N.Nivedita, Coimbatore V. ACIT, Coimbatore

ITA 848/CHNY/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 6474 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 22-06-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 02-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: K RAGHU
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER AN D SHRI GEORGE MATHAN, JUDICIAL MEMBER .. I.T.A. NO. 848/MDS/2010 ASSESSMENT YEAR : 2006-07 MS. N. NIVEDITA, NO. 29, RACE COURSE ROAD, COIMBATORE-641 018. V. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-II, COIMBATORE. (PAN: ABRPN2734L) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K. RAGHU RESPONDENT BY : SHRI P.B. SEKARAN O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE LEARNED CIT(APPEALS)-I, COIMBATORE IN APPEAL NO. 193/08-09 DATED 19-03-2009 FOR THE ASSESSMENT YEAR 2006-07. I.T.A. NO.848/MDS/2010 2 2. SHRI K. RAGHU, CA REPRESENTED ON BEHALF OF THE A SSESSEE AND SHRI P.B. SEKARAN, LEARNED CIT-DR REPRESENTED ON BEHALF OF TH E REVENUE. 3. IT WAS SUBMITTED BY THE LEARNED AUTHORISED REPRE SENTATIVE THAT THE ASSESSEE ALONG WITH HER FATHER AND MOTHER HAD ENTERED INTO A N AGREEMENT OF SALE ON 30- 11-1997 WITH SIX PERSONS TO SELL A RESIDENTIAL PROP ERTY AT SITE NO. 13, TEA ESTATES COMPOUND, RACE COURSE ROAD, COIMBATORE . IT WAS TH E SUBMISSION THAT AT THE TIME OF ENTERING INTO THE AGREEMENT THE ASSESSEE HA D ALSO TRANSFERRED POSSESSION IN THE PROPERTY TO THE SIX PERSONS. THE ASSESSEE H AD RECEIVED ADVANCES TO ANB EXTENT OF ` 1,65,96,000/-. IT WAS THE SUBMISSION THAT THE AGR EEMENT WAS FOR A PERIOD OF 5 YEARS. CONSEQUENTLY, THE AGREEMENT WAS TO EXPIRE ON30-11-2002. ON 26.11.2002 ANOTHER AGREEMENT WAS ENTERED INTO, NAME LY A SUPPLEMENT AGREEMENT OF SALE FOR EXTENDING THE PERIOD BY ANOTH ER 5 YEARS UPTO 25-11-2007. IN THE SUPPLEMENTARY AGREEMENT THE ASSESSEE RECEIVE D FURTHER ADVANCE OF ` 1,39,78,000/-. IT WAS THE SUBMISSION THAT THE SUPP LEMENTARY AGREEMENT ALSO RECOGNIZED THAT THE BALANCE SALE CONSIDERATION OF ` 54,26,000/- WAS DUE TO THE ASSESSEE. ON 10-06-2005 THE SALE DEED WAS REGIST ERED IN THE NAME OF ONE SHRI SURESH JAGANNATHAN, IDENTIFIED AS THE NOMINEE OF TH E PURCHASERS. IT WAS THE SUBMISSION THAT THE ASSESSING OFFICER HAS BROUGHT T O TAX THE CAPITAL GAINS ON THE TRANSFER OF THE SAID RESIDENTIAL PROPERTY WHEN COMP LETING THE ASSESSMENT FOR THE ASSESSMENT YEAR 2006-07. ON A SPECIFIC QUERY FROM THE BENCH IT WAS CONFIRMED I.T.A. NO.848/MDS/2010 3 BY THE LEARNED AUTHORISED REPRESENTATIVE THAT THE A SSESSEE HAS NOT OFFERED CAPITAL GAINS IN REGARD TO THE SALE OF THE RESIDENTIAL PROP ERTY FOR ANY OF THE EARLIER ASSESSMENT YEARS. IT WAS THE SUBMISSION THAT THE A SSESSING OFFICER HELD THAT THE TRANSFER TOOK PLACE ON 10-06-2005 ON THE GROUND THA T MAJOR PORTION OF THE SALE CONSIDERATION WAS RECEIVED FROM THE PURCHASERS OR T HEIR NOMINEES ONLY ON 10-06- 2005. IT WAS THE FURTHER SUBMISSION THAT ON APPEAL BEFORE THE LEARNED CIT(A), THE LEARNED CIT(A) HAD UPHELD THE ORDER OF THE ASSE SSING OFFICER. IT WAS THE SUBMISSION THAT THE LEARNED CIT(A) HAD HELD THAT IN THE ORIGINAL AGREEMENT NO CLAUSE FOR NOMINATION WAS INCORPORATED. IT WAS THE SUBMISSION THAT IN CLAUSE 1 OF THE AGREEMENT DATED 30-11-1997 A CLAUSE FOR NOMINAT ION WAS INCORPORATED AND THE FINDING OF THE LEARNED CIT(A) WAS WRONG. IT WA S THE SUBMISSION THAT THE ASSESSING OFFICER HAD ALSO HELD THAT THE SALE AGREE MENT WAS NOT REGISTERED AND THE SALE AGREEMENT DATED 30-11-1997 OR THE SUPPLEME NTARY AGREEMENT DATED 26- 11-2002 WAS NOT FILED NOR WAS ANY EVIDENCE OF RECEI VING PART SALE CONSIDERATION ON 30.11.1997 AND 26.11.2002 FILED. IT WAS THE SUB MISSION THAT THESE DOCUMENTS HAVE BEEN FILED BEFORE THE LEARNED CIT(A) AND THESE DOCUMENTS WERE NOT CALLED FOR BY THE ASSESSING OFFICER IN THE COURSE OF THE O RIGINAL ASSESSMENT. IT WAS THE FURTHER SUBMISSION THAT AS THE POSSESSION OF THE PR OPERTY HAD BEEN TRANSFERRED AS ON 30-11-1997 IN VIEW OF SECTION 2(47)(V) OF THE IN COME TAX ACT, 1961, TRANSFER WAS COMPLETE AS ON 30-11-1997 AND CAPITAL GAINS TAX COULD NOT BE LEVIED DURING THE ASSESSMENT YEAR 2006-07. THE LEARNED AUTHORISE D REPRESENTATIVE ALSO PLACED I.T.A. NO.848/MDS/2010 4 BEFORE US THE COPY OF THE ORDER UNDER SECTION 269UL (1) OF THE INCOME TAX ACT, 1961 DATED 20-06-1997 WHEREIN THE ASSESSEE HAD BEE N GRANTED NO OBJECTION TO TRANSFER THE PROPERTY FOR AN APPARENT CONSIDERATION OF ` 2,70,00,000/-. IT WAS THE SUBMISSION THAT THE SALE CONSIDERATION WAS ` 3,60,00,000/- AND THE SAME HAD BEEN DISCOUNTED TO ARRIVE AT THE FIGURE OF ` 2,70,00,000/- AS THE AGREEMENT WAS FOR A PERIOD OF 5 YEARS. IT WAS THE FURTHER SUBMIS SION THAT WHEN THE SUPPLEMENTARY AGREEMENT WAS DRAWN UP, THE REQUIREME NT OF CHAPTER XX-C HAD BEEN REMOVED. IT WAS THE FURTHER SUBMISSION THAT A S THE ASSESSEES FATHER HAD INCURRED SUBSTANTIAL DEBT, THE PROPERTY WAS SOLD TO SETTLE THAT DEBT. THE LEARNED AUTHORISED REPRESENTATIVE FURTHER RELIED UPON THE D ECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. G. SAROJA, REPORTED IN 301 ITR 124 TO SUPPORT THE ASSESSEES CASE. 4. IN REPLY, THE LEARNED DR SUBMITTED THAT AS PER C LAUSE 3 OF THE AGREEMENT DATED 30-11-1997 THE PERIOD WAS FOR 5 YEARS AND THE AGREEMENT TO SELL WAS LIABLE FOR EXTENSION BY MUTUAL CONSENT. IT WAS SUBMITTED THAT AS PER THE SAID CLAUSE IF THE VENDORS DID NOT WISH TO SELL THE RIGHT TO REFUS E TO SELL WAS AVAILABLE WITH THE VENDORS AND IN SHORT THE ASSESSEE RETAINED WITH HER SELF THE RIGHT TO TRANSFER AND CONSEQUENTLY IT CANNOT BE SAID THAT THE TRANSFER TO OK PLACE ON 30.11.1997. IT WAS THE FURTHER SUBMISSION THAT THE ADVANCES WHICH WERE PAID THROUGH BOTH THE AGREEMENTS DATED 30-11-1997 AND 26-11-2002 WERE ONL Y ADVANCES AND NOT THE I.T.A. NO.848/MDS/2010 5 SALE CONSIDERATION. IT WAS THE SUBMISSION THAT THO UGH THE ASSESSEE HAS PRODUCED LETTER FROM THE AGREEMENT HOLDERS THAT THEY WERE IN POSSESSION OF THE PROPERTY, THE SAME WAS UNDATED. IT WAS THE SUBMISSION THAT T HE ASSESSEE HAS NOT PROVED THAT THE PURCHASERS HAD BEEN PUT IN POSSESSION AND THE SAME HAVING NOT PROVED, IT CANNOT BE SAID THAT THE TRANSFER WAS COMPLETE AS PER THE PROVISIONS OF SECTION 53A OF THE TRANSFER OF PROPERTY ACT, 1882 READ WITH SECTION 2(47)(V) OF THE INCOME TAX ACT, 1961. HE VEHEMENTLY SUPPORTED THE ORDER OF THE LEARNED CIT(A). 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. A PE RUSAL OF THE CLAUSE 2 OF THE AGREEMENT DATED 30-11-1997 CLEARLY SHOWS THAT THE V ENDORS HAVE PUT THE PURCHASERS IN POSSESSION OF THE PROPERTY. THE SUPP LEMENTARY AGREEMENT ALSO CLEARLY RECOGNIZES AND RATIFIES THE AGREEMENT DATED 30-11-1997 AS PER CLAUSE 7 OF THE SUPPLEMENTARY AGREEMENT DATED 26-11-2002. ANOT HER INTERESTING ASPECT, ON A PERUSAL OF THE AGREEMENT TO SELL, SUPPLEMENTARY A GREEMENT AS ALSO THE SALE DEED, IS THAT THE SIGNATORY FOR THE ASSESSEE BEING VENDOR NO.3 IN THE AGREEMENT FOR SALE AND SUPPLEMENTARY AGREEMENT FOR SALE IS TH E SAME PERSON WHO IS THE POWER OF ATTORNEY AS PER THE AGREEMENT TO SELL WHEN SIGNING THE SALE DEED IS THE CONFIRMING PARTY. THIS ALSO GIVES CREDENCE TO THE CLAIM OF THE ASSESSEE THAT POSSESSION DID SHIFT FROM THE ASSESSEE TO THE AGREE MENT HOLDERS ON 30-11-1997 WHEN THE AGREEMENT TO SELL THE PROPERTY WAS ENTERED INTO. THE RECORDING OF THE I.T.A. NO.848/MDS/2010 6 ASSESSING OFFICER THAT THE SALE AGREEMENTS WERE NOT REGISTERED WOULD NOT AFFECT THE ISSUE INSOFAR AS THERE IS NO REQUIREMENT UNDER LAW THAT THE SALE DEED WAS TO BE REGISTERED. FURTHER THE SALE AGREEMENTS ALSO CL EARLY SHOW THE DETAILS OF THE CONSIDERATION TO BE PAID, SUCH AS CHEQUE NUMBERS AN D DATES. THE FINDING OF THE LEARNED CIT(A) THAT IN THE ORIGINAL AGREEMENT THERE WAS NO CLAUSE FOR NOMINATION IS FOUND TO BE WRONG INSOFAR AS THE SALE AGREEMENT DATED 30-11-1997 CLEARLY RECOGNIZES THE CLAUSE FOR NOMINATION IN CLAUSE 1 OF THE SAID AGREEMENT THE CLAIM OF THE LEARNED DR THAT THE ASSESSEE HAS NOT PROVED THAT THE AGREEMENT HOLDERS HAD BEEN PUT INTO POSSESSION OF THE PROPERTY CANNOT BE SUBSCRIBED TO INSOFAR AS THE ASSESSEE CANNOT PROVE THE NEGATIVE. THE AGREEM ENT HOLDERS HAD CLEARLY ADMITTED THAT THEY WERE PUT INTO POSSESSION EVEN TH OUGH THE LETTER IS UNDATED. IF THE ASSESSING OFFICER HAD DOUBTED THE VERACITY OF T HE SAID LETTER, IT WAS VERY WELL OPEN TO HIM TO CALL UPON THE AGREEMENT HOLDERS TO E XAMINE AS TO WHEN THEY WERE PUT INTO THE POSSESSION OF THE PROPERTY. THIS HAS ALSO NOT BEEN DONE BY THE REVENUE. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE POSSESSION OF THE PROPERTY WAS TRANSFERRED TO THE AGREEMENT HOLDERS O N 30-11-1997 WHEN THE AGREEMENT FOR SALE WAS ENTERED INTO AND THE ADVANCE WAS RECEIVED. THIS VIEW OF OURS ALSO FINDS SUPPORT FROM THE DECISION OF THE HO N'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V.G. SAROJA, REFERRED TO SUPRA. IN THE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THE CAPITAL GAIN IN REGARD TO THE SAL E OF THIS PROPERTY WAS NOT LIABLE I.T.A. NO.848/MDS/2010 7 FOR TAX DURING THE ASSESSMENT YEAR 2006-07. IN THE CIRCUMSTANCES, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6. THE ORDER WAS PRONOUNCED IN THE COURT ON 30/06/2 011. SD/- SD/- (ABRAHAM P. GEORGE) (GEORGE MATHAN) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED THE 30 TH JUNE, 2011. H. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE