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Income Tax Appellate Tribunal, “H” BENCH, MUMBAI
Before: SHRI D. KARUNAKARA RAO & SHRI AMARJIT SINGH
सुनवाई की तायीख / Date of Hearing : 04.01.2017 घोषणा की तायीख /Date of Pronouncement : 20.01.2017 आदेश / O R D E R
PER D. KARUNAKARA RAO, AM:
This appeal filed by the assessee on 02.05.2016 is against the order of the CIT (A)-42, Mumbai dated 5.1.2016 for the assessment year 2008-2009. In this appeal, assessee raised the following grounds which read as under:- “1. The Ld CIT (A) grossly erred in upholding the order passed u/s 154. It is submitted that on the facts and circumstances of the case, there was no mistake apparent and hence the order passed u/s 154 is bad & invalid.
2. On merits, the Ld CIT (A) was not justified in not following the decision(s) of this Hon‟ble Tribunal.
3. The Ld CIT (A) fell in error of law in not appreciating that on interpretation of the Conveyance Deed of August 2007, the „transfer‟ took place on receipt of the total sale consideration of the capital asset.
4. Without prejudice to the above, the Ld CIT (A) fell in error of law in not appreciating that the time period of six (6) months for making investment in bonds for exemption u/s 54EC, would commence from receipt of total consideration.”
2. Before us, at the outset, Ld Counsel for the assessee briefed relevant facts of the case and submitted that the assessee, who is an individual, filed the return of income declaring the total income of Rs. 31,43,010/-. It is a case where the Assessing Officer rectified the original assessment order dated NIL stating that the assessee is not entitled for capital gains deduction in respect of the investments made u/s 54EC of the Act. On appeal, CIT (A) confirmed the same relying on various judicial pronouncements. Aggrieved with the same, assessee is in appeal with the legal issue that the rectification is done, on an issue which involves judicial debate, is unsustainable. In this regard, Ld Counsel for the assessee mentioned that the capital gains arose consequent to the transfer of asset vide sale agreement dated 31.8.2007 / 2.8.2007. In the original assessment, AO allowed the claim of said deduction but, however, during the proceedings u/s 154 of the Act, relying on the date of agreement of sale ie 2.8.2007, AO denied the benefit of capital gains deduction. In the process, AO ignored the fact that the buyer has not become full owner of the transferred asset on that date since the contents of clauses (4) and (8) were not met. In this regard, he read out the clause (4), which read as under:-
4. ........ Vendor hereby undertakes to handover the possession of the said Tenement to the purchasers on receipt of the balance consideration amount.
Referring to the CIT (A)‟s order, Ld Counsel for the assessee read out the dates of payments given on page 3 and mentioned that 22.1.2008 is the date of payment of Rs. 60,25,000/- out of Rs. 1.1 Crs of total payments. In this regard, Ld Counsel for the assessee argued that the balance payment is since paid only in January 2008, it is only on that day the purchaser got the rights on the property and therefore, the original claim of the assessee is proper. In this regard, Ld AR cited the judgment of the Hon‟ble Supreme Court in the case of Janak Dulari Devi and Another vs. Kapildeo Rai and Another [2011] 6 SCC 555. Bringing our attention to para 13 in page 564 of the said judgment (supra), Ld Counsel for the assessee read out the following:- “13. Where the sale deed recites that on receipt of the total consideration by the vendor, the property was conveyed and possession was delivered, the clear intention is that title would pass and possession would be delivered only on payment of the entire sale consideration. Therefore, where the sale deed recited that on receipt of the entire consideration, the vendor was conveying the property, but the purchaser admits that he has not paid the entire consideration (or if the vendor proves that the entire sale consideration was not paid to him), title in the property would not pass to the purchaser.”
The above judgment has reflected in an income tax matter in the case of Smt. Raj Rani Devi Ramna vs. CIT (201 ITR 1032 (Del) the said principle was upheld and the same judgment is relevant for the following propositions. The held portion of the said decision is extracted as under:- “Held, that, in the instant case, it was apparent that the parties had clearly intended that, despite the execution and registration of sale deeds, transfer by way of sale would become effective only on payment of the entire sale consideration and in this background of facts, it had to be held that there was no transfer of land covered by the three sale deeds in question during the period under consideration making the assessee liable for capital gains tax under section 45”.
From the above extracted portion, we find that the date of registration of the property is not to be reckoned for the purpose of computing the timing of reinvestment of the capital gains when the said sale deed recited clause (4), which is extracted above. Since, the final payment is made only in January 2008 in accordance with the said clause (4) of the agreement, the original assessment order passed by the AO is proper and it does not call for any rectification. Consequently, the rectification order passed by the AO u/s 154 of the Act suffers from illegality. Further, we find, the case laws cited by the CIT (A) are not on the similar facts as in the case of the assessee. Accordingly, the Ground no.1 raised by the assessee is allowed.
Considering our decision on ground no.1 of the appeal, in our opinion, the adjudication of other grounds becomes academic. Accordingly, we dismissed the other grounds as academic.
In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 20th January, 2017. (AMARJIT SINGH) ACCOUNTANT MEMBER भुंफई Mumbai; ददनांक 20.01.2017 व.नन.स./ OKK , Sr. PS आदेश की प्रतिलऱपि अग्रेपिि/Copy of the Order forwarded to : अऩीराथी / The Appellant 1. प्रत्मथी / The Respondent. 2. आमकय आमुक्त(अऩीर) / The CIT(A)- 3. 4. आमकय आमुक्त / CIT 5. ववबागीम प्रनतननधध, आमकय अऩीरीम अधधकयण, भुंफई / DR,