CHANDRAVADAN C. PITHAWALLA, MUMBAI V. ITO (IT) - 3(3)(1), MUMBAI

ITA 7469/MUM/2018

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 8844 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-07-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Assessment Year: 2013-2014
• Appeal Filed On: 28-12-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVANEESH TIWARI
• Assessee Lawyers: CHETAN KARIA
• Keywords: Capital asset
• Section: 54EC; 43; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH I , MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO. 7469/MUM/2018 (AY : 2013 - 14) ( V IRTUAL H EARING IN VIRTUAL COURT NO. III ) CHANDR AVADAN C. PITHAWALLA, 42, DADAR SILVER BEACH, 1159 - 60, SURYAVANSHI SABHA, DADAR, MUMBAI - 400028 PAN : AACPP4933D VS ITO (IT) - 3(3)(1) 16 TH FLOOR, AIR INDIA BUILDING, NARIMAN POINT, MUMBAI - 400021 . APPELLANT RESPONDEDNT APPELLANT BY SHRI CHETAN KARIA (AR) RESPONDENT BY SHRI AVANEESH TIWARI ( SR. DR) DATE OF HEARING 27 - 07 - 2020 DATE OF PRONOUNCEMENT 27 - 07 - 2020 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER : 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - 57, ( HEREINAFTER REFERRED AS LD.CIT (A) , MUMBAI DATED 25.10.2018 FOR A SSESSMENT Y EAR 2013 - 14 . 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A NON - RESIDENT / INDIVIDU AL, FILED HIS RETURN OF INCOME FOR ASSESSMENT YEAR 2013 - 14 ON 26.07 .2013 DECLARING RETURN INCOME OF RS. 94,75,480/ - . IN THE COMPUTATION OF INCOME, THE ASSESSEE C OMPUTED L ONG TERM CAPITAL GAIN (LTCG) ON SALE OF LAND OUT OF SURVEY NO. 4451/1 AND 431 (CAPITAL ASSET) AT DUMMAS, DISTRICT - SURAT, GUJARAT . THE ASSESSEE CLAIMED LTCG ON SALE OF LONG TERM CAPITAL ASSET AND ALSO CLAIMED EXEMPTION OF CAPITAL GAIN OF RS. 50,00,000/ - UNDER SECTION 54EC BEING 2 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA INVESTMENT MADE IN N ATIONAL H IGH WAY A UTHORITY OF I NDIA (NHAI ) BONDS. DURING THE ASSESSMENT, THE ASSESSING OFFICER NOTED THAT THE DOCUMENT RELATED TO TRANSFER OF PROPERTY I.E. SALE - DEED REFLECTS TWO DIFFERENT DATE I.E. 8 TH OCTOBER 2012 ON WHICH IT WAS EXECUTED AND 16 JANUARY 2013 , WHEN IT WAS ULTIMATELY REGISTERED . THE ASSESSEE INVESTED THE AMOUNT OF RS. 5 0 ,00,000/ - IN NHAI BOND , OUT OF WHICH RS. 25 L AKHS ON 31 ST MAY 2013 AND REMAINING RS. 25 LAKHS ON 31 ST JULY 2013. ON SHOW - CAUSE NOTICE, THE ASSESSEE CLAIMED THAT ASSESSEE SOLD HIS IMMOVABLE PROPERTY ALONG WITH HIS CO - OWNER VIDE AGREEMENT DATED 08.10.2012, AS ONE OF THE SELLER WAS NOT AGREEABLE O N THE TERMS AND CONDITIONS SO HE DID NOT APPEAR BEFORE THE SUB - REGISTRAR CONCERN AND THE DOCUMENT COULD NOT BE REGISTERED ON THE SAID DATE. THE REGISTRATION OF DOCUMENT I.E. SALE - DEED WAS COMPLETE ONLY WHEN NON - AGREEABLE / CO - OWNER AGREED AND APPEARED BEFORE THE REGISTRAR ON 16.01.2013 AND REGISTRAR RECORDED REGISTRATION OF ON 16.01.2013. THE ASSESSEE MADE INVESTMENT OF RS. 25,00,000/ - EACH ON 31 ST MAY 2013 AND ON 31.07.2013 A ND THUS INVES T ED THE CAPITAL GAIN WITHIN SIX MONTH FROM DATE OF TRANSFER OF THE PROPERTY. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER BY TAKING VIEW THAT INVESTMENT IN LONG TERM SPECIFIED ASSET (NHAI) BONDS SHOULD BE DONE WITHIN SIX MO NTH AFTER THE DATE OF TRANSFER OF LONG TERM CAPITAL ASSET/IMMOVABLE PROPERTY. THE DATE OF TRANSFER IS 8.10.2012 AS PER TRANSFER DEED . T HE ASSESSEE WRONGLY MENTIONED THE DATE OF TRANSFER AS 16.01.2013 AND DISALLOWED THE EXEMPTION UNDER SECTION 54EC . ON APPE AL BEFORE THE LD. 3 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA CIT(A), THE ACTION OF ASSESSING OFFICER WAS MAINTAINED . THE LD. CIT(A) ALSO OBSERVED THAT THE COPY OF TRANSFER DEED IS IN GUJARATI AND ARE NOT READABLE , THUS, THE ASSESSEE C OULD NOT SUBSTANTIATE HIS CLAIM A ND THAT IT IS NOT CLEAR WHY THE REGISTRY IS REGISTERED ON TWO DIFFERENT DATES. THUS, FURTHER AGGRIEVED, THE ASSESSEE HAS FILED THIS APPEAL BEFORE THIS TRIBUNAL. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN CONFIRMI NG ACTION OF THE ASSESSING OFFICER OF DISALLOWING CLAIM FOR EXEMPTION U/S. 54EC AMOUNTING TO RS. 50,00,000/ - . 2. THE APPELLANT PRAYS THAT: (I) IT MAY BE HELD THAT APPELLANT IS ENTITLED TO EXEMPTION U/S. 54EC AMOUNTING TO RS. 50,00,000/ - ; 3. WE HAVE HEARD T HE SUBMISSION OF LD. AUTHORIZED REPRESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (DR) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE LD. AR OF THE ASSESSEE SUBMITS THAT A VERY SHORT DISPUTE IN THE PRESENT APPEAL IS WHETHER THE FINAL TRANSACTION OF THE TRANSFER OF ASSET CONCLUDED ON 8.10.2012 OR ON 16.01.2013. THE LD. AR OF THE ASSESSEE SUBMITS THAT WHEN THE DOCUMENT WAS PRESENTED FOR REGISTRATION ON 08.10.2012 , ONE CO - SHARER WAS NOT AGREED AND ACCORDINGLY DOCUMENT W AS NOT REGISTERED. THE CO - OWNER OF THE PROPERTY ULTIMATELY APPEARED BEFORE THE REGISTRAR CONCERN ON 16.01.2013 AND THE REGISTRATION OF TRANSFER OF PROPERTY WAS COMPLETE. THE ASSESSEE MADE INVESTMENT OF RS. 25,00,000/ - EACH ON 31 ST MAY 2013 AND 31 ST JULY 20 13, WHICH ARE WITHIN SIX MONTH S FROM THE DATE OF TRANSFER. TO BUTTRESS HIS SUBMISSION , THE LD. AR OF THE ASSESSEE RELIED UPON 4 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA THE DECISION OF JURISDICTIONAL HIGH COURT IN CASE OF AMARCHAND J. AGGARWAL VS. UNION OF INDIA [1983] 142 ITR 402 (BOM.) AND THE DE CISION OF HON BLE SUPREME COURT IN ALAPATI VENKATARAMAIAH VS. CIT [1965] 57 ITR 185 (SC). 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF ASSESSING OFFICER. 5. WE HAVE CONSIDERED THE RIVAL CONTENTION OF THE PARTIES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. A SHORT DISPUTE FOR OUR CONSIDERATION IS AS TO WHEN THE TRANSACTION OF TRANSFER OF ASSET WAS COMPLETED AND IF THE ASSESSEE INVESTED THE CAPITAL GAIN WITHIN SIX MONTHS FROM THE DATE OF TRANSFER OF CAPITAL ASSET . THE ASSESSI NG OFFICER DISALLOWED THE EXEMPTION UNDER SECTION 54EC BY TAKING HIS VIEW THAT INVESTMENT IN LONG TERM SPECIFIED ASSET SHOULD BE MADE WITHIN SIX MONTH FROM THE DATE OF TRANSFER OF ASSET. THE ASSESSING OFFICER TREATED THE DATE OF TRANSFER AS 8.10.2012 INSTE AD OF 16.01.2013 AS CLAIMED BY THE ASSESSEE. THE LD CIT(A) AFFIRMED THE ACTION OF ASSESSING BY TAKING THE VIEW THAT THE TRANSFER DEED OF THE ASSET IS IN GUAJARATI AND NOT READABLE AND THUS ASSESSEE HAS NOT PROVED 6. WE HAVE PERUSED THE COPY OF CONVEYANCE DE ED/ SALE DEED ON TRANSFER OF ASSET WITH ITS TRUE ENGLISH TRANSLATION. PERUSAL OF REGISTRATION RECEIPT OF THE TRANSFER DOCUMENT SHOWS THAT INITIAL DOCUMENT WAS PRESENTED FOR REGISTRATION VIDE DOCUMENT NO. 39, RECEIPT NO. 2012322000055 DATED 8.10.2012 . THE AS SESSEE PAID REQUISITE STAMP DUTY ON THE INSTRUMENT. TH US , THE DOCUMENT OF TRANSFER WAS INITIALLY EXECUTED ON 8.10.2012. FURTHER A CAREFUL PERUSAL OF THIS 5 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA SALE - DEED SHOWS THAT REGISTRATION OF THE SALE DEED WAS COMPLETED ON LY ON 16.01.2013. 7. SECTION 23 OF TH E REGISTRATION ACT PRESCRIBE THAT THE DOCUMENT CAN BE PRESENTED FOR ITS REGISTRATION WITHIN FOUR MONTH OF ITS EXECUTION. THE DOCUMENT WAS INITIALLY EXECUTED AND PRESENTED FOR REGISTRATION ON 0 8.10.20 1 2 , HOWEVER, IT WAS NOT REGISTERED. IT WAS AGAIN PRESENTE D AGAIN ON 16.01.2013 AND IT WAS REGISTERED ON THE SAME DATE. S ECTION 54 OF TRANSFER OF PROPERTY ACT (TP ACT) DEFINES SALE OF IMMOVABLE . AS PER SECTION 54 OF TP ACT SALE IS TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISE OR PART PAID AND PART PROMISE. SUCH TRANSFER , IN CASE OF TANGIBLE IMMOVABLE PROPERTY OF THE VALUE OF MORE THAN RS. 100/ - CAN BE MADE ONLY BY WAY OF REGISTERED INSTRUMENT. 8. TH US, IN VIEW OF THE ABOVE PROVISION S OF REGISTRATION ACT AND TP ACT, TH E TRANSFER OF IMMOVEABLE PROP ERTY IS COMPLETE ONLY WHEN THE REGISTRATION OF SALE IS COMPLETED . T HOUGH , AS PER SECTION 47 OF REGISTRATION ACT IT MAY RELATE BACK FROM THE DATE OF EXECUTION OF DOCUMENT. IN THE PRESENT CASE, INITIALLY THE DOCUMENT WAS EXECUTED ON 8.10.2012, THOUGH; IT WA S ULTIMATELY REGISTERED ON 16.01.2013. THE DATE OF REGISTRATION IS NOT DISPUTED BY LOWER AUTHORITIES . THE LOWER AUTHORITY DENIED THE CLAIM OF ASSESSEE ON THE GROUND THAT THE DOCUMENT WAS INITIALLY EXECUTED ON 8.10.2012. NO INVESTIGATION WAS CONDUCTED BY TH E ASSESSING OFFICER TO DISBELIEVE THE CONTENTION OF THE ASSESSEE THAT FINALLY TRANSACTION OF TRANSFER OF ASSET WAS COMPLETED ON LY ON 16.01.2013. 6 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA 9. SPECIAL BENCH OF AHMEDABAD TRIBUNAL IN ALKA BEN PATEL VS ITO [ 2014] 43 TAXMANN.COM 333 (AHD - TRIB) (SB) HELD THAT AS PER THE TERMS OF GENERAL CLAUSES ACT, 1897, PERIOD OF SIX MONTH MENTIONED IN SECTION 54EC HAS TO BE REGARDED AS SIX BRITISH CALENDAR MONTHS . THE SPECIAL BENCH REFERRED AND RELIED ON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF CIT VS MUNNALA L SHRIKISHAN [1987] 167 ITR 415 ( EMPHASIS ADDED BY US) . 10. HON BLE BOMBAY HIGH COURT IN AMARCHAND J AGGARWAL VS UOI (SUPRA) HELD THAT U NDOUBTEDLY, SECTION 47 OF THE REGISTRATION ACT PROVIDES TH AT THE DOCUMENT SHALL OPERATE FROM THE TIME OF ITS EXECUTION ONCE IT IS REGISTERED BY THE REGISTERING AUTHORITY, BUT IT DOES NOT SAY WHEN THE SALE WOULD BE DEEMED TO BE COMPLETED ; IT ONLY PERMITS A DOCUMENT TO OPERATE FROM A CERTAIN DATE WHICH MAY BE EARLI ER THAN THE DATE WHEN IT WAS REGISTERED. FURTHER, IT IS NOT POSSIBLE TO HOLD THAT THE TRANSFER IS COMPLETE ON THE DATE OF EXECUTION AND THE REGISTRATION ONLY MAKES THE SALE COMPLETE. THERE IS NO DISTINCTION BETWEEN THE TRANSFER OF TITLE AND THE COMPLETION OF SALE; AND THE TITLE PASSES ONLY WHEN THE DOCUMENT IS REGISTERED UNDER THE REGISTRATION ACT. THE MERE FACT THAT SUCH TRANSFER OPERATES FROM THE DATE OF EXECUTION IS NOT SUFFICIENT TO CONCLUDE THAT THE TITLE ITSELF PASSES ON THE DATE OF EXECUTION. CONSEQU ENTLY, THE TRANSFER IN THE INSTANT CASE COULD NOT BE DEEMED TO HAVE BEEN EXPECTED ON THE DATE OF EXECUTION OF THE DOCUMENT. 7 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA 11. AS WE HAVE ALREADY HELD THAT THE SALE OF THE IMMOVABLE PROPERTY IS COMPLETE ONLY ON REGISTRATION OF TRANSFER DEED AS MANDATED UNDER SECTION 54 OF THE TRANSFER OF PROPERTY ACT. THE RE IS NO DISPUTE THAT THE ASSESSEE HAS INVESTED RS. 25,00,000/ - ON 31.05.2013 AND RS. 25,00,000/ - ON 31.07.2013 . THEREFORE, IN VIEW OF THE AFORESAID DISCUSSION WE ARE IN AGREEMENT WITH THE CONTENTION OF THE LD . AR FOR THE ASSESSEE THAT THE ASSESSEE INVESTED THE LTCG IN NHAI BOND WITHIN SIX MONTH OF TRANSFER OF ASSET AND IS ELIGIBLE FOR EXEMPTION UNDER SECTION 54EC . THUS, THE ISSUE FRAMED BY US IN PARA 5(SUPRA) IS ALLOWED IN FAVOUR OF THE ASSESSEE. T HEREFORE , WE DIRECT THE ASSESSING OFFICER TO ALLOW THE EXEMPTION OF LTCG TO THE ASSESSEE, UNDER SECTION 54EC OF THE ACT . 12. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27 - 07 - 2020. SD / - SD/ - (RAJESH KUMAR) (PA WAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 27 TH JULY, 2020 SK/ - COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI 8 ITA NO. 7469 MUM 2018 - CHANDRAVADAN C. PITHAWALLA DATE INITIAL 1. DRAFT DICTATED ON (DICTA TION SHEET IS ENCLOSED WITH MAIN FILE.) 27 .07.2020 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 2 7.07.2020 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 5. APPROVED DRAFT COMES TO THE SR.PS/PS 6. KEPT FOR PRONOUNCEMENT ON 7. FILE SENT TO THE BENCH CLERK 8. DATE ON WHICH FILE GOES TO THE AR 9. DATE ON WHICH FILE GOES TO THE HEAD CLERK. 10. DATE OF DISPATCH OF ORDER. 11. DRAFT DICTATION SHEETS ARE ATTACHED SR.PS