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Income Tax Appellate Tribunal, DELHI BENCH ‘A’ : NEW DELHI
Before: SHRI G.D. AGRAWAL & SHRI KULDIP SINGH
Order
: 28.02.2017 O R D E R
PER KULDIP SINGH, JUDICIAL MEMBER :
The Appellant, Shri Rakesh Kumar Goel (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 13.02.2015 passed by the Commissioner of Income-tax (Appeals), Muzaffarnagar qua the assessment year 2011-12 on the grounds inter alia that :-
“1. That the assessee denies his liability to be assessed at an income of Rs.58,01,061/-.
2. That having regard to the facts and circumstances of the case the Ld. CIT (A) has erred in law and on facts in treating long term capital gains as short term capital gains of sale of leased hold plot at Noida.
3. That having regard to the facts and circumstances of the case the Ld. CIT (A) has erred in law and on facts by not allowing the exemption u/s 54F claimed by the assessee.
4. That having regard to the facts and circumstances of the case the Ld. CIT (A) has erred in law and on facts in not adjudicating the legal issue raised on account of section 50C.
5. That having regard to the facts and circumstances of the case the Ld. CIT (A) has erred in law and on facts by not allowing the benefit of Rs.30,00,000/- claimed by the assessee which was the part of acquisition cost.
Briefly stated facts of this case are : assessee’s return of income for Assessment Year 2011-12 at Rs.3,69,000/- was subjected to scrutiny and assessee was called upon to show-cause as to how the assessee has shown Long Term Capital Gain (LTCG) at Rs.32,50,549/- and has claimed deduction u/s 54F at Rs.25,82,936/-. It is noticed by Assessing Officer that the assessee has sold plot at Cassia Noida Estate to Anil Kumar Agarwal for a sale consideration of Rs.40,00,000/- but as per final settlement deed, the assessee has paid back Rs.30,00,000/- in order to settle pending matters and he was called upon to explain the reason for payment of Rs.30,00,000/- to Anil Kumar Agarwal. Assessee claimed exemption u/s 54F of Rs.25,82,936/- on purchase of two house properties. Assessee submitted that the investment for the purpose to avail deduction u/s 54F of Rs.85,00,000/- which was made in residential property i.e. for a flat in Indirapuram of Rs.43,27,000/- through cheques already debited to the bank account of the assessee and invested in residential house at Laxman Vihar for Rs.41,73,000/- for which he submitted the details before AO.
Assessee has made a claim of payment of Rs.30,00,000/- to Anil Kumar Agarwal to resolve the issue as Anil Kumar Agarwal made payment of Rs.12,00,000/- through oral agreement to purchase this plot and filed settlement letter in support of its claim.
However, AO came to the conclusion that the assessee has failed to furnish any document or evidence for claim of Rs.18,00,000/- paid on account of Dalali, possession and dispute settlement charges.
AO has also not accepted the contention of the assessee that the assessee was required to credit of Rs.30,00,000/- as payment made to Anil Kumar Agarwal because nowhere in the return of income nor in the computation of income the assessee has claimed Rs.12,00,000/- paid by Anil Kumar Agarwal on behalf of the assessee. Assessee also failed to bring on record any evidence to prove that Rs.18,00,000/- was given to Anil Kumar Agarwal on account of dispute money and thereby disallowed the claim of the assessee to the tune of Rs.18,00,000/-. AO also rejected the claim of the assessee as to claiming deduction u/s 54F of the Act and treated the same as Short Term Capital Gain (STGF) and assessed the total income at Rs.58,01,061/-.
Assessee carried the matter by way of an appeal before the ld. CIT (A) who has dismissed the appeal. Feeling aggrieved, the assessee has come up before the Tribunal by way of filing the present appeal.
We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case.
Undisputedly, the assessee has claimed LTCG of Rs.32,50,549/- qua the plot (PCH0169553) purchased from Greater Noida Development Authority (Noida Authority) allotted to him during Financial Year 204-05 and sold this plot on 16.06.2010.
Assessee also brought on record account statement issued by Noida Authority as Annexure ‘A’ to prove the date of allotment of the plot (PCH0169553) as 16.06.2004. However, AO treated the LTCG claimed by the assessee as STCG on the ground that the assessee took possession of the plot on 29.06.2009.
In the backdrop of the aforesaid undisputed facts and circumstances of the case and argument addressed by the parties, the first question arises for determination in this case is :-
“as to whether for the purpose of section 54 of the Act, the date of agreement to purchase is to be taken as date of purchase instead of date of registration of the sale deed?”
Undisputedly, as per letter dated 03.04.2007 issued by Noida Authority to the assessee, available at page 14 of the Paper Book, assessee paid an amount of Rs.16,83,120/- during the period 16.06.2004 to 17.05.2006 as against the total amount due of Rs.28,14,813.76 in compliance to the Transfer Letter dated 26.06.2004, available at page 13 of the Paper Book, which inter alia shows that the same has been issued pursuant to the application dated 22.06.2004 for allotment of the plot in question; that plot no.PCH0169553, measuring 750 sq.yds. has been allotted subject to the conditions contained therein.
Transfer letter (supra) apparently shows that the plot in question has been allotted to the assessee as per terms and conditions contained therein and in compliance thereto, the lease deed dated 29.06.2009 was executed in favour of the assessee by the Noida Authority, available at page 47 to 54 of the Paper Book.
It is settled principle of law that it is the date of allotment from which holding period for the purpose of computing the LTCG is to be computed and not the date of registration of the conveyance/ registration deed. In the instant case, assessee paid substantial amount of sale consideration pursuant to the Transfer Letter dated 26.06.2004 (supra), though the conveyance deed was executed on 29.06.2009.
We are of the considered view that in these circumstances, holding period for computing the gain would relate back to the date of Transfer Letter date i.e. 26.06.2006 from which date the assessee started making payment of installment towards sale consideration and not the date of execution of the sale deed i.e. 29.06.2009, so the lower Revenue authorities erred in computing the gain arising out of property in question to the assessee from 29.06.2009, the date of executing the conveyance deed. Reliance in this regard is placed on the following judgments :-
(i) CIT vs. R.L. Sood – 245 ITR 727 (Delhi) (ii) CIT vs. S.R. Jeyashanker – 373 ITR 120 (Mad.) (iii) CIT vs. K. Ramakrishan – 363 ITR 59 (Delhi) (iv) Mrs. Madhu Kaul vs. CIT, Chandigarh – (2014) 43 taxmann.com 417 (P&H)
Not only this, Circular No.471 dated 15.10.1986 is also categoric enough to explain the controversy at hand that in such like cases, allottee gets title of the property on the date of issuance of the allotment letter and the payment of installment is only a follow up action and taking the delivery of the possession is only a formality. The circular no.471 dated 15.10.1986 has further been explained in circular no.672 dated 16.12.1993 in cases of construction for the purpose of section 54 and 54F of the Act. So, we are of the considered view that the assessee is entitled for deduction on account of LTCG in this case.
Now, the next question arises for determination in this case is :-
“as to whether AO/CIT (A) have erred in disallowing the benefit of Rs.30,00,000/- claimed by the assessee being part of acquisition cost?”
Assessee claimed to have paid Rs.18,00,000/- as dalali, possession and dispute in computation of the income. On query raised by the AO, the assessee explained that it received Rs.12,00,000/- from Anil Kumar Agarwal and paid him Rs.30,00,000/- and as such, the difference of Rs.18,00,000/- was on account of dalali, possession and dispute settlement.
So far as amount of Rs.12,00,000/- claimed to have been allegedly paid by Anil Kumar Agarwal on behalf of the assessee is concerned, first of all, there is not an iota of evidence in the shape of some agreement or receipt on record nor there is any payment to the tune of Rs.12,00,000/- paid by Anil Kumar Agarwal on behalf of the assessee to Noida Authority as no such payment is reflected in the payment of account furnished by Noida Authority, available at page 14 of the Paper Book. So, since the assessee has failed to prove that Anil Kumar Agarwal has ever paid Rs.12,00,000/- against the land in question to Noida Authority nor any such claim has been filed by the assessee in the return of income or computation the benefit thereof has rightly not been extended by the Revenue authorities to the assessee.
16. So far as amount of Rs.18,00,000/- claimed to have been given by the assessee to Anil Kumar Agarwal on account of dalali, possession and on account of disputed money is concerned, again except affidavit filed by Anil Kumar Agarwal, there is not an iota of evidence either in the shape of some agreement or receipt or copy of some court case or any of compromise arrived at between the assessee and Anil Kumar Agarwal in the presence of some respectable nor it is mentioned in the affidavit itself that the amount is being paid on account of dalali or some dispute between the parties. Moreover, when the property in question has been directly allotted in the name of the assessee by the Noida Authority, the question of having any dispute regarding the same with Anil Kumar Agarwal or making payment of dalali does not arise. So, AO has rightly disallowed the amount of Rs.18,00,000/- to the assessee and affirmed by ld. CIT (A).
In view of what has been discussed above, the present appeal filed by the assessee is party allowed. Order pronounced in open court on this 28th day of February, 2017.