Amulya Gupta, Haryana V. ITO ward-1(1), Faridabad

ITA 2390/DEL/2019

AI Insights

The case involves Ms. Amyulya Gupta, the appellant, who contested the addition of Rs. 28,79,000 to her income as short-term capital gains by the Income Tax Officer, Ward-1(1), Faridabad. The addition was based on the sale of a property for which the assessee claimed an exemption under Section 54, which was disallowed. The Tribunal's decision was based on the interpretation that the property did not qualify for long-term capital gains treatment as it was not held for the requisite period and the conditions of transfer under the Transfer of Property Act were not satisfied. The Tribunal dismissed the appeal after considering the arguments and materials presented, affirming the decisions of the lower tax authorities.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 112777 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 9 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2023
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 04-01-2023
• Assessment Year: 2015-2016
• Appeal Filed On: 17-03-2019
• Other Referred Cases: Sanjeev Lai vs Cl I (SC)
• Laws Referred To: Income Tax Act, 1961, Transfer of Property Act, 1882
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Capital asset
• Section: 54; 143(3); 54F

Judgement Text

1 ITA no. 2390/Del/2019 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “SMC”: NEW DELHI BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER ITA No. _2390/DEL/2019 [Assessment Year: 2015-16 Ms. Amyulya Gupta, B-994, GF, Gate No. 4, Road no. 37, Sant Tuka Ram Marg, Green Field Colony, Faridabad. PAN- BCJPG8360F Vs Income Tax Officer, Ward-1(1), Faridabad. APPELLANT RESPONDENT Assessee represented by None Department represented by Sh. S.L. Anuragi, Sr. DR Date of hearing 05.01.2023 Date of pronouncement 13.01.2023 O R D E R PER KUL BHARAT, JM: This appeal, by the assessee, is directed against the order of the learned Commissioner of Income-tax (Appeals), Faridabad, dated 30.01.2019, pertaining to the assessment year 2015-16. The assessee has raised following grounds of appeal: “1. Hon CIT(A) erred in upholding the order of Hon AO passed under section 143(3) of the Income Tax Act, 1961 which was passed against the provisions of the Income Tax Act, 1961. 2 ITA no. 2390/Del/2019 1. Your honor, hon AO has made an addition of Rs.28,79,000/- during the assessment proceedings by disallowing the exemption under section 54F which has not even been claimed by the assessee in her income tax return. Therefore, the disallowance of exemption under section 54F does not enhance the income of the assessee. 2. Your honor, hon AO has not considered the facts of the case i.e. exemption has been claimed by the assessee under section 54, as LTCG of Rs. 28,79,000/- was utilized against the purchase of residential flat no. 301, 3 rd floor, block-1, Samapada Co-operative Ground Housing Society Ltd., plot no. GH-06, Sector-46, Faridabad, Haryana. Therefore, no addition is legitimate by the hon AO. 3. Your honor, the fact of the case is that the owners of property (viz. house no.215, sector 15A, Faridabad, Haryana), Smt. Asha Madan (mother of the assessee) and Smt Shashi Bala (sister to assessee’s mother i.e Smt. Asha Madan), have agreed to transfer/sell the first floor of the property to Mrs. Amulya Madan against consideration of Rs.36,21,000/- which was payable by Mrs. Amulya Madan to the contractors vide agreement dated 26/05/2011. Therefore, the owners have agreed to transfer/sell the first floor of the property to Mrs. Amulya Madan on 26/05/2011 and contractor is responsible only for the construction as per agreement dated 26/05/2011. The copy of agreement dated 26/05/2011 was also submitted with the hon AO at the time of assessment proceedings and no queries were raised by the hon AO at that time. Also, the agreement has also not been considered by him while disallowing the deduction claimed by the assessee u/s 54 of the Income Tax Act,1961, which is bad-in-lavv anc unjustified. Your honor, hon AO has not considered the agreement dated 26/05/201 i which was made between the assessee and assessee’s mother 8. mother’s sister which establisnec a right in personam in favor of the assessee and is considered as transfer as defined under section 2(47) of the Income Tax Act, 1961. As the assessee sold the said property on 19/02/2015, it construed that there is period of more than 3 years i.e. from 26/05/2011 and 19/02/2015, and therefore, arising LTCG of Rs.28,79,000/- is eligible for exemption under section 54. Your honor, hon AO has not raised question during the assessment 3 ITA no. 2390/Del/2019 proceedings for the legitimacy of LTCG and without considering the provision of section 2(47) of the Income Tax Act,1961 and wrongly taken the date of transfer 12/12/2012 i.e. date oi registered sale deed which is incorrect and against the provision of section 2(47) of the Income Tax Act,1961.As per section 2(47) clause (v) St (vi) read with explanation 2 in which it is clarified as per clause (v) St (vi)of section 2(47) as follows:- "(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53A of the Transfer of Property Act, 1882; or (vi) any transaction (whether by way of becoming a member of, a acquiring shares in, a co-operative society, company or other association of persons or by way of any agreement or any arrangement or in any other manner whatsoever) which has the effect of transferring or enabling the enjoyment of, any immovable property." As referred section to in 53A of Transfer of Properties Act, 1882, "[53A. Part performance.—Where any person contracts to transfer for consideration any immoveable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that 2[*** j where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract: Provided that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof.]” The assessee entered into tri-part agreement with the owner and contractors on 26/05/2011 and started their construction on the flat (which is 4 ITA no. 2390/Del/2019 reasonable certain, as per agreement to sale) owned according to section 53A of the transfer of tm properties Act, 1882. As the transfer took place on the date of Agreement datec 26/05/2011, which is more than before 3 years from the date of sale i.e. 19/02/2.015. therefore disallowance of capital gain under section 54 is bad in law and unjustified. Your honor, in our support in this condition we quote the case of Sanjeev Lai vs Cl I (SC), Appeal nos.5899-5900 of 2014, date of judgement:01/07/2014 Your honor, the addition of Rs. 28,79,000/- made by the Hon AO under section 54F .s bad-in-lav/ and against the provision of Income Tax Act, 1961,” 2. At the time of hearing no one attended the proceedings. It is transpired from the record that since 21.07.2022 no one is attending the proceedings on behalf of the assessee. Notices of hearing sent to the assessee at the address furnished in form no. 36 have been returned unserved with the postal remark “unclaimed”. Therefore, the appeal was taken up for hearing in the absence of the assessee and is being decided after hearing the learned DR and on the basis of material available on record. 3. Facts giving rise to the present appeal are that in this case the assessee filed her return of income declaring total income of Rs. 2,65,080/- on 11.08.2015. Thereafter, the case was taken up for scrutiny assessment and the Assessing Officer noticed that the assessee ah computed long term capital gains on sale of property i.e. first floor, plot no. 215, Sector 15A, Faridabad for sale consideration of Rs. 65,00,000/-. The Assessing Officer computed short term capital gain on this transaction of Rs. 28,79,000/- and added to the income of the assessee. Hence he 5 ITA no. 2390/Del/2019 assessed income at Rs. 31,44,080/-. 4. Aggrieved against this, the assessee preferred appeal before the learned CIT(Appeals), who after considering the submissions dismissed the appeal. Aggrieved against this, the assessee is in appeal before this Tribunal. 5. Learned DR supported the orders of the authorities below. 6. I have heard learned DR and perused the material available on record. The learned CIT(Appeals) has decided the issue by observing as under: “7. The facts of the case as well as material available on record and arguments of the Learned AR have been gone through. The appellant has entered into an agreement with Smt. Asha madan and Smt. Shashi Bala, owners of (house No. 215, Sector-15A, Faridabad) vide Agreement dated 26.05.2011. In the said agreement, it has been agreed that the existing house would be demolished and would be reconstructed. For this purpose, the construction cost of Rs.36,21,000/- would be borne by the appellant and in return she would be entitled to get 1 st floor of the newly constructed house. It is specifically mentioned in Clause (3) of the said agreement that the upper final construction and finished of all floors would be transferred to the appellant for consideration of Rs.36,21,000/-. Occupation certificate from the Municipal Corporation of Faridabad was received in respect of newly constructed house on 27.08.2012 and a Conveyance Deed was executed in respect of 1 st Floor of the new house in favour of the appellant on 12.12.2012. Therefore, from these facts, it is evident that the appellant has entered into an agreement with the above persons to get the 1 st Floor out of the newly built up property against consideration of Rs.36,21,000/-. For this purpose, after carrying out necessary construction, 'the property in reference' (1 st Floor) came into existence only after the Occupancy Certificate has been obtained. Before this, 'the first floor' was never in existence. Provision of Section 2(47) of the Act read with Section 53A of the Transfer of Properties Act, 1882, are not applicable to the facts of the present case as the appellant never obtained the possession of the 1 st Floor on 26.05.2011 from which capital gain has accrued. Moreover, in order to comply with the provision of Section 53A of the Transfer of Properties Act, it 6 ITA no. 2390/Del/2019 is essential that the possession should combine with the part/ full payment also, which are not the facts of the present case. The facts of the present case are different from the case of Shri Sanjeev Lai (supra) as relied by the appellant as no payment part/ full has been made by the appellant to Smt. Asha Madan and Smt. Shashi Bala on Sector-15A, Faridabad) vide Agreement dated 26.05.2011. In the said agreement, it has been agreed that the existing house would be demolished and would be reconstructed. For this purpose, the construction cost of Rs.36,21,000/- would be borne by the appellant and in return she would be entitled to get 1 st floor of the newly constructed house. It is specifically mentioned in Clause (3) of the said agreement that the upon final construction and finishing of all floors, 1 st floor of the newly constructed house would be transferred to the appellant for consideration of Rs.36,21,000/-. Occupation certificate from the Municipal Corporation of Faridabad was received in respect of newly constructed house on 27.08.2012 and the Conveyance Deed was executed in respect of l- 1 Floor of the new house in favour of the appellant on 12.12.2012. Therefore, from these facts, it is evident that the appellant has entered into an agreement with the above persons to get the 1 st Floor (out of the newly built up property) against consideration of Rs.36,21,000/-. For this purpose, after carrying out necessary construction, 'the property in reference' (1 st Floor) came into existence only after the Occupancy Certificate has been obtained. Before this, 'the first floor' was never in existence. Provision of Section 2(47) of the Act read with Section 53A of the Transfer of Properties Act, 1882, are not applicable to the facts of the present case as the appellant never obtained the possession of the 1 st Floor on 26.05.2011 from which capital gain has accrued. Moreover, in order to comply with the provision of Section 53A of the Transfer of Properties Act, it is essential that the possession should combine with the part/ full payment also, which are not the facts of the present case. The facts of the present case are different from the case of Shri Sanjeev Lai (supra) as relied by the appellant as no payment part/ full has been made by the appellant to Smt. Asha Madan and Smt. Shashi Bala on 26.05.2011 when the said agreement has been signed and the appellant has not taken the possession of the 1 st floor on 26.05.2011 as it was not in existence on 26.05.2011. Whereas in the case of Sanjeev Lai (supra) possession and payment have taken place on the date of the agreement itself. On the careful consideration of the facts of the case, it is noted that the appellant has acquired 'the 1st floor of the immovable 7 ITA no. 2390/Del/2019 property situated at Section 15A, Faridabad' on 12.12.2012. It is, therefore, held that the AO was justified in treating the same as short-term capital asset and denying the benefit of deduction u/s 54 of the Act. The same is hereby confirmed. Thus, the ground of appeal of the appellant is dismissed.” 7. The above finding of fact recorded by the learned CIT(Appeals) is not rebutted by the assessee by placing any contrary material on record. Therefore, I do not see any reason to disturb the finding of the learned CIT(Appeals) and the same is affirmed. 8. Appeal of the assessee stands dismissed. Order pronounced in open court on 13 th January, 2023. Sd/- (KUL BHARAT) JUDICIAL MEMBER *MP* Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI