LAL CHAND MEENA , JAIPUR V. ITO, WARD 7-3, JAIPUR

ITA 515/JPR/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2043 (ITAT-JAIPUR)
• Duration Of Justice: 2 year(s) 1 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 25-05-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: RAJENDRA SINGH CIT DHK
• Keywords: Sale consideration of property below Jantri Value; Unexplained expenditure; Capital asset; Depreciation; Retrospective amendment; Cost of acquisition; Fair market value; Sham transactions
• Section: 69C; 50C; 148; 54

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH DQY HKKJR] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS [KK LNL; DS LE{K BEFORE: SHRI KUL BHARAT, JM & SHRI VIKRAM SINGH YAD AV, AM VK;DJ VIHY LA-@ ITA NO. 515/JP/15 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 SHRI LALCHAND MEENA S/O PRATAP MEENA, VILLAGE- DHAMSIYA, VIA KUKAS TEHSIL AMER, JAIPUR CUKE VS. THE ITO WARD 7(3), JAIPUR . LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. ANPPM 0169 E VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI RAJENDRA SINGH (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 28.03.2017 ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT: 27.06.2017. VKNS'K@ ORDER PER SHRI VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT (A) -3, JAIPUR DATED 8.01.2015 WHEREIN THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL; (1) THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ACTION OF THE AO IN MAKING ADDITION OF RS. 72,49,65 5/- ON ACCOUNT OF SHORT TERM CAPITAL GAIN BY: (A) HOLDING THAT WHEN A CAPITAL ASSETS HAS BEEN GE NUINELY TRANSFERRED AS PER THE PROVISIONS OF SECTION 45(3) OF THE AC T AS CAPITAL CONTRIBUTION TO THE FIRM, THEN THE SAME CAPITAL AS SETS CANNOT BE TRANSFERRED SUBSEQUENTLY BY WAY OF ANY OTHER MODE AND THEREFORE, THE TRANSFER OF LAND AS CAPITAL CONTRIBUTION IS NOT GEN UINE MORE PARTICULARLY ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 2 WHEN THE FIRM EXISTED ONLY ON PAPERS AND NO BUSINE SS IS CARRIED OUT BY FIRM. (B) HOLDING THAT THE CAPITAL GAIN IS LIABLE TO BE TAXED IN THE YEAR UNDER CONSIDERATION ON EXECUTION OF THE SALE DEED AND NOT IN A.Y. 06-07 WHEN THE ASSESSEE CONTRIBUTED THE LAND TO THE PARTNERSH IP FIRM M/S CRYSTAL PARK RESORTS. (C) NOT CONSIDERING AND DECIDING THE VARIOUS CONTE NTIONS RAISED BY THE ASSESSEE REGARDING NON CHARGEABILITY OF CAPITAL GAI N ON THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW I N CONFIRMING THE ADDITION OF RS. 1,29,385/- U/S 69C BY HOLDING THAT EXPENDITURE INCURRED FOR OBTAINING THE JDA PATTA AND ON PAYMENT OF LEA SE MONEY WAS REQUIRED TO BE INCURRED BY THE ASSESSEE AND NOT B Y THE FIRM AND EVEN FROM THE FIRMS ACCOUNT, THE SOURCE OF SUCH AMOUNT I S NOT EXPLAINED. 3. THE LD. CIT(A) HAS ERRED ON FACT AND IN LAW IN CONFIRMING THE ACTION OF AO IN TREATING THE AGRICULTURAL INCOME OF RS. 60 ,000/- DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES. 2. IN RESPECT OF GROUND NO. 1, THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING OFFICER, BASED ON INFORMATION AVAILABLE O N AST SYSTEM, OBSERVED THAT THE ASSESSEE WAS IN RECEIPT OF SALE CONSIDERAT ION OF RS.1,73,45,452/- ON ACCOUNT OF SALE OF THE LAND SITUATED IN VILLAGE HAR WAR, TEHSIL AMER ON 31-03- 2007 AND ASSESSEE HAS NOT FILED ANY INCOME TAX RETU RN. ACCORDINGLY, NOTICE U/S 148 WAS ISSUED AND SERVED ON THE ASSESSEE ON 4- 03-2013. IN RESPONSE TO THE SAME, ASSESSEE FILED HIS RETURN OF INCOME ON 8- 04-2013 DECLARING INCOME OF RS.43,630/- BESIDES AGRICULTURAL INCOME OF RS.60 ,000/- . IN COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE SUBMITTED THAT HE, ALONG WITH SH. MUKESH MEENA CONSTITUTED A PARTNERSHIP FIRM IN THE NAME AN D STYLE OF M/S CRYSTAL PARK RESORTS VIDE PARTNERSHIP DEED DATED 01.03.2006 TO CARRY ON THE BUSINESS OF REAL ESTATE, DEVELOPMENT OF LAND, RUNNI NG OF GUEST HOUSE, HOTELS, MOTELS, RESORTS ETC. AND OTHER TOURISM RELATED ACTI VITIES IN WHICH THE LAND PURCHASED BY THEM BETWEEN 18.12.2004 TO 24.02.2006 WAS CONTRIBUTED TO THE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 3 FIRM AT COST AS THEIR CAPITAL CONTRIBUTION. THEREAF TER, TO HAVE THE LAND IN THE NAME OF THE FIRM IN THE REVENUE RECORDS, VARIOUS FO RMALITIES WERE UNDERTAKEN BY THE ASSESSEE IN HIS NAME AND THEREAFTER THE SALE DEED WAS EXECUTED BY THE ASSESSEE IN THE NAME OF THE FIRM ON 26.07.2007 WHIC H WAS REGISTERED ON 31.07.2007. IN THIS SALE DEED, THE FACT THAT THE AS SESSEE HAS ALREADY TRANSFERRED THIS LAND TO THE FIRM IS SPECIFIED AND IT IS ALSO CLARIFIED THAT THE SALE DEED IS EXECUTED ONLY WITH THE OBJECT OF REMOVING A NY LEGAL DOUBTS. HENCE, THERE IS NO TRANSACTION UNDER THE INCOME TAX ACT, 1 961 IN THE YEAR UNDER CONSIDERATION AS LAND ALREADY STOOD TRANSFERRED IN AY 2006-07. THE AO DIDNT AGREE WITH THE CONTENTIONS OF THE ASSESSEE AND CONS IDERED THE DATE OF TRANSFER OF LAND AS 31.07.2007, ADOPTING THE SALES CONSIDERATION U/S 50C AT RS. 1,73,45,452/- AND THE ASSESSEES SHARE IN THE L AND AT TWO THIRD AS PER THE PARTNERSHIP DEED WORKED OUT THE ASSESSEES SHARE IN THE SALE CONSIDERATION AT RS. 1,15,63,635/- AND AFTER REDUCING THE COST OF PU RCHASE AT RS. 63,62,450/-, COMPUTED THE SHORT TERM CAPITAL GAIN OF RS.72,49,65 5/- WHICH WAS ADDED TO THE INCOME OF THE ASSESSEE. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD CIT(A) WHO CONFIRMED THE ACTION OF THE AO AND HIS F INDINGS WHICH ARE UNDER CHALLENGE BEFORE US ARE AS UNDER: ON CAREFUL CONSIDERATION OF ALL RELEVANT FACTS IT MAY BE NOTED THAT AS PER PROVISIONS OF SECTION 45(3) THE PROFIT OR GA IN ARISING FROM TRANSFER FOR A CAPITAL ASSET BY A PERSON TO A FIRM BY WAY OF CAPITAL CONTRIBUTION WOULD BE TREATED TO BE A TRANSFER FOR THE PURPOSE OF SEC. 48 OF IT ACT AND THE AMOUNT RECORDED IN THE BO OKS OF ACCOUNTS SHALL BE DEEMED TO THE FULL VALUE OF CONSI DERATION FOR SUCH TRANSFER OF CAPITAL ASSET. HOWEVER WHEN A CA PITAL ASSET HAS BEEN GENUINELY TRANSFERRED AS PER PROVISIONS OF SE CTION 45(3) OF IT ACT THEN THE SAME CAPITAL ASSET CANNOT BE TRANSF ERRED SUBSEQUENTLY BY WAY OF ANY OTHER MODE. THE VERY FA CT THAT ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 4 SUBSEQUENT TO SUCH TRANSFER ON 01.03.2006 AS PER PR OVISIONS OF SECTION 45(3), THE ASSESSEE HAS TRANSFERRED /SOLD THE LAND ON 31.07.2007 BY WAY OF REGISTERED SALE DEED ITSELF IN DICATED THAT THE EARLIER TRANSACTIONS DATED 01.03.2006 SHOWING THE T RANSFER OF LAND AS CAPITAL CONTRIBUTION WERE NOT GENUINE. THERE IS NO DISPUTE ON THE FACT THAT SUBSEQUENT TO SUCH ALLEGED TRANSFER D ATED 01.03.2006, THE ASSESSEE HAS FILED AN AFFIDAVIT BEF ORE THE JDA CLAIMING ABSOLUTE OWNERSHIP ON THE LAND. THE FACTS ALSO INDICATE THAT THE EARLIER TRANSFER WAS NOT GENUINE AS IF THE EARLIER TRANSFER WAS GENUINE NO ABSOLUTE OWNERSHIP CAN BE CLAIMED. MOREOVER IN THE SALE DEED DATED 31.07.2007 THE ASSESSEE HAS AGA IN CLAIMED COMPLETE OWNERSHIP AND RIGHTS ON SUCH LAND AND THE FACTS STATED IN THE SALE DEED DATED 31.07.2007 CAN NOT BELIEVED TO BE INCORRECT OR FALSE. IT MAY ALSO BE NOTED THAT THOUGH THE TRA NSFER OF LAND TO THE FIRM IS SHOWN AND RETURNS OF INCOME OF THIS FIR M ARE ALSO FILED BUT THE FACT IS THAT SUCH FIRM EXISTED ONLY ON PAPE RS AND NO BUSINESS WAS CARRIED OUT BY THE FIRM. THE DOCUMENT S FILED BY THE APPELLANT INDICATE THAT THE ASSESSEE ENTERED INTO T HE PARTNERSHIP FIRM AS A PARTNER BY SHOWING CAPITAL CONTRIBUTION B Y WAY OF TRANSFER OF LAND BUT IN A VERY SHORT PERIOD BY 19.0 1.2007 THE ASSESSEE HAS RECEIVED BACK AN AMOUNT OF RS. 50,00,0 00/- FROM THE FIRM, AGAINST THE CAPITAL CONTRIBUTION OF RS. 63,64 ,983/-. THESE FACTS INDICATING THAT THE FIRM WAS CREATED JUST TO S HOW THE TRANSFER OF LAND TO THE FIRM AND TO AVOID PROPER CAPITAL GAI N LIABILITY AS PER PROVISIONS OF SEC. 50C. THE ABOVE FACTS ALSO INDI CATE THAT BOTH THE PARTNERS I.E. ASSESSEE AND SHRI MUKESH KUMAR ME ENA WHO WERE ORIGINAL PARTNERS TO THE FIRM NEVER GENUINELY INTENDED TO CARRY OUT ANY BUSINESS. KEEPING IN VIEW THESE FACT S THE AO HAS RIGHTLY TREATED THE TRANSFER OF LAND AS ON 31.07.20 07 BY WAY OF SALE DEED TO BE A TRANSFER WITHIN THE MEANING OF SE CTION 2(47) AND RIGHTLY TAXED THE CAPITAL GAIN ARISING IN THE HANDS OF THE APPELLANT AS PER PROVISIONS OF SECTION 50C OF IT ACT, ACCORDI NGLY THE ADDITION MADE BY THE AO AMOUNTING TO RS. 7249655/- ON ACCOUN T OF SHORT TERM CAPITAL GAINS IS CONFIRMED. THE GROUND OF APP EAL IS DISMISSED. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 5 4. THE DISPUTE RELATES TO HOW WOULD TRANSFER OF LAND, BY AN INDIVIDUAL TO THE PARTNERSHIP FIRM WHERE HE BECOMES A PARTNER, BE TAXED. WHETHER IT SHOULD BE TAXED UNDER THE PROVISIONS OF SECTION 45( 3) I.E. WHEN THE ASSESSEE,BY VIRTUE OF ENTERING INTO A PARTNERSHIP D EED, TRANSFERRED HIS LAND TO THE PARTNERSHIP FIRM NAMELY M/S CRYSTAL PARK RESORT S BY WAY OF HIS CAPITAL CONTRIBUTION WHICH WERE DULY RECORDED IN THE BOOKS OF THE PARTNERSHIP. ALTERNATIVELY, WHETHER IT SHOULD BE TAXED IN ACCORD ANCE WITH THE PROVISIONS OF SECTION 50C WHEN CONVEYANCE DEED WAS SUBSEQUENTLY EXECUTED, DULY REGISTERED WITH THE STAMP DUTY AUTHORITIES AND STAM P DUTY DULY PAID I.E, WHEN THE LAND WAS SOLD THROUGH REGISTERED SALE DEED DATE D 31.07.2007 BY THE ASSESSEE ALONGWITH SHRI MUKESH KUMAR MEENA TO M/S CRYSTAL PARK RESORTS. SECONDLY, ONCE A LAND IS DEEMED TO BE TRANSFERRED T O THE FIRM BY WAY OF CAPITAL CONTRIBUTION BY A PARTNER U/S 45(3) OF THE INCOME TAX ACT, 1961, WHETHER THE SUBSEQUENT REGISTRATION OF SUCH LAND IN THE NAME OF THE FIRM IN THE REVENUE RECORDS COULD LEAD TO A CONCLUSION THAT EARLIER TRANSFER WAS NON- GENUINE AND THE EARLIER TRANSACTION SHOULD BE DISRE GARDED. 