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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH Before: Shri Rajpal Yadav, Judicial Member And Shri Amarjit Singh, Accountant Member ITA No. 509/Ahd/2017 Assessment Year 2011-12
Damodarbhai Ishwarbhai The ITO, Patel 4/A Park View Ward-7(1)(5), Society, Opp. Anand Vs Ahmedabad Bunglow, Gulab Tower (Respondent) Area, Thaltej, Ahmedabad PAN: ACCPP4435C (Appellant)
Revenue by: Shri Somogyan Pal, Sr. D.R. Assessee by: Shri Biren Shah & Shri Gulb Thakore, ARs Date of hearing : 02-04-2019 Date of pronouncement : 27-05-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2011-12, arises from order of the CIT(A)-7, Ahmedabad dated 14-12-2016, in proceedings under section 143(3) r.w.s. 147of the Income Tax Act, 1961; in short “the Act”.
All Ground no 1 to 4 are pertained to the common issue of assessing capital gain by applying section 50C on the basis of stamp duty valuation prevailing in assessment year 2011-12 whereas the actual transfer had taken
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place in assessment year 2010-11, therefore, for the sake of convenience all the grounds of appeal are adjudicated together.
The fact in brief is that return of income declaring income of Rs. 289025/- was filed on 21st March, 2012. Thereafter, the case was reopened u/s. 147 of the act by issuing of notice u/s. 148 of the act on 24th Dec, 2013. The assessee has not filed the return of income in response to notice issued u/s. 148 of the act. During the course of assessment, on verification of the details filed by the assessee, the assessing officer noticed that during the year, the assessee has sold an immovable property situated at Lambha village on 28th May, 2010, the document price of which was shown at Rs. 7 lacs. However, the sub-registrar has valued the said property at Rs. 66,79,592/- for the purpose of stamp duty and registration. The assessing officer has further noticed that assesse has not declared any capital gain arising out of the aforesaid transaction in the return of income filed for the year under consideration. Therefore, a show notice dated 4th Sep, 2014 was issued to assessee to explain why capital gain arising on aforesaid transaction should not be worked out after taking into account the sale consideration at Rs. 66,79,592/- and cost of acquisition at Rs. 2 lacs. The assessee has explained that there was agreement to sale (Banakhat) dated 23rd October, 2009 for the sale of the said land for Rs. 7 lacs and an amount of Rs. 4 lacs has been paid by the buyer on the same date. The assessee has also referred section 53 of the transfer of property act 1882 that in part performance of the contract there is a transfer of property to the buyer in the part performance of the contract. The assessee has further claimed that he has given possession of the land on 23rd October, 2009 so according to
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section 53A of transfer of property act though the required registration with the sub-registrar was pending but transfer of property has taken place on 23rd October, 2009. In view of the above, the assesse has claimed that the jantry rate prevailing on the date of agreement should be applied. The assessee has further stated that the buyer of the land has requested him to convert this land from agricultural land to non-agricultural land as the buyer of the land was non-agriculturist and according to the Gujarat State Land Revenue Rule the agricultural land cannot be transferred to non-agricultural land. Thereafter, after conversion of agricultural land to non-agricultural land the sale deed was registered with sub-registrar on 20th May, 2010. The assessee has also stated that he along with the Shri Tinkendra T. Patel was the joint owner of the land having 50% share in the property. The assessing officer has not accepted the pleading of the assessee that if any capital gain is arisen to the asseeesse then the same should be charged as per banakhat dated 23rd October, 2009. The assessing officer has stated that on perusal of the sale deed dated 20th May, 2010, it is clearly stated that the assessee has purchased the said property on 22nd March, 2008 and thereafter on 23rd Feb, 2010, the assessee has applied for a conversion of agricultural land into non- agricultural land for residence purpose and there was no mention of so- called un-registered agreement dated 23rd April, 2009 made by the assessee with the buyer and further in the sale deed it is clearly mentioned that all the rights of the property vested in the assessee were transferred to the buyer vide sale deed dated 20th May, 2011. Therefore, the assessing officer has computed the capital gain after taking into consideration the value of the said property adopted by the sub-registrar for the purpose of stamp duty as per registered sale deed made on 20th May, 2010 and computed 50% share of
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short term capital gain arisen on sale of the aforesaid property at Rs. 32,39,796/-.
Aggrieved assessee has field appeal before the Ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee. Relevant part of the decision of ld. CIT(A) is as under:- “6.2 I have considered the assessment order, facts of the case and the submissions made by the appellant. The AO made the impugned addition on account of the fact that the appellant sold his property at Block No. 388, Lambha on 20.05.2010 i.e. during relevant year by way of registered deed. Since the stamp duty as per the valuation of the sub-registrar was much higher than the consideration shown by the appellant, the AO applied the provisions of Section 50C to the assessee's case. The appellant, on the other hand, has contended that the said immovable property had actually been transferred in the financial year 2009-10 relevant to Asst. Year 2010-11 as the vide agreement to sale dated 23.09.2009 had transferred the said land to the purchaser. As per section 2(47 ) of the ITA 1961 /'transfer", in relation to a capital asset, includes,— [(v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contract of the nature referred to in section 53AM of the Transfer of Property Act, 1882 (4 of1882); 6.2.1 Thus, going by the above definition, if a purchaser in part performance of the contract has taken possession of the property or has done some act in furtherance of the contract, then the same would fall under the definition of transfer. In this case, a perusal of the banakhat shows that out of the total consideration of Rs.7 lakhs, the appellant received the amount of Rs.4 lakhs at the time of signing the banakhaot. However, it is also a fact that the banakhat itself in para-7 mentions that the vacant and actual possession of the said land would be handed over to the purchaser at the time of execution of the sale deed. Thus, it is dear that as per the agreement itself, the possession had not been given to the purchaser and the same was done only at the time of registering the said deed i.e. in Asst. Year 2011-12. Further, it is also seen that it was the appellant who carried out the process of conversion of the agricultural land into non agricultural land for the buyer who was not an agriculturist. Thus, it cannot be said that the said property had been handed over to the purchaser in September 2009 in part performance of the Act. The Hon'ble Supreme Court in the case of S. Govindrai Vs. Devi Sahai states that as long as it can be proved that the buyer has used or occupied or made certain changes to the property to make it fit for his use, the doctrine of part performance would come into play. From the facts, it is clear that possession had not been given to the purchaser and the said sale had not been shown by the appellant in his return of income for Asst. Year 2010-11. The appellant has submitted that the purchaser carried out some work of land leveling in the said property. However, no documentary evidences of cash payments in respect of this expenditure has been furnished by the appellant. 6.2.2 Considering the discussion above, 1 am of the view that the sale deed registered on 20.05.2010 was the actual date of transfer and therefore the action of the AO in invoking of provisions of Section 50C. Grounds of appeal Nos. 2 to 4 are dismissed.”
We have heard the rival contentions and perused the material on record carefully. The assessee has not shown any income from sale of impugned land referred above in the return of income. Therefore, the case
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of the assessee was reopened by issuing of notice u/s. 148 of the Act. During the course of assessment proceedings on verification of the details, the assessing officer has noticed that the value of the sold property on the basis of stamp duty paid was determined at Rs. 66,79,592/- whereas the assessee has claimed that he has sold the impugned property for consideration of Rs. 7 lacs. The registered sale deed of the property was made on 20-05-2010. The assessee claimed that there was agreement to sale (Bankhat) dated 23/10/2010 for the sale of the impugned land for amount of Rs. 7 lacs and on the date of sale agreement an amount of Rs. 4 lacs has been paid by the buyer by mode of banking channel. Therefore by referring the judicial decisions and the decision of the Co-ordinate Bench of the ITAT Ahmedabad in the case of the Rahul G. Patel Vs. DCIT (2018) 97 taxman.com 598 (Ahmedabad), it is contended that the applicability of the provisions of the section 50C should be looked at only on the date of the sale agreement. We have perused the judicial pronouncement referred by the Ld. counsel and noticed that the facts of the case of the assessee are distinguishable from the fact of the above referred cases as described below.
(i) As per copy of unregistered agreement for sale executed on 23-10- 2009 placed at page 32 of the Paper Book, it was specified that this agreement was for sale of agricultural land. (ii) As per clause 8 of the Agreement to sale dated 23-10-2009 (Banakhat) both the parties to the agreement buyer and seller were farmers and it is stipulated that since the transaction is between the farmers, there is no bar of the Provisions of Land Tenancy Act.
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(iii) As per clause 7 of the Agreement to sale dated 23-10-2009 at the time of execution of the registered sale deed, the seller will hand over the possession of the said land to the purchaser. (iv) However, it is noticed that the assessee has not executed the sale deed as per the terms and conditions specified in the agreement to sale dated 23- 10-2019. (v) The assessee has placed at page no. 48 of the Paper Book a copy of Deed of Understating made by the assessee and at page no. 5 of this Deed of Understating it is stated that this agreement for sale executed on 24-12-2009. (vi) In the above referred Deed of Understating which was termed as another agreement for sale executed on 24-12-2009 it was categorically explained that buyer of the land was not a farmer therefore new agreement for sale executed on 24-12-2009 for conversion of said agriculture land to non-agricultural in order to execute the sale deed in respect of the impugned land. (vii) In the light of the aforesaid material fact it is crystal clear that it was not possible to execute the sale deed as per the terms and conditions specified in the agreement for sale executed on 24-12-2009. (viii) A part of above it is categorically clear that false assertion was made in the agreement to sale (Banakhat) dated 23-10-2009 as per clause 8 that buyers and sellers all were farmers and the transactions of sale of the impugned land was between farmers as per the provision of land Tenancy Act. (ix) Since as per the Prevailing law in the State of Gujarat an agricultural land cannot be sold to non-farmer therefore the assessee has executed another agreement for sale on 24-12-2009 to execute the sale deed of the
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land in the form of non-agricultural land and not agricultural land as specified in the agreement to sale of the impugned land executed on 23-10- 2009. (x) Accordingly, sale deed of the impugned land was executed on 20/05/2010 and nowhere in the sale deed any reference to the agreement to sale dated 23-10-2009 was made but on the other hand at page 13 of the sale deed dated 20-05-2010 it is specified that the permission for converting the said land into non-agricultural was given by the Distt. Collector on 23-02- 2010. In the light of the above unique material facts in the case of the assessee, it is very clear that sale of the impugned land was not executed in terms and conditions of agreement to sale (Banakhat) dated 23-10-2009. But the actual sale deed was executed on 20-05-2010 in respect of non- agricultural land after conversion of the agricultural land to non-agricultural land in accordance with the another agreement for sale executed on 24-12- 2009 in the form of Deed of Understanding. We consider that since the process of sale has been materialized in consequence of agreement for sale in the form of Deed of Understanding for non-agricultural land dated 24-12- 2009, therefore, the provision of section 50C to determine the sale consideration , jantri rate prevailing for non-agricultural land on the date of agreement to sale (deed of understanding) dated 24-12-2009 to be applied. In view of the above facts and circumstances, we set aside this issue to the file of the assessing officer. The assessing officer shall call for circle rate for the purpose of stamp duty valuation of his property in respect of non- agricultural land as on 24-12-2009 from the date of another agreement for sale of non-agricultural land in the form of Deed of Understating executed.
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Thereafter, the assessing officer shall compute the capital gain assessable in assessment year 2010-11. Accordingly, the appeal of the assessee is partly allowed for statistical purposes.
Ground No. l5 is pertaining to charging of interest u/s. 234B and 234C of the act. Since charging of interest under these sections are mandatory, therefore, we do not find any merit in this ground of appeal and the same is dismissed
In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open court on 27-05-2019
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 27/05/2019 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद