Indurani Venkat, CHENNAI V. ITO, CHENNAI

ITA 1357/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 77294 (ITAT-CHENNAI)
• Duration Of Justice: 11 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 27-03-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 14-06-2013
• Court: TRIBUNAL
• Department Lawyers: ANIRUDH RAI
• Assessee Lawyers: K MEENAKSHISUNDHARAM ITP
• Keywords: Capital asset; Cost of acquisition

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHE NNAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER . / I.T.A. NO. 1357/MDS/2013 / ASSESSMENT YEAR : 2009-10 SMT. INDURANI VENKAT, NO.12, EAST KAMAKOTI NAGAR, 2 ND STREET, VALASARAVAKKAM, CHENNAI-600 087 [PAN: AAHPI 8613 G] ( !% /APPELLANT) VS INCOME TAX OFFICER, BUSINESS WARD-III(1), CHENNAI ( &'!% /RESPONDENT) / APPELLANT BY : SHRI K.MEENAKSHISUNDHARAM, ITP / RESPONDENT BY : SHRI ANIRUDH RAI, CIT-DR / DATE OF HEARING : 27-03-2014 ! / DATE OF PRONOUNCEMENT : 27-05-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-VIII, CHENNA I, DATED 30-04-2013 RELEVANT TO THE ASSESSMENT YEAR (AY) 200 9-10. THE ASSESSEE IN APPEAL HAS IMPUGNED THE FINDINGS OF THE CIT(APPEALS) I.T.A. NO. 1357/MDS/2013 2 WITH RESPECT TO CONFIRMING THE LEVY OF CAPITAL GAIN S IN RESPECT OF SALE OF TWO PROPERTIES. 2. THE ASSESSEE IS AN INDIVIDUAL. DURING THE PERIO D RELEVANT TO THE AY UNDER CONSIDERATION, THE ASSESSEE ENTERED IN TO SALE AGREEMENT DT.07-05-2008 IN RESPECT OF LAND MEASURIN G 12,280 SQ. FT., SITUATED AT VILLAGE KOVUR FOR A CONSIDERATION OF ` 20,50,000/-. THE ASSESSEE HAD PURCHASED THE SAID LAND ON 26-02-1 997 FOR ` 3,50,000/-. THE ASSESSEE, THEREAFTER INCURRED CERT AIN EXPENDITURE ON IMPROVEMENT OF THE SAID LAND VIZ CLEANING OF LAN D, ELECTRICITY AND WATER CONNECTION ETC. THE ASSESSING OFFICER DU RING THE COURSE OF SCRUTINY ASSESSMENT, MADE ADDITION OF THE LONG TERM CAPITAL GAINS ON THE SALE OF LAND AFTER GRANTING TH E BENEFIT OF INDEXATION ON THE COST OF ACQUISITION AND IMPROVEME NT MADE THEREON. THE STAND OF THE ASSESSEE BEFORE ASSESSIN G OFFICER WAS THAT SINCE IT IS ONLY SALE AGREEMENT AND NOT A SALE DEED, THE ASSESSEE IS NOT LIABLE FOR CAPITAL GAINS TAX IN THE AY UNDER CONSIDERATION. THE ASSESSEE WILL OFFER LONG TERM C APITAL GAIN AFTER THE EXECUTION OF SALE DEED. 3. DURING THE PERIOD RELEVANT TO AY.2009-10, THE AS SESSEE SOLD ANOTHER LAND MEASURING 2,220 SQ. FT., AT VILLAGE KO VUR. THE I.T.A. NO. 1357/MDS/2013 3 ASSESSEE CLAIMED THAT THE SAID LAND IS AGRICULTURAL LAND AND IS THUS NOT LIABLE FOR CAPITAL GAINS. THE ASSESSING OFFICER HELD THAT THE LAND IS ONLY VACANT LAND AND NOT AN AGRICULTURAL LAND. THE ASSESSEE HAD CLAIMED CERTAIN EXPENDITURE ON THE IMPROVEMENT OF L AND, SUCH AS LAND FILLING, CONSTRUCTION OF COMPOUND WALL, ELECTR ICITY AND WATER CONNECTION ETC., THE ASSESSING OFFICER GIVING THE B ENEFIT OF INDEXED COST OF IMPROVEMENT MADE ADDITION IN THE IN COME RETURNED BY THE ASSESSEE AS LONG TERM CAPITAL GAINS. AGGRIEVED AGAINST THE ASSESSMENT ORDER, THE ASSESSE E PREFERRED AN APPEAL BEFORE THE CIT(APPEALS). BEFOR E THE CIT(APPEALS), THE ASSESSEE IN RESPECT OF FIRST PARC EL OF LAND SUBMITTED THAT SINCE THE ASSESSEE HAS NOT GIVEN THE POSSESSION OF LAND-IN-QUESTION, THERE IS NO TRANSFER OF LAND WIT HIN THE MEANING OF SECTION 2(47) OF THE OF THE INCOME TAX ACT, 1961 (H EREIN AFTER REFERRED TO AS THE ACT). THE TRANSACTION HAS RUN INTO ROUGH WHETHER AS CIVIL SUIT HAS BEEN FILED BY ONE MS.ESTH ER JAYARANI BEFORE THE DISTRICT MUNSIFF COURT, SRIPERUMBUDUR QU A THE LAND-IN- QUESTION. THE ASSESSEE HAS ALSO FILED CRIMINAL COM PLAINT BEFORE THE COMMISSIONER OF POLICE, ST.THOMAS MOUNT, CHENNA I AGAINST MS.ESTHER JAYARANI. SINCE THE LAND-IN-QUESTION IS UNDER LITIGATION, THE ASSESSEE HAS NOT BEEN ABLE TO HANDOVER THE POSS ESSION OF THE I.T.A. NO. 1357/MDS/2013 4 LAND TO THE VENDEE. IN RESPECT OF THE SECOND PARCE L OF LAND, THE ASSESSEE CONTENDED THAT THE ASSESSING OFFICER HAS C ONSIDERED ONLY THE IMPROVEMENT MADE TO THE LAND AND NOT TO TH E BUILDING ON THE SAID LAND. WHEREAS, THE ASSESSEE HAS PRODUCED RELEVANT DOCUMENTS WITH RESPECT TO THE EXPENDITURE INCURRED DURING THE IMPROVEMENT OF LAND AND BUILDING. THE CIT(APPEALS) SOUGHT REMAND REPORT FROM THE ASSESSING OFFICER ON BOTH TH E ISSUES. IN THE REMAND REPORT, THE ASSESSING OFFICER CONFIRMED THE FILING OF POLICE COMPLAINT AND CIVIL SUIT O.S.NO.86/2009 IN T HE COURT OF THE DISTRICT MUNSIFF JUDGE, SRIPERUMBUDUR. HOWEVER, TH E ASSESSING OFFICER OBSERVED THAT THE ASSESSEE COULD NOT SHOW A NY DOCUMENT WITH RESPECT TO POSSESSION OF LAND. THE CIT(APPEAL S) CONFIRMED THE ORDER OF ASSESSING OFFICER AND DISMISSED THE AS SESSEES APPEAL. AGGRIEVED BY THE ORDER OF THE CIT(APPEALS), THE ASS ESSEE HAS COME IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WE HAVE ALSO EXAMINED THE R EMAND REPORT PLACED AT PAGE 97 TO 103 OF THE PAPER BOOK. DURING THE AY UNDER I.T.A. NO. 1357/MDS/2013 5 CONSIDERATION, THE ASSESSEE HAS SOLD TWO PARCELS OF LAND, ONE MEASURING 12,280 SQ. FT., AND ANOTHER MEASURING 2,2 20 SQ. FT. BOTH THE PARCELS OF LAND ARE AT VILLAGE KOVUR, DIST . KANCHIPURAM. WITH RESPECT TO THE LAND MEASURING 12,280 SQ. FT., IT HAS COME ON RECORD THAT IT IS UNDER LITIGATION. THE ASSESSEE H AS FILED POLICE COMPLAINT BEFORE THE COMMISSIONER OF POLICE, ST.THO MAS MOUNT, CHENNAI AGAINST MS.ESTHER JAYARANI AND MS.ESTHER JA YARANI HAS FILED CIVIL SUIT O.S.NO.86/2009 BEFORE THE DISTRICT MUNSIFF JUDGE, SRIPERUMBUDUR. THE ASSESSING OFFICER IN HIS REMAND REPORT HAS CATEGORICALLY STATED; THE ASSESSEE HAS NOT PRODUCED ANY EVIDENCE AS TO W HETHER THE POSSESSION OF THE PROPERTY HANDED OVER OR NOT. HOWEVER, SINCE THE TITLE OF THE PROPERTY UNDER CONSIDERATION IS IN DISPUTE, APPARENTLY, THERE MAY NOT BE ANY SALE. TO PURCHASE A PROPERTY UNDER DISPUTE, THE PURCHASER MAY HAVE NO O PTION EXCEPT TO WAIT TILL TITLE OF THE SUIT PROPERTY IS C LEARED. SINCE, THE SALE OF LAND ITSELF IS UNDER A CLOUD, TH ERE MAY NOT BE ANY CAPITAL GAIN. IT IS ALSO NOT CLEAR FROM THE RECORDS WHETHER THE POSSESSION OF LAND HAS BEEN GIVEN TO THE TRANSFEREE /VENDEE. THE AR OF THE ASSESSEE HAS SUBMITTED THAT ON ACCOUNT OF LITIGATION, THE VENDEE IS PRESSURIZING THE ASSESSEE TO RETURN THE A MOUNT ALREADY PAID AND THE ASSESSEE IN VIEW OF PROLONGED LITIGATI ON WILL BE CONSTRAINED TO RETURN THE SAME. IN VIEW OF THE FAC TS AND I.T.A. NO. 1357/MDS/2013 6 CIRCUMSTANCES, WE ARE OF THE CONSIDERED OPINION THA T IN RESPECT OF FIRST PARCEL OF LAND MEASURING 12,280 SQ. FT., SINC E THE SALE CANNOT BE COMPLETED ON ACCOUNT OF LITIGATION, NO CAPITAL G AINS CAN BE ASSESSED UNDER THE ACT. NEEDLESS TO SAY THAT THE A SSESSEE SHALL BE LIABLE TO LONG TERM CAPITAL GAIN, ONCE THE SALE TRANSACTION IS COMPLETE AFTER TRANSFER OF LAND TO THE PRESENT VEND EE OR ANY OTHER VENDEE. 5. AS REGARDS THE SECOND PARCEL OF LAND MEASURING 2 ,220 SQ. FT., THE AR HAS PLEADED THAT THE ISSUE BEFORE THE CIT(AP PEALS) WAS NOT WITH RESPECT TO THE NATURE OF THE LAND BUT WITH RESPECT TO THE PRESENCE OF A BUILDING AT THE LAND ON THE DATE OF S ALE. THE ASSESSEE HAS PLACED ON RECORD THE EXTRACTED TRANSLA TION OF THE SALE DEED AT PG. NO.87 TO 89 OF THE PAPER BOOK. TH E EXTRACTED TRANSLATION GIVES THE DETAILS OF PROPERTY. IN THE DETAILS OF PROPERTY IT HAS BEEN MENTIONED THAT IT IS A VACANT PLOT NO.8 WI TH BUILDING THEREON WITH ELECTRICITY CONNECTION HAVING AN AREA OF 2,220 SQ. IN SURVEY NO.363/1 IN KOVUR VILLAGE. ANNEXURE-IA TO T HE SALE DEED SHOWS THAT THERE IS A BUILDING MEASURING 700 SQ. FT ., ON THE LAND. IN VIEW OF THE ABOVE, IT IS EVIDENT THAT THERE IS A BUILDING ON THE LAND-IN-QUESTION. ACCORDINGLY, WE DIRECT THE ASSES SING OFFICER TO GIVE THE BENEFIT OF INDEXATION ON THE BUILDING AFTE R VERIFYING FROM I.T.A. NO. 1357/MDS/2013 7 THE RECORD, THE AGE OF THE BUILDING AND OTHER RELEV ANT FACTORS. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED IN THE AFORESAID TERMS. ORDER PRONOUNCED ON TUESDAY, THE 27 TH MAY, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWA STHY) '#$ / VICE PRESIDENT % &' / JUDICIAL MEMBER (% /CHENNAI, )& /DATED: 27 TH MAY, 2014 TNMM &* +,-, /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. ./0 /CIT(A) 4. . /CIT 5. ,12 3 /DR 6. 245 /GF