Anil Bishnoi , 8-A, V. Asstt. Commisssioner of Income Tax, Chandigarh

ITA 1459/CHANDI/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6763 (ITAT-CHANDIGARH)
• Duration Of Justice: 9 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2014-2015
• Appeal Filed On: 27-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Competent authority
• Section: 54B; 54

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES, CHANDIGARH BEFORE SHRI SANJAY GARG, JUDICIAL MEMBER & MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO. 1459/CHD/2016 ASSESSMENT YEAR: 2014-15 SH. ANIL BISHNOI, VS. THE ACIT, CENTRAL CIRCLE-II , JAIPUR CHANDIGARH PAN NO. ABWPB0914D (APPELLANT) (RESPONDENT) APPELLANT BY : SH. T.N.SINGLA RESPONDENT BY : SMT.CHANDERKANTA DATE OF HEARING : 27.07.2017 DATE OF PRONOUNCEMENT : 27.09.2017 ORDER PER SANJAY GARG, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSESS EE AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX(APPEALS)-3 [HER EINAFTER REFERRED TO AS CIT(A)], GURGAON DATED 31.10.2016. 2. THE SOLE ISSUE RAISED BY THE ASSESSEE IN THIS AP PEAL IS AGAINST THE ACTION OF THE LOWER AUTHORITIES OF DENIAL OF DE DUCTION U/S 54B OF THE ACT IN RELATION TO THE INVESTMENT IN AGRICULTUR AL LAND. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DURING THE YEAR UNDER 2 CONSIDERATION SOLD LAND FOR A CONSIDERATION OF RS. 1,29,00,000/- AND CLAIMED DEDUCTION U/S 54B OF THE INCOME-TAX ACT, 19 61 (IN SHORT 'THE ACT') CLAIMING PURCHASE OF FOLLOWING AGRICULTURAL L ANDS:- I) AGRICULTURAL LAND AT KIRATPUR ROTWARA, TEHSIL PHAGI JAIPUR OF RS. 28,84,500/- THOUGH A REGISTERED SALE DEED DATED 6.5.2013. II) AGRICULTURAL LAND AT VILLAGE DUDU, TEHSIL MOJMABAD, JAIPUR FOR RS. 1,00,00,000/- THROUGH AN AGREEMENT TO SELL DATED 16.4.2014. THE ASSESSING OFFICER THOUGH ALLOWED THE DEDUCTION IN RESPECT OF PURCHASE OF LAND AT S.NO. (I) ABOVE, HOWEVER, HE SH OW CAUSED THE ASSESSEE IN RESPECT OF DEDUCTION CLAIMED IN RESPECT OF LAND AS MENTIONED AT S.NO. (II) ABOVE, OBSERVING THAT FOR G ETTING THE CLAIM OF DEDUCTION IT IS NECESSARY THAT THE SALE DEED SHOULD BE REGISTERED, WHEREAS, IN THE CASE OF PURCHASE OF LAND AT VILLAGE DUDU ALLEGEDLY FOR A SUM OF RS. 1,00,00,000/-, IT WAS BY WAY OF AN AGR EEMENT TO SELL AND NOT THROUGH REGISTERED DEED. THE ASSESSEE EXPLAINED THAT THE ENTIRE PAYMENT FOR PURCHASE OF THE LAND WAS MADE THROUGH C HEQUES AND THE POSSESSION WAS HANDED OVER TO THE ASSESSEE BY THE S ELLER WITH ALL THE RIGHTS TO USE THE SAID LAND OR TO SELL IT FURTHER. THE NAME OF THE ASSESSEE HAD ALSO BEEN ENTERED IN KASHRA GIRDAWARI A DOCUMENT SHOWING THE POSSESSION AND CULTIVATION OF THE LAND . IT WAS ALSO EXPLAINED THAT AT THE TIME OF THE EXECUTION OF THE AGREEMENT TO SELL, THE ASSESSEE WAS NOT AWARE OF THE STAY ORDER TO THE SALE OF LAND ISSUED BY THE ADM AND HENCE DUE TO THE ABOVE LEGAL OBSTRUCTION, THE SALE DEED COULD NOT BE REGISTERED. 3 3. THE LD. ASSESSING OFFICER, HOWEVER, REJECTED TH E ABOVE CONTENTION OF THE ASSESSEE AND OBSERVED THAT THE W ORD USED IN SECTION 54B OF THE ACT IS PURCHASE AND NOT THE WORD TRA NSFER AS DEFINED U/S 2(47) OF THE ACT. HE OBSERVED THAT THOUGH AS PE R THE DEFINITION OF WORD TRANSFER IT IS NOT NECESSARY TO GET DEED REG ISTERED, HOWEVER, IN THE CASE OF PURCHASE OF IMMOVABLE PROPERTY, THE SAM E CAN BE DONE THROUGH REGISTERED SALE DEED ONLY. 4. THE ASSESSEE UNSUCCESSFULLY CONTESTED THE APPEAL BEFORE LD. CIT(A). 5. BEFORE US, LD. AUTHORISED REPRESENTATIVE OF THE ASSESSEE HAS REITERATED HIS SUBMISSIONS AS WERE MADE BEFORE THE LOWER AUTHORITIES. HE HAS FURTHER SUBMITTED THAT THE ASSESSEE WAS PREV ENTED BY SUFFICIENT CAUSE FOR NOT REGISTERING THE DEED OF TH E PURCHASE OF PROPERTY AS THE ALIENATION OF THE SAME WAS STAYED B Y THE ADM AND THAT THE ASSESSEE WAS NOT AWARE OF THE SAID STAY OR DER AT THE TIME OF ENTERING INTO THE TRANSACTIONS. HE HAS FURTHER RELI ED UPON THE FOLLOWING DECISIONS AND SUBMITTED THAT FOR THE CLAI M OF DEDUCTION U/S 54 OF THE ACT, THE REGISTRATION OF SALE DEED IS NOT NECESSARY. IT IS ENOUGH IF THE ASSESSEE HAS PAID THE CONSIDERATION, ACQUIRED THE POSSESSION WITH FULL RIGHTS AND HAS FULFILLED OTHER REQUIREMENTS OF THE PROVISIONS OF THE ACT:- 1. SH. SANJEEV LAL ETC. VS. CIT 269 CTR 001(SC) 2014 2. CIT VS. T.N. ARAVINDA REDDY (1979) 12 CTR 0423 ( SC) 3. CIT VS K. JELANI BASHA (2002) 256 ITR 0282 (MADR AS) 4. CIT V RAM GOPAL (2015) 372 ITR 498 (DELHI) 5. BALRAJ VS. CIT (2002) 254 ITR 22 (DELHI) 4 6. CIT VS. R.L. SOOD (2000) 245 ITR 727 (DELHI) 7. CIT VS. DR LAXMICHAND NARPAL NAGDA, (1995) 211 I TR 804 (BOM.) 8. CIT V MRS. SHAHZADA BEGUM, (1988) 73 CTR 0229 (A .P.) 9. S. DABIR SINGH, JALANDHAR VS. DEPARTMENT OF INCO ME TAX, ITA NO. 27 (ASR.)/2015 6. ON THE OTHER HAND, LD. DR HAD RELIED UPON THE FI NDINGS OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND HAVE ALS O GONE THROUGH THE RECORD. ADMITTEDLY, THE ASSESSEE PAID THE CONSI DERATION THROUGH CHEQUES AND ALSO OBTAINED THE POSSESSION OF THE PRO PERTY IN QUESTION. THE CLAIM OF DEDUCTION U/S 54B OF THE ACT HAS BEEN DENIED TO THE ASSESSEE ON THE GROUND THAT THE SAID DEED OF PURCHA SE / SALE HAD NOT BEEN REGISTERED WITH THE COMPETENT AUTHORITY. THE H ON'BLE SUPREME COURT IN THE CASE OF SANJEEV LAL VS. CIT (SUPRA) HAS DISCUSSED AS TO WHETHER THE AGREEMENT TO SELL CAN BE CONSIDERED TO BE AN INSTRUMENT OF TRANSFER OF PROPERTY. THE HON'BLE SUPREME COURT OBSERVED THAT THOUGH IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGRE EMENT TO SELL IN RESPECT OF IMMOVABLE PROPERTY, A RIGHT IN PERSONAM IS CREATED IN FAVOUR OF THE TRANSFEREE / VENDEE AND WHEN SUCH A R IGHT IS CREATED, THE VENDOR IS RESTRAINED TO SELL THE SAID PROPERTY TO S OMEONE ELSE BECAUSE THE TRANSFEREE HAS GOT A LEGITIMATE RIGHT TO ENFORC E SPECIFIC PERFORMANCE OF SAID AGREEMENT TO SELL. IN NORMAL C IRCUMSTANCES, IT CANNOT BE SAID THAT ENTIRE PROPERTY HAVE BEEN SOLD AT THE TIME WHEN AGREEMENT TO SELL IS ENTERED INTO. HOWEVER, LOOKING AT THE PROVISIONS OF SECTION 2(47) OF THE INCOME-TAX ACT, 1961, TRAN SFER IN RELATION TO 5 THE CAPITAL ASSET IS COMPLETE IF A RIGHT IN A PROPE RTY IS EXTINGUISHED BY EXECUTING AN AGREEMENT TO SELL, THE CAPITAL ASS ET CAN BE DEEMED TO HAVE BEEN TRANSFERRED. THE HON'BLE SUPREME COURT TH US HELD THAT THE TRANSFER WAS COMPETE ON THE EXECUTION OF AGREEMENT TO SELL AND THAT THE ASSESSEE WAS ENTITLED TO CLAIM OF DEDUCTION U/S 54 IN RESPECT OF PURCHASE OF NEW RESIDENTIAL HOUSE SUBSEQUENT TO SUC H TRANSFER THROUGH AGREEMENT TO SELL. IN THE CASE OF T.R. ARVINDA RE DDY (SUPRA), THE HON'BLE SUPREME COURT WHILE INTERPRETING THE WORD PURCHASE REFERRED TO IN SECTION 54(1) OF THE ACT HELD THAT T HE ORDINARY MEANING OF THE WORD PURCHASE AS BUYING FOR PRICE OR EQUIV ALENT OF PRICE BY PAYMENT IN KIND OR ADJUSTMENT TOWARDS AN OLD DEBT O R OTHER MONETARY CONSIDERATION AND THAT THERE WAS NO REASON TO DIVOR CE THIS ORDINARY MEANING FROM THE LEGAL MEANING OF THE WORD IN SECTI ON 54(1) OF THE INCOME TAX ACT. THE DECISION OF THE HON'BLE SUPREM E COURT HAS BEEN FURTHER FOLLOWED BY THE HON'BLE BOMBAY HIGH CO URT IN THE CASE OF CIT VS. DR. LAXMICHAND NARPAL NAGDA, (SUPRA), WHEREIN THE HON'BLE BOMBAY HIGH COURT HAS OBSERVED AS UNDER:- 6. TAKING INTO CONSIDERATION THE LETTER AS WELL AS THE SPIRIT OF SECTION 54 AND THE TOWARDS USED BEFORE THE WORD PURCHASE IN SUB-SECTION (2) OF SECTION 54, IT SEEMS TO US THAT THIS SAID WORD IS N OT USED IN THE SENSE OF LEGAL TRANSFER AND, THEREFORE, THE HOLDING OF A LEGAL TITLE WITHIN A PERIOD OF ONE YEAR IS NOT A CONDITION PRECEDENT FOR ATTRACTING SECTION 54. IN THE INSTANT CASE, THE WHOLE CONSIDERATION WAS PAID, POSSESSION OF THE FLAT WAS OBTAINED AND IT WAS ACTUALLY PUT TO USE FOR DWELLING WITHIN FOUR MONTHS, AS A RESULT EXEMPTION CONTEMPLATED U/S 54 WAS CLEARLY ATTRACTED. 6 8. WE MAY FURTHER LIKE TO ADD HERE THAT IF CAPITAL GAINS ARE DEEMED TO HAVE BEEN EARNED BY THE ASSESSEE ON TRANSFER O F LAND AS PER THE PROVISIONS OF SECTION 2(47) OF THE ACT, AS PER WHIC H THE REGISTRATION OF THE SALE DEED IS NOT NECESSARY, THE CONSEQUENCES ARE THAT THE SELLER OR THE ASSESSEE IS SAID TO HAVE TRANSFERRED HIS RIG HT IN PROPERTY AND CONSEQUENTLY THOSE RIGHTS ARE ACQUIRED BY THE TRAN SFEREE; IF IN THE CASE OF TRANSFEROR THE SAME IS TO BE TREATED AS SAL E, THEN, WE DO NOT FIND ANY REASON TO GIVE A DIFFERENT MEANING TO THE WORD PURCHASE. IF SOMEONE HAS SOLD A PROPERTY, CONSEQUENTLY THE OTHER PERSON HAS PURCHASED THE SAID PROPERTY. IF THE TRANSFER OF PR OPERTY IS COMPLETE AS PER THE DEFINITION OF TRANSFER U/S 2(47) OF THE ACT, THE ASSESSEE IS MADE LABILE TO PAY TAX ON THE CAPITAL GAINS EARNED BY HIM, ON THE SAME ANALOGY, THE TRANSFER IS ALSO COMPLETE IN FAVO UR OF THE PURCHASER ALSO. THE PROVISIONS CANNOT BE INTERPRETED IN A MA NNER TO SAY THAT TRANSFER VIS-A-VIS SELLING IS COMPLETE BUT VIS-A-VI S PURCHASE IS NOT COMPLETE IN RESPECT OF SAME TRANSACTION. IN VIEW OF THIS, THE WORD PURCHASE CANNOT BE INTERPRETED AND DETACHED FROM THE DEFINITION OF WORD TRANSFER AS GIVEN U/S 2(47) OF THE ACT. WHEN THE TRANSFER TAKES EFFECT AS PER THE PROVISIONS OF SECTION 2(47) OF TH E ACT, IF A LIABILITY TO PAY TAX ARISE IN THE CASE OF THE SELLER, THE CON SEQUENT RIGHT TO GET DEDUCTION ON THE PURCHASE OF PROPERTY ACCRUES IN FA VOUR OF THE PURCHASER, IF HE OTHERWISE IS SO ELIGIBLE TO CLAIM IT AS PER THE RELEVANT PROVISIONS OF THE ACT. 7 9. IN VIEW OF OUR ABOVE OBSERVATIONS, THE ASSESSING OFFICER IS DIRECTED TO GIVE THE BENEFIT OF DEDUCTION U/S 54B O F THE ACT IN RESPECT OF THE PURCHASE OF THE PROPERTY AT VILLAGE DADU TO THE ASSESSEE. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27.09.2017 SD/- SD/- ( ANNAPURNA GUPTA) (SANJAY GARG) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 27 TH SEPT. 2017 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR