Smt. Shashi Gupta, Ghaziabad V. ITO, Ghaziabad

ITA 6109/DEL/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 98009 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 11 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 03-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 07-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B R R KUMAR SENIOR
• Assessee Lawyers: V K JAIN; NEM SINGH S
• Keywords: Sale consideration of property below Jantri Value; Capital asset
• Section: 50C; 54F; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH G : NEW DELHI) BEFORE SHRI G.D. AGRAWAL, VICE PRESIDENT AND SHRI A.T. VARKEY, JUDICIAL MEMBER ITA NO.6109/DEL./2012 (ASSESSMENT YEAR : 2007-08) SMT. SHASHI GUPTA, VS. ITO, WARD 2 (3), B 195, RAMPRASTHA, SURYA NAGAR, GHAZIABAD. GHAZIABAD. (PAN : AIVPG8799D) (APPELLANT) (RESPONDENT) ASSESSEE BY : S/SHRI V.K. JAIN & NEM SINGH, ADVOCA TES REVENUE BY : SHRI B.R.R. KUMAR, SENIOR DR DATE OF HEARING : 03.11.2015 DATE OF PRONOUNCEMENT : 24.11.2015 O R D E R PER A.T. VARKEY, JUDICIAL MEMBER : THIS APPEAL, AT THE INSTANCE OF THE ASSESSEE, IS DI RECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS), GHAZIABAD DATED 10.09.2012 FOR THE ASSESSMENT YEAR 2007-08. 2. THE REVISED GROUNDS RAISED BY THE ASSESSEE ARE A S UNDER :- 1. THE ORDER PASSED BY THE HON'BLE CIT(A) IS BAD I N LAW, WRONG ON FACTS AND AGAINST THE PRINCIPLES OF NATURA L JUSTICE. 2 (A) THE LD CIT(A) HAS ERRED IN CONFIRMING THE DIS ALLOWANCE OF EXEMPTION OF CAPITAL GAINS U/S 54 OF THE INCOME TAX ACT MADE BY THE LD. AO AMOUNTING TO RS.20,40,600/- CLAI MED BY THE APPELLANT IN RESPECT OF INVESTMENT IN NEW RESID ENTIAL HOUSE ITA NO6109 /DEL./2012 2 ON 04.08.2005 WHICH IS WITHIN ONE YEAR OF SALE OF H ER SHARE IN RESIDENTIAL HOUSE ON 16.04.2006 INSTEAD CONSIDERING THE DATE OF SALE AS 05.09.2006. (B) THE LD CIT(A) HAS FAILED TO APPRECIATE THAT TH E APPELLANT HAS TRANSFERRED ALL THE RIGHTS IN 1/4TH SHARE OF TH E PROPERTY TO MR. RAMESH CHAND KALRA AND THE POSSESSION WAS HANDE D OVER ON 16.04.2006 VIDE AGREEMENT TO SELL DATED 16.4.200 6. (C) THE LD CIT(A) HAS WRONGLY CONCLUDED THAT THE AGREEMENT TO SELL DATED 16.4.2006 IS NOT A GENUINE DOCUMENT IGNORING THE FACT THAT EVEN THE BUYERS I.E ASHOK SE TH AND POONAM SETH IN SALE DEED EXECUTED ON 05.09.2006 HAS ACKNOWLEDGED THAT SUM OF RS.20 LACS WAS PAID BY SH . RAMESH CHAND KALRA TO THE APPLICANT SMT. SHASHI GUPTA WHO WERE NOMINEES OF SH. RAMESH CHAND KALRA PURSUANT TO AGRE EMENT DT.16.4.2006. 3 (A) THE LD CIT(A) HAS ERRED IN CONCLUDING THAT TH E EXEMPTION U/S 54 IN RESPECT OF AMOUNT OF RS.933950/ - REPRESENTING COST OF CONSTRUCTION OF THE NEW HOUSE IN FINISHING THE HOUSE CANNOT BE ALLOWED AS THE HOUSE WAS PURCHA SED BEYOND THE PERIOD OF ONE YEAR BEFORE THE SALE OF TH E OLD HOUSE. 3. GROUND NO.1 IS NOT PRESSED SO DISMISSED. 4. GROUND NO.2 RELATES TO DISALLOWANCE OF RS.20,40, 600/- REPRESENTING CLAIM OF EXEMPTION UNDER SECTION 54 OF THE INCOME-T AX ACT, 1961 (HEREINAFTER THE ACT). 5. THE FACTS ARE THAT THE ASSESSEE SOLD HER 1/4 TH SHARE IN THE RESIDENTIAL HOUSE AT B-30, GEETANJALI ENCLAVE, NEW DELHI 110 030, UNDER A SALE DEED DATED 05.09.2006 FOR A CONSIDERATION OF RS.49,50,00 0/- AND DECLARED LONG TERM CAPITAL GAIN OF RS.43,27,615/-. IN RESPECT OF THIS ABOVE GAIN, THE ASSESSEE CLAIMED EXEMPTION OF RS.20,40,600/- UNDER SECTION 54 OF THE ACT ITA NO6109 /DEL./2012 3 ON THE GROUND THAT SHE HAS PURCHASED A NEW HOUSE PR OPERTY AT RAMPRASTHA, GHAZIABAD. THE AO, HOWEVER, OBSERVED THAT THE SAID PROPERTY WHICH WAS PURCHASED WAS ON 04.10.2005 I.E. BEFORE A PERIOD OF ONE YEAR, WHICH IS BEFORE THE DATE OF SALE OF HER SHARE IN THE RESIDEN TIAL PROPERTY I.E. 05.09.2005. THE ASSESSEE IN RESPECT OF THE ABOVE O BSERVATION OF THE AO CONTENDED THAT SHE HAD ENTERED INTO AN AGREEMENT TO SELL DATED 06.04.2006 AND, THEREFORE, THE CLAIM WAS IN ACCORDANCE WITH SE CTION 54 OF THE ACT. HOWEVER, THE AO DISAGREED WITH THE SAID CONTENTION OF THE ASSESSEE AND REJECTED HER SAID CLAIM. ON APPEAL BY THE ASSESSEE , THE CIT (A), HOWEVER, TURNED DOWN THE APPEAL AND UPHELD THE DISALLOWANCE ON THE GROUND THAT THERE ARE MANY GLARING CONTRADICTIONS AS WELL AS IN CONSISTENCIES IN THE ARGUMENT AND DOCUMENTS PRESENTED BY THE ASSESSEE, T O THE EXTENT THAT THIS DOCUMENT I.E. AGREEMENT TO SELL I.E. 16.04.2006 APP EARS TO BE CONCOCTED JUST FOR THE PURPOSE TO MEET THE VALID OBJECTIONS R AISED BY THE AO. 6. BEFORE US, THE LD. AR FILED A SYNOPSIS WHEREIN H E HAS SUBMITTED AS UNDER :- (A) THE ASSESSEE NAMELY-SHASHI GUPTA WAS MARRIED I N THE REPUTED FAMILY OF SHRI OM PRAKASH GUPTA IN THE YEAR 05.02.1972 WITH ONE OF SHRI NARENDRA PRAKASH GUPTA WHO HAD DIED ON 27.06.1998. (B) SMT. KIRAN DEVI W/O SHRI OM PRAKASH GUPTA PURCH ASED PROPERTY AT PLOT NO. 30, BLOCK-B, LOK SEWAK CO-OPER ATIVE HOUSE BUILDING SOCIETY LTD AT VILLAGE BEGUMPUR (GEE TANJALI ENCLAVE), LADO SARAI, NEW DELHI IN THE YEAR 1975. S MT. KIRAN DEVI EXPIRED ON 02.06.1984 AND AFTER EXPIRY AS PER HINDU LAW THE AFORE SAID RESIDENTIAL PROPERTY DEVOLVED IN FAV OUR OF SHRI ITA NO6109 /DEL./2012 4 OM PRASH GUPTA (HUSBAND), SHRI MAHENDRA PRAKASH GUP TA, SHRI NARENDRA PRAKASH GUPTA, SHRI SHIV PRAKASH GUPT A, SHRI RAM PRAKASH GUPTA (SONS) AND SMT PUSHPA AGGARWAL, S MT PHOOL GUPTA, SMT VEENA GUPTA, SMT SUMAN GUPTA (DAUGHTERS). (C) SMT PUSHPA AGGARWAL, SRNT PHOOL GUPTA, SMT VEEN A GUPTA AND SMT SUMAN GUPTA, THE DAUGHTER OF LATE SMT . KIRAN DEVI THE LEGAL HEIRS RELINQUISHED/RELEASED ALL THEI R RIGHTS, TITLES, INTERESTS, CLAIMS AND SHARE IN THE SAID PROPERTY IN FAVOUR OF SHRI OM PRAKASH GUPTA, SHRI MAHENDRA PRAKASH GUPTA, SHRI NARENDRA PRAKASH GUPTA, SHRI SHIV PRAKASH GUPTA AND SHRI RAM PRAKASH GUPTA THE OTHER LEGAL HEIRS ON 05.02.19 90. THERE AFTER THE SAID PROPERTY MUTATED, TRANSFERRED AND SU BSTITUTED IN JOIN NAME OF SHRI OM PRASH GUPTA, SHRI MAHENDRA PRA KASH GUPTA, SHRI NARENDRA PRAKASH GUPTA, SHRI SHIV PRAKA SH GUPTA AND SHRI RAM PRAKASH GUPTA ON 09.04.1990 AND EACH M EMBER HAS 1I5TH UNDIVIDED SHARE IN THE SAID PROPERTY. (D) ON 27.06.1998 SHRI NARENDRA PRAKASH GUPTA DIED LEAVING BEHIND SMT. SHASHI GUPTA (WIFE), MR. SHAILENDRA GUP TA, MR. NITIN GUPTA (SONS) AND MS. SEEMA GUPTA (DAUGHTER) T HE LEGAL HEIRS. ALSO ON 15.04.1999 SHRI OM PRAKASH GUPTA DIE D INTESTATE LEAVING BEHIND SHRI MAHENDRA PRAKASH GUPTA, SHRI SH IV PRAKASH GUPTA, SHRI RAM PRAKASH GUPTA (SONS) AND SM T PUSHPA AGGARWAL, SMT PHOOL GUPTA, SMT VEENA GUPTA, SMT SUMAN GUPTA (DAUGHTERS) AND SMT. SHASHI GUPTA (DAUG HTER-IN LAW [WIFE OF PREDECEASED SON SHRI NARENDRA PRAKASH GUPTA)], MR. SHAILENDRA GUPTA, MR. NITIN GUPTA (GRAND-SONS) AND