DY.C.I.T. CIR 1, Nagpur V. SHRI MOHAN B. AGRAWAL, Nagpur

ITA 233/NAG/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 7641 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 8 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 27-07-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A R NINAWE
• Assessee Lawyers: MNOJ MORYANI
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 54F

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI, JUDICIAL MEMBER.. I.T.A. NO. 233/NAG/2015 . ASSESSMENT YEAR : 20 11 - 12. DY. COMMISSIONER OF INCOME - TAX, SHRI MOHAN B. AGRAWAL, CIRCLE - 1, NAGPUR. VS. NAGPUR. PAN AAKPA 1678G. APPELLANT. RESPONDENT. APPELLANT BY : SHRI A.R. NINAWE. RESPONDENT BY : SHRI MNOJ MORYANI. DATE OF HEARING : 27 - 03 - 2017. DATE OF PRONOUNCEMENT : 29 TH MARCH, 2017. O R D E R. PER SHAMIM YAHYA, A.M. : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(APPEALS) - I, NAGPUR DATED 30 - 04 - 2015 AND PERTAINS TO ASSESSMENT YEAR 2011 - 12. THE GROUNDS OF APPEAL READ AS UNDER : 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , THE LD. CIT(APPEALS) ERRED IN DIRECTING THE AO TO TREAT THE TRANSACTION AS LONG TERM CAPITAL GAIN TRANSACTION IN SPITE OF THE FACT THAT THE ASSET WAS SOLD WITHIN 3 YEARS OF PURCHASE (DATE OF REGISTERED SALE DEED). 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(APPEALS) ERRED IN HOLDING THAT THE ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 54F OF THE I.T. ACT, 1961. 2. BRIEF FACTS OF THE CASE ARE AS UNDER : 2 THE AO IN THE COURSE OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS SHOWN THE LONG TERM CAPITAL GAINS OF RS.1,06,11,152/ - ON SALE OF PLOT OF CIVIL LINES KNOWN AS RAJAKOTHI, NAGPUR. THE AO IN HIS ORDER HAS STATED THAT THE ASSESSEE ALONG WITH HIS FOUR BROTHERS (A LL HAVING EQUAL SHARES OF 1/5 TH ) HAD ENTERED INTO AN AGREEMENT WITH SMT. NIRMALA MADHUKAR KOLTE FOR PURCHASE OF THE SAID PROPERTY. HOWEVER, DUE TO SOME DISPUTE THE SALE DEED COULD NOT BE EXECUTED. FURTHER THAT A REGISTERED SALE DEED WAS EXECUTED ONLY ON 1 8 - 04 - 2009 ON THE BASIS OF COMPROMISE DEED PASSED BY HONBLE HIGH COURT ON 01 - 01 - 2007 WHICH WAS MODIFIED BY ANOTHER DECREE ORDER DATED 01 - 09 - 2009 . THUS BY VIRTUE OF THE SALE DEED EXECUTED ON 18 - 04 - 2009 PURSUAN T TO THE COMPROMISE DEED AND THE MODIFIED COMPRO MISE DECREE EXECUTED ON 02 - 01 - 2007 AND 01 - 09 - 2008 RESPECTIVELY THE ASSESSEE GOT THE POSSESSION OF THE LAND. THE SAID LAND WAS SOLD BY THE ASSESSEE ALONG WITH OTHER CO - OWNERS TO SHRI BALBIR SINGH PRITAM SINGH RENU ON 20 - 08 - 2010 FOR A CONSIDERATION OF RS.5,5 1,00,000/ - . THUS ACCORDING TO THE AO THE ASSESSEE HAD SOLD THE PLOT OF LAND WITHIN A PERIOD OF 15 MONTHS OF GETTING THE POSSESSION OF THE LAND. ON THESE FACTS THE AO HELD THE GAIN TO BE SHORT TERM CAPITAL GAIN. 3 . UPON ASSESSEES APPEAL LEARNED CIT(APPEALS ) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE BY HOLDING AS UNDER : 6. I H A VE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE AR OF THE APPELLANT, THE ORDER OF THE AO AND THE MATERIAL ON RECORD. IT IS AN UNDISPUTED FACT THAT THE SELLER OF THE PROPERTY WAS DIR ECTED TO EXECUTE A ALE DEED IN FAVOUR OF THE PLAINTIFF, THE PURCHASERS AS PER THE TERMS OF THE AGREEMENT DAQTED 15.02.1983 IN THE DECREE PASSED BY THE HONBLE 2 ND JT. CIVIL JUDGE NAGPUR ON 13.07.1995, THE PLAINTIFF, THE APPELLANT ACCORDINGLY M A DE THE BALAN C E PAYM E NT O F RS.1 3 , 38 , 300/ - TO THE S E L L ER A N D T H E S EL LER H A S A CCE PT ED A ND A CKNOWLEDGE THE R E CEIPT OF THE SAME . T HUS, ONCE TH E T E R M S OF THE C O NTRA CT ENT E R E D O N 1 5 . 02 . 1 9 8 3 HAV E B EEN COM P L I E D WITH AND ACCEPTED BY BOTH THE PARTIES , IN PURSUAN CE T O THE C O URT DECREE ORDER DATED 13 . 07 . 19 9 5, TH E C O N TRACT BECOM E S FINAL. THERE IS ALSO NO DISP U TE AS REGA R D S TO 3 THE FA C T T HAT T H E PLAINTIFF DEP O SITED T HE B A LANCE AMOUNT OF RS . 13 , 38 , 300/ - IN THE COURT WITHI N T WO MONTHS F R OM THE DATE OF DECRE E PASSED BY THE HON'BLE C O U RT . A C CORDINGLY , PURSUANT TO A COMPROMIS E D DE C R E E O F H IGH CO URT P ASSED O N 02.01 . 2 007, SUBSEQUEN T L Y R ECT I F I E D ON 01 . 0 9 . 2008 , THE SALE D E ED WAS EXE CU T E D ON 18 . 04 . 2009 BETWE E N THE SELLER AND THE PLAINIFF , T HE A PPE L L A NT IN R E SPECT OF THE LAND AREA ADMEASURING 1 453 .7 1 SQ . METERES A S PER THE DECREE ORDER OF THE H O N' BLE H IG H COURT. IT IS ALSO AN UNDISPUTED FACT THAT THE S H ARES FALLING TO THE PURCHASERS PURSUANT TO THE C O U R T S DECREE ORDER WERE REGISTERED BY A DEED OF SALE O N 1 8 . 04 . 2009 ON THE VALUA T ION OF THE PROPERTY WHICH WAS MENT IO N ED IN CIVIL SUIT N O . 41 OF 1987 AND THE SHARES W E R E NOT REGISTERED ON THE VALUATI O N AS O N TH E DATE OF REGISTRA T ION OF THE SA L E DEED ON 18 . 04. 2 00 9 BEC A U S E THE RIGHT, TITLE AND INTEREST IN THE SA I D PR OPERTY GOT WITH TH E APPELLANT WITH EFFECT FROM 1 987 A S THE DECREE PASSED WAS I N RELATION TO TH E SUIT N O . 41 OF 1987. THEREFORE, THERE IS SUBSTANTIAL FOR CE IN THE CONTENTIONS OF THE AR OF THE T HE APP E LLA N T THAT THE ' ORDER OF THE COURT DETERMINING THE RIGHTS OF THE PARTIES TO ANY PROPERTY IN A SUIT IS A L WAYS RETROSPECTIVE IN EFFECT .' THUS THE RIGHT TITLE AND I NTER E ST IN T H E PROPERT Y GOT VESTED WITH THE APPELLANT ON TH E VA LU E OF THE PROPERTY AS EMBEDDED IN SUIT N O . 41 O F 1 987 BY V I RTUE O F C O M PR OM ISED CO URT DEC R E E P A S S ED ON 02 . 01 . 2007 AS M O DIFIED O N 0 1 . 09 . 20 08 . IT IS AL SO A FAC T AS EM A N A TED F ROM THE RECORDS THAT P U RSUANT TO THE C OU R T DE CREE PAS S ED ON 13 . 07 . 1995 IN RESPECT OF THE SAID SUIT NO.41/ 8 7 THE HON'BLE C O URT UPHE LD THE RI G H T TI TLE AND INT E REST IN THE PROPERTY OF THE APPELLANT AND ORDERED TO GET THE PROPERTY TRANSFERRED IN THE N AME O F THE APPELLANT. THEREFORE THE CONTENTION OF THE AR OF THE APPELLANT THAT THE SUBSEQUENT ACT OF REGISTRATION OF PROPERTY THROUGH SALE DEED ON 18.04.2009 IS ME RELY AN INCORPORATION OF THE SAID RIGHT EMANATED RETROSPECTIVELY FROM THE CONTRACT ENTERED BETWEEN THE PARTIES IN THE YEAR 1987 WHICH HAS BEEN UPHELD BY THE HONBLE HIGH COURT IN THE COMPROMISED DECREE PASSED ON 02.01.2007 ALSO CARRIES FORCE IN AS MUCH AS THAT THE COURTS ORDER DID NOT CREATE A NEW TITLE AS ON THE DATE OF PASSING THE DECREE BY CONFIRMING THE EARLIER AGREEMENT DATED 15.02.1983 AND ONLY CONFIRMED AND UPHELD THE RIGHT OF THE APPELLANT EMBEDDED IN THE CIVIL SUIT NO. 41 OF 87. 6.1 THE AR OF TH E APPELLANT IN THIS R EG A R D A S AL SO PLA C ED THE R ELIANCE IN T H E C A SE OF RABINDRA NATH BANNERJEE VS. HARENDRA KUMAR 4 CHAKRAVART H Y R EP OR TE D IN 1956 AIR 462 CALCUTTA. THE AR HAS ALSO RELIED O N THE DECISION OF 4 BOM LR 384 . 6 . 2 THE SAID PROPERTY SUBSEQUENTLY HAS BEEN S O LD T O SHRI BALBIR SING H PRITAM SINGH RENU PROP. M / S. P R IT AM B UILD E R S ON 21 . 08 . 2010. IT IS PER U SED FROM T H E R ECORD TH A T TH E C O MPR O MIS E D E CREE OF THE HON' BLE HIGH COURT WAS PA SSE D ON 02 . 01.2007 WH ER EIN THE HON ' BLE HIGH CO U RT CONFIRMED THE ORDER OF THE HON' BLE JT. CIVIL JU D GE IN SUIT NO.41/87 DATED 13 . 07.1995 . THUS, T H E C O M PR OM IS ED DECREE PASSED BY THE HON'BLE HIGH COU R T WHICH BEIN G N OT APPEALABLE HAS ACHIEVED FINALITY HAS VEST E D ABS O LU TE RIGHT, TITLE AND INTEREST IN THE PROPERT Y IN THE HANDS OF TH E APPELLANT IN THE EYES OF THE LAW. T HERE FO R E EVEN OTHERWISE THE PERIOD OF 3 YEARS IS OVER AS O N 01.01.2010 WHEREAS THE PROPERTY IN QUESTION WAS SOLD VIDE SALE DATED 21.08.2010. THUS EVEN OTHERWISE, THE TRANSACTION OF SALE HAS BEEN EFFECTED AFTER A PERI OD OF 3 YEARS, THEREFORE, THE TRANSACTION IN QUESTION QUALIFIES TO BE A LONG TERM TRANSACTION AS AGAINST THE SHORT TERM CAPITAL GAIN TRANSACTION DETERMINED BY THE AO. I, THEREFORE, DECLINE TO AGREE WITH THE VERSION OF THE AO, TREATING THE TRANSACTION AS S HORT TERM CAPITAL TRANSACTION. IT IS ALSO SIGNIFICANT TO MENTION THAT THE LEARNED AO OF ONE OF THE CO - OWNERS HAS ACCEPTED THE TRANSACTION ON IDENTICAL FACTS AS LONG TERM TRANSACTION. THEREFORE, THE TRANSACTION IN QUESTION IS DIRECTED TO BE TREATED AS LONG TERM CAPITAL GAIN TRANSACTION. 4 . AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE US. 5 . WE HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. LEARNED COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS ENTERED INTO AN AGREEMENT FOR THE PURCHASE OF LAND IN 1983 BY WAY OF AN AGREEMENT AND HAD ADVANCED A SUM OF RS.1.50 LAKHS. THEREAFTER DU E TO SOME LEGAL PROBLEMS THE REGISTRATION WAS DELAYED. ULTIMATELY DECREE ORDER WAS PASSED ON 13 - 07 - 199 5 . LEARNED COUNSEL SUBMITTED THAT THE ENTIRE SALE CONSIDERATION WAS DEPOSITED IN COURT AS PER COURT ORDER ON 13 - 07 - 1995. IN THESE CIRCUMSTANCES, LEARNED C OUNSEL SUBMITTED THAT SINCE THE LAND HAS BEEN SOLD BY THE ASSESSEE ON 26 - 03 - 5 2009 THERE IS NO REASON WHY THE GAIN SHOULD NOT BE TREATED AS LONG TERM CAPITAL GAIN. IN THIS REGARD LEARNED COUNSEL PLACED RELIANCE UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF SHRI SANJEEV LAL ETC. VS. CIT 365 ITR 389. LEARNED COUNSEL FURTHER REFERRED TO THE AMENDMENT IN SECTION 50C BY FINANCE ACT 2016 AND REFERRED TO THE FOLLOWING AMENDMENT : AMENDMENT BY THE FINANCE ACT, 2016. BY FINANCE ACT, 2016, IN SUB - SECTION ( 1), THE FOLLOWING PROVISIONS SHALL BE INSERTED WITH EFFECT FROM 1 ST DAY OF APRIL, 2017, NAMELY: - PROVIDED THAT WHERE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND THE DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT T HE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHORITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTING FULL VALUE OF CONSIDERATION FOR SUCH TRANSFER. PROVIDED FURTHER THAT THE FIRST PROVISO SHALL APPLY ONLY IN A CASE WHERE THE AMOUNT OF CONSIDERATION, OR A PART THEREOF, HAS BEEN RECEIVED BY WAY OF AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR BY USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, ON OR BEFORE THE DATE OF THE AGREEMENT FOR TRANSFER. 6 . REFERRING TO THE ABOVE AMENDMENT, LEARNED COUNSEL SOUGHT SUPPORT IN THE PRESENT CASE WHEREIN THE AGREEMENT HAS BEEN ENTERED INTO AND THE PRICE FIXED THEREIN AND PAID MUCH BEFORE THE DATE OF ACTUAL REGISTRATION. HENCE LEARNED COUNSEL SUBMITTE D THAT PERIOD OF HOLDING SHOULD BE TAKEN AS THE PERIOD FROM WHEN THE AGREEMENT WAS ENTERED INTO. 7 . PER CONTRA LEARNED D.R. RELIED UPON THE ORDER OF THE AO. 6 8. UPON CAREFUL CONSIDERATION WE NOTE THAT THE AGREEMENT FOR SALE WAS ENTERED INTO ON 15 - 02 - 1983. AS PER THE COURT DECREE THE ENTIRE SALE CONSIDERATION WAS DEPOSITED WITHIN TWO MONTHS OF THE ORDER I.E. 13 - 07 - 2095. SUBSEQUENTLY DUE TO FURTHER LITIGATION, THE REGISTRATION WAS DELAYED. IN THESE CIRCUMSTANCES, IN OUR CONSIDERED OPINION, THE ORDER PASSED B Y THE LEARNED CIT(APPEALS) IS CORRECT. WE FURTHER DRAW SUPPORT FROM THE HONBLE APEX COURT DECISION IN THE CASE OF SANJEEV LAL ETC. VS. CIT IN CIVIL APPEAL NOS. 5899 - 5900 OF 2014 DATED 1 ST JULY, 2014. IN THIS CASE HONBLE APEX COURT HAS EXPOUNDED AS UNDER : (HEAD NOTE ONLY): IN THE INSTANT CASE SALE COULD NOT BE EXECUTED BECAUSE OF REASONS BEYOND CONTROL OF APPELLANTS, I.E. PENDENCY OF LITIGATION AND SAME WAS REGISTERED ONLY ON 24.9.2004 AFTER DISMISSAL OF SUIT - IN VIEW OF DEFINITION OF TERM TRANSFER, IT CAN BE SAID THAT SOME RIGHT IN RESPECT OF CAPITAL ASSET IN QUESTION HAD BEEN TRANSFERRED IN FAVOUR OF VENDEE THEREFORE, SOME RIGHT WHICH APP ELLANTS HAD, IN RESPECT OF CAPITAL ASSET IN QUESTION, HAD BEEN EXTINGUISHED BECAUSE AFTER EXECUTION OF THE AGREEMENT TO SELF IT WAS NOT OPEN TO APPELLANTS TO SELL PROPERTY TO SOMEONE ELSE IN ACCORDANCE WITH LAW - A RIGHT IN PERSONAM HAD BEEN CREATED IN FAVO UR OF THE VENDEE, IN WHOSE FAVOUR AGREEMENT TO SELL HAD BEEN EXECUTED AND WHO HAD ALSO PAID RS.15 LAKHS BY WAY OF EARNEST MONEY - . 9. WE FIND THAT IN THE PRESENT CASE ALSO THE AGREEMENT WAS DULY ENTERED IN 1983. THEREAFTER PURSUANT TO COURT DECREE THE BAL A NCE AMOUNT WAS ALSO DEPOSITED IN 1995. SUBSEQUENTLY DUE TO THE LITIGATION AND CIRCUMSTANCES BEYOND THE CONTROL OF THE ASSESSEE, THE REGISTRATION WAS DELAYED. IN THESE CIRCUMSTANCES WHEN THE ASSESSEE SOLD THE PROPERTY IT CANNOT BE SAID THAT THE ASSESSEE WA S HOLDING THE PROPERTY FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN FOR A PERIOD OF LESS THAN 7 THREE YEARS. ACCORDINGLY IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LE A RNED CIT(APPEALS). ACCORDINGLY WE UPHOLD THE SAME. 10. IN THE RESULT, THE APPEAL FILED BY THE REVENUE STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF MARCH, 2017. SD/ - SD/ - (RAM LAL NEGI) ( SHAMIM YAHYA) JUDICIAL MEMBER. ACOUNTANT MEMBER. NAGPUR, DATED: 29 TH MARCH, 2017. COPY FORWARDED TO : 1. SHRI MOHAN B. AGRAWAL, FLAT NO. 001, P. NO. 248, PRITAM APTS., GROUND FLOOR, PT. RAVISHANKAR SHUKLA ROAD, CIVIL LINES, NAGPUR. 2. AC.I.T., CENTRAL CIRCLE - 1(1), NAGPUR. 3. CIT(APPEALS) - (C), NAGPUR. 4. C.I.T. - I, NAGPUR. 5. D.R., ITAT, NAGPUR. 6. GUARD FILE TRUE COPY BY ORDER ASSISTAN T REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.