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Income Tax Appellate Tribunal, DELHI BENCH “A” NEW DELHI
Before: SHRI CHALLA NAGENDRA PRASAD & DR. BRR KUMAR
आदेश /O R D E R PER C.N. PRASAD, J.M.
This appeal is filed by the Revenue against the order of the Ld.
Commissioner of Income Tax (Appeals)-37, New Delhi dated 25.03.2019 for the AY 2014-15. The Revenue in its appeal raised the following effective grounds of appeal: - 1. “That order the Ld.CIT(A) is bad in law and not in consonance with the facts of the case.
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2. On the facts and circumstances of the case the Ld.CIT(A) has erred in allowing the exemption u/s 54B of the Act without appreciating the facts of the case.
3. On the facts and circumstances of the case the Ld.CIT(A) has erred in not appreciating the ratio of binding precedent in the case of M/s Suraj Lamp & Industries Vs. State of Haryana 340 ITR 1 (SC) which held that the sale through unregistered sales agreement, GPA etc. is not valid in the eyes of law.
4. On the facts and circumstances of the case the Ld.CIT(A) has erred in not appreciating that conditions for exemption u/s 54B were not satisfied by the assessee in view of the fact assessee failed get property registered and also failed to get property recorded in her name in the Revenue records.
5. On the facts and circumstances of the case the Ld.CIT(A) has erred in confirming that the possession of the land and the ownership vests with the appellant on the basis of the unregistered documents.
6. That the reliance placed by the Ld.CIT(A) on CIT vs. Ram Gopal 372 ITR is misplaced.
7. On the facts and circumstances of the case the Ld.CIT(A) has erred in law while taking in consideration the evidence led by the appellant before him into consideration without any opportunity in rebuttal to the Assessing Officer which the appellant did not furnish during the assessment proceedings.”
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The only issue to be decided in this appeal is as to whether the assessee is entitled for exemption u/s 54B of the Act and briefly stated facts are that the assessee is an individual filed return of income on 30.07.2014 declaring income of Rs.11,48,900/-. In the course of assessment proceedings the Assessing Officer noticed that assessee had sold agricultural land measuring 8 Bighas situated in the Revenue Estate of Bakkarvala Village, Delhi for a consideration of Rs.8,76,56,250/- and claimed long term capital gain of Rs.8,48,80,881/- as deduction u/s 54B of the Act. The assessee was asked to submit the evidences for the claim for deduction made u/s 54B of the Act. The assessee submitted that in the year 2000 she purchased agricultural land measuring 8 Bighas from Shri Kali Ram Ganga Bishan (HUF) through its Karta Shri Ganga Bishan Gupta by entering into agreement of sale, General Power of Attorney, executed in the name of the assessee by Shri Kali Ram Ganga Bishan (HUF) and this agricultural land was sold to M/s Pearls Life Style Developer (P) Ltd. through its authorized signatory Sh. Sushil Kumar Gupta, S/o Sh. Kali Ram Gupta on 07.11.2013. The assessee submitted that since she had purchased the new agricultural land from Smt. Sumitra Devi Gupta vide agreement to sell dated 15.11.2013 and executed General Power of Attorney by the assessee in the name of Smt. Sumitra Devi Gupta and possession was also transferred through possession letter on the same day by investing whole of sale consideration in respect of old agricultural land which was sold by her the assessee claimed exemption
I.T.A.No. 5313/Del/2019 u/s 54B of the Act for the AY 2014-15. The assessee furnished copy of agreement to sell, copy of General Power of Attorney, copy of possession letter, affidavit of Shri Kali Ram Ganga Bishan (HUF) in proof of purchase of land by the assessee from Shri Kali Ram Ganga Bishan (HUF) in the year 2000 and copy of sale deed dated 07.11.2013 executed in the name of Pearls Life Style Developers (P) Ltd. Similarly, the assessee also furnished agreement to sell, possession letter, General Power of Attorney (GPA), Deed of Will, Affidavit executed by the assessee in favour of Smt.
Sumitra Devi Gupta in proof of sale of property by the assessee during the previous year 2013-14 relevant to the AY 2014-15.
The Assessing Officer while completing the assessment u/s 143(3) of the Act accepted the first transaction i.e., the transaction between Pearls Life Style Developers (P) Ltd. and the assessee in selling the old land by the assessee as genuine and fulfilled all the criteria and to be treated as transfer of property in the eyes of law. However, the second transaction i.e., the transaction between the assessee and Smt. Sumitra Devi Gupta was not accepted by the Assessing Officer as he was of the view that this transaction has been undertaken merely to claim deduction u/s 54B of the Act. In coming to such conclusion the AO observed that the land purchased by the assessee was made through GPA and not registered in the office of Sub-Registrar, GPA is not valid mode of transfer as held by Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana (SLP(C) No. 13917 of 2009 dated
I.T.A.No. 5313/Del/2019 11.10.2011). The AO also observed that the assessee has not furnished any evidence of change of ownership in Revenue Department’s records and Smt. Sumitra Devi Gupta has not responded to notice issued u/s 133(6) of the Act to furnish copy of return already filed by her for the AY 2014-15. AO observed that in the absence of return of Smt. Sumitra Devi Gupta it is not evident whether sale consideration received by her was either disclosed for capital gains. Therefore, the AO was of the view that the transaction which was made through GPA, agreement to sell is only to claim the benefit of deduction u/s 54B of the Act and accordingly, the assessment was completed denying the deduction u/s 54B claimed by the assessee.
On appeal the Ld.CIT(A) considering the submissions of the assessee, the evidences furnished before him and following the decision of the Hon’ble Delhi High Court in the case of CIT Vs. Ram Gopal (372 ITR 498) allowed deduction u/s 54B of the Act as claimed by the assessee.
Before us the Ld. DR submits that the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. (supra) held that the transactions carried out through GPA sales, or sale agreements/GPAs/Will transfers does neither convey any title nor create any interest in an immovable property. Therefore, the Ld. DR submits that in view of the decision of the Hon’ble Supreme Court the property sold to the assessee is not a valid mode of transfer and, therefore, the I.T.A.No. 5313/Del/2019 AO has rightly denied the deduction claimed by the assessee u/s 54B of the Act. Ld. DR strongly placed reliance on the order of the AO.
On the other hand, the Ld. Counsel for the assessee strongly placed reliance on the orders of the Ld.CIT(Appeals). The Ld. Counsel for the assessee further submits that the Hon’ble Delhi High Court in the case of CIT Vs. Ram Gopal (supra) while deciding as to whether the amount spent towards the cost of acquisition in the absence of an agreement to sell, the rights acquired by the assessee through provisional booking of the property by way of letter did not meet the requirements spelt out u/s 54 of the Act i.e., the acquisition of new capital asset, considered the judgment of the Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. Vs. State of Haryana (340 ITR 1) and held that the assessee is entitled deduction u/s 54 of the Act. Ld. Counsel further submits that the Hon’ble Delhi High Court distinguished the decision of Hon’ble Supreme Court observing that the Hon’ble Supreme Court did not had an occasion to deal with the provisions of Section 2(14) and 2(47) in the context of a claim of acquisition of rights of property and interest in capital asset for the purpose of Income Tax.
The Ld. Counsel also placed reliance on the following decisions:
S.No. Case Title Reported in Date of Order
CIT Vs. Ajitsingh Khajanchi 297 ITR 95 (MP) 2. Balraj Vs. CIT 254 ITR 22 (DEL) 3. Sanjeev Lal Vs. CIT 365 ITR 389 (SC) 4. Surinder Singh Vs. ITO ITA 3450/DEL/2017 11.10.2018 5. Gautam Jhunjhunwala Vs. ITO ITA 1356/KOL/2017 07.09.2018
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The Ld. Counsel for the assessee in so far as ground no. 7 of the grounds of appeal of the Revenue i.e., not providing opportunity to the AO to rebut the evidences filed by the assessee before the Ld.CIT(Appeals) is concerned, referring to para 5.2.9 of the Ld.CIT(Appeals) order submits that in the course of appeal proceedings the Ld.CIT(A) required the assessee to furnish copy of ITR and computation of income for AY 2014-15 in respect of Smt. Sumitra Devi Gupta and in compliance to the directions of the Ld.CIT(A) the assessee furnished copy of ITR and, therefore, it is not an additional evidence furnished by the assessee under Rule 46A of the IT Rules. The Ld. Counsel submits that under provisions of section 250(4) the Ld.CIT(A) has ample powers to make any enquiries in appeal proceedings as he thinks fit. Therefore, there is no merit in the ground raised by the Revenue.
9. Heard rival submissions, perused the orders of the authorities belowand the evidences placed on record. The only effective issue revolves in this Revenue’s appeal, is the assessee’s claim of deduction/exemption u/s 54B which was disallowed by the Ld.AO but was allowed by the Ld.CIT(A). The assessee was owning & possessing an agricultural land, having been purchased by her from M/s Kali Ram Ganga Bishan HUF, through Sale Documents (viz. Agreement to Sell & Purchase, Receipt, Possession Letter, General Power of Attorney, Affidavit – all
I.T.A.No. 5313/Del/2019 dated 12.09.2000). During the previous year relevant to AY 2014-15, the assessee had sold/transferred her agricultural land (old agricultural land) by executing the transfer documents in favour of the buyer M/s Pearls Life Style Developers (P) Ltd. on 07.11.2013, after receiving the entire agreed sale consideration. During the previous year relevant to AY 2014- 15, i.e. the same year, the assessee had purchased another agricultural land (new agricultural land) through the transfer documents (viz.
Agreement to sell, Receipt, Possession Letter, General Power of Attorney, Will Affidavit – all dated 15.11.2013) which were executed in her favour by Smt. Sumitra Devi Gupta on 15.11.2013, after receiving the entire consideration from the assessee (through banking channel, from time to time). The assessee had kept on making payments (through banking channel) towards purchase of new agricultural land, to the said Smt. Sumitra Devi Gupta. Immediately upon receiving the payments (through banking channel) on account of sale consideration in respect of old agricultural land the assessee had invested whole of the sale consideration received in respect of her old agricultural land, towards purchase of new agricultural land. Since the assessee had purchased the new agricultural land by investing whole of the sale consideration in respect of old agricultural land within next few days, she had become eligible and entitled to claim the deduction/exemption u/s 54B of the Act and accordingly, the assessee had claimed the deduction/exemption
I.T.A.No. 5313/Del/2019 u/s 54B in her ITR filed for AY 2014-15 which was denied by the Assessing Officer.
We observe that the Assessing Officer though accepted the transaction of sale of property by the assessee to Pearls Life Style Developers (P) Ltd. on 07.11.2013, he disbelieved the transaction of purchase of property from Smt. Sumitra Devi Gupta made by the assessee during the assessment year under consideration and for the reason that there is no mutation in the Revenue Records and the purchaser of the property Smt. Sumitra Devi Gupta did not respond to notice issued u/s 133(6) of the Act. The AO also placing reliance on the decision of Hon’ble Supreme Court in the case of Suraj Lamp & Industries Pvt. Ltd. he disbelieved the transaction as genuine. We find that in the course of appellate proceedings the assessee furnished copy of ITR of Smt. Sumitra Devi Gupta for the AY 2014-15 before the Ld.CIT(Appeals) as required by him. The Ld.CIT(A) considering the evidences furnished by the assessee and the submissions made before him allowed the deduction claimed u/s 54B of the Act. While allowing the deduction u/s 54B of the Act the Ld.CIT(A) had also followed the decision of Delhi High Court in the case of CIT Vs. Ram Gopal and the decision of the Tribunal of the coordinate bench in the case of Surinder Singh Vs. ITO (supra) observing as under:
5.2.2 “As per assessment order, the AO recorded that the appellant had sold agricultural land measuring 8 Bighas i.e. 1/3rd share of the total agriculture land measuring 24
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Bighas, out of Khasra No. 51/14 (4-16), 15 (4-16), 16(4-16), 17(4-16) and 24(4-16) situated in the Revenue Estate of Village Bakkarvala, Delhi-41. The AO further stated that the said sale transaction resulted into Capital Gain which has been claimed as deduction u/s 54B.
5.2.3 The AO noted that the assessee had stated that she had paid Rs.8,76,56,250/- to Smt. Sumitra Devi for agricultural land measuring 8 Bighas 10 Biswas i.e. 1/3rd share of the total agriculture land measuring 25 Bighas-09 Biswas, out of Khasra No. 1/3rd (2-17), 4(07-02), 7(4-16), 8 min (2-12), 13(3-6) and 14(4-6) situated in the Revenue Estate of Village Bakkarvala, Delhi-41. The AO further recorded that the appellant furnished copies of Agreement to sell, evidence of payment, copy of will, possession letter and General Power of Attorney, all dated 15.11.2013 and unregistered.
5.2.4 In subsequent para of the assessment order, the AO recorded that the first transaction i.e. the sale of land by the appellant is genuine and fulfils all the criteria, to be treated as Transfer of Property in the eyes of law. The AO further recorded that the second transaction i.e. claim of purchase of land by the appellant has been undertaken merely to claim deduction u/s 54B. The AO has drawn strength from the judgment of Hon’ble Supreme Court in the case of Suraj Lamps & Industries Pvt. Ltd. Vs. State of Haryana & Anr. The AO further recorded that he had issued notice u/s 133(6) to Smt. Sumitra Devi Gupta (from whom the appellant had purchased agricultural land) to furnish complete set of ITR for AY 2014-15, but she had not furnished the same. Due to non compliance by Smt. Sumitra Devi 10
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Gupta, the AO inferred that Smt. Sumitra Devi Gupta (from whom the appellant had claimed to had purchased agricultural land) had not disclosed the sale consideration in her ITR for capital gain purposes.
5.2.6 Before me, the Ld. AR of the appellant argued that the mode of purchase of new agricultural land, was not in anyway different from the mode (unregistered SPA & GPA etc.) of purchase of old agricultural land (which was sold by the appellant in this year). The appellant had purchased the new agricultural land in the same manner.
5.2.7 The Ld. AR of the appellant has vehemently argued that the case of the appellant is fully covered with the judgment of the Hon’ble Delhi High Court in the case of CIT Vs. Ram Gopal (372 ITR 498-Del). The AR of the appellant pointed out that it is a case where the Hon’ble Delhi High Court had taken into consideration the judgment of Hon’ble Supreme Court in the case of Suraj Lamps & Industries Pvt. Ltd. (340 ITR 1 SC) and thereafter held that even provisional booking of property amounts to acquisition of new capital asset and thus entitled to exemption u/s 54. The Hon’ble Court in para 6 of its order in the case of Ram Gopal (supra) held that-
“In the light of the definitions of “capital asset” u/s 2(14) and “transfer” u/s 2(47) as discussed in Gulshan (supra), this court has no doubt that the appellant’s contentions were merited. The reference to Suraj Lamps (supra), in the court’s opinion, is of no consequence because the Supreme Court, on that occasion had to deal
I.T.A.No. 5313/Del/2019 with a property transaction and whether a sale transfer, based upon confirming a GPA, amounted to sale or conveyance. That decision did not consider – rather had no occasion to deal with section 2(14) and section 2(47) in the context of a claim of acquisition of rights of property and interest in a capital asset, for the purchase of Income-tax.”
5.2.8 Regarding the AO’s comment relating to the recordings in the Revenue Records, the AR of the appellant furnished copy of the letter dated 16.12.2016 bearing no. F- 1/SDM(PB)/2016/5165 of Mr. Anil Chaudhary, Tehsildar : Punjabi Bagh, Govt. of N.C.T. of Delhi, Main Rohtak Road, Nangloi, Delhi – 110041, which was addressed to the AO. The Ld.AR of the appellant emphasized that the AO had not brought such vital document on record. I have perused the said letter of the Tehsildar and found that the Tehsildar had stated- “Further it is also stated that as per the document received in this office, Kali Ram Ganga Bishan HUF has executed GPA and agreement set in favour of Smt. Sumitra Devi on 07.08.2007 and Smt. Sumitra Devi W/o Sh. Sushil Kumar executed GPA and Agreement to sell in favour of Smt. Babita Gupta W/o Sh. Vipin Gupta on 15/11/2013 of their 1/3 share respectively. It is further stated that the mutation has not been done in the Revenue records for the above transactions.”
I find that it is case where the sale documents executed in favour of the appellant were furnished to the 12
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Revenue Department. Not effecting the mutation in favour of the appellant in the Revenue Records cannot be a deterrent for allowing deduction u/s 54B of the Act.
5.2.9 Regarding the AO comment relating to non compliance of his notice u/s 133(6) by Smt. Sumitra Devi Gupta, the Ld. AR of the appellant furnished copy of the letter of Smt. Sumitra Devi Gupta addressed to the AO through speed post which she confirmed making sale of agricultural land to Smt. Babita Gupta in FY 2013-14 and also confirmed receiving sale consideration from Smt. Babita Gupta through banking channel. I have perused the said letter and noticed that Smt. Sumitra Devi Gupta had confirmed having filed her ITR for AY 2014-15 and also that Smt. Sumitra Devi Gupta had filed copies of the documents executed by her in favour of Smt. Babita Gupta relating to sale of agricultural land. During the course of appellate proceedings, the AR was asked to furnish copy of the ITR Form with Computation of Income for AY 2014-15 of Smt. Sumitra Devi Gupta. In compliance thereof, the Ld. AR furnished copy of the ITR Form with Computation of Income for AY 2014-15 of Smt. Sumitra Devi Gupta. I find that as per the Computation of Income of Smt. Sumitra Devi Gupta for AY 2014-15, the sale of agricultural land for sale consideration of Rs.8,76,56,250/- was taken into consideration.
5.2.10 The Ld. AR of the appellant also relied upon the judgments of Hon’ble Delhi High Court in the case of Balraj Vs. CIT (254 ITR 22), Hon’ble MP High Court in the case of CIT Vs. Ajit Singh Khajanchi (297 ITR 95) and the judgment of Hon’ble ITAT Delhi Bench ‘G’ New Delhi pronounced on 13
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11.10.2018 in the case of Surinder Singh Vs. ITO (ITA No. 3450/Del/2017). I have perused these judgments and observed that judgment in the case of Ajit Singh Khajanchi (supra) and Balraj (supra) were prior to the judgment in the case of Suraj Lamps & Industries Pvt. Ltd. (supra), but the judgment in the case of CIT Vs. Ram Gopal (supra) and Sh. Surinder Singh are recent one which is after the judgment of the case of Suraj Lamps & Industries Pvt. Ltd. (supra). In this case, the benefit of exemption u/s 54 was denied to Sh. Surinder Singh, on the ground that the property was transferred by a General Power of Attorney (and not through Sale Deed) and vide order dt. 11.10.2018, the Hon’ble ITAT had allowed benefit of exemption u/s 54 to Sh. Surinder Singh relying on decisions of Delhi High Court in the case of Pace Developers and Promoters Vs. Govt. of NCT of Delhi.
5.2.11 After considering the finding of the AO, submissions of the appellant and the case laws relied upon by AO as well as Ld. AR, I intend to agree with the arguments of the AR. AO is accepting that the first transaction is valid transfer despite the fact that the first transaction has also taken place on the basis of agreement to sale. However, the AO raised doubt about the subsequent purchase primarily on the ground that the transaction entered through general power of attorney/Agreement to sale. Although both the transactions are in the similar manner. On the other hand, the Ld. AR has been able to controvert the finding of the AO by placing on record the copy of ITR for AY 2014-15 in the case of Sumitra Devi Gupta and also by relying on the decisions of Hon’ble Delhi High Court and ITAT. Further, AO
I.T.A.No. 5313/Del/2019 has not brought anything on record which establishes this theory that subsequent purchase as not genuine.
5.2.12 In view of aforesaid discussions and respectfully following the decisions of Delhi High Court in the case of CIT Vs. Ram Gopal (supra) and ITAT in the case of Sh. Surinder Singh Vs. ITO (supra), disallowance of deduction u/s 54B by the AO, is not sustainable. Therefore, the addition made is deleted and the Grounds of Appeal Nos. 2 to 5 of the appellant are allowed.”
As could be seen from the above observations of the Ld.CIT(Appeals) the assessee furnished copy of return filed by Smt.
Sumitra Devi Gupta from whom the land was purchased by assessee, wherein the capital gain was declared by Smt. Sumitra Devi Gupta in her return of income for the AY 2014-15. We also observe that the Ld.CIT(A) followed the decision of Delhi High Court in the case of CIT Vs. Ram Gopal (supra), wherein the judgment of the Apex Court in the case of Suraj Lamp & Industries (P) Ltd. was also considered by the Delhi High Court. The issue before the Hon’ble Delhi High Court was whether the assessee was entitled for deduction u/s 54 of the Act in respect of cost of acquisition and cost of improvement. The AO in this case rejected the assessee’s claim and held that in the absence of agreement to sell the rights acquired by provisional booking of the property did not meet the requirements spelt out u/s 54 of the Act i.e. acquisition of new capital asset. However, the Hon’ble Delhi High Court allowed the claim for exemption/deduction u/s 54 of the Act referring to the decision of the 15
I.T.A.No. 5313/Del/2019 Delhi High Court in the case of Gulshan Malik Vs. CIT (ITA No. 55/Del/2014 dated 14.03.2014) (2015) 4 ITR-OL-275. We noticed that the Hon’ble Delhi High Court observed that the Hon’ble Supreme Court’s decision in the case of Suraj Lamp & Industries Pvt. Ltd. is of no consequence because the Hon’ble Apex Court had dealt with whether a sale transfer based upon confirming a GPA amounted to sale/conveyance but the Hon’ble Apex Court did not consider and had no occasion to deal with section 2(14) and section 2(47) of the Act in the context of a claim of acquisition of rights of property and interest in a capital asset for the purpose of Income tax. The principles of this decision of the Delhi High Court in the case of CIT Vs. Ram Gopal applying to the facts of the present case, we hold that there is no infirmity in the order passed by the Ld.CIT(Appeals) in allowing the exemption claimed u/s 54B of the Act as claimed by the assessee. Thus, we sustain the order of the Ld.CIT(A) and reject the grounds of Revenue.
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 18.10.2022