ADMINISTRATOR OF ESTATEOF LATE Mr. E.F. DINSHAW, MUMBAI V. ITO, MUMBAI

ITA 3019/MUM/2008

• Counselvise Citation: 301919914 RSA 2008
• Duration Of Justice: 5 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Next Hearing Date: 24-06-2013
• Assessment Year: 2005-2006
• Appeal Filed On: 05-05-2008
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY
• Assessee Lawyers: S E DASTUR SHRI MADHUR AGARWAL; M THAKORE
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Business income; Corroborative evidences
• Section: 143(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL H BENCH, MUMBAI .. , ! '#$ % % % % &'. '.(.. %), * '#$ '+ BEFORE SHRI P.M. JAGTAP, AM AND DR. S.T.M. PAVALAN, JM './ I.T.A. NO. 3019 /MUM/08 ( *) - %.- *) - %.- *) - %.- *) - %.- / / / / ASSESSMENT YEAR : 2005-06) ADMINISTRATOR OF ESTATE OF LATE MR. E.F. DINSHAW, 412, CHURCHGATE CHAMBERS, 5, SIR VITHALDAS THACKERSEY MARG, MUMBAI 20. ) ) ) ) / VS. INCOME TAX OFFICER, MUMBAI. $/ ! './ PAN :AAEPD 8394 A ( /0 / // / APPELLANT ) .. ( 12/0 / RESPONDENT ) /0 3 4 ' / APPELLANT BY : SHRI S.E. DASTUR, SHRI MADHUR AGARWAL & SHRI M. THAKORE 12/0 3 4 ' / RESPONDENT BY : SHRI AJAY ')% 3 ! / // / DATE OF HEARING : 02-07-2013 56. 3 ! / DATE OF PRONOUNCEMENT : 14-08-2013 # 7 / O R D E R PER P.M. JAGTAP, A.M . : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A) 31, MUMBAI DTD. 26-3-2008. 2. IN GROUND NO. 1, THE ASSESSEE HAS CHALLENGED TH E ACTION OF THE LD. CIT(A) IN UPHOLDING THE VIEW TAKEN BY THE A.O. THAT VALUATION U/S 50-C OF THE INCOME TAX ACT, 1961 (THE ACT) IS TO BE CONSIDERED WHILE COMPU TING GAIN FROM SALE OF PROPERTIES WITHOUT CONSIDERING THE FACT THAT CONSID ERATION FOR THE SALE OF PROPERTY WAS FIXED PRIOR TO THE DATE ON WHICH SECTION 50-C O F THE ACT CAME INTO FORCE. ITA 3019/MUM/2008 2 2. THE ASSESSEE IN THE PRESENT CASE IS AN ADMINISTR ATOR TO THE ESTATE OF LATE MR. E.F. DINSHAW HOLDING LANDED PROPERTIES AND OTHE R TENANTED PROPERTIES WITH EF DINSHAW TRUST & EF DINSHAW CHARITIES JOINTLY. DU RING THE YEAR UNDER CONSIDERATION, TWO PROPERTIES OF THE SAID ESTATE WE RE SOLD AT A CONSIDERATION OF RS. 42,55,045/- AND PROFIT ARISING FROM THE SALE WA S DECLARED BY THE ASSESSEE UNDER THE HEAD LONG TERM CAPITAL GAIN IN THE RETU RN OF INCOME FILED FOR THE YEAR UNDER CONSIDERATION. CONSISTENT WITH THE STAND TAK EN IN THE EARLIER YEAR, THE A.O. HELD THAT THE PROFIT ARISING FROM THE SALE OF PROPERTY WAS CHARGEABLE TO TAX UNDER THE HEAD PROFITS AND GAINS FROM BUSINESS OR P ROFESSION. HE ALSO FOUND THAT THE MARKET VALUE OF THE PROPERTY SOLD BY THE A SSESSEE AS PER STAMP DUTY AUTHORITY WAS RS. 5,95,78,500/-. WHEN THE ASSESSEE WAS ASKED BY THE A.O. TO EXPLAIN THE VAST DIFFERENCE BETWEEN SUCH MARKET VAL UE AND THE SALE CONSIDERATION