NURUNNISA MUSA ALI SHAIKH,MUMBAI vs. ITO 30(2)(4),

As per definition of Transfer of Capital Assets, two condition should be satisfied for consideration transfer of assets i.e. A) Sale agreement should be made.

Briefly stated facts are that the AO noted the facts that as per MOU dated 02.10.2008, the assessee agreed for sale of property i.e. piece and parcel of land with structure therein known as Acchu Manzil. The address of the property is Survey No 32, Hissa No 321/C/1 of village Kurar, Taluka Borivali Mumbai. According to AO as per MOU, the assessee agreed for a total sale consideration of ₹ 75 lacs, out of which ₹ 30 lacs was to be paid till the date of execution of conveyance deed and the remaining was to be adjusted towards the cost of four flats to be provided to the assessee and in case flats are impracticable to be provided to the assessee, the remaining balance amount shall be provided to the assessee in lieu of the said flats. The AO further noticed in the submissions of the assessee, wherein the assessee contended that as per conveyance deed dated 15.07.2009, the assessee has received a sum of ₹ 30 lacs till the date and hence, the property has not been transferred yet and is under litigation. According to AO, the assessee has received a sale consideration of ₹ 75 lacs as per MOU and therefore, he treated the entire sale consideration as capital gains and taxed accordingly by observing in Para 4 as under:-

We have heard rival contentions and gone through the facts and circumstances of the case. Before us, the learned Counsel for the assessee filed copy of conveyance deed dated 15.07.2009, wherein it is categorically mentioned that there are three co-owners of this property namely Mrs. Nurunnisa Musa Ali Shaikh, Mr. Aslam Musa Ali Shaikh, Mr. Mohammed Rafi Shaikh. As per this conveyance deed, the assessee vide MOU dated 02.10.2008 agreed for sale of this property for a sum of ₹ 30 lacs out of which ₹ 20 lacs was received and balanced 10 lacs was to be paid on or before the execution of the said agreement. This conveyance deed is enclosed at assessee’s paper book at pages 1-39. Further, the learned Counsel for the assessee also drew our attention to the memorandum of understanding dated 02.10.2008 between the three co-owners and the purchaser namely M/s Ghanshyam Enterprises, Mr. Kamlesh Rupa Gami and Mr. Pusik H. Thakker. Now, the learned Counsel for the assessee drew our attention to the pages 12 to 15 of assessee’s paper book, wherein it is contended that this property is under litigation and till date only ₹ 30 lacs have been received as per conveyance deed and not 75 lacs as noted in the MOU. It was contended that MOU is not signed by the vendor and as per MOU there are four owners instead of three mentioned in the Revenue record of the property as per 7/12 extracts. It was also contended that the facts are not clear, transactions are not complete and the property is under litigation as is evidence filed before the Tribunal in assessee’s paper book. The learned Counsel for the assessee in an eventuality argued that the sale consideration should have been taken at ₹ 30 lacs and that also one third 6 ITAs No. 6774/Mum/2016 should have been assessed in the hands of the assessee. The learned Counsel stated that this property was acquired by assessee’s legal heirs in 1973 as per property record i.e. 7/12 extracts. Since, this property was acquired prior to 01.04.1981, the indexation cost of acquisition should also be allowed. According to the learned Counsel for the assessee, neither the AO nor CIT(A) have understood the facts, hence he requested that this matter be restored back to the file of the AO to find out (i) what is the status of litigation in Bombay City Civil Court at Mumbai in view of the copy of petition filed before us in Civil Suit No. 350 of 2013. (ii) In case, the deal is completed the assessee’s share should be assessed at 1/3rd only. (iii) Another point made by assessee is that this property is acquired prior to 1981, the indexation cost should be calculated appropriately after taking evidence from the assessee. When these facts were confronted to the learned Sr. Departmental Representative, he argued that the matter should go back to the file of the AO to ascertain true facts. In view of the above facts and circumstances, we restore this issue of long term capital gain to the file of the AO, who will ascertain the correct facts and then will decide the issue afresh. The appeal of assessee is allowed for statistical purposes.

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