Babulal Shambhubhai Rakholia, Junagadh V. Asstt. Commr. of Income Tax, Morbi Circle, Morbi

ITA 338/RJT/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6492 (ITAT-RAJKOT)
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax (International Taxation) Appeal
• Pronouncement Date: 04-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 06-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K L SOLANKI
• Assessee Lawyers: DM RINDANI
• Keywords: Capital asset
• Section: 56(2)(vii)(b); 56(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RAJKOT BENCH, RAJKOT [CONDUCTED THROUGH E-COURT AT AH MEDABAD] (BEFORE SHRI P. K. KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMBER) ITA. NO: 338/RJT/2017 (ASSESSMENT YEAR: 2014-15) BABULAL SHAMBHUBHAI RAKHOLIA BLOCKL NO. A, 5 SHIV SHAKTI DUPLEX, SHAKTI SOCIETYM, ZANZARDA ROAD, PP MAHILA SWAMI MANDIR, JUNAGADHS V/S THE ASSISTANT COMMISSIONER OF INCOME- TAX, MORBI CIRCLE, MORBI (APPELLANT) (RESPONDENT) PAN: AMGPR5625Q APPELLANT BY : SHRI D.M. RINDANI, AR RESPONDENT BY : SHRI K. L. SOLANKI, SR. D.R. ( )/ ORDER DATE OF HEARING : 16 -03-201 8 DATE OF PRONOUNCEMENT : 14 -05-2018 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A)-3, RAJKOT DATED 31.07.2017 PERTAINING TO A.Y. 2014-15 AND FOLLOWING GROUNDS HAVE BEEN TAKEN:. ITA NO. 338/ RJT/2017 . A.Y. 2014-1 5 2 1. THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) - 3, RAJKOT ERRED IN CONFIRMING ACTION OF ASSESSING OFFICER IN MAKING ADDITION OF R S. S,16,208/- U/S 56(2)(VII)(B) OF THE ACT BEING DIFFERENCE BETWEEN STAMP DUTY VALUATI ON AND PURCHASE CONSIDERATION AS PER REGISTERED SALE DEED OF IMMOVA BLE PROPERTY @ 8% SHARE OF THE APPELLANT. 2. BOTH, THE ASSESSING OFFICER AND THE LD. COMMIS SIONER OF INCOME-TAX (APPEALS) - 3, RAJKOT FAILED TO APPRECIATE THAT ON DATE OF TR ANSFER OF IMMOVABLE PROPERTY I.E. ON 31-03-2013, PROVISIONS OF SEC. 56(2)(VII)(B) WER E NOT IN FORCE. 2. THE FACTS OF THE CASE ARE ON VERIFICATION OF THE DE TAILS FILED BY THE ASSESSEE, IT IS SEEN THAT ONLY THE PURCHASE OF PROPERTY VALUED AT R S. 18,00,000/- ON 01.04.2013 BEING 8% SHARE IN THE PROPERTY IS REFLECTED IN HIS BALANCE SHEET. HOWEVER, AS PER GANATRI-PATRAK FURNISHED BY THE SUB-REGISTRAR, THE PROPERTY IS VALUED AT RS. 3,27,02,600/-. FROM THE DETAILS FURNISHED BY THE AS SESSEE, IT IS SEEN THAT THE ASSESSEE HAS 8% SHARE IN THE SAID PROPERTY. HENCE T HE 8% SHARE OF RS. 3,27,02,600/- COMES TO RS. 26,16,208/- WHEREAS AS P ER THE BALANCE SHEET FURNISHED BY THE ASSESSEE, THE VALUE OF THE SAID PR OPERTY IS REFLECTED AT RS. 18,00,000/-. IN THESE CIRCUMSTANCES, THE DIFFERENCE OF AN AMOUNT OF RS. 8,16,208/- IS ADDED TO TOTAL INCOME OF THE ASSESSEE AS PER PROVISIONS OF SECTION 56(VII)(B)OF THE INCOME TAX ACT. 3. ASSESSEE FILED REPLY STATING THAT SECTION 56(VII)(B ), AS SUBSTITUTED BY FINANCE ACT, 2013, CAME INTO EFFECT FROM THE 01.04.2014 WHI CH PROVIDE FOR THE EFFECT OF IMMOVABLE PROPERTY PURCHASED FOR INADEQUATE CONSIDE RATION IN THE HAND OF PURCHASER AND REQUESTED THAT MY CASE DOES NOT COME IN FINANCIAL YEAR 2014-15. HENCE, THE SAME SECTION DOES NOT APPLY IN MY CASE. BUT LD. A.O. WAS NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AND MADE ADDITI ON OF RS. 8,16,208/-. ITA NO. 338/ RJT/2017 . A.Y. 2014-1 5 3 4. AGAINST THE SAID ORDER, ASSESSEE PREFERRED FIRST ST ATUTORY APPEAL BEFORE THE LD. CIT(A) WHO CONFIRMED THE ORDER OF THE LD. A.O. 5. WE HAVE GONE THROUGH THE RELEVANT RECORD IN THE IMP UGNED ORDER. UNDISPUTEDLY, SECTION 56(2)(VII)(B) WAS BROUGHT BY AMENDMENT IN FINANCE ACT, 2013 WHICH WAS TO BE MADE EFFECT FROM 01.04.2014 AN D APPELLANT CONTENDED THAT THE DATE OF SALE IS NOT 01.04.2013 BUT 30.03.2 013 AND IN SUPPORT OF ITS CONTENTION. APPELLANT FILED COPY OF SALE DEED ON WH ICH TRANSFEROR AND TRANSFEREE HAS PUT THEIR SIGNATURE ALONG WITH DATED 30.03.2013 . BUT SAME SALE DEED WAS REGISTERED IN THE RECORD OF SUB-REGISTRAR ON 01.04.2014. 6. IN SUPPORT OF ITS CONTENTION, THE LD. A.R. CITED A JUDGMENT OF GUJARAT HIGH COURT CIT VS. MORMASJI MANCHARJI VAID WHEREIN IT HA S BEEN HELD BY THE HONBLE HIGH COURT: CAPITAL GAINS ACCRUAL TRANSFER VIS-A-VIS REGISTR ATION OF IMMOVABLE PROPERTY CAPITAL GAINS ARE DEEMED TO BE THE INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER OF CAPITAL ASSET IS EFFECTED EXPRESSION 'EFFECTED' IN THIS CONTEXT REFERS TO THE STAGE WHEN THE TRANSFER OF ASSET BECOMES COMPLETE OR OPERATIVE IN THE SENSE THAT THE TITLE OF THE TRANSFEROR IS EXTINGUISHED AND THE TITLE OF THE TRANSFEREE IS CREATED WORD 'TRANSFER' AS DEFINED IN THE ACT IS TO BE GIVEN THE SIMPLE MEANING AS INDICATED IN RESPECT O F TRANSFER OF LEASEHOLD RIGHTS, TRANSFEREE WAS PUT IN POSSESSION AND WAS ENJOYING THE PROPERTY AS A LEASE-HOLDER TRANSFER COULD BE S AID TO HAVE BEEN EFFECTED ON THE DATE OF EXECUTION OF THE CONVEYANCE DOCUMENT IT CANNOT BE HELD THAT THE TRANSFER WAS EFFECTED ON TH E DATE ON WHICH THE DOCUMENT WAS COPIED OUT IN THE BOOKS OF REGISTR AR. 7. AS WE CAN SEE, THE HONBLE HIGH COURT IS VERY MUCH IN FAVOUR F THE APPELLANT WHEREIN IN THE JUDGMENT IT IS HELD THAT THE TRANSFE R WAS EFFECTED ON THE DATE ON WHICH THE DOCUMENT WAS COPIED OUT IN THE BOOKS OF R EGISTRAR WILL NOT BE DATE OF TRANSFER. IN THIS CASE, STAMP PAPERS WERE PURCHA SED ON OR BEFORE 30.03.2013 ITA NO. 338/ RJT/2017 . A.Y. 2014-1 5 4 TRANSFEROR AND TRANSFEREE BOTH PUT SIGNATURE ON THE SALE DEED ON 30.03.2013. THEREFORE, IN OUR CONSIDERED OPINION, SECTION 56(2) (VII)(B) OF INCOME TAX ACT WILL NOT BE APPLICABLE IN CASE OF THE APPELLANT. 8. IN THE RESULT, THE APPEAL FILED BY THE APPELLANT IS ALLOWED. ORDER PRONOUNCED IN OPEN COURT ON 14 - 05- 2018 SD/- SD/- (P.K. KEDIA) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 14/05/2018 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD