Deputy Commissioner of Income-tax, Circle - 7, Pune V. Subhash S. Goel, Pune

ITA 1532/PUN/2017

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 6232 (ITAT-PUNE)
• Duration Of Justice: 4 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-03-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2009-2010
• Appeal Filed On: 15-06-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: DIVYA BAJPAI
• Keywords: Capital asset; Business income; Set aside; Capital Gains
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ‘A’ BENCH, PUNE SHRI PARTHA SARATHI CHAUDHURY, JM AND DR. DIPAK P. RIPOTE, AM ITA No. 1532/PUN/2017 Assessment Year : 2013-14 The Dy. CIT Circle 7, Pune : Appellant Vs. Subhash S. Goel, San Mahu Complex, 5 Bund Garden Road, Opp. Poona Club, Pune-411 001 PAN: AAWPG2100P : Respondent Appellant by : Shri Krishna V. Gujarathi Respondent by : Ms. Divya Bajpai Date of Hearing : 22-03-2022 Date of Pronouncement 23-03-2022 ORDER PER PARTHA SARATHI CHAUDHURY, JM : This appeal preferred by the Revenue emanates from order of the ld. Commissioner of Income Tax (Appeals) – 5, Pune dated 27-02-2017 for the Assessment Year 2013-14 on the following grounds:- 1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) justified in deleting the addition of Long term Capital gain Rs. 12,15,54,375/-in respect of transfer of plot of land situated at Gat No. 1277 & 1278, Village Wagholi, Pune. 2. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) justified in not appreciating the fact that entire property admeasuring 70 acres situated at Wagholi had sold to Wagholi Proprieties Pvt. Ltd by a registered sale deed dated 02.05.2008 for a consideration of Rs. 1,72,80,04,250/- and the total share of the assessee is Rs. 24,31,08,750/ - out of which the assessee had offered 50% of the actual consideration received for the purpose of Capital gain instead of full consideration as per the sale deed. 3. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) erred in not appreciating the clause (v) and (vi) of Section 2(47) of the Act r.w.s. 53A of the Transfer Property Act 1882. Thus, the entire Capital Gain correctly taxed in A.Y. 2009-10 by the AO. 4. The order of the ld. AO be upheld the and Ld. CIT(A) is to be deleted. 5. The appellant craves leave to add or amend the grounds of appeal on or before the appeal is heard and disposed off.” 2 ITA No. 1532/PUN/2017 Subhash S. Goel A.Y. 2009-10 2. The brief facts of the case are that the assessee is an individual engaged in the business of real estate development and construction of residential as well as commercial projects. He is also a partner in various partnership firms which are engaged in the same business. He filed the return of income on 30-10-2009 declaring a total income of Rs. 14,33,53,740/-. The return was processed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”). Thereafter, the case was re-opened by issue of notice u/s 148 of the Act for the reasons mentioned in the assessment order. The issue relates to the sale of 70 Acres of land at Wagholi, Pune, for a consideration of Rs. 1,75,80,04,250/- in which the share of the assessee was Rs. 24,31,08,750/-. 3. That on perusal of the Grounds of appeal in this case, the only grievance of the Revenue is with regard to the deletion of addition in respect of long term capital gain as regards transfer of plot of land situated at Gat No. 1277 and 1278, Village Wagholi, Dist. Pune, The brief facts emerging are that the owner Mr. Jaiprakash Sitaram Goel, M/s. Neeraj Horticulturists Pvt. Ltd., M/s. Deepak Kudale and Associates and M/s. Nupoora Developers Pvt. Ltd. and consenting parties Shri Rajendra Sitaram Goel, M/s. Deep Ganga Developers, Shri Umesh Sitaram Goel who are the owners as well as the consenting parties sold around 70 Acres of land situated at Gat No. 1277 and 1278, Village Wagholi, Dist. Pune, to M/s. Wagholi Properties Pvt. Ltd. Vide a sale deed dated 2-5-2008 registered with the Office of the sub-Registrar, Haveli, Pune, for an aggregate consideration of Rs. 1,75,80,04,250/-. The share of the assessee i.e. Subhash S. Goel on account of rights in the said land was at Rs. 24,31,08,750/-. The sellers received 50% of the aggregate consideration i.e. Rs. 87,90,02,125/- on signing of the Agreement. As per the Agreement, the sellers were required to procure another 38 Acre of land in the vicinity and fulfil certain obligations. For this 38 Acres, the sellers were to receive consideration @ of Rs. 2,51,00,000/- 3 ITA No. 1532/PUN/2017 Subhash S. Goel A.Y. 2009-10 per Acre. The balance 50% of the consideration of sale of 70 Acres was to be received only on the fulfilling of obligations and procuring further 38 Acres of land. The assessee had offered only Rs. 12,15,54,375/- being 50% of the total consideration actually received as sale consideration for the purpose of capital gains. The ld. A.O held that the Agreement of sale of 70 Acres at Wagholi had been registered on 2-5-2008 on which stamp duty had been paid on the total aggregate consideration of Rs. 1,75,80,04,250/- @ Rs. 2,51,00,000/- per Acre in which the assessee‟s share is Rs. 24,31,08,750/- and the possession of the property being handed over to the purchaser, the sale consideration which is required to be adopted by the assessee for computing the capital gains was Rs. 24,31,08,850/- against Rs. 12,15,54,375/- adopted by the assessee. The assessee‟s case was reopened accordingly. During the course of assessment, the ld. A.O did not agree with the claim of the assessee that the effective date of transfer of property did not solely depend on the Agreement but also on the intentions of the parties involved in the transaction. He therefore, adopted a sale consideration of Rs. 24,31,08,750/- as against Rs. 12,15,54,375/- adopted by the assessee and recomputed the capital gains. 4. Before the ld. CIT(A), it was submitted by the assessee that on similar facts and issue in the case of Mr. Rajendra Sitaram Goel who is a co-owner of the land in question, the Pune Tribunal in ITA No. 1310/PUN/2013 had upheld the stand of the assessee. Even the ld. .D.R fairly conceded that this issue is covered by the decision of the Tribunal in the co-owner‟s case as has been submitted before the ld. CIT(A). The ld. A.R brought to our notice relevant para 4.8 of the CIT(A)‟s order wherein the Tribunal‟s order in the case of co-owner Mr. Rajendra Sitaram Goel in ITA No. 1310/PUN/2013 dated 9-1-2017 was referred to and following that judgment, the ld. CIT(A) had allowed the appeal of the assessee. We find, Pune Tribunal in ITA No. 1310/PUN/2013 (supra) had observed and held as follows: 4 ITA No. 1532/PUN/2017 Subhash S. Goel A.Y. 2009-10 “47. In the instant case admittedly the assessee along with other co-owners was having land admeasuring 70 acres situated at Wagholi and was not having 108 acres of contiguous land that had been agreed upon to be 37 ITA No.1310, 1485,748, 749 & 933 /PUN/2013 sold at the relevant time. Further the sale deed contained certain obligations on the part of the assessee and the co-owners to be fulfilled and the assessee has received only 50% of the consideration during the impugned assessment year. We find from the letter addressed by Mr. Atul Chordia, Director of Wagholi Properties Pvt. Ltd., copy of which is placed at pages 41 to 44 of paper book No.III, that in response to notice u/s.226(3) for recovery of dues in case of the assessee, he has categorically stated that the balance amount of Rs.17.01 crores is payable only after fulfillment of certain conditions mentioned in the agreement. In our opinion, the contents of the agreement has to be read as a whole and the revenue cannot re-write the agreement. The various decisions relied on by CIT(A) in our opinion are distinguishable and not applicable to the facts of the present case. In all those cases, the right to receive the consideration has been postponed. However, in the instant case the right to receive the consideration is on fulfillment of certain obligations. Further, the assessee has offered the balance amount to tax in A.Y. 2014-15 as business income. In view of the above discussion and respectfully following the decisions cited above, we are of the considered opinion that assessee is liable to capital gain tax only on 50% of the consideration that has been received during the year. We, therefore, set aside the order of the CIT(A) and allow the grounds raised by the assessee. 5. The most important observation of the Tribunal was that the Judicial pronouncements which were relied on by the ld. CIT(A) were held to be distinguishable and not applicable to the case of the assessee therein. In all those cases right to receive consideration has been postponed. However, in the instant case, right to receive consideration is on fulfilment of certain obligations. Respectfully following the aforesaid decision of the Tribunal on the same facts and circumstances and on the same parity of reasoning, we do not find any reason to interfere with the findings of the ld. CIT(A) and the relief provided to the assessee is sustained. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open Court on this 23 rd day of March 2022 Sd/- sd/- (DR. DIPAK P. RIPOTE) (PARTHA SARATHI CHAUDHURY) ACCOUNTANT MEMBER JUDICIAL MEMBER Pune; Dated, the 23 rd March 2022 Ankam 5 ITA No. 1532/PUN/2017 Subhash S. Goel A.Y. 2009-10 Copy of the Order forwarded to : 1. The Appellant. 2. The Respondent. 3. The Pr. CIT- 4, Pune 4. The CIT(A)- 5, Pune. 5. D.R. ITAT „A‟ Bench 5. Guard File BY ORDER, Sr. Private Secretary ITAT, Pune. /// true copy /// 6 ITA No. 1532/PUN/2017 Subhash S. Goel A.Y. 2009-10 Date 1 Draft dictated on 22-03-2022 Sr.PS/PS 2 Draft placed before author 22-03-2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on 23-03-2022 Sr.PS/PS 7 Date of uploading of order 23-03-2022 Sr.PS/PS 8 File sent to Bench Clerk 24-03-2022 Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order