Income Tax Appellate Tribunal - Amritsar
Smt Manjeet Kaur , Gurdaspur vs Dy. Commissioner Of Income Tax, ... on 30 December, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
AMRITSAR BENCH; AMRITSAR
BEFORE SH.T.S. KAPOOR, ACCOUNTANT MEMBER AND
SH.N.K.CHOUDHRY, JUDICIAL MEMBER
I.T.A. No.112(Asr)/2015
Assessment Year: 2007-08
Smt. Manjeet Kaur thro Vs. Dy. CIT
L/H Surinder Singh, Pathankot.
637, Dashmesh Nagar,
Tibri Road, Gurdashpur.
PAN:AVKPA5786G
(Appellant) (Respondent)
Appellant by: Sh. J.S. Bhasin (Adv.)
Respondent by: Sh. Rahul Dhawan (DR)
Date of hearing :13.10.2016
Date of pronouncement :30.12.2016
ORDER
PER N. K. CHOUDHRY (JM):
This is an appeal preferred by the assessee, against the order of ld.
CIT(A), Amritsar, dated 11.11.2014, pertaining to Asst. Year:2007-08.
2. The assessee has raised the following grounds of appeal.
"1. That the Id.CIT(A) misdirected himself in law and on facts in rejecting the following contentions of assessee, to uphold the validity of impugned order of assessment:
i) That late Smt Manjit Kaur, simply being a nominee of the deceased assessee Shri Kartar Singh Pahara, could not be assessed as legal heir of the deceased for his share in Punjabi Coop. House Building Society Ltd, in exclusion of all the remaining five legal heirs of the deceased;
ii) That late Smt Manjit Kaur, could have been further assessed, through her legal heirs, only in respect of her 1/6th share in the above property, and not the whole;
iii) That by any reckoning, in the given facts, the assessment ought to have been framed in the status of AOP by impleading all the legal heirs of the deceased Shri Kartar Singh Pahara.2 ITA No.112 (Asr)/2015
Asst. Years: 2007-08
2. That without prejudice to above legal grounds, the Id. CIT(A) has erred in confirming the taxation of notional capital gain of Rs.3,65,06,833/- by wrongly upholding that the transfer of land took place on the very date of execution of a Joint Development Agreement with the developers.
3. That the ld. CIT(A) ought to have read the Joint Development agreement in totality, so as not to infer the accrual of capital gain on the very date of execution of the said agreement.
4. That the ld. CIT(A) was not justified overlooking various judicial authorities relied upon by assessee, on a facial distinction drawn by him.
5. That exemption claimed u/s. 54F ought to have been allowed.
6. That the ld. CIT(A) wrongly rejected the assessee's claim that the impugned capital gain, if any, could be assessed only in the hands of Society and not the assesseee member.
7. That the assessee's claim not to tax the impugned gain on the principles of mutuality involved in the transactions, has been wrongly rejected by ld.CIT(A).
8. That charging of interest u/s 234A & 234B has been wrongly confirmed.
9. That initiation of penalty u/s 271(1 (c) has been wrongly confirmed.
10. That the order under appeal is wholly against law and facts of the case."
3. In the instant appeal, there is delay of 1 day while filing in appeal. The ld. AR submitted that the delay was occurred because of his personal difficulties and the same was not intentional and malafide and also relied upon the case of Collector, Land Acquisition Vs. Mst Katiji & Ors. reported in (1987) 167 ITR 471(SC) and shown 'sufficient cause' for 1 day delay for filing the instant appeal, so in the interest of justice, the delay of 1 day is condoned.
4. The brief facts of the case as noted in the assessment order are that on 25.02.2007, the Punjabi Co-operative House Building Society Ltd., Mohali, of which the husband of Late Smt. Manjit Kaur was a member and was allotted plot No.44 measuring 1000 sq. yard by the said society, entered into a tripartite joint development agreement with M/s. HASH Builders (P) Ltd., Chandigarh and M/s. Tata Housing Development Company Ltd. Mumbai. By virtue of tripartite, agreement it was agreed 3 ITA No.112 (Asr)/2015 Asst. Years: 2007-08 among the parties that The Punjabi Co-op.Housing Society Ltd., Mohali, owner of 21.2 acre land, shall transfer its land to M/s. Tata Housing Development Company Ltd. in lieu of monetary consideration and also in kind. As per the agreement the assessee would receive Rs.1,65,00,000/- in addition to two flats of 2250 sq. feet each, worth Rs.2,02,50,000/-.
The Assessee filed return of income declaring total income of Rs.25,71,833/- on 31.03.2008. The same was processed u/s 143(1) of the I.T. Act on 20.06.2007. The assessee had also filed as revised return declaring NIL income on 30.06. 2009. As the original return filed by the assessee was belated, the same cannot be revised so the return filed by the assessee on 30.06.2009. As the original return filed by the assessee was belated, the same cannot be revised so the return filed by the assessee on 30.06.2009 in non-est and as such it is filed. Finally the Assessing Officer determined the liability as under:
I proposed to assessee the difference in the indexed cost as shown in the original return filed on 31.03.2008 and the consideration of 36.32% of your share i.e. Rs.1,31,04,483/-
(Rs.1,33,47,600/-(-)Rs.2,43,117/-) as a long term capital gain.
In case you have any objection to the same file the same on the date of hearing along with supporting evidence.
Further, I purposed to assess rental income at Rs.25,200/-
and interest income at Rs.5,384/-.
Notice U/s.142(1) fixing your case for 11/12/2009 is enclosed. Please note that no adjournment will be allowed as it a time barring case.
Thereafter, the ld. CIT initiated the proceedings u/s.263 and notices have been issued to the legal heir of the assessee and in pursuance to the order passed u/s 263, the Assessing Officer determined the liability again which reproduced herein below.
13.0 Another issue is regarding the amount of consideration which has been proposed in the show cause in present proceedings at Rs.3,67,50,000/-.4 ITA No.112 (Asr)/2015
Asst. Years: 2007-08 There is no dispute on the issue that the total consideration involved in this transaction includes the amount of cash component referred to in clause 4.1 of the agreement and the value of the flat which has to be given by the developer to the members of the society. As regards valuation of the said flat each at Rs.450G per square feet, the rate has to be taken as per the rate offered to the general public. That would be the actual rate of flat at which the builder would offer to any person. The sum of Rs.4500/- per sq. feet is rate as per which HASH is liable to buy from THDC. It is a clear indication of the value of flat, devoid of any special benefit to the members. The rate which could be offered to general public would in any case be not less than 4500/- per sq. ft. Therefore, according to facts, the total value of consideration to be adopted comes at Rs.3,67,50,000/-.
14.0 In view of the above, the transaction is treated as transfer and the capital gain is computed as under:
Sale consideration: Rs.3,67,50,000/-
Less Cost of acquisition
After indexation Rs.2,43,167/-
Long Term Capital Gain Rs.3,65,06,833/-
15.0 The assessee has other income Rs.25,200/- from rent and Rs.5,384/- from interest. The same is also to be added to the income. 16.0 I am satisfied that by not showing the correct amount of capital gain the assessee has concealed income and furnished inaccurate particulars of income. Therefore, penalty proceedings are being initiated u/s 271(1)(c) of the Income Tax Act 1961.
17.0 The income of the assessee is re-computed as under:
Income from LTCG as per return :Rs.27,56,833/-
Addition on account of LTCG :Rs.3,37,50,000/-
Addition on account of Rent :25,200/-
Addition on account of Interest :Rs.5,384/-
Total income :Rs.3,65,37,417/-
Assessed as above, Charge interest u/s 234A, 234B and 234C of the IT Act 1961. Issue penalty notice u/s 271(1)(c) of the IT Act, 1961. Issue demand notice and challan.
5. Feeling aggrieved by the order passed by the Assessing Officer, the Assessee preferred the first appeal before the CIT(A). The ld. CIT (A) confirmed the order passed by the A.O by observing as under:
"7. 11 Keeping in view the aforesaid factual and legal position, I am of the considered view that the AO was fully justified in holding that transaction referred to in JDA falls within the scope of transfer as envisaged in Section 2(47) of the Income Tax Act and the appellant was liable to pay tax under the head 'capital gains' on the said transaction during the year 2006-07 i.e AY 2007-08. The relevant ground of appeal deserves to be rejected.
7.12 In the totality of facts & circumstances discussed supra, I am of the considered opinion that it is a fit case to uphold the addition of Rs.5 ITA No.112 (Asr)/2015
Asst. Years: 2007-08 3,65,06,833/- on account of LTC gain worked out by subtracting the resultant cost of acquisition as on 1.2.2001 at Rs.2,43,167/- from the total transfer consideration of Rs.3,65,06,833/- and the same is hereby confirmed and sustained. This disposes of ground of appeal No.6 to 7 accordingly against the appellant.
8. Regarding ground of appeal No.8 pertaining to the appellant's grievance against non providing the benefit claimed u/s.54F, The appellant not only failed to adduce relevant documentary evidence in support of his claim u/s.54F before the Assessing Officer, but she has also failed to provide relevant corroborative evidence before the undersigned during the appellate proceedings, under consideration. Section 54 lays down two important pre conditions to claim benefit one is provided in 54F(4), which is reproduced as under:
"The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilized by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under subsection (1) of section 139 in an account in any such bank or institution as may be specified in, and utilized in accordance with, any scheme which the Central Government may, by notification in the Official Gazettee, frame in this behalf and such return shall be accompanied by proof of such deposit; and for the purpose of subsection (1) the amount, if any, already utilized by the assessee for the purchase or construction of the new asset together with the amount so deposited shall be deemed to be the cost of the new asset;]"
The assessee has not demonstrated that before the date of filling return for A.Y 2007-08, he has deposited above sum in specified bank or institution. Even till date theses details have not been submitted by the assessee. Similarly, assessee has to satisfy conditions as provided in the provision to section 54F(1), which is reproduced as under:-
Provided that nothing contained in this subsection shall apply where (a) the assessee,-
(i) owns more than one residential house, other than the new asset, on the date of transfer of the original asset; or
(ii) purchases any residential house, other than the new asset, within a period of one year after the date of transfer of the original asset; or
(iii) constructs any residential house, other than the new asset, within a period of three years after the date of transfer of the original asset; and
(iv) the income from such residential house, other than the one residential house owned on the date of transfer of the original asset, is chargeable under the head "Income from house property"6 ITA No.112 (Asr)/2015
Asst. Years: 2007-08 Again these details were neither submitted to AO nor to undersigned. Further no details of construction of house has been submitted for verification purposes to the assessing officer. Under the circumstances AO has rightly rejected the claim of deduction u/s 54F.
9. As regards, the next ground of appeal No. 10 pertaining to charging of interest under sections 234A 85 234B of the I.T. Act, 1961, it is pertinent to point that in my considered opinion, this ground of appeal being consequential in nature, requires no comments. Ground of appeal no.12 is general and consequential in nature, hence dismissed."
6. Feeling aggrieved by the order passed by the ld. CIT(A), the Assessee preferred the instant appeal .
7. That at the outset , the ld. AR argued that all the six legal heirs should have been brought on record and the Assessee (deceased) was only a nominee and acted as a nominee only, however, the Revenue determined the complete liability on the Assessee (deceased) as the same is against the law because the property of the deceased is required to be vest according to Sec.159 & Sec.168 of I.T. Act and also in Succession Law, all the legal heirs entitled to get their respective shares in the property of the deceased husband of the assessee. The assessee also filed the revised return and clarified her stand that she is not liable to pay any tax as an individual with regard to the property of her deceased husband. The ld. AR also submitted that even otherwise no estopple can be applied in the instant case as it is against the law because inadvertently the assessee had filed the return by disclosing the transactions of two properties in her name but subsequently, she filed the revised return and clarified, therefore, if inadvertently she had shown the property as her own then also she cannot become a full owner as law mandates that all the legal heirs are entitled to get their respective share unless and until separate arrangement has been made and/or debarred from inheritance. The ld. AR also relied upon the judgment passed by the Punjab & Haryana High Court in the case of CIT vs. Bakshi Sampuran Singh 133 ITR 0650 and argued that facts of the case are similar to the instance case as the Hon'ble High Court held as under:
7 ITA No.112 (Asr)/2015Asst. Years: 2007-08
"8.After hearing the learned counsel for the parties and going through the record of the case, we are of the opinion that the question of law referred to us has to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue. Mr. Awasthy, learned f counsel for the Revenue, could not cite any authority in support of his case. It is well settled that the income received by the executor during the course of administration belongs to him and he alone is liable to be assessed as such. The title of the residuary legatee accrues only when the administration is complete and after the residue is ascertained and not till then. This principle is enshrined in the provisions of s. 168 of the Act. This view also finds support; from a number of decided cases, such as, V. M. Raghavalu Naidu and Sons vs. CIT (supra), Asit Kumar Ghose vs. Commr. of Agrl. IT(supra), Gobindlal vs. ITO (supra) and Administrator- General of West Bengal for the Estate of Raja P. N. Tagore vs. CIT (supra). Mr. Awasthy learned counsel for the Revenue could not cite any authority taking a contrary view. This also follows from a plain reading of the provisions of s. 168 of the Act."
Section 168 of the Act is also directly applicable to the instant case, therefore, the assessee liability can be restricted to the particular share.
It was further argued by the ld. AR that the CIT(A) has also erred in confirming the taxation of notional capital gain of Rs.3,65,06,833/- by wrongly upholding that the transfer of land took place on the very date of execution of a Joint Development Agreement with the developers. It was argued by the ld. AR that the ld. CIT(A) has adopted the wrong notion and not followed the judgment passed by the Hon'ble High Court in C.S. Atwal vs. CIT 279 CTR 330 (P&H) whereas the Hon'ble High has held that that since no possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.02.2007 so as to fall within the domain of section 53A of the Transfer Act and consequently, section 2(47)(v) of the I.T. Act, did not apply, that further, willingness to perform their part of the contract was absent on the part of the developers, as it could not be performed by them, which was one of the conditions precedent for applying section 53A of the transfer Act. Further, in clause 26 of the JDA dated 25.02.2007, the principle of force majore had been provided for, which would be applicable with full vigour in the circumstances. From the cumulative 8 ITA No.112 (Asr)/2015 Asst. Years: 2007-08 effect of the covenants contained in the JDA read with the registered special power of attorney dated 26.02.2007, it could not be held that the mandatory requirements of section 53A of the Transfer Act were complied with, which stood incorporated in section 2(47)(v) of the Act and once that was so, it could not be said that the Assessees were liable to capital gain tax in respect of the remaining land which was not transferred by them to the developer/builder because of supervising event and not on account of any volition on their part; and that viewed from another angel, it could not be said that any income chargeable to capital gains tax in respect of the remaining land had accrued or arisen to the assessee in the facts of the case.
The ld. AR further submitted that exemption claimed u/s 54F ought to have been allowed in favour of the assessee.
8. On the contrary, the ld. DR submitted that the cases which have been relied upon by the ld. AR are distinguishable to the facts of the instant case. It was further argued that even otherwise other legal heirs have not objected to the original return of the Assessee (deceased) now as reflects from the assessment order itself.
It was further argued by the ld. DR that the order passed u/s 263 by the ld. CIT was never been agitated and/or challenged by the assessee, therefore, the order passed by the authorities below does not requires to be interfered with and same are likely to be upheld/confirmed.
9. We have gone through the facts and circumstances of the case and relevant record as well as rival submissions of the parties. At the outset, it is relevant to mention herein that the assessee was a wife of Late Shri Kartar Singh, who had died on 6.01.2006, and he was survived by three sons, two daughters and one wife as Kartar Singh was a member of the 9 ITA No.112 (Asr)/2015 Asst. Years: 2007-08 Punjab Co-operative House Building Society, Mohali and he was allotted Plot No.44 measuring 1000 Sq. yards vide allotment letter dated 9th January, 2014, that the assessee had entered into the sale agreement and none of the other legal heirs acted or participated in the transactions and it reflects from the record that Smt. Manjeet Kaur (assessee) acted as sole owner of the said property may be on wrong information, guidance or lack of knowledge. According to the Hindu Succession Act and or other subsidiary law in intestate succession, all the legal heirs are entitled to get their respective shares in the property of deceased in accordance with law, however in the instant case the assessee filed the original return in which she had shown the transaction of property under question but later on filed the revised return and try to apprise the Revenue Authorities that she is not a sole owner of the said property and having discussed the details of the legal heirs and other relevant information relating to her deceased husband, it was incumbent upon the Assessing Officer to bring on record all the legal heirs of to assess the impugned capital gain, rather than restricting it in the hands of Mrs. Manjeet Kaur. We have minutely gone through the documents as it reflects from the facts that the assessee have received the earnest money from the Punjab Co-operative House Building Society, Mohali, but there is no document which reflects that earnest money have been distributed among the legal heirs or not even otherwise this required to be invested that whether the assessee had shown herself as sole and exclusive owner of the properties under consideration and/or having any testamentary documents to claim exclusive ownership with rights to take care, deal and disposed off the property under question.
For the sake of brevity, we feel it appropriate to reproduce the contents of the Section159 & 168 of the I.T. Act.
"Sec.159(1) Where a person dies, his legal representative shall be liable to pay any sum which the deceased would have been liable to pay if he had not died, in the like manner and to the same extent as the deceased.
(2) For the purpose of making an assessment (including an assessment, reassessment or recomputation under section 147) of 10 ITA No.112 (Asr)/2015 Asst. Years: 2007-08 the income of deceased and for the purpose of levying any sum in the hands of the legal representative in accordance with the provisions of sub-section(1),-
(a) any proceeding taken against the deceased before his death shall be deemed to have been taken against the legal representative and may be continued against the legal representative from the stage at which it stood on the date of the death of the deceased;
(b) any proceeding which could have been taken against the deceased if he had survived, may be taken against the legal representative; and (c ) all the provisions of this Act shall apply accordingly. (3) The legal representative of the deceased shall, for the purposes of this Act, be deemed to be an assessee.
(4) Every legal representative shall be personally liable for any tax payable by his in his capacity as legal representative if, while his liability for tax remains undercharged, he creates a charge on or disposes of or parts with any assets of the estate of the deceased, which are in, or may come into, his possession, but such liability shall be limited to the value of the asset so charged, disposed of or parted with.
(5) The provisions of sub-section (2) of section 161, Sectio162, and section 167, shall, so far as may be and to the extent to which they are not inconsistent with the provisions of this section, apply in relation to a legal representative.
(6) The liability of a legal representative under this section shall, subject to the provisions of sub-section (4) and sub-section(5), be limited to the extent to which the estate is capable of meeting the liability.
Sec. 168 (1) Subject as hereinafter provided, the income of the estate of a deceased person shall be chargeable to tax in the hands of the executor,-
(a) if there is only one executor, then, as if the executor were an individual; or
(b) if there are more executors than one, as if the executor were an association of persons;
and for the purposes of this Act, the executor shall be deemed to be resident or non-resident according as the deceased persons was a resident or non-resident during the previous year in which his death took place.
(2) The assessment of an executor under this section shall be made separately from any assessment that may be made on him in respect of this own income.
(3) Separate assessment shall be made under this section on the total income of each completed previous year or part thereof as is included in the period from the date of the death to the date of complete distribution to the beneficiaries of the estate according to their several interests.
(4) In computing the total income of any previous year under this section, any income of the estate of that previous year distributed to, or applied to the benefit of, any specific legatee of the estate during that previous year shall be excluded; but the income so excluded shall be included in the total income of the previous year of such specific legatee."
11 ITA No.112 (Asr)/2015Asst. Years: 2007-08 In the instant case also the Assessee cannot be fasten with the complete liability until and unless finalization/and/or receiving the entire sale consideration as the Punjab & Haryana High Court in the case of C.S. Atwal vs. CIT (supra) held as under:
"since no possession had been given by the transferor to the transferee of the entire land in part performance of JDA dated 25.02.2007 so as to fall within the domain of section 53A of the Transfer Act and consequently, section 2(47)(v) of the I.T. Act, did not apply, that further, willingness to perform their part of the contract was absent on the part of the developers, or it could not be performed by them, which was one of the conditions precedent for applying section 53A of the transfer Act; that in clause 26 of the JDA dated 25.02.2007, the principle of force major had been provided for, which would be applicable with full vigour in the circumstances; that from the cumulative effect of the covenants contained in the JDA read with the registered special power of attorney dated 26.02.2007, it could not be held that the mandatory requirements of section 53A of the Transfer Act were complied with, which stood incorporated in section 2(47)(v) of the Act; that once that was so, it could not be said that the assessees were liable to capital gain tax in respect of the remaining land which was not transferred by them to the developer/builder because of supervising event and not on account of any volition on their part; and that viewed from another angle, it could not be said that any income chargeable to capital gains tax in respect of the remaining land had accrued or arisen to the assessee in the facts of the case."
Considering the facts and circumstances of the cases and also respectfully following the judgment passed by the Hon'ble Punjab & Haryana High Court, we feel it appropriate that the ld. CIT would have taken into consideration of the actual amount received as an earnest money for taxation purposes.
With regard to the cases relied upon by the ld AR, it reflects that although the controversy more or less is the same as in the instant case, however, the facts are dissimilar because in those cases, the property have been inherited through will but in the instant cases that is not of the case.
Finally as the instant case requires elaborate discussion with regard to the rights of the assessee as well as other legal heirs qua entitlement /rights/ obligation/liabilities of individual and as the order 12 ITA No.112 (Asr)/2015 Asst. Years: 2007-08 passed by the ld. CIT is erroneous to the extent that he has considered the complete amount including unpaid and unrealized also as notional capital gain, therefore, in our considered opinion, this is fit case to be remanded to the file of the ld. Assessing Officer for deciding afresh while considering the documents pertaining to the sale deed, agreement, society documents, relinquishment deeds etc. and other documents submitted by the other legal heir and/or claim of the Assessee as well as in the light of the judgments, the applicability of the same in the instant case and also while considering the Sec.159 and 168 of I.T. Act and Hindu Succession Act etc to which the Assessee and legal heirs are subjected, hence, in the interest of justice, we remand the case to the file of ld. Assessing Officer for deciding afresh.
11. In the result, the appeal filed by the assessee is allowed for statistical purposes.
Order pronounced in the open Court on 30.12. 2016 Sd/- Sd/-
(T. S. KAPOOR) (N.K.CHOUDHRY)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated:30.12.2016.
/PK/ Ps.
Copy of the order forwarded to:
(1) The Assessee:
(2) The
(3) The CIT(A),
(4) The CIT,
(5) The SR DR, I.T.A.T.,
True copy
By Order