SHRI PRABHAT JANAK GARG, Nagpur V. ITO WARD- 1(2), Nagpur

ITA 177/NAG/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2145 (ITAT-NAGPUR)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 30-05-2016
• Assessment Year: 2008-2009
• Appeal Filed On: 29-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PG K
• Assessee Lawyers: KAILASH JOGANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Opportunity of being heard; Principle of natural justice; Fair market value
• Section: 50C

Judgement Text

1 ITA NO. 177/NAG/2013. IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NO. 177 /NAG/2013. ASSESSMENT YEAR : 200 8 - 09 . SHRI PRABHAT JANAK GARG, THE INCOME - TAX OFFICER, NAGPUR. VS. WARD - 1(2), NAGPUR. PAN ABYPG 4094K. APPELLANT. RESPONDENT. APPELLANT BY : SHRI KAILASH JOGANI, AND SHRI MUKESH AGRAWAL. RESPONDENT BY : S MT. AGNESH P. THOMAS. DATE OF HEARING : 21 - 07 - 2016. DATE OF PRONOUNCEMENT : 22 ND JULY, 2016 O R D E R THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) DATED 22 - 01 - 2013 AND PERTAINS TO ASSESSMENT YEAR 2008 - 09. THE GROUNDS OF APPEAL READ AS UNDER : 1. THE ORDER PASSED IS ILLEGAL, INVALID AND BAD IN LAW. 2. THE INCOME DETERMINED AT RS.41,36,090/ - IS UNJUSTIFIED AND EXCESSIVE. 3. THE LEARNED A SSESSING OFFICER ERRED IN PASSING THE ASSESSMENT ORDER. 4. THE ASSESSMENT MADE WAS WITHOUT GIVING PROPER OPPORTUNITY OF BEING HEARD. 5. THE LEARNED ASSESSING OFFICER ERRED IN CHARGING INTEREST U/S 234A, 234B, 234C AND INITIATING PENALTY PROCEEDING UNDER SECTION 271(1)(C) OF THE I.T. ACT, 1961. T HE ASSESSEE HAS ALSO RAISED THE FOLLOWING ADDITIONAL GROUNDS OF APPEAL: 1. THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ERRED ON FACTS AND IN LAW IN UPHOLDING THE ACTION OF THE AO IN SUSTAINING ADDITION 2 ITA NO. 177/NAG/2013. OF RS.39,97,529/ - WH ICH IS BEYOND JURISDICTION, BAD IN LAW AND VOID AB - INITIO. 2. THAT THE LD. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION WITHOUT APPRECIATING THE FACT HAT THE TRANSACTION WAS COMPLETE AT THE TIME OF AGREEMENT TO SELL SINCE MAJOR PA RT OF CONSIDERATION WAS RECEIVED BEFORE THE EXECUTION OF SALE DEED. 3. THAT THE ABOVE GROUND OF APPEAL IS WITHOUT PREJUDICE TO ONE ANOTHER & ORIGINAL GROUNDS OF APPEAL. 2. UPON HEARING BOTH THE COUNSEL AND PERUSING THE RECORDS AND U PON CAREFUL CONSIDERATION IT IS NOTED THAT THE ADDITIONAL GROUNDS SOUGHT TO BE RAISED BY THE ASSESSEE ARE IN FACT A PART OF THE MAIN GROUND. HENCE IN MY CONSIDERED OPINION , ADJUDICATION ON THE ISSUES RAISED IN THE GROUNDS OF APPEAL SHALL ALSO COVER THE MATTERS NOW BEING SEPARATEL Y RAISED IN ADDITIONAL ROUNDS OF APPEAL. 