DCIT Corporate Circle 3(2), CHENNAI V. C.Shrinivasan, CHENNAI

ITA 3083/CHNY/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5604 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 1 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-01-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 14-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: R VIJAYARAGHAVAN

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , . , BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ I T.A. NO. 3083/CHNY/2017 / ASSESSMENT YEAR :2010-11 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 3(2), CHENNAI 600 034. VS. SHRI C. SHRINIVASAN, BLOCK-VI, FLAT 3C, RANI MEYYAMMAI TOWERS, MRC NAGAR, CHENNAI 600 032. [PAN:BMGPS0045E] ( APPELLANT ) ( RESPONDENT) / APPELLANT BY : SHRI AR.V. SREENIVASAN, JCIT / RESPONDENT BY : SHRI R. VIJAYARAGHAVAN, ADVOCATE / DATE OF HEARING : 24.01.2019 /DATE OF PRONOUNCEMENT : 31.01.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) 12, CHENNAI DATED 11.10.2017 RELEVANT TO THE ASSESSMENT YEAR 2010-11. THE EFFECTIVE GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE UNDER THE HEAD INCOME FROM LONG TERM CAPITAL GAINS OF .1,99,00,333/-. 2. THE LD. DR HAS SUBMITTED THAT WHILE DELETING THE ADDITION TOWARDS I.T.A. NO. 3083/CHNY/17 2 INCOME FROM LONG TERM CAPITAL GAINS, THE LD. CIT(A) HAS ERRONEOUSLY HELD THAT THE ASSESSEE HAS COMPLIED WITH THE PROVISIONS OF SECTION 2(47)(VI) OF THE INCOME TAX ACT, 1961 [ACT IN SHORT] R.W.S. 53A OF TRANSFER OF PROPERTY ACT BY OBSERVING THAT THE ASSESSEE HAS GIVEN POSSESSION TO THE INTENDED PURCHASER EVEN THOUGH THE PROPERTY WAS BEING HELD BY M/S. VOLTAS ON LONG LEASE AND FILED A CIVIL SUIT IN THE HIGH COURT FOR EXTENDING THE LEASE PERIOD. THE LD. DR VEHEMENTLY ARGUED THAT IT IS CLEAR FROM THE ABOVE FINDINGS OF THE LD. CIT(A) THAT WHEN THE PROPERTY IN QUESTION WAS IN POSSESSION OF M/S. VOLTAS, THE ASSESSEE COULD NOT HAVE GIVEN THE PHYSICAL POSSESSION OF THE PROPERTY, WHICH IS A MANDATORY CONDITION UNDER SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882. IT WAS FURTHER SUBMISSION OF THE LD. DR THAT THE AMENDMENT TO SECTION 53A OF TRANSFER OF PROPERTY ACT W.E.F. 24.09.2001, BY REMOVING THE WORDS THE CONTRACT, THOUGH REQUIRED TO BE REGISTERED, HAS NOT BEEN REGISTERED, OR CLEARLY MANDATES THAT THE AGREEMENT SHOULD BE REGISTERED FOR THE PURPOSE OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT. IT WAS FURTHER SUBMISSION OF THE LD. DR THAT SECTION 17(IA) OF INDIAN REGISTRATION ACT, 1908 MANDATES THAT THE DOCUMENTS CONTAINING CONTRACTS TO TRANSFER FOR CONSIDERATION, ANY IMMOVABLE PROPERTY FOR THE PURPOSE OF SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882) SHALL BE REGISTERED, IF THEY HAVE BEEN EXECUTED ON OR AFTER THE COMMENCEMENT OF THE REGISTRATION AND OTHER RELATED LAWS (AMENDMENT) ACT, 2001 AND IF SUCH DOCUMENTS ARE NOT REGISTERED ON OR AFTER SUCH COMMENCEMENT THEN, THEY HAVE NO EFFECT FOR THE I.T.A. NO. 3083/CHNY/17 3 PURPOSE OF THE SAID SECTION 53A OF TRANSFER OF PROPERTY ACT. THUS, THE POWER OF ATTORNEY GIVEN BY THE ASSESSEE TO SHRI S. SARAVANAN ONLY FOR LIMITED PURPOSE AS MENTIONED IN THE REGISTERED DEED DATED 23.07.2008 CANNOT BE HELD THAT THE TRANSFER HAS ALREADY BEEN TAKEN PLACE IN THE ASSESSMENT YEAR 2009-10. WHEREAS, THE TRANSFER OF THE PROPERTY WAS ACTUALLY TAKEN PLACE IN THE ASSESSMENT YEAR 2010-11 ONLY AFTER THE DATE OF REGISTRATION OF SALE DEED ON 27.04.2009, IN WHICH THERE WAS NO MENTION ABOUT THE EXISTENCE OF SALE AGREEMENT IN THE ABOVE SALE DEED. BY RELYING UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. BALBIR SINGH MAINI [2017] 86 TAXMANN.COM 94, THE LD. DR PLEADED FOR REVERSING THE FINDINGS OF THE LD. CIT(A) AND TO RESTORE THE ASSESSMENT ORDER. 3. ON THE OTHER HAND, THE LD. COUNSEL FOR THE ASSESSEE STRONGLY SUPPORTED THE ORDER PASSED BY THE LD. CIT(A) AND PRAYED FOR ITS CONFIRMATION. THE LD. COUNSEL FOR THE ASSESSEE ALSO FILED COPY OF THE JUDGEMENT OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. SHRI P.N. THIAGARAJAN & SMT. P.T. GEETHA RAMANI IN TAX CASE APPEAL NOS. 675 & 676 OF 2017 & CMP NO. 17564 OF 2017 CONFIRMING THE ORDER OF THE TRIBUNAL, WHICH WAS RELIED ON BY THE LD. CIT(A) IN HIS APPELLATE ORDER. 4. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESSEE OWNED PROPERTY, WHICH WAS ACQUIRED BY THE ASSESSEE'S FATHER IN 1975, HELD ALONG I.T.A. NO. 3083/CHNY/17 4 WITH 18 JOINT OWNERS AT MOUNT ROAD IN NANDANAM, CHENNAI. THE PROPERTY WAS IN LONG TERM LEASE WITH M/S. VOLTAS LIMITED FOR 25 YEARS ON 16.12.1975. THE LESSEE HAS FILED A CIVIL SUIT IN MADRAS HIGH COURT FOR EXTENDING THE LEASE PERIOD FOR FURTHER 30 YEARS. THE ASSESSEE AGREED TO SELL THE PROPERTY TO M/S. SHANGALPAM INDUSTRIES PRIVATE LIMITED. THE SALE DEED REGISTERED ON 27.4.2009. THE ASSESSEE ALONG WITH OTHER CO-OWNERS ENTERED INTO AN AGREEMENT ON 2.5.2008 WITH ONE, SHRI S. SARAVANAN TO SELL HIS SHARE OF PROPERTY WHICH CONSTITUTES1/3 RD OF THE TOTAL EXTENT FOR A CONSIDERATION OF . 3,07,55,540/- AND NO PROOF OF PAYMENT WERE MENTIONED IN THE SALE AGREEMENT. THE SALE AGREEMENT WAS NOT REGISTERED WITH THE GOVERNMENT AUTHORITIES. POSSESSION WAS NOT HANDOVER AS THE PROPERTY WAS OCCUPIED BY M/S. VOLTAS LIMITED. THE ASSESSEE ALSO GAVE A POWER OF ATTORNEY TO SHRI S. SARANAVAN ON 29.4.2008. THE ASSESSEE CLAIMS THAT THE DEEMED TRANSFER TOOK PLACE AS PER THE DATE OF SALE AGREEMENT IN THE FINANCIAL YEAR 2008-09 AND THE CAPITAL GAIN IS ASSESSABLE IN THE ASSESSMENT YEAR 2009-10. THE ASSESSING OFFICER OBSERVED THAT THE TRANSFER CANNOT TAKE PLACE THROUGH UNREGISTERED SALE AGREEMENT AS SECTION 53A OF TOP ACT,1882 WILL BE APPLICABLE FOR REGISTERED SALE AGREEMENT. SINCE, SALE/TRANSFER TOOK PLACE ONLY ON THE DATE OF SALE DEED I.E. 27.4.2009, THE CAPITAL GAIN IS TAXABLE IN THE ASSESSMENT YEAR 2010-11 AND ACCORDINGLY THE ASSESSING OFFICER DETERMINED THE LONG TERM CAPITAL GAINS AND BROUGHT TO TAX. I.T.A. NO. 3083/CHNY/17 5 4.1 ON APPEAL, BY FOLLOWING THE DECISION OF THE TRIBUNAL IN THE CASE OF SMT. P.T. GEETHA RAMANI IN I.T.A. NO. 2384/MDS/2016 AND SHRI P.N. THYIAGARAJAN IN I.T.A. NO. 2385/MDS/2016 DATED 31.01.2017, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION. ON FURTHER APPEAL AGAINST THE ORDER OF THE TRIBUNAL IN THE CASE OF SMT. P.T. GEETHA RAMANI & SHRI P.N. THIAGARAJAN BY THE DEPARTMENT, VIDE TAX CASE APPEAL NOS. 675 & 676 OF 2017 & CMP. NO. 17564 OF 2017 DATED 14.12.2017, NO DOUBT,+ THE HONBLE JURISDICTIONAL HIGH COURT CONFIRMED THE ORDER OF THE TRIBUNAL AND DISMISSED THE APPEAL FILED BY THE DEPARTMENT. HOWEVER, IN THAT CASE, THE DEPARTMENT HAS NOT PLACED RELIANCE ON THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. BALBIR SINGH MAINI (SUPRA), WHICH WAS DELIVERED ON 04.10.2017 MUCH BEFORE THE HONBLE HIGH COURT DELIVERED ITS JUDGMENT ON 14.12.2017 OR THE HONBLE HIGH COURT HAD NO OCCASION TO PERUSE THE JUDGEMENT OF THE HONBLE SUPREME COURT BEFORE DELIVERING ITS JUDGEMENT. IN THE CASE OF CIT V. BALBIR SINGH MAINI (SUPRA), THE HON'BLE APEX COURT HELD THAT FOR THE PURPOSE OF APPLICATION OF SECTION 53A OF TOP ACT, 1882, THE AGREEMENT SHOULD BE REGISTERED IF IT ENTERED AFTER 2001, THE YEAR OF AMENDMENT TOOK PLACE IN SECTION 17A OF THE TOP ACT, 1882 TO THIS EFFECT. ADMITTEDLY, THE ASSESSEE HAS NOT REGISTERED THE SALE AGREEMENT IN THIS CASE. WE ARE OF THE CONSIDERED OPINION THAT SINCE, THE SALE/TRANSFER TOOK PLACE ONLY ON THE DATE OF SALE DEED EXECUTED ON 27.4.2009, THE CAPITAL GAIN IS TAXABLE IN THE ASSESSMENT YEAR 2010-11. UNDER THE ABOVE FACTS AND I.T.A. NO. 3083/CHNY/17 6 CIRCUMSTANCES, WE SET ASIDE THE ORDER OF THE LD. CIT(A) AND REMIT THE MATTER BACK TO THE FILE OF THE LD. CIT(A) TO DECIDE THE ISSUE AFRESH IN VIEW OF THE JUDGEMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. BALBIR SINGH MAINI (SUPRA). THUS, THE GROUND RAISED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. 5. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED ON THE 31 ST JANUARY, 2019 AT CHENNAI. SD/- SD/- (ABRAHAM P. GEORGE) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 31.01.2019 VM/- /COPY TO: 1. / APPELLANT, 2. / RESPONDENT, 3. ( ) /CIT(A), 4. /CIT, 5. /DR & 6. /GF.