Income Tax Appellate Tribunal - Indore
Pramod Kumari Singhal, Indore vs Department Of Income Tax
1
IN THE INCOME TAX APPELLATE TRIBUNAL
INDORE BENCH, INDORE
Before Shri Joginder Singh, Judicial Member
And
Shri R.C. Sharma, Accountant Member
ITA No.89/Ind/2013
A.Y. 2008-09
ITO 2(1), Indore :: Appellant
Vs
Smt. Pramod Kumari Singhal
Indore
PAN - AGTPS - 5398C :: Respondent
Appellant by Shri Vijay Bansal
Respondent by Shri R.A. Verma
Date of hearing 28.5.2013
Date of 17.6.2013
pronouncement
O R D E R
PER SHRI R.C. SHARMA, AM
This is an appeal by the revenue against the order of the CIT(A) dated 12.11.2012 for the A.Y. 2008-09 2 in the matter of order passed u/s 143(3) of the Act. Following grounds have been taken by the revenue :-
"On the facts and in the circumstances of the case the learned CIT(A) erred in -
1. Deleting the addition of Rs. 11,99,500/- on account of short term capital gain and directed to accept the long term capital gain at Rs. 21,37,017/- as shown by the assessee and allow the deduction u/s 54F to that extent resulting the long term capital gain at Rs. Nil.
2. Deleting the addition of Rs.9,99,000/- on account of undisclosed cash deposits u/s 68 of the Act."
2. Rival contentions have been heard and record perused. The facts, in brief, are that the assessee had purchased a plot of land on 13.8.1994 from Shri Amritlal Dhawan for Rs. 3,11,000/-. The assessee has obtained possession of plot and also executed power of attorney in favour of her husband, Dr. V.P. Singhal. During the 3 year, under consideration, the assessee had sold this plot on which long term capital gain was computed and deduction was claimed u/s 54F of the Act. The AO declined assessee's claim of long term capital gain on the plea that the said plot of land was purchased by the assessee on 26.10.2007. Thus, as per the AO, the plot was not held for more than three years, accordingly, the assessee's claim for long term capital gain was declined.
3. By the impugned order, the CIT(A) allowed the assessee's claim after having the following observations :-
"4.2 Ground Nos. (2) & (3) : Through these grounds, the assessee has challenged the treatment of long term capital gain (on sale of plot 242AG Scheme No. 54, Indore) as short term capital gain of Rs. 11,99,500/- and thereby disallowing her claim of deduction u/s 54F of Rs. 21,37,017/- (on purchase of house (AH-31, Senior HIG, Sukhlia, Indore). During the year, the assessee had sold a plot at 242, AG Scheme No. 54 Indore of 2970.19 sq.ft. for Rs. 21,00,000/- as per 4 sale deed dated 26.10.2007 to one Smt. Sabita Nathani. (The value for the purpose of stamp duty was Rs. 30,36,500/-). The said plot was purchased through an agreement from Shri Amrit Lal Dhawan for Rs. 3,11,000/- on 13.08.1994. The assessee had obtained possession of plot as well as a power of attorney in favour of her husband Dr. V.P.Singhal from the seller Shri Amrit Lal Dhawan. The amount of consideration originally agreed was for Rs. 7,26,000/-. However, as per the amended agreement dated 28.09.1994, due to the various amount payable to IDA (Indore Development Authority) and other liabilities on the seller, amount originally agreed was reduced to Rs. 3,11,000/-. In the context the AO observed that assessee had offered no reason and proof for any further payment to IDA. He further observed that after said agreement, the said plot was registered in the name of the assessee in the month of March- April,07 i.e. after 12 years. In view thereof the AO denied the ownership and possession of the 5 assessee since 1994 and considered the same as under ownership & possession from the date of registration of sale deed on 24.4.2007. This plot of land was sold during A.Y. 08-09 vide registered document No. 1A/1938 dated 26.10.2007 for Rs. 21,00,000/- (M.V. Rs. 30,36,500/-). Accordingly, he calculated the Short Term Capital Gain of Rs. 11,99,500 by deducting the MV of Rs. 18,37,000 on the date of registration i.e. on 24.4.2007 from the M.V. of Rs. 30,36,500 as on the date of sale i.e. 26.10.2007. This also lead to denial of deduction u/s 54F (as the same is available against the long term capital gain.
4.2.1 After verifying the submission made by the assessee and documents placed on records, I am of the considerate view that it is a common practice in the transaction of sale/purchase of immovable property like land & building to make the payment in full & instead of executing registered document in favour of buyer, an irrevocable power of attorney is being obtained in the name of the buyer or in the 6 name of some family person at the choice of buyer. This is what has happened in the present case. The assessee had purchased the said plot in the year of 1994. As mentioned in the agreement, the amount of Rs. 1,00,000/- was paid vide cheque no. 966027 dated 13.8.1994 (of Rajasthan Bank) and the balance was paid in cash. It was explained to me that when assessee intended to sale that property in the year 2007, the buyer were generally unwilling to purchase a property which was held by way of simply agreement and power of attorney. It was for that reason, she had got that property registered in her name. For that, her husband having the power of attorney had signed on behalf of Amrit Lal Dhawan (the earlier owner) and then sold that property. While the counsel pleaded for the case of assessee on this issue, I noticed that even that property was not disclosed in the balance sheet as on 31.03.2007. But then it was argued that even if the said plot is treated as undisclosed and the investment thereon as 7 unexplained, no remedial action could be restored to now under the income tax act for the transaction made in AY 1994-95 at this tage and for that matter the nature of long term capital gain cannot be changed to sort term capital gain (in the matter as AO had done) and/or assessee could be deprived of the claim of deduction u/s 54F. In the facts of the case, I am of the view that the ownership over the said plot has to be reckoned from the year 1994 and as such the capital gain on sale of that plot is to be treated as "long term capital gain". Moreover, as the assessee had purchased a house (AH-31, Senior HIG, Sukhlia, Indore) on 24.2.2007 and that would be within a period of one year before the date of sale of the said plot (242 AG Scheme No. 54, Indore), the assessee would be eligible to deduction u/s 54F. The AO is, therefore, directed to accept the long term capital gain at Rs. 21,37,017/- as shown by the assessee and allow the deduction u/s 54F to that extent resulting into Net Long Term Capital 8 gain at NIL. Accordingly, the addition of Rs. 11,99,500/- as short term capital gain stands deleted."
4. We have considered the rival contentions, carefully gone through the orders of the authorities below and find from record that the plot of land was purchased by the assessee on 13.8.1994. Even though registered sale deed was not executed in favour of the assessee but the power of attorney was executed and registered in the name of husband of the assessee and the effective possession was taken by the assessee. The payment of Rs. 1 lac was made by account payee cheque dated 3.8.1994 of Rajasthan Bank and balance payment was made in cash. During the year, under consideration, when the assessee was intending to sell the plot, the buyer did not agree to buy the same since the plot was not registered in the name of the assessee. Therefore, the assessee first got the sale deed registered in her name which was signed by her husband as a power of attorney 9 holder of the seller which he was already holding. Since the plot was registered in the name of the assessee only in the year under consideration, the AO treated that the assessee had become owner of the plot only in this year. There is no substance in the order of the AO insofar as the assessee has taken effective possession of the plot in the year 1994. Thus, the sale was complete as per provisions of section 2(47) read with section 54A of Transfer of Property Act. The detailed finding recorded by the CIT(A) with respect to the question of acquisition of plot and sale of plot has not been controverted. Accordingly, we do not find any infirmity in the order of CIT(A) for directing the AO to treat the year of acquisition of plot as 1994 and allow the assessee benefit of indexation and long term capital gains. The AO is directed to recompute the long term capital gains and allow deductions u/s 54F in terms of our above discussion.
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5. The AO has also made addition of Rs. 9,99,000/- in respect of cash deposit in the bank account on 18.10.2007. By the impugned order, the CIT(A) deleted the addition after having the following observations :-
"4.3 Ground No. (4) Through this ground, the assessee has challenged the addition of Rs. 9,99,000/- being cash deposited on 18.10.2007 in the bank account of assessee maintain in the Bank of Rajasthan. The AO added this sum u/s 64 of the Act as no explanation thereon was given. During the appeal proceedings, it was submitted that the sum represented the advance amount received from Sri Kiran Bajaj against the sale of IDA plot (242 AG Scheme No.54, Indore) but then immediately thereafter the deal was cancelled and assessed had returned the advance by paying back Rs. 10,00,000/- vide account payee cheque no. 833571 dated 23.10.2007 and that after cancellation of that deal with Sri Kiran Bajaj, the plot was sold to one Smt. Sabita Nathani for Rs. 21,00,000 (refer the issue dealt in para (2) above). 11 The assessee however could not produce any evidence such as agreement to sale, saying that the same was not preserved as deal had cancelled. Keeping in view the fact that amount was finally returned back to Shri Kiran Bajaj through bank cheque, and the fact that the said plot was indeed finally sold to Smt. Sabita Nathani, the explanation given onto the source of the said cash deposit deserves to be accepted. In view thereof, the addition of Rs.9,99,000/- is deleted."
6. Rival contentions have been considered and record perused. In terms of findings recorded by the CIT(A), the amount so deposited in the bank was received by her from Shri Kiran Bajaj against the sale of IDA plot no. 242 AG Scheme No. 54, Indore. Since the sale deed did not materialise, the assessee immediately repaid the amount by way of account payee cheque no. 833571 dated 23.10.2007. The detailed finding recorded by the CIT(A) is as per material on record which has not been controverted by the department by bringing any positive 12 material on record. Accordingly, we do not find any infirmity for deleting the addition made in respect of cash deposited in the bank account. In the result, ground no. 2 of the revenue's appeal is dismissed.
7. In the result, the appeal filed by the department is disposed in part in terms indicated hereinabove.
Order pronounced in open Court on 17th June, 2013.
Sd sd
(JOGINDER SINGH) (R.C. SHARMA)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Dated - 17th June, 2013
Copy to : Appellant/Respondent/CIT/CIT(A)/DR Dn/-56