NARAYAN AGARWAL, CHENNAI V. ACIT NON CORPORATE CIRCLE 10(1), CHENNAI

ITA 3067/CHNY/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1524 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Assessment Year: 2015-2016
• Appeal Filed On: 12-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Capital Gains
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , , % BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER /. I.T.A. NO. 3067/CHNY/2018 / ASSESSMENT YEAR : 2015-16 SHRI NARAYAN AGARWAL, NEW NO. 44, OLD NO. 78, SHROFF ORCHARDS, 1 ST FLOOR, NEW AVADI ROAD, KILPAUK, CHENNAI 600 010. [PAN: ADJPA 5167C] VS. ASSISTANT COMMISSIONER OF INCOME TAX, NON CORPORATE CIRCLE 10(1), CHENNAI. 600 034. ( / APPELLANT) ( &'( /RESPONDENT ) ( ) / APPELLANT BY : SHRI . N. DEVAN ATHAN, ADVOCATE &'( ) / RESPONDENT BY : MS. R. ANITA, JCIT ) /DATE OF HEARING : 09.12.2019 ) /DATE OF PRONOUNCEMENT : 12.12.2019 / O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-12, CHENNAI IN ITA NO. 53/CIT(A)-12/2017-18 DATED 18.09.2018 FOR ASSESSMEN T YEAR 2015-16. 2. SHRI. NARAYAN AGARWAL, THE ASSESSEE, THOUGH HAS NOT CLAIMED ANY DEDUCTION U/S. 54 IN THE RETURN, HOWEVER, DURING TH E COURSE OF ASSESSMENT OFFERED LONG TERM CAPITAL GAIN FROM SALE OF PROPERTY AT RS. :-2-: ITA NO. 3067/CHNY/2018 75,10,589/- AND CLAIMED EXEMPTION U/S. 54. THE AO REFUSED SUCH CLAIM HOLDING, INTER ALIA, THE BUILDER HAS NOT GIVEN POSS ESSION TO THE ASSESSEE AS THE FLAT WAS UNDER CONSTRUCTION, NO DOCUMENTS SU CH AS AGREEMENT FOR SALE OF UDS OR CONSTRUCTION AGREEMENT ENTERED WITH THE BUILDER WERE SUBMITTED DURING THE ASSESSMENT PROCEEDINGS AND THE FLAT WAS NOT TRANSFERRED TO THE ASSESSEE. SO, THE AO ASSESSED T HE ENTIRE PROFITS AT RS. 88,55,701/- UNDER THE HEAD INCOME FROM OTHER SOURCE S. AGGRIEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE LD. CIT(A). TH E LD. CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAINST THAT ORDER, THE ASSE SSEE FILED THIS APPEAL. 3. THE LD. AR SUBMITTED THAT THE ASSESSEE HAD BOOKE D A FLAT IN METRO ZONE TOWERS, A PROJECT UNDERTAKEN BY M/S.OZONE PROJ ECTS PVT. LTD., ON 09.09.2010. THE AGREED PRICE WAS RS. 74,85,411/-. THE ASSESSEE PAID A TOTAL SUM OF RS. 61,44,289/- TILL 31.12.2013. SINC E, THE DEVELOPER I.E., M/S.OZONE PROJECTS PVT. LTD., COULD NOT COMPLETE TH E PROJECT AND THERE WAS INORDINATE DELAY, THE ASSESSEE CONSIDERED THAT TO AVOID THE RISK, IT IS BETTER IS SELL AND ACCORDINGLY BY A TRI-PARTY AGREE MENT, AN AGREEMENT FOR SALE WAS EXECUTED ON 31.03.2015, BY THE PARTIES CON CERNED VIZ., THE ASSESSEE, OZONE PROJECTS PVT. LTD. (DEVELOPER) AND THE PURCHASER (MR. N. VADIVEL AND V. MANJULA, AND TRANSFERRED HIS RIGHTS IN FAVOUR OF THE BUYERS FOR RS. 1,50,00,000/-. SUBSEQUENTLY, THE ASSESSEE A CQUIRED A NEW FLAT FOR RS. 2,95,60,500/-TOWARDS WHICH HE CLAIMED THE DEDUC TION U/S. 54 OF THE PROFITS ARISING FROM THE SALE CONSIDERATION. SINCE , THE ASSESSEE HAD :-3-: ITA NO. 3067/CHNY/2018 TRANSFERRED HIS RIGHTS AND RECEIVED THE CONSIDERATI ON, THE GAINS ARISING OUT OF WHICH IS CAPITAL ASSET AND IT HAS TO BE ASSE SSED UNDER THE HEAD CAPITAL GAINS ONLY. SINCE, THE ASSESSEE HAS ALSO P URCHASED ANOTHER FLAT, THE ASSESSEE IS ENTITLED FOR THE BENEFIT OF EXEMPTI ON U/S. 54 AND HENCE, THE LD. AR SUBMITTED THAT LOWER AUTHORITIES HAVE CO MMITTED ERROR IN UNDERSTANDING THE FACTS AND CIRCUMSTANCES. THEREFO RE, HE PLEADED THAT THE ASSESSEES APPEAL BE ALLOWED. PER CONTRA, THE LD. DR SUBMITTED THAT SINCE, THE TRANSACTION BETWEEN THE ASSESSEE AND THE SELLER IS NOT REGISTERED, THERE IS NO TRANSFER AND HENCE, THE ASS ESSEE IS NOT ENTITLED FOR THE BENEFIT OF DEDUCTION U/S. 54. THEREFORE, THE L D. DR SUPPORTED THE ORDERS OF THE LOWER AUTHORITIES. 4. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIAL. IT IS CLEAR FROM THE FACT THAT THERE WAS AN AGREEMENT FOR PURCHASE OF A PROPERTY AT METRO ZONE BETWEEN THE AS SESSEE AND THE DEVELOPER, OZONE PROJECTS PVT. LTD., AS ON 09.09.20 10. IN ACCORDANCE WITH THE AGREEMENT, OUT OF AGREED SALE CONSIDERATIO N OF RS. 74,89,411/-, THE ASSESSEE PAID A TOTAL AMOUNT OF RS. 61,44,299/- TILL 31.12.2013. SINCE, THERE WAS A DELAY IN HANDING OVER THE PROJEC T AND THE ASSESSEE DID NOT WANT TO TAKE THE RISK, HE FOUND A PARTY TO SELL HIS RIGHTS AND ACCORDINGLY ALL THE THREE PARTIES INVOLVED IN THE T RANSACTION ENTERED INTO AN AGREEMENT DATED 24.02.2015 AND AN UNREGISTERED S ALE AGREEMENT DATE 31.01.2015. ACCORDINGLY, THE ASSESSEE HAS REC EIVED RS. :-4-: ITA NO. 3067/CHNY/2018 1,50,00,000/- TOWARDS THE SALE OF HIS RIGHTS. THER EFORE, THE TRANSACTION IS COMPLETED AND ACCORDINGLY, THE ASSESSEE HAD GAINED A PROFIT OF RS. 88,55,701/- FROM THE SALE OF HIS RIGHTS, WHICH IS A CAPITAL ASSET. THEREFORE, IT IS ASSESSABLE UNDER THE HEAD CAPITAL GAINS, PARTICULARLY AS A LONG TERM CAPITAL GAINS. THE ASSESSEE HAS ALSO PUR CHASED A FLAT IN TVH LUMBINI SQUARE FOR RS. 2,95,60,500/- TOWARDS WHICH THE ASSESSEE CLAIMED THE SET OFF OF THE LONG TERM CAPITAL GAINS U/S. 54. SINCE, THE BASIC FACTS ARE NOT DISPUTED AND THE ASSESSEE GAINE D FROM ITS CAPITAL RIGHTS, AS PLEADED BY THE ASSESSEE, THE GAIN WHICH AROSE OUT OF THE TRANSACTION IS ASSESSABLE UNDER THE HEAD LONG TERM CAPITAL GAINS ONLY. THEREFORE, THE ASSESSEE IS ENTITLED TO THE BENEFIT SOUGHT U/S. 54. IN VIEW OF THAT, THE AO IS DIRECTED TO COMPUTE THE LONG TER M CAPITAL GAINS AND ALLOW THE EXEMPTION U/S. 54 TO THE EXTENT THE CAPIT AL GAIN IS AVAILABLE. 5. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED ON 12 TH DECEMBER, 2019 AT CHENNAI. SD/ - ( ) (GEORGE MATHAN) ! /JUDICIAL MEMBER SD/ - ( ) (S. JAYARAMAN) ! /ACCOUNTANT MEMBER /CHENNAI, 1 /DATED: 12 TH DECEMBER, 2019 JPV )&3454 /COPY TO: 1. ( / APPELLANT 2. &'( /RESPONDENT 3. 6 ) ( /CIT(A) 4. 6 /CIT 5. 4& /DR 6. /GF