Veerannagari Gopal Reddy , Medak V. Income Tax Officer, Ward-11(4), Hyderabad

ITA 988/Hyd/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 5222 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Next Hearing Date: 20-03-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 17-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NILANJAN DEY
• Assessee Lawyers: K A SAI PRASAD
• Section: 142(1); 148

Judgement Text

ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 1 OF 6 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B SMC BENCH, HYDERABAD BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.988/HYD/2018 (ASSESSMENT YEAR: 2008-09) SHRI VEERANNAGIRI GOPAL REDDY MEDAK PAN:ASOPG7077K VS INCOME TAX OFFICER WARD 11(4) HYDERABAD (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI K.A. SAI PRASAD FOR REVENUE : SHRI NILANJAN DEY, DR O R D E R THIS IS ASSESSEES APPEAL FOR THE A.Y 2008-09 AGAIN ST THE ORDER OF THE CIT (A)-5, HYDERABAD, DATED 22.02. 2018. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE, A N INDIVIDUAL, DID NOT FILE ANY RETURN OF INCOME FOR T HE A.Y 2008-09. THE AO RECEIVED INFORMATION THAT THE ASSESSEE IS HO LDING GPA FOR SRI M SHEETAL SINGH, SRI M SHANKER SINGH, SRI M MAN OHAR SINGH, SRI M VIJAY SINGH, SRI M ARVIND SINGH AND SRI M BAL DEV SINGH AND THAT HE SOLD THE IMMOVABLE PROPERTY BEARING NO. 1-2- 212/B/16 ADMEASURING 189 SQ. YARDS. DOMALGUDA SY.NO .190 & 191, GAGAN MAHAL VILLAGE, MUSHEERABAD MANDAL, HYDER ABAD BELONGING TO THEM VIDE DOCUMENT NO.3513/2007, DATED 22.09.2007, SRO CHIKADAPALLY, DURING THE FINANCIAL YEAR 2007-08 RELEVANT TO THE A.Y 2008-09 FOR A CONSIDERATION OF RS.8,40,000/- DATE OF HEARING: 20.03.2019 DATE OF PRONOUNCEMENT : 24.05.2019 ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 2 OF 6 AS AGAINST THE MARKET VALUE OF RS.38,08,000/- AS PE R THE REGISTRATION AUTHORITY. OBSERVING THAT THE ASSESSEE HAS NOT OFFERED THE CAPITAL GAINS TO TAX, THE ASSESSMENT WA S REOPENED U/S 148 OF THE ACT. 3. THE ASSESSEE DID NOT FILE ANY RETURN OF INCOME I N RESPONSE TO THE NOTICE U/S 148. THEREFORE, THE AO I SSUED A NOTICE U/S 142(1) ALONG WITH A QUESTIONNAIRE, REQUIRING TH E ASSESSEE TO FURNISH THE DETAILS IN CONNECTION WITH THE ASSESSME NT PROCEEDINGS. IN RESPONSE TO THE SAME, THE ASSESSEE FILED A REPLY DATED 15.06.2015 ALONG WITH A COPY OF THE SALE DEED STATING THAT HE HAS EXECUTED THE SALE DEED AS A GPA HOLDER ONLY AND THAT HE HAS NOT RECEIVED ANY AMOUNT FROM THE TRANSACTION. T HE AO OBSERVED THAT THE ASSESSEE HAS NOT FILED ANY EVIDEN CE IN SUPPORT OF HIS CONTENTION BUT HAS FILED A REPLY ON 29.02.20 16 IN WHICH HE HAD JUSTIFIED THE SALE OF THE PLOT FOR A SUM OF RS. 8,40,000/- AS AGAINST THE MARKET VALUE OF RS.38,08,000/-. THEREFO RE, THE AO HELD THAT THE ASSESSEE HAS SOLD THE PLOT TO HIS DAU GHTER SMT. V. RAJINI REDDY NOT ONLY AS A GPA HOLDER, BUT ALSO AS A OWNER OF THE PROPERTY AND HAS EARNED THE CAPITAL GAIN THEREFROM. HE ACCORDINGLY BROUGHT THE CAPITAL GAINS TO TAX. AGGRI EVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT (A), WH O CONFIRMED THE ORDER OF THE AO AND THE ASSESSEE IS IN SECOND A PPEAL BEFORE THIS TRIBUNAL. 4. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED T HAT THE ADDITION CANNOT BE MADE IN THE HANDS OF THE ASS ESSEE FOR TWO REASONS; (I) ASSESSEE IS NOT THE OWNER OF THE PROPE RTY AND ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 3 OF 6 THEREFORE, NO CAPITAL GAIN HAS ARISEN TO HIM; AND ( II) THAT THE VENDEE HAD PAID A SUM OF RS.8,40,000/- IN THE YEAR 1994 AND THE POSSESSION WAS ALSO GIVEN IN THE YEAR 1994, AND IN THE RELEVANT FINANCIAL YEAR, ONLY TRANSACTION WAS EXECUTION OF S ALE DEED AND THEREFORE, IF AT ALL THERE WAS A TRANSFER, IT WAS I N THE YEAR 1994 AND NOT IN THE RELEVANT FINANCIAL YEAR AND HENCE CA PITAL GAIN CANNOT BE BROUGHT TO TAX IN THIS YEAR. THE LEARNED COUNSEL FOR THE ASSESSEE HAS DRAWN OUR ATTENTION TO THE REGISTERED IRREVOCABLE GPA EXECUTED IN 1994, WHEREIN THE VENDORS HAVE CLEA RLY STATED THAT THEY ARE EXECUTING THE GPA ONLY TO EXECUTE THE SALE DEED ON THEIR BEHALF BUT THERE IS NO SALE OF THE PROPERTY B Y VIRTUE OF THE GPA. HE SUBMITTED THAT IT WAS NOT AN AGREEMENT OF S ALE CUM GPA AND THEREFORE, THE ASSESSEE WAS ONLY A GPA HOLDER. HE ALSO DREW OUR ATTENTION TO THE CONTENTS IN THE REGISTERED SAL E DEED; WHEREIN IT WAS CLEARLY MENTIONED THAT THE SUM OF RS.8,40,00 0/- WAS RECEIVED FROM THE VENDEE IN THE YEAR 1994 ITSELF AN D THAT THE POSSESSION OF THE SAME WAS ALSO HANDED OVER TO THE VENDEE SMT. V. RAJINI REDDY IN THE YEAR 1994 ITSELF AND THAT TH E ASSESSEE HAS ONLY CONCLUDED THE EXECUTION OF THE REGISTRATION OF THE SALE DEED IN THE FINANCIAL YEAR 2006-07. THEREFORE, ACCORDING TO HIM, THE TRANSACTION HAD CONCLUDED IN THE YEAR 1994, EXCEPT FOR EXECUTION OF THE REGISTERED SALE DEED AND HENCE THERE IS NO T RANSFER IN THE RELEVANT A.Y AND NO CAPITAL GAIN HAS ARISEN EITHER TO THE ASSESSEE OR TO THE VENDORS DURING THE RELEVANT FINANCIAL YEA R. 5. THE LEARNED DR, ON THE OTHER HAND, SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ASSESSEE HAD PAID THE SALE CONSIDERATION OF RS.8,40,000/- IN THE YEAR 1994 ITSELF DUE, TO WHICH HE OBTAINED THE IRREVOCABLE GP A AND IN THE ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 4 OF 6 RELEVANT A.Y, THE ASSESSEE HAS EXECUTED THE SALE DE ED IN FAVOUR OF HIS DAUGHTER SMT. V. RAJINI REDDY AND THEREFORE, TH ERE IS A TRANSFER OF PROPERTY FROM THE ASSESSEE TO HIS DAUGH TER AND HENCE CAPITAL GAIN HAS ARISEN TO THE ASSESSEE DURING THE RELEVANT A.Y. HE SUBMITTED THAT THE REGISTERED SALE DEED IS BETWEEN THE ASSESSEE AND HIS DAUGHTER I.E. RELATED PARTIES AND THEREFORE , THE CONTENTS OF THE SALE DEED CANNOT BE RELIED UPON WITHOUT ANY COR ROBORATIVE EVIDENCE THAT THE VENDORS HAVE RECEIVED THE SALE CO NSIDERATION FROM SMT. V. RAJINI REDDY IN THE YEAR 1994 EXCEPT F OR THE RECITALS IN THE SALE DEED, WHICH IS A SELF-SERVING DOCUMENT. 6. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT VIDE REGISTERED DOCUMENT NO. 1334 OF 1994, THE ASSESSEE WAS GIVEN AN IRREVOCABLE GPA BY THE OW NERS OF THE LAND AND IT IS STATED THEREIN THAT THE POSSESSION W AS ALSO GIVEN TO THE ASSESSEE TO ENABLE HIM TO HAND OVER THE POSSESS ION TO THE PURCHASER. THERE IS NO MENTION ABOUT THE RECEIPT OF ANY SALE CONSIDERATION FROM WHOMSOEVER. AFTER NEARLY 13 YEAR S, THE ASSESSEE HAS EXECUTED THE SALE DEED IN FAVOUR OF HI S DAUGHTER AND IN THE SALE DEED, IT IS MENTIONED THAT A SUM OF RS. 8,40,000/- HAS BEEN RECEIVED BY THE VENDORS FROM THE VENDEE IN THE YEAR 1994 AND THAT THE POSSESSION WAS ALSO HANDED OVER TO THE VENDEE THEREIN ON THE SAID DATE. AS RIGHTLY POINTED OUT BY THE REVENUE AUTHORITIES, IT IS NOT UNDERSTANDABLE AS TO WHY THE GPA WAS EXECUTED IN FAVOUR OF THE ASSESSEE AND NOT THE SALE DEED ITSELF IN FAVOUR OF THE ASSESSEES DAUGHTER IF THE VENDORS HA D RECEIVED THE ENTIRE SALE CONSIDERATION FROM THE VENDEE AT THAT P OINT OF TIME. THE RECITALS IN THE GPA SHOW THAT THE ASSESSEE IS N OT THE OWNER OF THE PROPERTY BUT HAS ONLY BEEN GRANTED AUTHORITY TO CONVEY THE ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 5 OF 6 PROPERTY TO THIRD PARTY. THEREFORE, IT CANNOT BE CO NSIDERED THAT THE ASSESSEE BECAME THE OWNER OF THE PROPERTY BY VIRTUE OF THE IRREVOCABLE GPA. IN THE RELEVANT PREVIOUS YEAR, THE ASSESSEE HAS EXECUTED THE SALE DEED IN FAVOUR OF HIS DAUGHTER AN D IN THE SALE DEED IT HAS BEEN MENTIONED THAT THE TOTAL OF THE SA LE CONSIDERATION OF RS.8,40,000/- WAS PAID IN THE YEAR 1994. THIS FA CT ALSO CANNOT BE ACCEPTED, BECAUSE IF THE ENTIRE SALE CONSIDERATI ON WAS PAID IN THE YEAR 1994, THEN THE VENDORS/PARTIES OR EVEN THE GPA HOLDER COULD HAVE EXECUTED THE SALE DEED IN FAVOUR OF THE VENDEE IN THAT YEAR ITSELF. THEREFORE, THE SALE IS ONLY IN THE YEA R 2007 BUT CAPITAL GAIN WOULD ARISE IN THE HANDS OF THE OWNERS OF THE PROPERTY AND NOT THE GPA HOLDER. THE HON'BLE SUPREME COURT IN TH E CASE OF SURAJ LAMPS & INDUSTRIES PVT. LTD VS. STATE OF HARY ANA REPORTED IN (2012) 340 ITR 2 HAS HELD THAT GPA IS NOT A DEED OF CONVEYANCE AND HENCE CANNOT BE CONSTRUED AS AN INSTRUMENT OF T RANSFER IN REGARD TO ANY RIGHT, TITLE OR INTEREST IN THE IMMOV ABLE PROPERTY. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF WIP RO LTD. VS. DCIT REPORTED IN 382 ITR 179 HAS CONSIDERED THE ABO VE JUDGMENT AS WELL AS THE JUDGMENT IN THE CASE OF STATE OF RAJ ASTHAN VS. BASANT NAHATA (2005) 12 SCC 77, TO HOLD AS UNDER: 142. A DEED OF POWER OF ATTORNEY IS EXECUTED BY THE PRI NCIPAL IN FAVOUR OF THE AGENT. THE AGENT DERIVES A RIGHT TO U SE HIS NAME AND ALL ACTS, DEEDS AND THINGS DONE BY HIM AND SUBJECT TO T HE LIMITATIONS CONTAINED IN THE SAID DEED, THE SAME SHALL BE READ AS IF DONE BY THE PRINCIPAL. A POWER OF ATTORNEY IS A DOCUMENT OF CON VENIENCE. A POWER OF ATTORNEY IS NOT AN INSTRUMENT OF TRANSFER IN REGARD TO ANY RIGHT, TITLE OR INTEREST IN AN IMMOVABLE PROPERTY. IT IS REVOCABLE OR TERMINABLE AT ANY TIME UNLESS IT IS MADE IRREVOCABL E IN A MANNER KNOWN TO LAW. 143. THEREFORE EVEN IF SECTION 2(47) IS HELD TO BE APPL ICABLE TO A STOCK-IN-TRADE, UNLESS THE TRANSACTION IN QUESTION HAS THE EFFECT OF TRANSFERRING OR ENABLING THE ENJOYMENT OF ANY IMMOV ABLE PROPERTY, IT WOULD NOT AMOUNT TO A TRANSFER . ITA NO 988 OF 2018 VEERANNAGARI GOPAL REDDY MEDAK. PAGE 6 OF 6 RESPECTFULLY FOLLOWING THE ABOVE JUDGMENTS AND SINC E THE ASSESSEE IS NOT THE OWNER OF THE PROPERTY, THE CAPITAL GAIN CANNOT BE BROUGHT TO TAX IN HIS HANDS. 7. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY, 2019. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 24 TH MAY, 2019. VINODAN/SPS COPY TO: 1 SHRI VEERANNAGARI GOPAL REDDY, C/O CH. PARTHASARA THY & CO. 1- 1-298/2/B/3 1 ST FLOOR, SOWBHAGYA AVENUE ST.NO.1 ASHOKNAGAR, HYDERABAD 500020 2 INCOME TAX OFFICER, WARD 11(4), 5 TH FLOOR, D BLOCK, IT TOWERS, MASAB TANK, HYDERABAD 3 CIT (A)-5 HYDERABAD 4 PR. CIT 5 HYDERABAD 5 THE DR, ITAT HYDERABAD 6 GUARD FILE BY ORDER