ITO, Ward 2(3), Aurangabad V. Shri Ambadas Abaji Mankape (HUF), Aurangabad

ITA 1178/PUN/2013

• Counselvise Citation: 117824514 RSA 2013
• Duration Of Justice: 1 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 19-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 28-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset; Opportunity of being heard; Capital receipt

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1178/PN/2013 (A.Y: 2008-09) ITO, WARD 2(3), AURANGABAD APPELLANT VS. SHRI AMBADAS ABAJI MANKAPE (HUF) PLOT NO.30-31, SHIVJYOTI COLONY, N-6, CIDCO, AURANGABAD PAN: AAHHM5020P RESPONDENT APPELLANT BY : SHRI RAJESH DAMOR RESPONDENT BY : NONE DATE OF HEARING: 19.08.2014 DATE OF ORDER : 25.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS), AURANGABAD , DATED 25.03.2013 FOR A.Y. 2008-09 ON THE FOLLOWING GROUND S. 1. WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CA SE AND POSITION OF LAW, THE LD.CIT(A) WAS CORRECT IN I GNORING THE FACT THAT THERE WAS TRANSFER OF CAPITAL ASSET A S PER SECT. 2(47) OF THE I.T. ACT, ONCE THE SALE DEED WAS REGISTERED ON 17/12/2007 AND POSSESSION WAS HANDED OVER TO THE PURCHASER? 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE AND POSITION OF LAW, IN IGNORING THE FACT THAT THE WORDS MENTIONED IN SALE DEED 17/12/2007 ONLY INDICA TE THE ASSESSEE'S RIGHT TO REPURCHASE THE CAPITAL ASSE T AND NOT CANCELLATION OF SALE DEED? 3. WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CA SE AND POSITION OF LAW, THE LD.CIT(A) WAS CORRECT IN I GNORING THE FACT THAT THERE EXISTS NO PROVISION FOR CANCELL ATION OF REGISTERED SALE DEED UNDER INDIAN REGISTRATION A CT, 1908 ? 2 ITA NO.1178/PN/13 SHRI AMBADAS ABAJI MANKAPE (HUF) 4. WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CA SE AND POSITION OF LAW, THE LD. CIT(A) WAS CORRECT IN NOT CONSIDERING THE FACT THAT THE ASSESSEE WAS IN RECEI PT OF SALE CONSIDERATION IN LIEU OF TRANSFER OF CAPITAL A SSET AS PER SALE DEED DATED 17/12/2007? 5. WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CA SE AND POSITION OF LAW, THE CIT(A) WAS CORRECT IN RELY ING ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CA SE OF TRAVAN CORE RUBBER AND TEA CO. (2000) 243 ITR 158 ( SC) WITHOUT REALIZING THAT THE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE ARE DISTINGUISHABLE AND THE POSITION O F LAW U/S 51 OF THE ACT ? 6. THE APPELLANT CRAVES, LEAVES, TO ADD, ALTER/AMEND A NY GROUNDS OF APPELLATE TIME OF HEARING. 2. THE ASSESSEE IS A HUF AND HAS SOLD AGRICULTURAL LAND ADMEASURING 10 H 21 R AT GUT NO.27 AS PER REGISTERE D SALE DEED BEARING NO.7041 DATED 17.12.2007 SITUATED AT GIRNER A, TQ. & DIST. AURANGABAD FOR TOTAL CONSIDERATION OF RS.1,50 ,00,000/- TO RAJIV GANDHI INFORMATION TECHNOLOGY PARK COOPERATIV E SOCIETY LTD. (RGITPSL). THE ASSESSING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS NOT FILED RETURN OF INCOME IN RESPECT OF THE ABOVE SALE OF LAND AND HENCE HAS ISSUED NOTICE U/S.148 OF THE ACT DATED 06.12.2010. CONSEQUENTLY, THE ASSESSEE HAS FILED R ETURN OF INCOME AND CLAIMED THAT NO CAPITAL GAIN HAS BEEN EA RNED. THE ASSESSING OFFICER HAS ASSESSED THE INCOME OF THE AS SESSEE AT RS.1,42,84,107/- AS LONG TERM CAPITAL GAIN. THE AS SESSING OFFICER HAS CONSIDERED SALE VALUE OF LAND AT RS.1,5 0,00,000/- IN RESPECT OF LAND SOLD TO RGITPSL AND HAS DEDUCED IND EXED COST OF THE SAME AT RS.7,15,893/- AND ARRIVED AT TAXABLE LO NG TERM CAPITAL GAIN AT RS.1,42,84,107/-. 