DCIT, CHENNAI V. Smt. A.H.Shakeetha and Others L/Rs of Late Shri A.N.A.Haja Moideen, CHENNAI

ITA 153/CHNY/2008

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 90515 (ITAT-CHENNAI)
• Duration Of Justice: 7 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-06-2015
• Appeal Filed By: Department
• Bench Allotted: A
• Next Hearing Date: 27-04-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 29-01-2008
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: DR ANITA SUMANTH
• Keywords: Cost of acquisition
• Section: 54F; 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : CHENNAI . . . , . ! , ' # $ [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.153/MDS/2008 & C.O.NO.50/MDS/2008 / ASSESSMENT YEAR : 2002-03 THE DY. COMMISSIONER OF INCOME-TAX BUSINESS CIRCLE I CHENNAI VS. SMT. A.H.SHAKEETHA & OTHERS L/ RS OF LATE SHRI A.N.A. HAJA MOIDEEN 26, SOUNDARARAJAN STREET T. NAGAR, CHENNAI 600 017 [PAN AAAPH 9123 P] (APPELLANT) (RESPONDENT/CROSS OBJECOR) / APPELLANT BY : SHRI P. RADHAKRISHNAN, JCIT /RESPONDENT BY : DR. ANITA SUMANTH, ADVOCATE / DATE OF HEARING : 27 - 0 4 - 2015 ! / DATE OF PRONOUNCEMENT : 19 - 0 6 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE REVENUE AND THE CROSS OBJECTIO N OF THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE COM MISSIONER OF INCOME-TAX (APPEALS)-VI, CHENNAI, DATED 17.102007 A ND PERTAINS TO ASSESSMENT YEAR 2002-03. ITA NO.153/08 CO NO.50/08 :- 2 -: 2. SHRI P. RADHAKRISHNAN, THE LD. DEPARTMENTAL REPRESE NTATIVE SUBMITTED THAT THE ASSESSEE ENTERED INTO AN AGREEM ENT FOR SALE OF 10,396 SQ FT OF LAND AT RANGANATHAN STREET, T. NAG AR ON 22.7.1998 WITH SHRI S.K.A. MOHAMED SHERIFF AND SMT. M.MAJEEDA BEGUM. AS PER THE AGREEMENT, THE PROPOSED PURCHASER OF THE PROPER TY HAS TO PAY INTEREST @ 24% PER ANNUM ON THE AMOUNT PAYABLE IN C ASE THE ENTIRE SALE CONSIDERATION WAS NOT PAID WITHIN 30 MONTHS FR OM THE DATE OF THE AGREEMENT. HOWEVER, THIS AGREEMENT DATED 22.7.19 98 WAS CANCELLED BY ANOTHER AGREEMENT DATED 31.7.2000. ACCORDING TO THE LD. DR, THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE PROPERTY COULD NOT BE DEVELOPED AS CONTEMPLATED IN TERMS OF THE AG REEMENT DATED 22.7.1998, THEREFORE, IT WAS CANCELLED BY ANOTHER A GREEMENT DATED 31.7.2000. SUBSEQUENTLY, THE ASSESSEE ENTERED IN TO ANOTHER AGREEMENT ON 30.10.2000 WITH (I) SHRI S. YOGARATHNA M, (II) SHRI S. RAJARATHNAM AND (III) SHRI S. SELVARATHNAM, FOR SA LE OF THE VERY SAME PROPERTY FOR ` 3,50,00,000/-. AS PER THIS AGREEMENT, A SUM OF ` 1 CRORE HAS TO BE PAID BY THE PROPOSED PURCHASERS DIR ECTLY TO THE PREVIOUS AGREEMENT HOLDERS NAMELY SHRI S.K.A. MOHAM ED SHERIFF AND SMT. M.MAJEEDA BEGUM. IN THE RETURN OF INCOME THE ASSESSEE CLAIMED THIS PAYMENT OF ` 1 CRORE TO THE EARLIER AGREEMENT HOLDERS AS DEDUCTION WHILE COMPUTING THE CAPITAL GAINS. ACCOR DING TO THE LD. DR, THE ASSESSEE HAS ALSO CLAIMED ANOTHER SUM OF ` 50 LAKHS WHICH WAS ITA NO.153/08 CO NO.50/08 :- 3 -: SAID TO BE WITHHELD BY THE PURCHASERS AND PAID IN T HE NEXT FINANCIAL YEAR ON THE GROUND THAT IMMEDIATELY AFTER RECEIPT O F THE SAME IT WAS DEPOSITED IN THE CAPITAL GAINS ACCOUNT. REFERRING TO THE ASSESSMENT ORDER, THE LD. DR SUBMITTED THAT AS PER THE AGREEME NT DATED 22.7.1998, THE ASSESSEE HAS TO TRANSFER 97% OF THE UNDIVIDED SHARE IN LAND AT DOOR NO.17/2 RANGANATHAN STREET, T. NAGAR, CHENNAI 17. THE AGREEMENT ALSO PROVIDES FOR PAYMENT OF INTEREST @ 24% PER ANNUM IN CASE IT WAS NOT PAID WITHIN A PERIOD OF 30 MONTHS. EVEN THOUGH THE ASSESSEE CLAIMED THAT THE DEVELOPMENT WORK COULD NOT BE CARRIED OUT AS PER THE AGREEMENT IT IS NOT KNOWN WH AT KIND OF DEVELOPMENT WAS AGREED BETWEEN THE PARTIES AS PER T HE AGREEMENT. AS PER THE TERMS AND CONDITIONS, THE ASSESSEE GOT CLEARANCE FROM THE INCOME TAX DEPARTMENT AS REQUIRED U/S 230A OF THE ACT. THE ASSESSEE HAS ALSO EXECUTED POWER OF ATTORNEY IN FAV OUR OF THE PURCHASERS. ACCORDING TO THE LD. DR, NO FURTHER DE VELOPMENT WAS CONTEMPLATED IN THE AGREEMENT. EVEN THOUGH THE PRE VIOUS AGREEMENT HOLDERS WAS SHOWN AS PARTIES IN THE AGREEMENT DATED 30.10.2000, THERE WAS NO REFERENCE ABOUT THE PREVIOUS AGREEMENT IN THE SALE DEED EXECUTED ON 26.4.2001. HOWEVER, A REFERENCE WAS MA DE IN THE SALE DEED WITH REGARD TO PAYMENT OF ` 1 CRORE TO THE PREVIOUS AGREEMENT HOLDERS BY THE PURCHASERS AT THE REQUEST OF THE VEN DOR. ACCORDING TO THE LD. DR, U/S 48 OF THE ACT, FOR THE PURPOSE OF COMPUTING CAPITAL ITA NO.153/08 CO NO.50/08 :- 4 -: GAIN, THE EXPENDITURE INCURRED IN CONNECTION WITH T RANSFER OF THE LAND AND THE COST OF ACQUISITION OF THE ASSET AND IMPROV EMENT, IF ANY, HAS TO BE DEDUCTED FROM THE SALE CONSIDERATION. IN THI S CASE, THE PAYMENT OF ` 1 CRORE PAID BY THE ASSESSEE IS NEITHER TOWARDS E XPENDITURE NOR DEVELOPMENT OF THE PROPERTY, THEREFORE, IT CANNOT B E DEDUCTIBLE WHILE COMPUTING CAPITAL GAIN U/S 48 OF THE ACT. IT IS N OBODYS CASE, ACCORDING TO THE LD. DR, THAT THE PROPERTY WAS DEVE LOPED AT ANY POINT OF TIME. EVEN THOUGH THE ASSESSEE CLAIMED BEFORE THE ASSESSING OFFICER THAT THE PREVIOUS AGREEMENT HOLDERS OBTAINE D APPROVAL FOR CONSTRUCTION OF THE BUILDING, PLANNING PERMISSION E TC, NO SUCH MATERIAL IS AVAILABLE ON RECORD TO SUGGEST THAT SUCH PLANNIN G PERMISSION WAS OBTAINED BY THEM. ACCORDING TO THE LD. DR, MERELY BECAUSE PLANNING PERMISSION WAS OBTAINED ON THE BASIS OF THE POWER O F ATTORNEY GIVEN BY THE ASSESSEE, IT CANNOT BE SAID THAT THERE WAS A DEVELOPMENT OF PROPERTY. ACCORDING TO THE LD. DR, IT IS THE ASSE SSEES RESPONSIBILITY TO HANDOVER THE VACANT PHYSICAL POSSESSION OF THE PROP ERTY TO THE PROSPECTIVE PURCHASER, THEREFORE, THE EXPENDITURE I F ANY, INCURRED PRIOR TO THE ALE CANNOT BE CONSIDERED AS EXPENDITURE INCU RRED IN CONNECTION WITH TRANSFER OF PROPERTY OR IMPROVEMENT OF THE PRO PERTY U/S 48 OF THE ACT. 3. THE LD. DR FURTHER SUBMITTED THAT THE AGREEMENT WAS CANCELLED SINCE THE PURCHASER COULD NOT PAY THE BAL ANCE SALE ITA NO.153/08 CO NO.50/08 :- 5 -: CONSIDERATION WITHIN THE TIME PERIOD. THEREFORE, T HE PAYMENT OF ` 1 CRORE TO THE PREVIOUS AGREEMENT HOLDERS IS NOT FOR THE PURPOSE OF CANCELLING THE AGREEMENT. IT IS FOR THE PURPOSE OF DIVERTING THE PROFIT ARISING OUT OF THE TRANSFER OF THE PROPERTY. THE L D. DR FURTHER SUBMITTED THAT AS PER THE SALE DEED, THE PROPERTY W AS SOLD AS IS WHERE IS BASIS. THEREFORE, THE EXPENDITURE, IF ANY, INCU RRED PRIOR TO THE SALE AGREEMENT CANNOT BE CONSIDERED AS PART OF THE SALE CONSIDERATION. ACCORDING TO THE LD. DR, WHEN THERE IS A DEFAULT BY THE PREVIOUS AGREEMENT HOLDERS, THE ASSESSEE COULD HAVE APPROPR IATED THE ADVANCE OF ` 42 LAKHS PAID IN PURSUANCE TO THE AGREEMENT. THE ASSESSEE NOT ONLY REFUNDED THE ADVANCE OF ` 42 LAKHS BUT ALSO CLAIMED TO HAVE PAID ` 1 CRORE. THIS SHOWS THAT THE EXISTING BUILDING WA S NOT EVEN ATTEMPTED TO BE DEMOLISHED BY THE PREVIOUS AGREEME NT HOLDERS. REFERRING TO THE CLAIM OF THE ASSESSEE THAT THE PA YMENT OF ` 1 CRORE WAS MADE FOR THE EFFORTS AND SERVICES OF THE AGREEM ENT HOLDERS FOR EVICTION OF THE TENANTS, PREPARATION OF PLANS, DEVE LOPMENT AND IMPROVEMENT EXPENSES, THE LD. DR SUBMITTED THAT NO EVIDENCE WAS AVAILABLE ON RECORD TO SUGGEST THAT ANY OF THE TENA NTS IN THE PROPERTY WAS EVICTED BY THE PREVIOUS AGREEMENT HOLDERS OR TH E PLAN WAS PREPARED AS CLAIMED BY THE ASSESSEE. THEREFORE, T HE PAYMENT OF ` 1 CRORE TO SHRI S.K.A. MOHAMED SHERIFF AND SMT. M.MAJ EEDA BEGUM IS NOT GENUINE AND IT WAS A SHAM TRANSACTION. ACCORD ING TO THE LD. DR, ITA NO.153/08 CO NO.50/08 :- 6 -: AT THE BEST, IT MAY BE AN APPLICATION OF INCOME, TH EREFORE, IT CANNOT BE TREATED AS PAYMENT BY OVERRIDING TITLE. 4. REFERRING TO THE CLAIM OF DEDUCTION OF ` 50 LAKHS, THE LD. DR SUBMITTED THAT THE SALE DEED CLEARLY SAYS THAT THE ASSESSEE HAS RECEIVED MONEY ON EXECUTION OF THE SALE DEED. SUBS EQUENTLY, THE ASSESSEE CLAIMED THAT AN INDEMNITY BOND WAS EXECUTE D AND THE MONEY WAS PAID ON 16.11.2002. THE ASSESSEE FURTHER CLAI MS THAT THIS WAS DEPOSITED IN NABARD BOND FOR CLAIMING EXEMPTION U/ S 54F OF THE ACT. REFERRING TO SECTION 54F OF THE ACT, MORE PARTICULA RLY, SUB-CLAUSE (4), THE LD. DR SUBMITTED THAT THE NET CONSIDERATION WHI CH WAS NOT APPROPRIATED BY THE ASSESSEE TOWARDS THE PURCHASE OF THE NEW ASSET WITHIN ONE YEAR BEFORE THE DATE ON WHICH THE TRANSF ER OF THE ORIGINAL ASSET TOOK PLACE OR WHICH IS NOT UTILIZED BY HIM FO R PURCHASE OR CONSTRUCTION OF THE NEW ASSET BEFORE THE DUE DATE O F FILING THE RETURN OF INCOME U/S 139(1), SHALL BE DEPOSITED IN AN ACC OUNT IN ANY SUCH BANK OR INSTITUTION AS MAY BE SPECIFIED. IN THIS C ASE, THE AMOUNT WAS NOT DEPOSITED WITHIN THE PERIOD PROVIDED U/S 139(1 ) OF THE ACT. MOREOVER, THERE IS A CLEAR EVIDENCE TO SHOW THAT TH E ASSESSEE HAS RECEIVED THE ENTIRE SALE CONSIDERATION ON THE DATE OF SALE DEED. 5. THE LD. DR FURTHER SUBMITTED THAT THE ASSESSEE HAS ALSO CLAIMED AN AMOUNT OF ` 50,000/- TOWARDS BROKERAGE. ACCORDING TO THE ITA NO.153/08 CO NO.50/08 :- 7 -: LD. DR, THE IDENTITY OF THE BROKER AND GENUINENESS OF THE PAYMENT WERE NOT PROVED BEFORE THE ASSESSING OFFICER. IN F ACT, ACCORDING TO THE LD. DR, NO DETAILS WERE FILED BEFORE THE ASSESSING OFFICER. THE LD. DR SUBMITTED THAT IN FACT THE PROPERTY WAS SOLD TO THE EXISTING TENANT, THEREFORE, THE QUESTION OF PAYMENT OF ANY BROKERAGE WOULD NOT ARISE FOR CONSIDERATION. 6. ON THE CONTRARY, DR. ANITA SUMANTH, LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT ADMITTEDLY, THE ASSESSEE E NTERED INTO AN AGREEMENT FOR SALE OF PROPERTY AT 17, RANGANATHAN S TREET, T. NAGAR, CHENNAI- 17, WITH SHRI S.K.A. MOHAMED SHERIFF AND S MT. M.MAJEEDA BEGUM ON 22.7.1998. THOUGH THE ASSESSEE RECEIVED PART OF THE SALE CONSIDERATION AS ADVANCE, THE SALE COULD NOT BE COM PLETED AND IN PURSUANCE TO THE POWER OF ATTORNEY GIVEN TO THE PRO POSED PURCHASER, HE MADE EFFORTS TO VACATE THE EXISTING TENANTS AND ALSO INCURRED EXPENDITURE FOR OBTAINING PLANNING PERMISSION FROM THE LOCAL AUTHORITIES. SINCE THE AGREEMENT COULD NOT BE PROC EEDED WITH FURTHER, THE SAME WAS CANCELLED BY ANOTHER AGREEMENT DATED 3 0.10.2000. ACCORDING TO THE LD. COUNSEL, AS PER THE ORIGINAL A GREEMENT DATED 22.7.1998, THE AGREED SALE CONSIDERATION WAS ` 2 CRORES. AFTER CANCELLING THE AGREEMENT DATED 22.7.1998, THE ASSE SSEE WAS ABLE TO ENTER INTO ANOTHER AGREEMENT ON 30.10.2000 FOR A SA LE CONSIDERATION ITA NO.153/08 CO NO.50/08 :- 8 -: OF ` 3,50,00,000/- IN RESPECT OF THE VERY SAME PROPERTY . BUT FOR CANCELLATION OF THIS AGREEMENT, ACCORDING TO THE LD . COUNSEL, THE ASSESSEE COULD NOT HAVE SOLD THE PROPERTY FOR ` 3,50,00,000/-. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE ASSESSEE PAID THE MONEY IN RESPECT OF THE IMPROVEMENTS MADE BY THE AGREEMENT H OLDERS FOR GETTING THE PLANNING PERMISSION FROM LOCAL AUTHORIT IES AND EFFORTS TAKEN BY HIM TO EVICT THE TENANTS, THIS HAS TO BE CONSIDE RED AS COST OF IMPROVEMENT IN THE PROPERTY. ACCORDING TO THE LD. COUNSEL, WITHOUT CANCELLING THE AGREEMENT ENTERED INTO WITH SHRI S.K .A. MOHAMED SHERIFF AND SMT. M.MAJEEDA BEGUM, THE ASSESSEE COU LD NOT HAVE SOLD THE PROPERTY TO SHRI S. YOGARATHNAM, SHRI S. RA JARATHNAM AND SHRI S. SELVARATHNAM. THEREFORE, THE PAYMENT OF ` 1 CRORE HAS TO BE CONSIDERED AS AN EXPENDITURE INCURRED FOR TRANSFER OF THE PROPERTY AND ALSO AS COST OF IMPROVEMENT. 7. REFERRING TO THE ORDER OF THE CIT(A), THE LD. COUNS EL SUBMITTED THAT THE CIT(A), FOLLOWED THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF CWT VS P.N. SIKAND [1977] 107 ITR 922. 8. THE LD. COUNSEL FURTHER POINTED OUT THAT AFTER ENTE RING INTO THE AGREEMENT, THE ASSESSEE HAS ALSO OBTAINED NOC FROM THE INCOME TAX DEPARTMENT UNDER CHAPTER XXC OF THE ACT. THERE FORE, IT CANNOT BE SAID THAT THE TRANSACTION OF AGREEMENT FOR SALE AND SUBSEQUENT ITA NO.153/08 CO NO.50/08 :- 9 -: CANCELLATION WAS NOT GENUINE. ACCORDING TO THE LD. COUNSEL, THE ENTIRE TRANSACTION WAS PROPERLY EVIDENCED AND THE ASSESSE E HAS FILED ALL THE MATERIAL BEFORE THE LOWER AUTHORITIES, THEREFORE, T HE CIT(A) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. 9. REFERRING TO THE AMOUNT OF ` 50 LAKHS RETAINED BY THE VENDOR, THE LD. COUNSEL SUBMITTED THAT IN FACT THER E WAS A DISPUTE WITH REGARD TO THE TITLE OF THE PROPERTY. ACCORDING TO THE LD. COUNSEL, THE BROTHER OF THE ASSESSEE CHALLENGED THE TITLE OF TH E ASSESSEE CLAIMING A SHARE IN THE PROPERTY. THEREFORE, THE PURCHASER ON THE BASIS OF THE INDEMNITY BOND DATED 16.4.2001 WITHHELD AN AMOUNT O F ` 50 LAKHS. HOWEVER, THE SAME WAS PAID TO THE ASSESSEE ON 16.1 1.2002 WHICH IS CORRESPONDING TO ASSESSMENT YEAR 2003-04. DURING T HE SAME YEAR THE ASSESSEE DEPOSITED THE AMOUNT IN THE NABARD ACCOUNT . THEREFORE, ACCORDING TO THE LD. COUNSEL, THE ASSESSEE IS ENTI TLED FOR DEDUCTION U/S 54F OF THE ACT IN RESPECT OF THE AMOUNT WITHHEL D BY THE PURCHASER. 10. ACCORDING TO THE LD. COUNSEL, THE ASSESSEE HAS PA ID THE AMOUNT OF ` 2,50,000/- AS BROKERAGE FOR SALE OF THE PROPERTY. THIS WAS NEVER DISPUTED BY THE ASSESSING OFFICER. THERE FORE, THE ASSESSEE THOUGHT IT NOT TO FILE ANY DETAILS WITH REGARD TO T HE BROKERAGE AND PAYMENT THEREOF. ITA NO.153/08 CO NO.50/08 :- 10 -: 11. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FIRST ISSUE ARISES FOR CONSIDERATION IS PAYMENT OF ` 1 CRORE TO THE PREVIOUS AGREEMENT HOLDERS. IT IS NOT IN DISPUTE THAT THE ASSESSEE E NTERED INTO AN AGREEMENT FOR SALE OF THE PROPERTY WITH SHRI S.K.A. MOHAMED SHERIFF AND SMT. M.MAJEEDA BEGUM ON 22.7.1998 FOR SALE OF T HE PROPERTY SITUATED AT DOOR NO.17/2 RANGANATHAN STREET, T. NAG AR, CHENNAI. THE ASSESSEE HAS FILED THE COPIES OF THE AGREEMENT FOR SALE AT PAGE 30 OF THE PAPER BOOK. IN THE AGREEMENT FOR SALE, THE ADD RESSES OF THE PURCHASERS ARE SHOWN AS NO.17, RANGANATHAN STREET, T. NAGAR. THE AGREEMENT FURTHER SAYS THAT THE ASSESSEE OFFERED T O SELL 97% OF THE UNDIVIDED SHARE OF THE LAND IN SCHEDULE A OF THE PR OPERTY FOR A TOTAL SALE CONSIDERATION OF ` 2 CRORES. FROM THE AGREEMENT DATED 22.7.1998 AND THE AGREEMENT FOR CANCELLATION OF THE SAME DATE D 31.7.2000 IT IS OBVIOUS THAT SHRI S.K.A. MOHAMED SHERIFF AND SMT. M .MAJEEDA BEGUM ARE OCCUPYING THE VERY SAME PROPERTY. IT IS NOT KN OWN IN WHAT CAPACITY THEY ARE IN POSSESSION OF THE PROPERTY AT 17 RANGANATHAN STREET. PROBABLY, THEY MAY BE IN OCCUPATION EITHER AS A TENANT OR AS A MORTGAGEE. HOWEVER, IN THE ASSESSMENT ORDER, THE AS SESSING OFFICER HAS REFERRED THE NAMES OF THE TENANTS INDICATING TH AT APART FROM THE PURCHASERS NAMELY SHRI S.K.A. MOHAMED SHERIFF AND S MT. M.MAJEEDA BEGUM, THREE MORE TENANTS ARE OCCUPYING THE PROPERT Y. THEREFORE, ITA NO.153/08 CO NO.50/08 :- 11 -: THE PROPOSED PURCHASER AS PER THE AGREEMENT DATED 2 2.7.1998 IS A TENANT OF THE PROPERTY ON THE DATE OF THE AGREEMENT . THE ASSESSEE CLAIMS THAT THE AGREEMENT COULD NOT BE PROCEEDED WI TH THEREFORE, IT WAS CANCELLED BY ANOTHER AGREEMENT DATED 31.7.2000. WE HAVE CAREFULLY GONE THROUGH THE AGREEMENT DATED 31.7.200 0, COPY OF WHICH IS AVAILABLE AT PAGE 65 OF THE PAPER BOOK. THIS AG REEMENT SHOWS THAT THE PAYMENT OF ` 1 CRORE HAS TO BE MADE IN ADDITION TO REFUND OF TH E ADVANCE OF ` 42 LAKHS FOR THE EFFORTS AND SERVICES MADE BY THE AGREEMENT HOLDERS TOWARDS EVICTION OF TENANTS, PREP ARATION OF PLANS, DEVELOPMENT AND IMPROVEMENT EXPENSES AND COST OF HO LDING. IT ALSO REFERS TO THE RELINQUISHMENT OF ALL THEIR RIGHTS AN D INTEREST IN AND OVER THE SCHEDULE A PROPERTY. AS RIGHTLY SUBMITTED BY THE LD. DR, THE ORIGINAL AGREEMENT DATED 22.7.1998 CLEARLY SAYS THA T THE PURCHASER SHALL PAY THE ENTIRE SALE CONSIDERATION WITHIN 30 M ONTHS FROM THE DATE OF THE AGREEMENT AND IF THERE WAS ANY FAILURE, INTE REST @ 24% PER ANNUM HAS TO BE PAID. THIS AGREEMENT ALSO PROVIDES FOR EXECUTION OF POWER OF ATTORNEY AGENT IN FAVOUR OF THE PURCHASERS BY THE ASSESSEE. IN FACT, THE ASSESSEE HAS ALSO EXECUTED A POWER OF AGENT AND OBTAINED NOC/CLEARANCE CERTIFICATE FROM THE INCOME TAX DEPARTMENT AS REQUIRED UNDER 230A OF THE ACT. IN FACT CLAUS E 4 OF THE AGREEMENT DATED 31.7.2000 READS AS FOLLOWS: ITA NO.153/08 CO NO.50/08 :- 12 -: 4. IN CONSIDERATION FOR THE ABOVE AND AS COMPENSA TION FOR ALL THE EFFORTS AND SERVICES MADE BY THE AGREEMENT HOLDERS TOWARDS EVICTION OF TENANTS, PREPARATION OF PLANS, DEVELOPMENT AND IMPROVEMENT EXPENSES AND COSTS OF HO LDING; AND ALSO RELINQUISHMENT OF ALL THEIR RIGHTS AND INT ERESTS IN AND OVER THE SCHEDULE A PROPERTY, THE VENDOR HEREBY A GREES TO PAY A SUM OF ` 1,00,00,000/- 9RUPEES ONE CRORE ONLY) TO THE AGREEMENT HOLDERS, IN ADDITION TO REFUNDING A SUM OF ` 42,00,000/- TO THEM (RUPEES FORTY TWO LAKHS ONLY) PAID AS ADVANCE BY THEM UNDER THE SAID AGREEMENT OF SALE IN TERMS OF THE NEXT CLAUSE. 12. IN VIEW OF THE ABOVE CLAUSE IN THE AGREEMENT, IT HA S TO BE SEEN WHETHER THE PURCHASER HAS OBTAINED ANY PLANNIN G PERMISSION FROM THE LOCAL AUTHORITIES OR THE TENANTS ARE EVICT ED. AS RIGHTLY SUBMITTED BY THE LD. DR, NO MATERIAL IS AVAILABLE O N RECORD EITHER TO INDICATE THAT AN APPLICATION FOR PLANNING PERMISSIO N WAS FILED BEFORE THE LOCAL AUTHORITIES OR PERMISSION WAS GRANTED BY THE LOCAL AUTHORITIES. THERE IS NO EVIDENCE AVAILABLE ON RECORD TO SUGGEST THAT THE TENANTS APART FROM THE ASSESSEE WAS EVICTED FROM THE PREMI SES. IN FACT, THE ASSESSEE COULD HAVE FILED A SUIT FOR SPECIFIC PURPO SE TO ENFORCE THE AGREEMENT DATED 22.7.1998. BUT INSTEAD OF FILING A SUIT FOR SPECIFIC PURPOSE, THE ASSESSEE PREFERRED TO CANCEL THE AGRE EMENT . NOW THE QUESTION ARISES FOR CONSIDERATION IS WHETHER THE PA YMENT OF ` 1 CRORE TO THE AGREEMENT HOLDERS IS FOR THE PURPOSE OF TRAN SFER OF THE PROPERTY OR TOWARDS COST OF IMPROVEMENT. THIS TRIBUNAL IS O F THE CONSIDERED OPINION THAT IN THE ABSENCE OF ANY MATERIAL WITH RE GARD TO PREPARATION ITA NO.153/08 CO NO.50/08 :- 13 -: OF PLAN AND OTHER DEVELOPMENT AS CLAIMED BY THE AS SESSEE, WE MAY NOT BE ABLE TO SAY THAT THE ASSESSEE HAS INCURRED ANY EXPENDITURE FOR DEVELOPMENT. HOWEVER, THIS TRIBUNAL IS OF THE CONS IDERED OPINION THAT THE MATTER NEEDS TO BE RECONSIDERED BY THE ASSESSIN G OFFICER BY GIVING ONE MORE OPPORTUNITY TO THE ASSESSEE TO PRO DUCE NECESSARY MATERIAL WITH REGARD TO PREPARATION OF PLAN, OBTAIN ING OF PLANNING PERMISSION AND IMPROVEMENT, IF ANY, MADE IN THE PRO PERTY. IT IS ALSO TO BE VERIFIED WHETHER ANY OF THE TENANTS WAS EVICT ED FROM THE PREMISES BY THE PREVIOUS AGREEMENT HOLDERS. IN THE ABSENCE OF ANY MATERIAL, THIS TRIBUNAL IS OF THE CONSIDERED OPINIO N THAT THE ISSUE OF PAYMENT OF ` 1 CRORE NEEDS TO BE RECONSIDERED BY THE ASSESSING OFFICER. ACCORDINGLY, THE ORDERS OF THE LOWER AUTH ORITIES ARE SET ASIDE AND THE ISSUE WITH REGARD TO CLAIM OF PAYMENT OF ` 1 CRORE TO THE AGREEMENT HOLDERS IS REMITTED BACK TO THE FILE OF T HE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RECONSIDER THE ISSUE AF RESH AND FIND OUT WHETHER THE PAYMENT OF ` 1 CRORE IS EXPENDITURE INCURRED IN CONNECTION WITH TRANSFER OF PROPERTY OR IT WAS TOWARDS COST OF IMPROVEMENT. THE ASSESSING OFFICER THEREAFTER DECIDE THE MATTER IN A CCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 13. NOW, COMING TO THE DISALLOWANCE OF ` 50 LAKHS WITHHELD BY THE PURCHASER, THE ASSESSEE CLAIMED THAT HIS BROTH ER MADE A CLAIM ITA NO.153/08 CO NO.50/08 :- 14 -: OVER THE PROPERTY, THEREFORE, THE PURCHASER WITHHEL D A SUM OF ` 50 LAKHS ON THE BASIS OF INDEMNITY BOND. THE ASSESSE E ALSO CLAIMS BEFORE THE ASSESSING OFFICER THAT THE SAME WAS RECE IVED ON 16.11.2002 AND IT WAS DEPOSITED IN NABARD ACCOUNT O N 14.5.2003. WE HAVE CAREFULLY GONE THROUGH THE PROVISIONS OF SE CTION 54F OF THE ACT. SUB-CLAUSE (4) CLEARLY SAYS THAT THE NET CONS IDERATION WHICH WAS NOT APPROPRIATED BY THE ASSESSEE TOWARDS PURCHASE OF THE NEW ASSET HAS TO BE DEPOSITED IN THE SPECIFIED BANK ACCOUNT O N OR BEFORE THE DUE DATE FOR FILING OF RETURN U/S 139(1) OF THE ACT. THE ASSESSEE CLAIMS THAT THE MONEY ITSELF WAS RECEIVED ON 16.11.2002. HOWEVER, THE SALE DEED DOES NOT SAY THAT THE MONEY WAS WITHHELD BY TH E PURCHASER. 14. WE HAVE CAREFULLY GONE THROUGH THE ASSESSING OFFICE R. FROM THE ORDER OF ASSESSMENT IT APPEARS THAT THE PROPERT Y SOLD IS A COMMERCIAL PROPERTY. SECTION 54 IS APPLICABLE IN R ESPECT OF RESIDENTIAL HOUSE. SINCE THE ASSESSING OFFICER FOUND THAT EXEM PTION U/S 54 CANNOT BE CLAIMED, THE ASSESSEE APPEARS TO HAVE CL AIMED EXEMPTION U/S 54F. FOR THE PURPOSE OF THIS APPEAL, THE DISPU TE IS ONLY IN RESPECT OF THE AMOUNT WITHHELD BY THE PURCHASER TO THE EXTE NT OF ` 50 LAKHS. A READING OF CLAUSES 6, 7 AND 8 OF SALE DEED DATED 26.4.2001 SHOWS THAT THE ASSESSEE HAS RECEIVED THE ENTIRE SALE CON SIDERATION OF ` 3,50,00,000/- ON OR BEFORE THE DATE OF EXECUTION OF THE SALE DEED. ITA NO.153/08 CO NO.50/08 :- 15 -: THEREFORE, IT IS NOT KNOWN HOW THE PURCHASER WAS AB LE TO WITHHOLD THE MONEY ON THE BASIS OF AN INDEMNITY BOND. THE CIT(A ) HAS SIMPLY ALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND TH AT THE PAYMENT OF ` 50 LAKHS AND INVESTMENT THEREOF WAS PROPERLY EVIDE NCED. WHETHER THE PAYMENT OF ` 50 LAKHS IS OVER AND ABOVE THE SALE CONSIDERATION DISCLOSED IN THE SALE DEED OR IT WAS A PART OF THE SALE CONSIDERATION DISCLOSED IN THE SALE DEED HAS TO BE VERIFIED. ACC ORDINGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSU E WITH REGARD TO CLAIM OF EXEMPTION U/S 54F IS REMITTED BACK TO TH E FILE OF THE ASSESSING OFFICER FOR RE-EXAMINATION. THE ASSESSIN G OFFICER SHALL DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW AFT ER GIVING OPPORTUNITY OF HEARING TO THE ASSESSEE. 15. NOW, COMING TO THE CLAIM OF ` 50,000/- TOWARDS BROKERAGE, AS RIGHTLY SUBMITTED BY THE LD. DR, THE DETAILS OF THE BROKER AND EVIDENCE OF PAYMENT ARE NOT AVAILABLE ON RECORD. T HE ASSESSEE CLAIMS THAT THE ASSESSING OFFICER HAS NOT CALLED FOR ANY D ETAILS. THOUGH THE REVENUE CLAIMS THAT THE BROKERAGE WAS TO THE EXTENT OF ` 50,000/- IN THE GROUNDS OF APPEAL, THE ASSESSEE CLAIMS THAT I N FACT THE BROKERAGE OF ` 2,50,000/- WAS PAID. THEREFORE, THERE WAS A CONF USION IN RESPECT OF THE ACTUAL AMOUNT OF BROKERAGE SAID TO BE PAID BY THE ASSESSEE. IN VIEW OF THE ABOVE, THIS TRIBUNAL IS OF THE CONSI DERED OPINION THAT THE ITA NO.153/08 CO NO.50/08 :- 16 -: ASSESSING OFFICER SHALL RECONSIDER THE MATTER. IT IS ALSO OPEN TO THE ASSESSEE TO FILE NECESSARY DETAILS WITH REGARD TO T HE IDENTITY OF THE BROKER AND THE GENUINENESS OF THE PAYMENT. ACCORDI NGLY, THE ORDERS OF THE LOWER AUTHORITIES ARE SET ASIDE AND THE ISSU E WITH REGARD TO PAYMENT OF BROKERAGE IS REMITTED BACK TO THE FILE O F THE ASSESSING OFFICER FOR RECONSIDERATION AFRESH IN ACCORDANCE WI TH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 16. NOW, COMING TO THE CROSS OBJECTION OF THE ASSESSEE , THE ONLY ISSUE ARISES FOR CONSIDERATION IS DEPOSIT OF ` 1,14,00,000/- IN CAPITAL GAINS ACCOUNT. THIS ISSUE WAS CONSIDERED W HILE DECIDING THE REVENUES APPEAL AND THE MATTER WAS REMITTED BACK T O THE FILE OF THE ASSESSING OFFICER. THEREFORE, FOR THE REASONS STAT ED IN THE EARLIER PART OF THIS ORDER, THE ISSUE OF DEPOSIT OF ` 1,14,00,000/- IS ALSO REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASS ESSING OFFICER SHALL RECONSIDER THE ISSUE AFRESH AND PASS APPROPRIATE OR DER IN ACCORDANCE WITH LAW AFTER GIVING A REASONABLE OPPORTUNITY OF H EARING TO THE ASSESSEE IN THE LIGHT OF THE JUDGMENT OF APEX COURT IN PRAKASH NATH KHANNA VS CIT [2004] 266 ITR 1. 17. IN THE RESULT, BOTH THE APPEAL OF THE REVENUE AND T HE CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED FOR STATISTI CAL PURPOSES. ITA NO.153/08 CO NO.50/08 :- 17 -: ORDER PRONOUNCED IN THE OPEN COURT ON 19 TH OF JUNE, 2015, AT CHENNAI. SD/- SD/- ( . ! ) (A. MOHAN ALANKAMONY) ' / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 19 TH JUNE, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF