MURUGESAN BALAKRISHNAN,CHENNAI vs. ITO NON CORPORATE WARD 8(5), CHENNAI

Shri Murugesan Balakrishnan, the assessee filed return claiming Rs.1,28,48,750/- as an exempt income. During the course of the assessment, the assessee claimed that his father inherited 3 acres 68 cents of land. After his death, the assessee’s mother settled the property among the assessee, his brothers and one sister, of which 93 cents was settled on him. He has entered into an agreement of sale for the portion of the land settled on him i.e., 93 cents with M/s. Ashok Nandavanam Properties Pvt. Ltd., for Rs.6,51,00,000/- which was registered vide Doc.No.16099/2013 dated 25.11.2013 and No.11541/2014 and he received Rs.4,92,50,000/- till the end of the year relevant to this assessment year, which was distributed to the assessee, his wife, daughter and son at Rs.123.49 lakhs, each. The assessee pleaded that being a HUF property, his share of sale consideration received at Rs.123.49 lakhs is claimed as an exempt income U/s.47(1). The Assessing Officer found from the registered sale agreement dated 25.11.2013, the GPA registered in Doc.No.11541/2014 dated 10.07.2014 and from the copy of patta and chitta adangal issued by the Tahsildhar of Alandur Taluk, etc that the assessee is an absolute owner of the land and it was held in his :- 3 -: individual capacity. Therefore, the Assessing Officer held that the impugned transfer is not a total or partial partition of HUF, it is a sale on the first instance to an outsider. He has also held that the assessee has not let any evidence on record to show that Shri Murugesan Balakrishnan, HUF ever existed with the assessee as kartha. Neither the sale agreement nor the General Power of Attorney (GPA) was executed with the status of HUF. Further, the assessee’s claim of exemption in return of income in the status of individual itself proved that there is no HUF in the assessee’s name and accordingly the Assessing Officer held that the impugned property is assessee’s individual property and refused the exemption claim U/s.47(1). Thereafter, the assessee pleaded to assess the receipt of actual consideration of Rs.4,92,50,000/- alone instead of the agreed consideration of Rs.6.51 crore. In this regard, the Assessing Officer examined this issue with M/s. Ashok Nandavanam Properties Pvt. Ltd., and found from their accounts, etc., that the sale consideration shown is Rs.6.51 crores, the assessee handed over possession and received Rs.4,92,50,000/- and the balance sum of Rs.2,51,12,290/- is shown as a liability payable by them to the assessee. Therefore, the Assessing Officer brought to tax the sale consideration of Rs.6.5 crores. The :- 4 -:

The ld.AR submitted that the ld.CIT(A) failed to consider that the transaction was by way of agreement for sale and the assessee has not given PoA for sale of entire extent of land but only to the extent for which the possession was handed over or the consideration received. He invited our attention to the clause 9 in page 5 of the copy of agreement for sale to prove that “no physical possession of schedule property is handed over”. Therefore, the ld.AR pleaded that sale can be considered to the extent of receipt of sale consideration only. In support, the ld.AR invited our attention to the Paper-book wherein the summary of sale deed executed for land given on PoA and the statement of account of the buyer, agreement of sale entered with the buyer, consideration received in the form of land, Power of Attorney executed in the name of the buyer, proof for investment made in residential property, the particulars of Power of Attorney document No. & date, total extent of land conveyed as per Power of Attorney document, Value conveyed in Power of Attorney document as per sale agreement, Sale deed document no. executed by power agent, value as per sale deed, value as per sale deed for Balakrishnan were placed and submitted that the ld.CIT(A) also grossly erred in not allowing the claim made U/s.54EC and 54F and erred in not adopting the correct :- 6 -:

We heard the rival submissions and gone through the material. It is clear from the above, the sale deed were executed on various dates from 09.06.2014 to 21.01.2015. From the material furnished by the assessee, it is seen that the Assessing Officer has not examined various aspects of the taxation in its proper perspective. Therefore, we deem it fit to remit this issue back to the Assessing Officer for a fresh examination. As held by the Hon’ble Apex Court in the case of CIT vs. Balbir Singh Maini, 398 ITR 531 (SC), the capital gains arising from the sale of immovable property can be assessed in the year in which the registration of the property is executed. Therefore, we direct the Assessing Officer to examine afresh and assess the capital gains in the year in which the registration was executed. The assessee shall lay all materials in support of his contention before the Assessing Officer and comply with the requirements of the Assessing Officer in accordance with law. The Assessing Officer is also free to conduct appropriate enquiry as deemed fit, however, he shall furnish :- 7 -: due opportunity to the assessee on the materials etc., to be used against the assessee and on due consideration of the assessee’s clarification / explanation shall pass the order in accordance with law.

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes.