Mr. Nayudu Nageswar Rao, Hyderabad V. Director of Income Tax (IT & TP), Hyderabad

ITA 1160/HYD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 87396 (ITAT-HYDERABAD)
• Duration Of Justice: 9 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 23-02-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 09-06-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: G APARNA RAO
• Assessee Lawyers: Y R RAO
• Keywords: Capital asset
• Section: 54; 263; 80C; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER ITA NO. 1160/HYD/2014 ASSESSMENT YEAR: 2009-10 MR. NAYUDU NAGESWAR RAO, HYDERABAD. PAN AFGPN2909C INCOME-TAX OFFICER, WARD 2(2), HYDERABAD (ASSESSEE) (RESPONDENT) ASSESSEE BY SHRI Y.R. RAO REVENUE BY SMT. G. APARNA RAO DATE OF HEARING 23-02-2015 DATE OF PRONOUNCEMENT 20 -03-2015 O R D E R PER ASHA VIJAYARAGHAVAN, J.M.: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF DIT (IT & TP), HYDERABAD DATED 26 TH MARCH, 2014 PASSED U/S 263 OF THE ACT, FOR AY 2010-11. 2. BRIEFLY THE FACTS OF THE CASE ARE ASSESSEE , A NON RESIDENT FILED HIS RETURN OF INCOME FROM HOUSE PROPERTY, CAPITAL G AINS AND OTHER SOURCES ADMITTING TAXABLE INCOME OF RS. 1,40, 42,573. THE ASSESSING OFFICER BEING ASSISTANT DIRECTOR OF INTER NATIONAL TAXATION-II COMPLETED THE ASSESSMENT U/S 143(3) OF THE ACT ACCEPTING THE NIL TAXABLE INCOME. 3. BY A SHOW CAUSE NOTICE DATED 28-11-2013, THE DIT (IT&TP), HYDERABAD SOUGHT CLARIFICATIONS ON CERTAIN POINTS. THE 2 ITA NO. 1160/HYD/2014 MR. NAYUDU NAGESWAR RAO ASSESSEE SUBMITTED THE CLARIFICATIONS SOUGHT BY THE DIT IN THE FORM OF A LETTER DATED 16-12-2013. THE LEARNED DIT (IT & TP), HYDERABAD SOUGHT FURTHER CLARIFICATIONS ON SOME MOR E ISSUES VIDE HIS LETTER DATED 22-01-2014. THE MAIN ISSUE IS REGARDING TAXABLE OF SALE PROCEEDS OF A HOUSE PROPERTY, I.E W HETHER LONG TERM OR SHORT TERM CAPITAL GAINS. THE ASSESSEE SUBM ITTED THAT HE HAS PURCHASED A HOUSE PROPERTY ON 31-10-2005 AND SOLD THE SAME ON 30-10-2008 WHICH IMPLIES THAT 36 MONTHS OF HOLDING PERIOD WAS COMPLETED AND HENCE THE ASSET IS CONSIDE RED AS LONG TERM CAPITAL ASSET AND THE GAIN IS OFFERED AS LONG TERM CAPITAL GAIN. IT WAS FURTHER SUBMITTED THAT THE HOU SE PROPERTY WAS REGISTERED IN FAVOUR OF THE BUYER ON 1-11-2008. THE LEARNED DIT ; PASSED AN ORDER U/S 263 OF THE IT ACT, DIRECTING THE ASSESSING OFFICER TO TREAT THE GAINS ON TRANSFER OF THE HOUSE PROPERTY TO SHORT TERM CAPITAL GAINS AND TAX IT ACC ORDINGLY. FURTHER, IN THE 263 ORDER, HE DIRECTED THE ASSESSIN G OFFICER NOT TO GIVE THE BENEFIT OF INDEXATION FOR ARRIVING AT T HE NET CAPITAL GAINS THAT ARE CHARGEABLE TO TAX. 4. AGGRIEVED BY THE ORDER OF DIT, ASSESSEE HAS PREF ERRED APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS O F APPEAL: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. DIT(IT & TP) ERRED IN DIRECTING THE AO TO TREAT THE CAPITAL GAINS RECEIVED ON TRANSFER OF PROPERTY AT PLOT NO. 624A, ROAD NO. 35, JUBILEE HILLS AS SHORT TERM CAPITAL GAINS. 2. THE LEARNED DIT ERRED IN NOT ACCEPTING THE EXPLA NATION OF THE ASSESSEE THAT THE ABOVE PROPERTY WAS PURCHASED ON 3 1/10/2005 AND SOLD THE SAME ON 30/10/2008, WHICH MEANS, THE P ROPERTY WAS HELD FOR 36 MONTHS. 3. THE LEARNED DIT FAILED TO APPRECIATE THAT REGIST RATION TOOK PLACE ON 01/11/2008 AND THEREFORE THE PERIOD OF HOL DING WAS 36 MONTHS. 4. THE LEARNED DIT FAILED TO APPRECIATE THAT UNLESS THE TRANSFER DEED IS REGISTERED, NO IMMOVABLE PROPERTY CAN BE SA ID TO BE TRANSFERRED. 3 ITA NO. 1160/HYD/2014 MR. NAYUDU NAGESWAR RAO 5. THE LEARNED DIT ERRED IN NOT ALLOWING DEDUCTION CLAIMED U/S 80C OF THE ACT IN RESPECT OF LIC PREMIUM AMOUNTING TO RS. 1,01,250/- PAID IN THE NAME OF HIS DAUGHTER. 5. GROUND NO. 5 WAS NOT PRESSED BY THE LEARNED COUN SEL FOR THE ASSESSEE AT THE TIME OF HEARING BEFORE US, THEREFOR E, THE SAME IS DISMISSED AS NOT PRESSED. 6. AS FAR AS GROUND NOS. 1 TO 4 ARE CONCERNED, LD. COUNSEL FOR THE ASSESSEE REITERATING THE SUBMISSIONS MADE BEFORE TH E LD. DIT RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF SURAJ LAMP & INDUSTRIES (P.) LTD. VS. STATE OF HARYANA [2 011] 14 TAXMANN.COM 103 WHEREIN SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882 HAS BEEN EXPLAINED, WHICH IS AS UNDER: SECTION 54 MAKES IT CLEAR THAT A CONTRACT SALE, THA T IS, AN AGREEMENT OF SALE DOES NOT, OF ITSELF, CREATE ANY I NTEREST IN OR CHARGE ON SUCH PROPERTY. IT IS, THUS, CLEAR THAT A TRANSFER OF IMMOVABLE PROPERTY BY WAY OF SALE CAN ONLY BE BY A DEED OF CONVEYANCE (SALE DEED). IN THE ABSENCE OF A DEED OF CONVEYANCE (DULY STAMPED AND REGISTERED AS REQUIRED BY LAW), NO RIGHT, TITLE OR INTEREST IN AN IMMOVABLE PROPERT Y CAN BE TRANSFERRED. 7. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON T HE ORDER OF DIT AND STATED THAT REGISTRATION OF THE PROPERTY HAS T AKEN PLACE ONLY ON 01/11/2008. HE SUBMITTED THAT ASSESSEE HAS ENTERED INTO AGREEMENT OF SALE AND TAKEN POSSESSION OF THE PROPERTY, HENCE , TRANSFER HAS TAKEN PLACED AT AN EARLIER DATE. DR ALSO STATED TH AT THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF SURAJ LAMP & I NDUSTRIES (P) LTD. (SUPRA) IS NOT RELEVANT TO THE ISSUE. 8. WE HAVE HEARD THE ARGUMENTS OF THE PARTIES AND P ERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS MATERI AL ON RECORD. THE DEFINITION OF TRANSFER U/S 2(47) OF THE INCOME-TAX ACT, 1961 READS AS UNDER: TRANSFER IN RELATION TO A CAPITAL ASSET, INCLUDES : (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET; OR 4 ITA NO. 1160/HYD/2014 MR. NAYUDU NAGESWAR RAO (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT; OR (IVA) THE MATURITY OR REDEMPTION OF A ZERO COUPON B OND; OR (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A O F THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882); OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBER OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT OR ANY ARRANG EMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EFFECT OF TR ANSFERRING, OR ENABLING THE ENJOYMENT OF, ANY IMMOVABLE PROPERTY. 8.1 SECTION 53A OF THE TP ACT DEFINES PART PERFORM ANCE, AS UNDER: 53A. PART PERFORMANCE.- WHERE ANY PERSON CONTRACTS TO TRANSFER FOR CONSIDERATION ANY IMMOVEABLE PROPERTY BY WRITING SIGNED BY HIM OR ON HIS BEHALF FROM WHICH THE TERMS NECESSARY TO CONSTITUTE THE TRANSFER CAN BE ASCERTAINED WITH REASONABLE CERTAINTY, AND THE TRANSFEREE HAS, IN PART PERFORMA NCE OF THE CONTRACT, TAKEN POSSESSION OF THE PROPERTY OR ANY P ART THEREOF, OR THE TRANSFEREE, BEING ALREADY IN POSSESSION, CON TINUES IN POSSESSION IN PART PERFORMANCE OF THE CONTRACT AND HAS DONE SOME ACT IN FURTHERANCE OF THE CONTRACT, AND THE TR ANSFEREE HAS PERFORMED OR IS WILLING TO PERFORM HIS PART OF THE CONTRACT, THEN, NOTWITHSTANDING THAT THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR, WHERE THER E IS AN INSTRUMENT OF TRANSFER, THAT THE TRANSFER HAS NOT B EEN COMPLETED IN THE MANNER PRESCRIBED THEREFOR BY THE LAW FOR TH E TIME BEING IN FORCE, THE TRANSFEROR OR ANY PERSON CLAIMING UND ER HIM SHALL BE DEBARRED FROM ENFORCING AGAINST THE TRANSFEREE A ND PERSONS CLAIMING UNDER HIM ANY RIGHT IN RESPECT OF THE PROP ERTY OF WHICH THE TRANSFEREE HAS TAKEN OR CONTINUED IN POSSESSION , OTHER THAN A RIGHT EXPRESSLY PROVIDED BY THE TERMS OF THE CONT RACT: PROVIDED THAT NOTHING IN THIS SECTION SHALL AFFECT THE RIGHTS OF A TRANSFEREE FOR CONSIDERATION WHO HAS NO NOTICE OF T HE CONTRACT OR OF THE PART PERFORMANCE THEREOF.] 8.2 THEREFORE, WE ARE OF THE VIEW THAT THE ELEMENT OF FACTUAL POSSESSION AND AGREEMENT MAY CONTEMPLATE THE ELEMEN T AS TRANSFER WITHIN THE MEANING OF SECTION IN THE INCOME-TAX ACT . THE CASE LAW 5 ITA NO. 1160/HYD/2014 MR. NAYUDU NAGESWAR RAO CITED BY THE LEARNED COUNSEL IS UNDER SECTION 54 OF THE TRANSFER OF PROPERTIES ACT, 1882 AND NOT UNDER THE INCOME-TAX A CT, HENCE, THE DECISION IS NOT APPLICABLE AND IRRELEVANT TO THE I SSUE. SINCE THE TRANSFER HAS ALREADY TAKEN PLACE WITHIN THE PERIOD OF 36 MONTHS, THE DIT HAS RIGHT IN HOLDING THAT ASSET TRANSFERRED IS SHORT TERM CAPITAL ASSET AND THE GAIN DERIVED THEREON IS SHORT TERM C APITAL GAIN. THEREFORE, THE ISSUE RAISED BY ASSESSEE IN GROUND N OS. 1 TO 4 ARE DISMISSED. 9. IN THE RESULT, APPEAL OF ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH MARCH, 2015 SD/- SD/- (P.M. JAGTAP) (ASHA VIJAYARA GHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBE R HYDERABAD, DATED: 20 TH MARCH, 2015 KV COPY TO:- . 1MR. NAYUDU NAGESWAR RAO, C/O A. SRIHARI RAO, CA, SSV & COMPANY, D.NO. 8-3-320/1/3/4, G-2, SAI PARIWAR APARTMENTS, SAI SARADHI NAGAR, YELLAREDDYGUDA, AMEERPET, HYDERABAD 500 073 2. ADITY (INTERNATIONAL TAXATION)-II, HYDERABAD 3. DIT(IT & TP), HYDERABAD 4. THE DR, ITAT, HYDERABAD