The ACIT, Circle-1, Surat V. Shri Hemant Ishwarlal Desai, Surat

ITA 1705/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9781 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-01-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 03-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DINESH SINGH
• Assessee Lawyers: H R VEPARI
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI PRAMOD KUMAR , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER THE ACIT, CIRCLE - 1, ROOM NO. 108, AAYAKAR BHAVAN, MAJURA GATE, SURAT (APPELLANT) VS SHRI HEMANT ISHWARLAL DESAI, 10/A, RATNABH, RAVIDHARMA COMPLEX, NR. CHILDREN PARK, ATHWALINES, SURAT - 395001 PAN:ACEPD3715N (RESPONDENT) REVENUE BY : S H RI DINESH SINGH , SR. D . R. ASSESSEE BY: S H RI H.R. VEPARI , A.R. DATE OF HEARING : 29 - 01 - 2 01 6 DATE OF PRONOUNCEMENT : 29 - 01 - 2 016 / ORDER P ER BENCH : - THI S REVENUE S APPEAL FOR A.Y. 2009 - 10 , AR ISES FROM ORDER OF THE CIT(A) - I, SURAT DATED 30 - 05 - 2012 IN APPEAL NO. CAS - 1/279/2011 - 12 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 1705 / A HD/20 12 A SSESSMENT YEAR 200 9 - 10 I.T.A NO. 1705 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ACIT VS. SHRI HEMANT ISHWARLAL DESAI 2 2. THE REVENU E S SOLE SUBSTANTIVE GROUND ASSAILS CORRECTNESS OF THE LOWER APPELLATE ORDER DELETING LONG TERM CAPITAL GAINS ADDITION OF RS. 75,23,910/ - BY INVOKING SECTION 50C OF THE ACT; AS MADE BY THE ASSESSING OFFICER IN A REGULAR ASSESSMENT FRAMED ON 30 - 12 - 2011. 3. FACTS OF THE CASE FALL IN A NARROW COMPASS. THE ASSESSE E CO - OWNS THE PROPERTY IN QUESTION. HE EXECUTED ITS SALE DEED ON STAMP PAPER PURCHASED ON 31 - 03 - 2008 FOR TOTAL CONSIDERATION OF RS. 80 LACS OUT OF WHICH HIS CONSIDERATION CAME TO BE RS. 40 LACS IN CLUDING ADVANCE MONEY OF RS. 10,50,000/ - . REST OF THE PAYMENT S WERE MADE BY POST DATED CHEQUE. THE SALE DEED WAS REGISTERED ON 28 - 07 - 2008. ITS REGISTRATION VALUE WAS RS. 44,81,900/ - . THE STAMP AUTHORITIES RECOVERED STAMP DUTY FOR THE ACTUAL SALE PRICE. THE ASSESSEE DISCLOSED CAPITAL GAINS ARISING THEREFROM IN ASSESSMENT YEAR 2008 - 09 AS AGAINST 2009 - 10. THE LATTER ASSESSMENT YEAR IS THE IMPUGNED A SSESSMENT YEAR. THE ASSESSING OFFICER INVOKED SECTION 50C OF THE ACT INTER ALIA BY HOLDING THAT ONLY A FRAC TION OF THE SUM HAD BEEN RECEIVED ON 31 - 03 - 2008 AND NO PRUDENT PERSON WOULD TRANSFER FULL POSSESSION AND OWNER WITHOUT RECEIVING THE ENTIRE SALE PRICE. HE PROCEEDED ON THIS REASONING AND ADDED LONG TERM CAPITAL GAINS IN QEUESITON OF RS. 75,23,910/ - . 