RIMJHIM GUPTA, Jaipur V. ITO, Jaipur

ITA 116/JPR/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 4720 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 5 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-08-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 04-07-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 08-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJENDER SINGH DHK
• Assessee Lawyers: ANIL KAUSHIK
• Keywords: Capital asset
• Section: 143(3); 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH JESK LH-'KEKZ] YS[KK LNL; DS LE{K BEFORE : SHRI RAMESH C.SHARMA, ACCOUNTA NT MEMBER VK;DJ VIHY LA-@ ITA NO.116/JP/2016 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SMT. RIMJHIM GUPTA B-101, JAWAHAR ENCLAVE, JAWAHAR NAGAR JAIPUR CUKE VS. THE ITO WARD- 6 (1), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ABOPG 3466 B VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ANIL KAUSHIK, CA JKTLO DH VKSJ LS@ REVENUE BY: SHRI RAJENDER SINGH, ADDL. CIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 31/07/2019 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 07 /08/2019 VKNS'K@ ORDER PER RAMESH C. SHARMA, AM THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LD. CIT(A)-2, JAIPUR DATED 30-11-2015 FOR THE ASSESSM ENT YEAR 2009-10, IN THE MATTER OF ORDER PASSED U/S 143(3) OF THE I.T. A CT, 1961. 2.1 THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO D ECLINE THE EXEMPTION CLAIMED U/S 54 OF THE ACT IN RESPECT OF CAPITAL GAI NS EARNED ON SALE OF PROPERTY WHICH WAS REINVESTED IN THE NEW HOUSE PROP ERTY. ITA NO.116/JP/2016 SMT. RIMJHIM GUPTA VS ITO, WARD- 6(1), J AIPUR 2 2.2 THE FACTS IN BRIEF ARE THAT THE ASSESSEE HAD PU RCHASED A FLAT NO. B- 508, JAWAHAR ENCLAVE, JAWAHAR NAGAR, JAIPUR ON 18- 10-2005 ON ENTERING INTO A SPECIFIC PERFORMANCE AGREEMENT BY MAKING AN ADVANCE OF RS. 30,000/- IN CASH AND RS. 1,70,000/- BY CHEQUE N O.878372 DATED 18- 10-2005 OF STANDARD CHARTERED BANK, M.I. ROAD, JAIP UR. THE SAID PROPERTY WAS LET OUT BY THE ASSESSEE ON 13-01-2006 WELL BEFORE THE EXECUTION OF THE PURCHASE DEED ON A MONTHLY RENT OF RS. 5,100/- AND THE RENTAL INCOME WAS DULY DISCLOSED IN HER INCOME TAX RETURN FOR THE A.Y. 2006-07. THE REGISTRATION OF THE SAID FLAT WAS GOT DONE IN FAVOUR OF THE ASSESSEE ON 6-02-2006 ON PAYMENT OF BALANCE AMOUNT OF RS. 14.00 LACS. THE SAID FLAT WAS SOLD BY THE ASSESSEE ON 23-01-200 9 AND TREATED THE GAIN AS LONG TERM CAPITAL GAIN ON SALE OF SAID PROPERTY ELIGIBLE FOR EXEMPTION U/S 54 OF THE ACT. THE AO CONSIDERED THE DATE OF PURCHASE AS 6-02-2006 BEING DATE OF REGISTRATION OF SALE DEED INSTEAD O F 18-10-2005 BEING DATE OF EXECUTION OF SALE AGREEMENT AND DATE OF SALE AS 23-01-2009. THUS THE AO TREATED THE GAIN AS SHORT TERM CAPITAL GAINS . 2.3 BY IMPUGNED ORDER, THE LD. CIT(A) HAS CONFIRMED THE ACTION OF THE AO AGAINST WHICH THE ASSESSEE IS IN FURTHER APPEAL BEFORE ME. 2.4 I HAVE CONSIDERED THE RIVAL CONTENTIONS AND CAR EFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. FROM THE RECOR D, I FOUND THAT THE ASSESSEE SOLD THE ABOVE FLAT ON 23-01-2009 BY ENTER ING INTO A SALE ITA NO.116/JP/2016 SMT. RIMJHIM GUPTA VS ITO, WARD- 6(1), J AIPUR 3 AGREEMENT WHICH WAS PURCHASED BY THE ASSESSEE VIDE AGREEMENT TO SELL ENTERED ON 18-10-2005. AS THE FLAT WAS OWNED BY THE ASSESSEE FOR MORE THAN 36 MONTHS, THE ASSESSEE CONSIDERED THE GAIN OF RS. 12,47,461/- ON SALE OF ABOVE PROPERTY AS LONG TERM CAPITAL GAIN AN D CLAIMED THE ENTIRE GAIN AS EXEMPTED U/S 54 OF THE ACT SINCE THE ENTIR E GAIN WAS INVESTED IN THE NEW HOUSE PROPERTY. HOWEVER, THE AO TREATED THE DATE OF PURCHASE OF SAID FLAT AS 6-02-2006 IN PLACE OF ASSESSEE'S CLAIM OF 18-10-2005. THERE IS NO MERIT IN THE FINDING OF THE AO FOR CONSIDERING THE DATE OF PURCHASE OF THE SAID FLAT BY THE ASSESSEE AS ON 6-02-2006 INSTE AD OF 18-10-2005, DESPITE THE FACT THAT THE ASSESSEE HAD GOT IRREVOCA BLE RIGHT OF PURCHASE OF THE SAID PROPERTY VIDE CLAUSE 5 OF THE AGREEMEN T TO SELL BY WHICH THE ASSESSEE HAD THE SPECIFIC RIGHT OF EXECUTION OF SAL E DEED IN HER FAVOUR AFTER PAYMENT OF BALANCE AMOUNT OF CONSIDERATION. M OREOVER, SHE HAD NOT ONLY GOT THE CONSTRUCTIVE POSSESSION OF THE PROPERT Y ON 18-10-2005 BUT SHE HAD LET OUT THE SAID PROPERTY VIDE RENT DEED D ATED 13-01-2006 TO ONE SHRI SATYA NARAIN THAT CLEARLY PROVES THAT SHE HAD BECOME THE BENEFICIARY OWNER OF THE SAID PROPERTY ON 18-10-2005. PART PAYM ENT WAS ALSO GIVEN BY THE ASSESSEE BY ACCOUNT PAYEE CHEQUE ON THE VERY SAME DATE OF EXECUTION OF AGREEMENT TO SELL. THUS THE AO IS NOT CORRECT IN HOLDING THAT ASSET SOLD BY THE ASSESSEE WAS SHORT TERM CAPITAL ASSETS BY IGNORING THE PROVISIONS OF SECTION 2(47) OF THE ACT WHICH READS AS UNDER:- ITA NO.116/JP/2016 SMT. RIMJHIM GUPTA VS ITO, WARD- 6(1), J AIPUR 4 2(47) [TRANSFER IN RELATION TO A CAPITAL ASSET, INCLUDES.- .. (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE N ATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPE RTY ACT, 1882 (4 OF 1882); OR IT IS ALSO NOTE IN DISPUTE THAT VERY SAME AGREEMENT TO SELL ENTERED ON 18-10-2005 WAS GOT REGISTERED ON 27-01-2006. THE C ONTENTION OF THE AO VIDE PARA 1.3 OF THE ASSESSMENT ORDER THAT THE FLAT WAS GOT REGISTERED IN THE NAME OF THE SELLER ON 27-01-2006 BY THE AVAS VIKAS SANSTHAN, AS SUCH SHE COULD NOT SELL FLAT BEFORE 27-01-2006, IS NOT A COMPLETE TRUTH AS THE AO IGNORED THE FACT THAT THE SELLER WAS ALLOTTED T HIS FLAT ON 13-01-1978 BY AVAS VIKAS SANSTHAN AND WAS HANDED OVER THE POSSESS ION THEREOF ON 17- 01-1998 AFTER DEPOSITING THE BALANCE DEMAND. THUS O N 18-10-2005 WHEN THE SELLER ENTERED INTO THE SALE AGREEMENT WITH THE ASSESSEE SHE HAD ALL THE LEGAL RIGHTS TO SELL THAT FLAT AND WAS A LEGAL OWNER OF THE SAME IN TERMS OF SECTION 2(47) OF THE ACT EXCEPT THAT SHE WAS NOT THE REGISTERED OWNER OF THAT FLAT AND THIS FACT WAS VERY WELL DISCLOSED IN THE SALE AGREEMENT. THE SELLER WAS GIVEN TIME OF TWO MONTHS BY THE ASSESSEE FOR GETTING THE FLAT REGISTERED IN HER NAME SO THAT THE SAME COULD BE RE GISTERED BY HER IN THE NAME OF ASSESSEE, HOWEVER, THE PROCESS DELAYED BEYO ND THE CONTROL OF THE ITA NO.116/JP/2016 SMT. RIMJHIM GUPTA VS ITO, WARD- 6(1), J AIPUR 5 ASSESSEE AND SEEING THE DELAY THE ASSESSEE WAS GIVE N POSSESSION BEFORE THE REGISTRATION OF THE SALE DEED OF THE FLAT TO TH E ASSESSEE TO AVOID ANY DISPUTE OVER THAT ISSUE. IN THE CASE OF JASBIR SING H SARKARIA, 294 ITR 196 (AAR-NEW DELHI), IT IS OBSERVED THAT TO ATTRACT SUB-CLAUSE (V) OF SECTION 2(47), IT IS NOT NECESSARY THAT ENTIRE SALE CONSIDE RATION UPTO THE LAST INSTALMENT SHOULD BE RECEIVED BY OWNER, IT WAS ALSO LAID DOWN THAT ON A FAIR AND REASONABLE INTERPRETATION AND ON ADOPTING PRINCIPLE OF PURPOSIVE CONSTRUCTION, IT CAN BE SAID THAT POSSESSION CONTEM PLATED BY SUB-CLAUSE (V) OF SECTION 2(47) NEED NOT NECESSARILY BE SOLE AND EXCLUSIVE POSSESSION; ONCE IT IS HELD THAT THE TRANSACTION OF THE NATURE REFERRED TO IN SUB-CLAUSE (V) OF SECTION 2(47) HAS TAKEN PLACED ON A PARTICULAR DATE, THE ACTUAL DATE OF TAKING PHYSICAL POSSESSION NEED NOT BE PROBED INTO; IT IS ENOUGH IF THE TRANSFEREE HAS, BY VIRTUE OF THAT TRA NSACTION, A RIGHT TO ENTER UPON AND EXERCISE THE ACTS OF POSSESSION EFFECTIVEL Y. FURTHER MORE, THE HON'BLE SUPREME COURT IN THE CASE OF SANJEEV LAL VS CIT [TS-397-SC- 2014) HELD THAT THE ASSESSEE HAD ACQUIRED A RIGHT IN THE ASSE T ON THE VERY DAY WHEN HE ENTERED INTO A SALE AGREEMENT, AND THAT RIGHT IS ALSO TREATED AS A CAPITAL ASSET, AND COUNTING OF HOLDING PERIOD OF 36 MONTHS IN RESPECT OF SUCH ASSET STARTS FROM THE DAY WHEN THE ASSESSEE HAD ENTERED INTO THE SALE AGREEMENT INSTEAD OF FROM THE DATE OF REGISTRA TION OF THE SALE DEED, ITA NO.116/JP/2016 SMT. RIMJHIM GUPTA VS ITO, WARD- 6(1), J AIPUR 6 AND IN VIEW OF DEFINITION OF TRANSFER 2(47), EXTING UISHMENT OF SUCH RIGHT IS ALSO TREATED AS TRANSFER . 2.4.1 IN VIEW OF THE ABOVE LEGAL AND FACTUAL POSITI ON, WE DO NOT FIND ANY MERIT IN THE ACTION OF THE LOWER AUTHORITIES FOR TR EATING THE GAIN ON SALE OF PROPERTY AS SHORT TERM CAPITAL GAINS. WE DIRECT THE AO TO TREAT THE SAME AS LONG TERM CAPITAL GAINS. WE DIRECT ACCORDINGLY. 3.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED IN TERMS INDICATED HEREINABOVE. ORDER PRONOUNCED IN THE OPEN COURT ON 07 /08/ 2019. SD/- JESK LH 'KEKZ (RAMESH C. SHARMA) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 07/08/ 2019 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SMT. RIMJHIM GUPTA, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD- 6(1), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.116/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR