Shri Kamleshkumar K. Chaudhary, Gandhinagar V. The Income Tax Officer, Ward-9(4), Ahmedabad

ITA 1258/AHD/2015

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5696 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2018
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 11-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Capital asset; Depreciation; Benefit of exemption; Set aside
• Section: 250; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ./ITA NO. 1258/AHD/2015 ( / ASSESSMENT YEAR: 2011-12) KAMLESHKUMAR K. CHAUDHARY PLOT NO.147/2 SECTOR NO.1-B GANDHINAGAR- 382 007 / VS. THE ITO WARD-9(4) AHMEDABAD ./ ./ PAN/GIR NO. : AAOPC 3133 E ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MEHUL TALERA, AR SHRI S.N. DIVATIA, AR & / RESPONDENT BY : SHRI MUDIT NAGPAL, SR.DR / DATE OF HEARING 12/11/2018 !'# / DATE OF PRONOUNCEMENT 30 /11/2018 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TA X (APPEALS)7, AHMEDABAD [CIT(A) IN SHORT] VIDE APPEAL NO.CIT(A)-7 /263/13-14 DATED 23.02.2015 ARISING IN THE ASSESSMENT ORDER PASSED UNDER S.143(3) OF THE INCOME TAX ACT, 1961(HEREINAFTER REFERRED TO AS 'TH E ACT') DATED 10.02.2014 RELEVANT TO ASSESSMENT YEAR (AY) 2011-12 . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APP EAL:- 1. DISALLOWANCE OF CAPITAL GAIN INVESTMENT OF RS.1 128126/-. ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 2 - PAYMENT, EXECUTION OF SALE DEED AND POSSESSION OF P ROPERTY SOLD IS COMPLETED UPTO 18.01.2010 I.E. WITHIN ONE YEAR OF P URCHASE OF NEW HOUSE ON 06.04.2009. INVESTMENT IN PURCHASE OF HOUSE IS MADE BEFORE ONE YEAR OF EXECUTION OF SALE DEED. THE FINAL REGISTRATION OF HOUSE IS JUST PROCEDURAL FORMALITIES WHICH ARE NOT IMPORT WHILE DETERMINING ALLOW ABILITY OF INVES TMENT MADE BY THE ASSESSEE. EVEN DOCUMENTS OF SALE IS EXECUTED ON 18.1.2010 BEF ORE ONE YEAR OF PURCHASE OF NE HOUSE ON 06.04.2009. 2. DISALLOWANCE EXCESS CLAIM OF MARUTI ZEN PROFIT MADE OF RS.19296/-. BLOCK OF ASSETS & DEPRECIATION ON BLOCK OF ASSETS C ONCEPT SHALL BE USED AS DURING THE CURRENT YEAR BLOCK DOES NOT BECOME TH E NIL. CORRECT EFFECT IS TO DETERMINE THE DEPRECIATION AFT ER CONSIDERING EFFECT OF SALE OF MARUTI ZEN. TO REDUCE BLOCK OF VEHICLE BY RS.19296/- AND HENCE DISALLOWANCE WILL BE RS.2894.40 (15% OF 19296) ONLY. 3. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS THE PRESENT CASE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF HIRING OF MOTORCARS. THE ASSESSEE WAS A JOINT OWNER OF AN IMMOVABLE PROPERTY LOCATED AT SECTOR 22 PLOT NO. 562/A, GANDHINAGAR. THE ASSESSEE WAS THE O WNER OF 50% IN SUCH PROPERTY. THE ASSESSEE ALONG WITH CO-OWNER HAS SOLD THIS PROPERTY FOR A CONSIDERATION OF RS. 31,74,000/- DATED 4 TH MAY 2010 BY EXECUTING A SALE DEED. 4. THE ASSESSEE IN RESPECT OF SUCH PROPERTY DECL ARED CAPITAL GAIN OF RS. 11,28,126./- AGAINST WHICH AN EXEMPTION WAS CLA IMED UNDER SECTION 54 OF THE ACT ON ACCOUNT OF INVESTMENT OF RS 11,50, 000/- IN ANOTHER PROPERTY DATED 6-4-2009. ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 3 - 5. HOWEVER, THE AO NOTICED THAT PROVISION OF SEC TION 54 OF THE ACT REQUIRES TO MAKE THE INVESTMENT WITHIN ONE YEAR FRO M THE DATE OF TRANSFER OF THE PROPERTY. THUS, AS PER THE AO, THE ASSESSEE DEFAULTED IN COMPLYING THE PROVISIONS OF SECTION 54 OF THE ACT. HENCE, THE AO ISSUED A SHOW CAUSE NOTICE FOR DENYING THE BENEFIT OF EXEMPTION C LAIMED UNDER SECTION 54 OF THE ACT. 6. THE ASSESSEE IN COMPLIANCE TO IT SUBMITTED T HAT THE PROPERTY WAS ACTUALLY SOLD ON 18 TH JANUARY 2010, BUT THE SAME WAS REGISTERED ON A LAT ER DATE, I.E. 4 TH OF MAY 2010. AS SUCH THE PART CONSIDERATION WAS RE CEIVED BY THE ASSESSEE ON 5 TH DECEMBER 2009 AND THE PROPERTY WAS ALSO HANDED OVER ON 18 TH OF JANUARY 2010 TO THE BUYER. ACCORDINGLY, THE TRA NSFER HAS TAKEN PLACE IN THE FINANCIAL 2009-10 CORRESPONDING TO THE ASSESSMENT YEAR 2010-11. ACCORDINGLY, THE INVESTMENT MADE IN ANOTHE R PROPERTY ON 6 TH APRIL 2009 IS WITHIN THE ONE YEAR FROM THE DATE OF TRANSFER AS SPECIFIED UNDER SECTION 54 OF THE ACT. 7. HOWEVER, THE AO DISAGREED WITH THE CLAIM OF T HE ASSESSEE BY OBSERVING THAT THE PROPERTY WAS REGISTERED ON 4 TH MAY 2010. THEREFORE THE TIME FOR MAKING THE INVESTMENT WITHIN ONE YEAR FROM THE DATE OF TRANSFER WILL BE COUNTED FROM 4 TH MAY 2010. ACCORDINGLY, THE AO DISALLOWED THE DEDUCTION CLAIMED UNDER SECTION 54 O F THE ACT FOR RS. 11,28,126/- AND ADDED TO THE TOTAL INCOME OF THE AS SESSEE. ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 4 - 8. AGGRIEVED, ASSESSEE PREFERRED APPEAL TO LD. CIT(A) WHO CONFIRMED THE ORDER OF THE AO BY OBSERVING AS UNDER: 4.1. I HAVE CONSIDERED THE ASSESSMENT ORDER AND THE SUBMISSIONS MADE BY THE APPELLANT. THE PROPERTY SITUATED AT SE CTOR 22, PLOT NO.562/A, GANDHINAGAR WAS SOLD ON 04.05.2010 AS PER THE SALE DEED OBTAINED BY THE ASSESSING OFFICER FROM THE SUB -REGISTRAR OFFICE. THE NEW PROPERTY, ON WHOSE INVESTMENT BENE FIT UNDER SECTION 54 IS BEING CLAIMED, IS SAID TO HAVE BEEN P URCHASED ON 6.4.2009. THEREFORE, THE INVESTMENT IN THE PROPER TY HAS BEE MADE BEYOND ONE YEAR PERIOD FROM THE SALE OF PROPERTY. THE APPELLANTS ARGUMENT THAT THE SALE AGREEMENT FOR THE PROPERTY O N WHICH CAPITAL GAIN IS COMPUTED WAS MADE ON 18.01.2010 IS NOT TENA BLE BECAUSE HAD THE PROPERTY IS CONSIDERED TO BE SOLD ON 18.01. 2010, THE CAPITAL GAIN SHOULD HAVE BEEN COMPUTED IN THE RETUR N IN THE FINANCIAL YEAR 2010-11. THE FACT THAT THE APPELLA NT HAS OFFERED THE CAPITAL GAIN IN THE FINANCIAL YEAR 2010-11 IN WHICH THE PROPERTY GOT REGISTERED, THE SALE DEED HAS TO BE TAKEN AS 04 .05.2010. IN VIEW OF THE ABOVE, THE DISALLOWANCE MADE BY THE ASS ESSING OFFICER IS CONFIRMED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PER USED THE MATERIALS AVAILABLE ON RECORD. FROM THE PRECEDING DISCUSSION, WE NOTE THAT THE ASSESSEE MADE THE SALE DEED ON 18 TH JANUARY 2010. THIS FACT IS VERIFIABLE FROM THE SALE DEED WHICH IS PLACED IN THE PAPER BOO K ON PAGES 1 TO 16. THE RELEVANT EXTRACT OF THE SALE DEED READS AS UNDE R: IN THIS WAY, THE ABOVE-MENTIONED SALES DEED OF THE SAID PROPERTY IS MADE IN THE CITY OF GANDHINAGAR. THE ABOVEMENTIONED SALES DEED IS UNITEDLY AGREED BY US, THE SELLERS. WE HAVE AGREED TO IT WILLINGLY AND WISELY. WE HAVE READ IT OR MADE OTHERS TO READ IT FOR US. WE HAVE UNDERSTOOD IT. WE HAVE WELL THOUGHT ON THE SUBJECT. WITHOUT ANY FORCE, CO ERCION OR MENANCE, WITH OUR OWN FREE WILL, WE ARE AGREEING ON THE SALES ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 5 - DEED. THIS SALES DEED SHALL BE BINDING ON US AS W ELL AS ON ALL MEMBERS OF OUR FAMILIES, ELDERS, INHERITORS, ASSIGN EES AND OTHERS. IT IS AND IT SHLL BE BINDING ON ALL OF THEM. WE PU T OUR ACKNOWLEDGEMENT SIGNATURE ON THE SAID SALES DEED ON 18 TH OF JANUARY-2010. 9.1. THE DETAILS OF THE PAYMENT RECEIVED BY THE ASSESSEE AS EVIDENT FROM THE SALE DEED STAND AS UNDER: 05,00,000.00 RUPEES FIVE LAKHS ONLY BY CHEQUE NO.000587, DATED 5.12.2009. KOTAK MAHENDRA BANK, KADI BRANCH, WE, THE SELLTERS NO.1 HAVE TAKEN AS REPARATION OF THE SAID PROPERTY FROM YOU, THE BUYER 05,00,000.00 RUPEES FIVE LAKHS ONLY BY CHEQUE NO.000588, DATED 5.12.2009, KOTAK MAHENDRA BANK, KADI BRANCH, WE THE SELLERS NO.1 HAVE TAKEN AS REPARATION OF THE SAID PROPERTY FROM YOU, THE BUYER 05,87,000.00 RUPEES FIVE LAKH EIGHTY SEVEN THOUSAND ONLY BY CASH, WE, THE SELLERS NO.1 HAVE TAKEN AS REPARATION OF THE SAID PROPERTY FROM YOU, THE BUYER. 15,87,000.00 31,74,000.00 RUPEES THIRTY-ONE LAKH SEVENTY F OUR THOUSAND ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 6 - ONLY. YOU, THE BUYER HAVE PAID US THE PRICE IN A N ABOVEMENTIONED MANNER. WE, THE SELLERS HAVE ACCEPTED THE AMOUNT. ALSO, WE ARE ACCEPTING THAT T HE TOTAL PRICE OF THE SAID PROPERTY IS RECEIVED BY U S FROM YOU, THE BUYER. 9.2. THE DETAILS OF POSSESSION HANDED OVER BY THE ASSESSEE AS EVIDENT FROM THE SALE DEED STAND AS UNDER: NOW, WE, THE SELLERS HAVE SOLD THE WHOLE OF THE SAID PLOT ALONG WITH WHATEVER CONSTRUCTION OF THE BUILDING HAS BEEN DONE ON THE SAID PLOT, AS WELL AS OUR RIGHTS ON THE SAID PROPE RTY TO YOU, TO THE BUYER THROUGH THIS SALES DEED. WE, THE SELLE RS HAVE HANDED OVER THE POSSESSION OF THIS SAID PROPERTY TO YOU, THE BUYER. HERE AFTERWARDS, YOU, THE BUYER ARE BOUND TO ADHERE TO THE RULES AND REGULATIONS ISSUED BY THE GOVERNMENT WITH RELATION TO THE SAID PROPERTY. 9.3. THE BUYER OF THE PROPERTY ALSO PURCHASE D THE REQUISITE STAMP PAPERS FOR THE PURPOSE OF THE REGISTRATION OF THE P ROPERTY DATED 16 TH JANUARY 2010 AS EVIDENT UNDER: GUJARAT 210575 NUMBER : 2669 DATE : 16/01/20 10 25000.00 NAME : DILIPKUMAR KANTILAL PATEL HIMSELF RESIDENCE : SECTOR22 PLOT NO.56 2/A GANDHINAGAR SUNIL K PARIKH LICENSE NO. /1993 SD/- 9.4. FROM THE ABOVE DETAILS, THERE REMAINS NO DOUBT THAT THE PROPERTY WAS TRANSFERRED AS PER THE PROVISIONS OF SECTION 2( 47) OF THE ACT IN THE ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 7 - FINANCIAL 2009-10. THEREFORE, THE REQUIREMENT FOR M AKING THE INVESTMENT IN THE PROPERTY AS PER THE PROVISIONS OF SECTION 54 OF THE ACT WILL BE TAKEN FROM THE DATE I.E. 18 TH JANUARY 2010 AS DISCUSSED ABOVE. 9.5. THERE IS NO DISPUTE THAT THE ASSESSEE MAD E THE INVESTMENT IN APRIL 2009 WHICH FALLS WITHIN ONE YEAR FROM THE DATE OF T RANSFER OF THE PROPERTY. THUS, WE ARE OF THE VIEW THAT THE ASSESSE E IS ELIGIBLE FOR DEDUCTION UNDER SECTION 54 OF THE ACT. 9.6. IN HOLDING SO, WE FIND SUPPORT AND GUIDAN CE ON THE JUDGMENT OF HONORABLE SUPREME COURT IN CASE OF SANJEEV LAL VS. CIT (CHANDIGARH) REPORTED IN 46 TAXMANN.COM 300 WHEREIN IT WAS HELD AS UNDER: NOW IN THE LIGHT OF DEFINITION OF 'TRANSFER' AS DE FINED UNDER SECTION 2(47), IT IS CLEAR THAT WHEN ANY RIGHT IN RESPECT O F ANY CAPITAL ASSET IS EXTINGUISHED AND THAT RIGHT IS TRANSFERRED TO SOMEO NE, IT WOULD AMOUNT TO TRANSFER OF A CAPITAL ASSET. IN THE LIGHT OF THE AFORESTATED DEFINITION, IF ONE LOOKS AT THE FACTS OF THE PRESENT CASE WHERE AN AGREEMENT TO SELL IN RESPECT OF A CAPITAL ASSET HAD BEEN EXECUTED ON 27- 12-2002 FOR TRANSFERRING THE RESIDENTIAL HOUSE/ORIGINAL ASSET I N QUESTION AND A SUM OF RS. 15 LAKHS HAD BEEN RECEIVED BY WAY OF EARNEST MONEY. A RIGHT IN PERSONAM HAD BEEN CREATED IN FAVOUR OF T HE VENDEE, IN WHOSE FAVOUR THE AGREEMENT TO SELL HAD BEEN EXECUTED AND WHO HAD ALSO PAID RS.15 LAKHS BY WAY OF EARNEST MONEY. NO DOUBT, SUCH CONTRACTUAL RIGHT CAN BE SURRENDERED OR NEUTRALIZED BY THE PARTIES TH ROUGH SUBSEQUENT CONTRACT OR CONDUCT LEADING TO NO TRANSFER OF THE P ROPERTY TO THE PROPOSED VENDEE BUT THAT IS NOT THE CASE AT HAND. IN ADDITION TO THE FACT THAT THE TERM 'TRANSFER' HA S BEEN DEFINED UNDER SECTION 2(47), EVEN IF LOOKED AT THE PROVISIONS OF SECTION 54 OF THE ACT WHICH GIVE RELIEF TO A PERSON WHO HAS TRANSFERRED H IS ONE RESIDENTIAL HOUSE AND IS PURCHASING ANOTHER RESIDENTIAL HOUSE E ITHER BEFORE ONE YEAR OF THE TRANSFER OR EVEN TWO YEARS AFTER THE TR ANSFER, THE INTENTION OF ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 8 - THE LEGISLATURE IS TO GIVE HIM RELIEF IN THE MATTER OF PAYMENT OF TAX ON THE LONG TERM CAPITAL GAIN. IF A PERSON, WHO GETS SOME EXCESS AMOUNT UPON TRANS FER OF HIS OLD RESIDENTIAL PREMISES AND THEREAFTER PURCHASES OR CO NSTRUCTS A NEW PREMISES WITHIN THE TIME STIPULATED UNDER SECTION 5 4 OF THE ACT, THE LEGISLATURE DOES NOT WANT HIM TO BE BURDENED WITH T AX ON THE LONG TERM CAPITAL GAIN AND THEREFORE, RELIEF HAS BEEN GIVEN T O HIM IN RESPECT OF PAYING INCOME TAX ON THE LONG TERM CAPITAL GAIN. THE INTENTION OF THE LEGISLATURE OR THE PURPOSE WIT H WHICH THE SAID PROVISION HAS BEEN INCORPORATED IN THE ACT, IS ALSO VERY CLEAR THAT THE ASSESSEE SHOULD BE GIVEN SOME RELIEF. THOUGH IT HAS BEEN VERY OFTEN SAID THAT COMMON SENSE IS A STRANGER AND AN INCOMPATIBLE PARTNER TO THE INCOME-TAX ACT AND IT IS ALSO SAID THAT EQUITY AND TAX ARE STRANGERS TO EACH OTHER, STILL THIS COURT HAS OFTEN OBSERVED THA T PURPOSIVE INTERPRETATION SHOULD BE GIVEN TO THE PROVISIONS OF THE ACT. IT HAS ALSO BEEN SAID THAT HARMONIOUS CONSTRUCTION OF THE PROVISIONS WHICH SUBSERVE THE OBJECT AND PURPOSE SHOULD ALSO B E MADE WHILE CONSTRUING ANY OF THE PROVISIONS OF THE ACT AND MOR E PARTICULARLY WHEN ONE IS CONCERNED WITH EXEMPTION FROM PAYMENT OF TAX . CONSIDERING THE AFORESTATED OBSERVATIONS AND THE PRINCIPLES WITH RE GARD TO THE INTERPRETATION OF STATUTE PERTAINING TO THE TAX LAW S, ONE CAN VERY WELL INTERPRET THE PROVISIONS OF SECTION 54 READ WITH SE CTION 2(47), I.E. DEFINITION OF 'TRANSFER', WHICH WOULD E NABLE THE ASSESSEE TO GET THE BENEFIT UNDER SECTION 54 OF THE ACT. CONSEQUENCES OF EXECUTION OF THE AGREEMENT TO SELL ARE ALSO VERY CLEAR AND THEY ARE TO THE EFFECT THAT THE ASSESSEES COULD NOT HAVE SOLD THE PROPERTY TO SOMEONE ELSE. IN PRACTICAL LIFE, THERE ARE EVENTS WHEN A PERSON, EVEN AFTER EXECUTING AN AGREEMENT TO SELL A N IMMOVABLE PROPERTY IN FAVOUR OF ONE PERSON, TRIES TO SELL THE PROPERTY TO ANOTHER SUCH AN ACT WOULD NOT BE IN ACCORDANCE WITH LAW BEC AUSE ONCE AN AGREEMENT TO SELL IS EXECUTED IN FAVOUR OF ONE PERS ON, THE SAID PERSON GETS A RIGHT TO GET THE PROPERTY TRANSFERRED IN HIS FAVOUR BY FILING A SUIT FOR SPECIFIC PERFORMANCE AND THEREFORE, WITHOUT HES ITATION ONE CAN SAY THAT SOME RIGHT, IN RESPECT OF THE SAID PROPERTY, B ELONGING TO THE ASSESSEE HAD BEEN EXTINGUISHED AND SOME RIGHT HAD B EEN CREATED IN FAVOUR OF THE VENDEE/TRANSFEREE, WHEN THE AGREEMENT TO SELL HAD BEEN EXECUTED. ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 9 - THUS, A RIGHT IN RESPECT OF THE CAPITAL ASSET, VIZ. THE PROPERTY IN QUESTION HAD BEEN TRANSFERRED BY THE ASSESSEES IN FAVOUR OF THE VENDEE/TRANSFEREE ON 27-12-2002. THE SALE DEED COULD NOT BE EXECUTED FOR THE REASON THAT THE ASSESSEES HAD BEEN PREVENTED FROM DEALING WITH THE RESIDENTIAL HOUSE BY AN ORDER OF A COMPETENT COURT, WHICH THEY COULD NOT HAVE VIOLATED IN VIEW OF THE AFORESAID PECULIAR FACTS OF THE CASE AND LOOKING AT THE DEFINITION OF THE TERM 'TRANSFER' AS DEFINED UNDER SECTION 2(47), IT IS OPINED THAT THE ASSESSEE WAS ENTITLED TO RELIEF UND ER SECTION 54 IN RESPECT OF THE LONG TERM CAPITAL GAIN WHICH THEY HA D EARNED IN PURSUANCE OF TRANSFER OF THEIR RESIDENTIAL PROPERTY AND USED FOR PURCHASE OF A NEW ASSET/RESIDENTIAL HOUSE THE APPEAL IS THEREFORE, ALLOWED. THE IMPUGNED JUDG MENTS ARE QUASHED AND SET ASIDE AND THE AUTHORITIES ARE DIRECTED TO R E-ASSESS THE INCOME OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2005-2006, AFT ER TAKING INTO ACCOUNT THE FACT THAT THE ASSESSEE WAS ENTITLED TO THE RELIEF, SUBJECT TO FULFILMENT OF OTHER CONDITIONS. 9.7. WE ALSO FIND GUIDANCE FROM THE JUDGMENT OF HONOURABLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. HORMASJI MANCHARJ I VAID REPORTED IN 250 ITR 542 WHICH HELD AS UNDER: CONSIDERING THE VARIOUS DECISIONS AND THE OBJECT O F THE ACT, DEFINITION GIVEN IN THE ACT IS REQUIRED TO BE TAKEN INTO CONSI DERATION. WHEN THE DOCUMENT IS EXECUTED, THE PROPERTY PASSES AND MEREL Y BECAUSE THERE IS NO REGISTRATION CERTIFICATE, THE STATE COFFERS SHOU LD NOT SUFFER. IF THE VIEW PROPOUNDED THAT ONLY ON REGISTRATION, ACT OF TRANSF ER WILL BE COMPLETE THEN IN THAT CASE, IF THE DOCUMENT IS NOT REGISTERE D, THOUGH THE ASSESSEE WILL BE ENJOYING THE PROPERTY, HE WILL SAY THAT HE IS NOT LIABLE TO PAY THE TAX. BUT THAT IS NOT THE INTENTION OF THE LEGISLATU RE. THE WORD 'TRANSFER' AS INDICATED IN THE INCOME-TAX ACT IS REQUIRED TO BE CONSIDERED AND NOT 'SALE' AS INDICATED IN THE TRANS FER OF PROPERTY ACT. IF THE INTENTION OF THE LEGISLATURE WAS DIFFERENT, THE N THERE WOULD HAVE BEEN SPECIFIC REFERENCE. IF THE WORDS ARE DEFINED I N THE ACT ITSELF, THEN IT IS NOT PROPER TO READ THE MEANING OF THE SIMILAR WO RDS GIVEN IN ANOTHER STATUTE UNLESS OTHERWISE EXPRESSLY PROVIDED. IN THE ACT, WHEREVER LEGISLATURE HAS THOUGHT FIT TO HAVE THE MEANING OF THE WORD PROVIDED IN ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 10 - DIFFERENT STATUTE, SPECIFIC PROVISION HAS BEEN MADE . THEREFORE, 'TRANSFER' AS DEFINED IN THE ACT IS TO BE GIVEN SIMPLE MEANING AS INDICATED. IN CASE OF OWNERSHIP, THERE IS A TRANSFER OF CAPITA L ASSETS. THIS WAS A CASE OF LEASE. THE TRANSFEREE WAS PUT IN POSSESSION AND WAS ENJOYING THE PROPERTY AS A LEASE-HOLDER. THERE CANNOT BE DIFFERE NT CRITERIA FOR TRANSFER OF CAPITAL ASSET. FOR THE PURPOSE OF TAX E VEN IF DOCUMENT, I.E., CONVEYANCE, IS NOT EXECUTED BUT THE TRANSFEREE EXERCISES ALL THE RIGHTS OF THE TRUE OWNER, ONE CANNOT EMPHAS IZE FOR THE TAXATION PURPOSE THAT UNLESS AND UNTIL THE DEED OF CONVEYANC E TRANSFERRING THE RIGHTS IN PROPERTY IS EXECUTED, THE TRANSFEREE IS N OT LIABLE THOUGH DID EVERYTHING WHICH IS REQUIRED FOR ACQUIRING A PROPER TY. THE VENDOR IS NOT PERMITTED IN LAW TO DISPOSES OR QUESTION THE TITLE OF THE VENDEE. UNDER THE CIRCUMSTANCES, TRANSFER OF IMMOVABLE PROP ERTY IN QUESTION HAD BEEN EFFECTED ON THE DATE OF EXECUTION OF THE D OCUMENT 9.8 IT IS ALSO A FACT ON RECORD THAT THE ASSES SEE HAS OFFERED THE CAPITAL GAIN IN THE ASSESSMENT YEAR 2011-12 INSTEAD OF 2010 -11. IF WE TAKE THE DATE OF TRANSFER, I.E. THE DATE OF CONVEYANCE DEED REGISTERED ON 4 TH OF MAY 2010, THEN ASSESSEE DEFAULTED IN MAKING THE INVESTM ENT WITHIN THE PRESCRIBED TIME AS SPECIFIED UNDER SECTION 54 OF TH E ACT. HOWEVER, IT IS THE SETTLED LAW THAT THE INCOME OF THE ASSESSEE HAS TO BE TAXED IN THE HANDS OF THE RIGHT ASSESSEE AND THE RIGHT ASSESSMEN T YEAR. THE RIGHT ASSESSMENT YEAR IS THE ASSESSMENT YEAR 2010-11 AS T HE PROPERTY WAS TRANSFERRED IN THE FINANCIAL YEAR 2009-10. THEREFOR E, THE ASSESSEE HAS WRONGLY DECLARED INCOME IN THE WRONG ASSESSMENT YEA R, BUT THAT CANNOT BE THE GROUND TO DEPRIVE THE ASSESSEE OF THE BENEFI T PROVIDED UNDER SECTION 54 OF THE ACT. 9.9. IN HOLDING SO, WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONBLE SUPREME COURT WHEREIN IT WAS HELD THAT THE INCOME HAS TO BE ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 11 - TAXED IN THE RIGHT HANDS AND THE RIGHT ASSESSMENT Y EAR IN THE CASE OF A. GAJAPATHY NAIDU REPORTED IN 53 ITR 114 WHEREIN IT W AS HELD AS UNDER: AN INCOME ACCRUES OR ARISES WHEN THE ASSESSEE ACQUIRES A RIGHT TO RECEIVE THE SAME. IT IS COMMON PLACE THAT TH ERE ARE TWO PRINCIPAL METHODS OF ACCOUNTING FOR THE INCOME, PROFITS AND GAINS OF A BUSINESS; ONE IS THE CASH BASIS AND THE OTHER , THE MERCANTILE BAS IS. THE LATTER SYSTEM OF ACCOUNTANCY 'BRINGS INTO CREDIT WHAT IS DUE I MMEDIATELY IT BECOMES LEGALLY DUE AND BEFORE IT IS ACTUALLY R ECEIVED; AND IT BRINGS INTO DEBIT EXPENDITURE THE AMOUNT FOR WHICH A LEGAL LIABI LITY HAS BEEN INCURR ED BEFORE IT IS ACTUALLY DISBURSED.' THE BOOK P ROFITS ARE TAKEN FOR THE PURPOSE OF ASSESSMENT OF TAX, THOUGH THE CR EDIT AM OUNT IS NOT R EALISED OR THE DEBIT AMOUNT IS NOT ACTUALLY DISBURSED. IF AN INCOM E ACCRUES WITHIN A PARTICULAR YEAR , IT IS LIABLE TO BE ASSESSED IN TH E SUCCEEDING YEAR . WHEN DOES THE RIGHT TO R ECEIVE AN AMOUNT UNDER A CONTRACT ACCRUE OR ARISE TO THE ASSESSEE, I.E., COME INTO EXISTENCE ? THAT DEPENDS UPON THE TERMS OF A PARTICULAR CONTRACT. NO OTHER R ELEVANT PROVISION OF THE ACT HAS BEEN BROUGHT TO NOTICE-FOR THER E IS NONE WH ICH PROVIDES AN EXCEPTION THAT THOUGH AN ASSESSEE DOES NOT ACQUIRE A R IGHT TO R ECEIVE AN INCOME UNDER A CONTRACT IN A PARTICULAR ACCOUNTING YEAR , BY SOME FICTION THEAMOUNT RECEIVED BY HIM IN A SUBSEQUENT YEAR IN C ONNECTION WITH THE CONTRACT, THOUGH NOT ARISING OUT OF A RIGHTACCRUED TO HIM IN THE EARLIER YEAR , COULD BE R ELATED BACK TO THE EARLIER YEAR AND MADE TAXABLE ALONG WITH THE INCOME OF THAT YEAR . WHEN AN ITO PROCEEDS TO INCLUDE A PARTICULAR INCOME IN THE ASSESSMENT, HE SHOULD ASK HIMSELF, INTER ALIA, TWO QUESTIONS, NA MELY: (I) WHAT IS THE SYSTEM OF ACCOUNTANCY ADOPTED BY THE ASSESSEE ? AND (II) IF IT IS THE MERCANTILE SYSTEM OF ACCOUNTANCY , SUBJECT TO THE D EEMED PROVISIONS, WHEN HAS THE RIGHT TO RECEIVE THAT AMOUNT ACCRUED? IF HE COMES TO THE CONCLUSION THAT SUCH A RIGHT ACCRUED OR AROS E TO THE ASSESSEE IN A PARTICULAR ACCOUNTING YEAR , HE SHALL INCLUDE THE SAID INCOME IN THE ASSESSMENT OF THE SUCCEEDING ASSESSMENT YEAR . NO POWER IS CONFERRED ON THE ITO UNDER THE ACT TO R ELATE BACK AN INCOME THAT ACCRUED OR AROSE IN A SUBSEQUENT YEAR TO ANOTHER EARLIER YE AR ON THE GROUND THAT THE SAID INCOME AROSE OUT OF AN EARLIER TRANSACTION. NO R IS THE QUESTION OF REOPENING OF ACCOUNTS RELEVANT IN THE MATTER OF ASC ERTAINING WHEN A PARTICULAR INCOME ACCRUED OR AROSE. SECTION 34 OF 1922 ACT EMPOWERS THE ITO TO ASSESS THE INCOME WHICH ESCAPED ASSESSMENT OR WAS UNDER- ASSESSED THE INCOME WHICH ESCAPED ASSESSMENT OR WAS UNDER-ASSESSED IN THE RELEVANT ASSESSMENT YEAR . SUBJECT TO THE PROVISIONS OF THE SECTION AND FOLL OWING THE PROCEDURE PRESCRIBED THERE UNDER , HE CAN INCLUDE THE ESCAP ED INCOME AND R EASSESS THE ASSESSEE ON THE BASIS OF WHICH THE EARL IER ASSESSMENT WAS MADE. SO, TOO UNDER SECTION 35 OF 1922 ACT OFFICER S MENTIONED THER EIN CAN ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 12 - RECTIFY MISTAKES EITHER OF THEIR OWN MOTION OR WHEN SUCH MISTAKES ARE BROUGHT TO THEIR NOTICE BY A PARTY TO THE PROCEEDINGS. FOR THAT PURPOSE THE CORRECTITEM MAY BE TAKEN INTO CONSIDERATI ON IN THE MATTER OF ASSESSMENT. BUT STRICTLY SPEAKING EVEN IN THE SE CASES THERE IS NO R EOPENING OF THE ACCOUNTS OF THE ASSESSEE, BUT A R E-ASSESSMENT IS MADE OR THE MISTAKE IS CORR ECTED ON THE BASIS OF THE ACT UAL INCOME ACCRUED OR RECEIVED BY THE ASSESSEE. IN THE R ESULT, IT WAS HELD THAT THE SUM IN QUESTIO N WAS RIGHTLY ASSESSED IN ASSESSMENT YEAR 1951-52. 9.10. MOREOVER, WE ALSO NOTE THAT THE PROVISIONS SPECIFIED UNDER SECTION 54 OF THE ACT ARE BENEFICIAL TO THE ASSESSE E. THEREFORE THE ASSESSEE SHOULD NOT BE DEPRIVED OF THE BENEFIT GIVE N UNDER THE STATUTE MERELY ON ACCOUNT OF TECHNICAL FAULT I.E. DELAY OF A COUPLE OF MONTHS IN MAKING THE INVESTMENT. IN THIS CASE WE FIND SUPPORT AND GUIDANCE FROM THE JUDGMENT OF HONOURABLE SUPREME COURT IN THE CAS E OF SANJEEV LAL VS. CIT, CHANDIGARH( 365 ITR 389 ) WHEREIN IT WAS HELD AS UNDER: 22. IN ADDITION TO THE FACT THAT THE TERM 'TRANSFER' H AS BEEN DEFINED UNDER SECTION 2(47) OF THE ACT, EVEN IF LOOKED AT THE PRO VISIONS OF SECTION 54 OF THE ACT WHICH GIVES RELIEF TO A PERSON WHO HAS TRANSFER RED HIS ONE RESIDENTIAL HOUSE AND IS PURCHASING ANOTHER RESIDENTIAL HOUSE E ITHER BEFORE ONE YEAR OF THE TRANSFER OR EVEN TWO YEARS AFTER THE TRANSFER, THE INTENTION OF THE LEGISLATURE IS TO GIVE HIM RELIEF IN THE MATTER OF PAYMENT OF TAX ON THE LONG TERM CAPITAL GAIN. IF A PERSON, WHO GETS SOME EXCES S AMOUNT UPON TRANSFER OF HIS OLD RESIDENTIAL PREMISES AND THEREAFTER PURCHAS ES OR CONSTRUCTS A NEW PREMISES WITHIN THE TIME STIPULATED UNDER SECTION 5 4 OF THE ACT, THE LEGISLATURE DOES NOT WANT HIM TO BE BURDENED WITH T AX ON THE LONG TERM CAPITAL GAIN AND THEREFORE, RELIEF HAS BEEN GIVEN T O HIM IN RESPECT OF PAYING INCOME TAX ON THE LONG TERM CAPITAL GAIN. THE INTEN TION OF THE LEGISLATURE OR THE PURPOSE WITH WHICH THE SAID PROVISION HAS BEEN INCORPORATED IN THE ACT, IS ALSO VERY CLEAR THAT THE ASSESSEE SHOULD BE GIVEN S OME RELIEF. THOUGH IT HAS BEEN VERY OFTEN SAID THAT COMMON SENSE IS A STRANGE R AND AN INCOMPATIBLE PARTNER TO THE INCOME TAX ACT AND IT IS ALSO SAID T HAT EQUITY AND TAX ARE STRANGERS TO EACH OTHER, STILL THIS COURT HAS OFTEN OBSERVED THAT PURPOSIVE INTERPRETATION SHOULD BE GIVEN TO THE PROVISIONS OF THE ACT. IN THE CASE OF OXFORD UNIVERSITY PRESS V. CIT [2001] 247 ITR 65 8/115 TAXMAN 69 THIS COURT HAS OBSERVED THAT A PURPOSIVE INTERPRETATION OF THE PROVISIONS OF THE ACT SHOULD BE GIVEN WHILE CONSIDERING A CLAIM FOR EXEMP TION FROM TAX. IT HAS ALSO ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 13 - BEEN SAID THAT HARMONIOUS CONSTRUCTION OF THE PROVI SIONS WHICH SUBSERVE THE OBJECT AND PURPOSE SHOULD ALSO BE MADE WHILE CONSTR UING ANY OF THE PROVISIONS OF THE ACT AND MORE PARTICULARLY WHEN ON E IS CONCERNED WITH EXEMPTION FROM PAYMENT OF TAX. CONSIDERING THE AFOR ESTATED OBSERVATIONS AND THE PRINCIPLES WITH REGARD TO THE INTERPRETATION OF STATUTE PERTAINING TO THE TAX LAWS, ONE CAN VERY WELL INTERPRET THE PROVISIONS OF SECTION 54 READ WITH SECTION 2(47) OF THE ACT, I.E. DEFINITION OF 'TRANS FER', WHICH WOULD ENABLE THE APPELLANTS TO GET THE BENEFIT UNDER SECTION 54 OF T HE ACT. 9.11. IN VIEW OF THE ABOVE WE ARE NOT IMPRESSED WITH THE FINDING OF LOWER AUTHORITIES. THEREFORE, WE REVERSE THE ORDER OF LD. CIT(A) AND DIRECT THE AO TO DELETE THE ADDITION MADE BY HIM. 10. HENCE, THE GROUND OF APPEAL OF THE ASSESSE E IS ALLOWED. 11. THE 2 ND ISSUE WAS NOT PRESSED BY THE ASSESSEE. THEREFORE W E DISMISS THE SAME AS NOT PRESSED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 30/11/2018 SD/- SD/- (MAHAVIR PRASAD) (WASEEM AHMED) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD; DATED 30/11/2018 &.., .(.. / T.C. NAIR, SR. PS ITA NO.1258/AHD/2015 KAMLESHKUMAR K. CHAUDHARY VS. ITO ASST .YEAR - 2011-12 - 14 - / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. )*+ , / CONCERNED CIT 4. , ( ) / THE CIT(A)-7, AHMEDABAD 5. /01 ((*+ , *+# , ) / DR, ITAT, AHMEDABAD 6. 145 6 / GUARD FILE. / BY ORDER, / ( //TRUE COPY// / ( DY./ASSTT.REGISTRAR) $%, / ITAT, AHMEDABAD 1. DATE OF DICTATION ( WORD PROCEED BY THE HONBLE AM IN HIS COMPUTER) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 27.11.18 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S. 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER