N.Krishnakumari, Coimbatore V. ITO, Coimbatore

ITA 1564/CHNY/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52100 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 15-09-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R B NAIK
• Assessee Lawyers: K RAGHU
• Keywords: Capital asset

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL CHENNAI B BENCH, CHENNAI. BEFORE SHRI HARI OM MARATHA, JUDICIAL MEMBER & SHRI N.S. SAINI, ACCOUNTANT MEMBER I.T.A. NO. 1564/MDS/2011 ASSESSMENT YEAR : 2006-07 N. KRISHNAKUMARI, NO. 29, RACE COURSE, OPP. MASONIC HOSPITAL, COIMBATORE 641 018. [PAN: AFUPK7565B] VS. THE INCOME TAX OFFICER, SALARY WARD I(4), COIMBATORE. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI K. RAGHU, C.A. REVENUE BY : SHRI R.B. NAIK, CIT DR DATE OF HEARING : 23.11.2011 DATE OF PRONOUNCEMENT 02.12.2011 ORDER PER HARI OM MARATHA, J.M. THIS APPEAL OF THE ASSESSEE, FOR THE ASSESSMENT YE AR 2006-07, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A) II, COIMBATORE, DATED 22.06.2011. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSESSEES HUSBAND, LATE SHRI L.G. NITHYANANDAN (KNOWN AS LGN ANAND) PURCHAS ED A PROPERTY FROM M/S. TEA ESTATES INDIA (P) LTD. ON 10.01.1966. SUBSEQUEN TLY, THIS PIECE OF PROPERTY IS AN IMMOVABLE PROPERTY, WAS SOLD BY LGN ANAND AND SM T. NIVEDITA, WHO WERE CO- OWNERS, DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07 BY A REGISTERED DEED ON 10.06.2005 AND RECEIVED A SUM OF ` .3,60,00,000/- TOWARDS SALE CONSIDERATION. BUT THE ASSESSEE DID NOT OFFER THE C APITAL GAINS IN RESPECT OF THE ABOVE TRANSACTION AND HAD NOT PAID TAX THEREON. ON A QUERY, IT WAS STATED THAT BY I.T.A I.T.A I.T.A I.T.A NO. NO. NO. NO.1564 1564 1564 1564/MDS/ /MDS/ /MDS/ /MDS/1 11 11 11 1 2 AN AGREEMENT OF SALE DEED DATED 30.11.1997 WITH SIX PARTIES, THE ASSESSEE HAS RECEIVED ` .1,65,96,000/- AND ALSO BY A SUPPLEMENTARY AGREEMEN T DATED 26.11.2007 RECEIVED AN AMOUNT OF ` .54,26,000/- TOWARDS TOTAL SALE CONSIDERATION. ACCORDING TO THE ASSESSEE, SINCE MAJOR PORTION OF T HE SALE CONSIDERATION WAS RECEIVED DURING THE YEAR 1997-98 AND THE POSSESSION WAS HANDED OVER TO THE VENDOR, THE CAPITAL GAINS WAS TAXABLE IN THE ASSESS MENT YEAR 1998-99 AS PER SECTION 2(47) OF THE ACT. AFTER EXAMINING THESE DET AILS, THE ASSESSING OFFICER CONCLUDED THAT THERE WAS NO DOCUMENTARY EVIDENCE LI KE, COPY OF SALE AGREEMENT DATED 30.11.1997 AND SUBSEQUENT AGREEMENT DATED 26. 11.2002, THERE WAS NO EVIDENCE FOR HAVING RECEIVED THE PART OF SALE CONSI DERATION ON 30.11.1997 AND 26.11.2002. THE SALE AGREEMENTS WERE ALSO NOT REGIS TERED. IT WAS FOUND THAT RELEVANT TO THE ASSESSMENT YEAR 1998-99 ALSO, THE A SSESSEE WAS NOT OFFERED ANY CAPITAL GAINS TAX. HOWEVER, THE PROPERTY WAS TRANSF ERRED BY A REGISTERED SALE DEED TO THE FOLLOWING THREE PARTIES: EXTENT SOLD 1. M/S. PRICOL LIMITED 19.72 CENTS 2. M/S. RAYALASEEMA TECHNOLOGIES LIMITED 39-40 CE NTS 3. MR. SURESH JAGANNATHAN 19-35 CENTS ACCORDINGLY, TAKING THE RELEVANCE OF REGISTERED SAL E DEED DATED 10.06.2005, THE ASSESSING OFFICER HAS TAXED AND COMPUTED THE CAPITA L GAINS FOR THE ASSESSMENT YEAR 2006-07 ARISING FROM THE TRANSFER OF CAPITAL A SSET AFTER ASCERTAINING THE VALUE OF THE PROPERTY AS ON 01.04.1981 AT ` .14,000/- PER CENT AND COMPUTED THE ASSESSEES SHARE IN THE CAPITAL GAINS AT 20% OF ` .3,05,41,101/- AT ` .61,08,220/- AND BROUGHT THE SAME TO THE TAX IN THE ASSESSMENT Y EAR 2006-07. THIS ADDITION HAS I.T.A I.T.A I.T.A I.T.A NO. NO. NO. NO.1564 1564 1564 1564/MDS/ /MDS/ /MDS/ /MDS/1 11 11 11 1 3 BEEN CONFIRMED BY THE LD. CIT(A) AS WELL. 3. NOW, THE ASSESSEE IS FURTHER AGGRIEVED AND HAS RAISED THE FOLLOWING GROUNDS: (1) THE LEARNED CIT (A)-II, HAVING HELD THAT THE D EPT. HAS ACCEPTED THE FACT OF AN AGREEMENT DATED 30.11.1997 FOR TRANS FER OF CAPITAL ASSET BEING AN IMMOVABLE PROPERTY, ENTERED INTO BY THE AP PELLANT ALONG WITH HER DAUGHTER AND HUSBAND, HE COULD NOT HOLD THAT TH E CAPITAL GAINS ARISING IN RESPECT OF SUCH TRANSFER COULD BE SUBJEC TED TO TAX, IN HER ASSESSMENT FOR THE ASST.YEAR 2006-07 AND CONFIRMING THE ASSESSMENT, CONTRARY TO THE PROVISIONS OF THE ACT, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (2) THE LEARNED CIT(A)-II, HAS GROSSLY ERRED IN REL YING ON THE ORDER OF CIT(A)-I, COIMBATORE, IN THE ASSESSMENT OF SMT.N .NIVEDITA, ANOTHER CO-OWNER, FOR SUSTAINING THE INCLUSION OF CAPITAL G AINS IN THE ASSESSMENT, DISREGARDING THE ORDER OF THE HON'BLE I TAT , 'B' BENCH, CHENNAI, IN ITA NO.848/MDS/2010 DATED 30 TH JUNE 2011, REVERSING THE ORDER OF THE LEARNED CIT(A)-I, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (3) THE LEARNED CIT(A)-II, OUGHT TO HAVE HELD THAT THERE WAS NO TRANSFER OF ANY CAPITAL ASSET, BEING AN IMMOVABLE P ROPERTY BY THE APPELLANT DURING THE PREVIOUS YEAR RELEVANT TO THE ASST.YEAR 2006-07, ON THE BASIS OF REGISTRATION OF SALE DEED IN FAVOUR OF THE TRANSFEREE AND THEIR NOMINEES, PURSUANT TO THE AGREEMENT OF SALE D ATED 30.11.1997, IN THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW. (4) THE LEARNED CIT(A)-II, OUGHT TO HAVE HELD THAT THE TRANSFEREES IN THE AGREEMENT OF SALE DATED 30.11.1997 WERE THE RIG HT-HOLDERS ON THE DATE OF REGISTRATION OF SALE DURING THE PREVIOUS YE AR RELEVANT TO THE ASST.YEAR 2006-07, IN LAW, AND NO CAPITAL GAINS ACC RUED TO THE APPELLANT HEREIN, IN THE ASSESSMENT FOR THE ASST.YE AR 2006-07 AND ACCORDINGLY, DELETED THE CAPITAL GAINS IN THE HANDS OF THE APPELLANT IN THE IMPUGNED ASSESSMENT, IN THE FACTS AND THE CIRCU MSTANCES OF THE CASE AND IN LAW. (5) FOR THESE AND OTHER ADDITIONAL GROUNDS OF APPEA L THAT MAY BE ADDUCED AT THE TIME OF HEARING, THE ORDER OF THE CI T(A)-II, IS PERVERSE, CONTRARY TO FACTS AND UNSUSTAINABLE IN LAW. I.T.A I.T.A I.T.A I.T.A NO. NO. NO. NO.1564 1564 1564 1564/MDS/ /MDS/ /MDS/ /MDS/1 11 11 11 1 4 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE PE RUSED THE RECORDS. IT WAS ARGUED BY THE LD. AR THAT THE ASSESSING OFFICER HAS TAXED THE CAPITAL GAINS IN ASSESSEES HAND FOR THE ASSESSMENT YEAR 20 06-07 ON THE BASIS OF CIT(A), COIMBATORES ORDER PASSED IN THE ASSESSMENT OF SMT. N. NIVEDITA, ANOTHER CO-OWNER. IT WAS ARGUED THAT THE SAID ORDER HAS SINCE BEEN REVERSED BY THE ITAT CHENNAI B BENCH, WHILE DECIDING THE A PPEAL OF SMT. N. NIVEDITA IN ITA NO. 848/MDS/2010 DATED 30.06.2011. IN THE LIGHT OF THE ABOVE FACTS, IT WAS ARGUED THAT THERE WAS NO TRANSFER OF ANY CAPITAL ASSET BEING AN IMMOVABLE PROPERTY DURING THE PREVIOUS YEAR RELEVAN T TO THE ASSESSMENT YEAR 2006-07, ON THE BASIS OF REGISTRATION OF SALE DEED IN FAVOUR OF THE TRANSFEREE AND THEIR NOMINEES, PURSUANT TO THE AGRE EMENT OF SALE DATED 30.11.1997, ON THE FORCE OF THE TRIBUNALS ORDER, W HICH IS PASSED ON AN IDENTICAL FACTS PERTAINING THE SALE OF SAME PIECE O F LAND AS CO-OWNER, THIS ISSUE HAS TO BE DECIDED ACCORDINGLY. 5. ON THE OTHER HAND, THE LD. DR RELIED ON THE ORD ER OF THE LD. CIT(A), BUT HE COULD NOT CONTROVERT THE TRIBUNALS ORDER PASSED IN ONE OF THE CO-OWNERS CASE DATED 30.06.2011. 6. AFTER CONSIDERING THE FACTS OF THE CASE IN THE LIGHT OF RIVAL STANDS TAKEN BY THE PARTIES AND THE TRIBUNALS ORDER IN QUESTION , WE ARE OF THE CONSIDERED OPINION THAT WE ARE BOUND TO FOLLOW THE TRIBUNALS ORDER PASSED IN CO- OWNERS CASE. AS DISCUSSED ABOVE, PARA 5 OF THE TRI BUNAL ORDER IS RELEVANT FOR THE PURPOSE AND IS BEING EXTRACTED HEREIN BELOW : I.T.A I.T.A I.T.A I.T.A NO. NO. NO. NO.1564 1564 1564 1564/MDS/ /MDS/ /MDS/ /MDS/1 11 11 11 1 5 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A P ERUSAL OF THE CLAUSE 2 OF THE AGREEMENT DATED 30-11-1997 CLEARLY SHOWS THAT THE VENDORS HAVE PUT THE PURCHASERS IN POSSESSION OF TH E PROPERTY. THE SUPPLEMENTARY AGREEMENT ALSO CLEARLY RECOGNIZES AND RATIFIES THE AGREEMENT DATED 30-11-1997 AS PER CLAUSE 7 OF THE S UPPLEMENTARY AGREEMENT DATED 26-11-2002. ANOTHER INTERESTING AS PECT, ON A PERUSAL OF THE AGREEMENT TO SELL, SUPPLEMENTARY AGR EEMENT AS ALSO THE SALE DEED, IS THAT THE SIGNATORY FOR THE ASSESS EE BEING VENDOR NO.3 IN THE AGREEMENT FOR SALE AND SUPPLEMENTARY AG REEMENT FOR SALE IS THE SAME PERSON WHO IS THE POWER OF ATTORNEY AS PER THE AGREEMENT TO SELL WHEN SIGNING THE SALE DEED IS THE CONFIRMING PARTY. THIS ALSO GIVES CREDENCE TO THE CLAIM OF THE ASSESS EE THAT POSSESSION DID SHIFT FROM THE ASSESSEE TO THE AGREEMENT HOLDER S ON 30-11-1997 WHEN THE AGREEMENT TO SELL THE PROPERTY WAS ENTERED INTO. THE RECORDING OF THE ASSESSING OFFICER THAT THE SALE AG REEMENTS WERE NOT REGISTERED WOULD NOT AFFECT THE ISSUE INSOFAR AS TH ERE IS NO REQUIREMENT UNDER LAW THAT THE SALE DEED WAS TO BE REGISTERED. FURTHER THE SALE AGREEMENTS ALSO CLEARLY SHOW THE D ETAILS OF THE CONSIDERATION TO BE PAID, SUCH AS CHEQUE NUMBERS AN D DATES. THE FINDING OF THE LEARNED CIT(A) THAT IN THE ORIGINAL AGREEMENT THERE WAS NO CLAUSE FOR NOMINATION IS FOUND TO BE WRONG I NSOFAR AS THE SALE AGREEMENT DATED 30-11-1997 CLEARLY RECOGNIZES THE C LAUSE FOR NOMINATION IN CLAUSE 1 OF THE SAID AGREEMENT THE C LAIM OF THE LEARNED DR THAT THE ASSESSEE HAS NOT PROVED THAT TH E AGREEMENT HOLDERS HAD BEEN PUT INTO POSSESSION OF THE PROPERT Y CANNOT BE SUBSCRIBED TO INSOFAR AS THE ASSESSEE CANNOT PROVE THE NEGATIVE. THE AGREEMENT HOLDERS HAD CLEARLY ADMITTED THAT THEY WE RE PUT INTO POSSESSION EVEN THOUGH THE LETTER IS UNDATED. IF T HE ASSESSING OFFICER HAD DOUBTED THE VERACITY OF THE SAID LETTER, IT WAS VERY WELL OPEN TO HIM TO CALL UPON THE AGREEMENT HOLDERS TO EXAMINE A S TO WHEN THEY WERE PUT INTO THE POSSESSION OF THE PROPERTY. THIS HAS ALSO NOT BEEN I.T.A I.T.A I.T.A I.T.A NO. NO. NO. NO.1564 1564 1564 1564/MDS/ /MDS/ /MDS/ /MDS/1 11 11 11 1 6 DONE BY THE REVENUE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE POSSESSION OF THE PROPERTY WAS TRANSFERRED TO T HE AGREEMENT HOLDERS ON 30-11-1997 WHEN THE AGREEMENT FOR SALE W AS ENTERED INTO AND THE ADVANCE WAS RECEIVED. THIS VIEW OF OURS AL SO FINDS SUPPORT FROM THE DECISION OF THE HON'BLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT V.G. SAROJA, REFERRED TO SUPRA. IN THE CIRC UMSTANCES, WE ARE OF THE VIEW THAT THE CAPITAL GAIN IN REGARD TO THE SAL E OF THIS PROPERTY WAS NOT LIABLE FOR TAX DURING THE ASSESSMENT YEAR 2 006-07. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWE D. 7. ACCORDINGLY, BY RESPECTFULLY FOLLOWING THE TRIB UNALS ORDER (SUPRA), WE HAVE TO ALLOW THE APPEAL OF THE ASSESSEE BY HOLDING THAT THE IMPUGNED CAPITAL GAINS CANNOT BE TAXED DURING THE YEAR UNDER CONSIDERATION. ACCORDINGLY, THE APPEAL OF THE ASSESSEE STANDS ALLO WED. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE STAND S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 02.12.2011. SD/- SD/- (N.S. SAINI) ACCOUNTANT MEMBER (HARI OM MARATHA) JUDICIAL MEMBER CHENNAI, DATED, THE 02.12.2011 VM/- TO: THE ASSESSEE//A.O./CIT(A)/CIT/D.R.