Rupa Rani Mahankali , Hyderabad V. Income Tax Officer, Ward-15(2) , Hyderabad

ITA 184/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 9925 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 20-07-2021
• Assessment Year: 2008-2009
• Appeal Filed On: 10-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAROOP MANNARD
• Assessee Lawyers: K K GUPTA
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Capital Gains
• Section: 50C; 147

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD S.M.C. BENCH, HYDERABAD. BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER (THROUGH VIRTUAL HEARING) I.T.A. NO. 184 /HYD/20 20 (ASSESSMENT YEAR : 20 08 - 09) SMT. RUPA RANI MAHANKALI, HYDERABAD . PAN AMBPM 6948C .APPELLANT. VS. INCOME TAX OFFICER, WARD 15(2), HYDERABAD. ..RESPONDENT . APPELLANT BY : SHRI K.K. GUPTA. RESPONDENT BY : SHRI SWAROOP MANNARD. DATE OF HEARING : 20.07 .2021. DATE OF PRONOUNCEMENT : 26 .0 7 .2021. O R D E R THIS IS ASSESSEE'S APPEAL FOR THE ASSESSMENT YEAR 2008 - 09 AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 8, HYDERABAD DT.15.11.2019 CONFIRMING THE ADDITION MADE BY THE ASSESSIN G OFFICER. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE , AN INDIVIDUAL , FILED HER RETURN OF INCOME FOR THE ASSESSMENT YEAR 2 ITA NO. 184/HYD/2020 2008 - 09 ELECTRONICALLY ON 4.12.2008 DECLARING AN INCOME OF RS.1,52,650. A NOTICE U/S.148 OF THE INCOME TAX ACT, 1961 ( 'THE ACT') WAS ISSUED TO THE ASSESSEE ON 4 . 3 . 2015 AND SERVED ON 10.3.2015. HOWEVER, THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME IN RESPONSE TO THE NOTICE U/S.148 OF THE ACT BUT FILED DOCUMENTS CONSEQUENT TO SHOW CAUSE NOTICE DT.16.3.2016. THE ASSESSIN G OFFICER THEREFORE COMPLETED THE ASSESSMENT U/S.144 R.W.S. 147 OF THE ACT. 3. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE , ALONG WITH HER SISTER AND 6 BROTHERS , SOLD 12 PLOTS OF LAND AND THE ASSESSEE'S 1/8 TH SHARE IN S.R.O. VALUE ( AFTER APPLYING THE PROVISIONS OF SECTION 50C OF THE ACT ) COME TO RS.21,08,500. HE , THEREFORE , CALLED FOR INFORMATION FROM THE VENDEE WHO SUBMITTED THAT THE PLOTS WERE ACTUALLY P URCHASED FROM THE ASSESSEE'S FATHER , LATE SHRI G SATTAIAH ( T H E VENDOR) AND THE LAND WAS ACTUALLY IN THEIR POSSESSION , BUT FOR THE SAKE OF GENTLEMAN AGREEMENT, THE SALE DEED TO PURCHASE THE LAND WAS EXECUTED FOR WHICH NO AMOUNT WAS PAID TO THE VENDOR S LEGAL HEIRS . THE ASSESSEE'S BROTHERS WERE ALSO EXAMINED WHO CON FIRM ED THAT THERE WAS NO PAYMENT 3 ITA NO. 184/HYD/2020 RECEIVED FROM THE VENDEE S NOR WAS ANY PAYMENT MADE TO THEIR SISTER I.E. THE ASSESSEE HEREIN . THE ASSESSEE , IN HER STATEMENT RECORDED ON 1.3.2014 , ALSO CONFIRMED IT . H OWEVER, SHE STATED THAT AS PER THE GENTLEMAN AGREEMENT, HER BROTHERS HAVE RECEIVED 500 SQUARE YARDS OF LAND AND HAVE CONSTRUCTED HOUSE THEREON AND WERE LIVING THEREIN. SHE STATED THAT JUST BECAUSE SHE WAS A LEGAL HEIR, SHE HAD SIGNED THE SALE DEEDS BUT SHE HAD NOT RECEIVED ANY SALE CONSIDERATION F ROM THE VENDEES NOR FROM THE FAMILY MEMBERS. 4. THE ASSESSING OFFICER HELD THAT THE LEGAL HEIRS OF THE VENDOR SRI G SATTAIAH, INCLUDING THE ASSESSEE , HAVE RECEIVED 500 SQUARE YARDS OF LAND THROUGH GENTLEMAN AGREEMENT AND THEREFORE, THE PROVISIONS OF SECTION 2 ( 4 7 ) (II) OF THE ACT ARE A TTRACTED. HE HELD THAT THE ASSESSEE HAS RELINQUISHED HER RIGHT OVER THE SAID LAND IN FAVOUR OF HER BROTHERS AND THEREFORE, RELINQUISHMENT OF RIGHT IS ALSO A TRANSFER AND IS CHARGEABLE TO TAX . HE ACCORDINGLY COMPUTED THE LONG TERM CAPITAL GAINS (LTCG ) OF RS.4,52,2 5 0 AS FALLING TO THE SHARE OF THE ASSESSEE AND BROUGHT IT TO TAX. THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) , STATING THAT 4 ITA NO. 184/HYD/2020 ASSESSEE'S FATHER LATE SRI SATTAIAH HAD PURCHASED THE LAND AND AFTER CONVERSION OF THE SAME INTO PLOTS, HAD S OLD PART OF THE LAND TO VENDEES AND THAT HE HAD RETAINED A PLOT OF 500 SQUARE YARDS ON WHICH THE ASSESSEE'S BROTHERS HAVE CONSTRUCTED A HOUSE AND WERE LIVING THERE IN . SHE ARGUED THAT SINCE THERE WAS NO TRANSFER OF PROPERTY DURING THE ASSESSMENT YEAR UNDER CONSIDERATION EXCEPT THE EXECUTION OF THE REGISTERED SALE DEED, AND PARTICULARLY SINCE THE VENDEES HAVE NOT PAID ANYTHING TO THE EXECUTORS OF THE SALE DEED, THERE WAS NO TRANSFER OF ANY PROPERTY NOR WAS ANY RELINQUISHMENT OF ANY RIGHT IN ANY PROPERTY. HO WEVER, THE CIT(A) W AS NOT CONVINCED AND ACCORDINGLY HAS CONFIRMED THE ASSESSMENT ORDER. AGGRIEVED BY THE ORDER OF CIT(A), THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL RAISING THE FOLLOWING GROUNDS OF APPEAL : - 1. THE FACTS OF THE CASE DO NOT SUP PORT THE ASSUMPTION THAT TRANSFER HAS TAKEN PLACE TO ATTRACT LONG TERM CAPITAL GAINS TAX. THE RELINQUISHMENT OF RIGHT IN THE PROPERTY AS STATED BY THE APPELLANT, IN FAVOUR OF HER BROTHERS DID NOT AMOUNT TO TAXABLE TRANSFER. 2. THERE IS NO DOCUMENT EVI DENCING THE RELINQUISHMENT OF RIGHT IN FAVOUR OF BROTHERS/SISTERS OF THE APPELLANT. 5 ITA NO. 184/HYD/2020 3. ON THE ABOVE AND OTHER GROUNDS THAT MAY ARISE DURING THE APPEAL THE APPELLANT REQUESTS THE HONOURABLE TRIBUNAL FOR AN ORDER TO DELETE THE CAPITAL GAINS IN THE ASSESSMENT. 5 . THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSION S MADE BEFORE THE CIT(A) AND FILED WRITTEN SUBMISSIONS STATING THAT THERE WAS NO TRANSFER OF LAND BY THE ASSESSEE NOR ANY RELINQUISHMENT OF HER RIGHT. W ITHOUT PREJUDICE TO HIS ARGUMENT THAT THERE IS NO TRANSFER, HE FURTHER ARGUED THAT THE RELINQUISHMENT O F RIGHT IN THE PROPERTY , IF ANY , BY THE ASSESSEE IS NOT EVIDENCED BY ANY DOCUMENT. HE THEREFORE PRAYED FOR DELETING THE ADDITION OF CAPITAL GAINS TO THE RETURNED INCOME OF THE ASSESSEE. 6 . THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAN D, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE AND HER BROTHERS AND SISTER, TOGETHER HAVE RECEIVED 500 SQUARE YARDS PLOT AS PER THE GENTLEMAN AGREEMENT AND SINCE THE ASSESSEE HAS NOT CLAIMED ANY RIGHT OVER THE SAME, IT IS TO BE PRESUMED THAT SHE HAS RELINQUISHED HER RIGHT THEREON AND THEREFORE CAPITAL GAIN IS LIABLE TO BE BROUGHT TO TAX. 6 ITA NO. 184/HYD/2020 7 . HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, I FIND THAT THE UNDISPUTED FACTS ARE THAT THE ASSESSEE'S FATHER , LATE SRI G. SATTAIAH DURING HIS LIFETIME HAD SOLD CERTAIN PIECE OF LAND TO VARIOUS VENDEES AND SOME OF THE VENDEES HA VE ALSO PASSED AWAY AND AT THE REQUEST OF THE VENDEES AND THE LEGAL HEIRS OF DECEASED VENDEES, THE LRS OF THE VENDOR, LATE SRI SATTAIAH, HAVE EXECUTED RE GISTERED DOCUMENT S IN THEIR FAVOUR. IN THE LIGHT OF SUCH CIRCUMSTANCES, THE ASSESSEE AND HER BROTHERS H AVE EXECUTED THE SALE DEED , IN RESPECT OF PROPERTIES, WHOSE POSSESSION OF THE PROPERTY WAS ALREADY GIVEN. IN VIEW OF PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, THE PROPERTIES HAVE ALREADY BEEN TRANSFERRED IN FAVOUR OF THE VENDEES EXCEPT FO R THE EXECUTION OF THE REGISTERED SALE DEED S . AS RIGHTLY CONTENDED BY THE LEARNED COUNSEL FOR THE ASSESSEE , THE TRANSFER HAS TAKEN PLACE IN THE EARLIER ASSESSMENT YEARS WHEN LATE SRI G. SATTIAH WAS ALIVE. AS REGARDS THE FINDING OF THE ASSESSING OFFICER T HAT LTCG HAS ARISEN OUT OF RETENTION OF 500 SQUARE YARDS BY ASSESSEE'S BROTHERS, I FIND THAT THE ASSESSEE HAS STATED BEFORE THE CIT(A) THAT 500 SQUARE YARDS VESTED WITH LATE 7 ITA NO. 184/HYD/2020 SRI G. SATTIAH AND AFTER HIS DEMISE, HIS SONS RECEIVED THE PROPERTY AND CONSTRU CTED HOUSE THEREON AND THAT IT WAS NOT RECEIVED BY ASSESSEE'S BROTHERS BY VIRTUE OF GENTLEMAN AGREEMENT. THE CIT(A) HAS NOT VERIFIED THIS FACT BUT HAS MERELY GONE BY THE PRESUMPTION THAT THE ASSESSEE HAD RELINQUISHED HER RIGHT OVER THE 500 SQ. YARDS PLO T RETAINED BY ASSESSEE'S BROTHERS. SINCE THE LAND RETAINED BY THE ASSESSEE'S BROTHERS CANNOT BE TREATED AS TRANSFER IN THEIR FAVOUR , THERE CANNOT BE ANY RELINQUISHMENT OR RIGHT BY THE ASSESSEE IN SUCH PROPERTY . THEREFORE , T HERE IS NO IN CIDENCE OF ANY LTCG IN FAVOUR OF THE ASSESSEE DURING THE ALLEGED ASSESSMENT YEAR WHEN THE REGISTERED SALE DEED WAS EXECUTED BY THE LEGAL HEIR S OF LATE SRI G. SATTIAH, WITH REGARD TO THE TRANSACTION WHICH HAD TAKEN PLACE DURING THE EARLIER ASSESSMENT YEAR. THUS, T HE ASSESSEE'S GROUNDS OF APPEAL ARE ALLOWED. 8 . IN THE RESULT, THE ASSESSEE'S APPEAL IS ALLOWED. O RDER PRONOUNCED IN THE OPEN COURT ON 26TH JU LY , 2021. SD / - (SMT. P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DT. 26TH JU LY , 2021. * REDDY GP 8 ITA NO. 184/HYD/2020 COPY TO : 1. SMT. RUPA RANI MAHANKALI, 2 - 10 - 46, NEAR MAHANKALI TEMPLE, UPPAL, HYDERABAD. 2. ITO, WARD 15(2), HYDERABAD. 3. PR. C I T - 7, HYDERABAD. 4. CIT(APPEALS) - 8, HYDERABAD. 5. DR, ITAT, HYDERABAD. 6. GUARD FILE. BY ORDER SR. PVT. SECRETARY, ITAT, HYDERABAD.