Ashok Behl, Ranchi V. ITO,Ward-1(1), Ranchi

ITA 78/RAN/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6362 (ITAT-RANCHI)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-09-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 25-02-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MOHANTI
• Assessee Lawyers: D SANNIGARH
• Keywords: Deemed Gift on Purchase of immovable Property below Jantri value; Capital asset; Gift; Cost of acquisition; Competent authority; Benefit of exemption; Capital Gains
• Section: 143(3); 54F; 48; 54

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL RANCHI E-COURTAT KOLKATA BEFORE SHRI S.S, GODARA, JM & DR. A.L. SAINI, AM ITA NO.78/RAN/2019 (ASSESSMENT YEAR: 2014-15) ASHOK BEHL 1 ST FLOOR, SAMRIDHI COMPLEX, SOUTH OFFICE PARA, DORANDA, RANCHI 834001. VS. ITO, WARD-1(1), RANCHI ./ ./PAN/GIR NO. : ADWPB2438E ( /APPELLANT ) .. ( / RESPONDENT ) APPELLANT BY : SHRI D. SANNIGARH, AR RESPONDENT BY : SHRI A. K. MOHANTI, ADDL. CIT, SR. DR / DATE OF HEARING : 22/07/2020 /DATE OF PRONOUNCEMENT : 10/09/2020 / O R D E R PER BENCH: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2014- 15, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX(APPEALS), JHARKHAND DATED 09.01.2019 WHICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY ASSESSING OFFICER U/S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 2. THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE ARE AS FOLLOWS: 1. FOR THAT IMPUGNED ORDER OF ASSESSMENT AS WELL AS ORDER OF HONORABLE CIT (APPEALS) IS NOT BASED ON THE CORRECT APPRECIATION OF LAW AND IS ALSO NOT IN ACCORDANCE WITH THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. FOR THAT FACTUAL CIRCUMSTANCES OF THE CASE THE ORDER OF HONORABLE CIT (APPEALS) IN CONFIRMING THE ARBITRARY ADDITION OF RS. 35,97,160/- MADE BY THE LD. A.O. IS NOT PROPER AND JUSTIFIED AND AGAINST THE PROVISIONS OF THE INCOME TAX ACT 1961 AND ACCORDINGLY IS LIABLE TO BE DELETED. 3. THAT, THE APPELLANT CRAVES TO ALTER, AMEND, MODIFY OR ADD ANY OTHER GROUND THAT MAY BE CONSIDERED NECESSARY IN THE COURSE OF APPEAL PROCEEDING. ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 2 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE IS AS INDIVIDUAL AND SOLD AN IMMOVABLE PROPERTY, VIDE SALE DEED NO. 6604 DATED 23.11.2013 FOR A CONSIDERATION OF RS.66,00,000/-. THE ASSESSEE PURCHASED THE SAID PROPERTY BY WAY OF AN AGREEMENT DATED 08.11.2009. HOWEVER, THE PURCHASE AGREEMENT WAS REGISTERED IN THE NAME OF THE ASSESSEE ON 30.05.2011, ( VIDE SALE DEED DATED 30.05.2011). THE ASSESSEE COMPUTED THE LONG TERM CAPITAL GAIN TAKING INTO ACCOUNT, THE DATE OF AGREEMENT FOR SALE ON 08.11.2009. THE ASSESSEE WAS OF THE VIEW THAT SINCE THE HOLDING PERIOD OF THE PROPERTY WAS MORE THAN THREE YEARS,( THE PROPERTY WAS PURCHASED ON 08.11.2009 AND IT WAS SOLD ON 23.11.2013), HENCE HE COMPUTED LONG TERM CAPITAL GAIN. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT SALE DEED WAS REGISTERED ON 30.05.2011 IN THE NAME OF ASSESSEE THEREFORE THE HOLDING PERIOD IS ONLY TWO YEARS AND SIX MONTHS, WHICH IS LESS THAN THREE YEARS HENCE ASSESSING OFFICER COMPUTED THE SHORT TERM CAPITAL GAIN AS FOLLOWS: ON PERUSAL OF THE SALE DEED NO.6604 DATED 23.11.2013 IT WAS OBSERVED THAT ASSESSEE HAD SOLD AN IMMOVABLE PROPERTY I.E FLAT NO.702, 7TH FLOOR , VASUNDHARA ELEGANCE, ARGORA, RANCHI FOR CONSIDERATION OF RS. 66, 00, 000/- WHICH WAS ACQUIRED BY THE ASSESSEE ON 30.05.2011 VIDE SALE DEED NO. 12391 AT COST OF RS. 20,21,200/-. THE ASSESSEE HAD PAID A SUM OF RS.1,08,000/- AS STAMP DUTY AND RS.81,301/- AS REGISTRATION FEE. THE COMPUTATION OF CAPITAL GAIN IS AS UNDER: SALE CONSIDERATION (2013-14) RS. 66, 00,000 LESS:COST OF ACQUISITION (2011-12] PURCHASE COST RS.20, 21,200 STAMP DUTY PAID RS. 1,08,000 REGISTRATION FEE RS. 81,301 RS. 22, 10, 501 SHORT TERM CAPITAL GAIN RS. 43,89,499 THEREFORE, THE CLAIM OF THE ASSESSEE REGARDING LONG TERM CAPITAL GAIN WAS NOT ACCEPTED BY ASSESSING OFFICER AND ASSESSING OFFICER TREATED A SUM OF RS.43,89,499/- AS SHORT TERM CAPITAL GAIN AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE ADDITION MADE BY THE ASSESSING OFFICER OBSERVING THE FOLLOWING: ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 3 7.1 DURING THE ASSESSMENT PROCEEDINGS, THE AO EXAMINED THE CLAIM OF LONG TERM CAPITAL GAIN AND SOUGHT THE REQUISITE DOCUMENTS INCLUDING THE POSSESSION CERTIFICATE ISSUED BY THE LOCAL AUTHORITY. AS THE APPELLANT COULD NOT FURNISH THE REQUISITE DOCUMENTS, THE AO HELD THAT THE CAPITAL GAIN IS SHORT TERM. DURING THE APPELLATE PROCEEDINGS INTER ALIA, THE APPELLANT WAS REQUIRED TO FURNISH THE FOLLOWING: (I) COPY OF COMPLETION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. (II) COPY OF ELECTRICITY, GAS, WATER, TELEPHONE EXPENSES. (III) COPY OF STATUTORY PAYMENTS LIKE MUNICIPALITY TAXES, HOUSE TAXES ETC. (IV) COPY OF SOCIETY MAINTENANCE BILLS. (V) ANY OTHER EVIDENCE TO ESTABLISH THAT THE APPELLANT WAS IN POSSESSION. (VI) ANY PAYMENTS MADE BY CHEQUE ESTABLISHING THE POSSESSION. IN RESPONSE, THE APPELLANT COULD PRODUCE ONLY THE ELECTRICITY BILL. HOWEVER, THE APPELLANT COULD NOT FURNISH THE OTHER ABOVE REQUISITE DOCUMENTS INCLUDING THE COPY OF COMPLETION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. 7.2 THE AGREEMENT FOR SALE DATED 08.11.2009 HAS NOT BEEN REGISTERED AND THEREFORE DOES NOT HAVE LEGAL SANCTITY. THE AUTHORIZED REPRESENTATIVE FURNISHED THE COPY OF AGREEMENT WHICH IS NOT A REGISTERED AGREEMENT AND THEREFORE IS NOT OF ANY EVIDENTIARY VALUE UNDER THE INDIAN EVIDENCE ACT, 1872. THE RELEVANT LEGAL PROVISIONS ARE REPRODUCED BELOW:- (A) SECTION 54 OF TRANSFER OF PROPERTY ACT, 1882 (I) SALE IS A TRANSFER OF OWNERSHIP IN EXCHANGE FOR A PRICE PAID OR PROMISED OR PART-PAID AND PART-PROMISED. (II) SUCH TRANSFER, IN THE CASE OF TANGIBLE IMMOVEABLE PROPERTY OR IN THE CASE OF REVERSION OR OTHER INTANGIBLE THING, CAN BE MADE ONLY BY A REGISTERED INSTRUMENT. (III) DELIVERY OF TANGIBLE IMMOVEABLE PROPERTY TAKES PLACE WHEN THE SELLER PLACES THE BUYER, OR SUCH PERSON AS HE DIRECTS, IN POSSESSION OF THE PROPERTY (IV) A CONTRACT FOR THE SALE OF IMMOVEABLE PROPERTY IS A CONTRACT THAT A SALE OF SUCH PROPERTY SHALL TAKE PLACE ON TERMS SETTLED BETWEEN THE PARTIES. (V) IT DOES NOT, OF ITSELF, CREATE ANY INTEREST IN OR CHARGE ON SUCH PROPERTY. (B) SECTION 17 OF THE INDIAN REGISTRATION ACT, 1908 'DOCUMENTS OF WHICH REGISTRATION IS COMPULSORY- (1) THE FOLLOWING DOCUMENTS SHALL BE REGISTERED, IF THE PROPERTY TO WHICH THEY RELATE IS SITUATE IN A DISTRICT IN WHICH, AND IF THEY HAVE BEEN EXECUTED ON OR AFTER THE DATE ON WHICH, ACT NO. XVI OF 1864, OR THE INDIAN REGISTRATION ACT, 1866, OR THE INDIAN REGISTRATION ACT, 1871, OR THE INDIAN REGISTRATION ACT, 1877, OR THIS ACT CAME OR COMES INTO FORCE, NAMELY:- (A) INSTRUMENT OF GIFT OF IMMOVABLE PROPERTY; ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 4 (B) OTHER NON-TESTAMENTARY INSTRUMENTS WHICH PURPORT OR OPERATE TO CREATE, DECLARE, ASSIGN, LIMIT OR EXTINGUISH, WHETHER IN PRESENT OR IN FUTURE, ANY RIGHT, TITLE OR INTEREST, WHETHER VESTED OR CONTINGENT, OF THE VALUE OF ONE HUNDRED RUPEES AND UPWARDS, TO OR IN IMMOVABLE PROPERTY; (C) AS PER THE INDIAN REGISTRATION ACT, 1908, ANY AGREEMENT FOR TRANSFER OF ANY INTEREST IN AN IMMOVABLE PROPERTY OF VALUE MORE THAN ONE HUNDRED RUPEE, IS REQUIRED TO BE REGISTERED. THIS ABSOLUTE RULE IS SUBJECT TO THE EXCEPTION PROVIDED UNDER SECTION 53A OF THE TRANSFER OF PROPERTY ACT. 7.3 AS STATED EARLIER, THE AGREEMENT FOR SALE DATE 08.11.2009 IS NOT REGISTERED, WHICH OUGHT TO HAVE BEEN REGISTERED AS PER THE TRANSFER OF PROPERTY ACT AND INDIAN REGISTRATION ACT. THEREFORE, UNREGISTERED AGREEMENT TO SELL IS NOT OF ANY EVIDENTIARY VALUE AS PER INDIAN EVIDENCE ACT, 1872. 7.4 IN VIEW OF THESE REASONS, IT IS STATED THAT THE SALE AND THE TRANSFER OF ALL RIGHTS HAS BEEN PASSED ON ONLY ON THE BASIS OF THE SALE DEED DATED 30.05.2011 AND NOT AS PER THE EARLIER UNREGISTERED AGREEMENT DATED 08.11.2009. AS PER THE PROVISIONS OF THE INDIAN EVIDENCE ACT, THE REGISTERED SALE DEED IS SACROSANCT AND THE CONTENTS OF THE SAME ARE DEEMED TO BE CORRECT. THEREFORE, IT IS HELD THAT THE REGISTERED SALE DEED WHICH WAS EXECUTED ON 30.05.2011 IS ONLY THE VALID LEGAL DOCUMENT FOR THE TRANSFER OF PROPERTY AND ALL THE RIGHTS RELATED TO THE PROPERTY. THEREFORE, NO COGNIZANCE IS TAKEN OF EARLIER UNREGISTERED DOCUMENTS DATE 08.11.2009. HENCE, FOR COMPUTING THE HOLDING PERIOD FOR THE PURPOSES OF CAPITAL GAIN, THE REGISTERED DEED IS CONSIDERED. MOREOVER, THE APPELLANT ALSO COULD NOT FURNISH THE COMPLETION CERTIFICATE ISSUED BY THE COMPETENT AUTHORITY. 7.5 IN VIEW OF ABOVE FACTS AND LEGAL POSITION, THE AO'S ACTION OF TREATING THE TRANSACTION AS SHORT TERM CAPITAL GAIN IS CONFIRMED. THEREFORE, THE ADDITION ON ACCOUNT OF SHORT TERM CAPITAL GAIN OF RS. 43,89,499/- IS HEREBY CONFIRMED. ACCORDINGLY, THIS GROUND OF APPEAL IS DISMISSED. 5.AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 6. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLUDING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS BROUGHT ON RECORD. LEARNED COUNSEL FOR THE ASSESSEE SUBMITS BEFORE US THAT AGREEMENT TO SALE DATED 08.11.2009 SHOULD BE CONSIDERED FOR COMPUTATION OF LONG TERM CAPITAL GAIN. WHEREAS, LD DR SUBMITS THAT SALE DEED OF THE PROPERTY WAS MADE ON 30.05.2011 AND THE SAME SHOULD BE CONSIDERED FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAIN. WE NOTE THAT THE ASSESSEE IS AN INDIVIDUAL CARRYING ON FABRICATION BUSINESS AND HAS DULY FILED HIS RETURN OF INCOME ON 29.03.2016 SHOWING TOTAL INCOME OF RS. 13,58,590/- INCLUDING LONG TERM CAPITAL GAIN FOR SALE OF HIS FLAT NO. 702 AT VASUNDHARA ELEGANCE, ARGORA, RANCHI RS. 8,02,828/-. IN ASSESSMENT U/S 143(3) THE ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 5 LEARNED ASSESSING OFFICER HAS MADE ARBITRARY ADDITIONS OF RS. 43,89,499/- UNDER THE HEAD SHORT TERM CAPITAL GAIN TO THE RETURNED INCOME BY TREATING THE AFORESAID PROPERTY AS SHORT TERM CAPITAL ASSET. ON FURTHER APPEAL TO THE LD COMMISSIONER OF INCOME TAX (APPEALS), THE LD CIT(A) DENIED TO ADMIT THE CLAIM OF THE ASSESSEE IN REGARD TO THE CAPITAL GAINS AS LONG TERM WITH THE CONTENTION THAT IN ABSENCE OF COMPLETION CERTIFICATE ISSUED BY THE BUILDER, THE ASSESSEE CANNOT BE CONSIDERED AS THE OWNER OF THE PROPERTY. 7. LEARNED COUNSEL SUBMITS BEFORE US THAT ASSESSEE PRODUCED BEFORE THE ASSESSING OFFICER AS WELL AS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THE 'AGREEMENT FOR SALE' DATED 08.11.2009 FOR PURCHASE OF THE AFOREMENTIONED FLAT, THE POSSESSION CERTIFICATE DATED 25.05.2010 ISSUED BY THE BUILDERS, COPY OF ELECTRICITY CONNECTION IN THE NAME OF THE ASSESSEE DATED 03.07.2010, CONVEYANCE DEED DATED 30.05.2011 AND SALE DEED DATED 23.11.2013 FOR THE SALE OF THE SAID FLAT AND THOSE ARE IN THE RECORD OF THE ASSESSING OFFICER. IT IS ALSO ACCEPTED BY BOTH THE LOWER AUTHORITIES THAT THE ASSESSEE HAD MADE THE PAYMENTS OF AGREED CONSIDERATION OF RS.20,21,200/-, DURING THE PERIOD 24.05.2008 TO 18.12.2009 BY ACCOUNT PAYEE CHEQUES AND DISBURSEMENT OF HOUSING LOAN. THE LD COUNSEL SUBMITS THAT THE LONG TERM CAPITAL ASSET IN QUESTION ARISES ON THE TRANSFER OF THE AFORESAID RESIDENTIAL FLAT OF THE ASSESSEE FOR RS.66,00,000/- ON 23.11.2013 AND THEREAFTER THE GAIN ON THE TRANSFER WAS SUBSEQUENTLY USED FOR BUYING ANOTHER RESIDENTIAL PROPERTY AT NAGPUR, THE ASSESSEE THEREBY TAKING THE BENEFIT OF INDEXATION U/S 48 AND BENEFIT OF EXEMPTION U/S 54 OF THE INCOME TAX ACT AND FILLED HIS RETURN OF INCOME WHICH INCLUDES THE LONG TERM CAPITAL GAINS OF RS. 8,02, 828/- FOR THIS TRANSACTION. WE NOTE THAT AGREEMENTS TO SALE EXTINGUISHES THE RIGHTS OF THE BUILDER IN THE SAID PROPERTY IN FAVOUR OF THE ASSESSEE AND BY SIGNING THIS AGREEMENT TO SALE, THE ASSESSEE AGREED TO BUY THE SAME AND FOR WHICH PAYMENTS ARE REGULARLY MADE. THE ENFORCEABILITY OF THE LETTER OF ALLOTMENT HAS BEEN CLARIFIED BY THE CBDT VIDE CIRCULARS NO 471 DATED ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 6 15.10.1986 AND NO.672 DATED 16.10. 1993. IT IS HELD THAT THE ALLOTTEE GET A TITLE TO THE PROPERTY ON THE ISSUE OF THE ALLOTMENT LETTER AND THE PAYMENT OF INSTALLMENT IS ONLY A FOLLOW UP ACTION AND TAKING THE DELIVERY OF POSSESSION IS ONLY A FORMALITY. THE BOARD VIDE CIRCULAR NO. 672 AFTER REFERRING TO CIRCULAR NO. 471 EXTENDED THE FACILITY OF EXEMPTION UNDER SECTIONS 54 AND 54F IN RESPECT OF ALLOTMENT OF FLAT/HOUSE. SINCE THE RIGHT IN THE FLAT WAS ACQUIRED AT THE TIME OF BOOKING ON 08.11.2009, ACCORDINGLY THE RIGHT IN THE PROPERTY WAS HELD FOR MORE THAN THREE YEARS BEFORE ITS TRANSFER ON 23.11.2013 AND THEREFORE, CAPITAL GAINS WERE, IN THE NATURE OF LONG TERM CAPITAL GAINS. THE HONORABLE APEX COURT IN THE CASE OF SHRI SANJEEV LAL U/S COMMISSIONER OF INCOME TAX (365 ITR 389 2014 SC) HELD THAT AGREEMENT FOR SALE CONVEYS THE INTENTION OF THE PARTIES TAKING PART IN THE SALE AND THEIR WILLINGNESS TO PERFORM THE CONTRACT, SALE DEED IS AN EXTENSION OF THE AGREEMENT FOR SALE. ONCE, THE SALE DEED IS EXECUTED IN PURSUANT TO AGREEMENT TO SALE AND ALL THE CONDITIONS U/S 2(47) OF THE ACT ARE SATISFIED IT WOULD CONSTITUTE TRANSFER AND WOULD BE EFFECTIVE FROM THE DATE OF AGREEMENT TO SALE ITSELF. THE FACT THAT THE ASSESSEE MADE THE PAYMENTS THROUGH ACCOUNT PAYEE CHEQUES AND THE DISBURSEMENTS OF THE HOUSING LOAN AS A PART PERFORMANCE OF THE AGREEMENT FOR SALE ENTERED AS ON 08.11.2009. IT IS NOT A CASE OF TRANSFER BASED ONLY ON UNREGISTERED DOCUMENTS BUT IN THIS CASE THE PARTIES HAVE EXECUTED SALE DEED IN PERFORMANCE OF THE AGREEMENT. THEREFORE, THE TRANSFER OF IMMOVABLE PROPERTY WOULD BE CONSIDERED AS A COMBINED ACT OF AGREEMENT TO SALE AND SALE DEED AS A SINGLE TRANSACTION OF TRANSFER WITH EFFECT FROM THE DATE ON WHICH SUCH TRANSACTION WAS INTENDED AND CONCEIVED BY THE PARTIES TO THE TRANSACTION. BASED ON FACTS AND LEGAL POSITION NARRATED ABOVE, WE NOTE THAT SINCE THE HOLDING PERIOD IS MORE THAN THREE YEARS ( 08.11.2009 TO 23.11.2013) THEREFORE WE ARE NOT INCLINED TO ACCEPT THE CONTENTION OF THE ASSESSING OFFICER, HENCE THE ASSESSING OFFICER IS DIRECTED TO TREAT THE TRANSFER OF IMMOVABLE PROPERTY AS LONG TERM CAPITAL ASSET. 8. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ITA NO.78/RAN/2019 ASHOK BEHL ASSESSMENT YEAR: 2014-15 7 ORDER PRONOUNCED IN THE OPEN COURT ON THIS 10/09/2020. SD/- (S. S. GODARA) SD/- (A. L. SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 10/09/2020 RS / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-ASHOK BEHL 2. /RESPONDENT- ITO, WARD-1(1), RANCHI 3. / CONCERNED CIT 4. - / CIT (A) 5. , / DR, ITAT, 6. [ / GUARD FILE. // TRUE COPY// BY ORDER/ , SR. PRIVATE SECRETARY