ITO, NCW - 15 (5), CHENNAI V. SHRI VARUN GUNASEELAN, CHENNAI

ITA 2621/CHNY/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4078 (ITAT-CHENNAI)
• Duration Of Justice: 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2020
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2011-2012
• Appeal Filed On: 10-09-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIJAYA PRABHAJCITD R
• Assessee Lawyers: R PAVAN KUMAR
• Keywords: Capital asset; Cost of acquisition; Liquidation; Capital Gains
• Section: 2(14); 201; 13

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : CHENNAI , ! ' # $% BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT & SHRI M. BALAGANESH, ACCOUNTANT MEMBER ./ I.T.A.NO.2621/CHNY/2019 / ASSESSMENT YEAR : 2011-12 THE INCOME TAX OFFICER, NON-CORPORATE WARD-15(5), CHENNAI 600 034. VS. SHRI VARUN GUNASEELAN , 10,GANDHI NAGAR,2 ND MAIN ROAD, ADYAR,CHENNAI 600 020. [PAN AFOPV 5695 K ] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : MS.VIJ AYAPRABHA,JCIT,D.R /RESPONDENT BY : MR.R.PAVAN KUMAR,ADVOCATE / DATE OF HEARING : 25 .0 2.2020 ! / DATE OF PRONOUNCEMENT : 28 .02.2020 $' / O R D E R PER M. BALAGANESH, ACCOUNTANT MEMBER: THIS APPEAL OF THE REVENUE ARISE OUT OF THE ORDER O F THE LD COMMISSIONER OF INCOME TAX (APPEALS)-15, CHENNAI, IN ITA NO.151/2018-19/C.I.T(A)-15 DATED 28.06.2019 FOR AS SESSMENT YEAR 2011-12. ITA NO.2621/CHNY/201 9 :- 2 -: 2. THE REVENUE RAISED THE FOLLOWING GROUNDS FOR OU R ADJUDICATION. 1. THE ORDER OF THE LD. CIT(A) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2. THE LD. CIT(A) ERRED IN HOLDING THAT THE TRANSFE R U/S 2(47) OF THE ACT TOOK PLACE DURING THE PREVIOUS YEAR RELEVANT TO AY 2005-06 AS PER THE SALE AGREEMENT DATED 21-03-2005 BETWEEN THE ASSESSEES FATHER (THE SELLER) AND M/S RAGAS EDUCATIONAL SOCIE TY (THE PURCHASER); WHEN IN FACT THE TRANSFER TOOK PLACE ON LY DURING THE PREVIOUS YEAR RELEVANT TO AY 2011-12 WHEN THE SALE DEED DATED 09- 12-2010 WAS EXECUTED. 2.1. THE LD. CIT(A) ERRED IN CONSIDERING THE SALE A GREEMENT DATED 21- 03-2005 AS THE DOCUMENT ON THE BASIS OF WHICH THE T RANSFER TOOK PLACE WHEN IN FACT PARA NO.2 OF THE SALE AGREEMENT CLEARLY STATES THAT THE AMOUNT OF RS. 6 CRORES PAID BY THE PURCHASER WA S ONLY AN ADVANCE AND HENCE IT IS NOT THE FINAL CONSIDERATION . FURTHER, PARA NO.6 OF THE SALE AGREEMENT PROVIDES THAT THE SELLER WAS REQUIRED TO REGISTER THE SALE OF THE PROPERTY WITH THE REGISTRA R WITHIN TWELVE MONTHS, BUT HE HAS FAILED TO DO SO. ACCORDINGLY, TH IS SALE AGREEMENT CANNOT BE CONSIDERED AS THE DOCUMENT FOR DECIDING W HETHER OR NOT ANY TRANSFER OF THE CAPITAL ASSET TOOK PLACE. 2.2. THE LD. CIT(A) ERRED IN IGNORING THE FACT THAT SURVEY NOS. 203/3B (13.5 CENTS), 203/8 (5 CENTS) AND 233/2 (34 CENTS) WHICH WERE SOLD BY THE ASSESSEE AS PER THE SALE DEED DATED 09-12-20 10 WERE NOT INCLUDED IN THE SALE AGREEMENT DATED 21-03-2005. AC CORDINGLY, THE TRANSFER OF THE CAPITAL ASSET TOOK PLACE AS PER THE SALE DEED DATED 09-12-2010 AND HENCE THE RESULTING LONG TERM CAPITA L GAIN WAS CORRECTLY TAXED IN AY 2011-12 BY THE ASSESSING OFFI CER. ITA NO.2621/CHNY/201 9 :- 3 -: 2.3. THE LD. CIT(A) ERRED IN HOLDING THAT THE IMPUG NED IMMOVABLE PROPERTY WAS NOT A CAPITAL ASSET U/S 2(14) OF THE A CT, IT BEING AGRICULTURE LAND, WITHOUT ANY FINDING OF FACT AS TO WHAT AGRICULTURAL ACTIVITIES WERE BEING CARRIED OUT ON THE SAID LAND. THE SALE DEED DATED 09-12-2010 DOES NOT SPECIFY THE LAND TO BE AG RICULTURE LAND, NOR DOES THE SALE AGREEMENT DATED 21-03-2005. FURTH ER THE TESTS LAID DOWN BY THE HONBLE MADRAS HIGH COURT IN THE CASE O F CIT VS. SHRI A. LALICHAN IN TCA NO. 504/2018 TO DETERMINE WHETHER O R NOT CERTAIN LAND CAN BE REGARDED AS AGRICULTURAL LAND FOR THE P URPOSES OF SECTION 2(14) OF THE ACT HAVE NOT BEEN APPLIED BY THE LD. C IT(A). 3. THE ONLY EFFECTIVE ISSUE TO BE DECIDED IN THIS APPEAL IS WHETHER CAPITAL GAINS CAN BE ASSESSED ON TRANSFER O F LANDS IN THE HANDS OF THE ASSESSEE DURING THE YEAR UNDER CONSIDE RATION IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 4. THE BRIEF FACTS OF THE ISSUE ARE THAT THE LD. A .O. REOPENED THE ASSESSMENT FOR THE ASSESSMENT YEAR 2011-12 ON G ROUND THAT THE ASSESSEE HAD SOLD TWO IMMOVABLE PROPERTIES FOR TOTA L CONSIDERATION OF .1,46,20,000/- AND .68,01,600/- DURING THE YEAR UNDER CONSIDERATION. SINCE CAPITAL GAINS WERE NOT REPORTE D BY THE ASSESSEE AND NO RETURN OF INCOME WAS FILED BY THE ASSESSEE, NOTICE UNDER SECTION.148 OF THE ACT WAS ISSUED TO THE ASSESSEE. THE REASON FOR REOPENING OF THE ASSESSMENT WAS DULY COMMUNICATED T O THE ASSESSEE BY THE A.O. THE ASSESSEE DURING THE RE-ASSESSMENT PROCEEDINGS ITA NO.2621/CHNY/201 9 :- 4 -: SUBMITTED THAT HE HAD NOT SOLD ANY PROPERTY DURING FINANCIAL YEAR 2010-11 RELEVANT TO ASSESSMENT YEAR 2011-12; THAT T RANSACTIONS REFERRED IN THE REASONS RECORDED REPRESENT THE REGI STRATION OF SALE DEED MADE BY POWER OF ATTORNEY OF THE ASSESSEE FOR CERTA IN AGRICULTURAL LANDS SITUATED AT UTHANDI VILLAGE, WHICH WERE IN TH E NAMES OF THE ASSESSEE, HIS FATHER R.GUNASEELAN AND HIS BROTHER K ARTHIK GUNASEELAN. THE LD. A.R. SUBMITTED THAT THESE PROPERTIES WERE A LREADY TRANSFERRED BY THEM AND THE POSSESSION OF THE LANDS WERE DULY H ANDED OVER BY THEM DURING MARCH,2005 VIDE SALE AGREEMENT DATED 21 .03.2005 ENTERED INTO WITH M/S.RAGAS EDUCATIONAL SOCIETY. TH E ASSESSEE ALSO SUBMITTED THAT THE CONSIDERATION WAS DULY RECEIVED BY THEM WAY BACK IN 2005 PURSUANT TO HANDING OVER OF THE POSSESSION OF LANDS TO M/S.RAGAS EDUCATIONAL SOCIETY. THE ASSESSEE ALSO SU BMITTED THAT POWER OF ATTORNEY WAS EXECUTED BY ALL THE THREE LAN D OWNERS IN FAVOUR OF THE THIRD PARTY IN EARLIER YEARS. ACCORDINGLY, T HE ASSESSEE SUBMITTED THAT THE SAME TANTAMOUNTS TO PART PERFORMANCE OF TH E CONTRACT AND TRANSFER WITHIN THE MEANING OF SECTION 2(47)(V) OF THE ACT READ WITH SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. AC CORDINGLY, THE ASSESSEE PLEADED THAT THERE WAS NO CAPITAL GAINS TH AT WOULD ARISE IN RESPECT OF THE SUBJECT MENTIONED LANDS DURING THE Y EAR UNDER CONSIDERATION. THE ASSESSEE SUBMITTED THAT POWER O F ATTORNEY HOLDER HAD EXECUTED REGISTRATION OF SALE