Satish Kumar Magon, Kolkata V. ITO, Ward 55(4)/ Kolkata, Kolkata

ITA 2338/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6343 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 18-07-2017
• Assessment Year: 2008-2009
• Appeal Filed On: 13-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS CIT SR DR REVEN
• Assessee Lawyers: N P JAIN
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 234B; 69

Judgement Text

IN THE INCOME TAX APPELLATE TR IBUNAL KOLKATA SMC BENCH, KOLKATA [BEFORE SRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER] I.T.A. NO. 2338/KOL/2016 ASSESSMENT YEAR: 2008-09 SHRI SATISH KUMAR MAGON..... .. APPELLANT C/O. N.P. JAIN & CO. 3, HO CHI MINH SARANI KOLKATA 700 0071 [PAN : AIBPM 8503 B] INCOME TAX OFFICE, WARD-55(4), KOLKATA ... RESPONDENT 169, AJC BOSE ROAD 2 ND FLOOR KOLKATA- 700 001 APPEARANCES BY: SHRI N.P. JAIN, ADVOCATE, APPEARED ON BEHALF OF THE ASSESSEE. SHRI RANU BISWAS, ADDL. CIT, SR. DR, APPEARING ON B EHALF OF THE REVENUE DATE OF CONCLUDING THE HEARING : MAY 23 RD , 2018 DATE OF PRONOUNCING THE ORDER : JUNE 15 TH , 2018 O R D E R PER J. SUDHAKAR REDDY :- THIS IS AN APPEAL FILED BY THE ASSESSEE DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-16, (HEREINAFT ER THE LD. CIT(A)), DT. 28/09/2016, PASSED U/S 250 OF THE INCOME TAX ACT, 1 961 (HEREINAFTER THE ACT), RELATING TO ASSESSMENT YEAR 2008-09. 2. THE ASSESSEE IS A RETIRED EMPLOYEE. HE DERIVES I NCOME FROM PENSION AND INCOME FROM OTHER SOURCES. HE FILED HIS RETURN OF I NCOME ELECTRONICALLY ON 03/12/2008, DECLARING TAXABLE INCOME AT RS.1,65,810 /-. 3. THE ISSUE BEFORE ME IS THE APPLICABILITY OF SEC TION 50C OF THE ACT, TO THE FACTS OF THE CASE AND WHETHER THE ADDITION OF RS.6, 22,000/-, MADE BY THE ASSESSING OFFICER, OF CASH DEPOSITS IN BANK ACCOUNT U/S 69 OF THE ACT IS RIGHT IN LAW. 4. AFTER HEARING RIVAL CONTENTIONS, I HOLD AS FOLLO WS:- 5. GROUND NO.1, IS GENERAL IN NATURE. 6. BRIEF FACTS RELATING TO GROUND NO. 2 IS AS FOLLO WS:- 2 I.T.A. NO. 2338/KOL/2016 ASSESSMENT YEAR: 2008-09 SHRI SATISH KUMAR MAGON THE ASSESSEE ENTERED INTO AN AGREEMENT FOR PURCHASE OF A FLAT AND ACQUIRED CERTAIN VALUABLE RIGHTS VIDE AGREEMENT DT. 20 TH MARCH, 2004. THE FLAT WAS NOT REGISTERED IN THE ASSESSEES NAME. THE ASSESSEE TRA NSFERRED THESE RIGHTS TO ONE SHRI MOTILAL BHATTAR, BY WAY OF AN AGREEMENT DT. 25 TH MAY, 205. THE POSSESSION OF THE FLAT WAS HANDED OVER TO SHRI MOTILAL BHATTAR ON 15/ 05/2007. THIS PROPERTY WAS REGISTERED BY THE BUILDER IN FAVOUR OF SHRI MOTILAL BHATTAR ON 24/09/2009 RELEVANT TO THE ASSESSMENT YEAR 2010-11. I ALSO NOTE THAT TH E NOMINATION OF SHRI MOTILAL BHATTAR WAS MADE ON 12/05/2005 BY THE ASSESSEE TO T HE BUILDER, AND THE AMOUNT OF RS.33 LAKHS/- WAS PAID TO THE ASSESSEE BY SHRI M OTILAL BHATTAR ON 07/10/2005, WHICH IS THE FINANCIAL YEAR 2005-06, RELEVANT TO TH E ASSESSMENT YEAR 2008-09. THE POSSESSION IS SUPPOSED TO HAVE BEEN HANDED OVER ONL Y ON 15/05/2007, WHICH IS RELEVANT OT THE ASSESSMENT YEAR 2007-08. THE DATE O F HANDING OVER THE POSSESSION IS TAKEN AS THE DATE OF TRANSFER BY THE ASSESSING O FFICER. THE ASSESSEE ALSO TOOK THIS DATE AS THE DATE OF TRANSFER AND OFFERED SHORT TERM CAPITAL GAINS. IN MY VIEW, WHAT WAS ACQUIRED BY THE ASSESSEE WERE CERTAIN RIGHT OVER THE IMMOVABLE PROPERTIES. AS IT IS WELL SETTLED, RIGHTS IN AN IMMOVABLE PROPERTY ARE A BUNDLE OF RIGHTS. AS NO REGISTRATION WAS DONE IN F AVOUR OF THE ASSESSEE. THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY IN QUESTI ON. HE HAS ONLY CERTAIN RIGHTS OVER THIS PROPERTY. HE COULD NOT HAVE TRANSFERRED T HE SAID IMMOVABLE PROPERTY TO SHRI MOTILAL BHATTAR WHEN HE ENTERED INTO AN AGREEM ENT WITH HIM ON 25 TH MAY, 2005. WHAT WAS SOUGHT TO BE SOLD BY WAY OF TRANSFER TO SHRI MOTILAL BHATTAR, WAS ONLY SUCH RIGHTS OF THE ASSESSEE TO ACQUIRE THE SAI D IMMOVABLE PROPERTY I.E. A FLAT FROM THE BUILDER. WHEN AN IMMOVABLE PROPERTY IS NOT THE SUBJECT MATTER OF TRANSFER PER SE , AND WHAT IS TRANSFERRED IS ONLY CERTAIN RIGHTS IN THE IMMOVABLE PROPERTY, OUT OF THE BUNDLE OF RIGHTS, SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, IS NOT ATTRACTED NOR CAN BE APPLIED. AS NO AG REEMENT WAS REGISTERED THIS SECTION IS ALSO NOT ATTRACTED AS HELD BY THE HONBL E SUPREME COURT IN THE CASE OF 15619 OF 2017 (ARISING OUT OF SLP (CIVIL) NO.35248 OF 2015) COMMISSIONER OF INCOME TAX VERSUS BALBIR SINGH MAINI , JUDGEMENT DT. 4 TH OCTOBER, 2017 . VIDE PARA 20 OF THIS JUDGEMENT THE HONBLE APEX COURT HELD AS FOLLOWS:- 20. THE EFFECT OF THE AFORESAID AMENDMENT IS THAT, ON AND AFTER THE COMMENCEMENT OF THE AMENDMENT ACT OF 2001, IF AN AGREEMENT, LIKE THE JDA IN THE PRES ENT CASE, IS NOT REGISTERED, THEN IT SHALL HAVE NO EFFECT IN LAW FOR THE PURPOSES OF SECTION 53A . IN SHORT, THERE IS NO AGREEMENT IN 3 I.T.A. NO. 2338/KOL/2016 ASSESSMENT YEAR: 2008-09 SHRI SATISH KUMAR MAGON THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. THIS BEING THE CASE, WE ARE OF THE VIEW THAT THE HIGH COU RT WAS RIGHT IN STATING THAT IN ORDER TO QUALIFY AS A TRANSFER OF A CAPITAL ASSET UNDER SECTION 2(47)(V) OF THE ACT, THERE MUST BE A CONTRACT WHICH CAN BE ENFORCED IN LAW UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. A READING OF SECTION 17(1A) AND SECTION 49 OF THE REGISTRATION ACT SHOWS THAT IN THE EYES OF LA W, THERE IS NO CONTRACT WHICH CAN BE TAKEN COGNIZANCE OF, FOR THE PU RPOSE SPECIFIED IN SECTION 53A . THE ITAT WAS NOT CORRECT IN REFERRING TO THE EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A IN SECTION 2(47)(V) IN ORDER TO ARRIVE AT THE OPPOSITE CONCLUSION. THIS EX PRESSION WAS USED BY THE LEGISLATURE EVER SINCE SUB-SECTION (V) WAS INSERTED BY THE FINANCE ACT OF 1987 W.E.F. 01.04.1988. ALL THAT IS MEANT BY THIS EXPRESSION IS TO REFER TO TH E INGREDIENTS OF APPLICABILITY OF SECTION 53A TO THE CONTRACTS MENTIONED THEREIN. IT IS ONLY WHERE THE CONTRACT CONTAINS ALL THE SIX FEATURES MENTIONED IN SHRIMANT SHAMRAO SURYAVANSHI (SUPRA), TH AT THE SECTION APPLIES, AND THIS IS WHAT IS MEANT BY THE EXPRESSION OF THE NATURE REFERRED T O IN SECTION 53A . THIS EXPRESSION CANNOT BE STRETCHED TO REFER TO AN AMENDMENT THAT WAS MADE YE ARS LATER IN 2001, SO AS TO THEN SAY THAT THOUGH REGISTRATION OF A CONTRACT IS REQUIRED BY THE AMENDMENT ACT OF 2001, YET THE AFORESAID EXPRESSION OF THE NATURE REFERRED TO IN SECTION 53A WOULD SOMEHOW REFER ONLY TO THE NATURE OF CONTRACT MENTIONED IN SECTION 53A , WHICH WOULD THEN IN TURN NOT REQUIRE REGISTRATION. A S HAS BEEN STATED ABOVE, THERE IS NO CONTRACT IN THE EYE OF LAW IN FORCE UNDER SECTION 53A AFTER 2001 UNLESS THE SAID CONTRACT IS REGISTERED. THIS BEING T HE CASE, AND IT BEING CLEAR THAT THE SAID JDA WAS NEVER REGISTERED, SINCE THE JDA HAS NO EFFICACY IN THE EYE OF LAW, OBVIOUSLY NO TRANSFER CAN BE SAID TO HAVE TAKEN PLACE UNDER THE AFORESAID DOCUME NT. SINCE WE ARE DECIDING THIS CASE ON THIS LEGAL GROUND, IT IS UNNECESSARY FOR US TO GO INTO THE OTHER QUESTIONS DECIDED BY THE HIGH COURT, NAMELY, WHETHER UNDER THE JDA POSSESSION WAS OR WAS NOT TAKEN; WHETHER ONLY A LICENCE WAS GRANTED TO DEVELOP THE PROPERTY; AND WHETHER THE DEV ELOPERS WERE OR WERE NOT READY AND WILLING TO CARRY OUT THEIR PART OF THE BARGAIN. SINCE WE ARE OF THE VIEW THAT SUB-CLAUSE (V) OF SECTION 2(47) OF THE ACT IS NOT ATTRACTED ON THE FACTS OF THIS CAS E, WE NEED NOT GO INTO ANY OTHER FACTUAL QUESTION. 4.1. THUS, THE INCOME IN QUESTION ON THE CAPITAL GA INS CANNOT BE BROUGHT TO TAX IN THE ASSESSMENT YEAR 2008-09 BY APPLYING SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882, AND NOT IN THE ASSESSMENT YEAR 2007-08. THUS, ON THIS GROUND, THE ADDITION HAS TO BE DELETED. SECTION 50C OF THE ACT, HAS BEEN BROUGHT INTO THE S TATUTE, W.E.F., 1/04/2003. THE ASSESSING OFFICER CHOSE TO APPLY THIS SECTION. 4.2. AS I HAVE HELD THAT THE TRANSFER OF RIGHTS IN QUESTION CANNOT BE BROUGHT TO TAX IN THIS ASSESSMENT YEAR THE QUESTION OF APPLYIN G SECTION 50C OF THE ACT, DOES NOT ARISE. HENCE, THIS GROUND OF THE ASSESSEE IS AL LOWED. 5. GROUND NO. 3 IS AGAINST THE ADDITION OF RS.6,22, 000/-, U/S 69 OF THE ACT. 6. THE ASSESSE SUBMITTED EVIDENCE OF SOURCES OF DEP OSITS MADE IN BANK ACCOUNT, WHICH WAS SALE OF PROPERTY BY HIMSELF ALON G WITH HIS FAMILY MEMBERS. I HAVE EXAMINED THE EVIDENCE. I SEE NO REASON FOR THE ASSESSING OFFICER OR THE LD. CIT(A) IN NOT ACCEPTING THE SAME. IN THE FACE OF TH ESE EVIDENCES, THE ASSESSING OFFICER IN MY VIEW COULD NOT HAVE MADE THESE ADDITI ONS. EVEN OTHERWISE, SECTION 69 OF THE ACT, CANNOT BE APPLIED TO THE FACTS OF TH E CASE. HENCE, THE ADDITION IS HEREBY DELETED. ACCORDINGLY GROUND NO. 3 IS ALLOWED . 4 I.T.A. NO. 2338/KOL/2016 ASSESSMENT YEAR: 2008-09 SHRI SATISH KUMAR MAGON 7. GROUND NO. 4 IS AGAINST THE LEVY OF INTEREST U/S 234B OF THE ACT, AND IS CONSEQUENTIAL IN NATURE. 8. GROUND NO. 5 IS GENERAL IN NATURE. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. KOLKATA, THE 15 TH DAY OF JUNE, 2018. SD/- [ J. SUDHAKAR REDDY ] ACCOUNTANT MEMBER DATED: 15.06.2018 {SC SPS} COPY OF THE ORDER FORWARDED TO: 1. SHRI SATISH KUMAR MAGON C/O. N.P. JAIN & CO. 3, HO CHI MINH SARANI KOLKATA 700 0071 2. INCOME TAX OFFICE, WARD-55(4), KOLKATA 169, AJC BOSE ROAD 2 ND FLOOR KOLKATA- 700 001 3. CIT(A)- 4. CIT- , 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY HEAD OF OFFICE/ D.D.O. ITAT, KOLKATA BENCHES