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Income Tax Appellate Tribunal, “A” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR
आदेश/O R D E R
PER PRADIP KUMAR KEDIA - AM:
The captioned appeal has been filed at the instance of the Revenue against the order of the Commissioner of Income Tax (Appeals)-5, Ahmedabad (‘CIT(A)’ in short), dated 16.02.2016 arising in the assessment order dated 28.03.2013 passed by the Assessing Officer (AO) under s. 143(3) of the Income Tax Act, 1961 (the Act) concerning assessment year 2010-11.
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The assessee has also filed cross objection in the Revenue’s appeal as captioned above.
As per its ground of appeal, the AO has impugned the action of the CIT(A) in deleting the addition of Rs.3,18,55,034/- made on account of undisclosed long term capital gains.
Briefly stated, the assessee filed return of income for the AY 2010-11 showing total income of Rs.66,32,298/-. The return filed by the assessee was subjected to scrutiny assessment. In the course of the scrutiny assessment, the AO with reference to Annual Information Report (AIR) details observed that the assessee has sold the immovable property for a consideration of Rs.3,40,84,800/- and the same was registered with the Sub-Registrar Office, Sanand on 21.01.2010. It was observed by the AO that assessee has not declared the capital gains arising in sale of the said immovable property for the year under consideration. On being confronted, the assessee pointed out that he has entered into an agreement to sale (Banakhat) in the preceding financial year on 15.09.2008 with one M/s. Melody Complex Pvt. Ltd. (Melody Complex) for sale of land of various survey numbers for a sale consideration of Rs.19,01,177/-. The capital gain arose on sale of land amounting to Rs.4,10,377/- was offered in the preceding AY i.e. AY 2009-10 relevant to FY 2008-09 and therefore no income has escaped for the purpose of assessment. According to the AO, the Banakhat (agreement to sale) entered into by the assessee with Melody complex was unregistered and the possession was not transferred to Melody Complex. The AO thus was of the view that the transfer was not completed in favour of Melody Complex by virtue of such agreement to sale. In this regard, the assessee presented before the AO that during the preceding FY 2008- 09 (AY 2009-10), the assessee entered into an agreement to sale dated
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15.09.2008 with the prospective purchaser namely Melody Complex in respect of various survey numbers of land allocated at Moje Gam, Godhavi, Taluka Sanand, Ahmedabad and the total sale consideration was determined/fixed for an amount of Rs.19,01,177/-. In terms of the said agreement to sale, the proposed buyer (Melody Complex) paid a sum of Rs.1 Lakh as earnest money to the assessee. Thereafter, at the behest of the proposed buyer, the assessee entered into another agreement to sale with the ultimate buyer M/s. Gatil Properties Pvt. Ltd. (Gatil Properties) on 25.03.2009 wherein Melody Complex was made a confirming party for relinquishment of its right accrued in the land. The consideration payable by the ultimate buyer (Gatil Properties) was fixed at Rs.3,40,84,800/-. It was further agreed that Gatil Properties shall pay the sale consideration to the assessee as per the amount fixed by Melody Complex vide agreement to sale dated 15.09.2008 entered into between assessee and Melody Complex and the differential amount i.e. Rs.3.21 Crore would go to Melody complex in consideration of relinquishment of his rights accrued in the land proposed to be sold to the Gatil Properties for consideration of Rs.3,40,84,800/-. It was thus contended that the assessee was not entitled for any additional amount receivable from Gatil properties as determined at the instance of Melody Complex. The AO however rejected the various explanation offered as baseless and adopted the sale price with Gatil Properties as amount of consideration need by the assessee. The AO accordingly revised the capital gains taxable amounting to Rs.3,18,55,034/- in the hands of assessee after giving allowance for the capital gains of Rs.4,10,177/- offered by the assessee in the preceding financial year in terms of agreement to sale entered into by the assessee with Melody Complex.
While doing so, the AO observed that actual registration of the sale of land as happened on 21.01.2010 with Gatil Properties. The AO
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inter alia observed that sale of property thus culminated on 21.01.2010 (date of registration) on which date the assessee has conveyed his rights totally, absolutely and completely to the purchaser Gatil Properties. The AO was not convinced with the assessee has received a mere sum of Rs.19,10,171/- whereas the bulk of the amount was stashed away by Melody Complex. It was further observed that the assessee as an original owner and who is in possession of the capital asset and who executed the transfer through process established by law and system in vogue is liable for the capital gains in entirety. The AO also observed that both the confirming parties as well as ultimate sellers were not found traceable for inquiry. In these circumstances, it was alleged that the assessee has avoided the payment of capital gains tax on sale of land which is chargeable to tax for AY 2010-11 quantified at Rs.3,18,55,034/-.
Aggrieved, the assessee preferred appeal before the CIT(A) and reiterated the facts concerning the issue as noted above. It was further emphasized that the assessee had parted with the possession of the land on receipt of full consideration as agreed with Melody Complex at the time of execution of a subsequent tripartite Banakhat dated 25.03.2009 and therefore all the conditions of the provisions of the Transfer of the Properties Act r.w.s. 2(47)(v) of the Act were satisfied namely (i) there is an agreement in writing between the purchaser and seller, (ii) purchaser has paid consideration & (iii) purchaser has taken the possession of the property. It was also pointed out that all the relevant documents namely Banakhat dated 15.09.2008 entered into with Melody Complex and subsequent tripartite Banakhat dated 25.03.2009 was produced before the AO to establish the alienation of rights in the land by the assessee in favour of Melody Complex. The copy of balance sheet and ledger account of the confirming party (Melody Complex) was also submitted. It was pointed out that the
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physical possession of the land has been handed over to the purchaser vide possession agreement (Kabja Karar) dated 25.03.2009 which fact has also been mentioned in the final sale deed. It was thus contended that the rights acquired by the Melody Complex in an enforceable right in law and thus a capital asset within the meaning of Section 2(14) of the Act. The said right has been transferred/extinguished by it within the meaning of Section 2(47)(ii) of the Act while executing the subsequent Banakhat dated 25.03.2009 as a confirming party. It was contended that in terms of Banakhat agreement, the confirming party had acquired right to obtain the conveyance of the land which right falls within the meaning of expression ‘property of any kind’ appearing in Section 2(14) of the Act. It was thus contended that the transaction in terms of Banakhat falls within the meaning of expression ‘transfer’ in terms of Section 2(47)(v) of the Act r.w.s. 53A of the Transfer of the Properties Act notwithstanding the actual registration in favour of the Gatil Properties happened in FY 2009-10 concerning AY 2010-11.
The CIT(A) after taking note of the facts broadly stated above and in the light of host of judicial decisions stating the position of law, found considerable force in the case of the assessee. The relevant operative para of the order of the CIT(A) while adjudicating the issue is reproduced hereunder for ready reference:
“3.4 I have considered the facts of the case and submission made by the appellant. In this case the return of income was filed on 26.08.2010 showing a total income of Rs.66,32,298/-. According to AO, as per the AIR details, the assessee has sold immovable property for a consideration of Rs.3,40,84,800/- and the same was registered in Sub-Registrar Office, Sanand on 21.01.2010. In the return of income, the assessee has not shown the sale of the above said immovable property for the year under consideration. The AO has called for information during the assessment proceedings. 3.5. The facts of the case is that assessee has entered into an agreement to sale (banakhat) on 15.09.2008 with Melody Complex
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Pvt. Ltd. for a sale consideration of Rs.19,01,177/-. The assessee has offered capital gain of Rs.4,10,377/- in the A.Y. 2009-10 relevant to F.Y. 2008-09. According to the A.O., that banakhat was unregistered and one sided without valid addresses of witnesses and possession was not transferred to the Melody Complex Pvt. Ltd. Therefore, transfer is not completed as per that agreement. Thereafter, one more agreement to sale was executed on 25.03.2009 between the appellant, Melody Complex Pvt. Ltd. and Gatil Properties Pvt. Ltd. As per this agreement, Melody Complex Pvt. Ltd. was entitled for consideration to be received by Melody Complex Pvt. Ltd. and before March, 2009, Melody Complex Pvt. Ltd. has received the consideration which was agreed upon as per the agreement dated 25.03.2009. On the same date i.e. 25.3.2009, a possession agreement was also executed with assessee as vendor, Gatil Properties Pvt. Ltd. as purchaser and Melody Complex Pvt. Ltd. as confirming party. The AO has made the addition of Rs.3,18,55,034/- on account of long term capital gain. The AO has ignored the first two agreement to sale on the ground that these agreement to sale are not registered. Therefore, transaction is not completed by these agreements. The AO is of the opinion that land was sold by way of registered sale deed only which was executed on 21.01.2010. Therefore, the capital gain resulted on transfer of land is assessed in the hands of the assessee in the A.Y. 2010-11.
3.6. During the appellate proceedings the appellant has contended that Melody Complex Pvt. Ltd. has acquired enforceable rights by virtue of the agreement to sale executed on 15.09.2008. It is further contended that Melody Complex Pvt. Ltd. could file suit for specific performance of contract under specific relief Act. The appellant has also contended that right with the assessee extinguished with agreement to sale executed on 15.09.2008. The appellant has also contended that the said agreement to sale dtd. 15.09,2008 is a binding agreement between the appellant and the buyer Melody Complex Pvt. Ltd. Further it is contended that the right acquired by Melody Complex Pvt. Ltd. vide agreement to sale dtd. 15.09.2008 is a capital asset in the hands of Melody Complex Pvt. Ltd. as per Section 2(14) of the Act. Further the appellant has contended that by the agreement to sale dtd. 25.03.2009, the Melody Complex Pvt. Ltd. has relinquished his rights in the land and in respect of the appellant the sale consideration has already been freezed vide agreement to sale dtd. 15.09.2008. As per this agreement to sale, no additional amount was determined in respect of the appellant. Thus, on an analysis of the record, the rights acquired by Melody Complex Pvt. Ltd. under the agreement dtd. 15.09.2008 are of capital nature and this agreement was enforceable in law under the specific relief Act. It is also contended that on execution of the agreement dtd. 25.03.2009 between the appellant, Gatil Properties Pvt. Ltd. and Melody Complex Pvt. Ltd. along with agreement to hand over the possession, transaction can be termed as a transfer giving rise to short term capital gain by referring to Section 2(47) of the I.T. Act r.w.s. 53 of
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the Transfer of Property Act, 1882. The appellant has also emphasize upon the clauses-5 and 6 of Section 2(47) of the Act and contended that on execution of agreement dtd. 25.3.2009 when the possession was also handed over the transfer within the meaning of Section 2(47)(v) and (vi) was complete. The appellant has also contended that the genuineness of any agreement is not depended upon the actual payment of tax resulted on account of execution of these agreements and first genuineness of the agreements has to be ascertained and then inconsequence of these agreement, if any, tax liability has arisen it is to be fastened upon the right person. The appellant has submitted that according to AO, Melody Complex Pvt. Ltd. has filed NIL return. The Department did not raise any objection in the case of Melody Complex Pvt. Ltd. The appellant has already shown the amount received in his books of account and the AO has also failed to establish that the appellant has received more money for which the additions have been made by him. Further contended that M/s.Melody Complex Pvt. Ltd. has shown the transaction in its books of accounts and M/s.Melody Complex is also assessed to tax. The appellant has relied upon various decisions/judgments which are cited in the written submissions reproduced above.
3.7. The facts of the case and the submissions are considered. The appellant has mainly contended that the Melody Complex Pvt .Ltd. has acquired enforceable rights on execution of agreement to sale dtd. 15.09.2008 and he could file suit for a specific performance of contract under Specific Relief Act and the right with the assessee stands extinguished on the day when he had entered into an agreement to sale of a property. The AO has ignored the existence of this agreement by referring to surrounding circumstances and held that agreements dtd. 15.09.2008 and 25.3.2009 are sham and deserved to be ignored. The decisions cited by the appellant are carefully considered. Considering all these legal pronouncements, it seems that the rights acquired by the Melody Complex Pvt. Ltd. under the agreement dtd. 15.09.2008 are of capital nature and this agreement was enforceable in law under the Specific Relief Act. Further the appellant has contended that by virtue of agreement to sale dtd. 25.03.2009, the transfer is completed u/s.2(47) of the Act r.w.s. 53A of the Transfer of Property Act. Clause-5 and 6 have been introduced in Section 2(47) of the Act w.e.f. April, 1st, 1988. The Board has also issued a Circular Bearing No.495 dtd. 22.09.1987 explaining the objective and the background for inclusion of this clause in order to widen the scope of expression "transfer" for the purpose of taxation. Section 2(47) as well as the circular issued by the Board were considered by the Hon'ble High Courts.
3.8. On analysis of various case laws, it emerges out that clause(5) and (6) were included in Section 2(47) with an intention to cover those case of transfer of ownership where the prospective buyer becomes owner of the property by becoming a member of company, co-operative society or to include those transactions that
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closely resembles transfer, but are not treated as such under the general law u/s.2(47)(v) of the Act any transaction involving allowing of possession referred to Section 53A of the Transfer of Property Act would come within the ambit of transfer. The whole scheme for introduction of clauses(5) &(6) of Seton 2(47) of the Act was that the capital gain is taxable in the year in which such transactions are entered into even if the transfer of immovable property is not effective or complete under the general law. Therefore, it is correctly said that on execution of agreement dtd. 25.03.2009 when the possession was handed over the transfer within the meaning of Section 2(47)(v) & (vi) was complete.
3.9 The one of the ground taken by the AO for rejecting the agreement to sale dtd. 15.09.2008 and 25.03.2009 is that both these agreements s were not registered. If the assessee refuse to honour the agreement dtd. 15.09.2008, the Melody Complex Pvt. Ltd. has a right to get to this agreement enforced by way of suit for a specific performance and the assessee could be persuaded to execute the sale deed in favour of Melody Complex Pvt. Ltd. by virtue of this agreement. The AO has not appreciated this aspect while holding that since the agreements are unregistered, therefore they are non- genuine. An analysis of all the facts and circumstances as well as the judicial pronouncements, I am of the view that agreement dtd. 15.09.2008 and 25.03.2009 are not sham or bogus as held by the A.O. The appellant has cited a recent order of the Hon'ble ITAT Bench-B, Ahmedabad in the case of Smt. Sapnaben B. Patel in ITA No.24114/Ahd/2013 dtd. 13.01.2016 for A.Y. 2010-11 wherein the Hon'ble ITAT has deleted the addition on account of alleged income from capital gain on similar sets of facts. I have gone through the order of the Hon'ble ITAT and it is found that the order of the Hon'ble ITAT is on similar set of facts. 3.10. Considering all these facts, the addition made by the AO is deleted. Thus this ground of appeal is allowed.”
The CIT(A) according reversed the action of the AO for taxability of capital gain on the basis of sale consideration agreed with the ultimate buyer Gatil Properties and restored the stand of the assessee.
Aggrieved by the relief given by the CIT(A), the Revenue has knocked the door of the Tribunal.
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The learned DR for the Revenue mainly relied upon the order of the AO and submitted that the assessee is susceptible to capital gain tax as per sale consideration determined in the sale deed registered on 21.01.2010 by virtue of which the owner has conveyed his rights totally, absolutely and completely to the purchaser i.e. Gatil Properties. It was alleged that the assessee has not worked out any capital gain for AY 2010-11 and has evaded the taxation by claiming sale on the basis of Banakhat and unregistered possession agreement. It was submitted that the AO has already excluded the capital gains offered by the assessee in the preceding assessment year and has rightly computed the capital gains on the basis of final sale consideration received in place of Banakhat consideration with the confirming party. It was essentially submitted that the asessee is the owner of the land till the execution of the sale agreement and thus cannot be absolved from the capital gains tax. It was also pointed out that the confirming parties as well as the ultimate purchasers have avoided to attend before the AO which does not inspire confidence. It was also pointed out that the intermediary namely Melody complex does not appear to have paid any taxes on the capital gains purportedly assessible in its hands. The learned DR accordingly submitted that the CIT(A) was not justified in vacating the order of the AO. The learned DR accordingly pleaded for setting aside the action of the CIT(A) and restoration of the order of the AO.
The learned AR, on the other hand, submitted in defense that the bonafides of Banakhat entered into with the intermediary namely Melody Complex has not been seen with doubt nor could have been. The assessee has admittedly received earnest money of Rs.1 Lakh against the proposed sale to Melody Complex. The enforceable right was thus created in favour of the intermediary by virtue of Banakhat. The learned AR next submitted that if the Banakhat with the
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intermediary is to be disbelieved then the final sale deed with the ultimate buyer (Gatil Complex) is also required to be treated alike where the intermediary as existed by virtue of Banakhat dated 15.09.2008 was part of the sale deed as a confirming party. The learned AR pointed out that the differential amount to the intermediary was paid by the seller to the confirming party directly and not routed through the assessee as pointed out to the AO. The assessee has received cheque only to the extent of consideration receivable by it as per the Banakhat with the confirming party. The learned AR referred to a detailed Banakhat entered into dated 15.09.2008 as appearing at page nos. 35 to 54 of the paper book and submitted that the aforesaid agreement has created enforceable right in law in favour of the intermediary / confirming party and therefore, the assessee could not have sold the land directly to the ultimate seller in exclusion to the intermediary without inviting civil and criminal consequences. The learned AR thereafter referred to another tripartite Banakhat with the ultimate buyer dated 25th March, 2009 (paper book page nos. 66 to 88) and submitted that the reference to the existence of confirming party is made explicit to enable the sale of land. The learned AR thereafter referred to a tripartite final sale deed 21.01.2010 and submitted that the assessee has received only the consideration at which it agreed to sale the land to the confirming party and the remaining amount has been given by the seller to the confirming party as can be seen from page no.108 of the paper book. The learned AR thereafter submitted that except for registration which eventually took place in the subsequent FY 2009-10, the assessee had received the consideration agreed upon and had also parted with the possession and enjoyment of land in sale. In the circumstances, the transfer took place in favour of the confirming party in FY 2008-09 concerning AY 2009-10 at the agreed sale consideration of Rs.19,10,177/- in terms of the definition of ‘transfer’ provided under
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s.2(47) of the Act which includes disposing of or parting with an asset or any interest therein or creating any interest in any asset in any manner whatsoever, directly or indirectly, absolutely or conditionally by way of an agreement or otherwise. The learned AR submitted that when the ‘transfer’ as contemplated under s.2(47) of the Act is read in conjunction which Section 53A of the Act of the Transfer of the Property Act, the transfer is complete in preceding AY 2009-10 on the basis of sale consideration determined as per Banakhat. The learned AR thereafter pointed out that PAN, ledger account of the confirming party as well as the audited balance sheet clearly establishes the identity of the confirming party. The responsibility of the confirming party for payment of taxes on income accrued to it, cannot be fastened in the hands of the assessee being a wrong person for assessment.
The learned AR thereafter adverted to its plea taken before the lower authorities that provisions of Section 50C of the Act has also not been invoked for determination of capital gains by the AO where the assessee transferred the right in the land in favour of the Melody Complex vide agreement date 15.09.2008. For this purpose para 3.3(5) / page no.17 of the order of the CIT(A) was referred. The learned AR thereafter referred to the decision of the co-ordinate bench in Smt. Sapnaben B. Patel vs. ITO ITA No. 24114/Ahd/2013 order dated 13.01.2016 and submitted that in the similar facts the issue has been resolved in favour of the assessee by the co-ordinate bench.
The learned AR accordingly submitted that the enforceable right created by virtue of agreement to sale dated 15.09.2008 falls within the ambit of expression ‘capital asset’ and ‘transfer’ thereof in terms of Section 2(47) of the Act would entail tax liability on the assessee in the year of transfer i.e. 2009-10. It was pointed out that the AO has itself accepted the capital gain arising on such transfer reported in the
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earlier year and given credit for it while computing the revised capital gains. The learned AR accordingly submitted that the CIT(A) has taken note of long line of judicial precedents as applicable to the facts of the case and has rightly concluded the issue in favour of the assessee. It was thus submitted that the order of the CIT(A) requires to be upheld as per the cross objection filed by assessee and no interference with the order of the CIT(A) is called for.
We have carefully considered the rival submissions. The essential controversy in the present appeal relates to quantification of capital gains arising on transfer of immovable property being land. The incidental question that arises for consideration is whether in the given set of facts, the rights acquired by Melody Complex under the agreement to sale is a capital asset or not and whether such right stands transferred/extinguished within the meaning of Section 2(47) of the Act while executing the agreement to sale dated 25.03.2009 as a confirming party having regard to provisions of Section 2(14) and Section 2(47) of the Act.
It is the case of the assessee that he entered into an agreement to sale dated 15.09.2008 with Melody Complex against which he has received earnest money. The sale consideration as per the aforesaid agreement to sale stands at Rs.19,10,177/-. It is the case of the assessee that the proposed buyer (Melody Complex) has acquired enforceable right to obtain the conveyance of the immovable property and therefore, is entitled to enforce its right of specific performance against the assessee. Such right to obtain the conveyance is thus a property of capital nature under s.2(14) of the Act. It is further case of the assessee that it has received the consideration as agreed from/on behalf of the Melody Complex on 25.03.2008 at the time of execution of another agreement to sale (tripartite) dated 25.03.2008. The
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possession and the enjoyment of the land were thus handed over by the assessee to the benefit of proposed buyer Melody Complex. Under these circumstances, it is claimed that the transfer of the capital asset is complete in the FY 2009-10 as per the agreed sale consideration. The capital gain arising thereof amounting to Rs.4,10,177/- was also duly offered for taxation in the respective assessment year and thus, there is no warrant for the Revenue to fasten the additional tax liability where the assessee has neither received additional sale consideration nor has additional consideration accrued to the assessee by virtue of the execution of final sale deed (tripartite).
To address the issue, we refer to Section 48 which provides mode of computation of capital gain. This Section contemplates that income chargeable under the head ‘capital gains’ shall be computed by deducting from ‘the full value of consideration’ received or accruing as a result of transfer, the amounts viz., (i) expenditure incurred wholly and exclusively in connection with such transfer & (ii) the cost of acquisition of asset and the cost of another improvement thereto. Sub-section (1) of Section 50C simultaneously contemplates that where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted by an authority of State Government for the purpose of payment of stamp duty valuation, in respect of such transfer, then value so adopted would be deemed to be ‘full value of the consideration’ received or accruing to the assessee. In other words, the AO will be entitled to replace and substitute the alleged sale consideration by the value on which stamp duty was paid while computing the capital gain at the time of transfer. However, where the jantri value is found higher than the sale consideration agreed, such jantri value shall be replaced by actual sale consideration by virtue of the deeming fiction of Section 50C of the Act. Apart from this
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Section, we do not visualize anything provided in the Act which might have authorized an AO to replace the actual sale consideration disclosed by the assessee. In these circumstances, unless the AO is in possession of cogent material that consideration actually received by the assessee is in excess of the amount disclosed, no adverse inference is permissible to be drawn against the assessee. It is an undisputed fact that the assessee has received only the amount of Rs.19,10,177/- which has been agreed as per the agreement to sale with the intermediary/confirming party Melody Complex. The consideration agreed by the ultimate purchaser over and above the consideration freezed by the assessee with Melody Complex was directly given by ultimate buyer (Gatil Properties) to the intermediary/confirming party (Melody Complex). There is no material available on record to hold that the assessee herein is the beneficiary of the excess consideration. Noticeably, the provisions of Section 50C of the Act have not been invoked at all. Therefore, where the deeming provisions of Section 50C has not been invoked and there is nothing to demonstrate that the assessee has received more than what is offered for the purposes of determination of capital gains, it is difficult to draw inference against the assessee on the basis of suspicion howsoever strong. We may however hasten to add that the CIT(A) ought to have weighed the jantri value vis-à-vis the sale price agreed by the assessee with Melody Complex while granting relief to assessee. Thus, the order of the CIT(A) suffers from inadequacy or infirmity to this extent.
We also notice another aspect to the matter. The AO has adopted the AY 2010-11 as the year of taxability of the capital gains on the basis of execution of sale deed and registration thereof in the FY 2009-10. The AO has also adopted and substituted the sale consideration as per the final sale deed (tripartite) for the purposes of determination of capital gain tax liability. We do not see any force in
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such action of the AO. Admittedly, the assessee has declared the capital gain on the basis of sale consideration agreed between him and the proposed buyer at the first instance namely Melody Complex in the return of income for AY 2009-10. It is the case of the assessee that agreement to sale with Melody Complex has given a right to the proposed buyer (intermediary/confirming party) to obtain the conveyance of the immovable property and therefore is required to be reckoned as capital asset under s.2(14) of the Act. It is further case of the assessee that on receipt of consideration and alienation on possession/enjoyment of land on 25.03.2009 at the time of subsequent Banakhat (tripartite), the transfer in terms of Section 2(47) of the Act is complete, pending actual registration of the sale deed in the subsequent assessment year. In this regard, we take notice of the long line of judicial precedents referred to and relied upon by the CIT(A) and more particularly, the decision rendered by the division bench of Punjab & Haryana High Court in the case of Ram Kishan vs. Bijender Mann. (Second Appeal No. 4946 of 2011) (page no.27 of the order of the CIT(A)), wherein Hon’ble High Court held that while Section 53A of the Transfer of the Properties Act is not a source by which the title of an immovable property can be acquired but it only serves as a shield to the defend ones lawful possession obtained in pursuance of a contract. It was further held that such unregistered agreement can be made the basis of suit for specific performance. Therefore, a decisive right was available to Melody Complex in view of agreement to sale albeit unregistered. As noted earlier, in the absence of invocation of Section 50C of the Act or in the absence of any finding for receipt of excess consideration by the assessee, there is no palpable reason to fasten the tax liability of assessee for excess sale consideration at this stage. The payment of tax by intermediary/confirming party or otherwise is an irrelevant consideration for the purposes of determination of tax liability in the hands of the assessee.
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We find that the CIT(A) has also taken cognizance of the decision of the co-ordinate bench in Sapnaben B. Patel (supra) while adjudicating the issue in favour of the assessee in similarly placed facts. We also take affirmative note of the significant plea on behalf of the assessee that if the unregistered agreement to sale with intermediary is discarded as an arrangement, the final contractual relationship as per the final sale deed will also crumble where intermediary is acknowledged as a confirming party to enable the transaction to sail through.
Thus, looking from any angle, we do not see any plausible reason to depart from the view taken by the first appeallate authority, until it is found that jantri value of parcels of land in question is higher than the sale price agreed by the assessee with Melody Complex. We, therefore, deem it expedient to remit the matter back to the file of AO to ascertain the jantri value/circle rate existing at the time of agreement with Melody Complex on 15.09.2008 and substitute the same with sale consideration agreed by the assessee with Melody Complex in case it is found higher than the actual sale consideration of Rs.19.10 Lakhs. To this extent, the issue is required to be restored back to the file of AO for its consideration. Needless to say, the AO shall provide reasonable opportunity to the assessee for determination of jantri value of land existing on 15.09.2008. The matter is accordingly set aside to the file of AO in terms of directions noted above. However, where the sale consideration agreed with Melody Complex is found to be in tune with the jantri value, no interference with the order of CIT(A) would be required.
In the result, appeal of the Revenue is allowed for statistical purposes.
ITA No. 1215/Ahd/16 with CO No. 81/Ahd/2016 [DCIT vs. Shri Nimish K. Vasa] A.Y. 2010-11 - 17 -
The cross objection filed by the assessee merely supports the action of the CIT(A) and therefore dismissed in terms of observations in the substantive appeal of Revenue.
In the result, the appeal of the Revenue is allowed for statistical purposes and cross objection of the assessee is dismissed.
This Order pronounced in Open Court on 19/12/2018
Sd/- Sd/- (MAHAVIR PRASAD) (PRADIP KUMAR KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad: Dated 19/12/2018 True Copy S. K. SINHA आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. राज�व / Revenue 2. आवेदक / Assessee 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त- अपील / CIT (A) 5. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड� फाइल / Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद ।