SHRI RAJESHKUMAR C. PATEL,AHMEDABAD vs. THE INCOME TAX OFFICER, WARD-9(1), NOW WARD-1(3)(4), AHMEDABAD

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ITA 564/AHD/2016Status: DisposedITAT Ahmedabad14 November 2017AY 2009-104 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the capital gains tax liability pertained to AY 2008-09, not AY 2009-10, because possession was handed over and a substantial part of the sale consideration was received in March 2008, triggering the transfer under Section 2(47) of the Act. Consequently, the addition of capital gains to the income for AY 2009-10 was deleted.

What were the facts?

The assessee sold agricultural land and the Assessing Officer (AO) included the short-term capital gain in the income for Assessment Year (AY) 2009-10. The assessee contended that the sale transaction pertained to AY 2008-09 as possession was handed over and substantial payment was received in March 2008.

What were the issues?

The primary issue was whether the short-term capital gain on the sale of agricultural land was taxable in AY 2009-10 or AY 2008-09, based on the date of transfer. A consequential issue was the validity of the penalty levied under Section 271(1)(c) for the deleted addition.

Which sections of the Income-tax Act were involved?

Section 2(47),Section 271(1)(c)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, AHMEDABAD “B” BENCH

Before: SHRI N.K. BILLAIYA & SHRI S. S. GODARA

For Appellant: Shri A.C. Shah, AR

PER N.K. BILLAIYA, ACCOUNTANT MEMBER

2 ITA Nos. 564 & 565/Ahd/2016 & S.P. Nos. 126 & 127/Ahd/2017 . A.Y. 2009-10 1. ITA No. 564/Ahd/2016 is appeal by the assessee preferred against the order of the ld. CIT(A)-10, Ahmedabad dated 01.02.2016 pertaining to A.Y. 2009-10 and with ITA No. 565/Ahd/2016, the assessee has challenged the levy of penalty u/s. 271(1)(c) of the Act which was confirmed by the ld. CIT(A)-10, Ahmedabad vide order dated 02.02.2016 for A.Y. 2009-10. We will first take up in ITA No. 564/Ahd/2016.

2.

The sum and substance of the grievance of the assessee is that the ld. CIT(A) erred in confirming the assessment by which the Short Term Capital Gain on sale of agriculture land is included in total income for the year under consideration.

3.

The main contention of the assessee is that the Short Term Capital Gain relates to A.Y. 2008-09 and not A.Y. 2009-10, Since the sale deed was executed on 31.03.2008 and the stamp duty was paid on 29.03.2008.

4.

A perusal of the orders of the authorities below shows that the assessee had purchased a land situated at Sola, Taluka: Daskroi admeasuring 4047 Sq. Mt. on 23.02.2007. The same land was sold on 27.05.208 at Rs. 68,79,900/-. The A.O. found that the assessee has not filed his return of income declaring the capital gain of Rs. 65,99,900/- arising out of the sale of said land. The A.O. treated the income on account of capital gains for the year under consideration.

3 ITA Nos. 564 & 565/Ahd/2016 & S.P. Nos. 126 & 127/Ahd/2017 . A.Y. 2009-10 5. We find that the sale deed was executed on 31.03.2008 and the stamp duty was paid on 29.03.2008. The assessee had handed over the possession of the property to the purchasers and has received a sum of Rs. 30 lakhs on 14.03.2008. Since the possession of the property was handed over by the assessee to the purchasers and has received a substantial amount towards sale consideration transfer under the provisions of Section 2(47) of the Act for capital gains tax liability has taken place. This means that the sale transaction pertains to F.Y. 2007-08 relevant to A.Y. 2008-09. Merely because the sale deed was registered on 23.05.2008 would not make the transaction fall in F.Y. 2008-09 relevant to A.Y. 2009-10.

6.

On the given facts of the case, in our considered opinion, the capital gains tax liability pertains to A.Y. 2008-09 and the same cannot be taxed in A.Y. 2009-10. Therefore, taxing the Short Term Capital Gains tax liability in A.Y. 2009-10 is bad in law and against the facts of the case, the same has to be considered in A.Y. 2008-09. With these observations, we direct the A.O. to delete the capital gains from the total income for the year under consideration. Appeal filed by the Assessee is accordingly allowed.

ITA No. 565/Ahd/2016 for A.Y. 2009-10

7.

Since, we have deleted the additions in ITA No. 564/Ahd/2016 (supra), there remains nothing for the levy of penalty u/s. 271(1)(c) of the Act. We accordingly direct the A.O. to delete the penalty so levied.

4 ITA Nos. 564 & 565/Ahd/2016 & S.P. Nos. 126 & 127/Ahd/2017 . A.Y. 2009-10 S.P. Nos. 126 & 127/Ahd/2017 for A.Y. 2009-10

8.

Since the quantum addition stand decided, these Stay Petitions becomes otiose and needs no separate adjudication.

Order pronounced in Open Court on 14 - 11- 2017.

Sd/- Sd/- (S.S. GODARA) (N. K. BILLAIYA) JUDICIAL MEMBER True Copy ACCOUNTANT MEMBER Ahmedabad: Dated: 14/11/2017 Rajesh Copy of the Order forwarded to:- 1. The Appellant. 2. The Respondent. 3. The CIT (Appeals) – 4. The CIT concerned. 5. The DR., ITAT, Ahmedabad. 6. Guard File. By ORDER

Deputy/Asstt.Registrar ITAT,Ahmedabad

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