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Income Tax Appellate Tribunal, “C” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
The Revenue has filed this appeal against the order of Commissioner of Income Tax (Appeals)-16, Chennai in 16/2007-08 dated 22.09.2016 .
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Shri I.A. Zafarullah , the assessee, an NRI , his daughter Mrs Hamsa Parvin Ahamed and son-in-law Shri S.Imtiaz Ahmed purchased contiguous land of a total extent of 46.93 cents at Neelangarai Village, Tambaram Taluk and claimed to have sold it by an oral agreement with Wavoo Magdoom Realtors (purchaser) for a total consideration of Rs. 40 lakhs. Out of which, the assessee's share is Rs.20 lakhs. On the receipt of the entire sale consideration on 19.10.2005, the assessee along with the other two co-owners claimed to have handed over the possession to the purchaser on 19.10.2005 itself. However, the sale deed was executed on 07.07.2006 .The guide lines value was at Rs.815 per Sq ft which worked out to Rs. 1,66,14,721/-. When the matter of valuation was referred to the collector u/s. 47A of the Indian Stamp Act and its proceedings were pending adjudication, the Government of Tamilnadu introduced a Samadhan scheme and the buyer availed the said scheme and therefore the registration took place on 07.07.2006. The assessee submitted that entire consideration was received in cheque dated 19.10.2005 and it was credited to his account on the same day. It was also submitted that possession was also handed over to the buyer on 19.10.2005 itself. So, the transfer was complete in a y 2006-07, therefore, pleaded that the question of bringing capital gains to tax in this ay , ie ay 2007- 08 , doesn't not arise. The AO noticed that the impugned property was sold by a registered sale deed dt.7.7.2006, i.e.in ay 2007-08 and hence he asked for the proof of handing over the possession of the property. In the absence of any such proof, the AO treated the sale deed as the conclusive evidence for the said transfer, i.e. the year in which the sale deed is registered as the year of transfer.
:-3-: I.T.A. N0. 3321/Mds/2016 Therefore, he applied section 50C(1) of the Act and adopted the stamp duty value as the deemed sale consideration for the purpose of capital gain and determined the LTCG at Rs.62,75,480/- . Aggrieved, the assessee filed an appeal before the CIT(A). The CIT (A) held that assessee has received the entire sale consideration of the property sold in FY 2005-06 and it is supported by evidences like the payment has been received by way of cheques and the same is found reflected in assessee's saving bank account 6171 of Mr. I A R Zafarullah in Bank of Baroda, MRC Nagar Branch, on dt.19.10.2005. Moreover, the proof of possession of the property handed over dt.19.10.2005 is also asufficient evidence that possession of the property is handed over to the purchaser in 19.10.2005.
Following the finding of the Apex Court in the case of Sangilal vs CIT 365 ITR 389, the CIT(A) arrived a conclusion that capital gain arose to the assessee in FY 2005-06 and not in FY 2006-07. Aggrieved against that order, the Revenue filed this appeal with the following grounds.
The Order of the learned Commissioner of Income Tax (Appeals) is contrary to the Law and facts of the case.
2. The Ld. CIT(A) erred in deleting the addition made by the AO on account of Long Term Capital Gain of Rs. 62,75,480/-, holding that the transfer had taken place in AY 2006-07. 3. The Ld. CIT(A) failed to consider the issue of year in which the transfer of property had taken place in the light of the provisions of section 53A of the Transfer of Property Act 1882 and Section2(47)(v) of the Income Tax Act 1961 which is emphasized by Hon’ble Bombay High Court in its decision in the case of Chaturbhuj Dwarkadas Kapadia Vs. CIT dated 13.02.2003. The decision of the Hon’ble Supreme Court in the case of Sanjeev Lal Vs. CIT in 365 ITR 389 relied upon by the CIT(A) is distinguishable on facts from the present case.
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4. The CIT(A) failed to appreciate the fact that the sale of property was registered only in FY 2006-07 and the sale deed is the only document in writing evidencing the transfer. One of the pre-requisite condition for transfer as per Section 53A is that there should be a contract for consideration in writing and the same should be signed by the transferor. In the present case, this condition is not satisfied as there is no written agreement in support of assessee’s claim that transfer had taken place in the FY 2005-06.
The Ld. CIT(A) erred in concluding that the transfer had taken place in AY 2006-07 on the basis of fresh evidence filed by the assessee during the Appellate proceedings in support of handing over of possession. He ought to have called for a remand report or remitted the issue back to the Assessing Officer for examining the genuineness of the claim. 6. The Ld. CIT(A) failed to consider the fact that the assessee had not filed any R/I for the AY 2006-07 admitting the capital gains in support of his claim that transfer was made in AY 2006-07. 7. For these and other grounds that may be adduced at the time of hearing, it is prayed that the Order of the Learned CIT(A) may be set aside and that of the Assessing Officer be restored.
The DR questioned the veracity of the copy of “possession delivery letter” filed before the CIT (A), a copy of which was in the Paper book filed by the AR, for the reason that it lacked date etc , reiterated the stand taken by the AO and the above grounds of appeal. Per contra, the AR took us through the paper book and submitted that the assessee is an NRI, gave power of attorney to his son- in -law Shri S.Imtiaz Ahmed on 05.01.2005 and in pursuance of that GPA , the property was sold on 19.10.2015 , full consideration was received by cheque and deposited in his bank account with the BOB, MRC Nagar on 19.10.2005 itself and the possession was also handed over to the purchaser on that date itself. As there was valuation problem with state authorities, the purchaser could not :-5-: I.T.A. N0. 3321/Mds/2016 complete the registration and when the proceedings were pending, the Government of Tamilnadu introduced a Samadhan scheme. The buyer availed the said scheme and therefore the registration took place on 07.07.2006. The assessee submitted that entire consideration was received in cheque dated 19.10.2005 , it was credited to his account on the same day and the possession was handed over. Hence , the transfer was complete in ay 2006-07 itself. The DR submitted that the assessee has not disclosed these facts in ay 2006-07. Then, AR submitted that since the assessee did not have any taxable income in ay 2006-07, he did not file the return. The AR further submitted that the AO of the co- owner has initiated similar proceedings in Shri S.Imtiaz Ahmed’s case in ay 2007-08 and when Shri S. Imtiaz Ahmed pointed out that the impugned transaction took in ay 2006-07 and hence it cannot be charged in ay 2007-08 . In view such plea, the AO of the co owner, Shri S.Imtiaz Ahmed has dropped the proceedings for ay 2007-08 by an order dt 11.11.2014 , a copy of which was in the paper book. He pleaded that the assessee deserves similar justice like his coowner . Further, he has invited our attention to the fact that the registered sale deed mentions that .... “ the Vendors hereby acknowledge having already delivered vacant possession of the said lands to the purchasers” in page 12 of the paper book . This evidences the fact canvassed by the assessee all along and hence pleaded that the order of the CIT(A) be sustained.
We heard the rival submissions and find merit in the AR’s submissions. On the above facts and circumstances, we are of the view that the impugned
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In the result, the Revenue’s appeal is dismissed.
Order pronounced on Wednesday, the 26th day of July, 2017 at Chennai.