The ACIT, Circle-1(1), Baroda V. Hashmukhlal M.Patel, Baroda

ITA 4553/AHD/2007

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6699 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 27-04-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 27-12-2007
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H P MEENA
• Assessee Lawyers: S N SOPARKAR
• Keywords: Sale consideration of property below Jantri Value; Capital asset; Share purchase agreement; Set aside; Capital Gains
• Section: 50C; 264

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD, D BENCH (BEFORE S/SHRI G.D. AGARWAL, VICE-PRESIDENT AND BHAVNESH SAINI, JUDICIAL MEMBER) ITA NO.4284/AHD/2007 [ASSTT. YEAR : 2004-2005] HASMUKHBHAI M. PATEL 14, ATUL PARK SOCIETY KARELIBAUG BARODA 390 018. VS. ACIT, CIR.1(1) BARODA. ITA NO.4553/AHD/2007 [ASSTT. YEAR : 2004-2005] DCIT, CIR.1(1) BARODA. VS. HASMUKHBHAI M. PATEL 14, ATUL PARK SOCIETY KARELIBAUG BARODA 390 018. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI S.N. SOPARKAR REVENUE BY : SHRI H.P. MEENA O R D E R PER G.D. AGARWAL, VICE-PRESIDENT: THESE ARE TWO APPEALS BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF T HE COMMISSIONER OF INCOME TAX(APPEALS)-I, BARODA DATED 26.9.2007 ARISI NG OUT OF THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3 ) THE INCOME TAX ACT, 1961. SINCE THE ISSUES ARE CONNECTED FOR THE SAKE OF CONVENIENCE, WE DISPOSE OF BOTH THE APPEALS BY THIS COMMON ORDER . ITA NO.4284/AHD/2007 2. GROUND NO.1 TO 3 OF THE ASSESSEES APPEAL READ A S UNDER: 1. THE LD.CIT(A) ERRED IN HOLDING THAT PROVISIONS OF SEC. 50C ARE APPLICABLE IN THE CASE OF THE DEVELOPMENT AGREE MENT. ITA NO.4284 AND 4553/AHD/2007 -2- 2. THE LD.CIT(A) FURTHER ERRED IN HOLDING THAT THE LAND SOLD AT TARSALI WAS NOT FOR RESIDENTIAL PURPOSE. 3. THE LD.CIT(A) HAS ERRED IN HOLDING THAT THE RATE APPLICABLE PER SQ. METR. AT RS.3500/- IN RESPECT OF COMMERCIAL PROPERTY WAS APPLICABLE IN CASE OF THE APPELLANT AND FURTHER ERR ED IN CONFIRMING THE LONG TERM CAPITAL GAIN COMPUTED BY THE ASSESSIN G OFFICER. THE ASSESSEE ALSO REQUESTED FOR THE ADMISSION OF AD DITIONAL GROUNDS WHICH READS AS UNDER: 1. THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONFIRMING ADDITION OF RS.29,375/- AND RS.11,70,031/- MADE Y A SSESSING OFFICER ON ACCOUNT OF DIFFERENCE IN LONG TERM CAPIT AL GAIN IN RESPECT OF LAND AT KOTALI & DUMAD RESPECTIVELY IF T HE LANDS ARE FOUND TO BE NON-IRRIGATED. BOTH THE LOWER AUTHORIT IES HAVE NOT APPRECIATED THE FACT THAT THE SALE DOCUMENT GOT REG ISTERED AT THE VALUE STATED IN THE SALE DEED WITHOUT REQUIRING ANY ADDITIONAL STAMP DUTY TO BE PAID. THE LD.CIT(A) OUGHT TO HAVE DELETED ADDITION MADE BY THE ASSESSING OFFICER. 3. AT THE TIME OF HEARING BEFORE US, IT IS STATED B Y THE LEARNED COUNSEL THAT THE ISSUE BEING RAISED BY WAY OF ADDITIONAL GR OUND IS SIMILAR TO THE ISSUE RAISED BY GROUND NO.1 OF THE ASSESSEES APPEA L. HE HAS STATED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSING OFFICER MADE THE ADDITION ON ACCOUNT OF CAPITAL GAIN IN RESPECT OF S ALE OF TWO ASSETS ONE AT TARSALI AND SECOND AT KOTALI & DUMAD. THAT BY M ISTAKE, WHILE FILING THE APPEAL, THE ISSUE RELATING TO ONE ASSET WAS MEN TIONED AND OTHER OMITTED TO BE MENTIONED WHICH IS BEING MENTIONED BY WAY OF ADDITIONAL GROUND. THE LIMITED ISSUE IN GROUND NO.1 AS WELL AS ADDITIONAL GROUND IS WHETHER SECTION 50C WOULD BE APPLICABLE WHEN THE ST AMP DUTY AUTHORITY HAS NOT DISTURBED THE VALUE DECLARED FOR THE PURPOS E OF STAMP DUTY. HE FURTHER EXPLAINED THAT IN RESPECT OF THE LAND AT TA RSALI INITIALLY THERE WAS ONLY DEVELOPMENT AGREEMENT. THE SAME WAS REGISTERE D AND VALUE ITA NO.4284 AND 4553/AHD/2007 -3- DECLARED BY THE ASSESSEE WAS ACCEPTED BY THE STAMP DUTY AUTHORITY AND NO FURTHER STAMP DUTY WAS LEVIED. EVEN WHEN THE FLATS WERE CONSTRUCTED ON THIS LAND AND FLATS WERE TRANSFERRED, THE VALUE DEC LARED WAS ACCEPTED BY THE STAMP DUTY AUTHORITY. SIMILARLY, IN RESPECT OF THE LAND AT KOTALI & DUMAD ALSO THE VALUE DECLARED IN THE SALE DEED WAS ACCEPTED BY THE STAMP DUTY AUTHORITY AND NO DEMAND FOR THE EXTRA PA YMENT OF STAMP DUTY WAS RAISED AGAINST THE ASSESSEE. HE THEREFORE SUBM ITTED THAT ON THE FACTS OF THE CASE, SECTION 50C WAS NOT APPLICABLE. 4. THE LEARNED DR, ON THE OTHER HAND, STATED THAT T HE ASSESSING OFFICER ASCERTAINED FROM THE STAMP VALUATION AUTHOR ITY THE VARIOUS RATES PRESCRIBED FOR VARIOUS TYPES OF LAND AND ON THE BAS IS OF THESE DETAILS RECEIVED FROM STAMP VALUATION AUTHORITY, THE ASSESS ING OFFICER ADOPTED THE RATE APPLICABLE TO THE LAND TRANSFERRED BY THE ASSESSEE. 5. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS AND PERUSED THE MATERIAL PLACED BEFORE US. SECTION 50C OF THE INCOME TAX ACT AS IT STOOD AT THE RELEVANT TIME READS AS UNDER: 50C. SPECIAL PROVISION FOR FULL VALUE OF CONSIDERAT ION IN CERTAIN CASES.(1) WHERE THE CONSIDERATION RECEIVED OR ACCR UING AS A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BUILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO AS THE STAMP VALUATION AUTHORITY) FOR THE PURP OSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER, THE VALU E SO ADOPTED OR ASSESSED SHALL, FOR THE PURPOSES OF SECTION 48, BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUIN G AS A RESULT OF SUCH TRANSFER. FROM THE ABOVE, IT IS EVIDENT THAT FOR APPLICABILIT Y OF SECTION 50C, THE ASSESSING OFFICER HAS TO FIND OUT (A) THE CONSIDE RATION RECEIVED OR ACCRUED AS A RESULT OF TRANSFER OF A CAPITAL ASSET, AND (B) THE VALUE ADOPTED ITA NO.4284 AND 4553/AHD/2007 -4- OR ASSESSED BY STAMP VALUATION AUTHORITY FOR THE PU RPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER. IF THE AM OUNT IN (B) ABOVE I.E. THE VALUE ADOPTED OR ASSESSED FOR STAMP DUTY VALUAT ION IS MORE THAN (A), THEN AS PER SECTION 50C, (B) WILL BE CONSIDERED A S FULL VALUE OF CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAIN. IN THE CASE UNDER APPEAL BEFORE US, THERE IS NO DISPUTE WITH RE GARD TO ITEM (A). THE DISPUTE IS WITH REGARD TO ITEM (B). THE ASSESSIN G OFFICER HAS CALLED FOR THE INFORMATION FROM THE STAMP VALUATION AUTHORITY WITH REGARD TO VARIOUS RATES WHICH ARE TO BE ADOPTED FOR THE PURPOSE OF PA YMENT OF STAMP DUTY IN RESPECT OF TRANSFER OF VARIOUS TYPES OF LAND IN VAR IOUS AREA. ON THE BASIS OF SUCH INFORMATION, HE WORKED OUT THE VALUE OF THE ASSET WHICH SHOULD BE ADOPTED OR ASSESSED FOR THE PURPOSE OF STAMP DUTY A ND THEN HE HAS TAKEN THE SAME VALUE FOR THE PURPOSE OF COMPUTING THE CAP ITAL GAIN. IN OUR OPINION, THIS EXERCISE MADE BY THE ASSESSING OFFICE R IS TO BE MADE BY THE STAMP VALUATION AUTHORITY AND NOT THE ASSESSING OFF ICER. THE ASSESSING OFFICER HAS TO CONSIDER THE VALUE ADOPTED OR ASSESS ED BY THE STAMP VALUATION AUTHORITY FOR THE PURPOSE OF PAYMENT OF S TAMP DUTY IN RESPECT OF SUCH TRANSFER. THE LEARNED COUNSEL FOR THE ASSESSE E HAS MADE A STATEMENT AT THE TIME OF HEARING THAT IN RESPECT OF TRANSFER OF ASSET DURING THE YEAR UNDER CONSIDERATION, THE VALUE DISCLOSED BY THE ASS ESSEE WAS ACCEPTED BY THE STAMP VALUATION AUTHORITY AND THE ASSESSEE WAS NOT REQUIRED TO PAY ANY EXTRA STAMP DUTY. ONCE A DOCUMENT IS REGISTERE D WITH THE STAMP DUTY AUTHORITY, THE VALUE ADOPTED/ASSESSED BY HIM FOR TH E PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF SUCH TRANSFER HAS TO BE CONSIDERED AS VALUE FOR THE PURPOSE OF (B). THE ASSESSING OFFICER CANNOT SUBSTITUTE THE VALUE WHICH THE STAMP DUTY AUTHORITY OUGHT TO HAVE ADOPTE D FOR THE PURPOSE OF STAMP DUTY. HOWEVER, WHETHER THE VALUE DISCLOSED B Y THE ASSESSEE WAS ACCEPTED BY THE STAMP VALUATION AUTHORITY, FOR THE PURPOSE OF STAMP DUTY ITA NO.4284 AND 4553/AHD/2007 -5- NEEDS VERIFICATION AT THE END OF THE ASSESSING OFFI CER. WE THEREFORE SET ASIDE THE ORDER OF THE AUTHORITIES BELOW WITH REGAR D TO THE COMPUTATION OF THE CAPITAL GAIN AND RESTORE THE MATTER BACK TO THE FILE OF ASSESSING OFFICER. WE DIRECT THE ASSESSING OFFICER TO VERIFY THE VALUE ACTUALLY ADOPTED OR ASSESSED BY THE STAMP VALUATION AUTHORIT Y FOR THE PURPOSE OF PAYMENT OF STAMP DUTY IN RESPECT OF TRANSFER OF THE LAND DURING THE YEAR UNDER CONSIDERATION. THE VALUE ADOPTED/ASSESSED B Y THE STAMP VALUATIN AUTHORITY SHALL BE CONSIDERED FOR THE PURPOSE OF CO MPUTING CAPITAL GAIN AS PER SECTION 50C OF THE IT ACT. ACCORDINGLY, THE GR OUND NOS.1, 2 AND 3 AS WELL AS ADDITIONAL GROUND OF THE ASSESSEES APPEAL ARE ALLOWED AS ABOVE. 6. GROUND NO.4 OF THE ASSESSEES APPEAL READS AS UN DER: 4. THE LD.CIT(A) ERRED IN HOLDING THAT THE BROKERA GE AND COMMISSION PAID TOWARDS THE LAND SOLD AT DUMAD AND KOTALI WERE NOT A PART OF THE CASE OF THE ASSESSEE AND FURTHER ERRED IN CONFIRMING THE DISALLOWANCE MADE BY THE ASSESSING O FFICER. 7. AT THE TIME OF HEARING BEFORE US, THE LEARNED CO UNSEL FOR THE ASSESSEE DID NOT PRESS GROUND NO.4. ACCORDINGLY, T HE SAME IS REJECTED. 8. GROUND NO.5 OF THE ASSESSEES APPEAL READS AS UN DER: 5. THE LD.CIT(A) ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN REJECTING THE CLAIM OF THE APP ELLANT FOR LONG TERM CAPITAL LOSS OF RS.4,39,651/- IN RESPECT OF SH ARES TRANSFERRED BY HIM TO ASHVIKA CONSTRUCTION PVT. LTD. 9. IT IS SUBMITTED BY THE LEARNED COUNSEL THAT DURI NG THE YEAR UNDER CONSIDERATION, THE ASSESSEE SOLD CERTAIN SHARES OF A PRIVATE LIMITED COMPANY I.E. ASHVIKA CONSTRUCTION PVT. LTD. (ACPL FOR SHORT). THE SHARES WERE UNQUOTED SHARES. THAT THE SAID COMPANY WAS SET UP BY LATE SHRI ASHOKBHAI M. PATEL (AMP FOR SHORT) FOR CARRY ING OUT BOLT PROJECT. ITA NO.4284 AND 4553/AHD/2007 -6- HOWEVER, ON HIS DEATH, THE ASSESSEE HAD NO INTENTIO N TO CARRY OUT THAT BUSINESS AND THEREFORE HE TRANSFERRED THE SHARES IN THE SAID COMPANY TO THE WIFE OF THE LATE AMP. THE SHARES WERE TRANS FERRED AT THE VALUE AS CERTIFIED BY AUDITORS OF ACPL. THAT THE ASSESSIN G OFFICER DISALLOWED THE LOSS HOLDING THAT THE ASSESSEE HAS SOLD THE SHA RES SO AS TO SET OFF THE LONG TERM CAPITAL LOSS AGAINST THE LONG TERM CAPITA L GAIN ARISING DURING THE YEAR UNDER CONSIDERATION ON THE SALE OF THE LAND. IT IS EXPLAINED BY THE LEARNED COUNSEL THAT THE ASSESSEE HAD PURCHASED THE SHARES IN THE SAID COMPANY WHEN THE LATE AMP WAS ALIVE AND HE AND A MP WERE INTENDING TO CARRY ON THE BUSINESS IN THE SAID COMP ANY. AFTER THE DEATH OF AMP SINCE THE ASSESSEE WAS NOT WILLING TO CARR Y ON THE BUSINESS, THEREFORE, HE DEEMED IT PROPER TO TRANSFER THE SHAR ES. THE SHARES WERE TRANSFERRED TO THE WIFE OF AMP AND NOT TO ANY OUT SIDER OR THIRD PARTY. IT WAS MERE INCIDENTAL THAT DURING THE YEAR UNDER CONS IDERATION, THERE WAS LONG TERM CAPITAL GAIN ON THE SALE OF THE LAND. HE ALSO STATED THAT EVEN IF THE ASSESSEE SOLD THE SHARES TO SET OFF THE CAPITAL LOSS AGAINST THE CAPITAL GAIN, THERE IS NO ILLEGALITY IN IT BECAUSE IF THE V ALUE OF SHARES HELD BY THE ASSESSEE IN ACPL HAS ERODED THEN THE ASSESSEE MAY DECIDE THE PROPER TIME TO SELL SUCH SHARES. THE ASSESSEE HAS SOLD TH E SHARES AS PER THE VALUE OF THE SHARES DETERMINED BY THE AUDITOR BASED UPON THE ASSETS OF THE ACPL. HE ALSO REFERRED TO VARIOUS DOCUMENTS IN THE ASSSSEES PAPER BOOK SO AS TO POINT OUT THAT THE SHARES WERE ACTUAL LY SOLD AS WELL AS TRANSFERRED DURING THE ACCOUNTING YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION. IN THIS REGARD, HE REFERRED T O SHARE TRANSFER DEED, SHARE CERTIFICATE, COPY OF SHARE-HOLDERS REGISTER IN THE COMPANYS BOOKS ETC. ITA NO.4284 AND 4553/AHD/2007 -7- 10. THE LEARNED DR, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW AND HE STATED THAT THE ONLY INTEN TION FOR THE SALE OF THE SHARES BY THE ASSESSEE WAS TO GET SET OFF OF CAPITA L LOSS AGAINST THE CAPITAL GAIN DERIVED BY THE ASSESSEE FROM THE TRANSFER OF T HE LAND. HE ALSO STATED THAT THE SHARES WERE OF THE PRIVATE LIMITED COMPANY IN WHICH THE ASSESSEE AND HIS FAMILY MEMBERS WERE SHAREHOLDERS AND THERE WAS NO NECESSITY FOR THE SALE OF THE SHARES DURING THE YEAR UNDER CONSID ERATION EXCEPT TO SET OFF THE LOSS AGAINST CAPITAL GAIN ON LAND. 11. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS AND PERUSED THE MATERIAL PLACED BEFORE US. WE FIND THAT THE ASSESSEE HAS GIVEN THE COPY OF THE TRANSFER DEED, SHARE CERTIFICATE AS WEL L AS SHAREHOLDERS REGISTERED. THESE DOCUMENTS CLEARLY SHOW THAT THE ASSESSEE HAS TRANSFERRED 60,000 SHARES OF ACPL TO SMT. POONAMB EN ASHOKBHAI PATEL ON 18-10-2003. IN THE COMPANY REGISTER THE T RANSFER IS RECORDED ON 7-11-2003. THUS, DURING THE ACCOUNTING YEAR RELEVA NT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE SHARES WERE DULY TRAN SFERRED AND ALSO RECORDED IN THE BOOKS OF THE COMPANY. THE SHARES W ERE SOLD AT THE RATE OF RS.5/- PER SHARE. THAT MUKUND K. PATEL & CO, CHART ERED ACCOUNTANT HAVE VALUED THE SHARES AT RS.4.73/- PER SHARE. THE COPY OF THE VALUATION IS GIVEN AT PAGE NO.51A OF THE ASSESSEES PAPER BOO K. WE FIND THAT HE VALUED THE SHARES BY ADOPTING THE MARKET VALUE OF T HE ASSET AS PER THE SCHEDULE-III TO WEALTH TAX ACT. NO INFIRMITY IN TH E WORKING OF THE AUDITOR IS POINTED OUT. THE ASSESSEE HAS SOLD THE SHARES AT A VALUE SLIGHTLY HIGHER THAN THE MARKET VALUE DETERMINED BY THE AUDI TOR. THE ASSESSEE HAS ALSO EXPLAINED THE CIRCUMSTANCES IN WHICH HE SOLD T HE SHARES. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTA NCES, WE DO NOT FIND ITA NO.4284 AND 4553/AHD/2007 -8- ANY JUSTIFICATION FOR DISALLOWING THE CAPITAL LOSS FROM THE SALE OF THE SHARES. WE THEREFORE ALLOW THE GROUND NO.5 OF THE ASSESSEES APPEAL. ITA NO.4553/AHD/2007: 12. IN THIS APPEAL BY THE REVENUE THE FOLLOWING GRO UNDS ARE RAISED: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE ID. CIT(A) ERRED IN HOLDING THE CAPITAL GAINS F ROM THE SALE OF LAND AT SURVEY NO. 264 AT TARSALI AS LONG TERM CAPI TAL GAINS WITHOUT APPRECIATING THAT THE LAND WAS 'FIELD' BY THE ASSES SEE ONLY FROM THE DATE OF EXECUTION OF PURCHASE DEED ON 15-05-2000 AN D NOT FROM THE DATE OF ENTERING INTO PURCHASE AGREEMENT ON 03-04-1 999, BECAUSE THE PURCHASE AGREEMENT DID NOT CONFER A TITLE WHICH COULD BE TRANSFERRED BY HIM TO SOME OTHER PERSON AND HE COUL D NOT TRANSFER WHAT HE DID RIOT POSSESS. 2. THE ID. CIT(A) ERRED IN DERIVING THE MEANING 'HE LD' IN SECTION 2(42A) FROM THE DEEMING CLAUSE OF SECTION 2 (47)(VI) WHEN THE DEEMING CLAUSE APPLIES ONLY WHERE THE WORD 'TRA NSFER' OCCURS IN THE ACT AND CAN NOT BE STRETCHED BEYOND THE LIMITED SPHERE OF THE MEANING OF TRANSFER OCCURRING IN THE ACT AS PER RUL E OF INTERPRETATION SETTLED IN THE CASE OF CIT VS CAMBAY ELECTRIC SUPPLY INDUSTRIAL COMPANY LTD 113 ITR 84, 93 (SC). 13. THE ONLY DISPUTE RAISED BY THE REVENUE IS WHETH ER THE CAPITAL GAIN ARISING FROM THE SALE OF LAND AT TARSALI IS TO BE T REATED AS LONG TERM CAPITAL GAIN OR SHORT TERM CAPITAL GAIN. THE ASSESSING OFF ICER, AFTER CONSIDERING THE DATE OF PURCHASE HAS COME TO THE CONCLUSION THA T THE SALE WAS MADE WITHIN THE THREE YEARS FROM THE DATE OF PURCHASE. HOWEVER, THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ACCEPTED THE A SSESSEES CONTENTION AND HELD AS UNDER: AS REGARDS (II) ABOVE, IT IS OBSERVED THAT IT IS N OT DENIED OR DISPUTED THAT THE APPELLANT HAD ENTERED INTO AN AGR EEMENT TO SALE DATED 3-4-1999 FOR THE EXECUTION OF THE LAND IN QUE STION. IT IS ALSO ITA NO.4284 AND 4553/AHD/2007 -9- NOT DISPUTED THAT CERTAIN ADVANCE PAYMENTS HAD BEEN MADE BY THE APPELLANT AS A CONSEQUENCE OF THIS WITH REGARD TO T HE ACQUISITION OF THE LAND. IT IS ALSO NOT DISPUTED THAT THE APPEL LANT WAS IN POSSESSION OF THE LAND IN QUESTION W.E.F. 3-4-1999. IN THESE CIRCUMSTANCES, A REFERENCE TO THE DEFINITION OF SHO RT TERM CAPITAL ASSET U/S.2(42A) OF THE IT ACT CLEARLY SUPPORTS THE APPELLANT'S VIEW THAT IT MEANS A CAPITAL ASSET HELD BY THE ASSESSE E AND NOT NECESSARILY OWNED BY WAY OF A REGISTERED SALE DEED. FROM THE FACTS OF THE APPELLANTS CASE, IT IS UNDISPUTED THA T THE APPELLANT HELD THE LAND IN QUESTION W.E.F. 3-4-99 AS DISCUS SED ABOVE. UNDER THE CIRCUMSTANCES, THE STAND TAKEN BY THE ASS ESSING OFFICER IS HELD TO BE ILL-FOUNDED. IT IS, THEREFORE, HELD THAT THE RELEVANT DATE FOR THE PURPOSE OF COMPUTATION OF THE CAPITAL GAIN WOULD BE 3-4-1999 AND NOT 15-5-2000. 14. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL PLACED BEFORE US. THE ONLY DISPUTE IN COMPUTING THE CAPIT AL GAIN IS WHETHER FOR THE PURPOSE OF ASCERTAINING PERIOD OF THREE YEARS T HE DATE OF AGREEMENT TO SELL DATED 3-4-1993 IS THE RELEVANT DATE OR THE DAT E OF ACTUAL TRANSFER OF THE LAND BY WAY OF REGISTERED SALE DEED DATED 15-5-2005 IS TO BE TAKEN. THE ASSESSEE HAD ENTERED INTO AN AGREEMENT TO PURCHASE THE LAND VIDE AGREEMENT DATED 3-4-1993. ON THE SAME DATE, THE AS SESSEE MADE ADVANCE PAYMENT AND POSSESSION OF THE LAND WAS ALSO HANDED OVER TO THE ASSESSEE. THE LAND WAS ULTIMATELY TRANSFERRED TO HIM BY REGIS TERED SALE DEED DATED 15-5-2000. THE SAID LAND WAS SOLD ON 4-4-2003/2-5- 2003. AS PER THE I.T. ACT, WHERE AN ASSET IS HELD FOR MORE THAN 36 M ONTHS, IT IS TO BE TREATED AS LONG TERM CAPITAL ASSETS AND CAPITAL GAIN ARISIN G FROM THE TRANSFER OF SUCH ASSET IS TO BE TREATED AS LONG TERM CAPITAL GA IN. NOW QUESTION IS WHETHER FOR THE PURPOSE OF COMPUTING THIS PERIOD OF 36 MONTHS, THE ASSET IS HELD BY THE ASSESSEE FROM 3-4-1999 I.E. THE DATE OF AGREEMENT OR FROM 15-5-2000 I.E. THE DATE OF TRANSFER BY REGISTERED S ALE DEED; THAT SUB-SECTION 47 OF SECTION (2) DEFINES THE WORD TRANSFER IN RE LATION TO A CAPITAL ASSET. THE CLAUSE-(V) OF THIS SUB-SECTION READS AS UNDER: ITA NO.4284 AND 4553/AHD/2007 -10- (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE P OSSESSION OF ANY IMMOVABLE PROPERTY TO BE TAKEN OR RETAINED IN PART PERFORMANCE OF A CONTRACT OF THE NATURE REFERRED TO IN SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 (4 OF 1882). THEREFORE, IF THE ASSESSEE HAS TAKEN THE POSSESSION OF THE IMMOVABLE PROPERTY IN PART PERFORMANCE OF THE CONTRACT AS PER SECTION 53A OF THE TRANSFER OF THE PROPERTY ACT, AS PER SECTION 2(47)( V), THE CAPITAL ASSET IS TRANSFERRED TO THE ASSESSEE. IN THIS CASE, AS PER THE AGREEMENT TO SELL DATED 3-4-1999, THE ASSESSEE WAS GIVEN THE POSSESSION OF THE PROPERTY AND THE ASSESSEE HAD ALSO MADE PART PAYMENT OF THE CONSIDER ATION AND HAS ALSO ISSUED THE POST DATED CHEQUES FOR THE REMAINING CON SIDERATION. THEREFORE, IN OUR OPINION, THE CIT(A) HAS RIGHTLY HELD THAT TH E ASSET WOULD BE DEEMED TO BE TRANSFERRED TO THE ASSESSEE ON 3-4-199 9. THE ASSESSEE SOLD THE LAND ON 4-4-2003/2-5-2003. THEREFORE, THE ASSE T WAS LONG TERM CAPITAL ASSET AND CAPITAL GAIN ARISING THEREFROM WO ULD BE LONG TERM CAPITAL GAIN. ACCORDINGLY, WE UPHOLD THE ORDER OF THE CIT( A) ON THIS POINT AND REJECT THE REVENUES APPEAL. 15. IN THE RESULT, ASSESSEES APPEAL IS DEEMED TO B E PARTLY ALLOWED FOR STATISTICAL PURPOSE WHILE THE REVENUES APPEAL IS D ISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 29 TH APRIL, 2011 SD/- SD/- (BHAVNESH SAINI) JUDICIAL MEMBER (G.D. AGARWAL) VICE-PRESIDENT PLACE : AHMEDABAD DATE : 29-04-2011 ITA NO.4284 AND 4553/AHD/2007 -11- C OPY OF THE ORDER FORWARDED TO: 1) : APPELLANT 2) : RESPONDENT 3) : CIT(A) 4) : CIT CONCERNED 5) : DR, ITAT. BY ORDER DR/AR, ITAT, AHMEDABAD