SHOWN, IT WAS EXPLAINED BY THE ASSESSEE THAT THE RE LEVANT SALE AGREEMENTS WERE MADE EARLIER IN THE YEAR 1997 AND 1999 AND SINCE TH E COMPLETION OF SALES HAD TAKEN TIME BECAUSE OF THE DELAY IN OBTAINING THE RE QUIRED PERMISSION FROM THE CHARITY COMMISSIONER AND RBI AND UNDER UL (C&R) ACT , THERE WAS A VAST DIFFERENCE IN THE MARKET VALUE OF THE PROPERTY. THI S EXPLANATION OF THE ASSESSEE WAS NOT FOUND ACCEPTABLE BY THE A.O. ACCORDING TO H IM, THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITY WAS BASED ON THE CURRENT MARKE T TREND AND THE ASSESSEE HAVING NOT DISPUTED THE VALUE ADOPTED BY THE STAMP AUTHORITY, HE HELD THAT THE SAME WAS LIABLE TO BE TAKEN INTO CONSIDERATION FOR COMPUTING THE PROFITS OF THE ASSESSEE FROM SALE OF THE PROPERTY. ACCORDINGLY, S UCH PROFIT WAS WORKED OUT BY THE A.O. AT RS. 5,84,14,610/- AND THE SAME WAS BROU GHT BY HIM TO TAX AS INCOME FROM BUSINESS IN THE ASSESSMENT COMPLETED U/S 143(3 ) OF THE ACT VIDE AN ORDER DTD. 27-12-2007. 3. AGAINST THE ORDER PASSED BY THE A.O. U/S 143(3) OF THE ACT, AN APPEAL WAS PREFERRED BY THE ASSESSEE BEFORE THE LD. CIT(A) AND FOLLOWING THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE EARLIER YEA RS, THE LD. CIT(A) HELD THAT THE SURPLUS ARISING FROM THE SALE OF PROPERTY WAS CHARG EABLE TO TAX AS CAPITAL GAIN AND NOT AS BUSINESS INCOME OF THE ASSESSEE. HAVING HELD THAT THE PROFIT ARISING FROM THE SALE OF PROPERTY WAS CHARGEABLE TO TAX UND ER THE HEAD CAPITAL GAIN, THE LD. CIT(A) HELD THAT SECTION 50-C OF THE ACT WAS SQ UARELY APPLICABLE AND THE SALE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSACTION OF CAPITAL ASSET BEING LESS THAN THE VALUE ADOPTED OR ASSESSED BY TH E STAMP VALUATION AUTHORITY, ITA 3019/MUM/2008 3 SUCH VALUE WAS TO BE TAKEN AS CONSIDERATION. AS RE GARDS THE CONTENTION OF THE ASSESSEE THAT SECTION 50-C OF THE ACT WAS NO T APPLICABLE IN HIS CASE AS THE CONSIDERATION FOR SALE OF TRANSACTION WAS FIXED PRI OR TO THE DATE ON WHICH THE SAID PROVISION CAME INTO FORCE, THE LD. CIT(A) HELD THAT THE SAME WAS NOT ACCEPTABLE AS SECTION 50-C WAS MADE APPLICABLE TO THE TRANSACTION S MADE AFTER 1-4-2003. SINCE THE MARKET VALUATION OF THE PROPERTY AS ADOPT ED BY THE STAMP VALUATION AUTHORITY HAD NOT BEEN DISPUTED BY THE ASSESSEE, TH E LD. CIT(A) HELD THAT THERE WAS NO INFIRMITY IN THE ORDER OF THE A.O. TAKING TH E MARKET VALUATION AS ADOPTED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF COMPUTING CAPITAL GAIN ARISING FROM THE SALE OF PROPERTY. 4. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, INVITED OUR ATTENTION TO THE STATEMENTS FURNISHED BY THE ASSESSEE GIVING THE SEQ UENCE OF EVENTS INVOLVED IN THE TWO TRANSACTIONS OF SALE OF PROPERTIES BY THE A SSESSEE TO POINT OUT THAT ALTHOUGH THE RELEVANT AGREEMENT TO SALE OF THE IMPU GNED PROPERTY HAD BEEN ENTERED INTO MUCH EARLIER, THERE WAS A DELAY IN EXE CUTING AND REGISTERING THE CONVEYANCE DEED DUE TO VARIOUS REASONS BEYOND THE C ONTROL OF THE ASSESSEE. HE SUBMITTED THAT ALTHOUGH THE PROPERTY OF THE ASSESSE E AGREED TO BE SOLD TO AVADH NARAYAN SING & OTHERS ON 12-3-1999 BY ACCEPTING THE IR OFFER IN RESPONSE TO THE TENDERS INVITED BY THE ASSESSEE ON 12-3-1999 AND TH E TOTAL CONSIDERATION OF RS. 25 LACS WAS ALSO RECEIVED UPTO 3-5-1999, THE CONVEY ANCE DEED COULD BE EXECUTED ONLY ON 3-8-2004 FOR WANT OF THE APPROVAL FROM CHAR ITY COMMISSIONER AND CLEARANCE FROM ULC AUTHORITY WHICH TOOK A LOT OF TI ME. HE SUBMITTED THAT SIMILARLY THE ANOTHER PROPERTY OF THE ASSESSEE WAS AGREED TO BE SOLD TO TARASHANKAR B. CHOUBEY ON 6-10-1982 AND EVEN THOUGH THE AGREEMENT WAS ALSO EXECUTED ON 7-2-1997 ACCEPTING PART CONSIDERATION O F THE SAME OUT OF THE TOTAL CONSIDERATION OF RS. 29.04 LACS, THE CONVEYANCE DEE D COULD BE EXECUTED FINALLY ON 8-11-2004 AS A RESULT OF DELAY IN GETTING REQUIRED CLEARANCE CERTIFICATE FROM INCOME TAX AUTHORITIES U/S 230-A OF THE ACT AND THE ADJUDICATION BY THE OFFICE OF SUPERINTENDENT OF STAMPS. HE CONTENDED THAT THE SA LE CONSIDERATION OF ALL THESE PROPERTIES, HOWEVER, WAS AGREED AT THE TIME OF ORIG INAL AGREEMENT AND THERE IS NOTHING TO SHOW THAT THE ASSESSEE HAS RECEIVED ANYT HING MORE THAN THE CONSIDERATION SO AGREED ON TRANSFER OF THESE TWO PR OPERTIES. HE SUBMITTED THAT SECTION 50-C OF THE ACT WAS NOT EVEN ON THE STATUTE WHEN THE AGREEMENT FOR THESE TWO PROPERTIES WERE ENTERED INTO BY THE ASSESSEE AN D THE SAME THEREFORE CANNOT BE APPLIED TO ADOPT STAMP DUTY VALUATION AS SALE CO NSIDERATION MERELY BECAUSE ITA 3019/MUM/2008 4 THE CONVEYANCE OF THE PROPERTIES AGREED TO BE SOLD EARLIER WAS FINALLY EXECUTED AND REGISTERED AFTER THE INSERTION OF SECT ION 50-C OF THE ACT. HE SUBMITTED THAT THE PURCHASERS HAVING AGREED TO PAY THE STAMP DUTY ON THE VALUATION MADE BY THE STAMP DUTY AUTHORITY ON THE D ATE OF CONVEYANCE, THE ASSESSEE HAD NO REASON TO DISPUTE THE SAID VALUATIO N BEFORE THE STAMP DUTY AUTHORITY. 5. THE LD. COUNSEL FOR THE ASSESSEE CONTENDED THAT IN THE FACTS AND CIRCUMSTANCES INVOLVED IN THE CASE OF THE ASSESSEE, PROVISIONS OF SECTION 50-C OF THE ACT HAVE TO BE READ WITH REFERENCE TO THE DATE OF AGREEMENT INSTEAD OF THE DATE OF TRANSFER AND ACCORDINGLY THE VALUE OF THE P ROPERTIES AS MADE FOR THE PURPOSE OF STAMP DUTY AS ON THE DATE OF AGREEMENT S HOULD BE TAKEN AND NOT AS ON THE DATE OF EXECUTION OF CONVEYANCE DEED. IN SU PPORT OF THIS CONTENTION, HE RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF VARGHESE (K.P.) V. INCOME-TAX OFFICER (1981) 131 ITR 597 (SC) WHEREIN IT WAS HELD THAT LEGISLATIVE INTENTION SHOULD BE CONSIDERED WHILE INTERPRETING T HE STATUTORY PROVISION. HE ALSO RELIED ON THE DECISION OF VISAKHAPATNAM BENCH OF ITAT IN THE CASE OF M. SIVA PARVATHI & ORS VS. ITO 37 DTR 124 WHEREIN A SIMILAR ISSUE WAS DECIDED BY THE TRIBUNAL IN FAVOUR OF THE ASSESSEE IN THE IDENTICAL FACTS AND CIRCUMSTANCES. HE ALSO REFERRED TO THE SPECIAL PROVISION CONTAINED IN SECTION 43-CA INSERTED IN THE STATUTE BY THE FINANCE ACT, 2013 W.E.F. 1-4-2014 WH ICH ARE SIMILAR TO THE PROVISIONS OF SECTION 50-C OF THE ACT AND DEAL WITH ADOPTING THE STAMP DUTY VALUATION AS THE FULL VALUE OF CONSIDERATION FOR TH E TRANSFER OF ASSETS OTHER THAN CAPITAL ASSETS IN CERTAIN CASES AND POINTED OUT THA T SUB-SECTION (3) THEREOF SPECIFICALLY PROVIDES THAT WHERE THE DATE OF AGREE MENT FIXING THE VALUE OF CONSIDERATION FOR TRANSFER OF THE ASSET AND THE DAT E OF REGISTRATION OF SUCH TRANSFER OF ASSET ARE NOT THE SAME, THE VALUE REFER RED TO SUB-SECTION (1) MAY BE TAKEN AS THE VALUE ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER ON THE DATE OF THE AGREEMENT. HE CONTENDED THAT SIMILARLY AS PER THE F IRST PROVISO TO SECTION 56- (2)(VII), WHERE THE DATE OF AGREEMENT FIXING THE AM OUNT OF CONSIDERATION FOR THE TRANSFER OF IMMOVABLE PROPERTY AND THE DATE OF REGI STRATION ARE NOT THE SAME, THE STAMP DUTY VALUE ON THE DATE OF AGREEMENT IS TO BE TAKEN FOR THE PURPOSES OF CLAUSE (VII) OF SUB-SECTION 2 OF SECTION 56. HE CON TENDED THAT THESE PROVISIONS SPECIFICALLY MADE IN THE STATUTE CLEARLY SHOWS THE LEGISLATIVE INTENTION THAT WHERE THE DATE OF AGREEMENT FIXING THE AMOUNT OF CONSIDER ATION FOR A TRANSFER OF CAPITAL ITA 3019/MUM/2008 5 ASSET AND THE DATE OF REGISTRATION ARE NOT THE SAME , THE STAMP DUTY VALUE ON THE DATE OF AGREEMENT SHOULD BE TAKEN. 6. THE LD. D.R., ON THE OTHER HAND, STRONGLY RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(A) IN SUPPORT OF THE REVENUES CASE ON THIS ISSUE. HE CONTENDED THAT THE SPECIFIC PROVISIONS AS CONTAINED IN SECTION 43- CA(3) AND 56(2)(VII) OF THE ACT REFERRED TO BY THE LD. COUNSEL FOR THE ASSESSEE ARE NOT THERE IN SECTION 50-C OF THE ACT AND THE SAME THEREFORE CANNOT BE RELIED UPON OR REFERRED TO WHILE DECIDING THE ISSUE INVOLVED IN THE CASE OF THE ASSESSEE WHER E SECTION 50-C OF THE ACT IS APPLICABLE. HE CONTENDED THAT FOR APPLYING SECTION 50-C, IT IS NOT NECESSARY FOR THE REVENUE TO ESTABLISH THAT THE ASSESSEE RECEIVED MONEY MORE THAN THE APPARENT CONSIDERATION. HE CONTENDED THAT PROVISIO NS OF SECTION 50-C ARE DEEMING PROVISION AND EQUITY AND JUSTICE CANNOT BE TAKEN INTO CONSIDERATION WHILE APPLYING SUCH DEEMING PROVISIONS, THE EFFECT OF WHICH IS VERY CLEAR. HE CONTENDED THAT THE DATE OF TRANSFER IS RELEVANT FO R APPLICATION OF SECTION 50-C AND THERE BEING NO DISPUTE THAT BOTH THE PROPERTIES IN QUESTION WERE TRANSFERRED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION , SECTION 50-C OF THE ACT WAS CLEARLY APPLICABLE. 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. THE QUESTION AS INVO LVED IN THE PRESENT CASE IS WHETHER THE PROVISIONS OF SECTION 50-C OF THE ACT A RE APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND WHETHER THE STAMP DUT Y VALUATION AS ON THE DATE OF TRANSFER OF THE TWO PROPERTIES OF THE ASSESSEE C AN BE ADOPTED AS DEEMED VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESU LT OF COMPUTING THE CAPITAL GAIN. IN THIS REGARD, IT IS RELEVANT TO CONSIDER T HE SEQUENCE OF EVENTS THAT OCCURRED IN THE TRANSACTIONS INVOLVING THE TRANSFER OF IMMOVABLE PROPERTIES OF THE ASSESSEE. THE ASSESSEE HAS FURNISHED BEFORE US THE STATEMENT GIVING THE SEQUENCE OF SUCH EVENTS WITH CORRESPONDING DATES AN D HAS ALSO PLACED ON RECORD THE RELEVANT DOCUMENTARY EVIDENCE TO SUPPORT AND SU BSTANTIATE OCCURRENCE OF EACH OF SUCH EVENTS. THESE DETAILS AS FURNISHED BY THE ASSESSEE IN RESPECT OF TRANSFER OF IMMOVABLE PROPERTIES TO TARASHANKAR B. CHOUBEY AND AVADH NARAYAN SINGH & OTHERS ARE AS UNDER :- ITA 3019/MUM/2008 6 TARASHANKAR B. CHOUBEY DATE PARTICULARS PAGE NOS 6-10-1982 WE WRITE TO CHOUBEY THAT WE AGREE TO ENTE R INTO AN AGREEMENT FOR SALE FOR LAND ADMEASURING 20 ACRES AT RS. 30/- PER SQ. YD. IN THE EVENT BMC RETURNING POSSESSION OF LAND. 1 6-10-1982 WE APPOINT HIM AS SECURITY AGENT FOR PROT ECTION OF LANDS ON PAYMENT OF RS. 25,000- PER MONTH 2-3 6-10-1982 CHOUBEY CONFIRMS THE TERMS 4 17-4-1984 BMC RETURNS POSSESSION OF LAND WHICH WAS TAKEN IN 1973 5 30-5-1985 CHOUBEY CLAIMS TITLE BY ADVERSE POSSESSIO N 6-7 12-7-1985 WE DENY THE CONTENTS OF CHOUBEYS LETTER DATED 30-5-1985 8 21-8-1985 WE DENY CHOUBEYS ALLEGATIONS OF ANY RIGH T, TITLE OR INTEREST IN LAND 9-10 7-9-1985 CHOUBEY CLAIMS POSSESSION OF LAND AND ALSO ADVERSE POSSESSION 11-20 1-11-1985 WE DENY THE ALLEGATIONS MADE BY CHOUBEY FOR COLLUSION WITH BMC AND FOR INSTIGATING REVENUE CASES AGAINST HIM. WE ALSO DEN Y THIS CLAIM OF ADVERSE POSSESSION 21-22 15-4-1987 CHOUBEY TERMINATES THE SECURITY CONTRACT W.E.F. 1.5.1987 23 20-4-1987 WE SEND DRAFT AGREEMENT OF SALE TO CHOUBE Y FOR APPROVAL 24 3-8-1987 CHOUBEY REQUESTS FOR ADJUSTMENT OF SECURIT Y CONTRACT AMOUNT TO SALE CONSIDERATION AND BLAMES US FOR DELAY IN EXECUTING THE AGREEMENT 25-26 14-8-1987 WE DENY AGAIN, ALLEGATIONS MADE BY CHOUBE Y. WE ALSO POINT OUT THAT HE WAS PERMITTING OTHERS TO DO UNAUTHORIZED QUARRYING IN T HE LAND AND CAUSING DAMAGE TO THE SAME. 27-33 21-2-1994 CHOUBEY WRITES TO US TO ADJUST THE OUTSTA NDING BILLS OF SECURITY AGAINST PAYMENT TO BE MADE BY US 34-36 21-2-1994 CHOUBEY CLAIMS AGAIN POSSESSION OF LAND A ND CARRIES ON QUARRYING OPERATIONS 37-38 9-3-1994 WE DENY CHOUBEYS ALLEGATIONS OF USE, OCCU PATION OR POSSESSION OF 20 ACRES OF LAND IN SURVEY NO. 239 39-40 16-3-1994 CHOUBEY WRITES TO US AGAIN ALLEGING THAT HE IS IN POSSESSION OF THE LAND 41-49 28-3-1994 WE WRITE TO CHOUBEY DENYING ALL ALLEGATIO NS AND CLAIM COMPENSATION FOR WRONGFUL ACTION 50-51 16-12-1994 CHOUBEY REQUESTS FOR MEETING TO THRASH O UT THE ISSUES 52-54 23-2-1966 CHOUBEY AGAIN REQUESTS FOR MEETING 55-57 7-3-1996 WE WRITE CHOUBEY AGREEING TO HAVE MEETING ON A MUTUALLY CONVENIENT DATE 58 4-1-1997 CHOUBEYS ADVOCATE PANDE RETURNS THE DRAFT OF AGREEMENT WITH MINOR CHANGES 59 7-2-1997 AGREEMENT EXECUTED BETWEEN THE PARTIES 6-67 7-2-1997 AGREEMENT FOR SALE WITH CHOUBEY EX ECUTED AFTER THE SAME WAS APPROVED BY HIM. RS. 10 LAKHS ADJUSTED TOWARDS SALE CONSIDERATION OF RS. 29.04 LAKHS AGAINST SECURITY BILLS. 26-2-1997 WE MAKE APPLICATION TO R.B.I. U/S 31 OF F ERA, 1973 14-5-1997 RBI SANCTIONS THE SALE 68 14-5-2000 CHOUBEY WRITES TO US AND SENDS PAYMENT OF BALANCE AMOUNT OF RS. 19.04 LAKHS 69-71 17-8-2000 FINAL INDENTURE OF CONVEYANCE FOR THE PUR POSE OF GETTING STAMPED GIVEN TO CHOUBEY 72-73 15-9-2000 CHOUBEYS ADVOCATE CONFIRMS THE RECEIPT O F THE INDENTURE OF CONVEYANCE AND STATES THAT THE SAME HAS BEEN SUBMITTED TO THE OFFICE OF S UPERINTENDENT OF STAMPS FOR ADJUDICATION. 74-75 3-10-2000 WE MAKE APPLICATION TO INCOME TAX AUTHORI TY FOR CERTIFICATE U/S 230-A 76-79 13-10-2000 JOINT CIT, SPECIAL RANGE 40, FORWARDS CE RTIFICATE U/S 230A 80 7-3-2001 WE REMIND CHOUBEYS ADVOCATE PANDEY ABOUT PROGRESS GETTING THE CONVEYANCE STAMPED. 81 4-4-2001 ADVOCATE PANDEY WRITES TO US THAT HE WILL GET THE DOCUMENTS STAMPED IN THE NEXT WEEK. 82-83 28-6-2001 CHOUBEY WRITES TO US THAT THE DOCUMENT WH ICH WAS FORWARDED FOR ADJUDICATION WITH THE AUTHORITY HAS BEEN MISPLACED AND REQUESTS US TO ISSUE FRESH DEED OF CONVEYANCE 84 30-6-2001 WE FORWARDED A XEROX COPY OF THE DEED OF CONVEYANCE TO CHOUBEY 85 26-4-2002 WE REMIND CHOUBEY ABOUT CONVEYANCE TO BE STAMPED. 86 12-10-2002 WE AGAIN REMIND CHOUBEY IN THE MATTER 87 3`1-1-2003 CHOUBEY INFORMS US THAT HE WAS GOING TO HAVE THE CONVEYANCE EXECUTED AT THE EARLIEST POSSIBLE 88-89 5-5-2003 WE AGAIN DENY CHOUBEYS ALLEGATIONS OF POS SESSION 90 5-11-2004 CHOUBEY SENDS TO US THE CONVEYANCE DEED, DULY ADJUDICATED AND STAMPED, FOR EXECUTION BY US 91 8-11-2004 CONVEYANCE FINALLY EXECUTED 91 ITA 3019/MUM/2008 7 AVADH NARAYAN SINGH & ORS. 8. A PERUSAL OF THE DETAILS OF THE EVENTS AS FURNIS HED BY THE ASSESSEE AS WELL AS DOCUMENTARY EVIDENCE FILED IN SUPPORT CLEARLY SH OWS THAT THE PROPERTY OF THE ASSESSEE IN QUESTION WAS AGREED TO BE SOLD TO AVADH NARAYAN SINGH & ORS ON 12- 3-1999 FOR RS. 25 LACS AND EVEN THIS ENTIRE CONSIDE RATION WAS RECEIVED BY THE ASSESSEE UPTO 3-5-1999. MEANWHILE ON 5-4-1999, THE ASSESSEE MOVED THE CHARITY COMMISSIONER U/S 36(1) OF THE BPT ACT FOR T HE REQUIRED APPROVAL WHICH THE ASSESSEE RECEIVED ONLY ON 4-10-2001. THEN, THE PURCHASERS ALSO APPLIED FOR THE NOC/CLEARANCE REQUIRED FROM THE ULC AUTHORITY O N 2-8-2002 WHICH WAS FINALLY RECEIVED IN THE REQUIRED FORM ONLY ON 11-12 -2003. MEANWHILE THE ITA 3019/MUM/2008 8 APPROVAL GRANTED BY THE CHARITY COMMISSIONER FOR A SPECIFIC PERIOD WAS REQUIRED TO BE EXTENDED AND SUCH EXTENSION WAS ULTI MATELY GRANTED BY CHARITY COMMISSIONER ONLY ON 20-4-2004. ACCORDINGLY THE FI NAL CONVEYANCE WAS EXECUTED ON 3-8-2004. THE DELAY IN EXECUTING THE F INAL CONVEYANCE OF THE PROPERTY THUS WAS BECAUSE OF THE DELAY IN GETTING T HE REQUIRED CLEARANCES FROM THE CONCERNED AUTHORITIES, WHICH WAS BEYOND THE CON TROL OF THE ASSESSEE. SIMILARLY, THERE WAS A DELAY IN EXECUTING THE CONVE YANCE OF THE OTHER PROPERTY AGREED TO BE SOLD BY THE ASSESSEE TO TARASHANKAR B. CHOUBEY FOR WHICH THE AGREEMENT WAS EXECUTED ON 7-2-1997 ITSELF AND EVEN THE CONSIDERATION OF RS. 10 LACS WAS PARTLY RECEIVED BY THE ASSESSEE ON THE DAT E OF AGREEMENT ITSELF. THE CONVEYANCE DEED, HOWEVER, COULD BE EXECUTED ONLY ON 8-11-2004 AND THIS DELAY AS EXPLAINED BY THE ASSESSEE WITH REFERENCE TO THE SEQUENCE OF EVENTS THAT OCCURRED WITH THE SUPPORTING EVIDENCE WAS BEYOND TH E CONTROL OF THE ASSESSEE. 9. IN THE CASE OF M. SIVA PARVATHI & ORS (SUPRA) RE LIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE, A SIMILAR ISSUE AROSE FOR THE CON SIDERATION OF VISAKHAPATNAM BENCH OF THIS TRIBUNAL. IN THE SAID CASE, BOTH THE PARTIES TO THE SALE DEED HAD CONFIRMED OF HAVING ENTERED INTO A SALE AGREEMENT I N AUGUST, 2001 AND THIS POSITION WAS ALSO SUPPORTED BY THE FACT THAT THE VE NDORS HAD RECEIVED PART PAYMENT OF THE TOTAL CONSIDERATION IN AUGUST, 2001 ITSELF. THERE WAS, HOWEVER, A DELAY IN REGISTERING THE SALE DEED WHICH WAS SUFFIC IENTLY EXPLAINED BY POINTING OUT THAT THE VENDORS WERE UNDER AN OBLIGATION TO OBTAIN URBAN LAND CLEARANCE PERMISSION AND WERE ALSO UNDER AN OBLIGATION TO SET TLE CERTAIN DISPUTES AND THE EXPLANATION OFFERED BY THE ASSESSEE IN THIS REGARD WAS DULY SUPPORTED BY DOCUMENTARY EVIDENCE WHICH CLEARLY ESTABLISHED THAT THE DELAY IN REGISTERING THE SALE DEED HAD OCCURRED FOR THE GENUINE REASONS BEYO ND THE CONTROL OF THE ASSESSEE. AS NOTED BY THE TRIBUNAL, THERE WAS NO M ATERIAL BROUGHT ON RECORD BY THE REVENUE TO SHOW THAT THERE WAS ANY SUPPRESSION OF ACTUAL CONSIDERATION. IN THESE FACTS AND CIRCUMSTANCES, IT WAS HELD BY THE T RIBUNAL THAT THE PROVISIONS OF SECTION 50-C OF THE ACT COULD NOT BE APPLIED TO THE SALE AGREEMENT AS THE SAID SECTION WAS NOT AVAILABLE IN THE STATUTE AT THE TIM E WHEN THE TRANSACTION WAS INITIALLY ENTERED INTO. IT WAS HELD BY THE TRIBUNAL THAT THE FINAL REGISTRATION OF THE SAME WAS ONLY IN FULFILLMENT OF THE CONTRACTUAL OBL IGATION AND THE PROVISIONS, WHICH DID NOT APPLY AT THE TIME OF ENTERING INTO TH E TRANSACTION INITIALLY COULD NOT BE APPLIED AT THE TIME THE TRANSACTION WAS COMPLETE D. THE TRIBUNAL, THUS, HELD THAT SECTION 50-C OF THE ACT COULD NOT BE APPLIED T O THE SALE AGREEMENT ENTERED ITA 3019/MUM/2008 9 INTO BEFORE THE INTRODUCTION OF THE SAID SECTION I. E. BEFORE IST APRIL, 2003 ESPECIALLY WHEN DELAY IN REGISTRATION OF SALE DEED WAS SUFFICIENTLY EXPLAINED AND THERE WAS NO SUPPRESSION OF ACTUAL CONSIDERATION. 10. IN OUR OPINION, THE ISSUE INVOLVED IN THE PRESE NT CASE AS WELL AS ALL THE MATERIAL FACTS RELEVANT THERETO AS DISCUSSED ABOVE ARE SIMILAR TO THE CASE OF M. SIVA PARVATHI & ORS. (SUPRA), AND THE RATIO OF THE DECISION RENDERED BY THE TRIBUNAL IN THE SAID CASE IS SQUARELY APPLICABLE IN THE PRESENT CASE. WE THEREFORE, RESPECTFULLY FOLLOW THE SAID DECISION OF THE CO-ORD INATE BENCH OF THIS TRIBUNAL AND HOLD THAT SECTION 50-C OF THE ACT CANNOT BE APPLIED TO THE SALE AGREEMENTS ENTERED INTO BEFORE THE INTRODUCTION OF THE SAID PR OVISIONS I.E BEFORE 1-4-2003 ESPECIALLY WHEN DELAY IN EXECUTION AND REGISTRATION OF CONVEYANCE IS SUFFICIENTLY EXPLAINED AND THERE IS NO ALLEGATION OF SUPPRESSION OF ACTUAL CONSIDERATION. ACCORDINGLY, WE DELETE THE ADDITION MADE BY THE A.O . AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF CAPITAL GAIN ARISING FROM TRAN SFER OF PROPERTIES OF THE ASSESSEE BY APPLYING THE PROVISIONS OF SECTION 50-C OF THE ACT AND ALLOW GROUND NO. 1 OF ASSESSEES APPEAL. 11. AS REGARDS THE ISSUE RAISED IN GROUND NO. 2 REL ATING TO LEVY OF INTEREST U/S 234B AND 234D, THE LD. COUNSEL FOR THE ASSESSEE HAS SOUGHT ONLY CONSEQUENTIAL RELIEF. THE A.O. IS ACCORDINGLY DIRECTED TO ALLOW CONSEQUENTIAL RELIEF TO THE ASSESSEE ON THIS ISSUE. 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOW ED. 8 9 *) -8 3 $% : 3 ;< ORDER PRONOUNCED IN THE OPEN COURT ON 14-08-2013. . # 7 3 56. ! =#)9 14-08-2013 6 3 SD/- SD/- (DR. S.T.M. PAVALAN) (P.M. JAGTAP ) * '#$ JUDICIAL MEMBER ! '#$ / ACCOUNTANT MEMBER MUMBAI; =#) DATED 14-08-2013. %.*).'./ RK , SR. PS ITA 3019/MUM/2008 10 # 7 3 1*>? @ ?. # 7 3 1*>? @ ?. # 7 3 1*>? @ ?. # 7 3 1*>? @ ?./ COPY OF THE ORDER FORWARDED TO : 1. /0 / THE APPELLANT 2. 12/0 / THE RESPONDENT. 3. A () / THE CIT(A)- XXXI, MUMBAI 4. A / DIT (INTERNATIONAL TAXATION) XVI MUMBAI 5. ?%D 1**) , , / DR, ITAT, MUMBAI H BENCH 6. &- E / GUARD FILE. # 7)' # 7)' # 7)' # 7)' / BY ORDER, '2? 1* //TRUE COPY// F FF F/ // /'; '; '; '; (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI