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Income Tax Appellate Tribunal, BENCH “I”, MUMBAI
Before: SHRI PAWAN SINGH & SHRI RAJESH KUMAR
O R D E R
PER PAWAN SINGH, JUDICIAL MEMBER :
This appeal by assessee is directed against the order of learned Commissioner of Income Tax (Appeals)- 57, (hereinafter referred as „ld.CIT(A), Mumbai dated 25.10.2018 for Assessment Year 2013-14.
Brief facts of the case are that the assessee is a non-resident/ individual, filed his return of income for Assessment Year 2013-14 on 26.07.2013 declaring return income of Rs. 94,75,480/-. In the computation of income, the assessee computed Long Term Capital Gain (LTCG) on sale of land out of Survey No. 4451/1 and 431 (capital asset) at Dummas, District-Surat, Gujarat. The assessee claimed LTCG on sale of long term capital asset and also claimed exemption of capital gain of Rs. 50,00,000/- under section 54EC being 2 Mum 2018-Chandravadan C. Pithawalla investment made in National High way Authority of India (NHAI) bonds. During the assessment, the Assessing Officer noted that the document related to transfer of property i.e. sale-deed reflects two different date i.e. 8th October 2012 on which it was executed and 16 January 2013, when it was ultimately registered. The assessee invested the amount of Rs. 50,00,000/- in NHAI bond, out of which Rs. 25 lakhs on 31st May 2013 and remaining Rs. 25 lakhs on 31st July 2013. On show-cause notice, the assessee claimed that assessee sold his immovable property along with his co-owner vide agreement dated 08.10.2012, as one of the seller was not agreeable on the terms and conditions so he did not appear before the Sub-Registrar concern and the document could not be registered on the said date. The registration of document i.e. sale-deed was complete only when non-agreeable/ co-owner agreed and appeared before the Registrar on 16.01.2013 and Registrar recorded registration of on 16.01.2013. The assessee made investment of Rs. 25,00,000/- each on 31st May 2013 and on 31.07.2013 and thus invested the capital gain within six month from date of transfer of the property. The contention of assessee was not accepted by Assessing Officer by taking view that investment in Long Term Specified Asset (NHAI) bonds should be done within six month after the date of transfer of Long Term Capital Asset/Immovable Property. The date of transfer is 8.10.2012 as per transfer deed. The assessee wrongly mentioned the date of transfer as 16.01.2013 and disallowed the exemption under section 54EC. On appeal before the ld.
3 Mum 2018-Chandravadan C. Pithawalla CIT(A), the action of Assessing Officer was maintained. The ld. CIT(A) also observed that the copy of transfer deed is in Gujarati and are not readable, thus, the assessee could not substantiate his claim and that it is not clear why the registry is registered on two different dates. Thus, further aggrieved, the assessee has filed this appeal before this Tribunal. The assessee has raised the following grounds of appeal:
1. The learned Commissioner of Income Tax (Appeals) erred in confirming action of the Assessing Officer of disallowing claim for exemption u/s. 54EC amounting to Rs. 50,00,000/-.
2. The appellant prays that: (i) It may be held that appellant is entitled to exemption u/s. 54EC amounting to Rs. 50,00,000/-;
3. We have heard the submission of ld. Authorized Representative (AR) of the assessee and ld. Departmental Representative (DR) for the revenue and perused the material available on record. The ld. AR of the assessee submits that a very short dispute in the present appeal is whether the final transaction of the transfer of asset concluded on 8.10.2012 or on 16.01.2013. The ld. AR of the assessee submits that when the document was presented for registration on 08.10.2012, one co-sharer was not agreed and accordingly document was not registered. The co-owner of the property ultimately appeared before the Registrar concern on 16.01.2013 and the registration of transfer of property was complete. The assessee made investment of Rs. 25,00,000/- each on 31st May 2013 and 31st July 2013, which are within six months from the date of transfer. To buttress his submission, the ld. AR of the assessee relied upon 4 Mum 2018-Chandravadan C. Pithawalla the decision of jurisdictional High Court in case of Amarchand J. Aggarwal vs. Union of India [1983] 142 ITR 402 (Bom.) and the decision of Hon‟ble Supreme Court in Alapati Venkataramaiah vs. CIT [1965] 57 ITR 185 (SC).
On the other hand, the ld. DR for the revenue supported the order of Assessing Officer.
We have considered the rival contention of the parties and have gone through the orders of authorities below. A short dispute for our consideration is as to when the transaction of transfer of asset was completed and if the assessee invested the capital gain within six months from the date of transfer of capital asset. The Assessing Officer disallowed the exemption under section 54EC by taking his view that investment in Long Term Specified Asset should be made within six month from the date of transfer of asset. The Assessing Officer treated the date of transfer as 8.10.2012 instead of 16.01.2013 as claimed by the assessee. The ld CIT(A) affirmed the action of assessing by taking the view that the transfer deed of the asset is in Guajarati and not readable and thus assessee has not proved 6. We have perused the copy of conveyance deed/sale deed on transfer of asset with its true English translation. Perusal of registration receipt of the transfer document shows that initial document was presented for registration vide Document No. 39, Receipt No. 2012322000055 dated 8.10.2012. The assessee paid requisite stamp duty on the instrument. Thus, the document of transfer was initially executed on 8.10.2012. Further a careful perusal of this 5 Mum 2018-Chandravadan C. Pithawalla sale-deed shows that registration of the sale deed was completed only on 16.01.2013.
Section 23 of the Registration Act prescribe that the document can be presented for its registration within four month of its execution. The document was initially executed and presented for registration on 08.10.2012, however, it was not registered. It was again presented again on 16.01.2013 and it was registered on the same date. Section 54 of Transfer of Property Act (TP Act) defines „Sale of Immovable‟. As per section 54 of TP Act „Sale‟ is transfer of ownership in exchange for a price paid or promise or part paid and part promise. Such transfer, in case of tangible immovable property of the value of more than Rs. 100/- can be made only by way of registered instrument.
Thus, in view of the above provisions of Registration Act and TP Act, the transfer of immoveable property is complete only when the registration of sale is completed. Though, as per section 47 of Registration Act it may relate back from the date of execution of document. In the present case, initially the document was executed on 8.10.2012, though; it was ultimately registered on 16.01.2013. The date of registration is not disputed by lower authorities. The lower authority denied the claim of assessee on the ground that the document was initially executed on 8.10.2012. No investigation was conducted by the assessing officer to disbelieve the contention of the assessee that finally transaction of transfer of asset was completed only on 16.01.2013.
6 Mum 2018-Chandravadan C. Pithawalla 9. Special Bench of Ahmedabad Tribunal in Alka Ben Patel Vs ITO [2014] 43 taxmann.com 333 (Ahd - Trib) (SB) held that as per the terms of General Clauses Act, 1897, period of six month mentioned in section 54EC has to be regarded as six British calendar months. The Special Bench referred and relied on the decision of Allahabad High Court in the case of CIT Vs Munnalal Shrikishan [1987] 167 ITR 415 (emphasis added by us).
Hon‟ble Bombay High Court in Amarchand J Aggarwal Vs UOI (supra) held that undoubtedly, section 47 of the Registration Act provides that the document shall operate from the time of its execution once it is registered by the registering authority, but it does not say when the sale would be deemed to be completed; it only permits a document to operate from a certain date which may be earlier than the date when it was registered. Further, it is not possible to hold that the transfer is complete on the date of execution and the registration only makes the sale complete. There is no distinction between the transfer of title and the completion of sale; and the title passes only when the document is registered under the Registration Act. The mere fact that such transfer operates from the date of execution is not sufficient to conclude that the title itself passes on the date of execution. Consequently, the transfer in the instant case could not be deemed to have been expected on the date of execution of the document.
7 Mum 2018-Chandravadan C. Pithawalla 11. As we have already held that the sale of the immovable property is complete only on registration of transfer deed as mandated under section 54 of the Transfer of Property Act. There is no dispute that the assessee has invested Rs. 25,00,000/- on 31.05.2013 and Rs. 25,00,000/- on 31.07.2013. Therefore, in view of the aforesaid discussion we are in agreement with the contention of the ld. AR for the assessee that the assessee invested the LTCG in NHAI bond within six month of transfer of asset and is eligible for exemption under section 54EC. Thus, the issue framed by us in para 5(supra) is allowed in favour of the assessee. Therefore, we direct the Assessing Officer to allow the exemption of LTCG to the assessee, under section 54EC of the Act.
In the result, appeal of the assessee is allowed. Order pronounced in the open court on 27-07-2020.