DEED IN FAVOUR OF M/S.RAGAS ITA NO.2621/CHNY/201 9 :- 5 -: EDUCATIONAL SOCIETY DURING THE FINANCIAL YEAR 2010- 11 WITH SUB- REGISTRAR, NEELANGARAI. THE ASSESSEE CATEGORICALLY STATED THAT THERE WAS NEITHER ANY SALE OF IMMOVABLE PROPERTY DURING T HIS YEAR BY HIM, OR HIS FAMILY MEMBERS, NOR RECEIPT OF ANY CONSIDERATIO N DURING THE YEAR. THE ASSESSEE ALSO SUBMITTED THAT THE ASSESSEE, BEIN G A MINOR DURING THE RELEVANT ASSESSMENT YEAR 2005-06 I.E. THE YEAR IN WHICH THE AGREEMENT OF SALE WAS ENTERED INTO, AND ACCORDINGLY , THE AGREEMENT WAS ENTERED INTO BY ASSESSEES FATHER R.GUNASEELAN ON HIS OWN BEHALF AND ON BEHALF OF TWO MINOR SONS. THE ASSESSEE ALSO FURNISHED THE COPY OF SCRUTINY ASSESSMENT ORDER OF R.GUNASEELAN ( ASSESSEES FATHER) FRAMED UNDER SECTION.143(3) OF THE ACT ON 30.11.201 7 FOR THE ASSESSMENT YEAR 2005-06 IN SUPPORT OF HIS CONTENTIO NS. 5. THE LD. A.O. DID NOT AGREE WITH THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE POSSESSION WAS HAN DED OVER BY THE ASSESSEE TO M/S.RAGAS EDUCATIONAL SOCIETY IN MARCH, 2005 VIDE SALE AGREEMENT DATED 21.03.2005 IS INCORRECT. LD. A.O. O BSERVED THAT ASSESSEES FATHER HAD WRITTEN A LETTER TO ACIT, CIR CLE-1,CHENNAI ON 23.11.2007 STATING THAT THE SALE AGREEMENT WAS NOT PROCEEDED UPON, AND THE ASSESSEE ALONG WITH MINOR SONS HAD EXECUTED A CANCELLATION AGREEMENT DATED 21.03.2005 WHEREIN THE INITIAL AGRE EMENT DATED 31.12.2003 WAS NULLIFIED AND CANCELLED AND ASSESSEE RETURNED A SUM ITA NO.2621/CHNY/201 9 :- 6 -: OF .6/- CRORES TOGETHER WITH THE LIQUIDATION DAMAGES O F .10 LAKHS TO M/S.JAYA EDUCATIONAL TRUST. 6. THE A.O. ALSO OBSERVED THAT THE ORIGINAL SALE AGREEMENT DATED 21.03.2005 WAS EXECUTED FOR 3.935 ACRES OF L AND AT UTHANDI VILLAGE, WHEREAS THE SALE DEED EXECUTED ON 09.12.20 10 FOR THE ASSESSMENT YEAR 2011-12 WAS ONLY FOR 172 CENTS OF V ACANT LAND FOR TOTAL CONSIDERATION OF .1,46,20,000/- AND 26 CENTS OF VACANT LAND FOR CONSIDERATION OF .68,01,600/-. THE LD. A.O. ALSO OBSERVED THAT SALE DEEDS OF LANDS EXECUTED ON 09.12.2010 ARE NOT AGRIC ULTURAL LANDS AS PER THE OFFICIAL WEB SITE OF THE REGISTRATION DEPAR TMENT, TAMILNADU, AS THE SAID LANDS HAD BEEN DESCRIBED AND CLASSIFIED AS HOUSE SITE AND THEREBY NEGATED THE CLAIM OF EXEMPTION BY THE ASSES SEE. ACCORDINGLY, THE LD. A.O. SOUGHT TO BRING TO TAX THE LONG TERM C APITAL GAINS ARISING ON TRANSFER OF SUBJECT MENTIONED LAND AND ASSESSED ACCORDINGLY. ON APPEAL, LEARNED CIT(A) ACCEPTED THE CONTENTIONS OF THE ASSESSEE AND ACCORDINGLY GRANTED RELIEF TO THE ASSESSEE BY OBSER VING AS UNDER:- 4.3. I HAVE CAREFULLY GONE THROUGH THE OBSERVATIO N OF TH A.O. IN THE ASSESSMENT ORDER AS MENTIONED ABOVE UNDER PA RA 4.1 AND THE APPELLANTS SUBMISSION BEFORE THE CIT(A) UN DER PARA 4.2 4.3.1. THE ONLY ISSUE CONTESTED IN APPEAL IS AGAINS T THE AOS ADDITION OF LONG TERM CAITA1 GAIN(LTCG) OF RS.2.49 CRORES. B EFORE DEALING WITH THE ISSUE, THE BACKGROUND FACTS ARE BRIEFLY ME NTIONED HEREUNDER: ITA NO.2621/CHNY/201 9 :- 7 -: THE APPELLANT, AND HIS FATHER, DR.R.GUNASEELAN AND ELDER BROTHER, MR.KARTHIK, SOLD TWO LAND PROPERTIES TO M/S JAYA E DUCATIONAL TRUST THROUGH A SALE AGREEMENT DATED 3-12-2003. LATER, TH E SAID SALE AGREEMENT WAS CANCELLED THROUGH A CANCELLATION AGRE EMENT DATED 21-3-2005 AND ANOTHER SALE AGREEMENT DATED 21-3-200 5 WAS SIGNED WITH M/S RAGAS EDUCATIONAL SOCIETY. AS STIPULATED U NDER CLAUSE-3 OF THE SALE AGREEMENT, THE POSSESSION WAS HANDED OVER AND THE ENTIRE SALE CONSIDERATION OF RS.6 CRORES WAS RECEIVED. SIN CE THE APPELLANT WAS THEN A MINOR, THE RELEVANT PORTION OF THE APPEL LANTS SALE CONSIDERATION WAS CLUBBED AND DECLARED AS PER SECTI ON 64, IN..TJIE HANDS OF THE APPELLANTS FATHER, DR.R.GUNASEELAN IN AY 2005-06. THE APPELLANTS FATHER, DR.R.GUNASEELAN FILED HIS INCOM E TAX RETURN WITH A MENTION OF THE SAID TRANSACTION IN HIS CAPITAL AC COUNT. DR.R.GUNASEELANS RETURN WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED BY ACCEPTING THE RETURNED INCOME IN THE SCRUTINY ASSESSMENT ORDER DATED 30-11-2007 FOR THE AY 2005-06. 4.3.2. THE OBSERVATIONS RELATED TO THE AOS ADDITIO N OF LTCG OF RS.2.49 CRORES ARE SUMMARIZED HEREUNDER: SINCE THE BUYER OF THE AFORESAID TWO LAND PROPERTIE S REGISTERED THE SALE DEED ON 9-12-2010? THE TRANSFER SHOULD BE ASSE SSED IN AY 2011- 12. FROM THE SALE DEED REGISTERED, IT IS INFERRED T HAT THE OWNERSHIP VESTED WITH THE APPELLANT TILL THEN. PERUSAL OF THE WEBSITE OF TAMILNADU REGISTRATION DEPARTMENT TNREGINET, SHOW S THAT THE LAND SOLD WAS CLASSIFIED AS RESIDENTIAL AND NOT A N AGRICULTURAL LAND. THEREFORE, THE AO ADOPTED THE GUIDELINE VALUE AND T REATED THE LAND SOLD AS A CAPITAL ASSET AND BROUGHT TO TAX LONG TER M CAPITAL GAIN ON THE GROUND THAT THE DETAILS RELATED TO SALE DEED AN D BREAK UP OF INDEXED COST OF ACQUISITION WERE NOT GIVEN, THE AO ADOPTED THE PURCHASE PRICE AS PER THE PURCHASE DOCUMENT AND WOR KED OUT LONG TERM CAPITAL GAIN AS MENTIONED ABOVE UNDER PARA 4.1 . 4.3.3. BEFORE THE CIT(A), THE APPELLANTS AR HAS ST RONGLY CONTENDED AGAINST THE AOS ADDITION. THE ARS CONTENTIONS ARE BRIEFLY MENTIONED BELOW: IN VIEW OF SUPPORTING DOCUMENTS, TRANSFER TOOK PL ACE ON 21-3-2005 WHEN AS PER CLAUSE -3 OF THE SALE AGREEMENT, THE FU LL CONSIDERATION OF RS.6 CRORES WAS RECEIVED BY THE JOINT OWNERS INC LUDING THE APPELLANT AND THE POSSESSION OF THE PROPERTY WAS HA NDED OVER TO THE BUYER ON THE SAME DATE. ONCE POSSESSION IS HANDED OVER AND FULL CONSIDERATION IS RECEIVED, TRANSFER AS PER SECTIO N 2(47) R.W.SECTION 53A OF THE TRANSFER OF PROPERTY ACT WAS CONCLUDED, PENDING REGISTRATION OF THE SALE AT INSTANCE OF THE BUYER. SUBSEQUENTLY, ON 17-10-2007, THE BUYER OBTAINED POA(POWER OF ATTORNE Y) THE APPELLANT ON HIS ATTAINING MAJORITY. THE LAND WAS I N FACT, AN AGRICULTURAL LAND AS EVIDENCED FROM THE CERTIFICATE OF VILLAGE ITA NO.2621/CHNY/201 9 :- 8 -: ADMINISTRATIVE OFFICER,, PURCHASE AND SALE DOCUMENT S. WHEN THE TRANSFER OF LAND WAS SCRUTINIZED BY THE THEN AO IN AY 2005-06 IN THE HANDS OF THE APPELLANTS FATHER, DR.R.GUNASEELAN, A DETAILED WRITTEN SUBMISSION DATED 12- 11-2007 WAS MADE BEFORE THE AQ ON 19-11- 2007. BASED ON THE DETAILED SUBMISSION, THE AO OF D R.R.GUNASEELAN ACCEPTED HIS RETURN OF INCOME IN THE SCRUTINY ASSES SMENT. HOWEVER, THE APPELLANTS AO HAS IGNORED THE APPELLANTS SUBM ISSION RELATED TO THE DECLARATION OF SALE CONSIDERATION BY THE APPELL ANTS FATHER, DR.R.GUNASEELAN AND BRUSHED ASIDE THE DOCUMENTS PLA CED BEFORE HIM, WITHOUT CONSIDERING THE VAOS CERTIFICATE WHIC H REFERRED TO THE LAND AS AN AGRICULTURAL LAND. THE AO RELIED ON CURR ENT CLASSIFICATION OF LAND AS RESIDENTIAL BASED OW REGISTRATION DEPARTMEN TS WEBSITE. AFTER HANDING OVER OF PROPERTY, THE CLASSIFICATION OF LAN D WAS NOT UNDER THE CONTROL OF THE APPELLANT. THE AO HAS NOT DISPUTED H ANDING OVER OF POSSESSION AND RECEIPT /OF A SALE CONSIDERATION AND DECLARATION OF SALE CONSIDERATION IN AY 2005-06. IN VIEW OF THE AB OVE CONTENTION AND THE DOCUMENTS RELIED ON MENTIONED BELOW, THE AR HAS CONTENDED THAT THE TRANSFER OF LAND WAS CONCLUDED I N AY 2005-06 AND THE SALE CONSIDERATION WAS DECLARED IN THE HAND S OF THE APPELLANTS FATHER, AS THE APPELLANT WAS THEN A MIN OR. THE SAME WAS ALSO ACCEPTED IN THE SCRUTINY ASSESSMENT IN THE HAN DS OF THE APPELLANTS FATHER. THEREFORE, THE AOS ADDITION OF LONG TERM CAPITAL GAIN ON THE GROUND THAT TRANSFER TOOK PLACE IN AY 2 01 1-12 BASED ON REGISTRATION OF SALE BY THE BUYER, IS NOT LEGALLY T ENABLE, THE AR HAS ARGUED. 4.3.4. IN SUPPORT OF HIS CONTENTION, THE AR HAS F URNISHED THE FOLLOWING PARTICULARS: (A) COPY OF SALE AGREEMENT DATED 2 1-3-2005. (B) COPY OF BANK STATEMENT EVIDENCING THE RECEIPT O F SALE CONSIDERATION OF RS.6 CRORES IN FY 2004-05. (C) COPY OF WRITTEN SUBMISSION MADE BY DR.R.GUNASE ELAN DATED 12- 11-2007 AND 23-11-2007 BEFORE THE AO DURING THE SCR UTINY ASSESSMENT PROCEEDINGS IN HIS HANDS IN AY 2005-06. (D) MEMO OF COMPUTATION OF FINANCIALS OF DR.R.GUNAS EELAN INCLUDING THE SALE CONSIDERATION OF AGRICULTURAL LAND. (E) BALANCE SHEET OF M/S RAGAS EDUCATIONAL SOCIETY DECLARING PURCHASE OF THE PROPERTY IN AY 2005-06, (F) COPY OF CONFIRMATION LETTER FROM M/S RAGAS ED UCATIONAL SOCIETY. (G) COPY OF VAO CERTIFICATE. ITA NO.2621/CHNY/201 9 :- 9 -: (H) COPY OF POWER OF ATTORNEY DATED 17-10-2007 EXEC UTED BY THE APPELLANT ON ATTAINING MAJORITY GIVEN TO THE BUYER. 4.3.5. IN SUPPORT OF HIS CONTENTION, THE AR HAS R ELIED THE FOLLOWING DECISIONS. (A) JASBIR SINGH SARKARIA[2007] (294 ITR 196(AAR)) CAPITAL GAINS TRANSACTION DEEMED TO BE SALE TRANSACTION IN WHICH POSSESSION OF IMMOVABLE PROPERTY IS ALLOWED T O BE TAKEN OR RETAINED POSSESSION NEED NOT BE SOLE AND EXCLUSIV E POSSESSION POSSESSION ENABLING EXERCISE OF GENERAL CONTROL OF PROPERTY TO MAKE USE OF IT ENOUGH AGRICULTURAL LAND DEVELOPMENT AGREEMENT DEVELOPER HAVING GENERAL CONTROL AND CUSTODY OF LAN D SUFFICIENT IRREVOCABLE POWER OF ATTORNEY IN FAVOUR OFDEVELOPER IS THE TRANSACTION FOR PURPOSES OF DATE OF TRANSFER FOR CAPITAL GAINS TAX INCOME TAX ACT, 1961, SS 2(47)(V), 45 CBDT CIRC ULAR NO. 495 DATED SEPTEMBER 22,1987. (B) THE HONBLE ITAT, CHENNAI IN THE CASE OF R.KALA NIDHI VS. ITO [2009] 314 ITR (AT) 266 (CHENNAI) HAS HELD AS UNDER : CAPITAL GAINS EXEMPTION TRANSFER ASSESSEE WI THIN THREE YEARS OF PURCHASE ENTERING INTO AGREEMENT TO DEVELO P PROPERTY EXECUTING POWER OF ATTORNEY IN FAVOUR OF DEVELOPER AND HANDING OVER OF POSSESSION OF HALF SHARE IN PROPERTY TOTAL CON SIDERATION AGREED AND VENDEE ALLOWED TO ENJOY PROPERTY FOR PURPOSE IT WAS TAKEN OVER TRANSFER COMPLETE EXEMPTION LIABLE TO BE WITHDR AWN INCOME TAX ACT, 1961, AS 54, 2(47)(V) TRANSFER OF PROPER TY ACT, 1882, S. 53A. 4.3.6. I HAVE CONSIDERED BOTH THE POINTS OF VIEW. I HAVE PERUSED THE APPELLANTS CONTENTION WITH SUPPORTING DOCUMENTS AN D THE DECISIONS RELIED ON. AFTER EXAMINATION OF THE APPELLANTS DOC UMENTS, I AM CONVINCED THAT TRANSFER OF THE TWO LAND PROPERTIE S WAS CONCLUDED ON THE DATE OF SALE AGREEMENT DATED 21-3-2005 AS PE R SECTION 2(47) R.W.S. 53A OF TRANSFER OF PROPERTY ACT AND THEREFOR E, THE LAND OWNERS WERE CORRECT IN DECLARING THE SALE IN AY 2005-06. T HE AOS OBSERVATION THAT THE TRANSFER TOOK PLACE IN AY 2011 - 12 MERELY BASED ON THE REGISTRATION OF SALE DEED BY THE BUYER, IS N OT AN ACCEPTABLE LEGAL POSITION. IN VIEW OF THE DECISIONS RELIED ON BY THE APPELLANT, THE APPELLANT HAS PROVED WITH SUPPORTING DOCUMENTS THAT THE LAND SOLD IN AY 2005-06 WAS IN FACT AN AGRICULTURAL LAND BASED O N A CERTIFICATE FROM VAO AND THE PROPERTY DOCUMENTS. THE AOS REJEC TION OF THE APPELLANTS CLAIM OF AGRICULTURAL LAND BY MERELY RE FERRING TO THE REGISTRATION DEPARTMENTS WEBSITE IS NOT ACCEPTABLE AS CLASSIFICATION OF LAND, SIX YEARS LATER IS NOT UNDER THE CONTROL O F THE APPELLANT WHO ITA NO.2621/CHNY/201 9 :- 10 -: HANDED OVERTHE PROPERTY IN AY 2005-06. IT IS PERTIN ENT TO NOTE THAT THE AO ACCEPTED THE DECLARATION OF SALE CONSIDERATI ON OF DR.R.GUNASEELAN, THE APPELLANTS FATHER INCLUDING T HE SHARE OF THE APPELLANT, IN THE SCRUTINY ASSESSMENT FOR AY 2005-0 6. THE BALANCE SHEET OF THE BUYER, M/S RAGAS EDUCATIONAL SOCIETY I N AY 2005-06 CLEARLY SHOWS THAT EVEN THE BUYER HAS DECLARED THE PURCHASE OF PROPERTY WHICH CONCLUSIVELY PROVES THAT THE TRANSFE R WAS CONCLUDED IN AY 2005-06. THE APPELLANT HAS ALSO EXECUTED POWE R OF ATTORNEY ON 17-10-2007 IN FAVOUR OF THE BUYER ON HIS ATTAINI NG MAJORITY WHICH AGAIN PROVES THAT THE TRANSFER WAS ALREADY CONCLUDE D IN AY 2005-06. FROM THE DISCUSSION IN THE FOREGOING PARAS, I HAVE COME TO THE FOLLOWING CONCLUSION: (A) TRANSFER OF LAND WAS CONCLUDED IN AY 2005-06 AS PER SECTION 2(24) R.W. SECTION 53A OF TRANSFER OF PROPERTY ACT. (B) THE APPELLANTS FATHER, DR.R.GUNASEELAN HAD DEC LARED THE SALE CONSIDERATION OF LAND IN AY 2005-06 WHICH HAS BEEN ACCEPTED BY THE AO IN HIS ASSESSMENT ORDER WHICH PROVES THAT THE RE LEVANT ASSESSMENT YEAR WAS IN FACT AY 2005-06. (C) BASED ON SUPPORTING DOCUMENTS, THE APPELLANT HA S PROVED THAT THE LAND SOLD WAS IN FACT AN AGRICULTURAL LAND AND THE SAME HAS BEEN ACCEPTED BY THE AO IN AY 2005-06 IN THE HANDS OF TH E APPELLANTS FATHER, DR.R.GUNASEELAN. 4.3.7. FROM THE ABOVE REMARKS, DECISIONS RELIED ON BY THE AR AND THE SUPPORTING DOCUMENTS SUBMITTED BY THE AR, I AM CONVINCED THAT THE TRANSFER OF AGRICULTURAL LAND WAS RELEVANT TO AY 2005-06 AND DULY CONSIDERED IN AY 2005-06. THEREFORE, THE AOS ADDITION OF LTCG BY TREATING THE LAND AS CAPITAL ASSET IN THIS AY 20 11-12 IS NOT SUSTAINABLE. THEREFORE, THE AOS ADDITION OF LTCG O F RS.2.49 CRORES IS DELETED AND THE APPELLANTS GROUNDS ARE ALLOWED. ) AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE ONL Y CONTENTION OF THE REVENUE IS THAT THE SALE AGREEMENT ENTERED INTO BY THE ASSESSEE WITH M/S.RAGAS EDUCATIONAL SOCIETY ON 21.03.2005 FOR SAL E OF 3.935 ACRES OF ITA NO.2621/CHNY/201 9 :- 11 -: LANDS AT UTHANDI VILLAGE WAS INCOMPLETE AS THE SAID AGREEMENT CONTEMPLATED COMPLETION OF REGISTRATION WITHIN 12 MONTHS FROM 21.03.2005, WHICH ADMITTEDLY DID NOT HAPPEN IN THE INSTANT CASE. THE LD. D.R. VEHEMENTLY ARGUED BEFORE US THAT THE SUBJE CT MENTIONED LANDS THAT WERE TRANSFERRED BY WAY OF REGISTRATION OF SALE DOCUMENTS ON 09.12.2010 WERE IN RESPECT OF 172 AND 26 CENTS O F LANDS WHICH ARE NOT INCLUDED IN 3.935 ACRES OF LAND FOR WHICH AGREE MENT OF SALE WAS ENTERED INTO ON 21.03.2005. PER CONTRA, THE LD.AR BEFORE US VEHEMENTLY SUBMITTED THAT THE SUBJECT MENTIONED LAN DS THAT WERE REGISTERED ON 09.12.2010 ARE FORMING THE PART OF TO TAL EXTENT OF LANDS OF 3.935 ACRES THAT WERE INCLUDED IN AGREEMENT OF S ALE DATED 21.03.2005. LD. A.R. VEHEMENTLY ARGUED THAT SINCE T RANSFER HAD ALREADY BEEN COMPLETE IN TERMS OF SECTION 2(47)(V) OF THE INCOME TAX ACT READ WITH SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 WAY BACK IN ASSESSMENT YEAR 2005-06, PURSUANT TO EXECUTION OF SALE AGREEMENT DATED 21.03.2005; HANDING OVER OF POSSESSION TO M/S .RAGAS EDUCATIONAL SOCIETY AND EXECUTING THE POWER OF ATTO RNEY IN FAVOUR OF A THIRD PARTY, HENCE ANY ACTION TAKEN FOR TAXING THE CAPITAL GAINS AGAIN IN ASSESSMENT YEAR 2011-12 WOULD TANTAMOUNT TO DOUBLE ADDITION IN THE HANDS OF THE ASSESSEE. THE LD. A.R. ALSO PLACED RE LIANCE ON THE COPY OF THE SCRUTINY ASSESSMENT ORDER FRAMED IN THE HAND S OF ASSESSEES FATHER FOR ASSESSMENT YEAR 2005-06 IN SUPPORT OF HI S CLAIM. ITA NO.2621/CHNY/201 9 :- 12 -: 8. LD. A.R. ALSO PLACED ON RECORD THE COPY OF ASSE SSMENT ORDER FRAMED IN THE HANDS OF FATHER R.GUNASEELAN FOR THE ASSESSMENT YEAR 2011-12 UNDER SECTION.143(3) OF THE ACT DATED 31.03 .2016 WHEREIN DURING THE COURSE OF ASSESSMENT PROCEEDINGS OF FATH ER, A SPECIFIC QUERY WAS RAISED WITH REGARD TO DETAILS OF SALE OF AGRICULTURAL LAND AT UTHANDI VILLAGE DURING THE ASSESSMENT YEAR 2011-12. THE ASSESSEE THEREON I.E. SHRI R.GUNASEELAN (ASSESSEES FATHER) HAD DULY RESPONDED TO THE SAID QUERY, VIDE LETTER DATED 12.11.2007 FIL ED BEFORE ACIT,CIRCLE- 1,CHENNAI STATING THAT THE SUBJECT MENTIONED LANDS WERE ONLY PART OF TRANSFER IN ASSESSMENT YEAR 2005-06 AND ALSO SUBJEC T MENTIONED LANDS WERE ONLY AGRICULTURAL LANDS AND HENCE OUT OF THE P URVIEW OF DEFINITION OF CAPITAL ASSETS UNDER SECTION.2(14) OF THE ACT. T HE LD. A.O.OF ASSESSEES FATHER I.E. ACIT, CIRCLE-1,CHENNAI WAS D ULY CONVINCED BY A CERTIFICATE ISSUED BY VILLAGE ADMINISTRATIVE OFFICE R , WHO HAD CERTIFIED THAT THE SUBJECT MENTIONED LANDS ARE AGRICULTURAL L ANDS AND ACCORDINGLY DID NOT PROCEED TO MAKE ANY ADDITION IN THE HANDS O F ASSESSEES FATHER FOR ASSESSMENT YEAR 2011-12. ACCORDINGLY, THE LD A .R. ARGUED THAT:- A) THE TOTAL EXTENT OF 3.935 ACRES OF LANDS THAT WERE PART OF THE SALE AGREEMENT DATED 21.03.2005 ARE AGRICULTURAL LANDS. ITA NO.2621/CHNY/201 9 :- 13 -: B) THAT THE SUBJECT MENTIONED LANDS THAT WERE REGI STERED ON 09.12.2010 BY POWER OF ATTORNEY HOLDER IN FAVOUR OF M/S.RAGAS EDUCATIONAL SOCIETY ARE ALSO AGRICULTURAL LANDS. C) THAT THE SUBJECT MENTIONED LANDS FOR WHICH THE SALE DEED IS EXECUTED ON 09.12.2010 ARE INCLUDED IN 3.935 ACRES OF LANDS WHICH ARE PART OF AGREEMENT OF SALE DATED 21.03.2005. D) THAT IN ANY CASE, TRANSFER IS ALREADY COMPLET ED IN ASSESSMENT YEAR 2005-06 PURSUANT TO HANDING OVER OF POSSESSION OF L ANDS; EXECUTION OF POWER OF ATTORNEY AND RECEIPT OF CONSI DERATION AND HENCE, NO CAPITAL GAINS ON SALE OF VERY SAME LANDS COULD BE ASSESSED IN ASSESSMENT YEAR 2011-12. ACCORDINGLY HE PLEADED THAT NO CAPITAL GAINS AT ALL COULD BE ARISEN IN THE HANDS OF ASSESSEE IN RESPECT OF THE SUBJECT MEN TIONED LANDS DURING THE YEAR UNDER CONSIDERATION. THE BENCH AT THE TIME OF HEARING RAISED A SPECIFIC QUERY TO THE LD. A.R. TO PROVE THE FACT THAT THOSE LANDS THAT WERE REGISTERED ON 09.12.2010 BY THE POWER OF ATTOR NEY HOLDER ARE INCLUDED IN 3.935 ACRES OF LAND FOR WHICH PURPOSE T HE BENCH DIRECTED THE LD. A.R. TO MATCH SURVEY NUMBERS THEREON. IN RE SPONSE THERETO, LD. A.R. PLACED FOLLOWING TABLE BEFORE US. ITA NO.2621/CHNY/201 9 :- 14 -: SAL E DEED DOCUMENT NO. ITEM IN THE DOCUMENT SURVEY NO. IN THE DOCUMENT AREA IN CENTS SURVEY NO. AS PER SALE AGREEMENT SURVEY NO. AS PER POWER OF ATTORNEY (SL.NO. IN P.OA) 6708 1 201 & 202/1B 6.5 201 & 202/1B 201 & 202/1B(1) 2 202/7 17 202/7 202/7 3 203/3B 13.5 --- -- 4 203/5 5 OUT OF 12 203/7 203/5(4) 5 216/4 14 216/4 216/4(15) 6 216/5 26 216/5 216/5(17) 7 216/8 25 216/8 216/8(16) 8 233/1A 16 233/1A 233/1A(19) 233/1B 15 233/1B 233/1B(19) 9 233/2 34 233/D 233/2(10) 6711 217/3 2 6 217/3 217/3(12) WE FIND THAT THIS DETAILS REQUIRES FACTUAL VERIFICA TION FROM THE SIDE OF THE LD. A.O. AND HENCE IN THE INTEREST OF JUSTICE A ND FAIR PLAY, WE DEEM IT FIT AND APPROPRIATE TO REMIT THIS ISSUE TO THE F ILE OF LD. A.O FOR ADJUDICATION IN THE LIGHT OF AFORESAID EVIDENCES AN D IN THE LIGHT OF AFORESAID OBSERVATIONS AND IN ACCORDANCE WITH LAW. THE REVENUE SHOULD ENSURE THAT THERE IS NO DOUBLE ADDITION MADE TOWARDS CAPITAL GAINS. THE ASSESSEE SHOULD ADDUCE NECESSARY EVIDENC ES IN SUPPORT OF HIS VARIOUS CONTENTIONS. ACCORDINGLY GROUNDS RAISE D BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSES. ITA NO.2621/CHNY/201 9 :- 15 -: 9. IN THE RESULT, THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT AFTER CONCLUSION OF HEARING ON 28 TH FEBRUARY, 2020, AT CHENNAI. SD/- SD/- ( ) (MAHAVIR SINGH) '#$ /VICE PRESIDENT %& '()* ) (M. BALAGANESH) # $% / ACCOUNTANT MEMBER +, / CHENNAI -. / DATED: 28 TH FEBRUARY,2020. K S SUNDARAM .*(( /0(10 / COPY TO: ( 1 . / APPELLANT 3. ( 2(34 / CIT(A) 5. 05)( 6 / DR 2. / RESPONDENT 4. ( 2 / CIT 6. )7(8 / GF