CIT, FARIDABAD vs. PREM NARAIN BHATIA M/S CHAND INDUSTRIES

ITA/622/2009HC Punjab & HaryanaPHHC01084750200903 December 2009Author: MR. JUSTICE SATISH KUMAR MITTAL,MR. JUSTICE M.S. SULLAR7 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that there was no ground to interfere with the ITAT's order. It affirmed the findings of fact recorded by the lower authorities that the assessee had paid Rs. 26 lacs to the vendor for the purchase of a residential house and had taken possession. The Court found that the capital gain of Rs. 21 lacs was utilized by the assessee within two years from the date of sale of the plot, making the Assessing Officer's addition unjustified. The genuineness of the transaction was also established. The Court distinguished the Madras High Court's decision in G. Saroja's case, noting that in that case, the sale consideration was not paid during the relevant period. The Court concluded that no substantial questions of law arose from the ITAT's order, as it was based on concurrent findings of fact regarding payment, possession, and utilization of capital gains within the stipulated time for exemption under Section 54F. The ITAT had correctly applied Section 2(47)(v) of the Act in considering possession taken in part performance as a transfer.

What were the facts?

The revenue appealed against an order of the ITAT which upheld the CIT(A)'s deletion of an addition of Rs. 21,08,853/-. This addition was made by the Assessing Officer for assessment year 2004-05, disallowing the assessee's claim for exemption under Section 54F of the Income Tax Act. The assessee had sold a plot in Faridabad on 10.11.2003, earning a capital gain of Rs. 21,08,853/-. The assessee claimed to have agreed to purchase a residential house in New Friends Colony, New Delhi, for Rs. 70 lacs, paid Rs. 26 lacs as earnest money, and took possession in part performance of the agreement. The CIT(A) and ITAT found that Rs. 26 lacs was paid to the vendor, and possession was taken in March 2005, well within the time limit for utilizing capital gains for purchasing a new asset.

What were the issues?

1. Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that there is part performance of contract of nature referred in Section 53A of the Transfer of Property Act, 1882, even though there was no written agreement for the purchase of property and the written agreement to sell was dated after the assessment year? - Assessee: Not explicitly recorded. - Revenue: Argued that part performance under Section 53A of the Transfer of Property Act, 1882, cannot be established without a written agreement, especially when the agreement to sell was dated after the assessment year. 2. Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in allowing the assessee's claim for deduction u/s 54F of the Act even though the sale deed was not executed within two years of sale of property? - Assessee: Not explicitly recorded. - Revenue: Contended that for sale of immovable properties, the sale is considered to have taken place on the date of execution of the sale deed, and thus, the assessee could not be said to have purchased a new asset within the prescribed time for exemption under Section 54F. 3. Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that as per provision of Section 2(47) clause (v) of the Act, any transaction involving the allowing of possession of immovable property to be taken and retained in part performance of contract of nature referred in section 53A of the Transfer of Property Act, 1882 will be considered as transfer in relation to the capital assets? - Assessee: Not explicitly recorded. - Revenue: Argued that mere delivery of possession of immovable property cannot by itself be treated as equivalent to conveyance of immovable property, questioning the applicability of Section 2(47)(v) of the Act. 4. Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that the possession was taken by the assessee by relying on telephone bills and the bills of security guard even though there was no credible evidences and written agreement to sell or registered sale deed? - Assessee: Not explicitly recorded. - Revenue: Challenged the ITAT's finding that possession was taken based on telephone and security guard bills, asserting a lack of credible evidence, written agreement, or registered sale deed.

Which sections of the Income-tax Act were involved?

Section 54F,Section 260-A,Section 143 (3),Section 53A,Section 2 (47)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No. 622 of 2009 DATE OF DECISION : 03.12.2009 Commissioner of Income Tax, Faridabad .... APPELLANT Versus Sh. Prem Narain Bhatia ..... RESPONDENT

CORAM :- HON'BLE MR. JUSTICE SATISH KUMAR MITTAL HON'BLE MR. JUSTICE MEHINDER SINGH SULLAR

Present: Ms. Urvashi Dhugga, Advocate, for the appellant-revenue.

* * * SATISH KUMAR MITTAL , J. The revenue has filed this appeal under Section 260-A of the Income Tax Act, 1961 (hereinafter referred to as `the Act'), against the order dated 20.3.2009, passed by the Income Tax Appellate Tribunal, Delhi Bench `F' New Delhi (hereinafter referred to as `the ITAT') in ITA No. 1766/Del/2008, pertaining to the assessment year 2004-05, raising the following substantial questions of law : (i) Whether on the facts and in the circumstances of the case, the learned ITAT was right in law in holding that there is part performance of contract of nature referred in Section 53A of the Transfer of Property Act, 1882 even though there was no written agreement for the purchase of property H. NO. 25GF, Friends Colony, New Delhi and the written agreement to sell which has been later

ITA No. 6

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 54F

All 2,628 judgments and leading authorities on Section 54F →

Recent GST High Court judgments

Search GST case law →