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Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH
Before: Shri P.M. Jagtap & Shri Siddhartha Nautiyal
आदेश/ORDER
PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:-
These two appeals, one filed by the assessee being ITA No.2383/Ahd/2016 and other filed by the Revenue being ITA No. 2485/Ahd/2016, are cross appeals which are directed against the order of learned Commissioner of Income-Tax (Appeals)-3, Ahmedabad (“CIT(A)” in short) dated 20.07.2016 passed for Assessment Year 2012-13.
The assessee has raised the following grounds of appeal:
“1. On the facts and circumstances of the case the LD CIT (A) -III Ahmedabad has erred in law and on facts in deciding that the long term capital gain of Rs. 2973200/- is taxable in the hands of the appellant for the Assessment year 2012-13.
On the facts and circumstances of the case The LD CIT (A)-III Ahmedabad has erred in law and on facts by taking 1/4 th of jantri value of the land as sale consideration in the hands of appellant for arriving at LTCG capital gain of Rs.2973200/- for AY 2012-13 3. The appellant craves to add , alter, change , modify , delete any of the grounds of appeal either before or during the course of the appellate proceedings.”
The Department has raised the following grounds of appeal:
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“1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.5,46,43,600/- out of total addition of Rs.5,76,16,800/- made on account long term capital gain. 1.1 The Ld. CIT(A) has erred in law and on facts in not appreciating that the case does not fall under the criteria mentioned in Rule 46A of the I. T. Rule. 2. On the facts and circumstances of the case, the Ld. Commissioner of Income tax (A) ought to have upheld the order of the Assessing Officer. 3. It is, therefore, prayed that the order of the Ld. Commissioner of Income tax (A) may be set-aside and that of the Assessing Officer be restored.”
The brief facts of the case are that the assessee filed return of income for assessment year 2012-13 on 29-09-2012 declaring total income of � 8,90,060/-. During the course of assessment, the AO observed that the assessee had sold the immovable property along with other co-owners for a total consideration of � 5,11,50,000/-as per sale deed dated 29-07-2011 (valuation for purpose of stamp duty � 6,11,49,300/-) but the capital gain arising from this sale was not offered to tax. The AO held that in absence of any agreement or any mutual understanding about the share of each beneficiary, assessee’s share in the above sale consideration was taken as 25% amounting to � 1,44,04,200/-. Further, since the assessee has not furnished any information in respect of other three co-owners, the remaining profit of other three persons of � 4,32,12,600/- was assessed in the hands of the assessee on protective basis. In appeal, Ld. CIT(Appeals) observed that Mr Ganapatbhai Patel (father of the assessee), was the original owner of the agricultural land who entered into a sale transaction through Banakhat
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(Agreement to Sell) dated 15-07-2000 with the Shri Hamad Ali. Further, Mr Ganapatbhai Patel also received consideration amounting to Rs. 53,26,000/- before his death on 19-10-2010. Shri Hamad Alisubsequently agreed to sell the property to Mr Gopal Sutaria/ Mr. Gopesh Sutaria. The final registered sale deed was executed on 29-07-2011 in assessment year 2012-13 wherein the legal heirs of Mr Ganapatbhai Patel(the assessee was one of the legal heirs) has signed the sale deed as the legal heirs/ successors of Mr Ganapatbhai Patel.Before Ld. CIT(Appeals), the assessee argued that through the Banakhat dated 15-07-2000, the father of the assessee had received the sale proceeds during his lifetime, and at the time of registration, the assessee (along-with other co-owners) only completed the legal formalities and no consideration towards sale of property was received by the assessee (or any of the co-owners). The Ld. CIT(Appeals) however observed that as per information on record, sale transaction has not been offered to tax by Mr Ganapatbhai Patel in assessment year 2001-02 when the Banakhat was entered into, and therefore the argument of the assessee to tax transactions in assessment year 2001-02 was rejected. Ld. CIT(Appeals) further observed that in the registered sale deed dated 29-07-2011, there was no mention of the terms and conditions of Banakhat dated 15-07-2000. Therefore, the sale of impugned property actually took place in assessment year 2012-13 and until then the land continued to be in the name of Mr. Ganpatbhai Patel in the land records. Accordingly, the assessee was liable for capital gains tax in respect of the sale of aforesaid property during the year consideration, as successors/ legal heirs of Mr. Ganpatbhai Patel.On the quantum of capital gains to be taxed in the hands of assessee, the Ld. CIT(Appeals) gave substantial relief to the assessee and deleted the addition
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made in the hands of assessee on protective basis and restricted the addition to only � 29,73,200/- (being 1/4th share of � 1,18,92.800/- stated to be received by the co-owners). Both the assessee and the revenue are in appeal before us against the aforesaid order of the Ld. CIT(Appeals).
We note that the ITAT Ahmedabad in the case of assessee’s co- owner’s appeal (Ramilaben Ganpatbhai Patel) against the Ld. CIT(Appeals) order in respect of the capital gains arising out of sale of the very same property which is for consideration before us, in the case of Ramilaben Ganpatbhai Patel in ITA number 2968/Ahd/2017 for assessment year 2012-13 has held that it cannot be said that there was no consideration received by the assessee / other co-owners on transfer of property by the sale deed dated 28-07-2011, and accordingly held that the co-owner of the assessee Mrs. Ramilaben Ganpatbhai Patel was liable to capital gains tax at the time when the sale deed was registered on 28-07-2011 in respect of her proportionate share of property. On the computation of capital gains arising from transfer of shares of the property, the ITAT in the above order relied upon and approved the quantum of capital gains computed by Ld. CIT(Appeals) vide order dated 27-07-2016 in the assessee’s case i.e. in Mrs Arunaben Patel’s case for the impugned assessment year (notably it is the same order against which appeal has been filed before us). Accordingly, in light of the judgement referred to above, since the facts in both the cases are identical, we respectfully rely on the above judgement to hold that the assessee is liable to capital gains tax for her 1/4th share in the property in the year when the registered sale deed was executed on 28-07-2011. For the sake of reference, the observations made by ITAT are reproduced below:
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“8. As regards the assessee’s appeal, the main contention raised by the learned Counsel for the assessee is that no consideration whatsoever was received by the assessee on transfer of her share in the immovable property in question. He has contended that Shri Ganpatbhai K. Patel, father of the assessee, was the original owner of the property and he had already entered into a sale transaction through banakhat dated 15.07.2000 with one Shri Hamad Ali before his death on 19.10.2010. He submitted that Shri HamadAli further agreed to sell the property to Shri Gopal G. Sutaria / Gopesh G. Sutaria; and, the assessee and other co-owners being legal heir of Shri Ganpatbhai K. Patel executed the sale deed on behalf of their late father merely to complete the transaction. He has contended that the assessee thus did not receive any consideration on execution of sale deed dated 28.07.2011 and she therefore cannot be held liable for any tax on capital gain arising from the said sale. We are unable to accept this contention of the learned Counsel for the assessee. It is observed that no capital gain was offered by Shri Ganpatbhai K. Patel on the sale transaction claimed to be entered through banakhat in the year 2000. As noted by the learned CIT(A) in her impugned order, there was no mention relating to any terms and conditions of banakhat stated to be entered into on 15.07.2000 in the sale deed executed on 29.07.2011. There is also nothing on record to show that the property in question was transferred by Shri Ganpatbhai K. Patel to Shri Hamad Ali on 15.07.2000 within the definition of Section 2(47) of the Act. The said property is actually transferred within the meaning of Section 2(47) of the Act only on 29.07.2011 when the sale deed was executed and registered; and, as clearly mentioned in the sale deed, the transferors were the assessee and other three co-owners being the legal heir of Shri Ganpatbhai K. Patel. Shri Hamad Ali had joined the said sale deed only as confirming party and received certain amount out of total consideration as stated therein. As regards the contention of the learned Counsel for the assessee that no consideration was received by the assessee on sale of her share in the immovable property, it is observed that a sum of Rs.53,26,000/- was already received by Shri Ganpatbhai K. Patel in the past from Shri Hamad Ali and the said amount was adjusted against the sale consideration agreed between the parties as per sale deed dated 28.07.2011. As specifically mentioned in Clause 12 of the sale deed, the party of the second part i.e. assessee and other co-owners being sellers had agreed to give credit for the said amount as the amount paid up by the party of the first part i.e. purchaser on the execution of sale deed. In our opinion,
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it therefore cannot be said that there was no consideration received by the assessee and the other co-owners on transfer of property vide sale deed dated 28.07.2011. 9. Insofar as the computation of capital gain arising from transfer of her share in the property is concerned, it is observed that similar issue was involved in the case of other co-owner Smt Arunaben K. Patel and the learned CIT(A) vide appellate order dated 20.07.2016 decided the same vide paragraph Nos. 5.2 and 5.3 as under:-
“5.2 As it is decided that appellant in legally taxable for 1/4th of the sale proceeds, the question now to be decided as to what was the total sale proceeds received by the all heirs of Shri Ganpatbhai K. Patel (deceased).
The factual position about the total sale consideration as submitted by appellant is as under:-
Sr. Amount Particulars and name of the party receiving the No. consideration. 1 3,26,000 Received in cash by Father of party of Second Part, paid by party of the Third part at the time of Banakhat 2 50,00,000 Received in cash by Father of party of Second Part, paid by party of the Third part at the time of Banakhat 3 1,00,000 Received in cash at the time of Agreement by party of the Third part, paid by party of the First part 4 2,28,24,000 Paid by Ch. No.733482 of SBI dated 06.04.2011 as premium to State Government by part of First part 5 1,14,50,000 Paid by P.O. No.999356 of State Bank of India dated 28.07.2011 to party of Third part, by party of the First part 6 1,14,50,000 Paid by P.O. No.999358 of State Bank of India dated 28.07.2011 to party of Third part, by party of the First part Tota 5,11,50,000 l
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The legal heirs have received the sale proceeds at Sr. No.1 to 3 above totaling of Rs.54,26,000/- and at Sr. No.4 has gone to Govt. as premium for conversion of Navi Sharat to Purani Sharat. In fact this was also one of the conditions in original banakhat that asset has to be converted into Purani Sherat before the final sale deed is executed. The amounts mentioned at Sr. No.5 & 6 have been received by 3rd party to sale agreement i.e. Shri Hamad Ali. Perusal of bank account does indicate that there is neither immediate cash withdrawal from the bank account of Hamad Ali nor there is any cash deposit in bank account of appellant. Therefore, the appellant is to be taxed for amounts other than mentioned at Sr. No.4 to 6 above.
5.3 Shri Pankaj K. Shah, AR vehemently argued that the LTCG should be taxed at Rs.13,56,500/- (Rs.54,26,000 / 4) as there is no evidence on record by the Department that any sale consideration over and above Rs.54,26,000/- has been received by the heirs in this case. As per para 15 of the assessment order, the issue was referred to DVO and based on the computation contained in para 16 of assessment order the LTCG is computed at Rs.5,76,16,800/-. If the total amount of Sr.No.4 to 6 above is deducted (Rs.4,57,24,000/- as per evidence on record) from the computation of LTCG based on DVO, then the four heirs have to be taxed at Rs.1,18,92,800/-. The difference of opinion between appellant and the AO is because of jantri value of Rs.6,00,49,300/- has been taken by the AO as total sale consideration as per specific provisions of section 50C of IT Act, 1961. I also don't find any objection filed by the appellant against jantri value during assessment proceedings. Hence recourse to the provisions of Sec.50C by the AO is found to be correct. As the appellant is one of the four heirs of Ganpatbhai K. Patel, it is decided that the appellant has earned taxable Long Term Capital Gain of Rs.29,73,200/- (1,18,92,800 / 4) and the same is confirmed. The appellant gets relief of Rs.5,46,43,600/-. The ground No.2/additional ground is partly allowed.”
It is observed that even though the learned CIT(A) in her impugned order passed in assessee’s case has duly taken note of the order passed in the case of Smt. Arunaben K. Patel dated 20.07.2016 to uphold the order of the Assessing Officer in assessing the capital gain arising on transfer of her share in the property on substantive basis, she completely overlooked
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quantification of capital gain as made by her counterpart in the case of Smt. Arunaben K. Patel. After going through the relevant observations/findings recorded by the learned CIT(A) in the case of Smt. Arunaben K. Patel in paragraph Nos. 5.2 and 5.3 of the appellate order dated 20.07.2016, we find that the computation of Long Term Capital Gain arising from the transfer of property by the assessee and other co-owners has been done correctly by him after taking into consideration all the relevant aspects including the valuation adopted under Section 50C of the Act, break-up of consideration of the property as paid to Shri Hamad Ali as the confirming party etc.. We, therefore, modify the impugned order of the learned CIT(A) on this issue and direct the Assessing Officer to recompute the capital gain arising from the transfer of her share of property as assessable in the hands of the assessee as computed by the learned CIT(A) in the case of Smt. Arunaben K. Patel, other co-owner of the property. 11. In the result, the appeal of the Revenue is dismissed, while the appeal of the assessee is partly allowed.”
Notably, in this case, it is important to point out that both the ITAT in the afore-mentioned case, as well as Ld. CIT(Appeals) have observed that from the records, that there is no mention relating to any terms and condition of Banakhat stated to be entered into on 15-07-2000 in the registered sale deed executed on 29-07-2011. No capital gains tax was offered by Mr. Ganpatbhai Patel on the sale transaction claimed to be entered through Banakhat in the year 2000. The father of the assessee, Mr. Ganpatbhai Patel admittedly received a sum of Rs. 53,26,000/- in cash, but there is nothing on record to show that the possession in the afore-said was transferred to Mr. Hamad Ali pursuant to entering of Banakhat in 2000. Further, as noted above, the terms and conditions of Banakhat entered into in the year 2000 find no mention in the subsequent registered sale deed entered during the year under consideration. The final registered sale deed was executed on 28- 07-2011. Recently the Hon'ble Supreme Court in the case of PCIT v. Chuni
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Lal Bhagat[2019] 103 taxmann.com 379 (SC) held that where High Court upheld Tribunal's order holding that in absence of registration of Joint Development Agreement (JDA) entered into by assessee with a builder, provisions of section 2(47)(v) would not apply, SLP filed against said decision was to be dismissed. The facts of the case were that assessee was owner of a piece of land. During relevant year, assessee entered into Joint Development Agreement (JDA) of said land with a developer. In part performance of contract, assessee handed over possession of immovable property to developer. Since JDA was signed during assessment year in question, Assessing Officer opined that there was transfer within meaning of section 2(47). The Tribunal, however noted that possession delivered, if at all, was as a licencee for development of property and not in capacity of a transferee. The Tribunal further opined that in absence of registration of JDA, agreement did not fall under section 53A of Transfer of PropertyAct, 1882 and, consequently, section 2(47)(v) did not apply. The High Court upheld order passed by Tribunal, which was also confirmed by the Hon'ble Supreme Court while dismissing the SLP filed against the aforesaid order. Again, the Hon'ble Supreme Court in the case of Sadiq Sheikh[2019] 106 taxmann.com 334 (SC) held that where High Court upheld Tribunal's order holding that provisions of section 2(47) would not apply to transfer of flats as during relevant year merely an agreement to sell flats which were yet to be constructed, had been executed and, moreover, possession had not been delivered, SLP filed against said order was to be dismissed. In the recent case of Shelter Project Ltd.[2022] 137 taxmann.com 192 (Calcutta), the Hon'ble Calcutta High Court held that where assessee owned a property and during assessment year 2009-10 it
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under an unregistered agreement received certain payment from developer of above property and Tribunal taking note of section 53A of Transfer of PropertyAct, 1882 deleted addition of payment received by assessee, in light of law laid down by Supreme Court in case of CIT v. Balbir Singh Maini [2017] 398 ITR 531to effect that if development agreement is not registered it shall have no effect in law for purposes of section 53A which bodily stood incorporated in section 2(47)(v) of the Act. Now, when we apply the above Rulings to the facts of the instant case, it is seen that when the father of the assessee entered into Banakhat with Mr. Hammad Ali in the year 2000, and received certain amount in cash, no amount was offered to tax as capital gains tax. Secondly, there is nothing on record to show that effective possession was transferred to Mr. Hammad Ali pursuant to entering of Banakhat in 2000. Thirdly, the fact that terms of conditions of Banakhat in 2000 do not find any mention in the registered sale deed dated 28.07.2011 points to the state of affairs that the terms of the registered sale deed were not governed by the terms of the Banakhat entered into in the year 2000 and operated independently of it. Fourth, the property remained in the name of Mr. Ganpathbai Patel till transfer took place pursuant to registered sale deed dated 28.07.2011. Therefore, in our considered view, in the light of above Rulings as applied to the assessee’s set of facts, the assessee (as legal heir of the said property) is liable to capital gains tax during the year under consideration. Accordingly, we are of the considered view that Ld. CIT(Appeals) has not erred in law and in facts in holding that the assessee is liable to pay capital gains tax on her 1/4th share in the property during the year under consideration. In the result, the order of ld. CIT(A) is upheld.
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In the result, both the appeals of the assessee and Department are dismissed.
Order pronounced in the open court on 20-07-2022
Sd/- Sd/- (P.M. JAGTAP) (SIDDHARTHA NAUTIYAL) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 20/07/2022 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से,
उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद