NAGESH VITTHAL SALGAONKAR,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX-24(3), MUMBAI

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.

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,