Sarala Kankaria, CHENNAI V. ITO, CHENNAI

ITA 404/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 6170 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-09-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 16-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B SAGADEVAN IRS
• Assessee Lawyers: D ANAND
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Charitable institution; Principle of natural justice
• Section: 50C

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B (SMC) BENCH : CHENNAI . , [BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEM BER ] ./I.T.A. NO. 404/MDS/2017 / ASSESSMENT YEAR : 2007-2008. SMT. SARALA KANKARIA, NO.19/8, 4 TH FLOOR, JAIN KRITI APARTMENTS, NORTH BOAG ROAD, T.NAGAR, CHENNAI 600 017. [ PAN AAEPK 9395A ] VS. THE INCOME TAX OFFICER, NON CORPORATE WARD 2(1) CHENNAI 600 034. ( !' / APPELLANT) ( #$!' /RESPONDENT) / APPELLANT BY : SHRI. D. ANAND, ADVOCATE /RESPONDENT BY : SHRI. B. SAGADEVAN, IRS, JCIT. /DATE OF HEARING : 13-09-2017 !' /DATE OF PRONOUNCEMENT : 18-09-2017 % / O R D E R ASSESSEE IN THIS APPEAL FILED AGAINST AN ORDER DAT ED 27.12.2016 OF LD. COMMISSIONER OF INCOME TAX (APPEA LS)-2, CHENNAI HAS RAISED THE FOLLOWING GROUNDS:- ITA NO.404/MDS/2017 :- 2 -: 1. THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 2 CONFIRMING THE ORDER OF INCOME TAX OF FICER, ON CORPORATE WARD- 2(1), CHENNAI IS AGAINST THE FACTS OF THE CASE AND PRINCIPLES OF NATURAL JUSTICE. 2. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS), FAILED TO APPRECIATE THE FACT THAT THE ALLEGED TRAN SFER HAD ALREADY BEEN EFFECTED IN ASSESSMENT YEAR 2006-07. 3. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FA ILED TO APPRECIATE THAT THE TRANSACTION OF SALE WAS COVE RED U/S 2(47)( V) OF THE INCOME TAX ACT R.W.S. 53(A) OF THE TRANSFER OF PROPERTY ACT. 4. WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) FAILED TO APPR ECIATE THE FACT THAT SECTION 50C WAS NOT APPLICABLE TO THE AGRICULTURAL LAND. 2. LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE LAN D ON WHICH CAPITAL GAINS WAS COMPUTED FOR THE IMPUGNED ASSESSMENT YEAR WAS TRANSFERRED TO THE BUYER IN THE PRECEDING YEAR PURSUANT TO AN AGREEMENT FOR SALE DATED 22 ND NOVEMBER, 2005. AS PER THE LD. AUTHORISED REPRESENTATIVE, OUT OF THE TOTAL AGREED CONSIDERATION OF RS.23 LAKHS, SUM OF RS.10 LAKHS WAS RECEIVED BY THE ASSESSEE ON 26 TH AUGUST, 2005 AND ANOTHER SUM OF RS.5 LAKHS RECEIVED ON 4 TH NOVEMBER, 2005. CONTENTION OF THE LD. AUTHORISED R EPRESENTATIVE WAS THAT ALL THESE HAPPENED IN PREVIOUS YEAR ENDING 31. 03.2006. LD. COUNSEL URGED THAT RECITALS IN THE AGREEMENT FOR SALE CLEARLY INDICATED HANDING OVER OF POSSESSION ON 26 TH AUGUST, 2005. LD. COUNSEL POINTED OUT THAT ASSESSEE WAS HAVING ONLY 1/4 TH RIGHT OVER THE PROPERTY AND ITA NO.404/MDS/2017 :- 3 -: RECEIPT OF RS.5,75,000/- ON SALE OF THE PROPERTY WA S DULY SHOWN BY HER, IN HER RETURN FOR ASSESSMENT YEAR 2006-07. F URTHER ACCORDING TO HIM, THE LAND SOLD WAS AGRICULTURAL IN NATURE. AS PER THE LD. AUTHORISED REPRESENTATIVE THE LOWER AUTHORITIES HAD PLACED UND UE RELIANCE ON THE CONVEYANCE DEED EXECUTED ON 10 TH NOVEMBER, 2006, IN FAVOUR OF THE BUYER AND COMPUTED CAPITAL GAINS APPLYING SECTION 50C OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) IGNORING THE H ANDING OVER POSSESSION IN THE EARLIER YEAR. ACCORDING TO HIM, T RANSFER BY VIRTUE OF SECTION 2(47)(V) OF THE ACT WAS COMPLETE IN PREVIOU S YEAR ENDED 31.03.2006 AND THE SAME TRANSACTION COULD NOT BE AG AIN CONSIDERED FOR TAXATION IN A SUBSEQUENT ASSESSMENT YEAR. IN A NY CASE ACCORDING TO HIM, THE LAND SOLD BEING AGRICULTURAL WAS NOT E XIGIBLE TO CAPITAL GAINS TAX. 3. PER CONTRA, LD. DEPARTMENTAL REPRESENTATIVE SUBMITT ED THAT RECITALS IN THE REGISTERED SALE DEED DATED 10 TH NOVEMBER, 2006 CLEARLY MENTIONED HANDING OVER OF POSSESSION ON THAT DATE. ACCORDING TO HIM, SECTION 53A OF TRANSFER OF PROPERTY ACT, 1882 COULD BE APPLIED ONLY WHERE SUBSTANTIAL CONSIDERATION WAS PAID. AS PER T HE LD. DEPARTMENTAL REPRESENTATIVE CONSIDERATION WHICH W AS PAID ON THE DATE OF ENTERING INTO THE AGREEMENT FOR SALE WAS O NLY RS.10 LAKHS, OUT OF THE TOTAL AGREED PRICE OF RS.23 LAKHS. ACC ORDING TO THE LD. ITA NO.404/MDS/2017 :- 4 -: DEPARTMENTAL REPRESENTATIVE RECITALS IN THE REGIST ERED CONVEYANCE DEED WAS PRIMARY EVIDENCE THAT COULD NOT BE IGNORED . CONTENTION OF THE LD. DEPARTMENTAL REPRESENTATIVE WAS THAT THE L AND WAS WITHIN MUNICIPAL LIMITS, AND DESCRIBED AS VACANT EVEN IN T HE AGREEMENT RELIED ON BY THE ASSESSEE. IT WAS URGED BY THE LD. DEPARTM ENTAL REPRESENTATIVE THAT LOWER AUTHORITIES WERE JUSTIFI ED IN CONSIDERING THE LAND AS NON- AGRICULTURAL. ACCORDING TO HIM, ASSE SSEE HAD NOT OFFERED ANY CAPITAL GAINS FROM THE TRANSACTIONS EVEN IN THE PRECEDING YEAR. THUS, AS PER THE LD. DEPARTMENTAL REPRESENTATIVE T HE ORDER OF THE LOWER AUTHORITIES WAS UNIMPEACHABLE. 4. I HAVE HEARD THE CONTENTIONS AND PERUSED THE ORDE RS OF THE AUTHORITIES BELOW. ENGLISH TRANSLATION OF THE AGREE MENT TO SELL, ENTERED BY THE ASSESSEE AND THE OTHER CO-OWNERS WITH THE B UYER, HAS BEEN REPRODUCED BY THE LD. COMMISSIONER OF INCOME TAX (A PPEALS) AND THIS READS AS UNDER:- ON 2 ND NOV. 2005, TO THANGAPUSHPAM, AGED 50, D/O THANGAIYAN, RESIDING AT VELLORE DISTRICT, SISTERS OF THE SACRED HEART OF JESUS, IDAYA NAGAR, RANGANATHAPURAM , WE, (1) ANI/ KANKARIA, AGED 50,5/0 MADAN/A/ KANKARIA, (2) SARA/A KANKARIA, AGED 43, HUSBAND'S NAME ANI/ KANKARIA (3) AMITH KANKARIA, AGED 26, FATHER'S NAME ANI/ KANKARIA, (4) ANKUS KANKARIA, AGED 22, FATHER'S NAME ANI/ KANKARIA, RESIDING AT CHENNAI-17, THIAGARAYA N AGAR, RAJAMAN&R STREET, NO. 41/19, AGREED TO SELL AND MADE THIS AGREEMENT TO SELL AS UNDER: ITA NO.404/MDS/2017 :- 5 -: THE PROPERTY AS PER THE DETAILS OF PROPERTY BELOW IS AT OUR OWN ENJOYMENT FROM 1965 AND FOR YOUR FAMILY COMMITMENT AND TO SETTLE OTHER DEBTS, WE HAVE DECIDED TO SELL THIS TO YOU AND FIXED THE SALE AMOUNT FOR A TOTAL SUM OF RS.23,OO,OOO/- (RUPEES TWENTY THREE LAKHS ONLY) AND TODAY THE 26TH AUGUST; WE HAVE RECEIVED RS. 10,00,000/- IN THE PRESENCE OF THE WITNESSES AND WE HAVE TODAY HANDED OVER THE ENJOYMENT RIGHTS TO THE YESUVIN THIRU IRUDAYA SABAI, A TRUST, AND THE FOLLOWING ITEMS ARE HANDED OVER TODAY: 1. PUMP SET KEY 2.BUILDING KEY 3. MAIN GATE KEY ON SETTLING THE BALANCE AMOUNT, WE AGREE TO SELL AT YOUR CONVENIENT DATE TO THE SAME TRUST. SD/- SD/- AS AGAINST THE ABOVE, WHAT IS STATED IN THE REGISTE RED SALE DEED DATED 10 TH NOVEMBER, 2006 IS REPRODUCED HEREUNDER:- ON 10 TH NOV. 2006, TO SISTER T. THANGAPUSHPAM, AGED 50,D /O THANGAIYAN, RESIDING AT VELLORE DISTRICT, PIN CODE 632 009, RANGAPURAM, IDAYA NAGAR, YESUVIN THIRUIRUDHAYA SAGO THARIGAL SABAI, WE, SHRI ANIL KANKARIA-1, AGED ABOUT 50 (PAN NO. AAEPK9394B), RESIDING AT CHENNAI-17, THIAGARAYA NAGAR, RAJAMANNA R STREET, NO. 41/19, SMT. SARALA KANKARIA-2, AGED ABOUT 43, (PAN AAEPK 9395A) RESIDING AT THE ABOVE ADDRESS, SHRI AMITH KANKARIA- 3, AGED ABOUT 26 (PAN NO. AAFPK0397M) & SHRI ANKUS KANKARIA, AGED ABOUT 22 (PAN AAEPK9392H), WHOLE-HEARTEDLY AGREED AND MADE THE SA LE DEED, AS THE PROPERTY AT KANCHEEPURAM DISTRICT, TAMBARAM CIR CTE, ANAKAPUTHW VILLAGE, KAMARAJAPURAM, THIRUNEERMALAI R OAD, ITA NO.404/MDS/2017 :- 6 -: GRAMANATHAM SURVEY NO. 307, INCLUDING 28340 SQ.FT. PLOT, WITH TWO OLD BUILDINGS, WELL, ELECTRIC ITY CONNECTION, COMPOUND WALL, FIFTEEN TEAK TREES AND T WENTY FOUR COCONUT TREES, IS BELONGING TO US AND IS IN ENJOYMENT BY US. THE ABOVE PROPERTY WAS BELONGING TO SHRI MADANLAL K ANKARIA, FATHER OF (1) OF US AND FATHER-IN-LAW OF (2) OF US, WHO PAID ALL THE TAXES IN RESPECT OF THE PROPERTY AND WAS ENJOYING IT. ON HIS EXPIRY ON 11.3.1996, THE PROPERTY DEVOLVED ON (1) OF US AND OTHER BLOOD RELATIONS. TILL DATE, THE PROPERTY WAS NOT SUBJECTE D TO ANY LITIGATION AND WE HAVE PAID ALL GOVERNMENT TAXES, PROPERTY TAX AND EL ECTRICITY BILLS AND HAVE BEEN ENJOYING THE PROPERTY WITH ALL RIGHTS. WE HAVE DECIDED TO SELL OUR ABOVE PROPERTY TO YOU, DUE TO OUR FAMILY COMMITMENT AND TO SETTLE OTHER DEBTS, AND FIXED THE CONSIDERATION AT RS. 23,00,000/- (RUPEES TWENTY THREE LAKHS ONLY) AN D RECEIVED THE SUMS IN CASH, IN THE PRESENCE OF THE WITNESSES, AS UNDER: 1. 26.8.2005 AS ADVANCE RS.10,00,000/-(RUPEES TEN LAKHS ONLY) 2. 4.11.2005 RS. 5,00,OOO/-(RUPEES FIVE LAKHS ONLY) 3. TODAY (BALANCE AMOUNT) RS. 8,OO,OOO/-(RUPEES EIGHT LAKHS ONLY) SINCE THE ENTIRE AMOUNT HAS BEEN RECEIVED BY US WIT HOUT ANY DUES, WE ARE EXECUTING THE SALE DEED TODAY, IN THE NAME OF T HE CHARITABLE TRUST AND HANDED OVER THE ENJOYMENT OF THE PROPERTY THROUGH THIS DEED. SO, WE DO NOT HAVE ANY RIGHTS ON THE PROPERTY FROM TODAY. YOU CAN ENJOY THE ABOVE PROPERTY, WHICH YOU HAVE RE GISTERED IN THE NAME OF THE CHARITABLE TRUST. WE ASSURE YOU THAT THERE IS NO LITIGATION LIKE PLEDGE, COURT ATTACHMENT, COLLATERAL SECURITY, WILL THAVA, LEGAL HEIR THAVA, AFFIDAVIT, COUNTER, REJOINDER, LAND GRABBING OVER THE PROPERTY. IN CASE OF ANY LITIGATION, WE AGREE TO TAKE ANY ACTION TO SETTLE THE SAME IN FAVOUR OF YOURSELF. WE HAVE MADE PAYMENTS OF ALL THE TAXES, PROPERTY TA X, ITA NO.404/MDS/2017 :- 7 -: ELECTRICITY BILL TILL DATE. THE PROPERTY CAN BE CHA NGED IN THE NAME OF THE TRUST AND NECESSARY PAYMENTS MAY BE MADE HER EINAFTER. WE HAVE, TODAY, HANDED OVER ALL THE RECORDS PERTAIN ING TO THE PROPERTY WHICH HAS BEEN SOLD OUT TO THE TRUST. THIS IS THE SALE DEED EXECUTED WHOLE-HEARTEDLY BY U S, IN THE PRESENCE 0F THE WITNESSES. PROPERTY DETAILS THE DETAILS OF THE PROPERTY AT SOUTH CHENNAI REGIST ER DISTRICT, PAMRNAL SUB-REGISTER CIRCLE, KANCHEEPURARN DISTRICT, TARNBA RARN CIRCLE, ANAKAPUTHUR VILLAGE, KAMARAJAPURAM, THIRUNEERMALAI ROAD, GRAMANATHAM SURVEY NO. 307 WITH 28340 SQ. FT. PLOT, IN THAT TWO OLD BUILDINGS, WELL, ELECTRICITY CONNECTION, COMPOUND W ALL, FIFTEEN TEAK TREES AND TWENTY FOUR COCONUT TREES, IS AS UNDER: TO NORTH PRAKASI AMMAL PROPERTY TO SOUTH ARPUTHAKANI PROPERTY TO EAST PROPERTIES OF G. SANTHANAMARIYAN, S. JOHNBOSCO AND S. INDRANI, THIRUNEERMALAI ROAD, PROPERTY OF ANTHONIYAR KOIL AND SIVANTHI ADITHYANAR WELFARE CLUB BUILDING. TO WEST PROPERTIES OF M. ANTHONIKURUS, S. MURUGAN AND S. SESURATHINAM AND ROAD IN THE MIDDLE, THE PROPERTY UNDER THIS SALE, WITH 28340 SQ.FT. PLOT, IN THAT TWO OLD BUILDINGS, WELL, ELECTRICITY CONNECTION, CO MPOUND WALL, FIFTEEN TEAK TREES AND TWENTY FOUR COCONUT TREES, IS SITUAT ED. PROPERTY TAX NO. 3655 ELECTRICITY CONNECTION NO. 258-10-570 THE ABOVE PROPERTY IS COMING UNDER ANAKAPUTHUR MUNI CIPALITY. THE PRESENT MARKET VALUE RS. 80,00,000/-. WITNESSES:- SELLERS SD/- SD/- PURCHASER:- SD/- THIS DOCUMENT WAS PREPARED BY: SD/-' ITA NO.404/MDS/2017 :- 8 -: IT IS NOT DISPUTED BY THE REVENUE THAT ASSESSEE HAD RECEIVED RS.10 LAKH ON 26.08.2005 AND ANOTHER RS.5 LAKH ON 4.11.20 05, WHICH FELL WITHIN PREVIOUS YEAR ENDING 31.03.2006. SINCE THE A GREED CONSIDERATION WAS RS.23 LAKHS, WE CANNOT SAY RS.15 LAKHS WAS AN INSIGNIFICANT PORTION. NOW THE QUESTION IS WHEN TH E POSSESSION WAS HANDOVER. AS PER THE AGREEMENT FOR SALE, POSSESSI ON STOOD HANDED OVER ON 26TH AUGUST, 2005. AS AGAINST THIS, THE REL EVANT SENTENCE IN THE REGISTERED CONVEYANCE DEED DATED 10 TH NOVEMBER, 2006 READS AS UNDER:- SINCE THE ENTIRE AMOUNT HAS BEEN RECEIVED BY US WITHOUT ANY DUES, WE ARE EXECUTING THE SALE DEED TODAY IN THE NAME OF THE CHARITABLE TRUST AND HANDED OVER THE ENJOYMENT OF THE PROPERTY THROUGH THIS DEED. THOUGH THE ABOVE SENTENCE IS NOT HAPPILY WORDED, I F THE POSSESSION WAS HANDED OVER ONLY ON 10 TH NOVEMBER, 2006, THE WORDS THAT SHOULD HAVE BEEN USED ARE HANDING OVER AND NOT HANDE D OVER, SINCE THESE ARE IN CONJUNCTION WITH THE WORDS EXECUT ING THE SALE DEED. THE USE OF THE WORDS HANDED OVER IN PREFERENCE TO THE WORDS HANDING OVER, IN MY OPINION INDICATED THAT POSSES SION WAS HANDED OVER ON AN EARLIER DAY. THE PURCHASER HAD SEPARATE LY AFFIRMED THAT POSSESSION WAS HANDED OVER TO THEM IN PREVIOUS YEA R ENDED 31.03.2006. IT CLEARLY CORROBORATES THE RECITAL I N THE AGREEMENT FOR ITA NO.404/MDS/2017 :- 9 -: SALE THAT POSSESSION WAS HANDED OVER ON 26 TH AUGUST, 2005. THUS SUBSTANTIAL CONSIDERATION WAS PAID IN THE YEAR ENDED 31.03.2006 AND THE POSSESSION WAS ALSO HANDED OVER IN THAT YE AR. TRANSFER BY VIRTUE OF SECTION 2(47)(V) OF THE ACT HAPPENED IN THE YEAR ENDED 31.03.2006. IT IS TRUE THAT THE LAND WAS NOT AGRIC ULTURAL AND ASSESSEE WAS NOT ABLE TO ADDUCE ANY EVIDENCE FOR THE AGRICU LTURAL NATURE OF THE LAND. HOWEVER, THE TRANSFER HAVING BEEN EFFECT ED IN YEAR ENDED 31.03.2006, THE CAPITAL GAINS COULD HAVE BEEN CONSI DERED ONLY FOR ASSESSMENT YEAR 2006-07 AND NOT FOR ASSESSMENT YEAR 2007-08. ACCORDINGLY, WE DELETE THE ADDITION UNDER THE HEAD CAPITAL GAINS MADE IN THE IMPUGNED ASSESSMENT YEAR. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON MONDAY, THE 18TH DAY OF SEPTEM BER, 2017, AT CHENNAI. SD/- ( . ) (ABRAHAM P. GEORGE) / ACCOUNTANT MEMBER #$ / CHENNAI %& / DATED: 18TH SEPTEMBER, 2017 KV &' ()*) / COPY TO: 1 . / APPELLANT 3. +,- / CIT(A) 5. )./ 0 / DR 2. / RESPONDENT 4. + / CIT 6. /12 / GF