MS. SEEMA GUPTA (GRAND-DAUGHTER) THE LEGAL HEIRS. (E) MR. SHAILENDRA GUPTA, MR. NITIN GUPTA, AND MS. SEEMA GUPTA RELINQUISHED/RELEASED ALL THEIR RIGHTS, TITLE S, INTERESTS, CLAIMS AND SHARES IN THE SAID PROPERTY IN FAVOUR OF THEIR MOTHER SMT. SHASHI GUPTA ON 29.03.2000. (F) SMT PUSHPA AGGARWAL, SMT PHOOL GUPTA, SMT VEENA GUPTA AND SMT SUMAN GUPTA, RELINQUISHED / RELEASED ALL THEIR RIGHTS, TITLES, INTERESTS, CLAIMS AND SHARES IN THE SAID PROPERTY IN FAVOUR OF SHRI MAHENDRA PRAKASH GUPTA, SHRI SHIV PR AKASH GUPTA, SHRI RAM PRAKASH GUPTA AND SMT. SHASHI GUPTA ON 29.03.2000. ITA NO6109 /DEL./2012 5 (G) ACCORDINGLY THE SAID PROPERTY MUTATED, TRANSFER RED AND SUBSTITUTED IN THE JOINT NAMES OF SHRI MAHENDRA PRA KASH GUPTA, SHRI SHIV PRAKASH GUPTA, SHRI RAM PRAKASH GUPTA AND SMT. SHASHI GUPTA AND EACH MEMBER HAS 1/4TH UNDIVIDED SH ARE. (H) ALL THE FOUR CO-OWNER HAVING EQUAL SHARE AGREED TO SELL THE SAID PROPERTY TO SHRI RAMESH CHANDRA KALRA S/O SHRI K. L. KALRA, B-49, SHIVALIK COLONY, NEW DELHI AND SHRI AS HISH RAJPAL S/O SHRI G. D. RAJPAL, B-1/53, MALVIYA NAGAR , NEW DELHI-17 FOR A SUM OF RS.1.98 CRORES AND AS PER THE TERMS AND CONDITIONS MENTIONED IN AGREEMENT DATED 16.04.2006 COPY OF THE SAME AT PAGE 77 TO 79 OF THE PAPER BOOK. THE RE LEVANT PARA OF THE AGREEMENT IS REPRODUCED HERE AS UNDER:- ' WHEREAS THE SECOND PARTY PAID CERTAIN AMOUNT TO T HE FIRST PARTY FOR PURCHASE OF THE SAID PROPERTY FOR TOTAL S ALE CONSIDERATION OF RS.1.98 CRORES. THE SAID PROPERTY IS OWNED BY THE FIRST PARTY. AND WHEREAS THE PAYMENT MADE BY SECOND PARTY TO FIR ST PARTY AS PER DETAILS BELOW: RS.20,00,000/- VIDE CHEQUE NO.759207 DATED 16.01.20 05 DRAWN ON I.C.I.C.I BANK, SAKET, NEW DELHI, BY SH. RAMESH CHANDER KALRA IN FAVOUR OF SMT. SHASHI GUPTA. RS.3,50,000/- VIDE CHEQUE NO.759210 DATED 16.01.200 5 DRAWN ON ICICI BANK, SAKET, NEW DELHI, BY SH. RAMESH CHAN DER KALRA IN FAVOUR OF SH. SHIV PRAKASH GUPTA. RS.3,50,000/- VIDE CHEQUE NO.759208 AND DATED 16.01 .2005 DRAWN ON ICICI BANK, SAKET, NEW DELHI BY SH. RAMESH CHANDER KALRA, IN FAVOUR OF SH. MAHENDRA PRAKASH GU PTA. RS.3,50,000/- VIDE CHEQUE NO.759209 AND DATED 16.01 .2005 DRAWN ON ICICI BANK, SAKET, NEW DELHI, BY SH. RAMES H CHANDER KALRA, IN FAVOUR OF SH. RAM PRAKASH GUPTA. AND WHEREAS THE BALANCE SALE CONSIDERATION HAS BEEN AGREED TO BE PAID BY THE SECOND PARTY TO THE FIRST PARTY, TIM E TO TIME OR AT THE TIME OF SALE TRANSACTION WITHIN SIX MONTHS OF T HIS DATE AND WHEREAS SMT. SHASHI GUPTA ONE OF THE OWNERED THE SA ID ITA NO6109 /DEL./2012 6 PROPERTY (FIRST PARTY) HANDED OVER THE VACANT POSSE SSION OF HER SHARE OF THE PROPERTY TO THE SECOND PARTY TODAY / ON THIS DATE. NOW THIS AGREEMENT WITNESS AS UNDER: 1. THAT THE SECOND PARTY SHALL PAY THE BALANCE SALE CONSIDERATION OF RS.1 CRORE 67 LACS 50 THOUSANDS TO THE FIRST PARTY AS FOLLOWS: 1. SHRI MAHENDRA GUPTA RS.46 LACS 2. SHRI SHIV PRAKASH GUPTA RS.46 LACS 3. SHRI RAM PRAKASH GUPTA RS.46 LACS 4. SMT. SHASHI GUPTA RS.29.5 LACS 2. THAT THE SALE TRANSACTION SHALL BE CONCLUDED ON/ OR BEFORE 01.10.06 BY THAT TIME, SECOND PARTY SHALL PAY THE REMAINING CONSIDERATION AMOUNT OF RS.1 CRORES 67 LA CS 50 THOUSANDS TO THE FIRST PARTY AND THE FIRST PARTY SHALL SIMULTANEOUSLY EXECUTE THE SALE DEED WITH RESPECT T O THE SAID PROPERTY IN FAVOUR OF THE SECOND PARTY OR HIS NOMINEE(S) AND SHALL ALSO HANDOVER THE VACANT AND PEACEFUL % BALANCE POSSESSION OF THE SAID PROPERTY TO THE SECOND PARTY OR THEIR NOMINEE(S). (I) THE ASSESSEE HAD SHARE IN THE PROPERTY B-30, GEETANJALI ENCLAVE, NEW DELHI-30 WHICH WAS SOLD TO SH. RAMESH CHANDER KALRA VIDE AGREEMENT DATED 16.04.200 6. SHE HAS ALREADY RECEIVED AN ADVANCE OF RS.20,00,000/- V IDE CHEQUE NUMBER 759207 ON 16.01.2005 DRAWN ON ICICI BANK, SA KET, NEW DELHI AS PART CONSIDERATION FOR HER SHARE IN THE PROPERTY. (J) THE SALE DEED COULD NOT BE REGISTERED BECAUSE O F FAMILY DISPUTE AND THE BALANCE CONSIDERATION COULD NOT BE RECEIVED. THE ASSESSEE HAD PURCHASED A NEW RESIDENTIAL HOUSE PROPERTY B- 195, RAMPRASTHA SURYA NAGAR, GAZIABAD FOR RS.20,00, 000/- + 40600/- VIDE REGISTERED DEED DATED 04.08.2005. THER EFORE THE MONEY RECEIVED FROM SH. RAMESH CHANDRA KALRA AS PAR T SALE CONSIDERATION WAS INVESTED IN PURCHASE OF NEW HOUSE PROPERTY B-195, RAMPRASTA SURYA NAGAR, GAZIABAD. (K) AS ALREADY MENTIONED ABOVE, VIDE AGREEMENT DATE D 16.04.2006 ALL THE FAMILY MEMBER (FOUR MEMBER HAVIN G EQUAL ITA NO6109 /DEL./2012 7 SHARE IN THE PROPERTY B-30, GEETANJALI ENCLAVE, NEW DELHI) AGREED TO SELL THE SAID PROPERTY TO SH. RAMESH CHAN DRA KALRA S/O K. L. KALRA, R/O B-49, SHIVALIK COLONY, NEW DEL HI AND SHRI ASHISH RAJPAL S/O SH. G. D. RAJPAL, R/O B-1/53, MAL VIYA NAGAR, NEW DELHI FOR TOTAL CONSIDERATION OF RS.1.98 CRORES. (L) THAT MR. KALRA HAD TAKEN THE POSSESSION FROM TH E ASSESSEE ON THE TERMS AND CONDITIONS AS SPECIFIED I N AGREEMENT DATED 16.04.2006 AND COMMITTED TO THE ASSESSEE THAT THE BALANCE AMOUNT OF RS.29,50,000/-WILL BE PAID ON OR BEFORE 6 MONTHS FROM 16.04.2006 AND/OR ON REGISTERED DEED IN FAVOUR OF THE SH. RAMESH CHANDER KALRA AND SH ASHISH RAJPAL O R THEIR NOMINEE(S) WHICHEVER IS EARLIER. (M) ON 4.09.2006 THE ASSESSEE HAD RECEIVED THE BALA NCE AMOUNT OF RS.29,50,000/- I.E. RS.19,50,000/- VIDE P AY ORDERS NO.039172 DATED 04.09.2006 AND RS.10,00,000/- VIDE BANKERS CHEQUE NO. 394334 DATED 04.09.2006 AND SIGNED THE R EGISTERED DEED ON S.09~2006 WHICH IS REGISTERED IN THE NAME O F SH. ASHOK SETH AND SMT. POONAM SETH WHO ARE THE NOMINEE (S) OF SH. RAMESH CHANDER KALRA AND SH. ASHISH RAJPAL THER EFORE, THE TRANSACTION OF SALE WAS COMPLETED IN THE FOLLOW ING MANNER:- (I) FIRSTLY, THE ASSESSEE HAS RECEIVED AN ADVANCE OF RS.20,00,000/- ON 16.01.2005 FROM MR. RAMESH CHANDRA KALRA WHICH WAS INVESTED IN PURCHASE OF NEW HOUSE PROPERTY AT GHAZIBAD ON 04.08.2005. (II) SECONDLY, ON 16.04.2006 AN' AGREEMENT WAS SIG NED BETWEEN THE ASSESSEE ALONG WITH OTHER JOINT HOLDERS OF THE PROPERTY B-30, GEETANJALI ENCLAVE, NEW DELHI AND SH. RAMESH CHANDER KALRA AND SH ASHISH RAJPAL THE PURCHASER OF THE PROPERTY. IN THI S AGREEMENT AND MR. RAMESH CHANDRA KALRA ASSURED THE ASSESSEE TO PAY BALANCE AMOUNT FOR HER SHARE IN THE PROPERTY IE THE EFFECTIVE DATE OF SALE OF SHARE IN THE PROPERTY OF THE ASSESSEE. (III) THIRDLY, THE REGISTERED SALE DEED WAS SIGNED ON 05.09.2006 AND THE ASSESSEE HAS RECEIVED THE BALANCE SALE CONSIDERATION AMOUNT OF RS.29,50,000/-. ITA NO6109 /DEL./2012 8 THEREFORE, THE SALE TRANSACTION WAS WITHIN ASSESSME NT YEAR 2007-08 AND HENCE THE ASSESSEE HAD DECLARED IT IN H ER RETURN OF INCOME AND SHOWN LONG TERM CAPITAL GAIN OF RS.1,53, 065/- AFTER TAKING THE BENEFITS AS PROVIDED IN SECTION(S) 54 AND 54EC OF THE INCOME TAX ACT, 1961. 7. ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORDE R OF THE LD. CIT (A). 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE R ECORD. THE FACTS AS EMERGING AND UNDISPUTED ARE THAT ASSESSEE PURCHASED A RESIDENTIAL HOUSE PROPERTY B-195, RAMPRASTHA SURYA NAGAR, GHAZIBAD FO R RS.20,40,600/- VIDE REGISTERED DEED DATED 04.08.2005. HOWEVER, TH E ABOVE PURCHASE OF RESIDENTIAL HOUSE IS HELD TO BE NOT ENTITLED TO EXE MPTION UNDER SECTION 54 OF THE ACT, ON THE GROUND THAT SUCH PURCHASE OF PRO PERTY AT GHAZIABAD HAPPENED ONE YEAR PRIOR TO THE SALE OF HER SHARE IN THE RESIDENTIAL PROPERTY AT B-30, GEETANJALI ENCLAVE, NEW DELHI 110 030. THE ASSESSEE, HOWEVER, SUPPORTED THE CLAIM ON THE BASIS OF AN AGR EEMENT FOR SALE DATED 16.04.2006, WHICH HAS NOT BEEN ACCEPTED BY THE AUTH ORITIES BELOW ON THE GROUND THAT SUCH AN AGREEMENT IS NOT A GENUINE DOCU MENT. IT IS, HOWEVER, NOT DISPUTED THAT ASSESSEE SOLD HER SHARE IN THE PR OPERTY FOR A CONSIDERATION OF RS.49,50,000/- WHICH WAS RECEIVED IN THE FOLLOWI NG MANNER :- (I) RECEIVED CHEQUE NO.759207 DT. 16.01.2006 RS.2 0,00,000/- (II) RECEIVED DD NO.039172 DT. 04.09.2006 RS.19,5 0,000/- (III) RECEIVED CHEQUE NO.394334DT. 04.09.2006 RS.1 0,00,000/- FROM THE AFORESAID FACTS, IT IS APPARENT THAT SUBST ANTIAL CONSIDERATION WAS RECEIVED BY THE ASSESSEE EVEN 15 MONTHS PRIOR TO TH E AGREEMENT OF SALE ITA NO6109 /DEL./2012 9 DATED 06.04.2006. MOREOVER, THE AGREEMENT DATED 16 .04.2006 IS SIGNED BY ALL THE FOUR CO-OWNERS AND THE VENDEE, SHRI RAMESH KALRA AND ALSO IS DULY WITNESSED. THE AGREEMENT FURTHER SPECIFICALLY STAT ES AS UNDER :- AND WHEREAS THE BALANCE SALE CONSIDERATION HAS BEE N AGREED TO BE PAID BY THE SECOND PARTY TO THE FIRST PARTY. TI ME TO TIME OR AT THE TIME OF SALE TRANSACTION WITHIN SIX MONTH OF TH IS DATE AND WHEREAS SMT. SHASHI GUPTA ONE OF THE OWNERED THE SA ID PROPERTY (FIRST PARTY) HANDED OVER THE VACANT POSSE SSION OF HER SHARE OF THE PROPERTY TO THE SECOND PARTY TODAY / ON THIS DATE. NOW THIS AGREEMENT WITNESSES AS UNDER : 1. THAT THE SECOND PARTY SHALL PAY THE BALANCE SALE CONSIDERATION OF RS.1 CRORE 67 LACS 50 THOUSANDS TO THE FIRST PARTY AS FOLLOWS: 1. SHRI MAHENDRA PRAKASH GUPTA RS.46 LACS 2. SHRI SHIV PRAKASH GUPTA RS.46 LACS 3. SHRI RAM PRAKASH GUPTA RS.46 LACS 4. SMT. SHASHI GUPTA RS.29.5 LACS 2. THAT THE SALE TRANSACTION SHALL BE CONCLUDED ON OR BEFORE 01.10.06 BY THAT TIME, SECOND PARTY SHALL PAY THE R EMAINING CONSIDERATION AMOUNT OF RS.L CRORES 67 LACS 50 THOU SANDS TO THE FIRST PARTY AND THE FIRST PARTY SHALL SIMULTANEOUSL Y EXECUTE THE SALE DEED WITH RESPECT TO THE PROPERTY IN FAVOUR OF THE SECOND PARTY OR HIS NOMINEE(S) AND SHALL ALSO HANDOVER THE VACANT AND PEACEFUL BALANCE POSSESSION OF THE SAID PROPERTY TO THE SECOND PARTY OR THEIR NOMINEE(S). FROM THE ABOVE, IT IS VIVID THAT THE POSSESSION TO THE EXTENT OF 1/4 TH SHARE OF THE ASSESSEES HOUSE IN THAT HOUSE STOOD TRANSFERRE D ON 16.04.2006 ITSELF. HOWEVER, THE LD. CIT (A) HAS STATED THAT SUCH AN AR GUMENT IS OUTLANDISH AS PROPERTY IS A JOINT PROPERTY AND THERE IS NO MEANIN G IN ONE OF THE VENDORS GIVING POSSESSION TO THE PURCHASER (VENDEE). HOWEV ER, SUCH AN ITA NO6109 /DEL./2012 10 OBSERVATION IS A NON-ISSUE BECAUSE WHAT IS RELEVANT IS THE QUESTION OF FACT WHETHER THE POSSESSION REGARDING 1/4 TH SHARE OF THE ASSESSEE HAS BEEN TAKEN POSSESSION OR NOT, THUS THE FACTUM THAT SUCH AN ARR ANGEMENT HAS ANY MEANING OR NOT IS IRRELEVANT. IT WAS FOR THE PURCH ASER TO SATISFY AND HAVING SO ACCEPTED BY THE VENDEE, IT CANNOT BE SUGGESTED V ALIDLY THAT THE POSSESSION HAS NOT BEEN HANDED OVER, MORE PARTICULA RLY WHEN IN AN AFFIDAVIT THE VENDEE HAS SPECIFICALLY AFFIRMED AS U NDER :- I. R.C. KALRA S/O K.L. KALRA R/O B-49, SHIVALIK CO LONY, MALVIYA NAGAR, NEW DELHI DO HEREBY CONFIRM AS UNDER :- 1. THAT VIDE AGREEMENT TO SALE DATED 16.4.2006 BETWEEN ME AND SMT. SHASHI GUPTA AND OTHERS FOR PURCHASE OF SHARE OF HER PORTION IN THE HOUSE LOCATED AT B-30, GEETANJAL I ENCLAVE, NEW DELHI. 2. I HAVE TAKEN POSSESSION OF SHARE OF THE HOUSE AS ON 16.4.2006 AGAINST CONSIDERATION AS AGREED UPON DETA ILED IN THE SALE AGREEMENT DT.16.4.2006. 3. THAT I HAVE OPTION TO GET THE SALE DEED EXECUTED IN MY NAME OR IN THE NAME OF MY NOMINEE AS PER CL.2 OF TH E REFERRED AGREEMENT. THE OBSERVATION OF CIT (A) THAT IN THE SALE DEED, T HE POSSESSION OF THE PROPERTY WAS TAKEN ON 05.09.2006 CANNOT BE SEEN IN ISOLATION BECAUSE IN THE AGREEMENT TO SALE ON 16.04.2006 SUGGESTED BY TH E AFFIDAVIT OF THE VENDEE CLEARLY BUTTRESS THE CLAIM OF THE ASSESSEE, THAT SHE HAS HANDED OVER HER SHARE OF THE PROPERTY TO VENDEE. HAVING REGARD TO THE ABOVE FACTUAL POSITION, WE ARE OF THE OPINION THAT POSSESSION OF THE PROPERTY STOOD ITA NO6109 /DEL./2012 11 HANDED OVER ON 16.04.2006. FURTHERMORE ON FACTS OF THE CASE, THE HONBLE APEX COURT HELD THAT REGISTRATION OF THE TRANSFER I N ACCORDANCE WITH THE AGREEMENT TO SALE CANNOT BE TERMED AS THE DATE OF TRANSFER AS ENVISAGED BY SECTION 50C READ WITH SECTION 2(47) OF THE ACT ( SANJEEV LAL & ANR. VS. CIT & ANR. (2014) 365 ITR 389(SC)), WHEREIN, IT WAS HELD AS UNDER:- IN NORMAL CIRCUMSTANCES BY EXECUTING AN AGREEMENT TO SELL IN RESPECT OF AN IMMOVEABLE PROPERTY, A RIGHT IN PE RSONAM IS CREATED IN FAVOUR OF THE TRANSFEREE/VENDEE. WH EN SUCH A RIGHT IS CREATED IN FAVOUR OF THE VENDEE, THE VENDOR I S RESTRAINED FROM SELLING THE SAID PROPERTY TO SOMEONE ELSE BECAUSE THE VENDEE, IN WHOSE FAVOUR THE RIGHT IN PERSONAM IS CR EATED, HAS A LEGITIMATE RIGHT TO ENFORCE SPECIFIC PERFORMANCE OF THE AGREEMENT, IF THE VENDOR, FOR SOME REASON IS NOT EXECUTING THE SALE DEED. THUS, BY VIRTUE OF THE AGREEMENT TO SEL L SOME RIGHT IS GIVEN BY THE VENDOR TO THE VENDEE. THE QUESTION I S WHETHER THE ENTIRE PROPERTY CAN BE SAID TO HAVE BEEN SOLD A T THE TIME WHEN AN AGREEMENT TO SELL IS ENTERED INTO. IN NORMAL CIRCUMSTANCES, THE AFORESTATED QUESTION HAS TO BE A NSWERED IN THE NEGATIVE. HOWEVER, LOOKING AT THE PROVISIONS O F SECTION 2(47) OF THE ACT, WHICH DEFINES THE WORD TRANSF ER IN RELATION TO A CAPITAL ASSET, ONE CAN SAY THAT IF A RIG HT IN THE PROPERTY IS EXTINGUISHED BY EXECUTION OF AN AGREEMENT TO SELL, THE CAPITAL ASSET CAN BE DEEMED TO HAVE BEEN T RANSFERRED. RELEVANT PORTION OF SECTION 2(47), DEFINING T HE WORD TRANSFER IS AS UNDER: 2(47) TRANSFER, IN RELATION TO A CAPITAL ASSET, INCLUDES,- .... (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR NOW IN THE LIGHT OF DEFINITION OF TRANSFER AS DEFINED UNDER SECTION 2(47) OF THE ACT, IT IS CLEAR THAT WHEN ANY RIGHT IN RESPECT OF ANY CAPITAL ASSET IS EXTINGUISHED AND T HAT RIGHT IS TRANSFERRED TO SOMEONE, IT WOULD AMOUNT TO TRAN SFER OF A CAPITAL ASSET. ITA NO6109 /DEL./2012 12 HAVING REGARD TO THE ABOVE BINDING PRECEDENT, WE RE JECT THE CONCLUSION OF THE LD. CIT (A) THAT AGREEMENT TO SELL IS A MERE ST ART OF THE SALE AND CANNOT BECOME THE ACT OF SALE FOR SECTION 54 OF THE ACT. MOREOVER, IT NEEDS TO BE APPRECIATED HERE THAT A HYPER TECHNICAL APPROACH CA NNOT BE ADOPTED TO AN INCENTIVE GRANTING PROVISION. HERE IS A CASE, WHER E THE ASSESSEE IS A WIDOW WHO HAS RECEIVED ADVANCE IN JUNE 2005 AGAINST SALE OF HER SHARE AND THEREAFTER, PURCHASED A RESIDENTIAL PROPERTY IN AUG UST 2005, BUT YET EXEMPTION IS NOT HELD ELIGIBLE ON THE GROUND THAT T HE SALE IS IN SEPTEMBER 2006. ACCORDING TO THE REVENUE, HAD THE SALE DEED BE EXECUTED IN AUGUST 2006, EVERYTHING WILL BE IN ORDER. WE DO NOT SUBSC RIBE TO SUCH A PEDANTIC APPLICATION OF THE INCENTIVE PROVISION. IT WAS ON ACCOUNT OF SUCH AN APPROACH, THE HONBLE APEX COURT IN SANJEEV LAL & A NR. VS. CIT & ANR. (SUPRA) HAS HELD AS ABOVE. THUS, IN VIEW OF THE AFO RESAID, WE ALLOW THE GROUND RAISED BY THE ASSESSEE. 9. GROUND NO.3 RELATES TO EXEMPTION CLAIMED BY THE ASSESSEE U/S 54 OF THE ACT IN RESPECT OF AN AMOUNT OF RS.933950/- REPR ESENTING COST OF CONSTRUCTION OF THE NEW HOUSE IN FINISHING THE HOUS E WHICH WAS NOT ALLOWED BY THE AO ON THE REASON THAT THE SAID HOUSE WAS PURCHASED BEYOND THE PERIOD OF ONE YEAR BEFORE THE SALE OF THE OLD H OUSE. 10. THE LD. CIT (A) HAD HELD IN RESPECT OF THE ABOV E CLAIM AS UNDER :- THE ASSESSEE FURTHER CLAIMED THAT IT HAD INCURRED RS.9,33,950/- TO MAKE THE HOUSE PURCHASED HABITABLE ONE AND ITA NO6109 /DEL./2012 13 THEREFORE IN COMPUTATION, BENEFIT OF INVESTMENT OF RS.9,33,950/- SHOULD BE GIVEN. SINCE ENTITLEMENT OF EXEMPTION U/S 54 HAS ALREADY B EEN DENIED; THIS GROUND OF APPEAL IS DISCUSSED ON MERIT S ONLY AS AN ALTERNATIVE SCENARIO; IN CASE, BENEFIT OF SECTION 5 4 IS ALLOWED TO THE ASSESSEE FOR ANY REASON. THE A.O. HAS MENTIONED THE NATURE OF WORK DONE IN T HE ASSESSMENT ORDER ITSELF ON PAGE 5. I FIND THAT MANY ASPECTS FOR EXAMPLE, MARBLE FLOORING, PART OF WOOD WORK, POP WO RK, PART OF WALL FINISHING ETC. MAY NOT BE TREATED AS 'NECES SARY' FOR MAKING THE HOUSE INHABITABLE; RATHER THESE ARE FOR BETTERMENT OR UP-GRADATION OF THE LOOKS AND FACILITIES OF THE HOU SE AND HENCE CANNOT BE TREATED AS COST INCURRED WHICH WAS NECESS ARY FOR INHABITABLE HOUSE; WHILE VARIOUS PORTIONS OF EXPEND ITURE ARE NORMALLY REQUIRED BEFORE MAKING THE HOUSE WORTH 'HA BITABLE'. ON A REASONABLE ESTIMATE BASIS, I HOLD THAT OUT OF EXPENDITURE OF RS.9,33,950/- CLAIMED, EXPENDITURE T O THE EXTENT OF RS.4 LAC NEEDS TO BE DISALLOWED. THUS ASSESSEE W ILL GET A PART RELIEF. HOWEVER, SINCE, AS OF NOW, NO EXEMPTION U/S 54 IS AVAILABLE; THIS GROUND OF APPEAL IS TREATED AS REJE CTED. 11. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL. WE HAVE ALREADY HELD HEREIN ABOVE WHILE DISPOSING OFF GROUN D NO.2 THAT THE ASSESSEE IS ENTITLED TO EXEMPTION UNDER SECTION 54 OF THE AC T IN RESPECT TO PURCHASE OF PROPERTY AT GHAZIABAD . THUS, ALL EXPENSES INCU RRED FOR PURCHASE OF THE HOUSE AND RENOVATION OF THE HOUSE TO MAKE IT HABITA BLE ARE ALLOWABLE. IN THE INSTANT CASE, THE LD. CIT (A) HAS HIMSELF ACCEP TED THE BASIC CLAIM TO THE EXTENT OF RS.4 LAKHS, WHICH ASPECT HAS NOT BEEN CHA LLENGED BEFORE US BY THE REVENUE BY FILING A CROSS APPEAL ON THIS ISSUE BEFO RE US. THUS, THE ISSUE ITA NO6109 /DEL./2012 14 WHICH REMAINS IS IN RESPECT TO ESTIMATION. THE ASS ESSEE HAD CLAIMED AS UNDER :- 3. ALTHOUGH THE ASSESSEE'S FURTHER CLAIM OF RS.9, 33,950/- AS COST OF REPAIR & RENOVATION ON RESIDENTIAL PROPERTY NO. 195, BLOCK-B. SECTOR-12, THA COLONY, RAM PRASTHA COLONY, GHAZIABAD STAND REJECTED. HOWEVER, ITS ALLOWABLLITY ALSO NEEDS TO BE DISCUSSED, INDEPENDENTLY FROM THE OBSERVATION MA DE ABOVE IN PARA 2.4. THE ASSESSEE HAS CLAIMED RS.9,33,950/- AS COST OF REPAIR & RENOVATION, AS PER BILL DATED 16.04.2006 OF M/S M ADHUKAR PROMOTERS & DEVELOPERS PVT. LTD. THE PERUSAL OF THE BILL 16.04.2009 SHOW THAT THE PAYMENTS HAVE BEEN MADE FO R THE WORK PERFORMED AS UNDER:- S.NO. DESCRIPTION AMOUNT (IN RS.) FINISHING WORK AT GROUND FLOOR & FIRST FLOOR 6 BED ROOMS, 2 DINING ROOM, 2 KITCHEN, 6 BATHROOMS, 2 SOTE AND STAIRS. 1. MARBLE FLOORING WITH MATERIAL 2,97,000/- 2. TERRACE ON FIRST FLOOR 11,500/- 3. TILE WORK WITH MATERIAL 35,150/ - 4. WOOD WORK (WITH MATERIAL) 1,12,500/ - 5. POP WORK IN BED ROOM, DINING ROOM IN KITCHEN ETC. 67,100/- 6. WALL FINISH INTERNAL, CEMENT PLASTER WITH PLASTIC EMULSION EXTERNAL -SAND FACE SYNTHETIC PAINT ON DOOR & WINDOW (WITH MATERIAL) 61,200/- 20,000/- 12,000/- 7. C.P. FITTING WITH 2 KITCHEN AND 6 BATHROOM STEEL SINK CERAMIC SINK AND WATER STORAGE TANK 72,500/ - 8. CONDUIT PIPE FITTING WITH COPPER WIRE STANDARD QUALITY TV AND TELEPHONE WIRING AND FITTING 70,000/- 9. HOT & COLD WATER FITTING WITH AQUA GUARD 25,000/ - 10. FURNITURE & FIXTURE - ALMIRAH TV TROLLEY, KITCHEN WOOD WORK 1,50,000/- TOTAL 9,33,950/- HAVING REGARD TO THE ABOVE EVIDENCE AND PAYMENT HAV ING BEEN MADE TO DISCHARGE THE SAID BILL, IN THE ABSENCE OF ANY EVID ENCE TO THE CONTRARY, THERE ITA NO6109 /DEL./2012 15 IS NO JUSTIFICATION TO RESTRICT THE CLAIM TO RS.4 L AKHS ON ESTIMATE BASIS. IN SALEEM FAZELHOY V. DCIT - 106 ITD 167 (MUM), IT WAS HELD THAT EXPENDITURE INCURRED ON MAKING HOUSE HABITABLE IS C ONSIDERED AS INVESTMENT IN PURCHASE OF HOUSE, AND HENCE DEDUCTIO N U/S 54F OF THE ACT IS ALLOWABLE. IN THE ANOTHER CASE IN MRS. GULSHANBANO O VS. JCIT - (2002) 83 ITD 649 (MUM.), IT WAS HELD THAT COST OF NEW HOUSE FOR THE PURPOSE OF SECTION 54, INCLUDE NOT ONLY COST OF PURCHASE OF NE W HOUSE BUT ALSO INCLUDES OTHER NECESSARY EXPENDITURE TO MAKE HOUSE HABITABLE. LD. COUNSEL ALSO RELIED ON THE ORDER OF THE AHMEDABAD B ENCH IN THE CASE OF SHRI SRINIVASA R. DESAI 90 DTR 346. THE ASSESSEE AF TER PURCHASING THE FLAT HAS INCURRED FURTHER COST WHICH ARE IN THE NATURE O F COST OF CONSTRUCTION AND IT HAS BEEN HELD THAT THE COST SO INCURRED WILL FOR M AN INTEGRAL PART OF THE QUALIFYING INVESTMENT UNDER SECTION 54 OF THE ACT. IN THE LIGHT OF THE AFORESAID CASE LAWS, THE CLAIM OF THE ASSESSEE STAN DS ALLOWED AND WE ORDER ACCORDINGLY. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN OPEN COURT ON THIS 24 TH DAY OF NOVEMBER, 2015. SD/- SD/- (G.D. AGRAWAL) (A.T. VARKEY) VICE PRESIDENT JUDICIAL ME MBER DATED THE 24 TH DAY OF NOVEMBER, 2015 TS ITA NO6109 /DEL./2012 16 COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT(A), GHAZIABAD. 5.CIT(ITAT), NEW DELHI. AR, ITAT NEW DELHI.