RUKSHANA SHABBIR TASIRA ,SECUNDERABAD vs. INCOME TAX OFFICER, WARD-10(3), HYDERABAD

Brief facts of the case are that the assessee, an individual was deriving income from consultancy business and interest income. For the relevant A.Y, the assessee filed her return of income on 7.7.2011 admitting a total income of Rs.2,69,050/-. On processing the 50C data received by the AO’s office, the AO came to know that the assessee has sold a property bearing No.001 admeasuring 1400 sft for a consideration of Rs.8,50,000/- as against the SRO market value of Rs.14.00 lakhs. Therefore, he issued a notice u/s 148 of the Act on 23.3.2018, in response to which, the assessee filed a letter stating that the return filed on 7.7.2011 may be treated as the return filed in response to the notice issued u/s 148 of the Act.

Thereafter, on a query, the assessee replied that the assessee had entered into an oral agreement for sale of her flat for a total consideration of Rs.8,50,000/- and received a sum of Rs.10,000/- on 10.08.2006 as advance and the vendee promised to pay the balance and get the same registered in his name. He submitted that however, there was inordinate delay in payment of balance of the sale consideration and the same was paid on instalments on various dates upto 24.12.2008 and all the payments were received by A/c payee cheques only. The reason for the delay as was explained by Late Shri Safdar Rohawala, (the vendee), was that he had financial difficulties and was very ill. Though the entire consideration was received and the assessee insisted on the vendee to get the property registered in his name, he was postponing the same citing his health reasons and finally during the financial year 2009-10 he took possession of the flat and occupied the flat and promised to get the property registered in his name soon. Since the assessee had received the full sale consideration and possession of the property was also given, the assessee offered the capital gains to tax during the A.Y 2010-11 and paid the resultant taxes along with interest.

Subsequently, Shri Safdar Rohawala, the vendee passed away and therefore, the legal heirs approached the assessee and requested her to execute the sale deed in their favour and accordingly, the sale deed was executed on 05.10.2010 for an amount of Rs.8,50,000/-.

The AO however, held that in the sale deed there is no mention about the possession of the property being handed over in the year 2009-10 nor is there a mention of agreement of sale on account of which the property was handed over. He therefore, Page 2 of 6

The learned Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the assessee had received the sale consideration from the year 2006 onwards and has received the full consideration upto the end of financial year 2008-09 and possession was also handed over thereafter and therefore, the correct A.Y in which the capital gains was liable to be taxed was the A.Y 2010-11 and the assessee has accordingly offered the capital gains to tax which has been accepted by the AO. He has also referred to the details of the payments which are all cheque payments to demonstrate that the payments were made by A/c payee cheques only. Therefore, he submitted that the SRO value as on the date of the agreement of sale for the purpose of capital gains has to be adopted and the assessee has furnished the copy of the SRO value (at page 58 of the Paper Book) according to which the market value of the property as on 1.10.2006 is Rs.3000/- per sq. yard which comes to Rs.8.50 lakhs only. He therefore, submitted that the assessee’s appeal should be allowed and the capital gain on sale of property should not be brought to tax in the relevant A.Y.

The learned DR however, supported the orders of the authorities below and submitted that since the registered sale deed has been executed in the relevant financial year, the capital gain should be brought to tax in this year only and the CIT (A) has rightly directed the AO to give the credit for the taxes paid during the earlier A.Y.

Having regard to the rival contentions and the material on record, I find that the assessee has received the advance payment in the financial year 2006-07 itself and the entire consideration by the end of 2008. The relevant details are given in the affidavit of the vendee’s legal heirs are under: “We, a. Rashida Rohawala, Wife of Late Safder Rohawala, aged about 49 years, resident of Flat No.1, Ground Floor, Survey No.llO/1, Saleh Manzil Kanajiguda, Secunderabad b AIi Hussain, son of Late Safder Rohawala, aged about 28 years, resident of Flat No.1, Ground Floor, Survey No.110/1, Saleh Manzil Kanajiguda, Secunderabad do hereby affirm and declare as follows: We both are legal heirs of Late Safder Rohawala, who, when he was alive, agreed to purchase the house property at Flat No.1, Ground Floor, Survey No.110/1, Saleh Manzil, Kanajiguda, Secunderabad and paid the agreed sale consideration in full and final settlement:

In the result, appeal filed by the assessee is allowed.