2.1 THE MATTER WAS CARRIED BEFORE FIRST APPELLATE A UTHORITY, WHEREIN THE VARIOUS CONTENTIONS WERE RAISED ON BEHA LF OF THE ASSESSEE AND HAVING CONSIDERED THE SAME AFTER CALLI NG REMAND REPORT, THE CIT(A) HAS GRANTED RELIEF TO THE ASSESS EE BY OBSERVING AS UNDER: 3 ITA NO.1178/PN/13 SHRI AMBADAS ABAJI MANKAPE (HUF) 7.2 I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AND RIVAL CONTENTIONS. ON PERUSAL OF THE SAME, IT HAS BEEN NOTICED THAT THE APPELLANT HAS ENTERED INTO A SALE DEED AND RECEIVED PART CONSIDERATION AGAINST THE SALE TO THE EXTENT OF RS.11,25,000/- OUT OF TOTAL CONSIDERATION OF RS. 1,50,00,000/-. AS THE POST DATED CHEQUES WERE DISHONOURED, THE BALANCE CONSIDERATION OF RS.1,38,7 5,000/- COULD NOT BE REALIZED BY THE APPELLANT EVEN AFTER E XPIRY OF ABOUT 5 YEARS AND HENCE THE SAID DEED WAS CANCELLED BY ENTERING INTO REGISTERED DEED DATED 16/06/2012. THE SAID AMOUNT OF RS.11,25,000/- RECEIVED AS PART CONSIDERA TION TOWARDS SALE OF LAND WHICH HAS BEEN LATER ON CANCEL LED HAS BEEN FORFEITED BY THE APPELLANT. IT IS UNDISPUTED F ACT THAT THE SAID CONSIDERATION HAS BEEN RECEIVED IN RESPECT OF THE LAND WHICH IS A CAPITAL ASSET, THEREFORE, IN MY CONSIDER ED VIEW THE RECEIPT OF RS.11,25,000/- IS ALSO CAPITAL RECEI PT WHICH IS NOT LIABLE TO TAX. AS REGARDS, THE CONTENTION OF TH E A.O. THAT THE AMOUNT OF RS.6,55,614/- [RS.11,25,000/- (-) RS. 4,69,386/-], FORFEITED IN EXCESS OF THE COST OF THE LAND IS TO BE TREATED AS INCOME FROM OTHER SOURCES, IT HAS BEE N NOTICED THAT THIS ISSUE IS COVERED BY THE RATIO LAID DOWN B Y THE DECISION IN THE CASE OF SMT.SMITA N. SHAH VS. JCIT (2005) 94 ITD 492 (MUMBAI). THE CONTENTION OF THE APPELLAN T IS ALSO SUPPORTED BY THE RATIO LAID DOWN IN THE CASE O F TRAVANCORE RUBBER & TEA CO. LTD. VS. CIT (2000) 243 ITR 158 (SC). IN VIEW OF THE ABOVE FACTS AND DISCUSSION , I AM OF THE CONSIDERED VIEW THAT THE AMOUNT OF RS.11,25,000 /- FORFEITED WHICH HAS BEEN RECEIVED IN RESPECT OF SAL E OF LAND WHICH HAS BEEN CANCELLED ON LATER DATE CANNOT BE RE GARDED AS REVENUE RECEIPT IN THE HANDS OF THE APPELLANT AN D THE SAME IS NOT LIABLE TO TAX BEING CAPITAL RECEIPT. TH E CONTENTION OF THE A.O. IS ACCORDINGLY REJECTED. 2.2 THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF O F THE REVENUE, INTER ALIA, STATED THAT THE CIT(A) HAS ERR ED IN IGNORING THE FACT THAT THERE WAS TRANSFER OF CAPITAL ASSET A S PER SECTION 2(47) OF THE I.T. ACT, ONCE THE SALE DEED W AS REGISTERED ON 17.12.2007 AND POSSESSION WAS HANDED OVER TO THE PU RCHASER. ACCORDINGLY, THE ORDER OF CIT(A) BE SET ASIDE AND T HAT OF ASSESSING OFFICER BE RESTORED. ON THE OTHER HAND, NONE APPEA RED ON BEHALF OF THE ASSESSEE, SO THE MATTER IS BEING DECIDED ON THE BASIS OF ARGUMENTS OF LEARNED DEPARTMENTAL REPRESENTATIVE AN D MATERIAL ON RECORD. 4 ITA NO.1178/PN/13 SHRI AMBADAS ABAJI MANKAPE (HUF) 2.3 AS STATED ABOVE, THE SALE DEED WAS CLAIMED TO H AVE EXECUTED ON 17.12.2007. SUBSEQUENTLY, IT WAS FOUND THAT THE ASSESSEE HAS NOT RECEIVED CONSIDERATION OF RS.1,38,75,000/- OUT OF TOTAL CONSIDERATION OF RS.1,50,00,000/- AGREED AS PER SAL E DEED. THE STAND OF THE ASSESSEE HAS BEEN THAT IN VIEW OF NON- RECEIPT OF BALANCE SALE CONSIDERATION, THE TRANSACTION HAS BEE N CANCELLED BY REGISTERED CANCELLATION DEED ON 16.06.2012 AND THE OWNERSHIP OF LAND HAS COME BACK TO THE ASSESSEE. THE STAND OF T HE ASSESSING OFFICER HAS BEEN THAT THE REGISTERED SALE DEED DATE D 17.12.2007 COULD NOT BE CANCELLED AND ONLY THE ACTION THE SELL ER CAN TAKE IS TO GET SALE DEED CANCELLED BY WAY OF COURT ORDER. IT IS UNDISPUTED THAT SALE DEED DATED 17.12.2007 IS PRACTICALLY DEVO ID OF CONSIDERATION AGREED BY THE PARTIES. IN SUCH A SIT UATION, THE ASSESSEE HAD TWO OPTIONS (I) TO GET EXECUTED REGISTERED RE-CONVEYANCE FOR CANCELLATION OF THE SALE DEED IN HIS FAVOUR FROM TH E PURCHASER WITH HIS CONSENT; AND (II) IF IN A SITUATION THAT THE PURCHASER REFUSES TO EXE CUTE RE-CONVEYANCE IN FAVOUR OF THE SELLER IN SPITE OF T HE DEMAND MADE BY THE SELLER, THE SELLER WAS ENTITLED TO GET SALE DEED CANCELLED THROUGH CONCERNED CIVIL COU RT. 2.4 WITHOUT PREJUDICE TO THE ISSUE OF CANCELLATION OF SALE DEED, THE FACTS REMAIN THAT THE SALE DEED DATED 17.12.200 7 IS DEVOID OF THE DUE CONSIDERATION AS STIPULATED IN THE SAID SAL E DEED. THE ASSESSEE HAS OPTION TO RECOVER THE AMOUNT OR FILE A SUIT FOR SPECIFIC PERFORMANCE IN TERMS AND CONDITIONS OF SAL E DEED BECAUSE CHEQUES ISSUED BY THE PURCHASER FOR RS.1,38 ,75,000/- HAVE BEEN DISHONOURED BY THE CONCERNED BANK OF THE PURCHASER. REMAINING CASH AMOUNT OF RS.11,25,000/- OUT OF RS.1,50,00,000/- WAS FORFEITED BY THE ASSESSEE. AP ART FROM THIS, WE FIND THAT THE SALE DEED DATED 17.12.2007 WAS FOL LOWED BY MUTATION IN SPITE OF ABOVE DEVELOPMENT. IT HAS TO BE SEEN WHETHER ON CANCELLATION OF THE SO CALLED SALE DEED AS DISCUSSED ABOVE AND CONSEQUENT MUTATION IN FAVOUR OF THE PURC HASER HAS 5 ITA NO.1178/PN/13 SHRI AMBADAS ABAJI MANKAPE (HUF) ALSO BEEN CANCELLED OR NOT. IN CASE, THE ASSESSEE HAS NOT TAKEN ANY ACTION FOR CANCELLATION OF MUTATION IN FAVOUR O F PROSPECTIVE PURCHASER, IT AMOUNTS TO CONSENT TO THE TRANSACTION AT THE STRENGTH OF ABOVE SALE DEED COUPLED WITH MUTATION. THE ASSESSEE CANNOT BE ALLOWED TO BLOW HOT AND COLD AT SAME TIME . NOTHING HAS BEEN BROUGHT TO OUR KNOWLEDGE ON BEHALF OF THE ASSESSEE IN THIS REGARD, SINCE NONE APPEARED ON BEHALF OF THE A SSESSEE IN SPITE OF SERVICE, WE ARE NOT HAVING ANY ADVANTAGE O F THE FACT WHETHER THE ASSESSEE HAS TAKEN A STEP FOR CANCELLAT ION OF MUTATION AS WELL AFTER SO-CALLED CANCELLATION OF SA LE DEED OR NOT. WE ARE NOT AWARE OF CURRENT STATUS OF PROPERTY IN Q UESTION. THIS ISSUE NEEDS DEEP PROBE INTO THE MATTER TO DECIDE TH E ISSUE AT HAND. SO, IN THE INTEREST OF JUSTICE, WE SET ASIDE THE ORDER OF CIT(A) AND RESTORE THIS MATTER TO THE ASSESSING OFF ICER WITH A DIRECTION TO DECIDE THE MATTER AS PER FACT AND LAW AFTER PROVIDING DUE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. 3. IN THE RESULT, APPEAL FILED BY THE REVENUE IS AL LOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS THE 25 TH DAY OF AUGUST, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 25 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A), AURANGABAD 4) THE CIT, AURANGABAD 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE