Shri Devendrasingh A. Jadeja, Ahmedabad V. The Income tax Officer, Ward-7(1)(4), Ahmedabad

ITA 430/AHD/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4093 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 20-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MAHESH VARJANI
• Keywords: Capital asset; Capital Gains
• Section: 143(3); 54F; 208

Judgement Text

, SMC IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ I.T.A. NO. 430/AHD/2017 ( ASSESSMENT YEAR : 2012-13) SHRI DEVENDRASINGH A. JADEJA 17/8, DARBAR COMPOUND, NEAR SANTOSHIMATA TEMPLE, GIDC, VITHALNAGAR TEKRA, VATVA, AHMEDABAD / VS. INCOME TAX OFFICER WARD - 7(1)(4), AHMEDABAD ./ ./ PAN/GIR NO. : AGGPJ0907K ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI MAHESH VARJANI, A.R. / RESPONDENT BY : SHRI VIRENDRA SINGH, SR.D.R. DATE OF HEARING 06/03/2019 !'# / DATE OF PRONOUNCEMENT 13/03/2019 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF I NCOME TAX (APPEALS)-7, AHMEDABAD (CIT(A) IN SHORT), DATED 1 9.12.2016 ARISING IN THE ASSESSMENT ORDER DATED 27.03.2015 PASSED BY THE ASSESSING OFFICER (AO) UNDER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AY 2012-13. ITA NO.430/AHD/17 [SHRI DEVENDRASINGH A. JADEJA VS. ITO] A.Y. 2012-13 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE REA D AS UNDER: 1. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRE D IN FACTS AND LAW BY CONSIDERING LAND OF 492 SQ. YARD AS SHOR T TERM CAPITAL ASSET WHICH IS ACTUALLY A LONG TERM CAPITAL ASSET. 2. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN FACTS AND LAW BY MAKING ADDITION IN RESPECT OF SHORT TERM CAPITAL GAIN OF RS.14,41,450/-. 3. THE LEARNED COMMISSIONER OF INCOME TAX HAS ERRED IN FACTS AND LAW BY CONSIDERING DATE OF SALE DEED FOR CALCUL ATING THE PERIOD OF HOLDING, HE OUGHT TO HAVE CONSIDERED THE DATE OF AGREEMENT TO SALE FOR THE SAME. 3. BRIEFLY STATED, THE ASSESSEE IS A RETIRED ARM Y OFFICER. THE ASSESSEE IS STATED TO HAVE ENTERED TO AN AGREEMENT OF SALE WITH A PARTY NAMED SAROJ BHAGWAT DHAKE (SBD) FOR PURCHASE OF PIE CE OF LAND OF 1065 SQ. YARDS SITUATED AT GHODASAR HAVING REVENUE SURVEY NOS. 40 TO 43, 169, 172, PART NO. 16 IN DIST. AHMEDABAD-5, NAR OL ON 12 TH MAY, 2007. THE SALE CONSIDERATION OF THE LAND WAS FIXED AT RS.10 LAKHS. AS PER THE AGREEMENT TO SALE DEED, THE ASSESSEE PAI D RS.2LAKHS AS EARNEST MONEY IN CONSIDERATION OF WHICH THE ASSESSE E CLAIMS TO HAVE RECEIVED POSSESSION OF THE PROPERTY FROM THE PROPOS ED SELLER (SBD). AS PER THE PARAGRAPH 3 OF THE EARNEST DEED, THE POS SESSION WAS OBTAINED BY THE ASSESSEE OWING TO FAMILY RELATIONS. SIMILARLY, THE EARNEST DEED PROVIDED FOR EXECUTION OF SALE DEED UP TO FY 2010-11. THE PARTIES TO THE AGREEMENT TO SALE EXECUTED THE S ALE DEED OF A PART OF AFORESAID LAND I.E. 208 SQ. YARDS ON 2 ND APRIL, 2008 AS PER THE SALE DEED. HOWEVER, THE SELLER OF THE LAND IS CLAIMED TO HAVE DISOBEYED THE MUTUAL AGREEMENT AND REVISED PRICE TO CARRY OUT THE SALE DEED OF THE REMAINING LAND. THE SALE DEED OF 492 SQ. YARDS WAS EVENTUALLY MADE ON 20 TH JULY, 2011 AT A REVISED PURCHASE CONSIDERATION OF RS.9,36,000/-. THE ASSESSEE SOLD THE AFORESAID LAN D OF 700 SQ. YARDS FOR A CONSIDERATION OF RS.35 LAKHS IN FY 2011-12 RE LEVANT TO AY 2012-13 IN QUESTION AND CLAIMED GAINS THEREON AS LO NG TERM CAPITAL ITA NO.430/AHD/17 [SHRI DEVENDRASINGH A. JADEJA VS. ITO] A.Y. 2012-13 - 3 - GAIN ARISING FROM SALE OF LONG TERM CAPITAL ASSET T OWARDS PROPERTY OF 700 SQ. YARDS SO SOLD. IT IS FURTHER CASE OF THE A SSESSEE THAT AGAINST THE SALE CONSIDERATION OF 700 SQ. YARDS, THE ASSESS EE PURCHASED THE REMAINING PIECE OF LAND OF 365 SQ. YARDS AND A RESI DENTIAL PROPERTY. IT WAS THUS ESSENTIALLY THE CLAIM OF THE ASSESSEE B EFORE THE AO THAT AGREEMENT TO SALE WAS MADE IN FY 2007-08 AND THE PR OPERTY WAS SOLD IN FY 2011-12 AND THUS HELD FOR MORE THAN THRE E YEARS IN THE POSSESSION OF THE ASSESSEE AND CONSEQUENTLY, IN THE SE CIRCUMSTANCES, THE ASSESSEE IS ENTITLED FOR BENEFIT ATTRIBUTABLE T O SALE OF LONG TERM CAPITAL ASSETS. IT WAS FURTHER CLAIMED THAT THE AS SESSEE HAS INVESTED THE SALE CONSIDERATION IN A RESIDENTIAL PROPERTY AN D CONSEQUENTLY, EXEMPTION UNDER S.54F OF THE ACT IS AVAILABLE TO TH E ASSESSEE. THE AO HOWEVER WAS NOT SATISFIED WITH THE CLAIM OF THE ASSESSEE AND CONSIDERED THE CAPITAL GAINS ARISING ON SALE OF LAN D PARCELS TO THE EXTENT OF 492 SQ. YARDS AS SHORT TERM CAPITAL GAIN ON THE GROUND THAT SALE DEED WAS EXECUTED IN JULY 2011 IN FAVOUR OF TH E ASSESSEE. THE AO ACCORDINGLY OBSERVED THAT THE HOLDING PERIOD OF THE LAND WAS LESS THAN 3 YEARS AND THUS THE GAINS ARISING ON SAL E OF SUCH LAND IS CHARGEABLE TO TAX AS SHORT TERM CAPITAL GAINS AT NO RMAL RATE. THE AO ACCORDINGLY DENIED THE CONCESSIONAL TREATMENT ATTRI BUTABLE TO LONG TERM CAPITAL GAINS AND ALSO DISALLOWED THE EXEMPTIO N UNDER S.54F OF THE ACT. 4. AGGRIEVED, THE ASSESSEE PREFERRED APPEAL BEFORE THE CIT(A) WITHOUT ANY SUCCESS. 5. FURTHER AGGRIEVED, THE ASSESSEE KNOCKED THE DOOR OF THE TRIBUNAL. 6. THE LEARNED AR FOR THE ASSESSEE AT THE OUTSET RE FERRED TO THE EARNEST DEED AND SUBMITTED THAT THE POSSESSION OF T HE PIECE OF LAND ITA NO.430/AHD/17 [SHRI DEVENDRASINGH A. JADEJA VS. ITO] A.Y. 2012-13 - 4 - WAS DULY TAKEN IN PURSUANCE OF THE EARNEST DEED WAY BACK IN MAY 2007. IT WAS THUS CLAIMED THAT THE RIGHTS OF THE S ELLER WERE EXTINGUISHED IN FAVOUR OF THE ASSESSEE AS PER SECTI ON 2(47) OF THE ACT. IT WAS FURTHER CLAIMED THAT THE ASSESSEE HAS DULY R ECEIVED POSSESSION OF THE LAND PARCELS AND THEREFORE, CONTRACT BETWEEN THE ASSESSEE AND THE SELLER WAS IN THE NATURE OF PART PERFORMANCE AS CONTEMPLATED IN SECTION 53A OF THE TRANSFER OF PROPERTIES ACT, 1882 . THE LEARNED AR ACCORDINGLY CONTENDED THAT NOTWITHSTANDING THE EXEC UTION OF SALE DEED AT A LATER DATE, THE RIGHT AND INTERESTS IN THE CAP ITAL ASSET (LAND PARCELS) ACCRUED IN FAVOUR OF THE ASSESSEE FROM THE DATE OF FIRST AGREEMENT I.E. EARNEST AGREEMENT. FOR THIS PURPOSE, THE LEARNED A R RELIED UPON THE DECISIONS OF THE HONBLE SUPREME COURT IN THE CASE OF SANJEEV LAL VS. CIT CIVIL APPEAL NO. 5899-5900 OF 2014. THE LEARNE D AR POINTED OUT THAT THE HONBLE SUPREME COURT IN SANJEEV LAL (SUPR A) HAS OBSERVED THAT CONSEQUENCES OF AGREEMENT TO SALE ARE VERY CLE AR AND THEY ARE TO THE EFFECT THAT THE ASSESSEE COULD NOT HAVE SOLD TH E PROPERTY TO SOMEONE ELSE. THE LEARNED AR FOR THE ASSESSEE THUS CONTENDED THAT THE ASSESSEE GOT A RIGHT TO GET THE PROPERTY TRANSF ERRED IN HIS FAVOUR BY FILING A SUIT AND THEREFORE, SOME DEFINITE RIGHTS W ERE CREATED IN FAVOUR OF THE ASSESSEE TRANSFEREE WHEN THE AGREEMENT TO SA LE WAS EXECUTED. THIS RIGHT IN RESPECT OF THE CAPITAL ASSET I.E. LAN D PARCEL IN QUESTION HAS BEEN TRANSFERRED BY THE ASSESSEE IN FAVOUR OF T HE PURCHASER AFTER THE COMPLETION OF THE HOLDING PERIOD OF 3 YEARS. T HE LEARNED AR ACCORDINGLY SUBMITTED THAT IN THE LIGHT OF THE DECI SION OF THE HONBLE SUPREME COURT IN SANJEEV LAL (SUPRA) THE TRANSFER O F THE LAND RELATES BACK TO THE DATE OF EARNEST AGREEMENT AND CONSEQUEN TLY, THE ASSESSEE IS ENTITLED FOR CONCESSIONAL TAX TREATMENT AVAILABLE T O GAINS ARISING ON SALE OF LONG TERM CAPITAL GAINS AND ALSO IS ENTITLE D TO BENEFIT OF DEDUCTION UNDER S.54F OF THE ACT. 7. THE LEARNED DR FOR THE REVENUE, ON THE OTHER HAN D, RELIED UPON THE ORDERS OF THE AO AND FIRST APPELLATE AUTHORITY. THE LEARNED DR ITA NO.430/AHD/17 [SHRI DEVENDRASINGH A. JADEJA VS. ITO] A.Y. 2012-13 - 5 - ALSO POINTED OUT THAT THE ASSESSEE HAS SOLD ONLY 70 0 SQ. YARDS AGAINST THE PURCHASE OF 1065 SQ. YARDS CLAIMED AS PER EARNE ST DEED AND THEREFORE, THE DOCTRINE OF RELATION BACK WOULD NOT APPLY TO THE TRANSACTION IN QUESTION. THE LEARNED DR ALSO CLAIM ED THAT NO EVIDENCE OF POSSESSION OF LAND IN FAVOUR OF THE ASSESSEE IS ON RECORD. THE LEARNED DR THUS URGED THAT NO INTERFERENCE WITH THE ORDER OF THE CIT(A) IS CALLED FOR. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. ON A PERUSAL OF THE EARNEST DEED, WE OBSERVE THAT THE PR OPOSED SELLER HAD ACQUIESCENCED TO HAND OVER THE POSSESSION OF THE LA ND TO THE ASSESSEE WAY BACK IN MAY 2007 AGAINST RECEIPT OF PART OF THE TOTAL CONSIDERATION, THE LAND PARCEL HAS EVENTUALLY BEEN TRANSFERRED IN FAVOUR OF THE ASSESSEE BY A FORMAL SALE DEED EXECUT ED IN JULY 2011. THEREFORE, THE MUTUAL UNDERSTANDING BETWEEN THE SEL LER AND ASSESSEE ULTIMATELY STOOD RATIFIED. CONSIDERING THE CIRCUMS TANCES OF THE CASE, WE ARE OF THE VIEW THAT THE DATE OF AGREEMENT TO SA LE/BANAKHAT/EARNEST AGREEMENT SHOULD BE RECKONED FOR THE PURPOSES OF DE TERMINATION OF PERIOD OF HOLDING OF THE LAND PARCEL. THUS, WHEN T HE FACTS ARE CONSTRUED IN THE LIGHT OF THE JUDGMENT RENDERED IN THE CASE OF SANJEEV LAL (SUPRA), WE BELIEVE THAT THE BENEFIT OF LONGER HOLDING PERIOD SHOULD BE GIVEN TO THE ASSESSEE. THEREFORE, THE GA INS ARISING ON SALE OF LAND DESERVES TO BE TREATED AS LONG TERM CAPITAL GAINS. AS A SEQUEL THERETO, THE ASSESSEE WOULD BE ENTITLED FOR BENEFIT OF DEDUCTION UNDER S.54F OF THE ACT. 9. NOTICEABLY, THE ASSESSEE HAS CLAIMED THE POSSESS ION OF THE LAND RIGHT FROM THE INCEPTION OF THE ASSESSMENT PROCEEDI NGS. THE REVENUE AUTHORITIES HAVE NOT REBUTTED THIS CRUCIAL ASPECT B Y ANY COGENT EVIDENCE. THE PAYMENT TO THE SELLER AND ULTIMATE E XECUTION OF SALE DEED SOMEWHAT PROVES THE CASE OF THE ASSESSEE. CON SEQUENTLY, WE SET ITA NO.430/AHD/17 [SHRI DEVENDRASINGH A. JADEJA VS. ITO] A.Y. 2012-13 - 6 - ASIDE THE ORDER OF THE CIT(A) AND DIRECT THE AO TO ALLOW THE CLAIM OF THE ASSESSEE AS LONG TERM CAPITAL GAINS AND ALSO AL LOW THE DEDUCTION CLAIMED UNDER S. 54F OF THE ACT IN ACCORDANCE WITH LAW. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. SD/- SD/- (RAJPAL YADAV) (PRADIP K UMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 13/03/2019 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 13/03/201 9