PRATAP RAJU BYRRAJU,HYDERABAD vs. INCOME TAX OFFICER, WARD-11(5) , HYDERABAD

In ITA No. 1864/Hyd/2019, the Revenue has raised the following grounds of appeal: "1. The order of the learned CIT (Appeals) is contrary to the law and to the facts of the case.

The learned CIT (Appeals) erred in holding that the capital gains were liable to be taxed in the hands of Late Sri B. Soma Raju in the Asst. Year 2009- 10 on the plea that the transfer was completed then itself. On the facts and in the circumstance of the case, the learned CIT (Appeals) ought to have held that no transfer took place in view of the fact that Late Sri B. Soma Raju did not have any right over the land since it was an assigned land under Andhra Pradesh Assigned Land (Prohibition of Transfers) Act, 1977. 3. On the facts and in the circumstances of the case, the learned CITA) ought to have held that the transaction does not fall under the ambit of sub-clause of (ü) and (v) of clause (47) of section 2 of the Income tax Act, in view of the fact that the capital asset being an assigned land belongs to State Government as laid down in AGPA Act, 1977 and cannot be transferred by the Late Sri B. Soma Raju unless the rights are legally transferred to him.

On the facts and in the circumstances of the case, the learned CIT(A) ought to have held that the assignees must obtain a No objection Certificate from the State Government and they must transfer their rights conferred on them by virtue of the NOC in writing in favour of late Sri B. Soma Raju to enable him and then only the transfer could be effected by allowing possession of the impugned capital assets to the vendees.

On the facts and in the circumstances of the case, the learned CITÍA) ought to have held that the Late Sri B. Soma Raju did not transfer the impugned capital assets in the F. Y 20082009 in view of the fact that he did not have any rights on the impugned capital assets as explained in ground No. 4 above.

The learned CIT(Appeals) erred in holding that the Late Shri B Soma Raju was liable to pay the capital gains in the FY 2008 2009. On the facts and in the circumstances of the case, he ought to have held that the transfer of the impugned capital assets was effected in the Asst. Year 201 1-12 by the assessee only after the assignees have ITA Nos 1864 and 1898 of 2019 Pratap Raju Byrraju Page 3 of 18

The learned CIT (Appeals) erred in holding that the assessee is not liable to pay tax on the capital gains of Rs. 2,65,82,146/- by deleting the addition, On the facts and in the circumstances of the case, he ought to have held that the assessee is liable to pay tax on capital gains of Rs. 2,65, 82,146/-

The learned CIT(Appeals) erred in holding that the assessee is liable to pay capital gains on an amount of Rs. 28, 94,750/-. On the facts and in the circumstances of the case, he ought to have held that the assessee has to pay capital gains considering the entire sale consideration of Rs. 2,39,58,000/-.

On the facts and circumstances of the case, the learned CIT(A) erred in not taking into consideration the decision of Hon'ble Supreme Court in case of M/s. Suraj Lamp & Industries Vs. state of Haryana & another wherein it was held that decisions recognizing of accepting SA/GA/ will transactions as concluded transfers, as contrasted, from an agreement to transfer, are not good in law.

The learned CIT Appeals) erred in holding that the assessee is liable to pay tax only on an income of Rs. 1,93, 750/-under the head Income from other sources.

On the facts and circumstances of the case the learned CIT(Appeals) ought to have held that the Assessing officer has correctly assessed the full value of consideration U/s. 50C of the Income tax Act, 1961 and there is no arithmetical mistake.

Any other ground urged at the time of hearing”.

Ground Nos. 1 & 12 are general in nature and does not require any specific adjudication.

Ground Nos 2 to 7 are regarding the additions made by the Assessing Officer on account of Long-Term Capital Gains

Brief facts leading to the controversy are culled out that the assessee is an individual and has not filed any return of income for the AY 2011-12. On the basis of the information about the sale of immovable property by the assessee, vide 2 sales deeds both dated 24/07/2010, a land situated at Pet Basheerabad Village, Quthbullapur Mandal, R.R District bearing No. 15/1/0 for a consideration of Rs.90 1lakhs and Rs.1.00 crore respectively, the AO reopened the assessment by issuance of notice u/s 148 of the Act On 23/3/2018. This land bearing Survey No.25/1/0 admeasuring 3 acres and 23 guntas was originally assigned in favour of one Shri Bire Nandham S/o Duragiah was sold to Shri B. Rama Raju vide sale deed dated 11/04/1989 registered as Document No.2382/89. Thereafter, Shri B. Soma Raju, the father of the assessee entered into an agreement of sale-cum-GPA dated 13/10/2008 in favour of one Shri Y. Ravi Prasad against a consideration of Rs.76,50,000 /-. Thereafter, Shri B. Soma Raju expired on 29/10/2009. In order to have a clear title of the land in question in favour of Shri Y. Ravi Prasad, having a sale agreement cum GPA dated 13/10/2008 in his favour, he approached the assessee and other legal heirs of Shri B Soma Raju for execution of sale deed which was executed on 24/07/2010 by the assessee on his behalf as well as a GPA Holder of the other 7 legal heirs of Shri B Soma Raju for a consideration of Rs.l crore, out of which a sum of Rs.76,50,000/-

The assessee challenged the action of the AO before the CIT (A) who has accepted the claim of the assessee that the property was already sold by the diseased father of the assessee Cum GPA dated 13/10/2008 for a consideration of Rs.76,50,000/- and after the death of Shri B Soma Raju, the sale deed was executed by the legal heirs of late Shri B. Soma Raju to remove the defect in the title of the property in favour of Shri Y. Ravi Prasad. The CIT (A) thus, held that the transfer of the property in question was already completed on 13/10/2008 and the extra amount received by the assessee of Rs.23,50,000/- is required to be shared between all the 8 legal heirs. The learned CIT (A) has also allowed the claim of the assessee by estimating the compensation of Rs.2 lakhs each to consenting parties, total amounting to Rs.8 lakhs and the balance of Rs.15,50,000/- was held to be apportioned equally among the 8 legal heirs resulting the share of the assessee at Rs. 1,93,750/- to be taxed as income from other sources. Thus, the CIT (A) has restricted the addition to the tune of Rs.1,93,750/- as against the addition of LTCG made by the AO of Rs.2,65,82, 146/-.

Aggrieved by the impugned order of the CIT (A), the Revenue has filed the present appeal.

Earlier, these cross appeals were disposed by the Tribunal vide order dated 20/12/2021 against which the assessee filed the appeal before the juri ictional High Court and vide judgment dated 4/7/2024, the Hon'ble High Court has set aside the earlier order of this Tribunal and remanded the matter to the Tribunal with the direction to decide both the matters in accordance with law. Thus, these cross appeals are again placed before us for hearing and disposal.

The learned DR has submitted that the transaction of the transfer of the immovable property in question cannot be held to be completed only by way of the alleged agreement of sale-cum GPA dated 13/08/2008. The executor Shri B Soma Raju expired on 29/10/2009 and therefore, the GPA shall have no legal force. The ld DR has thus, submitted that after the death of Shri B. Soma Raju, the prospective buyer Shri Y. Ravi Prasad left with no legal title over the property and consequently only by the sale deed dated 27/07/2010, the title of the property was transferred in favour of the buyer by the legal heirs through the assessee. The assessee has received the entire sale consideration, and the assessee has failed to produce any record to show that the sale consideration received by the assessee was shared with the other legal heirs and therefore, the capital gain arising from the transfer of the property is eligible to be assessed in the hands of the ITA Nos 1864 and 1898 of 2019 Pratap Raju Byrraju Page 7 of 18

On the other hand, the learned AR of the assessee has submitted that the property in question had transferred by Late Shri B Soma Raju vide agreement of sale cum GPA dated 13/10/2008. He has further submitted that the sale of agreement cum GPA was also subsequently registered with the Sub