ZAHID I QURESHI,MUMBAI vs. ITO 19(3)(3), MUMBAI

The learned CIT (A) erred in law by sustaining the assessment order of the learned AO without appreciating the facts and circumstances of the case and the provisions of the relevant statutory enactment & laws.

The learned CIT (A) failed to appreciate the material available on record as the sale of said immovable property is taxed twice, once in the assessment year 2002/03 & second time in the assessment year 2009/10. 3. The learned CIT(A) erred in law by invoking the provisions of section 50'C' applying the market rate of immovable property of the assessment year 2009/10 to the property which is already sold in the assessment year 2002/03 and offered for taxation in that assessment year. 4. The learned CIT(A) failed to appreciate the fact that as per the provisions of section 53A of the transfer of property Act, 1908 a property is deemed to have been transferred if consideration for the same is paid and physical possession of the property is handed over to the transferee without the agreement for sale being stamped and registered with the registrar. 5. The appellant prays before your honor that the addition of Rs.6,01,985/- being long term capital gains on sale of immovable property made to the total income of the appellant is illegal bad in law and contrary to the provisions of the Act and hence it should be deleted and squashed.

Briefly stated the facts are, assessee an individual filed his return of income on 29th March 2010, declaring total income of ` 1,55,260. Assessee is engaged in the business of purchase and sale of car. In the course of assessment proceedings, on the basis of information available on record, the Assessing Officer found that though the assessee had sold a property on 2nd April 2008, as per records of Jt. Registrar, Andheri, Mumbai, and purchased a new property but the assessee has not declared / offered any capital gain in the return of income filed. On verifying the sale deed, the Assessing Officer found that the sale consideration shown in the sale deed is less than the valuation made by the registering authority for stamp duty purpose. He, therefore, called upon the assessee to explain why capital gain should not be computed by applying the provisions of section 50C of the Act. As alleged by the Assessing Officer, assessee could not properly comply to the query raised. He, therefore, computed the capital gain by adopting the value determined by the registering authority for stamp duty at ` 36,73,860, as per the provisions of section 50C and worked out assessee’s 1/4th share from such deemed sale consideration at ` 9,93,465 and after allowing indexed cost of acquisition of ` 3,91,480, determined net long term capital gain at `

Before the first appellate authority, it was submitted by the assessee that the property in question was actually sold by the assessee on 13th July 2002, though, the document was not registered with Registrar of Documents because the society where the property was situated had not issued no objection certificate for the transfer of property. It was submitted, as far as assessee is concerned, he has treated the property as sold in the year 2002 itself as subsequently it was not reflected either in the balance sheet or capital account. He submitted, even the assessee had offered long term capital gain arising out of the sale of property for taxation in the return of income filed for assessment year 2002–03. The learned Commissioner (Appeals), however, did not find merit in the assessee’s submissions. He was of the view that though the assessee might have entered into agreement of sale with the purchaser and received advance but sale of property is not complete until and unless the registration was made in the name of the purchaser and stamp duty paid on the value of property in the name of the purchaser. He opined as the registration of the property was made on 2nd April 2008, falling within the financial

Learned Departmental Representative relied upon the reasoning of the learned Commissioner (Appeals) and the Assessing Officer.

We have considered the submissions of the learned Departmental Representative and perused the material available on record. As far as the factual aspect is concerned, though there is no dispute that the sale deed was registered before the Jt. Registrar, Andheri, Mumbai, on 2nd April 2008, at a value determined at ` 39,73,860, for stamp duty purpose against the recorded sale consideration which was adopted as deemed sale consideration received by the assessee in terms of section 50C but it is the claim of the assessee that the property for all practical purpose stood transferred to the vendee vide agreement of sale dated 13th July 2002. Further, it is seen from the written submission filed before the learned Commissioner (Appeals), which has been reproduced in Para–1.2 of the learned Commissioner (Appeals)’s order, assessee has specifically submitted that long term capital gain arising out of the sale of subject property was offered for taxation in assessment year 2002–03. Departmental Authorities are completely silent on this issue. If the capital gain derived from sale of the property was offered for taxation in assessment year 2002–03 and Shri Zahid I. Qureshi 6 the Department has also accepted that, in our view, it cannot be taxed again in the assessment year 2008–09, wherein the sale deed was registered. As the aforesaid specific claim of the assessee has not at all been considered by the learned Commissioner (Appeals) / Assessing Officer, in our view, the same requires re–examination. Moreover, it is seen from the assessment order that the assessee is one of the co– owners of the property. Therefore, assessment of long term capital gain in respect of other co–owners also requires examination. As these facts have not been examined / verified by the Departmental Authorities, we deem it appropriate to set aside the impugned order of the learned Commissioner (Appeals) and restore the matter back to the file of the Assessing Officer for deciding the issue afresh after providing reasonable opportunity of being heard to the assessee.

In the result, appeal stands allowed for statistical purposes. Order pronounced in the open Court on 29.01.2016