ITO, Jaipur V. SHANTI POONIA, Jaipur

ITA 51/JPR/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 5422 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-02-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 16-01-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJ MEHRA
• Assessee Lawyers: G M MEHTA CA DHK
• Keywords: Capital asset; Cost of acquisition
• Section: 54B; 2(14); 54; 144

Judgement Text

ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 1 VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH VKJ-IH-RKSYKUH] U;KF;D LNL; ,OA JH FOE FLAG ;KN O] YS[KK LNL; DS LE{K BEFORE:SHRI R.P.TOLANI, JM & SHRI VIKRAM SINGH YADA V, AM VK;DJ VIHY LA-@ ITA NO. 51/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 THE ITO WARD- 3(5), JAIPUR CUKE VS. SMT. SHANTI POONIA A-15, HANUMAN NAGAR, KHATIPURA, JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADJPP 6157 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT C.O. NO. 3/JP/2015 (ARISING OUT OF VK;DJ VIHY LA-@ ITA NO. 51/JP/2015) FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2011-12 SMT. SHANTI POONIA A-15, HANUMAN NAGAR, KHATIPURA, JAIPUR CUKE VS. THE ITO WARD- 3(5), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: ADJPP 6157 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJ MEHRA, JCIT -DR FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI G.M. MEHTA, CA LQUOKBZ DH RKJH[K@ DATE OF HEARING : 14/02/2016 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 29 /02/2016 VKNS'K@ ORDER PER R.P. TOLANI, JM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 19-11-2014 FOR THE ASSESSMENT YEAR 201 1-12. THE ASSESSEE HAS FIELD THE CROSS OBJECTION. ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 2 2.1 THE GROUND RAISED BY THE REVENUE IN ITS APPEAL IS AS UNDER:- WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) HAS ERRED IN DELETING THE ADD ITION OF RS. 2,44,55,016/- ON ACCOUNT OF CAPITAL GAIN IGNORING THE FACT THAT THE CAPITAL GAIN WAS RIGHTLY ASSESSED IN THE ASSESSMENT YEAR 2011-12 AS THE PROPERTY IN QUESTION WAS TRANSFERRED DURING THE F.Y. 2010-11. 3.1 THE ASSESSEE HAS A C.O. SUPPORTING THE ORDER OF LD. CIT(A) AND RAISING ALTERNATE GROUND FOR ALLOWING EXEMPTIONS QUA INVEST MENTS U/S 54EC: 1. THAT THE LD. CIT(A) WAS LEGALLY CORRECT IN PAS SING THE ORDER APPEALED AGAINST AFTER CONSIDERING THE FACTS OF THE CASE INC ORPORATED IN THE REGISTERED SALE DEED AND AFTER APPLYING THE LAW LAID DOWN BY H ON'BLE PATNA HIGH COURT (201 ITR 1032); 2. ALTERNATIVELY LD. CIT(A) SHOULD CONSIDERED AND A LLOWED FOLLOWING LEGAL GROUNDS OF APPEAL : (A) DEDUCTIONS OF RS. 50,00,000/- U/S 54EC OF I.T. ACT FOR INVESTMENT IN NHA BONDS AND RS. 85,59,386/- U/S 54B OF I.T. ACT F OR PURCHASE OF NEW AGRICULTURAL LAND (B) INDEXATION BENEFIT OF SOLD AGRICULTURAL LAND SH OULD HAVE BEEN ALLOWED AS PER ACTUAL PURCHASE COST OF ASSESSEE AND NOT ON THE BASIS OF PRESUMED CALCULATED VALUE OF SOLD AGRICULTURAL LAND (AS PER ASSESSMENT ORDER OF LD. AO) 4.1 BRIEF FACTS ARE - ASSESSEE ALONG WITH OTHER JOI NT OWNER MRS. KAILASHI DEVI W/O SHRI JITENDRA KUMAR OWNED AGRICULTURAL LAND AT VILLAGE CHATARPURA (TEHSIL GONER) DISTRICT JAIPUR. THE IMPUGNED LAND WAS JOINT LY SOLD FOR RS.6,00,00,000/- (SIX CRORE) THROUGH A CONDITIONAL SALE DEED DATED 1 7 TH JANUARY 2011 (REGISTERED ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 3 WITH SUB-REGISTRAR ON 19.01. 2011 TO ONE M/S. APEX LAND MARK PVT. LTD., THROUGH ITS DIRECTOR SHRI GOPAL LAL JAT. ASSESSEE S RECEIVED SHARE OF SALE PROCEEDS OF RS.2,93,55,828/- THROUGH POST DATED CHE QUES OF NEXT FINANCIAL YEAR AS THE VENDEE HAD NO READY CASH. TO ELIMINATE THE APP REHENSION OF POST DATED CHEQUE(S), NOT GETTING DISHONORED AFTER REGISTRATIO N, THE COVENANT OF SALE DEED CLEARLY STIPULATED THAT THE SALE WAS CONDITIONAL AN D TRANSFER OWNERSHIP RIGHTS WILL BE COMPLETE ONLY WHEN ALL THE POSTDATED CHEQUES TOW ARDS SALE CONSIDERATION ARE HONORED BY VENDEE AND REALIZED BY VENDOR PARTIES. T HE STIPULATION CLEARLY MENTIONED THAT IN CASE ANY OF THE CHEQUE(S) GET DIS HONOURED, THE SALE WILL STAND AB-INITIO VOID AND CONSEQUENTLY CANCELLED WITHOUT A NY ACTION OR NOTICE ON PART OF THE VENDORS. TILL THE PAYMENTS WERE REALIZED AND T HE SALE WAS LEGALLY COMPLETED THE REGISTERED SALE DEED DOCUMENTS WERE TO BE RETAI NED BY VENDORS. AS THE EVENTS UNFOLDED, OUT OF ALL THE FIVE POST-DATED CHEQUES IS SUED BY VENDEE, TWO CHEQUES OF RS.75,00,000/- ISSUED TO EACH JOINT OWNER (TOTAL RS .1,50,00,000/-) STOOD BOUNCED AS THEY COULD NOT BE REALIZED ON GIVEN DATES. THERE FORE AS PER THE TERMS AND CONDITION EMBODIED IN REGISTERED SALE DEED THE SALE WAS CLAIMED TO BE VOID AB- INITIO. THUS IN A.Y. 2011-12 THERE WAS NO LEGAL SAL E OR TRANSFER OF PROPERTY TO BE CHARGED FOR LONG TERM CAPITAL GAINS. IN THESE FACTS AND CIRCUMSTANCES ASSESSEE EXERCISED THE LEGAL RIGHT OF RESCINDING THE SALE DE ED AND ISSUED APPROPRIATE LEGAL ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 4 NOTICE TO VENDEE AND LEGAL NOTICE WAS ALSO SENT TO COMMISSIONER, JAIPUR DEVELOPMENT AUTHORITY (JDA) TO AVOID THE BUYER FROM INDULGING IN ANY MISCHIEF OF APPROACHING JDA FOR DUBIOUS CONVERSION OF IMPUGN ED LAND INTO URBAN LAND BY OBTAINING A CERTIFIED COPY OF PURCHASE DEED DATED 1 7.01.2011 FROM OFFICE OF SUB- REGISTRAR. THE VENDEE THEREAFTER WAS CONSTRAINED TO MAKE FULL PAYMENT IN THE YEAR RELEVANT TO A.Y. 2012-13. A FRESH DEED TERMED AS CO MPENSATION CUM UNDERTAKING AGREEMENT DATED 11.07.2011 WAS ENTERED IN TO WITH T HE BUYER EFFECTING A PROPER SALE AND TRANSFER OF OWNERSHIP RIGHTS. SINCE THE I MPUGNED SALE WAS FACTUALLY AND LEGALLY EFFECTED IN A.Y. 2012-13, THE APPELLANT RIG HTFULLY OFFERED FOR TAXATION THE LONG TERM CAPITAL GAINS IN HER RETURN OF INCOME IN A.Y. 2012-13. LD. AO WAS OF THE VIEW THAT THE SALE WAS COMPLETED IN AY 2011-12 ITSELF, THEREFORE, PROPONED THE YEAR OF TAXABILITY FROM AY 2012-13 TO AY 2011-1 2. 4.2 AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BEFO RE LD. CIT(A) WHO REVERSED THE ACTION OF THE AO AND HELD THAT THE LTCG WERE TA XABLE IN AY 2012-13, BY FOLLOWING OBSERVATIONS: IN VIEW OF FACTS AND CIRCUMSTANCES OF THE CASE AS MENTIONED ABOVE, AO IS NOT CORRECT TO TAKE HYPOTHETICAL INCOM E ON CAPITAL GAIN FOR A.Y. 2011-12 WHEN APPELLANT, ON THE BASIS OF SA LE CONSIDERATION RECEIVED IN F.Y. 2011-12 HAS OFFERED IT FOR TAXATIO N IN HER RETURN OF INCOME FOR A.Y. 2012-13 BECAUSE THE SAID CONDITIONA L SALE WAS AB INITIO AVOID. CAPITAL ASSET AS DEFINED U/S 2(14) O F INCOME TAX ACT, 1961 HAS TO BE INTERPRETED W.R.T. SECTION 54 OF THE TRANSFER OF PROPERTY ACT, 1882. PROPERTIES DO NOT NECESSARILY P ASS AS SOON AS THE ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 5 INSTRUMENT IS REGISTERED, FOR, THE TRUST TEST IS TH E INTENTION OF THE PARTIES. REGISTRATION IS PRIMA FACIE PROOF OF AN IN TENTION TO TRANSFER, BUT IT IS NOT PROOF OF AN OPERATIVE TRANSFER, IF TH ERE IS A CONDITION PRECEDENT AS TO THE PAYMENT OF CONSIDERATION OF DEL IVERY OF THE DEED. THUS THE SELLER MAY RETAIN THE DEED PENDING PAYMENT OF PRICE AND IN THAT CASE THERE IS NO TRANSFER UNTIL THE PRICE IS P AID AND THE DEED IS DELIVERED. THE TRANSFER U/S 2(47) MUST MEAN AN EFFE CTIVE CONVEYANCE OF THE CAPITAL ASSET TO THE TRANSFEREE. HERE IN THI S CASE, AO FOR BEST REASONS KNOWN TO HIM, HAS COMPLETELY IGNORED THE FA CTS OF CONDITIONAL SALE AS MENTIONED IN PARA 8 PG 9 OF THE SAID SALE DEED, POSTED DATED CHEQUES (DT. APRIL 2011 & MAY 2011) AN D TAKEN HYPOTHETICAL STAND FOR TAXING CAPITAL GAIN IN A.Y. 2011-2012 INSTEAD OF TAXING IT IN A.Y. 2012-13. THIS SHOWS LACK OF BA SIC KNOWLEDGE OF TAXATION ON THE PART OF AO. AOS ACTION OF CHERRY PICKING FOR SUITABLE WORD S IN THE SALE DEED AND COMPLETELY IGNORING THE FACTS OF CONDITION AL SALE ARE QUITE SURPRISING AND ALSO WITHOUT ANY JUSTIFICATION. THER EFORE, AO, IS DIRECTED TO DELETE ADDITION ON ACCOUNT OF CAPITAL GAIN OF RS. 2,44,55,016/- 4.3 BEING AGGRIEVED AGAINST THE ORDER OF THE LD. CI T(A), THE REVENUE IS BEFORE US ON LIMITED ISSUE OF YEAR OF TAXABILITY OF LTCG A ND ASSESSEE IN SUPPORT OF THE ORDER OF LD. CIT(A) ON THIS ISSUE AND RAISING ALTER NATE GROUNDS WHICH REMAIN UNADJUDICATED BECAUSE OF THE MAIN RELIEF ACCORDED B Y LD. CIT(A). 4.4 LD. DR RELIED ON THE ORDER OF LD. AO. 4.5 LD. COUNSEL FOR THE ASSESSEE SHRI G M MEHTA VEH EMENTLY CONTENDS THAT THE RIGHTS OF OWNERSHIP ON ANY IMMOVABLE PROPE RTY ARE TRANSFERRED AS PER THE DOCUMENTS EXECUTED IN THIS BEHALF. THE PERC EPTIONS OF LD. AO BY ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 6 DISTORTING THE FACTS AND PROVISIONS OF LAW CANNOT B E CHANGE THE DATE OF TRANSFER OF PROPERTY. WHILE ASCERTAINING THE DATE A LL THE FACTS, EVIDENCE, COVENANT OF REGISTERED DOCUMENTS ARE TO BE HARMONIO USLY CONSIDERED. AUTHORITIES BELOW BY ADOPTING A NARROW AND PEDANTIC VIEW HAVE UNJUSTIFIABLY CHANGED THE YEAR OF TAXATION OF LTCG. REITERATING THE FACTS IT IS CONTENDED THAT TOTAL SALE CONSIDERATION OF RS.2,93, 55,828/- FOR SALE OF IMPUGNED AGRICULTURAL LAND WAS INITIALLY PAID BY TH E BUYER THROUGH POST DATED CHEQUES OF APRIL 2011 AND MAY 2011 (A.Y. 2012 -13), AS UNDER: AMOUNT CHEQUE NO. DATED DRAWN ON (BANK) 50,00,000 002286 08.04.2011 JAIPUR THAR GRAMIN BANK 43,55,828 002288 14.04.2011 JAIPUR THAR GRAMIN BANK 50,00,000 002290 22.04.2011 JAIPUR THAR GRAMIN BANK 75,00,000 002292 28.04.2011 JAIPUR THAR GRAMIN BANK 75,00,000 002294 04.05.2011 JAIPUR THAR GRAMIN BANK 2,93,55,828 TOTAL SALE CONSIDERATION RECEIVABLE BY THE APPELLANT. AS CLEARLY STIPULATED BY CLAUSE (9) AT PAGE NO. (4) OF THE REGISTERED DEED, SALE AND TRANSFER OF IMPUGNED AGRICULTURAL LAND WAS CONT EMPLATED TO BE COMPLETE ONLY WHEN THE ENTIRE SALE CONSIDERATION OF RS. 2,93 ,55,828/- PAID THROUGH POSTDATED CHEQUES WAS REALIZED. THE SAME CLAUSE PRO VIDED THAT IF POSTDATED ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 7 CHEQUE IS DISHONORED ON GIVEN DATE, THE PAYMENT WAS TO BE MADE WITHIN 15 DAYS WITHOUT ANY FURTHER NOTICE TO BUYER FROM THE SELLER(S). ON RECEIPT OF PAYMENT AGAINST DISHONOURED CHEQUE, THE BUYER WILL OBTAIN A RECEIPT FROM THE SELLERS. IN CASE OF NON-PAYMENT WITHIN SAID PER IOD OF 15 DAYS, THE SALE AND TRANSFER OF PROPERTY WILL STAND VOID AB-INITIO WITHOUT ANY LEGAL ACTION ON PART OF THE SELLER. LD. AO CONVENIENTLY AVOIDED THI S IMPORTANT AND CRUCIAL CLAUSE OF CONDITIONAL SALE, AND REPRODUCED THE WORD ING OF THE CLAUSE IN PARTISAN MANNER THAT THE TOTAL PAYMENT OF SALE CON SIDERATION HAS BEEN RECEIVED AND ACCEPTED BY THE SELLERS . THIS IND ICATES THAT THE ACTION OF LD. AO WAS GUIDED BY SOLE AIM TO WILLY-NILLY PRO PONE THE YEAR OF SALE AND TRANSFER OF LAND TO A.Y. 2011-12. WHEN THE SALE IS ACCEPTED BY BOTH THE PARTIES AS VOID AB INITIO BY WAY OF LEGAL NOTICES, THERE IS NO JUSTIFICATION TO CHARGE LONG TERM CAPITAL GAINS ON SUCH CONDITIONAL SALE WHICH IS ADMITTEDLY VOID AB-INITIO. THE CONDITIONAL SALE WAS MANDATORIL Y DEPENDENT ON AGREE PRECONDITION THAT ALL THE POSTDATED CHEQUES ARE REA LIZED. OUT OF SALE CONSIDERATION OF RS. 2,93,55,828, CHEQUE NO. 000229 2 DATED 28.04.2011 FOR RS.75,00,000/- WAS DISHONOURED AND THE NEXT CHEQUE NO. 0002294 DATED 04.05.2011 FOR RS.75,00,000/- TOO WAS ALSO DISHONOU RED WHEN PRESENTED TO BANK. IN OTHER WORDS, OUT OF TOTAL SALE CONSIDERATI ON OF RS.2,93,55,828/- ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 8 THROUGH POST DATED CHEQUES, THE MAJOR PART OF SALE CONSIDERATION OF 1,50,00,000/- WAS NOT PAID BY THE BUYER THOUGH IT W AS THE CONDITION IN THE SALE DEED THAT IF ANY CHEQUE IS DISHONOURED, THE SE LLER SHALL MAKE PAYMENT AT HIS OWN WITHOUT ANY NOTICE FROM THE BUYER WITHIN 15 DAYS OTHERWISE THE SALE WILL BE VOID AB-INITIO. WHEN THE PAYMENT WAS NOT FO RTHCOMING FROM THE SELLER, THE APPELLANT SELLER, IN ORDER TO COMPLY WI TH LEGAL FORMALITIES, HAD TO SERVE A LEGAL NOTICE THROUGH AN ADVOCATE BY REGISTE RED POST ON THE BUYER ON 12.05.2011. AS A PRECAUTIONARY MEASURE, LEGAL NOTIC E THROUGH AN ADVOCATE WAS ALSO SENT TO COMMISSIONER, JAIPUR DEVELOPMENT A UTHORITY (JDA) AS THE BUYER COULD HAVE APPROACHED JDA TO CONVERT SAID LA ND INTO URBAN BY OBTAINING A CERTIFIED COPY OF PURCHASE DEED DATED 1 7.01.2011 FROM OFFICE OF SUB-REGISTRAR (ANNEXURE C). AFTER ADOPTING ALL THES E MEASURES THE BUYER REALIZED THERE FALLACY AND WEAKNESS OF THERE STAND, CONSEQUENTLY THEY YIELDED TO THE TERMS OF SALE DEED. AS A NATURAL COURSE ON R ECEIVING FULL PAYMENT OF SALE CONSIDERATION IN THE PERIOD RELEVANT TO A.Y. 2 012-13, A FRESH DEED TERMED AS COMPENSATION CUM UNDERTAKING AGREEMENT DA TED 11.07.2011 WAS ENTERED IN TO WITH THE BUYER BY WHICH THE SALE WAS COMPLETED AND RIGHTS OF OWNERSHIP IN THE PROPERTY TRANSFERRED. THEREFORE, T HE APPELLANT RIGHTLY OFFERED THE CAPITAL GAIN IN HER RETURN OF INCOME FO R THE A.Y. 2012-13 IN ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 9 ACCORDANCE WITH LAW. IT IS CONTENDED THAT SALE AND TRANSFER IN IMPUGNED LAND BEING COMPLETED IN FY 2011-12 RELEVANT TO AY 2012-1 3, LD. AO WAS NOT JUSTIFIED IN UNJUSTIFIABLY PRE-PONING THE YEAR OF T AXABILITY OF LTCG IN AY 2011-12 BY DISTORTING THE FACTS, MISINTERPRETING TH E LEGAL PROVISIONS AND ON HYPOTHETICAL CONSIDERATIONS. LD. CIT(A) RIGHTLY APP RECIATED THE RELEVANT FACTS, CIRCUMSTANCES, EVIDENCE ON RECORD AND INTERP RETATION OF LAW, THERE IS NO INFIRMITY IN THIS ORDER. RELIANCE IS PLACED ON T HE LAW LAID DOWN BY FOLLOWING JUDICIAL PRECEDENTS: (I) SMT. RAJ RANI DEVI RAMNA VS. CIT (1993) 201 ITR 1032 (PAT ) : IN THE ABSENCE OF ANY PROVISION TO THE CONTRARY, THE CONCEPT OF SALE OF IMMOVABLE PROPERTY WHICH IS INCLUDED IN THE EXPRESSION CAPITAL ASSET AS DEFINED UNDER SECTION 2 (14) OF INCOME TAX ACT 1961 HAS TO BE GATHERED FROM SECTION 54 OF THE TRANSFER OF PROPERTY ACT 1882. PROPERTIES DO NOT NECESSARILY PA SS AS SOON AS THE INSTRUMENT IS REGISTERED, FOR, THE TRUE TEST IS THE INTENTION OF THE PARTIES. REGISTRATION IS PRIMA -FACIE PROOF OF AN INTENTION TO TRANSFER, BUT IT IS NOT PR OOF OF AN OPERATIVE TRANSFER, IF THERE IS A CONDITION PRECEDE NT AS TO THE PAYMENT OF CONSIDERATION OF DELIVERY OF THE DEE D. THUS THE SELLER MAY RETAIN THE DEED PENDING PAYMENT OF PRICE AND IN THAT CASE THERE IS NO TRANSFER UNTIL T HE PRICE IS PAID AND THE DEED IS DELIVERED. THE TRANSFER UNDER SECTION 2 (47) MUST MEAN AN EFFECTIVE CONVEYANCE OF THE CAP ITAL ASSET TO THE TRANSFEREE. HELD, THAT, IN THE INSTANT CASE, IT WA S APPARENT THAT THE PARTIES HAD CLEARLY INTENDED THAT, DESPITE THE EXECUTION AND REGISTRATION OF SALE DEEDS, TRANSFER BY WAY OF SALE WOULD BECOME EFFECTIVE ONLY ON PAYMENT OF T HE ENTIRE SALE CONSIDERATION AND IN THIS BACKGROUND OF FACTS, ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 10 IT HAD TO BE HELD THAT THERE WAS NO TRANSFER OF LAN D COVERED BY THE THREE SALE DEEDS IN QUESTION DURING THE PERIOD UNDER CONSIDERATION MAKING THE ASSESSEE LIAB LE FOR CAPITAL GAIN TAX UNDER SECTION 45. (COPY OF JUDGMEN T ENCLOSED MARKED ANNEXURE F) (II) CIT VS. EXCEL INDUSTRIES LTD. (2013) 358 ITR 295 (SC) : IT IS WELL SETTLED THAT INCOME TAX CANNOT BE LEVIED ON HYPOTHETICAL INCOME. INCOME ACCRUES WHEN IT BECOMES DUE BUT IT MUST ALSO BE ACCOMPANIED BY CORRESPONDING LIABILITY OF THE OTHER PARTY TO PAY T HE AMOUNT. ONLY THEN CAN IT BE SAID THAT FOR THE PURPO SE OF TAXABILITY THAT THE INCOME IS NOT HYPOTHETICAL A ND IT HAS REALLY ACCRUED TO THE ASSESSEE. IT IS CONTENDED THAT WHILE DELIVERING THIS JUDGMENT HONBLE APEX COURT FURTHER OBSERVED THAT IF YEAR OF TAXABILITY IS BASI CALLY TAX NEUTRAL THE YEAR OF TAX LIABILITY SHOULD NOT BE ORDINARILY DISTURBED, A GITATED OR APPEALED BY DEPARTMENT. IN ASSESSEES CASE TAX ON LTCG IN BOTH YEARS IS 20%, THEREFORE BOTH THE PROPOSITIONS ARE APPLICABLE ON ALL THE FOU RS TO ASSESEES CASE. FURTHER HONBLE APEX COURT WHILE DELIVERING THIS JUDGMENT H AS APPLIED ITS OWN JUDGMENTS IN THE CASES OF CIT VS. SHOORJI VALLABHDA S & CO (46 ITR 144 (SC)}, MORVI INDUSTRIES LTD. VS. CIT (CENTRAL) (197 1) 82 ITR 835 (SC) AND GODHRA ELECTRICITY CO. LTD. VS. CIT (1997) 225 ITR 746 (SC). ORDER OF LD. CIT(A) IS RELIED ON THAT THE LTCG ARE TAXABLE IN AY 2012-13 AS RETURNED BY THE ASSESSEE. ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 11 4.6 APROPOS CO LD. COUNSEL CONTENDS THAT IF ASSESSE ES TAXABILITY FOR LTCG IS ALLOWED IN AY 2012-13 THEN THE GROUNDS RAIS ED IN CO WILL BECOME INFRUCTUOUS. 4.7 ON MERITS OF THE ALTERNATE GROUNDS RAISED IN CO , IT IS SUBMITTED THAT THE APPELLANT HAD MADE TO FOLLOWING INVESTMENT IN B ONDS OF NATIONAL HIGHWAY AUTHORITY OF INDIA UNDER SECTION 54EC AND I N PURCHASE OF NEW AGRICULTURAL LAND WITHIN TIME ALLOWED UNDER LAW AS PER ENCLOSED PROOFS: S.NO. PURCHASED ON NATURE DEDUCTION AMOUNT ANNEXURE 1. 1507.2011 NHI BONDS 54 EC 50,00,000 H-1 DEDUCTION ALLOWABLE U/S. 54EC OF IT ACT (SALE COMPLETED ON 11.07.2011) 50,00,000 2. 16.06.2011 AGRICULTURAL LAND 54B 2,86,988 H-2 3. 14.07.2011 AGRICULTURAL LAND 54B 3,20,000 H-3 4. 17.08.2011 AGRICULTURAL LAND 54B 79,52,398 H-4 DEDUCTION ALLOWABLE U/S. 54B OF IT ACT (SALE COMPLETED ON 11.07.2011) 85,59,386 FOR SALE OF AGRICULTURAL LAND WHICH WAS COMPLETED ON 11 TH JULY 2011 AS STATED ABOVE THROUGH UNDERTAKING CUM COMPENSATION D EED (THOUGH REGISTERED WITH SUB-REGISTRAR ON 17 TH JANUARY 2011), THE ASSESSEE IS LEGALLY ENTITLED FO R DEDUCTION OF RS.50,00,000/- UNDER SECTION 54EC FOR INVESTMENT IN BONDS OF ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 12 NATIONAL HIGHWAY AUTHORITY OF INDIA (CHEQUE REALIZE D ON 15.07.2011 AND RS.85,59,386/- UNDER SECTION 54B OF IT ACT (PURCHA SE OF NEW AGRICULTURAL LAND WITHIN 2 YEARS). THESE FACTS WERE ALREADY WITH IN KNOWLEDGE OF THE LD. AO THROUGH COPY OF COMPUTATION OF TOTAL INCOME FOR THE A.Y. 2012-13, SUBMITTED DURING THE COURSE OF HEARING BUT LD. AO D ID NOT ALLOW THE DEDUCTIONS. THE CONSIDERATION AND INTEREST ON LOAN FOR PURCHASE OF SOLD AGRICULTURAL LAND WAS PAID BY THE APPELLANT AS PER FOLLOWING DETAILS FOR WHICH INVESTMENTS ARE APPEARING IN HER REGULAR BOOKS OF A CCOUNTS:- DATE AMOUNT INDEXATION INFLATED COST ANNEXUR E 07.09.2005 20,00,000 20,00,000X 711./ 497 28,61,167 J-1 05.08.2006 1,35,200 1,35,200X711./519 1,85,262 J-2 05.08.2006 44,92,987 44,92,987X711./519 61,55,132 J-3 02.07.2007 2,31,000 2,31,000X711./551 2,98,078 J-4 31.03.2009 1,00,124 1,00,124X711./711 1,00,124 J-5 31.03.2010 2,77,162 2,77,162X711./711 2,77,162 J-6 08.05.2010 2,50,000 2,50,000X711./711 2,50,000 J-7 74,86,473 1,01,26,925* (SUMMARY OF ABOVE DETAILED PAYMENTS, APPEARING IN APPELLANTS BOOKS IS ALSO ATTACHED. * COST INFLATIO N WILL BE HIGHER IF SALE TREATED AS MADE IN F.Y. 2011-12) AS AGAINST INFLATED PRICE OF RS.1,01,26,926/-, LD. AO AT PAGE NO. (8) OF THE ORDER APPEALED AGAINST, HAS CALCULATED RS.49,00,812 /- AS COST INFLATION PRICE OF THE SOLD AGRICULTURAL LAND BY TAKING THE PURCHAS E PRICE AND YEAR OF PAYMENT/PURCHASE AT HIS OWN PRESUMPTION, ESTIMATION AND CALCULATIONS. THE ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 13 ADOPTION OF THE LOWER INDEXED COST OF ACQUISITION O F SOLD AGRICULTURAL LAND BY TWISTING THE TRUE FACTS IS UNJUSTIFIED AND ARBITRAR Y. 4.8 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE FACTS AND DATES MENTIONED ABOVE ARE NOT DISPUTED. THE JUSTIFICATION OFFERED BY AUTHORITIES BELOW IS T O THE EFFECT THAT BY INITIAL REGISTERED DEED WHICH FALLS IN AY 2011-12, THE ASSE SSEE PARTED WITH HER POSSESSION ON RECEIPT OF POSTDATED CHEQUES. THE DOC UMENT OF SALE DEED WAS REGISTERED. SINCE THE POSSESSION WAS PARTED AND DO CUMENT REGISTERED IT AMOUNTS TO A COMPLETE SALE OR ALTERNATIVELY A PART PERFORMANCE OF SALE OF PROPERTY TOGETHER WITH POSSESSION WHICH IS A TRANSF ER IN TERMS OF SEC. 2(47). THEREFORE THE LTCG ON SALE OF IMPUGNED LAND IS TAXA BLE IN AY 2011-12. PER CONTRA ASSESSEE HAS DEMONSTRATED THAT: I. THERE WAS NO INTENTION TO PART WITH OWNERSHIP OF TH E PROPERTY. SUCH RIGHTS TOGETHER WITH POSSESSION WERE PROVISION ALLY TRANSFERRED WITH A CLEAR STIPULATION IN DEED ITSELF THAT SALE TRANSACTION AND OWNERSHIP IN PROPERTY WILL BE COMPL ETE ONLY ON REALIZATION OF POSTDATED CHEQUES. COVENANT FURTHER PROVIDED THAT IN CASE OF NO REALIZATION THE SALE DEED WILL STAND NULL AND VOID. THUS A PURELY CONDITIONAL SALE CANNOT BE HYPOTHETIC ALLY ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 14 ASSUMED TO BE COMPLETE WHEN IT IS NEITHER INTENDED BY PARTIES NOT BORNE OUT FROM ANY EVIDENCE. II. THIS IS CORROBORATED BY THE FACT THAT PENDING REALI ZATION OF CHEQUES THE ORIGINAL REGISTERED DOCUMENTS WERE RETA INED BY THE ASSESSEE AS LIEN OVER THE PROPERTIES OWNERSHIP AND POSSESSION. III. LEGAL ISSUES ENSUED CONSEQUENT TO BOUNCING OF CHEQU ES, VENDEE RELENTED AND MADE GOOD THE PAYMENT IN SUBSEQUENT AS SESSMENT YEAR. THIS IS EVIDENCED BY THE FRESH DEED TERMED AS COMPENSATION CUM UNDERTAKING AGREEMENT DATED 11.07. 2011. THIS FRESH DEED NARRATES ALL THE FACTS AND EVENTS A S ACCEPTED BY BOTH THE PARTIES. LD. AO CANNOT PREFER ONE DOCUMENT FAVORABLE TO REVENUE AT THE COST OF OTHER DOCUMENT WHICH IS S UBSEQUENTLY EXECUTED BY BOTH PARTIES AND REGISTERED. ITS GENUIN ENESS HAS NOT BEEN QUESTIONED. 4.9 IN VIEW OF THESE FACTS, CIRCUMSTANCES AND CONSI DERATION OF EVIDENCE WE FIND NO INFIRMITY IN THE ORDER OF LD. CIT(A). TH ERE IS MERIT IN THE PROPOSITIONS AND CONTENTIONS RAISED BY THE ASSESSEE . TRANSFER OF THE OWNERSHIP OF PROPERTY BASED ON A ON A CONTRACT REGI STERED OR OTHERWISE IS TO BE ASCERTAINED FROM THE INTENTION, DOCUMENTS AND VO LITION OF THE PARTIES TO ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 15 THE TRANSACTION. A DIFFERENT STAND CANNOT BE ADOPTE D BY REVENUE AUTHORITIES ON ONE HAND NOT TO QUESTION ABOUT THE GENUINENESS O F THE DOCUMENTS AND THEN HYPOTHECATE OVER THE COVENANTS. IN OUR VIEW TH E UNCONDITIONAL TRANSFER OF OWNERSHIP AND POSSESSION TOOK PLACE IN FY 2011-1 2 RELEVANT TO AY 2012- 13 THE YEAR IN WHICH ASSESSEE HAS DISCLOSED THE SAM E IN HER RETURN OF INCOME. BESIDES HONBLE PATNA HIGH COURT IN THE CASE OF SMT . RAJ RANI DEVI RAMNA (SUPRA) HAS CLEARLY HELD THAT REGISTRATION IS PRIMA-FACIE PROOF OF AN INTENTION TO TRANSFER, BUT IT IS NOT PROOF OF AN OPERATIVE TRANSFER, IF TH ERE IS A CONDITION PRECEDENT AS TO THE PAYMENT OF CONSIDERATION OF DEL IVERY OF THE DEED. THUS THE SELLER MAY RETAIN THE DEED PENDING PAYMENT OF PRICE AND IN THAT CASE THERE IS NO TRANSFER UNTIL THE PRICE IS P AID AND THE DEED IS DELIVERED. THE TRANSFER UNDER SECTION 2 (47) MUST M EAN AN EFFECTIVE CONVEYANCE OF THE CAPITAL ASSET TO THE TRANSFEREE. IN OUR CONSIDERED VIEW THE RATIO OF THIS JUDGMENT I S FAVORABLY APPLICABLE TO ASSESSEES CASE WHICH WE RESPECTFULLY FOLLOW. IN TH E ENTIRETY OF FACTS AND CIRCUMSTANCES, WE UPHOLD THE ORDER OF LD. CIT(A) H OLDING THAT TRANSFER OF OWNERSHIP AND POSSESSION OF THE IMPUGNED LAND TOOK PLACE IN FY 2011-12 RELEVANT TO AY 2012-13 THE YEAR IN WHICH ASSESSEE H AS OFFERED THE LTCG HER RETURN OF INCOME AND ARE LIABLE TO BE TAXED IN AY 2 012-13. SINCE WE HAVE HELD THE LTCG TO BE TAXABLE IN AY 2012-13 THE GROUN DS RAISED IN CO FILED BY ASSESSEE BECOME INFRUCTOUS. ITA NO. 51/JP/2015 ITO, WARD- 3 (5), JAIPUR VS. SMT. SHANTI POONIA, JAIPUR 16 5.0 IN THE RESULT APPEAL FILED BY THE REVENUE AND C O FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 29 /02/2016. SD/- SD/- FOE FLAG ;KNO VKJ-IH-RKSYKUH (VIKRAM SINGH YADAV) (R.P.TOLANI) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 29/02/ 2016 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE ITO, WARD- 3 (5), JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- SMT. SHANTI POONIA, JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A) 4. VK;DJ VK;QDR@ CIT 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.51/JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR