaking the development activity. In fact for that reason, assessee and other land holders instituted a suit against the developer seeking cancellation of development agreement. Further, on a perusal of the order passed by the coordinate bench in case of Sri R. Srinivasa Rao in ITA No. 1786/Hyd/12 and others (supra), we find that on considering identical facts and circumstances arising out of same development agreement with M/s Amsri Developers, the coordinate bench has given categorical finding while upholding the order of learned CIT(A) that there is no transfer as envisaged u/s 2(47)(v) since there is no willingness on the part of the developer to undertake the development activity.
S. 263: Failure to conduct inquiry & hear assessee before issue of notice renders proceedings invalid. Order of CIT(A) results in merger of AO's order and bars s. 263 revision
It is clear that the assessee and the revenue both had preferred the appeals raising all the grounds, over and above the ground of deduction under Section 80HHC and 80IA of the Act, the order of the AO stood merged into the order of the CIT(A). In other words, what was at large before the Tribunal was not only the issue with regard to claim of the
assessee for deduction under Section 80HHC and 80IA of the Act, but, with regard to additions and disallowances made by the AO, as well. Thus, the principle of merger would apply in this case. Meaning thereby, once the CIT(A) partly allowed the appeal of the assessee in respect of the additions and disallowances made by the AO by way of order dated 23.03.2005, same got merged with the order of the CIT(A). Therefore, when the appeals filed by the assessee as well as the revenue before the Tribunal were pending, in view of the principle of merger and the decision of this Court in "COMMISSIONER OF INCOME TAX VS. SHASHI THEATER PVT. LTD." (2001) 248 ITR 126, the assessee could not have been issued the notice under Section 263 of the Act, more particularly, in view of the fact that the matter was at large before before the Tribunal in its entirety. Even otherwise, in view of the fact that before issuing the notice under Section 263 of the Act, the assessee was neither heard nor the revenue conducted any inquiry, same deserves to be quashed and set aside.
assessee for deduction under Section 80HHC and 80IA of the Act, but, with regard to additions and disallowances made by the AO, as well. Thus, the principle of merger would apply in this case. Meaning thereby, once the CIT(A) partly allowed the appeal of the assessee in respect of the additions and disallowances made by the AO by way of order dated 23.03.2005, same got merged with the order of the CIT(A). Therefore, when the appeals filed by the assessee as well as the revenue before the Tribunal were pending, in view of the principle of merger and the decision of this Court in "COMMISSIONER OF INCOME TAX VS. SHASHI THEATER PVT. LTD." (2001) 248 ITR 126, the assessee could not have been issued the notice under Section 263 of the Act, more particularly, in view of the fact that the matter was at large before before the Tribunal in its entirety. Even otherwise, in view of the fact that before issuing the notice under Section 263 of the Act, the assessee was neither heard nor the revenue conducted any inquiry, same deserves to be quashed and set aside.
S. 153C: Whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the AO to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else based on cogent material
On a plain reading of Section 153C, it is evident that the
Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the search person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re-assess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is – after such satisfaction is arrived at – that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132( 4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material
available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction" (Pepsi Foods P. Ltd. Vs ACIT (Del HC) followed, Dr. K M Mehboob Vs DCIT 76 DTR (Ker) 449 not followed)
Assessing Officer of the searched person must be "satisfied" that inter alia any document seized or requisitioned "belongs to" a person other than the searched person. It is only then that the Assessing Officer of the search person can handover such document to the Assessing Officer having jurisdiction over such other person (other than the searched person). Furthermore, it is only after such handing over that the Assessing Officer of such other person can issue a notice to that person and assess or re-assess his income in accordance with the provisions of Section 153A. Therefore, before a notice under Section 153C can be issued two steps have to be taken. The first step is that the Assessing Officer of the person who is searched must arrive at a clear satisfaction that a document seized from him does not belong to him but to some other person. The second step is – after such satisfaction is arrived at – that the document is handed over to the Assessing Officer of the person to whom the said document "belongs". In the present cases it has been urged on behalf of the petitioner that the first step itself has not been fulfilled. For this purpose it would be necessary to examine the provisions of presumptions as indicated above. Section 132( 4A)(i) clearly stipulates that when inter alia any document is found in the possession or control of any person in the course of a search it may be presumed that such document belongs to such person. It is similarly provided in Section 292C(1)(i). In other words, whenever a document is found from a person who is being searched the normal presumption is that the said document belongs to that person. It is for the Assessing Officer to rebut that presumption and come to a conclusion or "satisfaction" that the document in fact belongs to somebody else. There must be some cogent material
available with the Assessing Officer before he/she arrives at the satisfaction that the seized document does not belong to the searched person but to somebody else. Surmise and conjecture cannot take the place of "satisfaction" (Pepsi Foods P. Ltd. Vs ACIT (Del HC) followed, Dr. K M Mehboob Vs DCIT 76 DTR (Ker) 449 not followed)
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