M/S. ARCHEAN REALTY P. LTD.,,CHENNAI vs. DCIT, CC - 1 (1),, CHENNAI
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Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI
Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE
आदेश / O R D E R PER MANJUNATHA.G, AM: This appeal filed by the assessee is directed against the order of the
Commissioner of Income Tax (Appeals)-1, Chennai, dated 30.07.2020 and
pertains to assessment year 2015-16.
The assessee has raised the following grounds of appeal:
The order of the Commissioner of Income Tax (Appeals) - 1, Chennai dated 30.07.2020 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case.
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The CIT(Appeals) erred in sustaining the quantification of capital loss amounting to Rs.19,94,46,822/- upon negating the claim of transfer happened relating to the property transaction under scrutiny relating to the previous year relevant to the assessment year under consideration and consequently erred in re-computing the taxable total income without assigning proper reasons and justifications.
The CIT (Appeals) failed to appreciate that the transfer within the scope of Section 2(47) of the Act took place during the assessment year under consideration for the purpose of validating the reckoning capital gains/loss especially in view of the possession being handed over during the previous year relating to the assessment year 2015-16.
The CIT (Appeals) failed to appreciate that the sale agreement entered into during the assessment year 2014-15 was unregistered thereby vitiating the presumption of transfer within the scope of Section 2(47)(v) of the Act and further ought to have appreciated the judicial trend in this regard would negate the presumption of transfer during the assessment year 2014-15 especially in view of the ownership being intact with the Appellant during assessment year 2014-15.
The CIT (Appeals) failed to appreciate that in any event the Assessing Officer having not disputed the claim of the capital loss, the denial of such claim on technical stand was wrong, erroneous, incorrect and unsustainable in law and ought to have appreciated that having not disputed the fact of handing over the possession during the assessment year under consideration which extinguished the right of the Appellant over the property, the denial of the claim of making the computation of long term capital loss in relation thereto was wrong and incorrect.
The CIT (Appeals) failed to appreciate that the provisions of Section 2(47) (v) of the Act was wrongly interpreted and ought to have appreciated that the provisions of Section 53A of the Transfer of Property Act, 1882 was not bodily lifted and incorporated in Section 2(47)(v) of the Act while fortifying the reckoning of transfer based on possession was correct and sustainable in law in so far as the present assessment year under consideration.
The CIT (Appeals) erred in sustaining the denial of TDS credit to the tune of Rs.40,00,000/- on the presumption that the transfer did not take place during the assessment year under consideration while computing the tax liability without assigning proper reasons and justifications.
The CIT (Appeals) failed to appreciate that the Assessing Officer having noticed the fact of not claiming the TDS credit during the assessment year 2014-15 despite the same being reflected in Form No. 26AS, ought to have allowed the claim for such refund of TDS credit for which the Appellant was otherwise entitled to, thereby negating the relating findings in the impugned order.
The CIT (Appeals) failed to appreciate that having not disputed the transaction and the loss arising from the said transaction, the action of the Assessing Officer to deny the grant of refund on TDS credit from such transaction was wholly unjustified and not sustainable in law.
The CIT (Appeals) failed to appreciate that the provisions of Rule 37BA r.w.s 199 of the Act had no application to the facts of the case and further ought to have appreciated that the wrong interpretation of the said provisions while the said provisions in the Income Tax Rules, 1962 having not specifically debarred the claim for the TDS credit in the assessment year under consideration while permitting the carry forward of such TDS credit from the earlier assessment year even if the income is assessable in the said earlier assessment year, the entitlement of such TDS credit in the subsequent assessment year namely the assessment year under consideration would get fortified thereby negating the interpretation attempted in the impugned order.
The CIT (Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law.
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The Appellant craves leave to file additional grounds/arguments at the time of hearing. 3. The brief facts of the case are that the assessee company is engaged
in the business of real estate development filed its return of income for AY
2015-16 on 29.09.2015 admitting total income of Rs.NIL after claiming
current year loss of Rs.19,96,80,144/-. The case was selected for scrutiny
and during the course of assessment proceedings, it is seen from the P&L
A/c that the assessee company had debited a sum of Rs.14.77 Crs. towards
loss on sale of land and disallowed the same in the statement of
computation of total income. It was further noted that the assessee had
claimed long term capital loss of Rs.19,94,46,822/- towards sale of land.
The AO called upon the assessee to furnish necessary details. In response,
the assessee company has submitted copy of the agreement dated
12.06.2013 with M/s.Appaswamy Real Estate Ltd., towards sale of property
at Porur Village, Ambattur Taluk, Thiruvallur District, comprising of 1.25
acres, for a consideration of Rs.40 Crs. The assessee had also filed ledger
extracts of sale of land in the books of accounts and necessary
consideration received from the buyer and claimed that although, full
consideration has been received in the FY relevant to the AY 2014-15, but
possession of the property has been handed over in all respects to the
buyer in the FY 2014-15 relevant to the AY 2015-16, and thus, it has
computed long term capital loss from sale of property for AY 2015-16. The
AO, however, was not convinced with the explanation of the assessee and
according to the AO, entire sale consideration of Rs.40 Crs. was received
by the assessee in the FY 2014-15 relevant to the AY 2014-15. The last
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payment was received on 28.03.2014. Therefore, the AO opined that
transfer of property took place in terms of provisions of Sec.2(47)(v) of the
Act, for AY 2014-15 only, and thus, rejected arguments of the assessee
and disallowed long term capital loss claimed amounting to
Rs.19,94,46,822/-.
Being aggrieved by the assessment order, the assessee preferred an
appeal before the Ld.CIT(A). Before the Ld.CIT(A), the assessee has filed
detailed written submissions on the issue, which has been reproduced at
Para No.4 on page Nos.6-12 of the order of the Ld.CIT(A). The sum and
substance of the arguments of the assessee before the Ld.CIT(A) are that
transfer as defined u/s.2(47)(v) r.w.s.53A of Transfer of Property Act,
1882, had taken place in the FY relevant to the AY 2015-16, because, the
assessee had handed over possession of the property to the buyer with
necessary documents, even though, full amount of consideration has been
received in the FY 2013-14. The Ld.CIT(A) after considering relevant
submissions of the assessee and also taken note of fact that entire sale
consideration has been paid in the FY 2013-14 relevant to the AY 2014-15
only, observed that transfer as defined u/s.2(47)(v) r.w.s.53A of Transfer
of Property Act, 1882, had taken place for AY 2014-15 only, but not for AY
2015-16 as claimed by the assessee. Therefore, rejected arguments of the
assessee and sustained disallowance of capital loss for AY 2015-16. In so
far as disallowance of credit for TDS, the Ld.CIT(A) by referring Rule
37BA(1) of Income Tax Rules, 1962, and Sec.199(3) of the Act, opined that
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credit for TDS can be given only in the year in which income pertains to
said TDS is offered to tax. Since, capital loss is not included in the income
for AY 2015-16, the credit for TDS cannot be allowed to the assessee.
Therefore, rejected arguments of the assessee and upheld rejection of
credit for TDS for AY 2015-16. Aggrieved by the order of the Ld.CIT(A),
the assessee is in appeal before us.
The Ld.Counsel for the assessee submitted that the Ld.CIT(A) erred
in sustaining disallowance of capital loss amounting to Rs.19,94,46,822/-
upon negating the claim of transfer happen relating to the property and
scrutiny for the previous year relevant to the AY under consideration
ignoring specific provisions of Sec.2(47)(v) r.w.s.53A of Transfer of
Property Act, 1882, where, it has been clearly held that any transaction
which involves transfer of possession of property shall be regarded as
transfer which allows possession of any immovable property in part
performance of contract of nature referred to sec.53A of Transfer of
Property Act, 1882. He further submitted that if you go through the details
of transaction of sale of property, the assessee has transferred the property
by way of an unregistered agreement dated 12.06.2013 and also received
consideration for FY 2013-14 relevant to the AY 2014-15. However, the
buyer and seller both confirmed that the possession of the property was
handed over to the buyer on 18.04.2014, which falls under AY 2015-16
only. Further, the Sale Deed is not executed even in the AY 2015-16.
Therefore, when the assessee has computed capital gains from transfer of
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property on the basis of hand over of possession, there is no reason for the
AO to disallow capital loss for AY 2015-16. In so far as credit for taxes, he
submitted that as per provisions of Sec.199(3) r.w.r.37BA(1) of the Income
Tax Rules, 1962, credit for TDS shall be given for assessment year for which
such income is assessable. Since, the income is assessable for AY 2015-
16, the assessee has rightly claimed credit for TDS and same needs to be
allowed.
The CIT-DR, Mr.M.Rajan, supporting the order of the Ld.CIT(A),
submitted that as per agreement dated 12.06.2013, the assessee has
received entire sale consideration of Rs.40 Crs. in the FY 2013-14 relevant
to the AY 2014-15. The purchaser has deducted TDS u/s.194IA of the Act,
for AY 2014-15 only. Therefore, transfer as defined u/s.2(47)(v) r.w.s.53A
of Transfer of Property Act, 1882, took place for AY 2014-15 only but not
for AY 2015-16 as claimed by the assessee. The AO after considering
relevant facts has rightly disallowed capital loss and consequent credit for
TDS for AY 2015-16 and their orders should be upheld.
We have heard both the parties, perused the materials available on
record and gone through orders of the authorities below. The factual matrix
of the impugned dispute is that the assessee has entered into an agreement
for sale of property at Porur Village, Ambattur Taluk, comprising of 1.25
acres to M/s.Appaswamy Real Estate Ltd., for a consideration of Rs.40 Crs.
The buyer has paid entire sale consideration of f Rs.40 Crs. in the FY 2013-
14 relevant to the AY 2014-15 and has also deducted applicable TDS as per
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the provisions of Sec.194IA of the Act. The assessee computed capital
gains from transfer of property for AY 2015-16 and declared long term
capital loss of Rs.19,94,46,822/- on the ground that the possession of the
property has been handed over to the buyer in the FY 2014-15 relevant to
the AY 2015-16 alone and to justify their stand filed confirmation from the
buyer, where it has been stated that the possession of the property has
been taken over on 18.04.2014. The AO disallowed capital loss computed
by the assessee from transfer of property for AY 2015-16 on the ground
that transfer as defined u/s.2(47)(v) of the Act, took place for AY 2014-15,
because, entire sale consideration of Rs.40 Crs. has been paid by buyer to
the seller in the FY 2013-14 itself.
We have given our thoughtful consideration to the reasons given by
the AO to disallow capital loss for AY 2015-16 in light of arguments
advanced by the Ld.Counsel for the assessee and we ourselves do not
subscribe to the reasons given by the AO, for the simple reason that as per
definition of transfer as defined u/s.2(47)(v) of the Act, any transaction
involving allowing of the possession of any immovable property to be taken
or retained in part performance of contract of the nature referred to sec.53A
of Transfer of Property Act, 1882, or any transaction which has the effect
of transferring or enabling the enjoyment of any immovable property is
considered as transfer. As per provisions of Sec.53A of Transfer of Property
Act, 1882, defines the term part performance, as per which, where any
person contracts to transfer for consideration any immoveable property by
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writing signed by him or on his behalf from which the terms necessary to
constitute the transfer can be ascertained with reasonable certainty, and
the transferee has in part performance of the contract, taken possession of
the property or any part thereof, or the transferee, being already in
possession, continues in possession in part performance of the contract and
has done some act in furtherance of the contract, and the transferee has
performed or is willing to perform his part of the contract. If you go by
definition of the transfer as is u/s.2(47)(v) of the Act, it is clearly envisages
that transfer takes place only when the transferee takes possession of the
property or any part thereof and further, the transferee has performed or
is willing to perform his part of the contract. Therefore, from the above, it
is clear that the transaction shall be treated as transfer only when the
possession has been taken or retained by the buyer. In this case, there is
no dispute with regard to fact that agreement between the parties dated
12.06.2013 coupled with payment of entire sale consideration of Rs.40 Crs.
was taken place in the FY 2013-14 relevant to the AY 2014-15. But, fact
remains that possession of the property has been handed over to the buyer
on 18.04.2014 only and this has been confirmed by both seller and buyer
in writing. Since, the possession of the property has been handed over to
the buyer in the FY 2014-15 relevant to AY 2015-16, in our considered
view, the transfer has been defined u/s.2(47)(v) r.w.s.53A of Transfer of
Property Act, 1882, took place in the AY 2015-16 only. Therefore, we are
of the considered view that the assessee has rightly computed capital
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gains/loss from transfer of property for AY 2015-16. The AO & the
Ld.CIT(A) without appreciating relevant facts and also on wrong
appreciation of relevant provisions of the Act, has disallowed capital loss
computed by the assessee from transfer of property for AY 2015-16. Thus,
we direct the AO to delete additions made towards disallowance of capital
loss for AY 2015-16.
In so far as denial for credit for taxes for AY 2015-16, we find that as
per the provisions of Sec.199(3) of the Act r.w.r.37BA(1) of the Income
Tax Rules, 1962, credit for TDS shall be given for assessment year for which
such income is assessable. Since, the income pertains to transfer of
property is assessable for AY 2015-16, the assessee has rightly claimed for
credit for taxes for AY 2015-16 only. Therefore, we direct the AO to give
credit for TDS for AY 2015-16 only.
In the result, appeal filed by the assessee is allowed.
Order pronounced on the 31st day of May, 2023, in Chennai.
Sd/- Sd/- (वी. दुगा� राव) (मंजूनाथा.जी) (MANJUNATHA.G) (V. DURGA RAO) लेखा सद�य/ACCOUNTANT MEMBER �याियक सद�य/JUDICIAL MEMBER चे�ई/Chennai, �दनांक/Dated: 31st May, 2023. TLN आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 3. आयकर आयु�/CIT 5. गाड� फाईल/GF 2. ��यथ�/Respondent 4. िवभागीय �ितिनिध/DR
