Sama Om Reddy , Hyderabad V. Income Tax Officer, Ward-8(2), Hyderabad

ITA 2225/Hyd/2018

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 2139 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 09-03-2020
• Assessment Year: 2012-2013
• Appeal Filed On: 28-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Keywords: Cost of acquisition; Capital Gains
• Section: 201

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES SMC, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER I.T.A. NO. 2225/HYD/2018 ASSESSMENT YEAR: 2012-13 SAMA OM REDDY, HYDERABAD [PAN: AITPS2701B] VS THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.C.DEVDAS, AR FOR REVENUE : SHRI NILANJAN DEY, DR DATE OF HEARING : 09-03-2020 DATE OF PRONOUNCEMENT : 29-04-2020 O R D E R THIS IS ASSESSEES APPEAL FOR THE AY.2012-13, DIRECT ED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)2, HYDERABAD, DATED 29-10-2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, AN INDIVIDUAL, DID NOT FILE ANY RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR. THE ASSESSING OFFICER (AO) RECEIVED INFORMATION THAT THE ASSESSEE HAS SOLD A PROPERTY VIDE SALE DEED DOCUMENT NO.1610/2012 REGISTERED AT SRO, RAJENDRANAGAR DURING THE FINANCIAL YEAR 2011-12 FOR AN AMOUNT OF RS.9,90,000/-. THE ASSESSEE HAD NOT OFFERED TO TAX ANY CAPITAL GAINS FROM THE SAID TRANSACTION. THEREFORE, THE AO INITIATED PROCEEDINGS U/S.147 OF THE INCOME TAX ACT [AC T], AFTER ISSUANCE OF NOTICE U/S.148 OF THE ACT, DT.28-04-2015. IN RESPONSE TO THE SAID NOTICE, THE ASSESSEE APPEARED THROUGH HIS REPRESENTATIVE AND SUBMITTED THE INFORMATION ITA NO. 2225/HYD/2018 :- 2 -: CALLED-FOR. THE ASSESSEE, VIDE LETTERS DT.29-02-2016 & 16-05- 2016, SUBMITTED THAT THE ASSESSEE HAD ENTERED INTO AN AGREEMENT OF SALE CUM GPA, VIDE REGD. DOCUMENT NO.16792/2006, DT.29-11-2006 IN RESPECT OF PROPERTY A T H.NO.2-3-190, SITUATED AT UPPARPALLY, RAJENDRANAGAR MA NDAL, R.R.DISTRICT AND THE SALE CONSIDERATION AS MENTIONED THEREIN AT RS.5,94,000/- WAS RECEIVED IN ENTIRETY AND THE POSSE SSION OF THE SAME WAS ALSO HANDEDOVER TO THE TRANSFEREE OF THE PROPERTY, SHRI A.MANIKYAM. IT WAS MENTIONED THAT BY V IRTUE OF THE ABOVE DOCUMENT, THE VENDEE BECAME THE ABSOLUTE OWNE R OF THE PROPERTY AND THEREAFTER, SHRI A.MANIKYAM TRANSFERR ED THE SAID PROPERTY BY WAY OF A REGISTERED SALE DEED, VIDE DOCUMENT NO.1610/2012, DT.14-03-2012 TO SHRI P.ILAIAH, UPPERPA LLY AND THEREFORE THE VENDOR WAS THE AGPA-HOLDER AND NOT THE ASSESSEE HEREIN. THEREFORE, ACCORDING TO HIM, THERE W AS NO TRANSFER OF PROPERTY BY THE ASSESSEE VIDE DOCUMENT DT. 14-03- 2012 AND THERE WAS NO CAPITAL GAIN WHICH HAD ACCRUED TO THE ASSESSEE IN THE LIGHT OF THE SAID SALE TRANSACTION. 2.1. THE AO, HOWEVER, DID NOT ACCEPT THE CONTENTIONS OF ASSESSEE AND OBSERVED THAT VIDE THE AGREEMENT OF SALE C UM GPA, THE ASSESSEE HAS ONLY APPOINTED HIS ATTORNEY ON HI S BEHALF TO DEAL WITH PROPERTY WITH THE PROSPECTIVE BUYE RS AND THEREFORE THERE IS NO TRANSFER OF PROPERTY VIDE AGPA. HE HELD THAT THE TRANSACTION VIDE SALE DEED NO.1610/2012, DT.14-0 3- 2012 IS THE TRANSACTION RESULTING IN TRANSFER OF PROPE RTY BY THE ASSESSEE THROUGH HIS ATTORNEY, SHRI A.MANIKYAM. THER EFORE, HE HELD THAT THE ASSESSEE IS LIABLE TO PAY TAX ON THE LONG T ERM CAPITAL GAIN. WITHOUT GIVING ANY CREDIT FOR COST OF AC QUISITION, ITA NO. 2225/HYD/2018 :- 3 -: THE AO TREATED THE ENTIRE SUM OF RS.9,90,000/- AS CAPI TAL GAIN AND BROUGHT THE SAME TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFOR E THE CIT(A), WHO CONFIRMED THE ORDER OF AO AND THE ASSESSE E IS IN SECOND APPEAL BEFORE THE TRIBUNAL, RAISING THE FOLLOW ING GROUNDS: 1. THE ORDER OF THE HON'BLE CIT(A) IS ERRONEOUS IN LAW AS WELL AS FACTS OF THE CASE. 2. THE HON'BLE CIT(A) OUGHT TO HAVE NOTED THAT THE ASSESSEE TRANSFERRED THE SAID PROPERTY VIDE REGISTERED DOCUM ENT I.E. SALE CUM GPA DATED 29.11.2006 AFTER ACCEPTING CONSIDERATION AND THEREFORE CEASED TO BE THE OWNER OF THE PROPERTY. 3. THE HON'BLE CIT(A) OUGHT TO HAVE NOTED THAT THE ASSESSEE WAS NOT A PARTY (SIGNATORY) FOR THE DOCUMENT DATED 14.03.20 12 AND THEREFORE THERE WAS NO CAPITAL GAIN IN THE HANDS OF THE ASSES SEE LIABLE FOR TAX AS ALLEGED BY THE ASSESSING OFFICER AND CONFIRMED B Y THE HON'BLE CIT(A). 4. THE HON'BLE CIT (A) OUGHT TO HAVE NOTED THAT THE ASSESSEE RECEIVED THE CONSIDERATION WITH REGARD TO SALE CUM GPA DATED 29.11.2006 AT THE TIME OF EXECUTION OF THE DOCUMENT AND THEREFORE HE WAS NOT ENTITLED FOR ANY FURTHER CONSIDERATION WITH REGARD TO THE DOCUMENT DATED 14.03.2012. 5. THE HON'BLE CIT(A) OUGHT TO HAVE NOTED THAT THE CONCLUSION ARRIVED AT BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER WAS AGAINST PROVISIONS OF THE ACT AS WELL AS VARIOUS JUDICIAL D ECISIONS WITH REGARD TO TAXATION OF GAIN RESULTED IN THE LIGHT OF SALE C UM GPA AND THEREFORE THE ADDITION IS LIABLE TO BE DELETED. 6. THE OBSERVATION OF THE HON'BLE CIT(A) THAT THE A SSESSEE DID NOT DECLARE THE CAPITAL GAIN FOR THE ASST. YEAR 2007-08 CANNOT BE THE BASIS FOR TAXING CAPITAL GAIN IN THE ASST. YEAR 201 2-13 IN THE LIGHT OF FACTS AND CIRCUMSTANCES OF THE CASE. 7. WITHOUT PREJUDICE TO THE ABOVE, THE HON'BLE CIT( A) OUGHT TO HAVE OBSERVED THAT THE ASSESSING OFFICER ERRED IN ASSESS ING ENTIRE CONSIDERATION AS GAIN WITHOUT ALLOWING DEDUCTION AS PER PROVISIONS OF THE ACT. ITA NO. 2225/HYD/2018 :- 4 -: 8. ANY OTHER GROUND WILL BE RAISED AT THE TIME OF H EARING. 4. BOTH THE PARTIES WERE HEARD. LD.COUNSEL FOR THE ASS ESSEE HAD REITERATED THE SUBMISSIONS MADE BY THE ASSESSEE BE FORE THE AO AND HAS SUBMITTED THAT BY VIRTUE OF THE AGREEMENT O F SALE CUM GPA AND HANDING OVER OF THE POSSESSION, THE ASSESSEE HAD TRANSFERRED THE PROPERTY IN FAVOUR OF THE VENDEE/GPA-HOLDER, SHRI A.MANIKYAM. IT IS SUBMITTED TH AT THE ASSESSEE HAD RECEIVED THE ENTIRE SALE CONSIDERATIO N OF RS.5,94,000/- AND HAD ALSO HANDEDOVER THE VACANT POSS ESSION OF THE PROPERTY TO THE VENDEE. THEREFORE, ACCORDING TO HIM, THE TRANSFER WAS COMPLETE IN 2006 ITSELF. IT IS SUBMITTED TH AT IT WAS IN THE YEAR 2012 THAT THE AGPA-HOLDER HAD SOLD THE PR OPERTY TO ANOTHER PERSON AND THE ASSESSEES NAME HAS ONLY BEEN INCLUDED AS THE VENDOR, BUT THE DOCUMENT NEITHER CONTAINE D THE SIGNATURE OF THE ASSESSEE NOR THE ASSESSEE HAS REC EIVED ANY SALE CONSIDERATION. THEREFORE, ACCORDING TO HIM, THE LONG TERM CAPITAL GAIN CANNOT BE BROUGHT TO TAX IN THE HANDS O F ASSESSEE IN THE RELEVANT ASSESSMENT YEAR. 4.1. WITHOUT PREJUDICE TO THE ABOVE ARGUMENT ON MERITS AN D IN THE ALTERNATIVE, THE LD.COUNSEL FOR THE ASSESSEE AL SO SUBMITTED THAT IF IT WERE TO BE HELD THAT THERE IS A TRANSF ER OF PROPERTY BY THE ASSESSEE IN FAVOUR OF A THIRD PERSON IN THE RELEVANT FINANCIAL YEAR, THEN THE ASSESSEE SHOULD HAVE BEEN ALLOWED THE COST OF ACQUISITION, WHICH THE AO FAILED TO GIVE WHILE COMPUTING THE LONG TERM CAPITAL GAIN. ITA NO. 2225/HYD/2018 :- 5 -: 5. THE LD.DR, ON THE OTHER HAND, SUPPORTED THE ORDERS O F THE AUTHORITIES BELOW AND RELIED UPON THE RECITALS IN TH E AGPA TO ARGUE THAT THE ASSESSEE IS STILL THE OWNER OF THE PROPE RTY AND HE HAD ONLY EXECUTED THE AGREEMENT OF SALE CUM GPA IN FAVOUR OF SHRI A.MANIKYAM AND THEREFORE ON THE EXECUTION OF TH E SALE DEED IN 2012, THERE IS A TRANSFER OF PROPERTY AND ASS ESSEE IS LIABLE TO PAY LONG TERM CAPITAL GAIN THEREON. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND MATERIAL ON RECORD, I FIND THAT BY VIRTUE OF THE AGPA DT.29-11-2006, THE ASSESSEE HAS PARTED WITH HIS RIGHT IN THE PROPERTY BECA USE HE HAD RECEIVED THE ENTIRE SALE CONSIDERATION OF RS.5,94 ,000/- AS AGREED TO BETWEEN BOTH THE PARTIES AND HAS ALSO HANDEDO VER THE VACANT POSSESSION OF THE PROPERTY TO THE VENDEE THERE IN. IT IS ALSO STATED THEREIN THAT THE GPA IS GIVEN TO THE VEND EE FOR THE CONVENIENCE OF THE PURCHASER FOR DOING THE NECES SARY ACTS AND THINGS ON BEHALF OF THE VENDOR AND THE VENDEE THER EIN. SINCE THE VENDEE HAS PAID THE ENTIRE SALE CONSIDERATI ON AND HAS TAKEN POSSESSION OF THE PROPERTY, THE VENDEE BECOM ES THE OWNER OF THE PROPERTY U/S.53A OF THE TP ACT AND U/S.2( 47) OF THE IT ACT, IT IS A TRANSFER OF THE PROPERTY. THE VENDE E HAS EXECUTED THE SALE DEED BY VIRTUE OF THE SAID AGPA, AS HE HAS SOLD THE PROPERTY TO ANOTHER PARTY FOR RS.9,90,000/-. THE SALE OF THE PROPERTY BY THE VENDEE CUM AGPA-HOLDER CANNOT B E CONSIDERED AS SALE OF PROPERTY BY THE ASSESSEE. FURTH ER, IT IS WORTH NOTING THAT EXCEPT BEING DESCRIBED AS THE VENDOR , THE ASSESSEE IS NEITHER A SIGNATORY TO THE SUBSEQUENT SALE DEED NOR IS HE THE RECIPIENT OF ANY OF THE SALE CONSIDERATIO N. IN VIEW OF THE SAME, IT IS HELD THAT THE ASSESSEE IS NOT LIABLE FOR TAX ON ITA NO. 2225/HYD/2018 :- 6 -: ANY CAPITAL GAIN ARISING OUT OF TRANSFER OF PROPERTY V IDE DOCUMENT NO.1610/2012, DT.14-03-2012. ACCORDINGLY, THE APPEAL OF ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 TH APRIL, 2020 SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED: 29-04-2020 TNMM ITA NO. 2225/HYD/2018 :- 7 -: COPY TO : 1. SHRI SAMA OM REDDY, NO.2-4-125, UPPARPALLY, RAJE NDRA NAGAR, HYDERABAD. 2. THE INCOME TAX OFFICER, WARD-8(2), HYDERABAD. 3. CIT(APPEALS)-2, HYDERABAD. 4. PR.CIT-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.