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Income Tax Appellate Tribunal, “ B ” BENCH, AHMEDABAD
Before: SHRI PRADIP KUMAR KEDIA & SHRI MAHAVIR PRASAD
आदेश / O R D E R
PER PRADIP KUMAR KEDIA - AM: The captioned appeal filed at the instance of the Revenue is against the order of the Commissioner of Income Tax(Appeals)-XIV, [CIT(A) in short] dated 13/01/2014 arising in the assessment order passed by Assessing Officer (AO) under s.143(3) dated 08/12/2011 for Assessment Year (AY) 2009-10.
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 2 -
The grounds of appeal raised by the Revenue read as under:- i) The ld.CIT(A) has erred in law and on facts in deleting the addition of Rs.64,89,000/- on account of the long term capital gain as short term capital gain and in allowing exemption u/s.54EC to the tune of Rs.50,00,000/- in consequent to allowing the Capital Gains as Long Term Capital Gain.
ii) The ld. CIT(A) has further erred in law and on facts in holding that the land on question was in possession of the Assessee merely because the letter of allotment was given on 14.09.2002 and ignoring other registered documents demonstrating that no possession or rights embedded there to were with the Assessee. The payment by assessee was also not made to the original land owner.
Briefly stated, the assessee an individual filed its return of income for AY 2009-10. The return was subjected to scrutiny assessment. In the course of the scrutiny concerned, the AO found that Long Term Capital Gain (LTCG) of Rs.64,89,000/- has been wrongly claimed on sale of certain parcel of land. It is the case of AO that the capital gain arising on sale of the aforesaid land requires to be assessed as Short Term Capital Gain (STCG) in view of the purchase-deed executed towards acquisition of such land dated 04/01/2007 and a corresponding sale-deed executed on 18/03/2008 towards sale thereof. It is thus case of the AO that the aforesaid land was held for less than 36 months in view of the aforesaid agreements. While holding so, the AO negatived the claim of
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 3 - the assessee that the aforesaid property was in its possession since the year 2002 corroborated by allotment letter. The AO observed that as per the purchase agreement dated 04/01/2007 the possession was handed over to the assessee with effect from date of purchase agreement and not earlier as claimed. The AO further alleged that assessee did not produce any evidence towards payment for acquisition of asset in 2002 or prior thereto. In conclusion, the AO embarked upon addition of Rs.64,89,000/- towards STCG accrued in the hands of the assessee and denied the benefit of LTCG claimed by the assessee.
In the first appeal preferred by the assessee, the CIT(A) reversed the action of the AO as per following operative paras.
“5. I have perused the facts of the case as enumerated by A.O. and as submitted by appellant. I have perused the case laws relied on by A.O. as well as appellant. After careful consideration of facts, submission and contention of both A.O. as well as of appellant, ground wise adjudication is as follows: The appellant's only ground of appeal is against the A.O's treatment of long term capital gain for sale of land as short term capital gain of Rs. 64,89,000/- and denial of claim of deduction u/s 54EC of Rs. 50,00,000/-. The A.O. after analyzing sale deed of impugned property emphasized that- (i) As per purchase deed, the impugned property is purchased in 2006-07 (Para 9 page no. 8) and period of holding is less than 36 months. (ii) Appellant failed to produce any agreement with seller in the form of 'Agreement to sale' and rejected appellant's explanation that sale deed of impugned land reflect that sale consideration was paid (Rs. 1,11,000) in 1996 - 97 duly
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 4 - affirmed the appellant's contention. The appellant failed to produce any pass book entry, Bank book entries of 1996-97 payment. (iii) The ratio of Hon'ble Supreme Court decision in the case of Alapati Venkataramiah (supra) is applicable i.e. "If the document is not registered and conditions of section 53A of transfer of property acts are satisfied, ownership in the property is not transferred." (iv) By rejecting copy of possession letter executed in Sept. 2002 as produced by appellant because in purchase deed the possession was mentioned to be given on 04.01.07. (v) Appellant's claim u/s 54EC was simply denied without giving any detail and reasons. From the above observation of A.O., the only dispute is in reference to ownership of purported land, the transfer of which resulting into capital gain. The A.O. on the basis of purchase deed 04.01 .07 where at para 9 it is mentioned that in consideration of Rs. 1,11,000/- for which detail is mentioned at para 16, the possession of land is handed over. The detail at para 16 reflect that Rs. 11,000/- was paid by appellant in cash while Rs. 1,00,000/- was paid vide cheque no. 110302 dt. 14.10.96 of the Ahmedabad Mercantile Co. op. Bank. The appellant produced an allotment letter and contended that the purchase deed executed on 04.01.07 was in the form of ratification of transaction of purchase of land and as per standard language such drafting at para 9 is not proper & correct because, the complete payment & consideration for the impugned land was already paid by appellant in 1996 and plot of land was already allotted in 2002 but the registration of transaction was effected in Jan. 2007 for want of sale of the land.
The A.O. has not doubted purchase value rather adopted the same value as cost of acquisition. The A.O. though mentioned that .appellant failed to produce bank pass book or books of account to substantiate payment by such cheque dt. 14.10.96, but, A.O. not only accepted it as purchase consideration but also not initiated any proceeding against appellant for unexplained amount of cost of acquisition because a property valued at Rs. 1,11,000/- in Jan. 2007 cannot fetch Rs. 66,00,000/- in 30.03.08. There are two important facts which were overlooked by A.O. as follows: a. The sub Registrar while registering the purchase deed dt. 04.01.2007 valued the land as per valuation in 1996 and not as per valuation for 2007 for charging of stamp
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 5 - duty. This otherwise will invite the provisions of section 50C of the Act for which A.O. has not initiated any action. b. The sale deed of the said land dt. 04.04.08 which is the basis of sale consideration of Rs. 66,00,000/- and charging of capital gain, at para 5, 6, 7 & 8 has details of various events of purchase of this property, payment of purchase consideration and other events of allotment and registration. These findings were not doubted by A.O. and therefore affirm the appellant's contention that though purchase consideration was paid in 1996 for which this plot of land was allotted by M/s N C corporation through Shri Narsingh Ganpatbhai Patel who thereafter issued power of attorney to his nephew Shri Varunbhai Naginbhai Patel who was confirming party in both purchase & sale deed.
It is therefore, merely by a draft language of the purchase deed at para 9, in my view all other facts cannot be brushed aside for ownership and holding of land for more than 36 months. As per settled legal proposition, Registration is not a must but for further sale of any immovable property, the purchase document required to be registered which appellant has done. The legal proposition in this regard is also gives such ratio as follows: (i) Board circular No. 471 dt. 15.10.86 and No. 672 dt. 10.12.93 recognizes that 'Even allotment of a flat or house by State housing boards or co-operative societies would tantamount to purchase as on the date of allotment itself. (ii) The Supreme Court in CIT Vs. T. N. Arvinda Reddy (1979) 120 ITR 46 held that the purchase in the context of section 54 should be understood in a liberal sense without any under restriction limiting the meaning to 'lexical legalism.' It should be understood in the sense in which 'Plain spoken people' would have understood it. (iii) Hon'ble supreme court in the case of CIT Vs. Podar Cement Pvt. Ltd. (1997) 226 ITR 625 and in the case of Mysore Mineral Ltd. Vs. CIT (1999) 239 ITR 775 held that Registration of document is not mandatory for recognition of transfer.
(iv) Hon'ble Gujarat High Court full Bench in the case of CIT Vs. Mormasij Mancharji Vaid (2001) 250 ITR 542 following Hon'ble Guj. High Court decision in the case of Arundhati Balkrishna (1982) 138 ITR 245 considered section 45 of the Income tax Act, section 54 of the transfer of property Act and section 47 of the Registration Act and held that the transfer of capital asset become effective under 45
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 6 - of the IT. Act from the date on which the document was executed, in case its registration was subsequently admitted before the Registrar. In the case of appellant sale consideration of Rs. 1,11,000/- paid in respect of plot of land allotted vide allotment letter dt. 14.09.2002 was accepted by the Registrar in purchase deed dt. 04.01.2007. It is therefore, A.O. is not justified in holding that appellant's holding period of impugned land is below 36 months. He is directed to treat the gain from transfer of the impugned land as long term capital gain as reflected by appellant in the return of income. In reference to claim of appellant of Rs. 50,00,000/- u/s 54EC, since A.O. has simply denied the claim considering the ineligibility of said deduction from short term capital gain, but now since I have held the transfer of impugned land is resulting into long term capital gain therefore appellant is allowed the deduction u/s 54EC of the Act. This will result into deletion of addition of Rs. 64,89,000/- and relief to appellant accordingly.”
Aggrieved by the order of the CIT(A), the Revenue is in appeal before the Tribunal.
The Ld.DR for the Revenue referred to para-9 of the English translation of the purchase-deed dated 04/01/2007 and submitted that the physical possession was handed over to the assessee from the date of purchase agreement and not at earlier date as claimed. He thereafter asserted that the claim of the assessee that payment towards purchase was made through banking channel on 14/10/1996 remained unvouched. The assessee has failed to produce fact of making such payment by banking channel towards such acquisition as claimed. The Ld.DR thus submitted in conclusion that the asset should be deemed to be held from the date of purchase-deed and not from a prior date and therefore the claim of the
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 7 - assessee towards LTCG on sale of such asset is contrary to the provisions of section 45 r.w.s.2(29B) of the Act. The Ld.DR accordingly submitted that the CIT(A) misdirected itself in holding that the gain arising on sale of land to be ‘long term’ in nature. He accordingly pleaded for reversal of the action of the CIT(A).
The Ld.Senior Counsel, on the hand, relied upon the order of the CIT(A) and submitted that payment for the purchase of land was made way back in 1996 details of which form part of the purchase agreement. On the basis of such payment, the possession was obtained and a formal purchase deed was finally executed in 2007 to give a legal effect to the aforesaid transaction. The ld.Counsel thus submitted that for all intent and purposes, the asset was held for more than 36 months. He also referred to the decision of the Coordinate Bench of the Tribunal in Anita D.Kanjani vs. ACIT in ITA No.2291/Mum/2015 dated 13/02/2007 to attend that holding period should be computed from the date of allotment letter notwithstanding the fact that formal purchase-deed was executed at a later stage.
We have considered rival submissions. The short controversy in hand is whether the land in question was held as STCG or LTCG for the purposes of determination of capital gain. As can be seen from the record, the assessee claims that the allotment towards purchase of land
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 8 - was available with reference to Financial Year 2002-03. The assessee claims that the payment towards acquisition of land was made in October-1996 as evidenced from the formal purchase-deed dated 04/01/2007. The formal purchase-deed has been executed which merely ratifies earlier act of acquisition and possession. Thus, when accounted from the date of possession vouched by payment of consideration, we find no rationale in the appeal of the Revenue. The CIT(A), in our view, has come to a rightful conclusion while holding the Asset sold to be Long Term Capital Asset. We do not find any error in the process of reasoning adopted by the CIT(A). As a result, we find no merit in the appeal of the Revenue.
In the result, appeal of the Revenue is dismissed. This Order pronounced in Open Court on 16 / 10 /2017
Sd/- Sd/- (महावीर �साद) (�द�प कुमार के�डया) �या�यक सद�य लेखा सद�य ( PRADIP KUMAR KEDIA ) ( MAHAVIR PRASAD ) JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad; Dated 16 / 10/2017
ट�.सी.नायर, व.�न.स./T.C. NAIR, Sr. PS
ITA No. 914/Ahd/2014 DCIT vs. Shri Dilip R.Parikh Asst.Year – 2009-10 - 9 -
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-XIV, Ahmedabad �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation .. 11.10.17 (dictation-pad 11- pages attached at the end of this appeal-file) 2. Date on which the typed draft is placed before the Dictating Member …12.10.17 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S…….16.10.17 7. Date on which the file goes to the Bench Clerk…………………16.10.17 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………