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Income Tax Appellate Tribunal, VISAKHAPATNAM BENCH, VISAKHAPATNAM
Before: SHRI V. DURGA RAO, HON’BLE & SHRI D.S. SUNDER SINGH, HON’BLE
Assessee by : Shri G.V.N. Hari, Advocate Department By : Smt. U.Mini Chandran,Sr.DR Date of hearing : 19/02/2020. Date of pronouncement : 26/02/2020. O R D E R PER V. DURGA RAO, JUDICIAL MEMBER This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-1, Visakhapatnam, dated 21/01/2019 for the Assessment Year 2007-08.
Facts of the case in brief are that assessee has executed an Agreement of Sale-cum-General Power of Attorney on 22/09/2005 in favour of Shri Vemuri Krishna Murthy and the entire consideration of Rs. 6,72,000/- was received on the same day and possession was also handed over to the purchaser. Subsequently, (Chintala Rambabu) Shri Vemuri Krishna Murthy sold the property to the third party for Rs. 10,34,000/- on 31/03/2007 vide document No. 2536/2007. The Assessing Officer has noted that market value of the property was Rs. 14,56,000/- as per section 50C of the Act. Accordingly, case of the assessee was reopened and assessment was completed by taxing the capital gains in the hands of the assessee.
The assessee carried the matter in appeal before the ld.CIT(A) wherein he submitted that he transferred the property on the date of execution of agreement of sale-cum-GPA on 22/09/2005, if at all capital gains has to be taxed, it has to be taxed in the A.Y. 2006-07 and not in A.Y. 2007-08. However, the ld. CIT(A) not agreed with the explanation of the assessee and observed that execution of agreement of sale-cum-GPA does not confer any right in absolute terms to the GPA holder as he was appointed as a legal agent to carry the transaction. Accordingly, confirmed the order of the Assessing Officer.
On appeal before us, ld. counsel for the assessee has submitted that agreement of sale-cum-GPA was entered into on 22/09/2005 and the entire sale consideration was received and possession was given to the purchaser, therefore the entire transaction of transfer has been completed and the property was (Chintala Rambabu) transferred from assessee to Vemuri Krishna Murthy, therefore capital gains has to be taxed in the hands of the assessee, if at all in the A.Y. 2006-07 and not in 2007-08.
On the other hand, ld.DR strongly supported the orders of the authorities below.
We have heard both the sides, perused the material available on record and orders of the authorities below.
It is an admitted fact that agreement of sale-cum-GPA was executed on 22/09/2005 and the entire sale consideration was received on the same day and possession was also handed over to the purchaser. Subsequently, the purchaser Shri Vemuri Krishna Murthy has sold the property to the third party. Under these facts and circumstances of the case the issue before us is whether the Assessing Officer is justified in taxing the capital gains in the A.Y. 2007-08 or not. We have considered the entire facts of the case and find that once full consideration is received and possession is given, transfer has already taken place from the assessee to the purchaser and therefore capital gains has to be taxed in which year assessee received consideration. Insofar as capital gains in the hands of Shri Vemuri Krishna Murthy is concerned, from the date on which he received the property i.e. 22/09/2005 and the date of which he sold the property i.e. on 31/03/2007 capital (Chintala Rambabu) gains has to be taxed in the hands of Shri Vemuri Krishna Murthy. A similar view has been taken by the coordinate bench of the tribunal in the case of Yenugula Chandra Rao Vs. ITO in by order dated 07/02/2020. For the sake of convenience, the relevant portion of the order is extracted as under:- “7. I have heard both the sides, perused the material available on record and orders of the authorities below.
The assessee along with his wife has sold the property to Shri Paturi Krishna Babu on 23/07/2004 for a sale consideration of Rs.23,41,000/-, in which he received Rs.23,21,000/- and the remaining balance amount of Rs. 20,000/- has to be received later. According to the Assessing Officer, the same property was sold subsequently on 28/05/2012. The stamp duty value as on the date of subsequent sale i.e. on 28/05/2012 was Rs.78,97,000/-, therefore as per section 50C capital gains has to be calculated from the date of subsequent sale made by the purchaser Shri Paturi Krishna Babu on the ground that assessee has not received full consideration i.e. he only received Rs.23,21,000/- and Rs.20,000/- was not received and possession was also not given to the GPA holder and therefore it has to be taxed in the hands of the assessee on subsequent sale i.e. on 28/05/2012. I have gone through the registered Sale Agreement-cum-GPA document, dated 23/07/2004 by which assessee has sold the subject matter of the property for a sale consideration of Rs.23,41,000/- through Sale Agreement-cum-GPA and received Rs.23,21,000/- on the same day and handover the possession to GPA holder and he received remaining balance amount of Rs.20,000/- on 26/07/2004.
9. From the above, it is very clear that assessee has sold the property as a Sale Agreement-cum-GPA in 2004 and full consideration has been received on 26/07/2004 and the possession of the land was given to the purchaser Sri Paturi Krishna Babu S/o Paturi Radha Krishna, therefore as per (Chintala Rambabu) section 2(47)(v), transfer has been completed and possession is given to the party. In the present case, assessee has received full consideration on 26/07/2004, therefore it can be concluded that the property has been transferred to Sri Paturi Krishna Babu on 26/07/2004. From 27/07/2004 onwards the entire land is in the possession and ownership of Shri Paturi Krishna Babu, therefore the capital gains as per section 50C as on the date of sale i.e. 28/05/2012 has to be taxed in the hands of Shri Paturi Krishna Babu. So far as assessees is concerned, the capital gains has to be taxed in the hands of the assessee by considering the transfer has taken place on 26/07/2004 as per section 50C of the Act. In view of the above, the Assessing Officer is directed to tax the capital gains according to law. Hence, I set aside the order passed by the ld.CIT(A) and allow the appeal of the assessee partly.”
8. Respectfully following the decision of the coordinate bench of this Tribunal in the above referred to case, we hold that capital gains cannot be taxed in the hands of the assessee for the year under consideration i.e. A.Y. 2007-08. Hence, we set aside the order passed by the ld. CIT(A) and allow the appeal of the assessee. It is open to the Assessing Officer to tax the capital gains in the hands of the assessee as well as Shri Vemuri Krishna Murthy in accordance with law.
In the result, appeal filed by the assessee is partly allowed. Order Pronounced in open Court on this 26th day of Feb., 2020.