5. DURING THE COURSE OF HEARING, THE AR SUBMITTED T HAT TO DECIDE THE ISSUES UNDER CONSIDERATION, WHAT IS RELEVANT IS THE DEFINITION OF TRANSFER UNDER THE INCOME TAX ACT, 1961 AND NOT UNDER THE TRANSFER OF PROPERTIES ACT, 1882 OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE. IN THIS REGARD, IT WAS SUBMITTED AS UNDER:- (A) SECTION 2(47) OF THE INCOME TAX ACT, 1961 DEFINES T RANSFER. AS PER CLAUSE (VI) OF THIS SECTION, TRANSFER IN RELATION T O A CAPITAL ASSETS INCLUDES ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBE R OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSON OR BY WAY OF ANY AGREEMENT OR ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHICH HAS THE EF FECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT, OF ANY IMM OVABLE PROPERTY. FURTHER SECTION 45(3) OF THE INCOME TAX ACT, 1961 P ROVIDES THAT THE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 6 PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAP ITAL ASSET BY A PERSON TO A FIRM OR OTHER ASSOCIATION OF PERSONS OR BODY O F INDIVIDUALS (NOT BEING A COMPANY OR A CO-OPERATIVE SOCIETY) IN WHICH HE IS OR BECOMES A PARTNER OR MEMBER, BY WAY OF CAPITAL CONTRIBUTION O R OTHERWISE, SHALL BE CHARGEABLE TO TAX AS HIS INCOME OF THE PREVIOUS YEA R IN WHICH SUCH TRANSFER TAKES PLACE AND, FOR THE PURPOSES OF SECTI ON 48, THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM, ASSOC IATION OR BODY AS THE VALUE OF THE CAPITAL ASSET SHALL BE DEEMED TO BE TH E FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF T HE TRANSFER OF THE CAPITAL ASSET. (B) FROM THE COMBINED READING OF THE SECTION 2(47) READ WITH SECTION 45(3), IT IS CLEAR THAT WHEN A CAPITAL ASSET OWNED BY A PARTNER IS CONTRIBUTED TO THE FIRM, THERE IS TRANSFER IN THE P REVIOUS YEAR IN WHICH SUCH CAPITAL ASSET IS CONTRIBUTED IN THE FIRM AND F OR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN, THE AMOUNT RECORDED IN THE BOOKS OF THE FIRM AS THE VALUE OF THE CAPITAL ASSETS IS DEEMED T O BE THE FULL VALUE OF CONSIDERATION. (C) IN THE PRESENT CASE, THE PARTNER SHRI LAL CHAND MEE NA HAS CONTRIBUTED THE LAND OWNED BY HIM TO THE FIRM ON 01.03.2006 ON ENTERING THE PARTNERSHIP WITH SH. MUKESH MEENA. BOTH THE PARTNER S CONTRIBUTED THEIR LAND TO THE FIRM AT COST. THUS, THERE IS A TRANSFER OF LAND BY THE PARTNERS TO THE FIRM IN ASSESSMENT YEAR 2006-07 AND THEREFOR E AT THIS RECORDED VALUE ONLY THE CAPITAL GAIN IS CHARGEABLE TO TAX IN THE HANDS OF THE PARTNER IN THAT ASSESSMENT YEAR. THEREFORE, NO CAPI TAL GAIN CAN BE CHARGED ON THE BASIS OF SALE DEED EXECUTED BY THE P ARTNER IN FAVOUR OF THE FIRM ON 26.07.2007 FALLING IN AY 2008-09 IN AS MUCH AS THE TRANSFER OF LAND BY THE PARTNER TO THE FIRM UNDER THE INCOME TAX ACT IS COMPLETED IN AY 2006-07 AND NOT IN AY 2008-09. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 7 (D) IT IS A SETTLED LAW THAT THE MEANING OF WORD DEFINE D IN THE ACT SHOULD PREVAIL THROUGHOUT. WHERE THE STATUE DEFINED A PART ICULAR WORD, THE SAME SHOULD, UNLESS THE CONTEXT OTHERWISE REQUIRES, BE CONSTRUED IN THE SAME MANNER AND BE GIVEN THE SAME MEANING [209 ITR 824(PAT)]. THE MEANING GIVEN IN ANY OTHER LAW CANNOT BE IMPORTED I N DEFINING THAT EXPRESSION UNDER THE INCOME TAX ACT. THEREFORE ONCE THERE IS A DEFINITION OF TRANSFER UNDER THE INCOME TAX ACT AND ALSO THE MECHANISM OF COMPUTATION OF CAPITAL GAIN ON SUCH TRANSFER IS PRESCRIBED, THE REFERENCE TO ANY OTHER ACT CANNOT BE MADE FOR ASCER TAINING MEANING OF TRANSFER. THEREFORE ONLY BECAUSE A SALE DEED WAS EX ECUTED BY THE PARTNER IN RESPECT OF CAPITAL ASSETS ALREADY CONTRI BUTED BY THEM TO THE FIRM, AT SUBSEQUENT POINT OF TIME, IT WOULD NOT MEA N THAT THE YEAR OF TRANSFER WOULD BE SHIFTED FROM THE YEAR OF CONTRIBU TION TO THE YEAR OF EXECUTION OF SALE DEED. HENCE ON THE BASIS OF SALE DEED EXECUTED BY THE PARTNERS IN FAVOUR OF THE FIRM ON 26.07.2007, N O CAPITAL GAIN LIABILITY CAN BE FASTENED ON THE PARTNERS IN AY 2008-09. IF T HE DATE OF EXECUTION OF SALE DEED IS CONSIDERED AS DATE OF TRANSFER, SEC TION 2(47)(V)/(VI) AS ALSO SEC. 45(3)/(4) WOULD BECOME OTIOSE AND IN SUCH CASES NO TAX LIABILITY CAN BE FASTENED ON AN ASSESSEE EVEN WHEN THERE IS AN AGREEMENT TO SALE COUPLED WITH THE POSSESSION OR EN ABLING THE ENJOYMENT OF SUCH PROPERTY TO OTHER PERSON. (E) THE LOWER AUTHORITIES HAVE GIVEN MUCH EMPHASIS TO T HE APPLICATION/ AFFIDAVIT/ SAMARPANNAMA FILED BY BOTH THE PARTNERS TO THE JDA TO PRESUME THAT THEY WERE THE OWNERS OF THE LAND TILL THE SALE DEED IS EXECUTED BY THEM IN FAVOUR OF FIRM. THE EMPHASIS SO GIVEN IS INCORRECT AND WITHOUT APPRECIATING THE ENTIRE FACTS ON THE RE CORDS. IN THE SALE DEED AT PAGE 3 , IT HAS BEEN CLEARLY MENTIONED THAT THE SAID LAND WAS TRANSFERRED BY THEM TO THE FIRM AND POSSESSION OF T HE LAND WAS ALSO GIVEN TO THE FIRM AND ONLY TO REMOVE ANY LEGAL DOUB T, SALE DEED IS BEING ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 8 EXECUTED BY THEM IN FAVOUR OF THE FIRM. ALL OTHER D OCUMENT FILED BEFORE THE DEPARTMENT ALSO PROVES THAT THE ASSESSEE HAS AL READY CONTRIBUTED THE LAND TO THE FIRM IN A.Y. 2006-07. THEREFORE, IT CANNOT BE PRESUMED THAT THE ASSESSEE HAS TRANSFERRED THE LAND TO THE F IRM IN THE YEAR UNDER CONSIDERATION AND THEREFORE NO CAPITAL GAIN ARISES IN THE HANDS OF THE ASSESSEE IN THE YEAR UNDER CONSIDERATION. EVEN AFTE R EXECUTION OF SALE DEED, THE JDA VIDE LETTER DATED 13.12.2007 HAS INTI MATED THE FIRM THAT TRANSFER OF LAND IN THE NAME OF THE FIRM IN ITS REC ORD IS ONLY FOR GETTING APPROVAL OF MAP ETC. AND NOT IN RESPECT OF LEGAL OW NERSHIP OVER THE LAND. (F) IT MAY BE NOTED THAT AS PER SECTION 14 OF INDIAN PA RTNERSHIP ACT, 1932, THE PROPERTY OF THE FIRM INCLUDES ALL PROPERTY AND RIGHTS AND INTEREST IN PROPERTY ORIGINALLY BROUGHT INTO THE STOCK OF FIRM, OR ACQUIRED, BY PURCHASE OR OTHERWISE, BY OR FOR THE FIRM OR FOR TH E PURPOSE AND IN COURSE OF BUSINESS OF FIRM, AND INCLUDES ALSO THE G OODWILL OF THE BUSINESS. THEREFORE ANY INDIVIDUAL PROPERTY OWNED B Y A PARTNER AND CONTRIBUTED TO THE FIRM BECOMES THE FIRMS PROPERTY AND INDIVIDUAL DOES NOT REMAIN THE EXCLUSIVE OWNER OF SUCH PROPERTY. IN CASE OF ADD.CIT VS. MANJEET ENGINEERING INDUSTRIES [154 ITR 509] (DEL.) AND IN CASE OF CIT VS. A.V BHANOJIRAO [142 ITR 706] (AP) IT IS HELD TH AT NO PARTICULAR MODE OR FORM IS PROVIDED FOR BRINGING IN A SEPARATE PROP ERTY INTO THE STOCK OF THE FIRM BY A PARTNER AND NO DEED WHATSOEVER, REGIS TERED OR OTHERWISE IS REQUIRED TO BE EXECUTED BY THE PARTNER FOR DOING SO. IT MAY BE NOTED THAT AFTER THE LAND UNDER CONSIDERATION BECAME THE PROPERTY OF THE FIRM, STEPS WERE TAKEN BY THE FIRM TO CHANGE THE LAND USE FROM AGRICULTURE TO RESORTS IN THE REVENUE RECORDS TO DEVELOP THE RESOR TS OVER THIS LAND. ALL THE PAYMENT REGARDING CONVERSION OF LAND WAS MADE B Y THE FIRM. THEREFORE, SALE DEED EXECUTED BY THE ASSESSEE ON 31 .07.2007 IN FAVOUR ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 9 OF THE FIRM M/S CRYSTAL PARK RESORTS IS ONLY TO LEG ALIZE THE TITLE OF THE LAND IN THE NAME OF THE FIRM IN THE REVENUE RECORDS . (G) UNDER THE INCOME TAX ACT, 1961, NO TAX CAN BE IMPOS ED ON A PERSON UNLESS THE TRANSACTION FALLS IN THE FOUR CORNERS OF TAXABILITY UNDER THE ACT. IN PRESENT CASE, AO HAS CONSIDERED THE DATE OF EXECUTION OF THE SALE DEED AS THE DATE OF TRANSFER IGNORING THE FACT THAT ON THE DATE THE SALE DEED IS EXECUTED, THE ASSESSEE HAS NO RIGHT OR CLAIM IN THE SAID LAND AS THE LAND BECOME THE PROPERTY OF THE FIRM TH OUGH HELD IN THE NAME OF THE PARTNER. THEREFORE, ON EXECUTION OF THE SALE DEED, IN THE FACTS OF THE CASE, THERE IS NO TRANSFER OF LAND BY THE ASSESSEE TO THE FIRM IN AY 2008-09 UNDER THE PROVISIONS OF THE INCO ME TAX ACT, 1961 AS THE LAND ALREADY STOOD TRANSFERRED TO THE FIRM I N AY 2006-07. HENCE, NO CAPITAL GAIN IS CHARGEABLE TO TAX U/S 45 OF THE INCOME TAX ACT IN THE YEAR UNDER CONSIDERATION. 5.1 THE AO FOR CONSIDERING THE DATE OF TRANSFER AS 31.07.2007 HAS REFERRED TO THE DECISION OF HONBLE SUPREME COURT REPORTED I N 340 ITR 1. THIS DECISION WAS GIVEN IN CONTEXT OF THE TRANSFER OF PROPERTIES ACT, 1882, INDIAN STAMP ACT, 1899 AND THE REGISTRATION ACT, 1908. IN THAT C ONTEXT, IT WAS HELD THAT THE REGISTERED DEED OF CONVEYANCE IS THE ONLY MODE OF L EGAL TRANSFER. THIS DECISION IS NOT IN CONTEXT OF THE INCOME TAX ACT, 1 961 AND THEREFORE NOT APPLICABLE. IN THE PRESENT CASE, THE PARTNER OF THE FIRM ONLY TO GIVE A LEGAL TITLE OF THE LAND OWNED BY IT, WHICH IS ALREADY CONTRIBUT ED AND TRANSFERRED BY THEM TO THE FIRM, HAS EXECUTED THE SALE DEED SO THAT THE FIRM BECOMES THE LEGAL OWNER IN THE REVENUE RECORDS. HOWEVER, THIS DOES NO T MEAN THAT UNDER THE INCOME TAX ACT, 1961, THE LAND IS NOT TRANSFERRED B Y THE ASSESSEE TO THE FIRM ON 01.03.2006 WHEN HE IMPRESSED UPON HIS LAND TO TH E FIRM AS HIS CAPITAL CONTRIBUTION. FURTHER THE DECISION OF MADRAS HC REP ORTED IN 166 ITR 207 WHICH PERTAINS TO AY 1976-77, WHERE THE HIGH COURT HELD THAT NO TRANSFER IS INVOLVED IN THE CONVERSION OF INDIVIDUAL PROPERTY I NTO THE PARTNERSHIP PROPERTY ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 10 BUT THIS CASE HAS NO APPLICATION AFTER THE INSERTIO N OF CLAUSE (VI) TO SECTION 2(47) AND SECTION 45(3) BY FINANCE ACT, 1987 W.E.F. 01.04.1988. 5.2 THE ANOTHER OBJECTION MADE BY THE AO IS THAT T HE TRANSFER MADE BY THE ASSESSEE ON 01.03.2006 IS NOT VALID IN THE EYES OF LAW AS A PERSON BELONGING TO THE ST COMMUNITY CANNOT TRANSFER AN AGRICULTURE LAND TO A PERSON BELONGING TO A NON ST COMMUNITY. IT MAY BE NOTED TH AT ON 01.03.2006 WHEN THE PARTNERSHIP FIRM WAS CONSTITUTED IT COMPRISED O F TWO PARTNERS BOTH OF WHOM BELONGED TO THE ST COMMUNITY. THUS, THERE IS A VALID TRANSFER OF THE LAND TO THE FIRM BY THE ASSESSEE. THE ASSESSEE THER EAFTER, ON BEHALF OF THE FIRM CHANGED THE USE OF LAND FROM AGRICULTURE TO CO MMERCIAL (RESORTS/HOTELS/MOTELS) AND AFTER SUCH CONVERSION F RESH LEASE DEED WAS DRAWN ON 13.07.2007. THUS BEFORE THE SALE DEED WAS EXECUT ED BY THE ASSESSEE TO MAKE THE FIRM A LEGAL OWNER IN THE REVENUE RECORD, THERE WAS A VALID TRANSFER OF THE LAND OWNED BY HIM TO THE FIRM ON 01.03.2006. FURTHER THE OBSERVATION OF THE AO THAT THE TRANSFER OF LAND BY ASSESSEE TO THE FIRM IS NOT CONFIRMED IN THE ABSENCE OF FILING RETURN BY THE ASSESSEE FOR AY 2006-07 IS IRRELEVANT IN AS MUCH AS THE FIRM HAS FILED THE RETURN FOR AY 2006-0 7 ON DUE DATE WHERE THIS FACT IS DISCLOSED. THE ASSESSEE HAS NOT FILED THE R ETURN AS HIS INCOME WAS BELOW THE MAXIMUM AMOUNT CHARGEABLE TO TAX AND HE H AS NO CAPITAL GAIN TAX LIABILITY AS THE CONTRIBUTION OF LAND BY HIM TO THE FIRM WAS AT COST. 5.3 THE AO HAS ALSO MADE AN ALLEGATION THAT THE TRA NSACTION BETWEEN THE ASSESSEE AND THE FIRM ON THE BASIS OF PARTNERSHIP D EED DATED 01.03.2006 IS SHAM AND NOT GENUINE. SUCH ALLEGATION OF THE AO IS BASELESS AND WITHOUT ANY SUBSTANCE. THE SUPREME COURT IN MCDOWELLS CASE 154 ITR 148 RELIED BY THE AO HAS HELD THAT TAX PLANNING IS LEGITIMATE PROVIDE D THAT IT IS WITHIN THE FRAMEWORK OF LAW. AGAIN THE SC IN CASE OF AZADI BAC HAO ANDOLAN 263 ITR 706 AFTER CONSIDERING THE MCDOWELLS CASE HELD THAT ONE COULD NOT ACCEPT THE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 11 SUBMISSION THAT AN ACT WHICH IS OTHERWISE VALID IN LAW CAN BE TREATED NON EST MERELY ON THE BASIS OF SOME UNDERLINED MOTIVE SUPPO SEDLY RESULTING IN SOME ECONOMIC DETRIMENT OR PREJUDICE TO THE NATIONAL INT EREST. AGAIN THE SC IN CASE OF VODAFONE INTERNATIONAL HOLDINGS BV VS. UOI 341 I TR 1 HAS HELD THAT THE LEGAL FICTION CANNOT BE EXPANDED BY INTERPRETATION, PARTICULARLY IF SUCH INTERPRETATION TRANSFORMS CONCEPT OF CHARGEABILITY. IT IS THE TASK OF THE COURT TO ASCERTAIN THE LEGAL NATURE OF THE TRANSACTION AND B Y DOING SO IT HAS TO LOOK AT THE ENTIRE TRANSACTION AS WHOLE AND NOT ADOPT A DIS SECTING APPROACH. THE BURDEN IS ON THE REVENUE TO SHOW THAT A TRANSACTION HAS BEEN EFFECTED TO ACHIEVE A FRAUDULENT, DISHONEST PURPOSE, SO AS TO D EFEAT THE LAW. IN VIEW OF THESE DECISIONS, THE CONTRIBUTION OF LAND BY ASSESS EE TO THE PARTNERSHIP FIRM AS HIS CAPITAL CONTRIBUTION IN TERMS OF SECTION 45( 3) OF THE INCOME TAX ACT, 1961 CANNOT BE REGARDED AS A SHAM AND NON-GENUINE T RANSACTION. 5.4 OTHERWISE ALSO, SECTION 50C IS A DEEMING SECTIO N TO PROVIDE THAT FOR THE PURPOSE OF SECTION 48 THE VALUE ASSESSED/ADOPTED BY STAMP DUTY AUTHORITIES ON TRANSFER OF A CAPITAL ASSET BEING LAND OR BUILDI NG WOULD BE REGARDED AS FULL VALUE OF CONSIDERATION. SIMULTANEOUSLY SECTION 45(3 ) IS ALSO A DEEMING SECTION TO PROVIDE THAT WHERE A PERSON TRANSFER HIS CAPITAL ASSET TO THE FIRM IN WHICH HE BECOMES A PARTNER AS CAPITAL CONTRIBUTION, FOR T HE PURPOSE OF SECTION 48, THE AMOUNT RECORDED IN THE BOOKS OF THE FIRM SHALL BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATION. SECTION 50C DOES NOT OV ERRIDE SECTION 45(3). THEREFORE, IN THE PRESENT CASE DEEMING FICTION OF S ECTION 45(3) WHICH IS MORE SPECIFIC TO THE ASSESSEES CASE IS APPLICABLE AND N OT THE DEEMING FICTION OF 50C. IN VIEW OF THIS LEGAL PROPOSITION ALSO NO CAPI TAL GAIN CAN BE ASSESSED IN THE HANDS OF THE ASSESSEE BY SUBSTITUTING THE AMOUN T RECORDED IN THE BOOKS OF THE FIRM BY THE VALUE ADOPTED BY THE STAMP DUTY AUTHORITIES FOR THE PURPOSE OF LEVY OF THE STAMP DUTY. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 12 5.5 THE LD. CIT(A) WRONGLY PRESUMED THAT TRANSACTIO N DATED 1.03.2006 SHOWING THE TRANSFER OF LAND AS CAPITAL CONTRIBUTIO N IS NOT GENUINE AS HAD IT BEEN A GENUINE TRANSFER U/S 45(3), THEN THE SAME CA PITAL ASSET CANNOT BE TRANSFERRED SUBSEQUENTLY BY WAY OF ANY OTHER MODE. IN HOLDING SO, HE IGNORED THAT UNDER THE INCOME TAX ACT, 1961, THERE IS NO RE STRICTION THAT ONCE A IMMOVABLE PROPERTY IS CONTRIBUTED TO THE FIRM AS CA PITAL CONTRIBUTION, RESULTING INTO A TRANSFER, THE SALE DEED FOR THAT PROPERTY CA NNOT BE EXECUTED IN THE NAME OF THE FIRM. THERE IS NO MATERIAL WITH THE CIT (A) TO CONCLUDE THAT THE FIRM IS NOT GENUINE AND EXISTED ONLY ON PAPERS. THE FACT THAT THE FIRM TOOK STEPS TO CHANGE THE USE OF LAND FROM AGRICULTURAL T O RESORTS IN THE REVENUE RECORDS AND THAT THE JDA VIDE LETTER DATED 13.12.20 07 HAS ALSO RECOGNIZED THE TRANSFER OF LAND IN THE NAME OF THE FIRM SHOWS THAT THE FIRM IS GENUINE AND IS EXISTING NOT ONLY ON PAPER BUT IS GENUINELY CONSTIT UTED TO CARRY ON THE BUSINESS OF REAL ESTATE, DEVELOPMENT OF LAND, RUNNI NG OF GUEST HOUSES, HOTELS, MOTELS AND RESORTS, ETC & OTHER TOURISM RELATED ACT IVITIES. IN VIEW OF ABOVE AND THE SPECIFIC DEFINITION OF TRA NSFER GIVEN IN SECTION 2(47) READ WITH SECTION 45(3), NO CAPITAL GAIN CAN BE ASS ESSED IN THE HANDS OF THE ASSESSEE AND THEREFORE THE ADDITION MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A) BE DELETED. 6. THE LD DR VEHEMENTLY ARGUED THE MATTER AND RELIED ON THE ORDER OF THE LOWER AUTHORITIES. HE SUBMITTED THAT SUBSEQUENT TO FORMATION OF PARTNERSHIP FIRM AND TRANSFER OF LAND, THE ASSESSEE ALONGWITH S HRI MUKESH KUMAR MEENA FILED AN APPLICATION U/S 90B OF RAJASTHAN REVENUE A CT ALONGWITH AFFIDAVIT AND INDEMNITY BOND BEFORE THE JAIPUR DEVELOPMENT AUTHO RITY (JDA) CLAIMING ABSOLUTE OWNERSHIP ON SUCH LAND AND FURTHER BY WAY OF SALE DEED DATED 31.07.2007SOLD THE LAND TO M/S CRYSTAL PARK RESORT S FOR A SALE CONSIDERATION OF RS. 7244987/- HAVING MARKET VALUE OF RS. 1735445 2/-. ACCORDINGLY AS PER ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 13 AO THE REAL TRANSFER OF LAND FOR LEVY OF CAPITAL GA IN WAS ON 31.07.2007 WHEN THE LAND WAS SOLD FOR SALE CONSIDERATION OF RS.724 4987/-. AS PER AO IF THE LAND HAS GENUINELY BEEN TRANSFERRED TO THE FIRM O N 01.03.2006 THEN THE ASSESSEE WOULD NOT HAVE BEEN OWNER OF THE LAND SUBS EQUENT TO SUCH TRANSFER AND THE FACT THAT THE ASSESSEE HAS FILED AN AFFIDAV IT SHOWING THE ABSOLUTE OWNERSHIP SUBSEQUENT TO 01.03.2006 ON SUCH LAND ITS ELF INDICATED THAT THE EARLIER TRANSFER OF LAND TO THE FIRM WAS NOT A GENU INE TRANSFER AND THESE TRANSACTIONS WERE SHAM TRANSACTIONS. 6.1 FURTHER, HE RELIED UPON THE DECISION OF LUCKNOW BENCH OF ITAT IN CASE OF CARLTON HOTEL (P) LTD 35 SOT 26 (LUCK) (URO) AND SUBMITTED THAT WHERE A CAPITAL ASSET IS CONTRIBUTED BY A PARTNER TO A FIRM U/S 45(3) BUT SUCH CAPITAL ASSET IS ASSESSED AT A HIGHER VALUE FOR STAMP DUTY PURCHASES U/S 50C, CAPITAL GAIN IS TO BE CALCULATED WITH REFERENCE TO THE VALU E SO ASSESSED U/S 50C AND NOT AT THE VALUE RECORDED IN THE BOOKS OF ACCOUNTS U/S 45(3). 7. REGARDING THE ABOVE DECISION IN CASE OF CARLTON HOTEL (P) LTD REFERRED BY THE LD. DR, THE LD AR SUBMITTED THAT IN THE ABOVE J UDGMENT, THE PARTNER CONTRIBUTED THE CAPITAL ASSET AS HIS CAPITAL CONTRI BUTION ON 01.03.2004 FALLING IN A.Y. 2004-05 AT RECORDED VALUE OF RS. 7.82 CRORE S AND THE AO HOWEVER WORKED OUT THE CAPITAL GAIN U/S 50C BY CONSIDERING THE ASSESSABLE VALUE. IN THESE FACTS, THE HONBLE ITAT HELD THAT THERE IS TR ANSFER U/S 45(3) IN A.Y. 04- 05 BUT AS THERE IS NO REGISTRATION OF TRANSFER UNDE R THE REGISTRATION ACT AND NO STAMP DUTY HAS BEEN PAID, SEC. 50C CANNOT BE INVOKE D AND THUS APPEAL IS ALLOWED IN FAVOUR OF THE ASSESSEE. IN COURSE OF THI S JUDGMENT, HONBLE ITAT IN PARA 23 HELD THAT WHERE A TRANSFER COVERED U/S 45(3 ) IS SOUGHT TO BE REGISTERED BY THEFIRM AND THE STAMP DUTY IS PAID, T HEN, PROVISION OF SEC. 50C COULD BE INVOKED EVEN IF THE CASE IS COVERED U/S 45 (3). ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 14 7.1 IN THE CASE OF THE ASSESSEE, THE LAND WAS CONTR IBUTED BY HIM TO THE FIRM ON 01.03.2006 FALLING IN A.Y. 06-07. THUS, THERE IS A TRANSFER U/S 45(3) IN A.Y. 06-07 ITSELF. IN THIS YEAR, THERE IS NO REGISTRATIO N OF TRANSFER UNDER THE REGISTRATION ACT AND NO STAMP DUTY WAS PAID. THEREF ORE, THE SUBSEQUENT REGISTRATION IN A.Y. 08-09 WOULD NOT SHIFT THE DATE OF TRANSFER AND THEREFORE EVEN AS PER THE ABOVE DECISION, THERE IS NO LIABILI TY OF CAPITAL GAIN IN THE HANDS OF THE ASSESSEE IN A. Y. 08-09. 7.2 IT WAS FURTHER SUBMITTED IT IS A WELL-KNOWN RU LE OF INTERPRETATION THAT IN A CASE WHERE A GENERAL AS WELL AS A SPECIFIC SECTIO N IS APPLICABLE, THE SPECIFIC PROVISION WILL OVERRULE THE GENERAL PROVISION. EXA MINING THE FACTS OF THE CASE WITH THIS RULE, SECTION 45(3) OR SEC. 50C, WHICHEVE R IS THE SPECIFIC PROVISION, SHOULD OVERRULE THE OTHER SECTION. THOUGH, IN THE C ASE OF CARLTON HOTEL (P.) LTD. VS. ACIT (2010) 35 SOT 26 (LUCK.) (TRIB.), IT WAS HELD THAT SECTION 45(3) IS A GENERAL PROVISION AND SECTION 50C IS A SPECIFI C PROVISION, HOWEVER, THIS IS AN ERRONEOUS CONCLUSION. WHILE SECTION 50C IS SPECI FIC TO A CLASS OF ASSET ( LAND AND BUILDING), SECTION 45(3), THOUGH IS GENERA L AS FAR AS THE CLASS OF ASSETS IS CONCERNED, IT IS SPECIFIC TO A CATEGORY O F TRANSITION ( CONTRIBUTION OF CAPITAL BY PARTNER TO A FIRM). THEREFORE, WHEN SEC. 45(3) COVERS SPECIFIC CATEGORY OF TRANSACTION, SEC. 50C WHICH IS FOR SPEC IFIC CLASS OF ASSET, CANNOT OVERRIDE SEC. 45(3). THIS ASPECT IS NOT CONSIDERED IN THE SAID DECISION. 7.3 SECTION 45(3) WAS INTRODUCED IN 1987, WITH THE OBJECTIVE TO OVERRULE THE SUPREME COURT DECISION IN SUNIL SIDDHARTHBHAI VS. CIT 156 ITR 0509, WHICH STATED THAT SINCE IT WAS IMPOSSIBLE TO EVALUATE THE CONSIDERATION ACQUIRED BY THE PARTNER WHEN HE BRINGS HIS PERSONAL ASSET IN TH E PARTNERSHIP FIRM AS CONTRIBUTION TO CAPITAL, THEY ARE UNABLE TO CALCULA TE THE CAPITAL GAIN AND TAX THE SAME. SECTION 45(3) STATES THAT THE AMOUNT RECO RDED IN THE BOOKS OF ACCOUNTS OF THE FIRM AS THE VALUE OF CAPITAL ASSET, I.E. THE AMOUNT CREDITED IN ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 15 THE PARTNERS CAPITAL ACCOUNT SHALL BE DEEMED TO BE THE VALUE OF CONSIDERATION RECEIVED. HENCE, AS PER SECTION 45(3), CAPITAL GAIN SHOULD BE CHARGED ON THE DIFFERENCE BETWEEN SUCH VALUE AND THE COST ( IN CAS E OF SHORT TERM CAPITAL GAIN)/ INDEXED COST ( IN CASE OF LONG TERM CAPITAL GAIN OF SUCH LAND TO THE PARTNER. 7.4 SECTION 50C STATES THAT WHERE THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF TRANSFER OF A LAND OR BUILDING OR BOTH IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE FOR THE PURPOSE O F STAMP DUTY ( STAMP DUTY VALUATION), THEN THE STAMP DUTY VALUATION WILL BE DEEMED TO BE THE FULL VALUE OF CONSIDERATION RECEIVED/ACCRUED FOR THE PUR POSE OF CALCULATING CAPITAL GAIN TAX. SECTION 50C WAS INTRODUCED TO DEAL WITH T HE UNACCOUNTED MONEY GENERATED BY UNDER-REPORTING OF SALE PRICE. 7.5 THUS, SECTION 50C WAS INTRODUCED TO DEAL WITH U NACCOUNTED MONEY GENERATED BY UNDERREPORTING OF THE SALE PRICE. IN S EC. 45(3), WHERE A PARTNER CONTRIBUTED HIS CAPITAL ASSET TO THE FIRM, THE AMOU NT RECORDED IN THE BOOKS IS DEEMED TO BE THE FALL VALUE OF CONSIDERATION RECEIV ED OR ACCRUING AS A RESULT OF THE TRANSFER. THEREFORE, QUESTION OF GENERATION OF UNACCOUNTED MONEY BY UNDERREPORTING OF SALE PRICE DO NOT ARISE FOR CONSI DERATION. HENCE, CONSIDERING THE LEGISLATIVE INTENT OF SECTION 45(3) VIS-A-VIS S EC. 50C, IT IS INCORRECT TO HELD THAT SEC. 50C WOULD OVERRIDE SECTION 45(3). 7.6 IT IS FURTHER SUBMITTED THAT BY FINANCE BILL, 2 016, SEC. 50C IS PROPOSED TO BE AMENDED W.E.F. 01.04.2017 TO PROVIDE THAT WHE RE THE DATE OF THE AGREEMENT FIXING THE AMOUNT OF CONSIDERATION AND TH E DATE OF REGISTRATION FOR THE TRANSFER OF THE CAPITAL ASSET ARE NOT THE SAME, THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY THE STAMP VALUATION AUTHO RITY ON THE DATE OF AGREEMENT MAY BE TAKEN FOR THE PURPOSES OF COMPUTIN G FULL VALUE OF ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 16 CONSIDERATION FOR SUCH TRANSFER. IN THIS CASE, THE AMOUNT OF CONSIDERATION WAS DETERMINED ON 01.03.2006 AND THEREFORE THE VALUE AD OPTED OR ASSESSED ON THIS DATE CAN ONLY BE TAKEN AS FULL VALUE OF CONSID ERATION EVEN U/S 50C. THIS AMENDMENT BEING A BENEFICIAL AMENDMENT TO AVOID UNI NTENDED HARDSHIP HAS TO BE GIVEN A RETROSPECTIVE EFFECT AS HELD BY SUPRE ME COURT IN CASE OF CIT VS. VATIKA TOWNSHIP PVT. LTD. 367 ITR 466 WHEREIN IN 33 OF THIS ORDER IT WAS HELD THAT LEGISLATIONS WHICH MODIFY ACCRUED RIGHTS OR WH ICH IMPOSE OBLIGATIONS OR IMPOSE NEW DUTIES OR ATTACH A NEW DISABILITY HAVE T O BE TREATED AS PROSPECTIVE UNLESS THE LEGISLATIVE INTENT IS CLEARLY TO GIVE TH E ENACTMENT A RETROSPECTIVE EFFECT. HOWEVER, IF LEGISLATION CONFERS A BENEFIT O N SOME PERSONS BUT WITHOUT INFLICTING A CORRESPONDING DETRIMENT ON SOME OTHER PERSON OR ON THE PUBLIC GENERALLY AND WHERE TO CONFER SUCH BENEFIT APPEARS TO HAVE BEEN THE LEGISLATORS OBJECT, THEN THE PRESUMPTION WOULD BE T HAT SUCH LEGISLATION, GIVING IT A PURPOSIVE CONSTRUCTION, WOULD WARRANT IT TO BE GIVEN A RETROSPECTIVE EFFECT. IN VIEW OF ABOVE DISCUSSION, THE ADDITION MADE BY A O AND CONFIRMED BY THE LD. CIT(A) ON ACCOUNT OF LTCG IN THE HANDS OF THE A SSESSEE FOR A.Y. 08-09 IS NOT AS PER LAW AND THE SAME BE DELETED. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE ON THE FACT THAT TH E ASSESSEE ALONGWITH SHRI MUKESH KUMAR MEENA HAS CONSTITUTED A PARTNERSHIP F IRM ON 01.03.006 IN THE NAME AND STYLE OF M/S CRYSTAL PARK RESORTS IN WHICH THE ASSESSEE CONTRIBUTED LAND MEASURING 2.13 HECTARES AS CAPITAL CONTRIBUTIO N AT THE COST OF RS.63,62,450/-. THERE IS ALSO NO DISPUTE ON THE FA CT THAT A PART OF THE LAND COSTING RS 43,13,980 SO CONTRIBUTED AS CAPITAL CONT RIBUTION IN THE PARTNERSHIP FIRM WAS SUBSEQUENTLY REGISTERED IN THE NAME OF M/S CRYSTAL PARK RESORTSTHROUGH SALE DEED DATED 26.07.2007 REGISTERE D ON 31.07.2007 FOR SALE CONSIDERATION OF RS. 43,13,980 EQUIVALENT TO COST T O THE ASSESSEE AND THE VALUE AS REFLECTED AS CAPITAL CONTRIBUTION IN THE B OOKS OF THE PARTNERSHIP FIRM. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 17 IT IS ALSO NOT IN DISPUTE THAT TOTAL SALE CONSIDERA TION IN THE SALE DEED HAS BEEN MENTIONED AS RS 72,44,987 WHICH RELATES TO LAND BEL ONGING TO THE ASSESSEE AND SHRI MUKESH KUMAR MEENA AND THE MARKET VALUE F OR STAMP DUTY PURPOSES HAS BEEN DETERMINED AT RS. 1,73,54,452/- A ND WHICH HAS BEEN CONSIDERED BY THE AO FOR THE PURPOSES OF INVOKING S ECTION 50C TO THE EXTENT OF RS. 1,15,63,635/- TOWARDS ASSESSEES SHARE IN TH E SALE CONSIDERATION. 9. FIRSTLY, IT WOULD BE RELEVANT TO REFER TO THE PROVI SIONS OF SECTION 2(47) OF THE ACT WHERE THE TRANSFER OF CAPITAL ASSET HAS BEE N GIVEN A WIDER MEANING INCLUDING BUT NOT LIMITED TO TRANSFER BY WAY OF EXE CUTING A REGISTERED CONVEYANCE DEED. IT READS AS UNDER: (47) 'TRANSFER', IN RELATION TO A CAPITAL ASSET, INCLUDE S, (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET ; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW ; OR (IV) IN A CASE WHERE THE ASSET IS CONVERTED BY THE OWNER THEREOF INTO, OR IS TREATED BY HIM AS, STOCK-IN-TRADE OF A BUSINESS CARRIED ON BY HIM, SUCH CONVERSION OR TREATMENT ;OR (IVA ) THE MATURITY OR REDEMPTION OF A ZERO COUPON BOND; O R] (V) ANY TRANSACTION INVOLVING THE ALLOWING OF THE POSSE SSION 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) ; OR (VI) ANY TRANSACTION (WHETHER BY WAY OF BECOMING A MEMBE R OF, OR ACQUIRING SHARES IN, A CO-OPERATIVE SOCIETY, COMPAN Y OR OTHER ASSOCIATION OF PERSONS OR BY WAY OF ANY AGREEMENT O R ANY ARRANGEMENT OR IN ANY OTHER MANNER WHATSOEVER) WHIC H HAS THE EFFECT OF TRANSFERRING, OR ENABLING THE ENJOYMENT O F, ANY ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 18 IMMOVABLE PROPERTY. EXPLANATION 1.FOR THE PURPOSES OF SUB-CLAUSES (V) AND (VI), 'IMMOVABLE PROPERTY' SHALL HAVE THE SAME MEANING AS IN CLAUSE (D) OF SECTION 269UA . EXPLANATION 2.FOR THE REMOVAL OF DOUBTS, IT IS HER EBY CLARIFIED THAT 'TRANSFER' INCLUDES AND SHALL BE DEEMED TO HAVE ALW AYS INCLUDED DISPOSING OF OR PARTING WITH AN ASSET OR ANY INTERE ST THEREIN, OR CREATING ANY INTEREST IN ANY ASSET IN ANY MANNER WHATSOEVER, DIRECTLY OR INDIRECTLY, ABSOLUTELY OR CONDITIONALLY, VOLUNTARIL Y OR INVOLUNTARILY, BY WAY OF AN AGREEMENT (WHETHER ENTERED INTO IN INDIA OR O UTSIDE INDIA) OR OTHERWISE, NOTWITHSTANDING THAT SUCH TRANSFER OF RI GHTS HAS BEEN CHARACTERISED AS BEING EFFECTED OR DEPENDENT UPON O R FLOWING FROM THE TRANSFER OF A SHARE OR SHARES OF A COMPANY REGISTER ED OR INCORPORATED OUTSIDE INDIA. 10. NOW WE REFER TO THE PROVISIONS OF SECTION 45(3) OF THE ACT WHICH HAVE BEEN SPECIFICALLY BROUGHT ON THE STATUE BOOK TO BRI NG TO TAX THESE TYPE OF TRANSACTIONS WHERE A PARTNER BRINGS IN HIS CAPITAL ASSET AND CONTRIBUTE THE SAME AS HIS SHARE IN THE CAPITAL OF THE PARTNERSHIP FIRM. THE SUB-SECTION (3) TO SECTION 45 WHICH WAS INSERTED BY THE FINANCE ACT 1987 W.E.F. 01.04.1988 READS AS UNDER:- (3) THE PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY A PERSON TO A FIRM OR OTHER ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS (NOT BEING A COMPANY OR A (CO-OPERATIVE SOCIETY) IN WHICH HE IS OR BECOMES A PARTNER OR MEMBER, BY WAY OF CAPITAL CON TRIBUTION OR OTHERWISE, SHALL BE CHARGEABLE TO TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUCH TRANSFER TAKES PLACE AND, FOR THE PUR POSES OF SECTION 48, THE AMOUNT RECORDED IN THE BOOKS OF ACCOUNT OF THE FIRM, ASSOCIATION OR BODY AS THE VALUE OF THE CAPITAL ASSET SHALL BE DEE MED TO BE THE FULL ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 19 VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET. 11. THE OBJECT AND INTENT OF THE LEGISLATURE BEHIND INTRODUCTION OF THESE PROVISIONS HAVE BEEN EXPLAINED BY WAY OF CBDT CIRCU LAR NO. 49 DATED 22.09.1987 AS UNDER:- 24.1 ONE OF THE DEVICES USED BY ASSESSEE TO EVADE TAX ON CAPITAL GAINS IS TO CONVERT AN ASSET HELD INDIVIDUALLY INTO AN ASSET OF THE FIRM IN WHICH THE INDIVIDUAL IS A PARTNER. THE DECISION OF THE SUPREM E COURT IN KARTIKEYA V. SARABHAI V. CIT [1985] 156 ITR 509 HAS SET AT REST THE CONTROVERSY AS TO WHETHER SUCH A CONVERSION AMOUNTS TO TRANSFER. THE COURT HELD THAT SUCH CONVERSION FELL OUTSIDE THE SCOPE OF CAPITAL GAIN T AXATION. THE RATIONALE ADVANCED BY THE COURT IS THAT THE CONSIDERATION FOR THE TRANSFER OF THE PERSONAL ASSET IS INDETERMINATE, BEING THE RIGHT WH ICH ARISES OR ACCRUES TO THE PARTNER DURING THE SUBSISTENCE OF THE PARTNERSHIP T O GET HIS SHARE OF THE PROFITS FROM TIME TO TIME AND ON DISSOLUTION OF THE PARTNERSHIP TO GET HIS SHARE OF THE PROFITS FROM TIME TO TIME AND ON DISSOLUTION OF THE PARTNERSHIP TO GET THE VALUE OF HIS SHARE FROM THE NET PARTNERSHIP ASS ETS. 24.2 WITH A VIEW TO BLOCKING THIS ESCAPE ROUTE FOR AVOIDING CAPITAL GAINS TAX, THE FINANCE ACT, 1987 HAS INSERTED NEW SUB-SECTION (3) IN SECTION 45. THE EFFECT OF THIS AMENDMENT IS THAT PROFITS AND GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY A PARTNER TO A FIRM SHALL BE CHA RGEABLE AS THE PARTNERS INCOME OF THE PREVIOUS YEAR IN WHICH THE TRANSFER T OOK PLACE. FOR PURPOSES OF COMPUTING THE CAPITAL GAINS, THE VALUE OF THE ASSET RECORDED IN THE BOOKS OF THE FIRM ON THE DATE OF THE TRANSFER SHALL BE DEEME D TO BE THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF TH E TRANSFER OF THE CAPITAL ASSET. 12. ON READING OF ABOVE REFERRED PROVISIONS, IT IS CLEAR THAT THE PROFITS OR GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET BY A PERSON TO A FIRM IN WHICH ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 20 HE BECOMES A PARTNER, BY WAY OF CAPITAL CONTRIBUTIO N, SHALL BE CHARGEABLE TO TAX AS HIS INCOME OF THE PREVIOUS YEAR IN WHICH SUC H TRANSFER TAKES PLACE. IN OTHER WORDS, THE YEAR IN WHICH THE ASSET IS TRANSFE RRED BY WAY OF CAPITAL CONTRIBUTION SHALL BE THE YEAR OF TRANSFER WHICH SH ALL BE CONSIDERED FOR THE PURPOSES OF DETERMINING THE TAXABILITY OF SUCH TRAN SACTION. IN THE INSTANT CASE, THE LAND HAS BEEN TRANSFERRED BY THE ASSESSEE BY W AY OF HIS SHARE OF CAPITAL CONTRIBUTION IN THE FIRM ON 1.3.2006 FALLING IN THE FINANCIAL YEAR 2005-06 RELEVANT TO ASSESSMENT YEAR 2006-07. ACCORDINGLY, THE TAXABILITY ARISING ON TRANSFER OF SUCH LAND SHALL ARISE IN THE AY 2006-07 . FURTHER, THE VALUE AT WHICH SUCH CAPITAL ASSET IS RECORDED IN THE BOOKS O F THE FIRM ON THE DATE OF THE TRANSFER SHALL BE DEEMED TO BE THE FULL VALUE O F THE CONSIDERATION RECEIVED OR ACCRUED AS A RESULT OF THE TRANSFER OF THE CAPIT AL ASSET. IN THE INSTANT CASE, THE VALUE SO RECORDED IN THE BOOKS OF THE FIRM IS R S.63,62,450/- WHICH IS LIABLE TO TAX IN AY 2006-07 IN THE HANDS OF THE ASSESSEE, SUBJECT TO NECESSARY DEDUCTIONS IN RESPECT OF COST OF ACQUISITION, ETC. 13. ANOTHER RELATED ISSUE THAT ARISE FOR CONSIDERAT ION IS WHETHER THERE IS ANY SPECIFIED MODE OF TRANSFER OF CAPITAL ASSET INTO TH E FIRM THAT HAS BEEN PRESCRIBED UNDER THE PROVISIONS OF THE ACT. IN THIS REGARD, THE LD AR HAS DRAWN OUR REFERENCE TO THE DECISION OF HONBLE RAJASTHAN HIGH COURT IN CASE OF CIT VS. AMBER CORPORATION REPORTED IN 127 ITR 29, HONB LE DELHI HIGH COURT IN CASE OF ADD.CIT VS. MANJEET ENGINEERING INDUSTRIES REPORTED IN 154 ITR 509 AND HONBLE ANDHRA PRADESH HIGH COURT IN CASE OF CI T VS. A.V BHANOJIRAO REPORTED IN 142 ITR 706 WHEREIN IT WAS HELD THAT NO PARTICULAR MODE OR FORM IS PROVIDED FOR BRINGING IN A SEPARATE PROPERTY INT O THE STOCK OF THE FIRM BY A PARTNER AND NO DEED WHATSOEVER, REGISTERED OR OTHER WISE IS REQUIRED TO BE EXECUTED BY THE PARTNER FOR DOING SO. IT WOULD THER EFORE BE RELEVANT TO REFER TO THESE DECISIONS AS UNDER: 13.1 IN CASE OF CIT VS. AMBER CORPORATION , THE HONBLE RAJASTHAN HIGH COURT HAS HELD AS UNDER: ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 21 NOW REMAINS QUESTION NO. 1 FOR OUR DETERMINATION. MR. MEHTA, LEARNED COUNSEL FOR THE REVENUE, HAS CONTENDED THAT THE TRA NSFER OF THE SHARE BY ONE OF THE PARTNERS IN THE FIRM CONSISTED OF AN IMMOVAB LE PROPERTY WHICH UNDER THE TRANSFER OF PROPERTY ACT, BEING ADMITTEDLY FOR A VALUE MORE THAN RS. 100, REQUIRED REGISTRATION. IT IS CONTENDED THAT IN THE ABSENCE OF REGISTRATION NO SUCH TRANSFER COULD BE GIVEN EFFECT TO, AND THE PRO PERTY KNOWN AS RAMBAGH PALACE CANNOT BE CONSIDERED TO HAVE BEEN CONTRIBUTE D TOWARDS THE ASSETS OF THE PARTNERSHIP IN THE ABSENCE OF REGISTRATION. IT IS, THUS, CONTENDED THAT THE QUESTION OF DEPRECIATION ON SUCH PROPERTY DOES NOT ARISE AT ALL AND THE SAME CANNOT BE TAKEN INTO CONSIDERATION. ON THE OTHER HA ND, MR. GUPTA, LEARNED COUNSEL FOR THE ASSESSEE, HAS CONTENDED THAT THE TR ANSFER IS NOT REQUIRED TO BE REGISTERED UNDER THE INDIAN REGISTRATION ACT. THERE WAS NO PROVISION UNDER THE PARTNERSHIP ACT OR UNDER THE INDIAN REGISTRATIO N ACT REQUIRING SUCH TRANSFER TO BE REGISTERED. IT WAS NOT A TRANSFER AT ALL UNDER THE PROVISIONS OF THE TRANSFER OF PROPERTY ACT. RELIANCE IS PLACED ON FIRM RAM SAHAY MALL RAMESHWAR DAYAL V. BISHWANATH PRASAD, AIR 196,3 PAT 221, AND SUDHANSU KANTA V. MANINDRA NATH, AIR 1965 PAT 144. SECTION 14 OF THE INDIAN PARTNERSHIP ACT READS AS U NDER: '14. SUBJECT TO CONTRACT BETWEEN THE PARTNERS, THE PROPERTY OF THE FIRM INCLUDES ALL PROPERTY AND RIGHTS AND INTEREST IN PR OPERTY ORIGINALLY BROUGHT INTO THE STOCK OF THE FIRM, OR ACQUIRED, BY PURCHASE OR OTHERWISE, BY OR FOR THE FIRM, OR FOR THE PURPOSES AND IN THE COURSE OF THE BUSINESS OF THE FIRM, AND INCLUDES ALSO THE GOODWILL OF THE BUSINESS. UNLESS THE CONTRARY INTENTION APPEARS, PROPERTY AND RIGHTS AND INTERESTS IN PROPERTY ACQUIRED WITH MONEY BELONGING TO THE FIRM ARE DEEMED TO HAVE BEEN ACQUIRED FOR THE FIRM.' THUS, FROM THE READING OF THE ABOVE PROVISION IT WO ULD BE QUITE CLEAR THAT ALL PROPERTY AND RIGHTS AND INTERESTS WHICH THE PARTNER S MAY HAVE BROUGHT INTO ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 22 THE COMMON STOCK AS THEIR CONTRIBUTION TO THE COMMO N BUSINESS ARE PARTS OF THE; PARTNERSHIP PROPERTY. EVEN IF A PROPERTY CONTR IBUTED BY ONE PARTNER BE AN IMMOVABLE PROPERTY, NO DOCUMENT REGISTERED OR OTHER WISE, IS REQUIRED FOR TRANSFERRING THE PROPERTY TO THE PARTNERSHIP. WE AR E IN AGREEMENT WITH THE VIEW TAKEN BY THE PATNA HIGH COURT. THIS COURT ALSO , AS ALREADY OBSERVED ABOVE, IN CIT V. AMBER CORPORATION [1974] 95 ITR 178 APPROVED THE ABOVE DECISION OF THE PATNA HIGH COURT, THOUGH THE POINT WAS NOT DIRECTLY FOR DECISION BEFORE THEM. IN THE CIRCUMSTANCES MENTIONE D ABOVE, IN OUR VIEW, THE QUESTION NO. 1 IS ANSWERED IN THE AFFIRMATIVE. 13.2 IN CASE OF ADD.CIT VS. MANJEET ENGINEERING INDUSTRIES , THE HONBLE DELHI HIGH COURT HAS HELD AS UNDER: WHEREAS THE TRANSFER OF PROPERTY ACT PROVIDES FOR D IFFERENT MODES OF TRANSFER OF PROPERTY, IT IS NOT EXHAUSTIVE OF THE MODES OF T RANSFER OF PROPERTY. THERE MAY BE A MODE OTHER THAN THOSE AS MENTIONED IN THE TRANSFER OF PROPERTY ACT BY WHICH PROPERTY MAY BE LAWFULLY TRANSFERRED BY IT S OWNER IN FAVOUR OF ANOTHER. THROWING OF COPARCENARY PROPERTY BY A COPA RCENER INTO THE HOTCHPOT OF THE HUF IS ONE SUCH RECOGNISED MODE OF TRANSFER. SECTION 14 OF THE PARTNERSHIP ACT EMBODIES ANOTHER SUCH PROVISION. SE CTION 14 OF THE PARTNERSHIP ACT IS IN THAT SENSE A SPECIAL PROVISIO N AND IT CANNOT BE SAID TO BE IN DEROGATION OF OR IN CONFLICT WITH ANY PROVISION OF THE TRANSFER OF PROPERTY ACT, VIZ., SECTION 5 OR 54 THEREOF. AS PER SECTION 14 OF THE P ARTNERSHIP ACT THE CONTRIBUTION BY A PARTNER OF HIS SEPARATE IMMOVABLE PROPERTY BY THROWING THE SAME INTO THE STOCK OF THE PARTNERSHIP FIRM HAS THE EFFECT OF TRANSFERRING THE PARTNER'S SHARE THEREIN TO THAT OF THE FIRM. NO PAR TICULAR MODE OR FORM IS PROVIDED FOR SO BRINGING IN SEPARATE PROPERTY OF TH E PARTNER INTO THE STOCK OF THE FIRM AND NO DEED WHATSOEVER, REGISTERED OR OTHE RWISE, IS REQUIRED TO BE EXECUTED BY THE PARTNER FOR DOING SO. THERE IS AMPL E AUTHORITY IN SUPPORT OF THIS VIEW. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 23 13.3 IN CASE OF CIT VS. A.V BHANOJIRAO , THE HONBLE ANDHRA PRADESH HIGH COURT HAS FOLLOWED HONBLE RAJASTHAN HIGH COURT DEC ISION IN CASE OF AMBER CORPORATION(SUPRA) AND HAS HELD AS UNDER: ON BEHALF OF THE REVENUE, IT IS STRENUOUSLY CONTEN DED BEFORE US THAT THE TRANSFER WAS EFFECTED ONLY IN TERMS OF THE CONVEYAN CE DEED DATED JANUARY 29, 1972, AND NOT DURING THE ACCOUNTING YEAR 1969-70. A CCORDING TO THE LEARNED STANDING COUNSEL, THE TRANSFER COULD BE MADE ONLY B Y A DULY REGISTERED DOCUMENT WHICH WAS EXECUTED ON JANUARY 29,1972, AND THE TRANSFER COULD NOT HAVE BEEN MADE OTHERWISE DURING DECEMBER, 1969, OR IN TERMS OF THE PARTNERSHIP DEED DATED MAY 16, 1970. WE DO NOT FIND ANY SUBSTANCE IN THIS SUBMISSION. IT IS ENOUGH IF REFERENCE IS MADE TO TH E FOLLOWING OBSERVATIONS MADE BY THE SUPREME COURT IN NARAYANAPPA V. BHASKAR A KRISHNAPPA, AIR 1966 SC 1300 (P. 1304, COL. 2) : 'THE WHOLE CONCEPT OF PARTNERSHIP IS TO EMBARK UPON A JOINT VENTURE AND FOR THAT PURPOSE TO BRING IN AS CAPITAL MONEY OR EVEN P ROPERTY INCLUDING IMMOVABLE PROPERTY. ONCE THAT IS DONE, WHATEVER IS BROUGHT IN WOULD CEASE TO BE THE EXCLUSIVE PROPERTY OF THE PERSON WHO BROUGHT IT IN. IT WOULD BE THE TRADING ASSET OF THE PARTNERSHIP IN WHICH ALL THE P ARTNERS WOULD HAVE INTEREST IN PROPORTION TO THEIR SHARE IN THE JOINT VENTURE O F THE BUSINESS OF PARTNERSHIP. THE PERSON WHO BROUGHT IT IN WOULD, THEREFORE, NOT BE ABLE TO CLAIM OR EXERCISE ANY EXCLUSIVE RIGHT OVER ANY PROPERTY WHIC H HE HAS BROUGHT IN, MUCH LESS OVER ANY OTHER PARTNERSHIP PROPERTY. HE WOULD NOT BE ABLE TO EXERCISE HIS RIGHT EVEN TO THE EXTENT OF HIS SHARE IN THE BUSINE SS OF THE PARTNERSHIP. AS ALREADY STATED, HIS RIGHT DURING THE SUBSISTENCE OF THE PARTNERSHIP IS TO GET HIS SHARE OF PROFITS FROM TIME TO TIME AS MAY BE AGREED UPON AMONG THE PARTNERS AND AFTER THE DISSOLUTION OF THE PARTNERSHIP OR WIT H HIS RETIREMENT FROM PARTNERSHIP OF THE VALUE OF HIS SHARE IN THE NET PA RTNERSHIP ASSETS AS ON THE DATE OF DISSOLUTION OR RETIREMENT AFTER A DEDUCTION OF LIABILITIES AND PRIOR CHARGES.' ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 24 THE AFORESAID DECISION OF THE SUPREME COURT HAS BEE N FOLLOWED BY THE RAJASTHAN HIGH COURT IN CIT V. AMBER CORPORATION [1 974] 95 ITR 178 AND CIT V. AMBER CORPORATION [1981] 127 ITR 29 . IN THE FIRST OF THESE TWO CASES, THE ASSESSEE WAS A PARTNERSHIP FIRM COEXISTING OF MAHAR AJA MAN SINGH AND HIS FOUR SONS WHO CARRIED ON A HOTEL BUSINESS AT JAIPUR . THE FOUR SONS, WHO OWNED THE RAMBAGH PALACE, TREATED THE PALACE AS FOR MING PART OF THE COMMON STOCK OF THE FIRM. THE PARTNERSHIP DEED PROV IDED THAT ON THE DISSOLUTION OF THE FIRM, THE PALACE SHOULD REVERT T O THE FOUR SONS IN EQUAL SHARES AT ITS WRITTEN DOWN VALUE AS APPEARING IS TH E BOOKS OF ACCOUNT OF THE PARTNERSHIP. IN THE RETURNS FILED FOR THE TWO ASSES SMENT YEARS 1959-60 AND 1960-61, THE FIRM CLAIMED DEPRECIATION ON THAT PALA CE. THE LEARNED JUDGES HELD THAT ONCE THE PALACE WAS TREATED AS FORMING PA RT OF THE COMMON STOCK OF THE PARTNERSHIP, THE PARTNERSHIP BECAME ENTITLED TO CLAIM DEPRECIATION ON THAT BUILDING. IN THE SECOND OF THE CASES, THE LEARNED J UDGES WERE DEALING WITH A SIMILAR CLAIM FOR DEPRECIATION MADE FOR THE ASSESSM ENT YEAR 1961-62. IT WAS CONTENDED THAT IN THE ABSENCE OF REGISTRATION, NO S UCH TRANSFER COULD BE GIVEN EFFECT TO AND THE PROPERTY KNOWN AS RAMBAGH PALACE CANNOT BE CONSIDERED TO HAVE BEEN CONTRIBUTED TOWARDS THE ASSETS OF THE PAR TNERSHIP IN THE ABSENCE OF REGISTRATION. THE LEARNED JUDGES HELD (P. 32): 'EVEN IF A PROPERTY CONTRIBUTED BY ONE PARTNER BE A N IMMOVABLE PROPERTY, NO DOCUMENT, REGISTERED OR OTHERWISE, IS REQUIRED FOR TRANSFERRING THE PROPERTY TO THE PARTNERSHIP.' 13.4 THE LEGAL PROPOSITION THAT EMERGES IS THAT SEC TION 14 OF THE INDIAN PARTNERSHIP ACT, 1932 CLEARLY SHOWS THAT ALL PROPER TY AND RIGHTS AND INTERESTS WHICH THE PARTNERS MAY HAVE BROUGHT IN THE COMMON S TOCK AS THEIR CONTRIBUTION TO THE COMMON BUSINESS ARE PARTS OF TH E PARTNERSHIP PROPERTY. EVEN IF A PROPERTY CONTRIBUTED BY ONE PARTNER BE AN IMMOVABLE PROPERTY, NO DOCUMENT, REGISTERED OR OTHERWISE, IS REQUIRED FOR TRANSFERRING THE PROPERTY TO THE PARTNERSHIP. THEREFORE, THE IMPUGNED PARTNERSHI P DEED UNDER WHICH ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 25 PARTNERS CONTRIBUTED IMMOVABLE PROPERTY AS THEIR CA PITAL TOWARDS ITS ASSETS, DID NOT REQUIRE REGISTRATION. 14. PER CONTRA, THE LD CIT DR HAS REFERRED TO THE D ECISION OF HONBLE SUPREME COURT IN CASE OF SURAJ LAMP AND INDUSTRIES PVT LTD VS STATE OF HARYANA AND ANOTHER 340 ITR 1. IN THAT CASE, THE HONBLE SUPREME COUR T HAS HELD AS UNDER (HEAD NOTES): A SA/GPA/WILL TRANSACTION DOES NOT CONVEY ANY TITL E NOR CREATE ANY INTEREST IN AN IMMOVABLE PROPERTY. THE OBSERVATIONS BY THE D ELHI HIGH COURT, IN ASHA M. JAIN V. CANARA BANK - 94 (2001) DLT 841, THAT THE 'CONCEPT OF POWER OF ATTORNEY SALES HAVE BEEN RECOGNIZED AS A MODE OF TR ANSACTION' WHEN DEALING WITH TRANSACTIONS BY WAY OF SA/GPA/WILL ARE UNWARRA NTED AND NOT JUSTIFIED, UNINTENDEDLY MISLEADING THE GENERAL PUBLIC INTO THI NKING THAT SA/GPA/WILL TRANSACTIONS ARE SOME KIND OF A RECOGNIZED OR ACCEP TED MODE OF TRANSFER AND THAT IT CAN BE A VALID SUBSTITUTE FOR A SALE DEED. SUCH DECISIONS, TO THE EXTENT THEY RECOGNIZE OR ACCEPT SA/GPA/WILL TRANSACTIONS A S CONCLUDED TRANSFERS AS CONTRASTED FROM AN AGREEMENT TO TRANSFER, ARE NOT G OOD LAW. [PARA 15] IMMOVABLE PROPERTY CAN BE LEGALLY AND LAWFULLY TRAN SFERRED/CONVEYED ONLY BY A REGISTERED DEED OF CONVEYANCE. TRANSACTIONS OF TH E NATURE OF 'GPA SALES' OR 'SA/GPA/WILL TRANSFERS' DO NOT CONVEY TITLE AND DO NOT AMOUNT TO TRANSFER, NOR CAN THEY BE RECOGNIZED A VALID MODE OF TRANSFER OF IMMOVABLE PROPERTY. THE COURTS WILL NOT TREAT SUCH TRANSACTIONS AS COMP LETED OR CONCLUDED TRANSFERS OR AS CONVEYANCES AS THEY NEITHER CONVEY TITLE NOR CREATE ANY INTEREST IN AN IMMOVABLE PROPERTY. THEY CANNOT BE R ECOGNIZED AS DEEDS OF TITLE, EXCEPT TO THE LIMITED EXTENT OF SECTION 53A. SUCH TRANSACTIONS CANNOT BE RELIED UPON OR MADE THE BASIS FOR MUTATIONS IN MUNI CIPAL OR REVENUE RECORDS. WHAT IS STATED ABOVE WILL APPLY NOT ONLY TO DEEDS O F CONVEYANCE IN REGARD TO FREEHOLD PROPERTY BUT ALSO TO TRANSFER OF LEASEHOLD PROPERTY. A LEASE CAN BE VALIDLY TRANSFERRED ONLY UNDER A REGISTERED ASSIGNM ENT OF LEASE. IT IS TIME THAT ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 26 AN END IS PUT TO THE PERNICIOUS PRACTICE OF SA/GPA/ WILL TRANSACTIONS KNOWN AS GPA SALES. [PARA 16] IT HAS BEEN SUBMITTED THAT MAKING DECLARATION THAT GPA SALES AND SA/GPA/WILL TRANSFERS ARE NOT LEGALLY VALID MODES O F TRANSFER IS LIKELY TO CREATE HARDSHIP TO A LARGE NUMBER OF PERSONS WHO HA VE ENTERED INTO SUCH TRANSACTIONS AND THEY SHOULD BE GIVEN SUFFICIENT TI ME TO REGULARIZE THE TRANSACTIONS BY OBTAINING DEEDS OF CONVEYANCE. IT I S ALSO SUBMITTED THAT THIS DECISION SHOULD BE MADE APPLICABLE PROSPECTIVELY TO AVOID HARDSHIP. [PARA 17] IT IS THE WELL-SETTLED LEGAL POSITION THAT SA/GPA/W ILL TRANSACTIONS ARE NOT 'TRANSFERS' OR 'SALES' AND THAT SUCH TRANSACTIONS C ANNOT BE TREATED AS COMPLETED TRANSFERS OR CONVEYANCES. THEY CAN CONTIN UE TO BE TREATED AS EXISTING AGREEMENT OF SALE. NOTHING PREVENTS AFFECT ED PARTIES FROM GETTING REGISTERED DEEDS OF CONVEYANCE TO COMPLETE THEIR TI TLE. THE SAID 'SA/GPA/WILL TRANSACTIONS' MAY ALSO BE USED TO OBTAIN SPECIFIC P ERFORMANCE OR TO DEFEND POSSESSION UNDER SECTION 53A. IF THEY ARE ENTERED B EFORE THIS DAY, THEY MAY BE RELIED UPON TO APPLY FOR REGULARIZATION OF ALLOT MENTS/LEASES BY DEVELOPMENT AUTHORITIES. HOWEVER, IF THE DOCUMENTS RELATING TO 'SA/GPA/WILL TRANSACTIONS' HAS BEEN ACCEPTED AND ACTED UPON BY THE DDA OR OTHE R DEVELOPMENTAL AUTHORITIES OR BY THE MUNICIPAL OR REVENUE AUTHORIT IES TO EFFECT MUTATION, THEY NEED NOT BE DISTURBED, MERELY ON ACCOUNT OF THIS DE CISION. [PARA 18] HOWEVER, AFORESAID OBSERVATIONS ARE NOT INTENDED TO IN ANY WAY AFFECT THE VALIDITY OF SALE AGREEMENTS AND POWERS OF ATTORNEY EXECUTED IN GENUINE TRANSACTIONS. FOR EXAMPLE, A PERSON MAY GIVE A POWE R OF ATTORNEY TO HIS SPOUSE, SON, DAUGHTER, BROTHER, SISTER OR A RELATIV E TO MANAGE HIS AFFAIRS OR TO EXECUTE A DEED OF CONVEYANCE. A PERSON MAY ENTER IN TO A DEVELOPMENT AGREEMENT WITH A LAND DEVELOPER OR BUILDER FOR DEVE LOPING THE LAND EITHER BY FORMING PLOTS OR BY CONSTRUCTING APARTMENT BUILDING S AND IN THAT BEHALF EXECUTE AN AGREEMENT OF SALE AND GRANT A POWER OF A TTORNEY EMPOWERING THE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 27 DEVELOPER TO EXECUTE AGREEMENTS OF SALE OR CONVEYAN CES IN REGARD TO INDIVIDUAL PLOTS OF LAND OR UNDIVIDED SHARES IN THE LAND RELATING TO APARTMENTS IN FAVOUR OF PROSPECTIVE PURCHASERS. IN SEVERAL STA TES, THE EXECUTION OF SUCH DEVELOPMENT AGREEMENTS AND POWERS OF ATTORNEY ARE A LREADY REGULATED BY LAW AND SUBJECTED TO SPECIFIC STAMP DUTY. AFORESAID OBS ERVATIONS REGARDING 'SA/GPA/WILL TRANSACTIONS' ARE NOT INTENDED TO APPL Y TO SUCH BONA FIDE /GENUINE TRANSACTIONS. [PARA 19] 15. WE ARE OF THE VIEW THAT AS FAR AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF SURAJ LAMP & INDUSTRIES (P.) L TD. (SUPRA) IS CONCERNED, IT IS ALTOGETHER IN DIFFERENT CONTEXT. THERE IS NO DIS PUTE WITH REGARD TO THE PROPOSITION THAT TRANSFER OF AN IMMOVABLE PROPERTY HAVING VALUE OF MORE THAN RS.100/- CAN ONLY BE COMPLETED BY WAY OF REGISTERED SALE DEED, AS CONTEMPLATED IN SECTION 17 OF THE REGISTRATION ACT. THIS JUDGMENT DEALS WITH THE CONCEPT OF POWER OF ATTORNEY, LEASE, LICENCE ET C. DEFINITION OF EXPRESSION 'TRANSFER' PROVIDED IN SECTION 2(47) IS MORE WIDER THAN IN THE GENERAL LAW. AS WE HAVE HELD ABOVE, THE PROVISIONS OF SECTION 2(47) OF THE ACT WHERE THE TRANSFER OF CAPITAL ASSET HAS BEEN GIVEN A WIDER ME ANING INCLUDING ANY TRANSACTION WHICH HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF THE IMMOVABLE PROPERTY AND IS NOT LIMITED TO TRANSF ER EFFECTED BY WAY OF EXECUTING A REGISTERED CONVEYANCE DEED ONLY. FURTHE R, THE PROVISIONS OF SECTION 45(3) HAS BEEN BROUGHT ON THE STATUE BOOK T O BRING TO TAX TRANSACTIONS RELATING TO TRANSFER OF CAPITAL ASSET BY A PARTNER TO THE FIRM. IT IS A CARDINAL RULE OF INTERPRETATION THAT THE PROVISIONS SHOULD BE READ IN A MANNER THAT IT SHOULD NOT MAKE THE PROVISIONS OTIOSE. IF W E WERE TO READ THE PROVISIONS OF SECTION 45(3) LIMITED TO CASES WHERE THE PROPERTY IS TRANSFERRED BY WAY OF REGISTERED CONVEYANCE DEED, THEN IT WILL TAKE AWAY LARGE NUMBER OF TRANSACTIONS, AS IN THE INSTANT CASE, OUT OF THE TA X NET WHICH THE LEGISLATURE HAS SPECIFICALLY INTENDED TO BE BROUGHT IN TAX NET AND WHICH IS PRECISELY THE REASONS FOR THE INSERTION OF SUB-SECTION (3) TO SEC TION 45 OF THE ACT. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 28 16. IN LIGHT OF ABOVE, WE ARE OF THE VIEW THAT THE TAXABLE EVENT HAS HAPPENED IN THE YEAR OF TRANSFER OF CAPITAL ASSET B Y WAY OF CAPITAL CONTRIBUTION WHICH HAPPENS TO BE FINANCIAL 2005-06 RELEVANT TO A SSESSMENT YEAR 2006-07 AND THE PROVISIONS OF SECTION 45(3) ARE CLEARLY ATT RACTED. THE SUBJECT TRANSACTION SHALL THEREFORE BE EXIGIBLE FOR CAPITAL GAINS TAX IN THE ASSESSMENT YEAR 2006-07 IN TERMS OF THE PROVISIONS OF SECTION 2(47) READ WITH SECTION 45(3) OF THE ACT 17. WE NOW REFER TO THE PROVISIONS OF SECTION 50C, WHICH HAS BEEN INVOKED BY THE AO WHILE BRINGING TO TAX THE SUBJECT TRANSAC TION, TO EXAMINE WHETHER THE SAID PROVISIONS ARE APPLICABLE IN THE INSTANT C ASE. SECTION 50C READS AS UNDER: (1) WHERE THE CONSIDERATION RECEIVED OR ACCRUING A S A RESULT OF THE TRANSFER BY AN ASSESSEE OF A CAPITAL ASSET, BEING LAND OR BU ILDING OR BOTH, IS LESS THAN THE VALUE ADOPTED OR ASSESSED OR ASSESSABLE BY ANY AUTHORITY OF A STATE GOVERNMENT (HEREAFTER IN THIS SECTION REFERRED TO A S THE 'STAMP VALUATION AUTHORITY') FOR THE PURPOSE OF PAYMENT OF STAMP DUT Y IN RESPECT OF SUCH TRANSFER, THE VALUE SO ADOPTED OR ASSESSED OR ASSES SABLE SHALL, FOR THE PURPOSES OF SECTION 48 , BE DEEMED TO BE THE FULL VALUE OF THE CONSIDERATI ON RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. 18. BEFORE WE EXAMINE THE APPLICABILITY OF SECTION 50C, IT WOULD BE RELEVANT TO UNDERSTAND THE CONTEXT AND BACKGROUND OF ENTERIN G INTO THE SALE DEED DATED 26.07.2007 AND GETTING THE SAME REGISTERED WI TH THE STAMP DUTY AUTHORITIES IN THE FINANCIAL YEAR 2007-08 RELEVANT TO IMPUNGED ASSESSMENT YEAR 2008-09. IN THIS REGARD, THE LD AR HAS SUBMIT TED THAT IN ORDER THAT THE FIRM CAN DEVELOP THE RESORTS OVER THIS LAND, THE LA ND USE WAS REQUIRED TO BE CHANGED FROM AGRICULTURE TO RESORTS IN THE REVENUE RECORDS AND ALL THESE FORMALITIES WERE COMPLETED BY THE ASSESSEE ALONG WI TH THE OTHER PERSON IN ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 29 WHOSE NAME THE PROPERTY WAS REGISTERED IN THE REVEN UE RECORDS, EVEN THOUGH THE SAME HAVE BEEN CONTRIBUTED TO THE FIRM. HOWEVER , ALL EXPENDITURE RELATING TO SUCH CONVERSION WAS BORNE BY THE PARTNERSHIP FIR M.AFTER ALL THESE FORMALITIES WERE COMPLETED, CHANGE OF LAND USE WAS PERMITTED AND A PATTA WAS GIVEN BY JDA TO THEM ON 13.07.2007 AND TO HAVE A LEGAL TITLE OF THE FIRM ON SUCH LAND, BOTH THESE PERSONS EXECUTED A SALE DE ED ON 26.07.2007 IN FAVOUR OF THE FIRM. IT WAS FURTHER SUBMITTED THAT I N THIS SALE DEED, THE FACT THAT THE LAND WAS ALREADY TRANSFERRED BY BOTH THESE PERSONS TO THE FIRM M/S CRYSTAL PARK RESORTS IS SPECIFIED AND IT IS ALSO CL ARIFIED THAT THE SALE DEED IS EXECUTED WITH THE OBJECT OF REMOVING ANY LEGAL DOUB TS AND OUR REFERENCE WAS DRAWN TO THE FOLLOWING NARRATION IN THE SALE DEED P LACED AT PAGE 26 OF APB WHICH READS AS UNDER . SS ;G GS FD MDROF.KZR FJLKSVZ EKSVYK IZ;KSTUKFKZ :IKURFJR HKWFE IZFKE I{K FODSZRK DS LOA; DH FEFYD;R DH GS] FTLDKS IZFKE IK{K FODSZRK US ,D QEZ FDLVY IKDZ FJLKSVZL [KKSYDJ MLESA LFKKUKURFJR DJ NH GS ,A O DCTK HKH QEZ LEGKY FN;K GS] YSFDU DKUWUH N`'FV LS LFKKUKKURJ.K DS LECU/K ES A FDLH HKH IZDKJ DS LAK; DKS NWJ DJUS DS MNSNK; LS BL FODZ; I= DS EK/;E LS VKT IZFK E FODZSRK US MDR FJLKSVZ EKSVY IZ;KTUKFKZ :IKURFJR 24238.95 OXZXT ;K 20266.18 OXZEHVJ FTLDKS FD LAYXU LOROKSA LFGR EQCFYX 7244987 : V{KJS CGRRJ YK[K PAOKYHL GTKJ UKS LKS FLR;KLH :DS CNYS F}RH; I{K DZSRK DS F GAR ESA DRBZ FODZ; DJ FN;K GS RFKK FODZ; IZFRQY DH LEIW.KZ JKFK QEZ DH IQLRDK S ESA TEK [KPZ }KJK IZFKE I{K FODZSRK UKS F}RH; I{K DZSRK LS IWOZ ESA GH IZKIR DJ YH FKH] VC IZFKE IZ{K FODZSRK DKS F}RH; I{K DZSRK LS FODZ; EWY; DH JKFK ESA LS DQN H KH IZKIR DJUK KS'K UGH JGK GSA 19. HAVING CONSIDERED THE PROVISIONS OF SECTION 50C AND THE SALE DEED EXECUTED BY THE ASSESSEE DATED 26.07.2007 WITH THE FIRM M/S CRYSTAL PARK RESORTS, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 50C CANNOT BE INVOKED IN THE INSTANT CASE. THE REASONS FOR THE S AME ARE AS FOLLOWS. FIRSTLY, AS WE HAVE HELD ABOVE, THE TAXABLE EVENT FOR TRANSFER OF LAND IS THE YEAR IN WHICH THE LAND WAS CONTRIBUTED TO THE FIRM IN TERMS OF SE CTION 45(3) OF THE ACT. THE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 30 SAID TAXABLE EVENT CANNOT BE SHIFTED EITHER BY THE ASSESSEE OR THE REVENUE, BY VIRTUE OF ENTERING INTO OR TAKING INTO ACCOUNT, A S UBSEQUENT SALE DEED IN RESPECT OF THE SAME CAPITAL ASSET IN A SUBSEQUENT YEAR. TH IS WILL MAKE THE PROVISIONS OF SECTION 45(3) OTIOSE. SECONDLY, THE SALE DEED I S BETWEEN THE SAME PARTIES FOR THE SAME PROPERTY AND FOR THE SAME CONSIDERATIO N AT WHICH THE PROPERTY WAS INITIALLY CONTRIBUTED AS SHARE CAPITAL IN THE F IRM. THE SALE DEED CLEARLY STIPULATE THAT THE LAND HAS ALREADY BEEN TRANSFERRE D AND POSSESSION HANDED OVER TO THE FIRM AND THE REASON WHY THE SAME HAS BE EN EXECUTED IS TO AVOID ANY DOUBTS OR CONFUSION FROM A LEGAL STANDPOINT REG ARDING THE TITLE OVER THE LAND IN THE REVENUE RECORDS. THEREFORE, IN SUBSTAN CE, IT IS THE SAME TRANSACTION AND NOT A NEW OR AMENDED TRANSACTION IN ANY CASE AN D A TRANSACTION, WHICH IS ALREADY SUBJECT TO TAXABILITY UNDER SECTION 45(3) O F THE ACT, CANNOT AGAIN BE BROUGHT TO TAX UNDER PROVISIONS OF SECTION 50C OF T HE ACT. THIRDLY, SECTION 50C IS APPLICABLE WHERE THE CONSIDERATION RECEIVED OR A CCRUING AS A RESULT OF TRANSFER OF A CAPITAL ASSET IS LESS THAN THE VALUE ADOPTED OR ASSESSED BY THE STAMP DUTY AUTHORITY IN RESPECT OF AN ASSET WHICH H AS BEEN TRANSFERRED DURING THE YEAR. IN THE CASE OF THE ASSESSEE, THE LAND WA S CONTRIBUTED BY THE ASSESSEE TO THE FIRM ON 01.03.2006 FALLING IN A.Y. 06-07. THUS, AS WE HAVE HELD ABOVE, THERE IS A TRANSFER U/S 45(3) IN A.Y. 06-07 ITSELF AND IN THAT YEAR, THERE WAS NO REGISTRATION OF TRANSFER UNDER THE REGISTRAT ION ACT, NO STAMP DUTY WAS ADOPTED, ASSESSED OR PAID. MERELY ON ACCOUNT OF THE FACT THAT THERE IS A SUBSEQUENT REGISTRATION OF THE SALE DEED IN THE YEA R UNDER CONSIDERATION, THE VALUED ASSESSED BY THE STAMP DUTY AUTHORITIES CANNO T BE SUBSTITUTED FOR THE VALUED RECORDED IN THE BOOKS OF THE PARTNERSHIP FIR M. 20. WE HAVE ALSO GONE THROUGH THE DECISION OF CARLTON H OTELS (SUPRA) CITED BY THE LD DR, IT DOESNT SUPPORT THE CASE OF THE RE VENUE, RATHER IT SUPPORTS THE CASE OF THE ASSESSEE. THE RELEVANT FINDINGS ARE AS UNDER: ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 31 24. WE ARE OF THE CONSIDERED VIEW THAT SECTION 45(3 ), SECTION 50C AND SECTION 55A OPERATE IN DIFFERENT SPHERES AND THEY C AN BE INVOKED WHEN CONDITIONS LAID DOWN IN THOSE SECTIONS ARE SATISFIE D. INVOKING OF POWER CONTAINED IN ONE OF THESE SECTIONS DOES NOT COME IN TO CONFLICT WITH EACH OTHER. AS MENTIONED ABOVE, PROVISIONS OF SECTION 50 C CAN BE INVOKED WHEN THERE IS A REGISTRATION OF TRANSFER UNDER REGISTRAT ION ACT AND STAMP DUTY IS PAID FOR THE PURPOSES OF REGISTERING THE SALE. IF T HE TRANSFER BY WAY OF SALE IS NOT REGISTERED UNDER REGISTRATION ACT AND NO STAMP DUTY IS PAID THEN SECTION 50C CANNOT BE INVOKED. SECTION 55A, ON THE OTHER HA ND, EMPOWERS THE ASSESSING OFFICER TO REFER THE PROPERTY UNDER TRANS FER TO A DVO IF HE HAS MATERIAL ON RECORD ON THE BASIS OF WHICH HE FORMS A N OPINION THAT VALUE DECLARED BY THE ASSESSEE AS PER ESTIMATE OF THE REG ISTERED VALUER IS LESS THAN ITS FAIR MARKET VALUE OR FAIR MARKET VALUE IS MORE BY CERTAIN PERCENTAGE TO WHAT IS DECLARED BY THE ASSESSEE AS SALE CONSIDERAT ION, OR THERE ARE OTHER RELEVANT FACTORS WHICH NECESSITATED THE ASSESSING O FFICER TO REFER THE CAPITAL ASSET UNDER TRANSFER TO THE DVO. SECTION 55A CAN BE INVOKED FOR THE PURPOSE OF THIS CHAPTER. ON THE OTHER HAND, WHERE A TRANSFE R COVERED UNDER SECTION 45(3) IS SOUGHT TO BE REGISTERED BY THE FIRM AND ST AMP DUTY IS PAID BY THE PARTIES THEN PROVISIONS OF SECTION 50C COULD STILL BE INVOKED EVEN THAT CASE MAY BE COVERED UNDER SECTION 45(3). IN OUR CONSIDER ED VIEW, IN THAT CASE, PROVISIONS OF SECTION 45(3) WOULD NOT BE APPLICABLE BUT IT IS ONLY SECTION 50C WHICH CAN ALONE BE INVOKED AS THERE IS A REGISTRATI ON OF SALE DEED UNDER REGISTRATION ACT. THUS, WHERE A SALE TRANSACTION IS REGISTERED BY PAYING STAMP DUTY THEN IT IS ONLY SECTION 50C WHICH CAN OPERATE. IN THAT SITUATION, SECTION 50C WOULD OVERRIDE SECTION 45(3). SECTION 45(3) IS A GENERAL PROVISION AND SECTION 50C IS A SPECIAL PROVISION WHICH WOULD OVER RIDE SECTION 45(3) IF THE SALE DEED IS SOUGHT TO BE REGISTERED BY PAYING STAM P DUTY. BUT WHERE SUCH REGISTRATION DOES NOT TAKES PLACE BY PAYING STAMP D UTY THAT CASE WOULD ONLY BE COVERED UNDER SECTION 45(3) AND THEREFORE, VALUE RECORDED BY THE FIRM IN ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 32 ITS BOOKS WOULD ONLY BE THE FULL VALUE OF CONSIDERA TION FOR THE PURPOSES OF COMPUTING CAPITAL GAINS. 25. IN THE PRESENT CASE, THERE IS ADMITTEDLY NO REG ISTRATION OF THE TRANSFER UNDER REGISTRATION ACT AND NO STAMP DUTY HAS BEEN P AID. THEREFORE, PROVISIONS OF SECTION 50C CANNOT BE INVOKED. THE CASE IS THERE FORE, COVERED ONLY UNDER SECTION 45(3). 21. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRETY O F FACTS AND CIRCUMSTANCES OF THE CASE, THE PROVISIONS OF SECTIO N 45(3) ARE ATTRACTED AND PROVISIONS OF SECTION 50C ARE NOT HELD APPLICABLE. THE TAXABLE EVENT HAS HAPPENED IN THE YEAR RELEVANT TO ASSESSMENT YEAR 20 06-07 WHEN THE ASSESSEE,BY VIRTUE OF ENTERING INTO A PARTNERSHIP D EED DATED 1.03.2006, TRANSFERRED HIS LAND TO THE PARTNERSHIP FIRM NAMEL Y M/S CRYSTAL PARK RESORTS BY WAY OF HIS CAPITAL CONTRIBUTION AND THE SAME WAS R ECORDED IN THE BOOKS OF THE PARTNERSHIP FIRM. 22. NOW, COMING TO THE SECOND ISSUE AS TO WHETHER ONCE A LAND IS DEEMED TO BE TRANSFERRED TO THE FIRM BY WAY OF CAPITAL CON TRIBUTION BY A PARTNER U/S 45(3) OF THE INCOME TAX ACT, 1961, THE SUBSEQUENT R EGISTRATION OF SUCH LAND IN THE NAME OF THE FIRM TO GIVE A LEGAL TITLE TO IT COULD LEAD TO A BELIEF THAT EARLIER TRANSFER WAS NON-GENUINE AND THE EARLIER TR ANSACTION SHOULD THEREFORE BE DISREGARDED. 23. AS WE HAVE STATED ABOVE, THE PROVISIONS OF SECTION 2(47) HAVE BEEN EXPANDED BY THE LEGISLATURE TO INCLUDE CASES WHERE THERE IS TRANSFER OF POSSESSION IN FAVOUR OF AND ENJOYMENT OVER THE PROP ERTY BY THE BUYER EVEN WITHOUT ENTERING INTO A CONVEYANCE DEED. THUS, ENT ERING INTO A CONVEYANCE DEED IS NOT THE SOLE MODE OF TRANSFER AND AT THE SA ME TIME, THERE ARE OTHER MODES OF TRANSFER WHICH ARE ALSO RECOGNISED, AS IN THE PRESENT CASE BY VIRTUE ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 33 OF SECTION 45(3) OF THE ACT. THERE IS THEREFORE A DISTINCTION BETWEEN THE TRANSFER UNDER THE PROVISIONS OF THE ACT AND THE TR ANSFER AS PER THE TRANSFER OF THE PROPERTY ACT. THE INTENT AND PURPOSE OF ENTERIN G INTO THE CONVEYANCE DEED IS TO ENFORCE PARTIESS RESPECTIVE RIGHTS AND OBLIGATIONS, IN RELATION TO THE TRANSFER OF AN IMMOVABLE PROPERTY, WHICH ARE GOVERN ED BY AND SUBJECT TO THE LAWS RELATING TO IMMOVABLE PROPERTY, AND NOT GUIDED BY THE INCOME TAX LAWS. THE PARTIES TO A TRANSACTION ARE THEREFORE, WELL WI THIN THEIR RIGHTS TO ENTER INTO A SUBSEQUENT CONVEYANCE DEED EVEN WHEN THE SAME TRA NSACTION HAS BEEN HELD TO BE IN NATURE OF TRANSFER UNDER THE PROVISIO NS OF SECTION 2(47) OF THE ACT AND THERE IS NOTHING IN THE INCOME TAX LAW WHIC H PROHIBITS THE SAME. THEREFORE, IN THE INSTANT CASE, AS A GENERAL PROPOS ITION, ONCE A LAND IS DEEMED TO BE TRANSFERRED TO THE FIRM BY WAY OF CAPI TAL CONTRIBUTION BY A PARTNER U/S 45(3) OF THE INCOME TAX ACT, 1961, THE SUBSEQUENT REGISTRATION OF SUCH LAND IN THE NAME OF THE FIRM TO GIVE A LEGAL T ITLE TO IT COULD NOT LEAD TO A CONCLUSION THAT EARLIER TRANSFER WAS NON-GENUINE AN D THE EARLIER TRANSACTION SHOULD THEREFORE BE DISREGARDED. 24. NOW, IN ORDER TO EXAMINE THE CONTENTION RAISED BY T HE REVENUE ON MERITS THAT TRANSACTION BETWEEN THE ASSESSEE AND TH E FIRM ON THE BASIS OF PARTNERSHIP DEED DATED 1.3.2006 IS SHAM AND NOT GEN UINE, WE REFER TO THE CONSTITUTION OF THE PARTNERSHIP FIRM, CONTRIBUTION OF LAND BY THE ASSESSEE AS HIS CAPITAL CONTRIBUTION, THE TAX FILINGS AND EVENT S SUBSEQUENT TO ENTERING INTO THE PARTNERSHIP. THERE IS NO DISPUTE ON THE FACT THAT THE ASSESSEE ALONG WITH SHRI MUKESH MEENA CONSTITUTED A PARTNERSHIP FIRM IN THE NAME & STYLE OF M/S CRYSTAL PARK RESORTS VIDE DEED OF PARTNERSHIP DT. 0 1.03.2006 TO CARRY ON THE BUSINESS OF REAL ESTATE, DEVELOPMENT OF LAND, RUNNI NG OF GUEST HOUSES, HOTELS, MOTELS AND RESORTS, ETC & OTHER TOURISM RELATED ACT IVITIES. BOTH THESE PARTNERS CONTRIBUTED THEIR AGRICULTURE LAND AT VILLAGE HARWA R, TEHSIL AMER AS THEIR CAPITAL CONTRIBUTION. THE ASSESSEE CONTRIBUTED 2.13 58 HECTARE OF HIS ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 34 AGRICULTURE LAND TO THE FIRM AT A COST OF RS. 63,62 ,450/- AND SH. MUKESH MEENA CONTRIBUTED 1.12 HECTARE OF HIS AGRICULTURE L AND TO THE FIRM AT COST OF RS. 29,31,007/-. THE TAX RETURN OF THE PARTNERSHIP FIRM M/S CRYSTAL PARK RESORTS FOR A.Y. 2006-07 WAS FILED ON 30-10-2006 WH EREIN THIS FACT HAS BEEN DISCLOSED. THIS LAND CONTINUED TO REMAIN THE ASSET OF THE FIRM AND DISCLOSED TO THE REVENUE IN THE TAX RETURN FOR AY 2007-08 FILED ON 31.07.2007 AND IN THE TAX RETURN FOR AY 2008-09 FILED ON 26.07.2008.THE C ONSTITUTION OF THE PARTNERSHIP FIRM M/S CRYSTAL PARK RESORTS CHANGED F ROM TIME TO TIME. ON 1 ST DECEMBER 2006, M/S CRYSTAL PARK RESORTS PVT. LTD. W AS INTRODUCED AS A PARTNER. ON 21 ST OF JULY 2007, SHRI BHARAT RAJ BHANDARI AND SHRI KA MLESH BHANDARI WERE INTRODUCED AS PARTNER. ON 4 TH DAY OF AUGUST 2007, SHRI LAL CHAND MEENA RETIRED FROM THE FIRM.THUS, AS ON 31.03 .2008, M/S CRYSTAL PARK RESORTS PVT. LTD., SHRI BHARAT RAJ BHANDARI, SHRI K AMLESH BHANDARI AND SHRI MUKESH MEENA WERE PARTNERS IN THIS FIRM.IN ORDER TH AT THE FIRM CAN DEVELOP THE RESORTS OVER THIS LAND, IT WAS NECESSARY THAT T HE LAND USE IS CHANGED FROM AGRICULTURE TO RESORTS IN THE REVENUE RECORDS. THER EFORE, SINCE THE LAND IN THE REVENUE RECORDS WERE IN NAME OF THE PARTNERS, BOTH THE PARTNERS FILED APPLICATION AND AFFIDAVITS TO THE JAIPUR DEVELOPMEN T AUTHORITY FOR CHANGE OF LAND USE FROM AGRICULTURE TO RESORTS PURPOSEU/S 90B OF THE RAJASTHAN LAND REVENUE ACT, 1956. THEREAFTER, THROUGH THE COURT O RDER DT. 14.03.2007 , THE SAID LAND SURRENDERED TO THE JDA WAS ALLOTTED BACK TO BOTH THESE PERSONS AFTER CHANGE OF LAND USE AND A PATTA WAS GIVEN BY J DA TO THEM ON 13.07.2007. ALL THESE ACTIVITIES WERE SUPPORTED BY THE PARTNERSHIP FIRM AND THE EXPENDITURE RELATING TO SUCH CONVERSION WAS BOR NE BY THE PARTNERSHIP FIRM. AFTER ALL THESE FORMALITIES, TO HAVE A LEGAL TITLE OF THE FIRM ON SUCH LAND, BOTH THESE PARTNERS EXECUTED A SALE DEED ON 26.07.2 007 IN FAVOUR OF THE PARTNERSHIP FIRM. ALL THESE FACTS DOESNT THEREFOR E SUPPORT THE CASE OF THE REVENUE AS THE CHANGE OF LAND USE IS CRITICAL FOR C ARRY OUT ANY FURTHER ACTIVITIES TOWARDS BUILDING AND DEVELOPING THE RESO RT AND NECESSARY ACTIONS ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 35 HAVE BEEN TAKEN IN THAT REGARD. FURTHER, IF THE RE VENUE HAS ANY CONCERNS REGARDING THE GENUINENESS OF THE PARTNERSHIP FIRM O R ITS ACTIVITIES, THE NECESSARY ACTION COULD HAVE BEEN TAKEN AGAINST THE PARTNERSHIP FIRM. HOWEVER, THERE IS NOTHING TO SUGGEST ANY ACTION TAK EN BY THE REVENUE IN ALL THESE YEARS. 25. FURTHER, AS WE HAVE HELD ABOVE, THE REVENUE IS WELL WITHIN ITS RIGHTS TO TAX THE CONTRIBUTION OF LAND IN THE ASSESSMENT YEAR 2006-07 IN THE HANDS OF THE ASSESSEE. IT IS ALSO AN ADMITTED FACT THAT THE ASSESSEE DIDNT FILE ITS INDIVIDUAL TAX RETURN FOR THE YEAR 2006-07. THE LD AR HAS SUBMITTED THAT THE REASONS WHY THE ASSESSEE HAS NOT FILED HIS RETURN O F INCOME WAS THAT HIS INCOME WAS BELOW THE MAXIMUM AMOUNT CHARGEABLE TO T AX AND HE HAS NO CAPITAL GAIN TAX LIABILITY AS THE CONTRIBUTION OF L AND BY HIM TO THE FIRM WAS AT COST. IT IS ALSO A FACT THAT THE FIRM HAS BEEN REGU LAR IN FILING ITS TAX RETURNS WHERE THE SAID TRANSACTION HAS BEEN DULY DISCLOSED AND THE REVENUE IS THUS PRIVY TO SUCH TRANSACTION. THE FACT THAT THE TRANS ACTION IS TAX NEUTRAL AS CLAIMED BY THE ASSESSEE AND THE ASSESSEE HAS FAILED TO FILE ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2006-07 CANNOT BE HELD A GAINST THE ASSESSEE BY HOLDING THAT THE WHOLE TRANSACTION WAS SHAM AND NOT GENUINE. THE ASSESSEE IS WELL WITHIN HIS RIGHTS TO ARRANGE HIS AFFAIRS WE LL WITHIN THE FOUR CORNERS OF LAW AND SO LONG AS, ITS ACTS AND AFFAIRS ARE IN COM PLIANCE WITH THE LAW, EVEN WHERE IT IS HELD TO BE TAX NEUTRAL, THE SAME CANNOT BE THE BASIS FOR DOUBTING THE GENUINENESS OF THE TRANSACTION. 26. IN LIGHT OF ABOVE DISCUSSIONS AND IN THE ENTIRE TY OF FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION OF RS 72,49 ,655 ON ACCOUNT OF SHORT- TERM CAPITAL GAINS IN THE HANDS OF THE ASSESSEE IS HEREBY DELETED. IN THE RESULT, GROUND NO. 1 OF THE ASSESSEES APPEAL IS AL LOWED. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 36 27. IN RESPECT OF GROUND NO. 2, BRIEF FACTS OF THE CASE ARE THAT THE AO OBSERVED THAT ASSESSEE HAS DEPOSITED RS.1,33,314/- FOR ALLOTMENT OF JDA PATTA AND RS.8,290/- ON ACCOUNT OF LEASE MONEY. NO EXPLANATION IN THIS REGARD WAS FILED. HE, THEREFORE, MADE ADDITION OF RS. 1,41 ,604/- U/S 69C OF THE I.T. ACT, 1961 AS UNEXPLAINED EXPENDITURE. 28. BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER BEF ORE THE LD. CIT(A) WHO HAS CONFIRMED THE ADDITION OF RS.1,29,385/- BY GIVING THE FOLLOWING FINDINGS:- AS PER AO, THE ASSESSEE INCURRED RS.1,41,604/- ON ACCOUNT OF LEASE RENT ETC. FOR OBTAINING PATTA FROM JDA AND AS SOURCE O F SUCH EXPENSES WAS NOT EXPLAINED, THEREFORE, THE AO TREATED THE SAME TO BE UNEXPLAINED EXPENDITURE U/S 69C OF IT ACT. ON THE OTHER HAND, T HE APPELLANT CASE IS THAT THE TOTAL EXPENDITURE OF RS.1,29,385/- WAS INCURRED AND THAT THE EXPENDITURE WAS INCURRED BY THE FIRM M/S CRYSTAL PA RK RESORT AND NOT THE ASSESSEE. IN THIS CONNECTION, THE APPELLANT ALSO FI LED COPY OF LEDGER ACCOUNT OF M/S CRYSTAL PARK RESORT WHEREIN CASH PAYMENT OF RS.48,478/- AND RS.72,717/- ON 21.04.2007 IS SHOWN. IN THIS CONNECT ION, IT MAY FURTHER BE NOTED THAT THE NECESSARY PATTA FROM THE JDA WAS O BTAINED BY THE ASSESSEE AND THEREFORE THE EXPENDITURE WAS TO BE INCURRED BY THE ASSESSEE AND NOT THE FIRM. MOREOVER, EVEN FROM THE FIRMS ACCOUNT, T HE SOURCE OF SUCH AMOUNT IS NOT EXPLAINED. HOWEVER, AS THE TOTAL EXPE NDITURE WAS ONLY FOR RS.1,29,385/- AND NOT RS.1,41,604/-, THEREFORE, THE ADDITION TO THE EXTENT OF RS.1,29,385/- IS CONFIRMED. THE APPELLANT GETS R ELIEF OF RS.12,219/-. 29. THE AR OF THE ASSESSEE SUBMITTED THAT THE FIRM HAS DEPOSITED RS. 1,21,195/- (48,478+72,717) ON 21.04.2007 TO JDA TOW ARDS LEASE MONEY AS IS MENTIONED ON THE LEASE DEED. THIS IS DULY RECORDED IN THE BOOKS OF THE FIRM. FURTHER, RS. 8,290/- IS DEPOSITED ON 13.07.2007 DU LY RECORDED IN THE BOOKS OF FIRM. THUS, THE TOTAL EXPENDITURE OF RS.1,29,385/- IS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE FIRM, THE SOURCE OF WHICH IS VERIFIABLE FROM ITS BOOKS OF ACCOUNTS. THERE IS NO MATERIAL WITH THE CIT(A) T O ALLEGE THAT THE SOURCE OF THIS AMOUNT IS NOT VERIFIABLE FROM THE BOOKS OF ACC OUNTS OF THE FIRM. IN ANY ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 37 CASE, WHEN ASSESSEE HAS NOT INCURRED THE EXPENDITUR E ON PAYMENT OF THE SAID AMOUNT, THERE CANNOT BE ANY ADDITION IN THE HANDS O F THE ASSESSEE. IN VIEW OF ABOVE, THE ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A) BE DELETED. 30. THE LD AR HAS CONTENDED THAT THE TOTAL EXPENDI TURE OF RS.1,29,385/- IS DULY RECORDED IN THE BOOKS OF ACCOUNTS OF THE FIRM, THE SOURCE OF WHICH IS VERIFIABLE FROM ITS BOOKS OF ACCOUNTS. FURTHER, THE ASSESSEE HAS NOT INCURRED THE EXPENDITURE ON PAYMENT OF THE SAID AMOUNT, THER E CANNOT BE ANY ADDITION IN THE HANDS OF THE ASSESSEE. THE SUBJECT ADDITION IS ACCORDINGLY DELETED AND GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 31. IN RESPECT OF GROUND NO. 3, BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE DECLARED AGRICULTURE INCOME OF RS. 60,000/-. THE AO OBSERVED THAT NO DETAILS REGARDING PRODUCTION OF AGRICULTURE PRODUCE OR SUPP ORTING BILL/VOUCHER HAS BEEN FURNISHED. ACCORDINGLY, HE TREATED THE AGRICUL TURE INCOME DECLARED BY THE ASSESSEE AS INCOME FROM OTHER SOURCES AND MADE ADDITION FOR THE SAME. 30. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER BE FORE LD. CIT(A) CONFIRMED THE ADDITION BY HOLDING THAT IT IS A SETT LED LAW THAT IN RESPECT OF AGRICULTURAL INCOME WHICH IS AN EXEMPTED INCOME, TH E ONUS IS ON THE ASSESSEE TO PROVE THAT SUCH AGRICULTURAL INCOME WAS GENUINEL Y EARNED. THE ASSESSEE HAS FAILED TO PROVE THE EARNING OF AGRICULTURAL INC OME FOR RS.60,000/- EITHER BEFORE THE AO OR DURING THE APPELLATE PROCEEDINGS. THEREFORE THE AO HAS RIGHTLY TAXED THE INCOME AS INCOME FROM OTHER SOURC ES. ACCORDINGLY THE ADDITION IS MADE BY THE AO WAS CONFIRMED. 32. THE LD AR SUBMITTED THAT IT IS TO BE NOTED THAT THE AO HAS NOT RAISED ANY QUERY NOR GIVEN AN OPPORTUNITY TO EXPLAIN THE AGRIC ULTURE INCOME DECLARED BY THE ASSESSEE IN THE RETURN. THE ASSESSEE IS HAVING 5 BIGHA OF AGRICULTURE LAND. ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 38 THE AGRICULTURE INCOME SHOWN BY THE ASSESSEE IS REA SONABLE CONSIDERING THE LAND HOLDING. OTHERWISE ALSO, THE LOWER AUTHORITIES HAVE NOT BROUGHT ANY EVIDENCE TO SHOW THAT ASSESSEE IS HAVING ANY OTHER INCOME WHICH IS SHOWN IN THE SHAPE OF AGRICULTURE INCOME. IN VIEW OF ABOVE, THE ADDITION CONFIRMED BY THE LD. CIT(A) BE DELETED . 33. WE HAVE GONE THROUGH THE CONTENTIONS OF BOTH TH E PARTIES AND PURSUED THE MATERIAL AVAILABLE ON RECORD. THE LD CIT(A) HAS STATED THAT THE ASSESSEE HAS FAILED TO PROVE THE EARNING OF AGRICULTURAL INC OME FOR RS.60,000/- EITHER BEFORE THE AO OR DURING THE APPELLATE PROCEEDINGS A ND HAS FAILED TO DISCHARGE THE ONUS CAST ON THE ASSESSEE TO PROVE THAT SUCH AG RICULTURAL INCOME WAS GENUINELY EARNED. WE AGREE WITH THE SAID FINDINGS OF THE LD CIT(A) WHICH REMAIN UNCONTROVERTED BEFORE US. HENCE, GROUND NO. 3 OF ASSESSEES APPEAL IS DISMISSED. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27/6/2017. SD/- SD/- (KUL BHARAT ) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 27/06/2017 SANTOSH VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- SHRI LALCHAND MEENA, S/O SH. PRATAP MEENA, VILLAGE DHAMSIYA, VIA KUKAS, TEHSIL-AMER, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- THE ITO, WARD 7(3), JAIPUR 3. VK;DJ VK;QDR@ CIT III, JAIPUR 4. VK;DJ VK;QDRVIHY@ THE CIT(A)-III, JAIPUR ITA NO. 515/JP/15 LALCHAND MEENA, VS. ITO, WARD 7(3), JAIPUR 39 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO.515 /JP/2015) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR.