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Income Tax Appellate Tribunal, VISAKHAPATNAM “SMC” BENCH, VISAKHAPATNAM
Before: SHRI DUVVURU RL REDDY, HON’BLE
आदेश /O R D E R
Per Shri Duvvuru RL Reddy, Judicial Member :
1. This appeal is filed by the assessee against the order of Commissioner of Income Tax (Appeals) [CIT(A)], Vijayawada vide Appeal No.10224/CIT(A)/VJA/2018-19 DIN : ITBA/APL/M/250/2019- 20/1023881769(1) dated 28.02.2020 for the Assessment Year (A.Y.) 2011-12.
Yadla Srinivasa Rao, Vijayawada
Brief facts of the case are that the assessee is an individual. The assessee entered into sale agreement-cum-GPA dt.04.04.2007 (Regd No.3169/2007) for purchase of a site at Nunna, admeasuring 1000 sq.yds for a consideration of Rs.5,00,000/- and as per this agreement, the possession was agreed to be handed over at the time of execution of registration of conveyance deed. The regular conveyance deed was executed and registered by the assessee in the capacity of GPA in favour of Sri K.Anil Kumar of Vijayawada for a consideration of Rs.17,00,000/- as against the market value of Rs.20,00,000/- through regd. Doc. No.8/2011 dt.04.01.11. The assessee did not file his return of income for A.Y.2011-12 u/s 139 of the Income Tax Act, 1961 (in short “Act”). The assessment was reopened by issue of notice u/s 148 on 28.03.2018, since the assessee has not disclosed the capital gains arising from the sale of the said property by filing a return of income. The assessee did not file his return of income in response to the notice u/s 148. The AO, therefore, completed the assessment u/s 148 r.w.s. 147 on 22.11.2018, determining the total income at Rs.13,45,910/- under the head “income from long term capital gains” arising from the sale of immovable property.
3 Aggrieved, the assessee preferred appeal before the CIT(A) and the Ld.CIT(A), after careful consideration of the facts of the case and the Yadla Srinivasa Rao, Vijayawada written submissions of the assessee, partly allowed the appeal of the assessee.
On being aggrieved, the assessee preferred appeal before the Tribunal. The assessee pleaded to replace the grounds raised along with Form No.36 with the revised grounds as under, as they are repetitive :
The order of the Ld.CIT(A), Vijayawada in Appeal No.10224/CIT(A)/VZA/2018-19,dated 28.02.2020 for the A.Y.2011- 12 may be erroneous both in law and on facts of the case.
2. Taking cognizance of the fact that DELIVERY OF POSSESSION would be given only at the time of execution of a REGULAR CONVEYANCE OF DEED after discharging the LEGAL OBLIGATIONS (vide page 4 of the Registered Agreement cum GPA No. 3169/2007, dated 04.04.2007, the Ld.CIT(A) ought not have held that there is a DEEMED TRANSFER within the meaning of section 2(47)(v) of the IT Act, 1961 and in the context of WELL SETTLED LAW, the impugned assessment order dated 22.11.2018 may be NONEST IN LAW AND HENCE THE SAME MAY BE LIABLE TO BE ANNULLED. 3. That in the facts and circumstances of the case vis-a-vis the enacted law and judge made law, the Ld.CIT(A) ought to have noticed that the assessee executed the Registered Conveyance Deed dated 04.01.2011 only in the status of GPA HOLDER and hence the assessment order dated 22.11.2018 may be void ab initio. 4. That even otherwise and without PREJUDICE to the legal GROUNDS enunciated supra, the Ld.CIT(A) ought not have CONFIRMED THE SUBSTITUTION OF GUIDELINE VALUE of Rs.20,00,000/- ignoring the mandatory provisions contained in 1st and 2nd PROVISO appended to Section 50C of the Act which hold RETROSPECTIVE EFFECT as per the decided law. 5. For these reasons and other reasons which may be advanced at the time of hearing of the appeal, it is requested that the impugned
Yadla Srinivasa Rao, Vijayawada assessment order dated 22.11.2018 may be ORDERED TO BE ANNULLED 5. Ground No.1 and 5 are general in nature, which do not require specific adjudication.
Ground No.2 and 3 are related to the delivery of possession of impugned property. The Ld.AR submitted that there was no possession handed over to the assessee, by the landlords, viz., Sri Suresh Babu and Smt. Vasanthi and that such possession is to be given only upon fulfilment of certain obligation recorded at pages 3 and 4 of the Agreement dated 04.04.2007 and that the same should be delivered only at the time of execution of regular conveyance deed. Without considering the said fact, the Ld.CIT(A) arrived at adverse conclusions, confirming the assessment order passed by the AO u/s 144 of the Act. Hence the orders passed by the lower authorities are void-ab-inito, therefore, pleaded that the same may be annulled.
Per contra, the Ld.DR relied on the order of the Ld.CIT(A) and submitted that the AO has rightly charged capital gains to tax in the hands of the assessee since the vacant possession of the property was delivered to the assessee. The Ld.DR further submitted that as per translated copy of the sale agreement cum GPA dated 04.04.2007, it was Yadla Srinivasa Rao, Vijayawada mentioned in the last paragraph of page No.3, that the property was delivered at the time of execution of GPA. Therefore, the contention of the assessee that the property was not delivered to him on 04.04.2007 is not tenable and contrary to his pleadings.
The Ld.DR further contended that the assessee himself sold the property which is evident vide last para of page No.2 of the sale deed that the assessee was not deriving income proportionate to the value of the property from his property. In view the financial needs of the assessee, the property was proposed to be sold by the assessee and since the purchaser (Shri K.Anil Kumar) has come forward to pay the highest price, the assessee has agreed to the same and the property has been sold by the assessee for a consideration of Rs.17 lakhs. The recitals of the sale deed established that the assessee is not a GPA holder. He, further submitted that the assessee sold the property on 04.01.2011 as a owner, but not in the capacity of GPA. The assessee could not furnish any evidence that the sale consideration received by the assessee was passed on to the original owners.. The Ld.DR, therefore, pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee on this ground.
Yadla Srinivasa Rao, Vijayawada
I have heard both the parties and perused the material placed on record. The main contention of the assessee is that he is only the GPA holder, therefore, his status is only an agent and the property was not delivered to him on 04.04.2007. Further contention of the assessee is that the registered conveyance deed was executed by him on 04.01.2011 on behalf of the landlords Sri Suresh Babu and Vasanthi in the name of the buyer, Shri K.Anil Kumar. Further contention of the assessee is that the consideration of Rs.17,00,000/- was received by the assessee on behalf of the owners. Hence, accountability about the sale by the conveyance deed dated 04.01.2011 cannot be fixed on the assessee to charge capital gains against him and the same has to be operated against the original landlords only. I have perused the recitals mentioned in the translated copy of sale agreement cum GPA dated 04.04.2007 and sale deed executed on 04.01.2011, filed by the assessee. The recitals as mentioned in the last paragraph of page No.3 of the sale agreement cum GPA dated 04.04.2007 are as under :
“The schedule property sold to you as stated supra, and delivered to your possession, excepting we have not made any transactions over it, and there are no court attachments, injunctions, no joint partition disputes, no mortgages, no security, no long term rental deed, deposit of title deed etc. agreement and other securities no rights and responsibilities not holding by anyone the schedule property is our own and we only got full
Yadla Srinivasa Rao, Vijayawada rights it is free from al encumbrances and clear titled one, and to sell to you we are having full rights, convincing you in your favour sale deed executed and given to you.” The recitals as mentioned in last paragraph of page No.2 and first paragraph of page No.3 of the sale deed executed on 04.01.2011 are as under : “In the circumstances as stated supra among us over the below schedule property not getting property income by the 2nd party, for his family better thing require of money the below schedule property to sell made efforts, you have offered more amount than others, for which 2nd one convinced and the schedule property for a total sale consideration of Rs.17,00,000/- (Rupees Seventeen Lakhs only) Out of the total amount you have paid in the name of 2nd among us, through Vijaya Bank, Basheerbagh, Hyderabad Br. vide No.128936 dt.31.12.2010 through DD paid Rs.6,00,000/-, and today at the time of execution of this sale deed you have paid to 2nd party by cash Rs.11,00,000/- total as per 1st para sale consideration of Rs.17,00,000/- from you among us 2nd party received in full.” Therefore, after considering the recitals mentioned in the sale agreement cum GPA and sale deed, there is no dispute that the assessee purchased the property for a consideration of Rs.5,00,000/- and took possession of the property on 04.04.2007 itself and sold the property for Rs.17,00,000/- to Shri K.Anil Kumar on 04.01.2011. Therefore, the oral contention of the assessee that he acted only as an agent on behalf of the owners is not at all acceptable since the recitals clearly established the sale transaction between the assessee and sellers. Therefore, I have no Yadla Srinivasa Rao, Vijayawada hesitation to come to conclusion that the sale deed executed by the assessee on 04.01.2011 is not in the capacity of GPA holder on behalf of the original owners. Moreover, there is no recital in the sale deed executed by the assessee on 04.01.2011 that the sale consideration was received by the assessee on behalf of the original owners. He has also not placed any evidence to establish that he has repaid the amount to the original owners. Therefore, the capital gains arising out of the transfer occurred on 04.01.2011 should be charged in the hands of the assessee only. Therefore, the AO as well as the Ld.CIT(A) has rightly taxed the capital gains in the hands of the assessee after allowing deduction of indexed cost of acquisition of Rs.6,54,090/-. Hence, the grounds raised by the assessee are dismissed.
Ground No.4 is related to estimation of the value of the impugned property as per fair market value at Rs.20,00,000/-. The Ld.AR submitted that the substitution of Rs.20,00,000/- representing the FMV as on the date of execution of the regular conveyance deed dated 04.01.2011 in the place of recorded consideration of Rs.17,00,000/- may not be sustainable in law. He pleaded to set aside the order passed by the Ld.CIT(A) and allow the appeal of the assessee.
Yadla Srinivasa Rao, Vijayawada
Per contra, the Ld.DR relied on the order of the Ld.CIT(A) and pleaded to uphold the order passed by the Ld.CIT(A) and dismiss the appeal of the assessee.
I have heard both the parties and perused the material placed on record. On this aspect, as per sale agreement cum GPA executed on 04.04.2007, the assessee purchased the property for Rs.5,00,000/- and sold the property for Rs.17,00,000/-. But as per the sale deed, the stamp duty value of the property is Rs.20,00,000/-. Therefore, as per section 50C of the Act, the AO has correctly computed the capital gains against the sale consideration of Rs.20,00,000/- after allowing indexed cost of acquisition at Rs.6,54,090/- and arrived at the long term capital gains of Rs.13,45,910/-. For the sake of clarity, the provisions of section 50C are extracted as under : Special provision for full value of consideration in certain cases. 50C. (1) Where the consideration received or accruing as a result of the transfer by an assessee of a capital asset, being land or building or both, is less than the value adopted or assessed or assessable by any authority of a State Government (hereafter in this section referred to as the "stamp valuation authority") for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed or assessable shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer : Provided that where the date of the agreement fixing the amount of consideration and the date of registration for the transfer of the capital asset are not the same, the value adopted or assessed or assessable by the stamp valuation authority on the date of agreement may be taken for the purposes of computing full value of consideration for such transfer:
Yadla Srinivasa Rao, Vijayawada Provided further that the first proviso shall apply only in a case where the amount of consideration, or a part thereof, has been received by way of an account payee cheque or account payee bank draft or by use of electronic clearing system through a bank account 51a[or through such other electronic mode as may be prescribed52], on or before the date of the agreement for transfer: Provided also that where the value adopted or assessed or assessable by the stamp valuation authority does not exceed one hundred and 53[ten] per cent of the consideration received or accruing as a result of the transfer, the consideration so received or accruing as a result of the transfer shall, for the purposes of section 48, be deemed to be the full value of the consideration. (2) Without prejudice to the provisions of sub-section (1), where— (a) the assessee claims before any Assessing Officer that the value adopted or assessed or assessable by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed or assessable by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, the provisions of sub-sections (2), (3), (4), (5) and (6) of section 16A, clause (i) of sub-section (1) and sub-sections (6) and (7) of section 23A, sub-section (5) of section 24, section 34AA, section 35 and section 37 of the Wealth-tax Act, 1957 (27 of 1957), shall, with necessary modifications, apply in relation to such reference as they apply in relation to a reference made by the Assessing Officer under sub-section (1) of section 16A of that Act. Explanation 1.—For the purposes of this section, "Valuation Officer" shall have the same meaning as in clause (r) of section 2 of the Wealth-tax Act, 1957 (27 of 1957). Explanation 2.—For the purposes of this section, the expression "assessable" means the price which the stamp valuation authority would have, notwithstanding anything to the contrary contained in any other law for the time being in force, adopted or assessed, if it were referred to such authority for the purposes of the payment of stamp duty. (3) Subject to the provisions contained in sub-section (2), where the value ascertained under sub-section (2) exceeds the value adopted or assessed or assessable by the stamp valuation authority referred to in sub-section (1), the value so adopted or assessed or assessable by such authority shall be taken as the full value of the consideration received or accruing as a result of the transfer.
In the instant case, the Ld.CIT(A) has correctly upheld the assessment order, which needs no interference. Hence, the grounds raised by the assessee are dismissed.
Yadla Srinivasa Rao, Vijayawada
In the result, appeal of the assessee is dismissed. Order pronounced in the open court on 17th March, 2023.
Sd/- (दुव्वूरु आर.एल रेड्डी) (DUVVURU RL REDDY) न्याधयक सदस्य/JUDICIAL MEMBER Dated : 17 .03.2023 L.Rama, SPS आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. ननधधाऩरती/ The Assessee– Yadla Srinivasa Rao, D.No.20-04-190/7A Basavataraka Nagar, Ayodhya Nagar, Vijayawada 2. रधजस्व/The Revenue – The Income Tax Officer, Ward-3(2), Vijayawada 3. The Principal Commissioner of Income Tax, Vijayawada 4. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम / DR,ITAT, Visakhapatnam 5..गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER
Sr. Private Secretary ITAT, Visakhapatnam