Rakesh Kumar Goel, Muzaffarnagar V. JCIT, Muzaffarnagar

ITA 2246/DEL/2015

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6601 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 10 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 11-01-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-04-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S K JAIN SENIOR
• Keywords: Sale consideration of property below Jantri Value; Cost of acquisition
• Section: 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH A : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI KULDIP SINGH, JUDICIAL MEMBER ITA NO.2246/DEL./2015 (ASSESSMENT YEAR : 2011-12) SHRI RAKESH KUMAR GOEL, VS. JCIT, RANGE 2, 60 / 111, LAXMAN VIHAR, MUZAFFARNAGAR. MUZAFFARNAGAR (UP). (PAN : AIGPG7313N) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RAHUL KHARE, ADVOCATE REVENUE BY : SHRI S.K. JAIN, SENIOR DR DATE OF HEARING : 11.01.2017 DATE OF ORDER : 28.02.2017 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : THE APPELLANT, SHRI RAKESH KUMAR GOEL (HEREINAFTER REFERRED TO AS THE ASSESSEE) BY FILING THE PRESEN T APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 13.02.2015 PASS ED BY THE COMMISSIONER OF INCOME-TAX (APPEALS), MUZAFFARNAGAR QUA THE ASSESSMENT YEAR 2011-12 ON THE GROUNDS INTER ALIA T HAT :- 1. THAT THE ASSESSEE DENIES HIS LIABILITY TO BE ASSESSED AT AN INCOME OF RS.58,01,061/-. 2. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ITA NO.2246/DEL./2015 2 ERRED IN LAW AND ON FACTS IN TREATING LONG TERM CAPITAL GAINS AS SHORT TERM CAPITAL GAINS OF SALE OF LEASED HOLD PLOT AT NOIDA. 3. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ALLOWING THE EXEMPTION U/S 54F CLAIMED BY THE ASSESSEE. 4. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS IN NOT ADJUDICATING THE LEGAL ISSUE RAISED ON ACCOUNT OF SECTION 50C. 5. THAT HAVING REGARD TO THE FACTS AND CIRCUMSTANCES OF THE CASE THE LD. CIT (A) HAS ERRED IN LAW AND ON FACTS BY NOT ALLOWING THE BENEFIT OF RS.30,00,000/- CLAIMED BY THE ASSESSEE WHICH WAS THE PART OF ACQUISITION COST. 2. BRIEFLY STATED FACTS OF THIS CASE ARE : ASSESSEE S RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 AT RS.3,69,000/- WAS SUBJECTED TO SCRUTINY AND ASSESSEE WAS CALLED UPON TO SHOW-CAUSE AS TO HOW THE ASSESSEE HAS SHOWN LONG TERM CAPITAL GAIN (LTCG) AT RS.32,50,549/- AND HAS CLAIMED DEDUCTION U/S 54F AT RS.25,82,936/-. IT IS NOTICED BY ASSESSING OFFICER THAT THE ASSESSEE HAS SOLD PLOT AT CASSIA NOIDA ESTATE TO ANIL KUMAR AGARWAL FOR A SALE CONSIDERATION OF RS.40,00,000/- BUT AS PER FIN AL SETTLEMENT DEED, THE ASSESSEE HAS PAID BACK RS.30,00,000/- IN ORDER TO SETTLE PENDING MATTERS AND HE WAS CALLED UPON TO EXPLAIN T HE REASON FOR ITA NO.2246/DEL./2015 3 PAYMENT OF RS.30,00,000/- TO ANIL KUMAR AGARWAL. A SSESSEE CLAIMED EXEMPTION U/S 54F OF RS.25,82,936/- ON PURC HASE OF TWO HOUSE PROPERTIES. ASSESSEE SUBMITTED THAT THE INVE STMENT FOR THE PURPOSE TO AVAIL DEDUCTION U/S 54F OF RS.85,00,000/ - WHICH WAS MADE IN RESIDENTIAL PROPERTY I.E. FOR A FLAT IN IND IRAPURAM OF RS.43,27,000/- THROUGH CHEQUES ALREADY DEBITED TO T HE BANK ACCOUNT OF THE ASSESSEE AND INVESTED IN RESIDENTIAL HOUSE AT LAXMAN VIHAR FOR RS.41,73,000/- FOR WHICH HE SUBMITTED THE DETAILS BEFORE AO. 3. ASSESSEE HAS MADE A CLAIM OF PAYMENT OF RS.30,00 ,000/- TO ANIL KUMAR AGARWAL TO RESOLVE THE ISSUE AS ANIL KUM AR AGARWAL MADE PAYMENT OF RS.12,00,000/- THROUGH ORAL AGREEME NT TO PURCHASE THIS PLOT AND FILED SETTLEMENT LETTER IN S UPPORT OF ITS CLAIM. HOWEVER, AO CAME TO THE CONCLUSION THAT THE ASSESSE E HAS FAILED TO FURNISH ANY DOCUMENT OR EVIDENCE FOR CLAIM OF RS.1 8,00,000/- PAID ON ACCOUNT OF DALALI, POSSESSION AND DISPUTE SETTLE MENT CHARGES. AO HAS ALSO NOT ACCEPTED THE CONTENTION OF THE ASSE SSEE THAT THE ASSESSEE WAS REQUIRED TO CREDIT OF RS.30,00,000/- A S PAYMENT MADE TO ANIL KUMAR AGARWAL BECAUSE NOWHERE IN THE RETURN OF INCOME NOR IN THE COMPUTATION OF INCOME THE ASSESSEE HAS C LAIMED RS.12,00,000/- PAID BY ANIL KUMAR AGARWAL ON BEHALF OF THE ASSESSEE. ASSESSEE ALSO FAILED TO BRING ON RECORD ANY EVIDENCE TO ITA NO.2246/DEL./2015 4 PROVE THAT RS.18,00,000/- WAS GIVEN TO ANIL KUMAR A GARWAL ON ACCOUNT OF DISPUTE MONEY AND THEREBY DISALLOWED THE CLAIM OF THE ASSESSEE TO THE TUNE OF RS.18,00,000/-. AO ALSO RE JECTED THE CLAIM OF THE ASSESSEE AS TO CLAIMING DEDUCTION U/S 54F OF THE ACT AND TREATED THE SAME AS SHORT TERM CAPITAL GAIN (STGF) AND ASSESSED THE TOTAL INCOME AT RS.58,01,061/-. 4. ASSESSEE CARRIED THE MATTER BY WAY OF AN APPEAL BEFORE THE LD. CIT (A) WHO HAS DISMISSED THE APPEAL. FEELING AGGRIEVED, THE ASSESSEE HAS COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL. 5. WE HAVE HEARD THE LD. AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS R ELIED UPON AND ORDERS PASSED BY THE REVENUE AUTHORITIES BELOW IN T HE LIGHT OF THE FACTS AND CIRCUMSTANCES OF THE CASE. 6. UNDISPUTEDLY, THE ASSESSEE HAS CLAIMED LTCG OF RS.32,50,549/- QUA THE PLOT (PCH0169553) PURCHASED FROM GREATER NOIDA DEVELOPMENT AUTHORITY (NOIDA AUTHORITY) ALLOT TED TO HIM DURING FINANCIAL YEAR 204-05 AND SOLD THIS PLOT ON 16.06.2010. ASSESSEE ALSO BROUGHT ON RECORD ACCOUNT STATEMENT I SSUED BY NOIDA AUTHORITY AS ANNEXURE A TO PROVE THE DATE OF ALLO TMENT OF THE PLOT (PCH0169553) AS 16.06.2004. HOWEVER, AO TREAT ED THE ITA NO.2246/DEL./2015 5 LTCG CLAIMED BY THE ASSESSEE AS STCG ON THE GROUND THAT THE ASSESSEE TOOK POSSESSION OF THE PLOT ON 29.06.2009. 7. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACT S AND CIRCUMSTANCES OF THE CASE AND ARGUMENT ADDRESSED BY THE PARTIES, THE FIRST QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER FOR THE PURPOSE OF SECTION 54 OF THE ACT, THE DATE OF AGREEMENT TO PURCHASE IS TO BE TAKEN AS DATE OF PURCHASE INSTEAD OF DATE OF REGISTRATION OF THE SALE DEED? 8. UNDISPUTEDLY, AS PER LETTER DATED 03.04.2007 ISS UED BY NOIDA AUTHORITY TO THE ASSESSEE, AVAILABLE AT PAGE 14 OF THE PAPER BOOK, ASSESSEE PAID AN AMOUNT OF RS.16,83,120/- DURING TH E PERIOD 16.06.2004 TO 17.05.2006 AS AGAINST THE TOTAL AMOUN T DUE OF RS.28,14,813.76 IN COMPLIANCE TO THE TRANSFER LETTE R DATED 26.06.2004, AVAILABLE AT PAGE 13 OF THE PAPER BOOK, WHICH INTER ALIA SHOWS THAT THE SAME HAS BEEN ISSUED PURSUANT T O THE APPLICATION DATED 22.06.2004 FOR ALLOTMENT OF THE PLOT IN QUEST ION; THAT PLOT NO.PCH0169553, MEASURING 750 SQ.YDS. HAS BEEN ALLO TTED SUBJECT TO THE CONDITIONS CONTAINED THEREIN. 9. TRANSFER LETTER (SUPRA) APPARENTLY SHOWS THAT TH E PLOT IN QUESTION HAS BEEN ALLOTTED TO THE ASSESSEE AS PER T ERMS AND CONDITIONS CONTAINED THEREIN AND IN COMPLIANCE THER ETO, THE LEASE ITA NO.2246/DEL./2015 6 DEED DATED 29.06.2009 WAS EXECUTED IN FAVOUR OF THE ASSESSEE BY THE NOIDA AUTHORITY, AVAILABLE AT PAGE 47 TO 54 OF THE PAPER BOOK. 10. IT IS SETTLED PRINCIPLE OF LAW THAT IT IS THE D ATE OF ALLOTMENT FROM WHICH HOLDING PERIOD FOR THE PURPOSE OF COMPUT ING THE LTCG IS TO BE COMPUTED AND NOT THE DATE OF REGISTRATION OF THE CONVEYANCE/ REGISTRATION DEED. IN THE INSTANT CASE , ASSESSEE PAID SUBSTANTIAL AMOUNT OF SALE CONSIDERATION PURSUANT T O THE TRANSFER LETTER DATED 26.06.2004 (SUPRA), THOUGH THE CONVEYA NCE DEED WAS EXECUTED ON 29.06.2009. 11. WE ARE OF THE CONSIDERED VIEW THAT IN THESE CIR CUMSTANCES, HOLDING PERIOD FOR COMPUTING THE GAIN WOULD RELATE BACK TO THE DATE OF TRANSFER LETTER DATE I.E. 26.06.2006 FROM WHICH DATE THE ASSESSEE STARTED MAKING PAYMENT OF INSTALLMENT TOWA RDS SALE CONSIDERATION AND NOT THE DATE OF EXECUTION OF THE SALE DEED I.E. 29.06.2009, SO THE LOWER REVENUE AUTHORITIES ERRED IN COMPUTING THE GAIN ARISING OUT OF PROPERTY IN QUESTION TO THE ASSESSEE FROM 29.06.2009, THE DATE OF EXECUTING THE CONVEYANCE DE ED. RELIANCE IN THIS REGARD IS PLACED ON THE FOLLOWING JUDGMENTS :- (I) CIT VS. R.L. SOOD 245 ITR 727 (DELHI) (II) CIT VS. S.R. JEYASHANKER 373 ITR 120 (MAD.) (III) CIT VS. K. RAMAKRISHAN 363 ITR 59 (DELHI) (IV) MRS. MADHU KAUL VS. CIT, CHANDIGARH (2014) 4 3 TAXMANN.COM 417 (P&H) ITA NO.2246/DEL./2015 7 12. NOT ONLY THIS, CIRCULAR NO.471 DATED 15.10.1986 IS ALSO CATEGORIC ENOUGH TO EXPLAIN THE CONTROVERSY AT HAND THAT IN SUCH LIKE CASES, ALLOTTEE GETS TITLE OF THE PROPERTY ON THE DATE OF ISSUANCE OF THE ALLOTMENT LETTER AND THE PAYMENT OF INSTALLM ENT IS ONLY A FOLLOW UP ACTION AND TAKING THE DELIVERY OF THE POS SESSION IS ONLY A FORMALITY. THE CIRCULAR NO.471 DATED 15.10.1986 HA S FURTHER BEEN EXPLAINED IN CIRCULAR NO.672 DATED 16.12.1993 IN CA SES OF CONSTRUCTION FOR THE PURPOSE OF SECTION 54 AND 54F OF THE ACT. SO, WE ARE OF THE CONSIDERED VIEW THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION ON ACCOUNT OF LTCG IN THIS CASE. 13. NOW, THE NEXT QUESTION ARISES FOR DETERMINATION IN THIS CASE IS :- AS TO WHETHER AO/CIT (A) HAVE ERRED IN DISALLOWING THE BENEFIT OF RS.30,00,000/- CLAIMED BY THE ASSESS EE BEING PART OF ACQUISITION COST? 14. ASSESSEE CLAIMED TO HAVE PAID RS.18,00,000/- AS DALALI, POSSESSION AND DISPUTE IN COMPUTATION OF THE INCOME . ON QUERY RAISED BY THE AO, THE ASSESSEE EXPLAINED THAT IT RE CEIVED RS.12,00,000/- FROM ANIL KUMAR AGARWAL AND PAID HIM RS.30,00,000/- AND AS SUCH, THE DIFFERENCE OF RS.18 ,00,000/- WAS ON ACCOUNT OF DALALI, POSSESSION AND DISPUTE SETTLE MENT. ITA NO.2246/DEL./2015 8 15. SO FAR AS AMOUNT OF RS.12,00,000/- CLAIMED TO H AVE BEEN ALLEGEDLY PAID BY ANIL KUMAR AGARWAL ON BEHALF OF T HE ASSESSEE IS CONCERNED, FIRST OF ALL, THERE IS NOT AN IOTA OF EV IDENCE IN THE SHAPE OF SOME AGREEMENT OR RECEIPT ON RECORD NOR THERE IS ANY PAYMENT TO THE TUNE OF RS.12,00,000/- PAID BY ANIL KUMAR AGARW AL ON BEHALF OF THE ASSESSEE TO NOIDA AUTHORITY AS NO SUCH PAYME NT IS REFLECTED IN THE PAYMENT OF ACCOUNT FURNISHED BY NOIDA AUTHOR ITY, AVAILABLE AT PAGE 14 OF THE PAPER BOOK. SO, SINCE THE ASSESS EE HAS FAILED TO PROVE THAT ANIL KUMAR AGARWAL HAS EVER PAID RS.12,0 0,000/- AGAINST THE LAND IN QUESTION TO NOIDA AUTHORITY NOR ANY SUCH CLAIM HAS BEEN FILED BY THE ASSESSEE IN THE RETURN OF INC OME OR COMPUTATION THE BENEFIT THEREOF HAS RIGHTLY NOT BEE N EXTENDED BY THE REVENUE AUTHORITIES TO THE ASSESSEE. 16. SO FAR AS AMOUNT OF RS.18,00,000/- CLAIMED TO H AVE BEEN GIVEN BY THE ASSESSEE TO ANIL KUMAR AGARWAL ON ACCO UNT OF DALALI, POSSESSION AND ON ACCOUNT OF DISPUTED MONEY IS CONC ERNED, AGAIN EXCEPT AFFIDAVIT FILED BY ANIL KUMAR AGARWAL, THERE IS NOT AN IOTA OF EVIDENCE EITHER IN THE SHAPE OF SOME AGREEMENT O R RECEIPT OR COPY OF SOME COURT CASE OR ANY OF COMPROMISE ARRIVE D AT BETWEEN THE ASSESSEE AND ANIL KUMAR AGARWAL IN THE PRESENCE OF SOME RESPECTABLE NOR IT IS MENTIONED IN THE AFFIDAVIT IT SELF THAT THE AMOUNT IS BEING PAID ON ACCOUNT OF DALALI OR SOME D ISPUTE BETWEEN ITA NO.2246/DEL./2015 9 THE PARTIES. MOREOVER, WHEN THE PROPERTY IN QUESTI ON HAS BEEN DIRECTLY ALLOTTED IN THE NAME OF THE ASSESSEE BY TH E NOIDA AUTHORITY, THE QUESTION OF HAVING ANY DISPUTE REGAR DING THE SAME WITH ANIL KUMAR AGARWAL OR MAKING PAYMENT OF DALALI DOES NOT ARISE. SO, AO HAS RIGHTLY DISALLOWED THE AMOUNT OF RS.18,00,000/- TO THE ASSESSEE AND AFFIRMED BY LD. CIT (A). 16. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE, THE P RESENT APPEAL FILED BY THE ASSESSEE IS PARTY ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 28 TH DAY OF FEBRUARY, 2017. SD/- SD/- (G.D. AGRAWAL) (KULDIP SINGH) VICE PRESIDENT JUDICIAL MEMBE R DATED THE DAY OF FEBRUARY, 2017 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A), MUZAFFARNAGAR. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.