THE DCIT-3(1), Indore V. Kumari Sheetal Garg, Indore

ITA 254/IND/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7492 (ITAT-INDORE)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-01-2019
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 07-01-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 06-04-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: K C SELVAMANI
• Assessee Lawyers: S S SOLANKI
• Keywords: Reopening of assessment; Capital asset; Audit objection; Difference of opinion; Assessment record; Revised return; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 54F; 142(1); 147; 148; 139

Judgement Text

SHEETAL GARG ITA NO.254/IND/2017 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, INDORE BENCH, INDORE BEFORE HON'BLE KUL BHARAT, JUDICIAL MEMBER AND HON'BLE MANISH BORAD, ACCOUNTANT MEMBER ITA NO.254/IND/2017 ASSESSMENT YEAR 2008-09 REVENUE BY S HRI K.C. SELVAMANI , SR.DR ASSESSEE BY SHRI S.S. SOLANKI, CA DATE OF HEARING 0 7 . 0 1. 201 9 DATE OF PRONOUNCEMENT 10 . 01.20 19 O R D E R PER MANISH BORAD, AM. THE ABOVE CAPTIONED APPEAL IS FILED AT THE INSTANCE OF REVENUE PERTAINING TO ASSESSMENT YEAR 2008-09 AND IS DIREC TED AGAINST THE ORDERS OF LD. COMMISSIONER OF INCOME TAX (APPEALS)- I (IN SHORT LD.CIT(A)], INDORE DATED 07.12.2016 WHICH IS ARIS ING OUT OF THE ORDER U/S 147 R.W.S. 143(3) OF THE INCOME TAX ACT 1 961(IN SHORT THE ACT) DATED 31.07.2015 FRAMED BY ACIT-3(1), INDORE . 2. REVENUE HAD RAISED FOLLOWING GROUNDS OF APPEAL; DC IT - 3 (1), INDORE VS. KUMARI SHEETAL GARG, 8/2, NEW PALASIA, INDORE ( APPELLANT ) (RESPONDENT ) PAN NO. A FHPG9179G SHEETAL GARG ITA NO.254/IND/2017 2 1. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE LD. CIT(A)'HAS ERRED IN DELETING THE ADDITION OF RS. 2,50,74,858/- MADE BY THE AO ON ACCOUNT OF DISALLOWANCE OF DEDUCTION CLAIMED U/S. 5 4F AS CLAIM OF LONG TERM CAPITAL GAIN WAS TREATED AS SHORT TERM CAPITAL GAIN . 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN HOLDING THAT EFFECTIVE DATE OF TRANSFER FR OM HANDS OF ASSESSEE WAS DATE OF REGISTRATION I.E. 10.04.2007 WHILE, THE ASS ESSEE RELINQUISHED HERE RIGHTS VIDE SALE AGREEMENT DATED 14.12.2006 IN FAVO UR OF SHRI VINAY CHAJLANI AND SMT. SUNITA CHAJLANI AND ENJOYING THE SAID RIGH TS SHRI VINAY CHAJLANI & SMT. SUN ITA CHAJLANI SOLD THE PROPERTY TO M/S. HON EYWELL PROPERTY P. LTD. AT HIGHER PRICE THAN THAT IS MENTIONED IN AGREEMENT WI TH THE ASSESSEE. 3. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE LD. CIT(A) HAS ERRED IN HOLDING THAT REOPENING IS NOT VALID WHILE THE COPY OF AGREEMENT DATED 14.12.2006 WAS NOT SUBMITTED BY ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDINGS HENCE, THE FACTS OF THE AGREEMENT WAS N OT VERIFIED BY THE AO DURING THE ORIGINAL ASSESSMENT PROCEEDINGS. 4. THE APPELLANT RESERVES THE RIGHT TO ADD, AMEND O R ALTER THE GROUND OF APPEAL ON OR BEFORE THE DATE THE APPEAL IS FINALLY HEARD FOR DISPOSAL.' 3. BRIEFLY STATED THE FACTS AS CULLED OUT FROM THE RECORDS ARE THAT THE ASSESSEE FILED HER RETURN OF INCOME ON 31.3.09 DECLARING TOTAL INCOME OF RS.34,51,540/-. IN THE SAID RETURN THE AS SESSEE HAD CLAIMED EXEMPTION U/S 54F OF THE RS. 2,50,74,857/- IN RESPECT OF INVESTMENT MADE IN THE FIXED DEPOSIT OF RS. 2,51,00 ,000/- UNDER THE CAPITAL GAIN DEPOSIT SCHEME. AS THE CORRECT EXE MPTION ALLOWABLE U/S 54F WAS RS. 2,18,13,595/-THE RETURN WAS REVISED . THE SHEETAL GARG ITA NO.254/IND/2017 3 ASSESSMENT OF THE ASSESSEE WAS COMPLETED U/S 143(3) OF THE INCOME TAX ACT ON 30.12.2010 WHEREIN THE TOTAL INCOME WAS FINALLY ASSESSED AT RS. 67,12,802/- I.E. AS PER THE REVISED RETURN FILED BY HER ON 12.07.2010. AN AUDIT OBJECTION WAS RAISED A LLEGING THAT AS THE ASSESSEE HAS ENTERED INTO AGREEMENT TO SALE ON 14.12.2016, THE EFFECTIVE DATE OF SALE SHALL BE 14.12.2006 AND NOT 10.4.2007(THE DATE OF REGISTERED SALE DEED). ON THE BASIS OF AUDI T OBJECTION, THE CASE WAS REOPENED AND CLAIM U/S 54F WAS DENIED ALLE GING THE GAIN TO BE SHORT TERM CAPITAL GAIN. 4. AGGRIEVED ASSESSEE PREFERRED AN APPEAL BEFORE TH E LD.CIT(A) WHO ALLOWED THE APPEAL OF THE APPELLANT. 5. AGGRIEVED BY THE ABOVE DELETION REVENUE IS IN AP PEAL BEFORE THE TRIBUNAL RAISING TWO ISSUES (I) AS THE DATE OF AGREEMENT TO SALE WAS 14.12.2006, THE CAPITAL GAIN IS SHORT TERM AND EXEMPTION U/S 54F IS NOT ALLOWABLE & (II) THE REOPENING WAS VALID . 6. LD. DEPARTMENTAL REPRESENTATIVE VEHEMENTLY SUPPO RTED THE ORDER OF LD.A.O. 7. PER CONTRA LD. COUNSEL FOR THE ASSESSEE SUPPORTE D THE FINDINGS OF LD. CIT(A) AND SUBMITTED THAT AS PER SECTION 2 ( 47)(V) OF THE IT ACT '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 O F THE TRANSFER OF PROPERTY ACT, 1882.' AS PER THIS CLAUSE THREE COND ITIONS ARE MANDATORY FOR TRANSFER, (I) PART PERFORMANCE, (II) POSSESSION & (III) SHEETAL GARG ITA NO.254/IND/2017 4 CONTRACT OF NATURE REFERRED TO IN SECTION 53A OF TH E TRANSFER OF PROPERTY TAX. THAT THE APPELLANT RECEIVED ONLY RS. 2,50,000/- EACH VIDE AGREEMENT TO SALE DATED 14.12.2006 FROM THE BU YERS WHEREAS THE SALE VALUE WAS RS. 2,64,30,573/- AND RS. 3,24,6 3,573/-. THAT THE APPELLANT HAS RECEIVED LESS THAN 10% OF THE AMO UNT AS TOKEN AMOUNT VIDE AGREEMENT TO SALE. THAT IS PARA 5 OF A GREEMENT TO SALE IT WAS CLEARLY MENTIONED THAT POSSESSION WILL BE HA NDED OVER TO THE BUYERS AT THE TIME OF REGISTRATION OF SALE DEED. IN PARA 15 OF AGREEMENT TO SALE IT WAS MENTIONED THAT IF THE BALA NCE AMOUNT IS NOT PAID WITHIN STIPULATED TIME, RS. 2,50,000/- WIL L BE FORFEITED AND THIS SALE AGREEMENT WILL AUTOMATICALLY STAND CANCEL LED. THAT NEITHER POSSESSION IS TRANSFERRED NOR' PART PERFORMANCE IS DONE, ONLY A TOKEN AMOUNT IS GIVEN. FURTHER THE SAME IS NOT REGI STERED AS REQUIRED U/S 53A OF THE TRANSFER OF PROPERTY ACT, 1 882. HON'BLE SUPREME COURT IN THE CASE OF CIT V. BALBIR SINGH MA INI REPORTED IN 389 ITR 0531 HELD AS UNDER :_ 'THE EFFECT OF THE AFORESAID AMENDMENT IS THAT, ON AND AFTER THE COMMENCEMENT OF THE AMENDMENT ACT OF 2001, IF A N AGREEMENT, LIKE THE JDA IN THE PRESENT CASE, IS NOT REGISTERED, THEN IT SHALL HAVE NO EFFECT IN LAW FOR THE PURPOSE S OF SECTION 53A. IN SHORT, THERE IS NO AGREEMENT IN THE EYES OF LAW WHICH CAN BE ENFORCED UNDER SECTION 53A OF THE TRANSFER O F PROPERTY ACT. THIS BEING THE CASE, WE ARE OF THE VIEW THAT T HE HIGH COURT 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 SHEETAL GARG ITA NO.254/IND/2017 5 SECTION 53A OF THE TRANSFER OF PROPERTY ACT. 8. THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITT ED THAT AS PER ABOVE DECISION TRANSFER UNDER SECTION 2(47)(V) WILL TAKE PLACE FROM THE DATE OF REGISTRATION OF DOCUMENT AND NOT OTHERW ISE. 9. AS REGARDS REOPENING OF ASSESSMENT, THE AO, AFT ER CAREFULLY CONSIDERING THE FACTS AND SUBMISSIONS OF THE CASE A LLOWED THE CLAIM OF ASSESSEE. WHEN THE CLAIM OF ASSESSEE WAS ALLOWED BY THE AO AFTER TAKING CARE OF ALL THE FACTS OF THE CASE MORE PARTI CULARLY OF THE ISSUE INVOLVED, THE CASE CANNOT BE REOPENED. IT WILL TANT AMOUNT TO CHANGE OF OPINION. THAT THE GROUND HAS BEEN RAISED BY THE AO THAT THE COPY OF THE AGREEMENT DATED 14.12.2006 WAS NOT SUBM ITTED BY THE ASSESSEE DURING THE COURSE OF ASSESSMENT PROCEEDING S. THE COPY OF THE SALE AGREEMENT WAS PART OF ASSESSMENT RECORD AS IS CLEARLY EVIDENT FROM THE REASON TO BELIEVE SUPPLIED BY THE AO. FURTHER IN BOTH SALE DEEDS IN POINT NO.2 THIS FACT WAS CLEARLY MENTIONED THAT AN AGREEMENT TO SALE DATED 14.12.2006 HAS BEEN ENTE RED INTO BETWEEN THE PARTIES. IN THIS CASE NOTICE U/S 148 HA S BEEN ISSUED ON 12/03/2015 I.E AFTER 4 YEARS FROM THE END OF ASST Y EAR WHICH IS 2008-09 IN THE PRESENT CASE. AS PER PROVISO TO SECT ION 147 WHERE AN ASSESSMENT U/S 143(3) OR UNDER THIS SECTION HAS BEEN MADE FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TA KEN UNDER THIS SECTION AFTER THE EXPIRY OF 4 YEARS FROM THE END OF RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TA X HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY AL L MATERIAL FACTS SHEETAL GARG ITA NO.254/IND/2017 6 NECESSARY FOR HIS ASSESSMENT FOR THAT ASSESSMENT YE AR. IN THE PRESENT CASE THERE WAS NO FAILURE ON THE PART OF AS SESSEE. THE ASSESSEE HAS ALSO PLACED RELIANCE ON THE FOLLOWING JUDGMENTS; (A) IN ORDER TO QUALIFY AS 'TRANSFER' OF CAPITAL AS SET U/S 2(47)(V) OF THE ACT, THERE MUST BE 'CONTRACT' WHICH CAN BE E NFORCED IN LAW UNDER SECTION 53A OF THE TRANSFER OF PROPERTY A CT:- I) CIT V. BALBIR SINGH MAINI 389 ITR 531 (SC) (B) WHEN POSSESSION IN TRANSFERRED AND PART PERFORM ANCE (SUBSTANTIAL PAYMENT) IS MADE, THEN ONLY TRANSFER I S CONSIDERED AS PER SECTION 2(47)(V):- (I) CHATURBHUJ DWARKADAS KAPADIA V. CIT 260 ITR 9 (II) CIT V. COCHIN STOCK EXCHANGE LTD 363 ITR (III) CIT V VED PRAKASH RAKHRA 370 ITR 762 (KARNATA KA) (IV) SHRI MAHESH NEMICHANDRA GANESHWADE V ITO ITANO.594/PN/10 ITAT (PUNE) (C) ASSESSMENT U/S 147 CANNOT BE REOPENED ON CHANGE OF OPINION:- (I) CIT V. KELVINATOR OF INDIA LTD 320 ITR - (II) ASSISTANT COMMISSIONER OF INCOME TAX, MUMBAI & OTHERS V/S ICICI SECURITIES PRIMARY DEALERSHIP LTD 348 ITR 029 9 (SC) SHEETAL GARG ITA NO.254/IND/2017 7 (III) COMMISSIONER OF INCOME TAX VS. FUJISTU OPEL L TD 359 ITR 0067(MP) (IV) PRINCIPAL COMMISSIONER OF INCOME TAX VS. CHL L IMITED 110 CCH 0113 (DELHI) (V) KARTI P. CHIDAMBARAM VS. ASSISTANT COMMISSIONER OF INCOME TAX 300 CTR 0233 (MADRAS) (VI) COMMISSIONER OF INCOME TAX VS. P.G. FOILS LTD 356 ITR 0594 (GUJ.) (D) AS PER PROVISO TO SECTION 147, WHERE AN ASSESSM ENT U/S 143(3) HAS BEEN MADE, NO ACTION CAN BE TAKEN AFTER THE EXPIRY OF 4 YEARS IF THERE BEING NO FAILURE ON THE PART OF ASSESSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS:- (I) COMMISSIONER OF INCOME TAX & ANR. VS. FORAMER F RANCE 264 ITR 0566 (SC) (II) COMMISSIONER OF INCOME TAX VS. STEEL TUBES OF INDIA LTD 326 ITR 0046 (MP) (III) SABH INFRASTRUCTURE LTD VS. ASSISTANT COMMISS IONER OF INCOME TAX 398 ITR 0198 (DELHI) (IV) BHOR INDUSTRIES LTD VS. ASSISTANT COMMISSIONE R OF INCOME TAX & ORS. 267 ITR 0161 (BOMBAY) (V) PARIKH PETROL CHEMICAL AGENCIES (P) LTD VS. ASS ISTANT SHEETAL GARG ITA NO.254/IND/2017 8 COMMISSIONER OF INCOME TAX 266 ITR 0196 (BOMBAY) (VI) NIKHIL K. KOTAK VS. MAHESH KUMAR, ASSESSING OF FICER 319 ITR 0445 (GUJ.) (VII) LAMBDA THERAPEUTIC RESEARCH LIMITED VS. ASSIS TANT COMMISSIONER OF INCOME TAX 101 CCHP 0030 (GUJ) (VIII) SIMPLEX CONCRETE PILES (INDIA) LTD VS. DEPUT Y COMMISSIONER OF INCOME TAX & ORS. 262 ITR 0605 (CAL CUTTA) (IX) COPERION IDEAL PRIVATE LIMITED VS. COMMISSIONE R OF INCOME TAX 378 ITR 0525 (DELHI) (E) REOPENING THE ASSESSMENT U/S 147 MERELY ON THE BASIS OF AUDIT OBJECTION IS ILLEGAL AND WRONG:- (I) COMMISSIONER OF INCOME TAX (L TU) VS. RELIANCE INDUSTRIES LTD 382 ITR 0574 (BOMBAY) (II) RECKITT BENCKISER HEALTHCARE INDIA PRIVATE LTD VS. DEPUTY COMMISSIONER OF INCOME TAX 96 CCH 0159 (GUJ.) (III) RAAJRATNA METAL INDUSTRIES LTD VS. ASSISTANT COMMISSIONER OF INCOME TAX 371 ITR 0222 (GUJ.) , (IV) AVTEC LIMITED .VS. DEPUTY COMMISSIONER OF INCO ME ITR 0611 (DELHI) SHEETAL GARG ITA NO.254/IND/2017 9 (V) COMMISSIONER OF INCOME TAX VS. DRM ENTERPRISES 91 CCH 0070 (BOMBAY) (VI) SHREE RAM BUILDERS VS. ASSISTANT COMMISSIONER OF INCOME TAX 377 ITR 0631(GUJ.) (VII) NATIONAL CONSTRUCTION CO. VS JOINT COMMISSION ER OF INCOME TAX 93 CCH 0309 (GUJ.) (VIII) P.C. PATEL AND COMPANY VS. DEPUTY COMMISSION ER OF INCOME TAX 379 ITR 0151 (IX) DISTRICT COOPERATIVE BANK LTD VS. DEPUTY COMMI SSIONER OF INCOME TAX 94 CCH 0019 (ALLAHABAD) (F) AO HAS TO DISPOSE OF OBJECTIONS, IF FILED BY P ASSING SPEAKING ORDER, BEFORE PROCEEDINGS WITH ASSESSMENT: - (I) GKN DRIVE SHAFTS (INDIA) LTD V. ITO 70 CCH 1264 (SC) 10. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED TH E RECORDS PLACED BEFORE US AND CAREFULLY GONE THROUGH THE SUB MISSIONS OF LD. COUNSEL FOR THE ASSESSEE. WE WILL FIRST TAKE UP GR OUND NO.3 RAISED BY THE REVENUE CHALLENGING THE FINDINGS OF LD. CIT( A) HOLDING THAT THE REOPENING OF THE ASSESSMENT U/S 147 R.W.S. 143( 3) OF THE ACT WAS NOT VALID. SHEETAL GARG ITA NO.254/IND/2017 10 11. IT IS AN ADMITTED FACT THAT THE ASSESSEES CASE IS PERTAINING TO ASSESSMENT YEAR 2008-09, AND THE ASSESSMENT PROCEED INGS U/S 143(3) COMPLETED ON 30.12.2010 AND THE TRANSACTION S GIVING RISE TO CAPITAL GAIN WERE THOROUGHLY EXAMINED BY THE LD.A.O WHILE ALLOWED THE DEDUCTION U/S 54F OF THE ACT DURING THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS ON 12.03.15 THAT THE LD.A.O IS SUED A NOTICE U/S 148 OF THE ACT WHICH IS BEYOND THE PERIOD OF FO UR YEARS FROM THE END OF THE ASSESSMENT YEAR 2008-09. THE POWER TO R EOPEN THE ASSESSMENT BEYOND FOUR YEARS CAN BE USED BY THE AO ONLY IF ANY INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF THE FAILURE ON THE PAR T OF THE ASSESSEE TO MAKE THE RETURN U/S 139 OR FAILURE TO RESPONSE T O NOTICE U/S 142(1) OR SECTION 148 OF THE ACT OR A FAILURE TO DI SCLOSE FULLY AND TRULY THE MATERIAL FACTS NECESSARY FOR ASSESSMENT F OR THAT ASSESSMENT YEAR I.E. 2008-09. PERUSAL OF THE RECOR DS REVEALS THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS U/S 143 (3) OF THE ACT WHEN THE TRANSACTION GIVING RISE TO CAPITAL GAIN WA S EXAMINED, THE COPY OF SALE AGREEMENT WAS VERY MUCH PART OF THE AS SESSMENT RECORD AND THE DETAILS OF COPY OF AGREEMENT DATED 1 4.02.2006 AND OTHER CONDITIONS WERE DULY MENTIONED THEREIN. IT C ANNOT BE SHEETAL GARG ITA NO.254/IND/2017 11 PRESUMED THAT THE LD.A.O DID NOT EXAMINED THE SALE DEED WHILE COMPLETING THE ASSESSMENT. IN OUR VIEW THERE WAS N O FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FULLY OR TRULY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT AND IN THESE GIVEN FACTS A ND CIRCUMSTANCES OF THE CASE REOPENING OF THE COMPLETE D ASSESSMENT U/S 143(3) BEYOND FOUR YEARS WAS NOT VALID AS IT WA S MERELY FOR CHANGE OF OPINION AND THEREFORE IN THE LIGHT OF THE SETTLED LEGAL POSITION AS HELD BY HON'BLE APEX COURT IN THE CASE OF CIT V/S KELVINATOR OF INDIA LTD 320 ITR 561 (SC) WHICH IN O UR VIEW SQUARELY APPLIES ON THE FACTS OF THE ASSESSEE, THE REASSESSM ENT PROCEEDINGS CARRIED OUT U/S 147 R.W.S. 143(3) OF THE ACT IN THE CASE OF THE ASSESSEE ARE BAD IN LAW AND CANNOT BE HELD TO BE VA LID. WE THEREFORE FIND NO REASON TO INTERFERE IN THE FINDIN G OF LD. CIT(A) HOLDING THE REASSESSMENT PROCEEDINGS AS INVALID AND UPHOLD THE SAME AND DISMISS REVENUES GROUND NO.3. 12. AS REGARDS GROUND NO.1 & 2 WHICH RELATES TO THE MERITS OF THE CASE, REVENUE IS AGGRIEVED THAT THE LD. CIT(A) ERRE D IN DELETING THE ADDITION OF RS.2,50,74,858/- MADE BY LD.A.O ON ACCO UNT OF DISALLOWANCE OF DEDUCTION U/S 54F OF THE ACT. THOU GH WE HAVE SHEETAL GARG ITA NO.254/IND/2017 12 ALREADY HELD THAT THE REASSESSMENT PROCEEDINGS ARE INVALID BUT JUST FOR ACADEMIC PURPOSE WE WILL ADJUDICATE GROUND NO.1 & 2 RELATING TO THE MERITS OF THE CASE. WE FIND THAT THE LD.CIT (A) DELETED THE ADDITION OF RS.2,50,74,858/- OBSERVING AS FOLLOWS; 5. GROUND NOS. 2 & 3:- THE ABOVE GROUNDS ARE DIRE CTED AGAINST THE REJECTION OF CLAIM OF EXEMPTION U/S 54F OF THE ACT AND THE TREATMENT OF LTCG ON SALE OF PLOT AS STCG. THE DETAILED FACTS OF THE CASE AS PER THE ASSESSMENT ORDER ARE REPRODUCED AT PARA NO.2 ABOVE AND THE DETAILED SUBMISSION OF THE APPELLANT ARE REPRODUCED AT PARA NO.3 ABOVE. 5.1 ON PERUSAL OF THE MATERIAL ON RECORD, IT IS SEE N THAT THE ONLY DISPUTE IS REGARDING THE DATE OF TRANSFER OF THE PLOT IN QU ESTION. THE APPELLANT HAS CONTENDED THAT THE DATE IS 10/04/2007 ON WHICH DATE THE REGISTRY WAS MADE WHILE THE AO HAS TAKEN THE VIEW THAT THE DATE IS 14/12/2006 WHICH IS THE DATE OF AGREEMENT. THE AO HAS RELIED O N THE DEFINITION OF TRANSFER AS PER SECTION 2(47)(II) OF THE ACT CONTEN DING THAT TRANSFER INCLUDES EXTINGUISHMENT OF ANY RIGHTS IN THE CAPITA L ASSET AND VIDE PARA NO. 11 OF THE AGREEMENT DATED 14/12/2006 THE APPELL ANT HAD GIVEN UP HER RIGHT IN THE CAPITAL ASSET OF TRANSFERRING IT T O ANY OTHER PERSON. THE AO FURTHER OBSERVED THAT AS PER THE SALE AGREEMENT DATED 14/12/2006 THE CONSIDERATION WAS AGREED TO BE PAID ON OR BEFOR E 10/04/2007 AND AS THE CONSIDERATION WAS PAID ON 07/04/2007 THE TRANSF ER WILL RELATE BACK TO THE DATE OF AGREEMENT WHICH IS 14/12/2006 IRRESP ECTIVE OF THE FACT THAT REGISTRY WAS MADE ONLY ON 10/04/2007. 5.2 THE ABOVE ARGUMENT OF THE AO IS HOWEVER WITHOUT TAKING INTO CONSIDERATION THE FOLLOWING MATERIAL FACTS:- 1. AS PER, THE SALE AGREEMENT DATED 14/12/2006 PARA NO.2 OUT OF THE SHEETAL GARG ITA NO.254/IND/2017 13 TOTAL SALE CONSIDERATION OF RS. 26430573/- ONLY RS. 250000/_ WAS PAID BY THE PURCHASER TO THE APPELLANT; 2. AS PER THE PARA NO.2 IT WAS ALSO AGREED THAT THE BALANCE CONSIDERATION WILL BE PAID BEFORE 10/04/2007 AND IF, THE BALANCE AMOUNT IS NOT PAID WITHIN THE AGREED TIME AND DEED IS NOT REGISTERED T HE AGREEMENT WILL STAND CANCELLED.; 3. EXCEPT FOR RS.250000/ - NO AMOUNT WAS RECEIVED B Y THE APPELLANT IN PURSUANCE OF THE AGREEMENT DATED 14/12/2006 FROM TH E PURCHASER; 4. IT IS ALSO AN ADMITTED FACT THAT POSSESSION WAS NOT HANDED OVER TO THE PURCHASER BY THE APPELLANT; 5. THE PLOT WAS ULTIMATELY 'NOT SOLD TO THE PURCHAS ER, BUT WAS SOLD TO ANOTHER PARTY NAMELY HONEY WELL PROPERTIES PVT. LTD . AND THE CONSIDERATION WAS RECEIVED FROM HONEY WELL PROPERTI ES PVT. LTD. AND NOT THE ORIGINAL PURCHASER WITH WHOM THE APPELLANT HAD ENTERED INTO THE AGREEMENT DATED 14/12/2006; 6. AS REGISTERED DEED WAS WITH A PARTY WHICH WAS DI FFERENT FROM THE PARTY WITH WHOM THE APPELLANT ENTERED INTO AN AGREEMENT T HE GENERAL LEGAL PRINCIPLE THAT THE TRANSFER AS PER THE REGISTERED D EED WILL RELATE BACK TO DATE OF AGREEMENT DOES NOT APPLY; 5.3 THE SUPREME COURT IN THE CASE OF ALAPATI VENKAT ARAMIAH VS CIT (1965) 57 ITR 185 HAD HELD THAT CAPITAL GAIN AROSE IN THE YEAR IN WHICH THE DEED WAS REGISTERED. IT IS HOWEVER TO BE NOTED THAT THE DECISION WAS WITH REFERENCE TO THE CHARGEABILITY UNDER SECTION 4 5 WIT 'REFERENCE TO TRANSFER AS DEFINED E AMENDMENT UNDER THE TAXATION LAWS AMENDMENT ACT 1984 WITH EFFECT FROM 1.4.1985 AND THE FINANCE BILL 1987 WITH EFFECT FROM 1988. SHEETAL GARG ITA NO.254/IND/2017 14 IN THE DECISION REPORTED IN ZUARI ESTATE DEVELOPMEN T AND INVESTMENT CO. P. LTD. VS. J.R. KANEKAR, DEPUTY CIT (ASSESSMENT) [ 2004J 271 ITR 269 (8 THE BOMBAY HIGH COURT CONSIDERED THE EFFECT OF S ECTION 2(47) WHICH WAS AMENDED FROM MARCH 1, 1988. THE BOMBAY HIGH COU RT HELD THAT FOR THE TRANSACTION TO AMOUNT TO 'TRANSFER' WITHIN THE MEANING OF SECTION 2(47), THE MINIMUM REQUIREMENTS ARE THAT THERE HAS TO BE AN AGREEMENT BETWEEN THE PARTIES SIGNED BY THE PARTIES; IT SHOUL D BE IN WRITING; IT SHOULD PERTAIN :C TRANSFER OF PROPERTY AND THE TRAN SFEREE SHOULD HAVE TAKEN POSSESSION OF WE PROPERTY. IN THE DECISION OF THE PUNJAB AND HARYANA HIGH COURT REPORTED IN CIT VS. VED PARKASH AND SONS (HUF) [1994J 207 ITR 148, THE DECISIONS OR THE RAJASTHAN HIGH COURT REPORTED IN CIT VS. VISHNU TRADING AND INVESTMENT CO. [2003] 259 ITR 724 AND CIT VS. RAJASTHAN MIRROR MANUFACTURING CO. [2003J 2 60 ITR 503 AS WELL AS THE DECISION OF THE ANDHRA PRADESH HIGH COURT RE PORTED IN M. SYAMALA RAO VS. CIT [1998] 234 ITR 140, IT IS HELD THAT THE CAPITAL GAIN ARISING ON THE TRANSFER OF CAPITAL ASSETS HAS TO BE WORKED OUT FROM THE DATE OF THE AGREEMENT UNDER WHICH THE ASSESSEE WAS PUT IN POSSESSION OF THE PROPERTY. 5.4 ON ANALYZING THE FACTS OF THE PRESENT CASE IN T HE LIGHT OF THE ABOVE JUDICIAL PRONOUNCEMENTS IT CANNOT THEREFORE BE HELD THAT THE TRANSFER TOOK PLACE ON 14.12.2006 WHICH IS THE DATE OF THE A GREEMENT AS THE PURCHASER WAS NOT PUT IN POSSESSION AT ALL AND THE PROPERTY WAS SUBSEQUENTLY SOLD TO ANOTHER ENTITY BY THE REGISTER ED DEED DATED 10.4.2007. NO DOUBT AS POINTED OUT BY THE AO SOME R IGHT IN THE PROPERTY WAS RELINQUISHED BY THE' APPELLANT HOWEVER THE TRAN SFER OF THE SAID RIGHT WAS ALSO ONLY CONDITIONAL AND WAS EXECUTABLE ON FUL FILMENT OF THE CONDITIONS AS SPECIFIED IN PARA 2 OF THE AGREEMENT WHICH CONDITIONS HAVE ADMITTEDLY NOT BEEN FULFILLED. ALSO THE SAID RIGHT WAS TRANSFERRED BY THE ERSTWHILE PURCHASER TO THE NEW ENTITY NAMELY HONEYW ELL PROPERTIES PVT. LTD. BY BECOMING AN ASSIGNOR IN THE DEED DATED 10.4 .2007 FOR A SHEETAL GARG ITA NO.254/IND/2017 15 CONSIDERATION OF RS.1500000/- 'THUS AS FAR AS THE A PPELLANT IS CONCERNED THEREFORE THE EFFECTIVE DATE OF TRANSFER WAS 10.4.2 007 AND HENCE THE CAPITAL GAINS WAS RIGHTLY SHOWN BY THE APPELLANT AS LONG TERM CAPITAL GAINS. THERE IS NO OTHER DISPUTE AS TO THE CLAIM OF EXEMPTION U/S 54F OF THE ACT AND HENCE THE APPELLANT IS ALSO ELIGIBLE FO R THE CLAIM OF EXEMPTION U/ S 54F OF THE ACT TO THE EXTENT AS ALLO WED IN THE ORIGINAL ASSESSMENT U/S 143(3) OF THE ACT DATED 30.12.2010. BOTH THE ABOVE GROUNDS OF THE APPELLANT ARE THEREFORE ALLOWED. 13. THE ABOVE FINDING OF LD. CIT(A) HAS NOT BEEN CO NTROVERTED BY THE LD. DEPARTMENTAL REPRESENTATIVE BY PLACING ANY CONTRARY MATERIAL ON RECORD. THE FACTS CLEARLY SHOWS THAT I N THE AGREEMENT OF SALE DATED 14.12.2006 THE POSSESSION OF THE PROPERT Y WAS NOT TRANSFERRED TO THE PURCHASER AND ONLY A TOKEN AMOUN T OF RS.2,50,000/- (WHICH IS APPROXIMATELY 1% OF SALE CO NSIDERATION) WAS RECEIVED BY THE ASSESSEE. PARA 5 OF THE AGREEM ENT OF SALE DEED CLEARLY MENTION THAT POSSESSION WILL BE HANDED OVER TO THE BUYER ONLY AT THE TIME OF REGISTRATION OF SALE DEED. WE THEREFORE FIND THAT THE BASIC CONDITIONS REQUIRED UNDER THE PROVISIONS OF 2(47)(V) OF THE ACT FOR TREATING IT TO BE A VALID TRANSFER COULD NO T BE FULFILLED AND THEREFORE THE DATE OF AGREEMENT TO SALE I.E. 14.12. 2006 CANNOT BE TAKEN AS A EFFECTIVE DATE OF SALE. WE THEREFORE CO NFIRM THE VIEW TAKEN BY LD.CIT(A) AND HOLD THAT THE DATE OF TRANSF ER OF PROPERTY IS SHEETAL GARG ITA NO.254/IND/2017 16 10.4.2007 AND THE GAIN FROM SALE THEREOF IS GIVING RISE TO LONG TERM CAPITAL GAIN AND THEREFORE NO INTERFERENCE IN THE F INDING OF LD.CIT(A) IS CALLED FOR. IN THE RESULT GROUND NO. 1& 2 OF THE REVENUES APPEAL STANDS DISMISSED. 14. GROUND NO.4 OF REVENUE IS GENERAL IN NATURE WHI CH NEEDS NO ADJUDICATION. 15. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER PRONOUNCED IN THE OPEN COURT ON 10.01.2 019. SD/- SD/- ( KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER / DATED : 10 JANUARY, 2019 /DEV COPY TO: THE APPELLANT/RESPONDENT/CIT CONCERNED/CIT (A) CONCERNED/ DR, ITAT, INDORE/GUARD FILE. BY ORDER, ASSTT.REGISTRAR, I.T.A.T., INDORE