3 . BRIEF FACTS OF THE CASE ARE AS UNDER : DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT FATHER OF THE ASSESSE LATE SHRI JANK S/O SHRI HAZARILAL GARG HAD ENTERED INTO AGREEMENT FOR SALE OF IMMOVABLE PROPERTY ADMEASURING ABOUT 4048.33 SQ.MTRS. SITUATED IN MAUZA WANJARI, KHASAR NO. 21/11, P.H. NO. 17, BEARING CITY SURVEY NO. 27, SHEET NO. 419.16 SITUATED APPROXIMATELY 2000 FEET AWAY FROM THE MAIN KAMPTEE ROAD, NAGPUR WITH SHRI SUBIR KUMAR S /O SHRI SUDHANSHU KUMAR BANERJEE ON 15/08/2005 AT TOTAL CONSIDERATION OF RS.70,00,000/ - . THE ABOVE PROPERTY SOLD BY THE ASSESSEE WAS PURCHASED BY SHRI JANAK S/O HAZARILAL GARG ON 13/01/1989 FOR TOTAL CONSIDERATION OF RS.54,754/ - (COST 50,000 + 4250 STAMP P APER + 504 FEE). SHRI JANAK S/O SHREE HAZARILAL GARG OWNER OF THE PROPERTY PASSED AWAY ON 17/08/2006, LEAVING HIS LEGAL HEIRS VIZ. (SMT. GARG, WIFE (2) SHRI PRABHAT JANAK GARG, SON (3) SHRI VIKAS JANAK GARG AND KU. CHANDANA JANAK GARG, DAUGHTER. THE NAME S OF THE ABOVE LEGAL HEIRS WERE ENROLLED IN MUTATION RECORDS OF THE PROPERTY WITH CITY SURVEY OFFICE NO - 2 (GOVT. OF MAHARASHTRA), NAGPUR 3 ITA NO. 177/NAG/2013. ON 20/12/2006. THUS THE ABOVE MENTIONED LEGAL HEIRS BECAME OWNER OF PROPERTY LEGALLY. LATER ON ASSESSMENT ALONG WITH HER DAUGHTER CHANDANA JANAK GARG APPOINTED SHRI PRABHAT GARG AS POWER OF ATTORNEY AUTHORIZED HIM TO TAKE CARE AND MAKE DECISION IN RESPECT OF SALE TRANSACTION OF THE PROPERTY. ACCORDINGLY SHRI PRABHAT JANAK GARG HAS EXECUTED SALE DEED ON 23//07/2007 FOR T HE SHARE OF ASSESSEE, FOR THE SHARE OF CHANDANA GARG AND FOR HIS SHARE FOR THE SHARE OF ASSESSEE I.E. SMT. MADHU JANAKA GARG AND CHANDANA GARG FOR A TOTAL SALE CONSIDERATION OF RS.70,00,000/ - . THE FAIR MARKET VALUE DETERMINED BY STAMP VALUATION OFFICER IS AT RS.1,61,77,505/ - . THUS FROM THE ABOVE ANALYSIS OF THE FACTS OF RECORDS, THE AO HELD THAT IT IS CRYSTAL CLEAR THAT THE ASSESSEE HOLD BENEFICIARY SHARE IN THE PROPERTY SOLD, AND THEREFORE, THE ASSESSEE WAS REQUESTED VIDE SHOW CAUSE NOTICE DATED 20/12/20 10 TO EXPLAIN AS TO WHY THE LONG TERM CAPITAL GAINS AROSE FROM ABOVE MENTIONED SALE TRANSACTIONS SHOULD NOT BE T A XED IN HIS HAND FOR SHARE. 4 . THE ASSESSEES REPLY IN THIS REGARD WAS AS UNDER : THAT THE FATHER OF THE ASSESSEE HAD PASSED AWAY ON 17/08/ 2006 AND TO REGULARIZE THE SALE MADE BY THE FATHER, LATE SHRI JANAK GARG, THE MUTUATION WAS MADE IN THE NAME OF LEGAL HEIRS. THE PURCHASER INSISTS AND MADE REGULAR FOLLOW UP TO REGULARIZE THE SALE DEED WHICH WAS SOLD BY LATE SHRI JANAK GARG. AT THE TIME O F SALE THE PROPERTY WAS MORTGAGED WITH AKOLA URBAN CO - OP BANK, GANDHIBAGH, NAGPUR. THE PURCHASER DIRECTLY MADE PAYMENT OF RS.38,75,000/ - TO THE BANK ON 16/09/2005 AND GOT THE N.O.C. THE CAPITAL GAIN WAS NOT CHARGED IN MY HANDS. FAIR MARKET VALUE ON THE REGULARIZATION OF SALE DEED CANNOT BE CONSIDERED FOR CALCULATION OF CAPITAL GAIN AS THE PROPERTY WAS ALREADY SOLD DURING THE LIFE TIME OF FATHER AND MAJOR CONSIDERATION WERE GONE TO BANK AND THE BALANCE WAS RECEIVED BY FATHER. THE PROPERTY WAS MORTGAGED FOR BANK GUARANTEE TAKEN BY FATHER AND PAID THE TOTAL NET CONSIDERATION OF RS. 70,00,000/ - CANNOT BE CONSIDERED AS SALE CONSIDERATION. MOREOVER AS I SIGNED DEED ONLY FOR REGISTRY PURPOSE AND REGULARIZE THE SALE, THERE IS NO QUESTION OF HAVING CAPITAL GAIN IN MY HANDS. 4 ITA NO. 177/NAG/2013. 5 . THE ABOVE EXPLANATION GIVEN BY THE ASSESSEE THAT THE ASSESSEE HAS SIGNED THE SALE DEED ONLY FOR REGISTRATION AND TO REGULARIZE THE SALE WAS NOT ACCEPTED BY THE AO. HENCE HE MADE THE IMPUGNED ADDITION. 6 . UPON ASSESSEES APPEAL, LEARNED CI T(APPEALS) AFFIRMED THE ACTION OF THE AO. LEARNED CIT(APPEALS) CONCLUDED AS UNDER : THE ASSESSING OFFICERS ORDER, THE CONTENTIONS OF THE APPELLANT, AND MATERIALS ON RECORD HAVE BEEN CONSIDERED. IT IS SETTLED LAW THAT THE PAYMENT OF CONSIDERATION ALONG WITH THE TRANSFER OF/HANDING OVER OF POSSESSION OF THE PROPERTY SOLD COMPLETES THE TRANSACTION OF SALE OF AN IMMOVABLE PROPERTY. THE AGREEMENT FOR SALE OF THE PROPERTY INITIALLY ENTERED INTO BY LATE SHRI JANAK HAZARILAL GARG, THE FATHER OF THE APPELLANT, W AS COMPLETED BY THE LEGAL HEIRS. THE ASSESSING OFFICER HAS BROUGHT OUT THE RELEVANT CLAUSES OF THE ORIGINAL AGREEMENT AND SALE DEED EXECUTED ON 23 - 07 - 2007 BY THE LEGAL HEIRS OF LATE SHRI JANAK HAZARILAL GARG, THE AGREEMENT OF SALE DATED 15/08/2005 WAS DRAF TED AT THE LIFE TIME OF FATHER OF ASSESSEE, WHICH SHOW WHEN THE POSSESSION OF THE PROPERTY WAS HANDED OVER. THE ORIGINAL AGREEMENT ENTERED INTO BY LATE SHRI JANAK HAZARILAL GARG CLEARLY MENTIONS THAT POSSESSION OF THE PROPERTY SHALL BE HANDED OVER AT THE T IME OF EXECUTION OF SALE DEED, AND THE SAME FACTS ARE ALSO MENTIONED IN THE SALE DEED EXECUTED ON 23/07/2007 AT PAGE NO. 6, POINT (G). THE POSSESSION OF THE PROPERTY WAS HANDED OVER TO SELLER BY THE APPELLANT AND OTHERS. THE FACT THAT LATE SHRI JANAK HAZAR ILAL GARG ALSO DID NOT FILE ANY RETURN OF INCOME TAX (AS ADMITTED BY THE AR OF THE APPELLANT) ALSO SUPPORTS THE VIEW THAT THE TRANSACTION OF SALE OF PROPERTY WAS NOT COMPLETE AT THE TIME OF ENTERING INTO THE ORIGINAL AGREEMENT OF SALE IN VIEW OF THIS POSIT ION THE ACTION OF THE ASSESSING OFFICER IN BRINGING TO TAX THE CAPITAL GAINS IN THE NAMES OF THE LEGAL HEIRS IN THE ASSESSMENT YEAR IN WHICH THE TRANSACTION WAS COMPLETED BY HANDING OVER POSSESSION OF THE PROPERTY IS CORRECT AND IS CONFIRMED. 7 . AGAINST T HE ABOVE ORDER, ASSESSEE IS IN APPEAL BEFORE THE ITAT. 8 . I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE IN THIS REGARD HAS MADE THE FOLLOWING SUBMISSIONS : 5 ITA NO. 177/NAG/2013. THE APPEAL BEFORE HON'BLE BENCH IS ONLY ON ONE GROUND AND ONLY ON ONE POINT THAT 1/4 TH OF CAPITAL GAIN WAS ASSESSED IN THE HAND OF THE ASSESSEE OF THE PROPERTY WHICH WAS SOLD BY DECEASED FATHER OF THE ASSESSEE LATE SHRI JANAK GARG. THAT THE LATE FATHER OF THE ASSESSEE SHRI JANAK GARG HAD ENTERED INTO THE AGREEMENT FOR THE SALE OF PIECE OF LAND WHEN HE WAS ALIVE, FOR THE CONSIDERATION OF RS.70 LAKHS, ON 15 TH AUGUST, 2005. OUT OF THE TOTAL CONSIDERATION OF RS.70 LAKHS, HE HIMSELF RECEIVED AN AMOUNT OF RS. 53,75,000 / - . THE WHOLE TRANSACTION WAS COMPLETED BY FATHER EXCEPT A PART CONSIDERATION OF RS. 16,25,000 / - , WHICH WAS RECEIVED BY FOUR LEGAL HEIRS AFTER HIS DEATH AT THE TIME OF REGULARIZING OF SALE DEED. THE SALE DEED WAS EXECUTED BY THE LEGAL HEIRS AFTER 11 MONTHS OF THE DEATH OF THE FATHER. THE LEGAL HEIRS WHO REGULARIZED THE SALE DEED WERE THE ASSESSEE MR. PRABHAT GARG, HIS BROTHER, SISTER AND WIDOW MOTHER.' THAT THE ASSESSEE BEING BOUND BY MORAL DUT Y, LEGAL RESPONSIBILITY AND FURTHER FORCEFUL ACT OF THE PURCHASER REGULARIZED THE TRANSACTION OF EXECUTION OF SALE DEED. HE HONORED THE SAME ALONG WITH 3 OTHERS CO - HEIRS AND RECEIVED RS.2,08, 197/ - . BUT BY IGNORING THE CIRCUMSTANCES, FACTS AS WELL AS LA W, THE CIT(A) AGGRIEVED AND UPHELD THE DECISION OF ASSESSING OFFICER BY ASSESSING WHOLE OF 1/4 TH CAPITAL GAIN ON THE SALE OF LAND AMOUNTING TO RS.39,97,529/ - IN THE HANDS OF THE ASSESSEE, THOUGH HE RECEIVED ONLY RS. 2,08,197/ - . THE LEARNED A.O ASSESSED THE CAPITAL GAIN IN THE HANDS OF LEGAL HEIRS BY CONSIDERING READY RECONER VALUE ON THE DATE OF EXECUTION OF SALE DEED BY APPLYING SEC 50C OF THE INCOME TAX ACT, 1961. THAT THE HON'BLE CIT(A) REJECTED THE CONTENTION OF THE ASSESSEE BY STATING THAT THE T RANSACTION WAS TAKEN PLACE WHEN THE LEGAL HEIRS HANDED OVER THE POSSESSION TO THE BUYER WHICH IS AGAINST THE NATURAL JUSTICE AND PREJUDICE TO THE ASSESSEE SINCE ABOUT 81 % OF THE SALE CONSIDERATION WAS RECEIVED BY THE FATHER OF THE ASSESSEE WHEN HE WAS ALIVE AND THE LEGAL HEIRS RECEIVED LESS THAN 5% EACH OF TOTAL SALE CONSIDERATION AND AS SUCH THE TRANSACTION WAS COMPLETED ON THE DATE OF AGREEMENT & CONSIDERATION RECEIVED BY THE DECEASED FATHER OF THE ASSESSEE. BEING AGGRIEVED THE ASSESSEE IS BEFORE YOUR HONOR FOR THE SAKE OF JUSTICE. . 9 . LEARNED COUNSEL PLACED RELIANCE UPON THE HONBLE APEX COURT D ECISION IN THE CASE OF ANARKALI SARABHAI VS. CIT 224 ITR 422. LEARNED COUNSEL FURTHER PLACED RELIANCE UPON HONBLE SUPREME COURT DECISION IN THE CASE OF SHRI SANJEEV LAL ETC. ETC. VS. CIT & ANR. IN CIVIL APPEAL NO. 5899 - 5900 OF 2014 VIDE ORDER DATED 1 ST JULY, 2014. HE FURTHER SUBMITTED THAT THE FATHER HAS RECEIVED 6 ITA NO. 177/NAG/2013. SUBSTANTIAL PORTION OF THE SALE PROCEEDS I.E. 81%. HENCE THE CAPITAL GAIN SHOULD HAVE BEEN TAXED IN HIS HANDS AND NOT IN THE HANDS OF THE ASSESSEE. 10 . LEARNED D.R. ON THE OTHER HAND, RELIED U PON THE ORDERS OF THE AUTHORITIES BELOW. 1 1 . AS PER THE FACTS OF THE CASE, ASSESSEES FATHER HAS ENTERED INTO AN AGREEMENT OF SALE FOR THE SALE OF A PIECE OF LAND WHEN HE WAS ALIVE FOR THE CONSIDERATION OF RS.70 LAKHS ON 15 TH AUGUST, 2005. A SUM OF RS.53,7 5,000/ - WAS RECEIVED BY SHRI JANAK GARG, LATE FATHER OF THE ASSESSEE IN HIS LIFE TIME. THE AGREEMENT OF SALE ENTERED INTO BY SHRI JANAK GARG HAD STIPULATED VIDE CLAUSE 8 THAT THE VENDOR WILL DELIVER THE VACANT POSSESSION OF THE PROPERTY AGREED TO BE SOLD T O THE PURCHASER AT THE TIME OF EXECUTION OF THE SALE DEED. THE SAID AGREEMENT OF SALE HAD ALSO PROVIDE CLAUSE 2 THAT THE SALE DEED WILL BE EXECUTED ON OR BEFORE 15 - 01 - 2006 . CLAUSE 13 OF THE SAID AGREEMENT PROVIDED AS UNDER : IN THE EVENT, THE VENDOR FAIL S TO EXECUTE THE ABOVE DOCUMENT WITHIN THE TIME FRAME AS PER THE CONDITION NO. 2 AND ANY OTHER EVENT CAUSING SERIOUS LOSSES TO THE PURCHASER IN ANY MANNER WHATSOEVER IN RESPECT OF THE PROPERTY INTENDED TO BE PURCHASED, THEN THE PURCHASER SHALL HAVE A RIGH T TO RECOVER THE INITIAL AMOUNT PAID BY HIM. 1 2 . NOW SHRI JANAK GARG PASSED AWAY ON 17 - 08 - 2006 LEAVING BEHIND FOUR LEGAL HEIRS. THE NAMES OF THESE LEGAL HEIRS WERE ENROLLED IN MUTATION RECORD OF THE PROPERTY ON 20 - 12 - 2006. HENCE THE ABOVE MENTIONED LEGAL HEIRS BECAME 1/4 TH OWNER OF THE PROPERTY LEGALLY. THEREAFTER THESE LEGAL HEIRS EXECUTED THE SALE DEED AFTER RECEIPT OF THE BALANCE OF RS.16,25,000/ - ON 23 - 07 - 2007. THE AO HAS OBTAINED THE STAMP VALUATION PRICE AT THE TIME OF EXECUTION OF SALE DEED AND COMP UTED THE DEEMED VALUE OF SALE AT RS.1,61,77,505/ - AND HELD THE FOUR LEGAL HEIRS LIABLE FOR THE ENTIRE CAPITAL GAIN ARISING FROM THIS TRANSACTION. 1 3 . THE FIRST ISSUE TO BE DEALT IN THIS REGARD IS THE DATE OF TRANSFER WHICH IS TO BE TAKEN FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. I FIND THAT HONLE 7 ITA NO. 177/NAG/2013. APEX COURT IN THE CASE OF SHRI SANJEEV LAL (SUPRA) HAD OCCASION TO CONSIDER THE LAW WITH REGARD TO TRANSFER IN RELATION TO CAPITAL ASSET FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. HONBLE APEX COURT HAD EXPOUNDED AS UNDER : '20. THE QUESTION TO BE CONSIDERED BY THIS C OURT IS WH E TH E R THE AGR EE MENT TO SELL WHICH HAD BEEN EXECUTED ON 2 7 TH DECEMBER , 2002 C AN BE CONSIDER E D AS A DATE ON WHICH THE PROPERTY I . E. THE RESIDENTIAL HOUSE HAD BEEN TRANSFERRED. IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVEABLE PROPERTY, A RIGHT IN PERSONAM IS CREATED IN FAVOUR OF THE TRANSFEREE L VENDEE. WHEN SUCH A RIGHT IS CREATED IN FAVOUR OF T HE VENDEE , THE VENDOR IS RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE EL S E BECAUSE THE VENDEE , IN WHOSE FAVOUR THE RIGHT IN PERSONAM IS CREATED, HAS A LEGITIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEMENT , IF THE VENDOR , FOR SOME REA SON IS NOT EXECUTING THE SALE DEED . THUS , BY VIRTUE OF THE AGREEMENT TO S ELL SOME RIGHT IS GIVEN BY THE VENDOR TO THE VENDEE. THE QUESTION IS WHETHER THE ENTIRE PROPERTY CAN BE SAID TO HAVE BEEN SOLD AT THE TIME WHEN AN AGREEMENT TO SELL IS ENTERED INTO . IN NORMAL CIRCUMSTANCES , THE AFORESTATED QUESTION HAS TO BE ANSWERED IN THE NEGATIVE. HOWEVER , LOOKING AT THE PROVISIONS OF SECTION 2(4 7 ) OF THE ACT, WHICH DEFINES THE WORD 'TRANSFER ' IN RELATION TO A CAPITAL ASSET , ONE CAN SAY THAT IF A RIGHT IN THE PROPERTY IS EXTINGUISHED BY EXECUTION OF AN AGREEMENT TO SELL , THE CAPITAL ASSET CAN BE DEEMED TO HAVE BEEN TRANSFERRED . RELEVANT PORTION OF SECTION 2(4 7 ) , DEFINING THE WORD ' TRANSFER' IS AS UNDER : '2(47) ' TRANSFER ', IN RELATION TO A CAP ITAL ASSET , INCLUDES.: (I) .............. . (U) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR 1. 21 .... . 22 .... . 23. CONSEQUENCES OF EXECUTION OF THE AGREEMENT TO SELL ARE ALSO VERY CLEAR AND THEY ARE TO THE EFFECT THAT THE APPELLANTS COULD NOT HAVE SOLD THE PROPERT Y TO SOMEONE ELSE. IN PRACTICAL LIFE, THERE ARE EVENTS WHEN A PERSON , EVEN AFTER EXECUTING AN AGREEMENT TO SELL AN IMMOVEABLE PROPERTY IN FAVOUR OF ONE PERSON, TRIES TO SELL THE PROPERTY TO ANOTHER. IN OUR OPINION , SUCH AN ACT WOULD NOT BE I N ACCORDANCE WITH LAW BECAUSE ONCE AN AGREEMENT TO SELL IS EXECUTED IN FAVOUR OF ONE PERSON , THE SAID PERSON GETS A RIGHT TO GET THE PROPERT Y TRANSFERRED IN HIS FAVOUR BY FILING A SUIT FOR SPECIFIC PERFORMANCE AND THEREFORE , WITHOUT HESITATION WE CAN SA Y THAT SOME RIGHT , IN RESPECT OF THE SAID PROPERT Y , BELONGING TO THE APPELLANTS HAD BEEN EXTINGUISHED AND SOME RIGHT HAD BEEN CREATED IN FAVOUR OF THE VENDEE / TRANSFEREE , WHEN THE AGREEMENT TO S E LL HAD BEEN EXECUTED. .. . ' 8 ITA NO. 177/NAG/2013. 1 4 . NOW EXAMINING THE PRESEN T ISSUE ON THE TOUCH STONE OF ABOVE SAID CASE LAW, I FIND THAT ASSESSEES FATHER SHRI JANAK GARG HAS ENTERED INTO AN AGREEMENT FOR SALE WITH THE VENDEE SHRI SUDHANSHU KUMAR BANERJEE ON 15 - 08 - 2005. THE SAID PROPERTY WAS MORTGAGED TO THE BANK AND PART OF THE SALE PROCEEDS WERE TO BE DIRECTLY GIVEN TO THE BANK TO OBTAIN NO OBJECTION CERTIFICATE. NOW BY VIRTUE OF THIS AGREEMENT FOR SALE SHRI JANAK GARG HAS EXTINGUISHED HIS RIGHT TO SELL THE PROPERTY IN FAVOUR OF THE VENDEE SHRI SUDHANSHU KUMAR BANERJEE. THUS ON THE BASIS OF ABOVE HONBLE APEX COURT CASE LAW, A RIGHT IN PERSONAM WAS CREATED IN FAVOUR OF THE VENDEE. HENCE HE GOT AN LEGITIMATE RIGHT TO ENFORCE A SPECIFIC P ERFORMANCE OF THE AGREEMENT. THUS THERE WAS AN EXTINGUISHMENT OF SHRI JANAK GARGS RIGHT TO SELL THE PROPERTY TO ANY PERSON OTHER THAN THE VENDEE. HENCE THE EXTINGUISHMENT OF THIS RIGHT HAS RESULTED IN TRANSFER AS PER SECTION 2(4 7) OF THE INCOME - TAX ACT. 1 5. IT IS NOT THE CASE THAT THE SAID AGREEMENT FOR SALE WAS SUBSEQUENTLY NOT HONOURED. IN FACT THE LEGAL HEIRS WHO WERE BROUGHT ON RECORD HAVE TO SUBSEQUENTLY EXECUTE THE SALE DEED TO HONOUR THE ABOVE COMMITMENTS IN AGREEMENT FOR SALE. HENCE ON THE ANVIL O F AFORESAID HONBLE APEX COURT CASE LAW, THE TRANSFER OF THIS CASE TOOK PLACE ON THE EXECUTION OF AGREEMENT TO SALE I.E. 15 - 08 - 2005. HENCE THE CAPITAL GAIN IN THIS CASE WAS TO BE COMPUTED AND ASSESSED FOR ASSESSMENT YEAR 2006 - 07. 16. AS SHRI JANAK GARG PA SSED AWAY ON 17 - 08 - 2006, CLEARLY THE LIABILITY TO CAPITAL GAINS FOR ASSESSMENT YEAR 2006 - 07 FASTENED UPON HIM AND AFTER HIS DEMISE UPON THE LEGAL HEIRS. ACCORDINGLY I HOLD THAT ASSESSMENT OF CAPITAL GAIN IN THE HANDS OF THE ASSESSEE IN THE PRESENT ASSESSME NT YEAR IS BAD IN LAW AND IS LIABLE TO BE QUASHED. ACCORDINGLY I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND DELETE THE COMPUTATION OF CAPITAL GAINS IN THE HANDS OF THE ASSESSEE IN THE CURRENT ASSESSMENT YEAR. HOWEVER, REVENUE IS FREE TO PROCEED AGAI NST THE ACTUAL CAPITAL GAIN LIABILITY A S DEALT WITH ABOVE UPON THE LEGAL HEIRS AS MAY BE 9 ITA NO. 177/NAG/2013. PERMISSIBLE UNDER LAW. 1 7 . IN THE RESULT, THIS APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF JULY,2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. NAGPUR, DATED: 22 ND JULY, 2016. COPY FORWARDED TO : 1. SHRI PRABHAT JANAK GARG, GANGA KUTIR, CLARK TOWN, BEZONGAGH, NAGPUR - 440004. 2. I.T.O., WARD - 1(2) , NAGPUR. 3. C.I.T. - I, NAGPUR. 4. CIT(APPEALS), - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.