4. THE ASSESSEE PREFERRED APPEAL. THE CIT(A) ACCEPTS HIS SUBMISSION AS UNDER : - I.T.A NO. 1705 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ACIT VS. SHRI HEMANT ISHWARLAL DESAI 3 6 IN THE FIRST PART OF FIRST GROUND OF APPEAL, THE APPELLANT HAS CHALLENGED THE ASSESSING OFFICER'S ACTION OF TAXING THE CAPITAL GAIN IN ASSTT YEAR 2009 - 10 WHEN THE ASSESSEE HAD OFFERED THIS AMOUNT IN ASSTT YEAR 2008 - 09. THE APPELLANT SUBMITTED THAT THE AGREEMENT FOR SALE OF RESIDENTIAL PROPERTY LOCATED AT SANGAM SOCIETY JOINTLY OWNED BY THE APPELLANT AND HIS BROTHER WAS SOLD AT RS 80,00,000/ - VIDE AGREEMENT DATED 31.03.2008. THE APPELLANT ALSO SUBMITTED THAT THE POSSESSION OF THE SAID PROPERTY WAS ALSO HANDED OVER IN MARCH 2008 AS SPECIFICALLY MENTIONED IN THE AGREEMENT. 6.1 FROM A PERUSAL OF THE AGREEMENT DATED 31.03.2008, IT IS NOTICED THAT THE SAID AGREEMENT HAS BEEN EXEC UTED ON STAMP PAPER DATED 30.03.2008. THE AGREEMENT VALUE IS RS 80,00,000/ - OUT OF WHICH APPELLANT 'S SHARE COMES TO RS 40,00,000/ - . OUT OF THE TOTA L CONSIDERATION OF RS 80,00,000/ - AN AMOUNT OF RS. 21,00,000/ - WAS PAID TILL THE DATE OF AGREEMENT AND THE R EMAININ G CONSIDERATION OF RS 59,00,000/ - WAS PAID BY WAY OF POST DATED CHEQUES. SINCE THE APPELLANT HELD 50 % OF SHARE IN THE SAID PROPERTY, T HE APPELLANT PAID RS 10,50,000/ - BY 31.03.2008 AND THE RE MAINING AMOUNT OF RS 29, 50,000/ - WAS PAID BY WAY OF POST DATED CHEQUES. THE SALE DEED WAS REGISTERED ON 28.07.2008 AND THE STAMP DUTY WAS LEVIED ON THE AGREEMENT VALUE OF RS 80,00,000/ - . AS PER FORM NO. 1 THE VALUATION OF THE PROPERTY WAS DONE AT RS.44,81,900/ - . SINCE THE A GREEMENT VALUE WAS RS 80,00,000/ - THE STAMP D UTY WAS LEVIED AT RS. 80,00,000/ - . 6.2 THE ASSESSING OFFICER TAXED THE CAPITAL GAIN IN ASSTT YEAR 2009 - 10 ON TH E GROUND THAT ONLY RS 10,50,000/ - WAS PAID OUT OF RS 40,00,000 BEFORE 31.03.2008. THE ASSESSING OFFICER HAS MADE A PRESUMPTION THAT NO P ERSON WOULD GIVE POSSESSION AND OWNERSHIP OF PROPERTY WITHOUT RECEIVING FULL PAYMENT ON THIS GROUND, THE ASSESSING OFFICER HAS TAKEN THE DATE OF REGISTRATION AS THE DATE OF TRANSFER. 6.3 THE ASSESSING OFFICE R' S ACTION IS NOT IN ACCORDANCE WITH LAW. REGIS TRATION OF DOCUMENT IS NOT A PRE CONDITION FOR TRANSFER OF ' CAPITAL ASSET'. IN FACT, THE PROVISIONS OF SECTION 50 C WERE AMENDED BY THE FINANCE ACT, 2009 WITH EFFECT FROM 01.10.2009, WHEREIN THE WORD 'ASSESSABLE' HAS BEEN ADDED AFTER THE WORD 'ASSESSED T O TAKE CARE OF SITUATIONS WHERE THE TRANSFER OF CAPITAL ASSET HAS TAKEN PLACE AND THE SAID DOCUMENT HAS NOT BEEN REGISTERED. EARLIER THE WORD USED WAS ONLY 'ASSESSED' AND THEREFORE, SECTION 50 C COULD NOT BE APPLIED IN CASES , WHERE THE CONSIDERATION FOR TR ANSFER WAS I.T.A NO. 1705 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ACIT VS. SHRI HEMANT ISHWARLAL DESAI 4 LESS THAN THE VALUATION AS PER THE STAMP DUTY AUTHORITY FOR THE REASONS THAT THERE WAS NO REGISTERED DOCUMENT IN SUCH CASES. 6. 4 THE LEGISLATURE SUBSTITUTED THE WORD 'ASSESSED' WITH WORD 'ASSESSED OR ASSESSABLE ' TO TAKE CARE OF SUCH SITUATION. THIS ESTABLISHES THAT EVEN THE LEGISLATURE DOES NOT INTEND TO TAKE DATE OF REGISTRATION OF DOCUMENT AS DATE OF TRANSFER. MOREOVER, ONCE THE AGREEMENT HAS BEEN EXECUTED AND PART CONSIDERATION THEREOF HAS BEEN PAID, THE ACT ITSELF INCLUDES SUCH TRANSACTIONS IN THE DEFINIT ION OF TRANSFER UNDER SECTION 2 (47)(V). THIS SECTION TREATS THE TRANSACTIONS ALLOWING POSSESSION OF IMMOVEABLE PROPERTY TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT, REFERRED TO IN SECTION 53 A OF TRANSFER OF PROPERTY ACT, AS TRANSFER FOR THE PURPOSE OF CAPITAL GAIN TAX. THEREFORE, IT IS HELD THAT THE TRANSFER OF PROPERTY IN QUESTION, TOOK PLACE DURING THE ASSTT YEAR 2008 - 09 AND NOT IN THE ASSTT YEAR 2009 - 10. THE FIRST PART OF FIRST GROUND OF APPEAL IS THEREFORE DECIDED IN FAVOUR OF THE APPELLANT. THE SECOND AND THE THIRD PART OF 1 ST GROUND OF APPEAL ARE COMMON WITH GROUND NO. 3 AND THEREFORE, ARE NOT BEING TAKEN UP SEPARATELY. THIS LEAVES THE REVENUE AGGRIEVED. 5. WE HAVE HEARD BOTH THE PARTIES. THE REVENUE S SOLE ARGUMENT REITERA TES THE ASSESSING OFFICER S STAND THAT THE ASSESSEE HAD RECEIVED ON A FRACTION OF THE SALE CONSIDERATION ON 31 - 03 - 2008 AND THEREFORE, THERE WAS NO TRANSFER EXECUTED IN ASSESSMENT YEAR 2008 - 09. THE ASSESSEE STRONGLY SUPPORTS THE CIT(A) S ORDER. WE FIND TH AT THE PAPER BOOK COMPRISING OF A COPY OF THE AGREEMENT. THE REVENUE FAILS TO REBUT THE CRUCIAL FACTUAL FINDING THAT THE ASSESSEE HAD ALREADY TRANSFERRED THE OWNERSHIP AND POSSESSIO N OF THE PROPERTY ON 31 - 03 - 2008 U/S. 2(47)(V) COMING TO BE WELL BEFORE THE REGISTRATION OF THE SALE DEED. THE HON BLE JURISDICTIONAL HIGH COURT IN CIT VS. MORMASJI MANCHARJI VAID (2001) 250 ITR 542 (FB) HOLDS THAT CAPITAL GAINS ON I.T.A NO. 1705 /AHD/20 12 A.Y. 2009 - 10 PAGE NO ACIT VS. SHRI HEMANT ISHWARLAL DESAI 5 SUCH A TRANSFER HAS TO BE ASSESSED TO TAX IN THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR WITHIN WHICH THE DATE OF EXECUTION OF THE DEED OF TRANSFER FALLS AND NOT THAT PERTAINING TO ITS REGISTRATION SINCE THE LATTER IS ONLY AN ACT OF THE OFFICER APPOINTED BY LAW TO REGISTER THE DOCUMENTS. THE REVENUE FAILS TO POINT OUT ANY EXCEPTION TO THIS LEGAL PRINCIPLE. W E UPHOLD CIT(A) S ORDER TREATING THE ASSESSEE TO FULFIL ALL NECESSARY CONDITIONS OF TRANSFER U/S. 2(47)(V) OF THE ACT ON 31 - 03 - 2008. THE REVENUE S ARGUMENTS IN SUPPORT OF ITS SOLE SUBSTANTIVE GROUND STAND REJECTED. 6. THIS REVENUE S APPEAL IS DISMISSED . ORDER PR ONOUNCED IN THE OPEN C OURT ON 29 - 01 - 201 6 SD/ - SD/ - ( PRAMOD KUMAR ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 29 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,