Income Tax Appellate Tribunal - Pune
Aruna A. Khadilkar, Pune vs Assessee on 11 November, 2013
IN THE INCOME TAX APPELLATE TRIBUNAL
PUNE BENCHES "B", PUNE
BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER
AND SHRI R.S. PADVEKAR, JUDICIAL MEMBER
ITA No. 648/PN/2012
(Assessment Year : 2007-08)
Smt. Aruna A. Khadilkar,
1170/31/6, Revenue Colony,
Vrushali Apartment,
Shivajinagar, Pune - 411 005.
PAN : AFIPK9985M .... Appellant
Vs.
Income Tax Officer,
Ward 3(2), Pune. .... Respondent
Appellant by : Shri Nikhil Pathak
Respondent by : Shri S. P. Walimbe
Date of hearing : 11-11-2013
Date of pronouncement : 30-12-2013
ORDER
PER G. S. PANNU, AM
This appeal by the assessee is directed against an order of the Commissioner of Income Tax (Appeals)-II, Pune dated 30.12.2011 which, in turn, has arisen from an order dated 24.12.2009 passed by the Assessing Officer, u/s 143(3) of the Income-tax Act, 1961 (in short "the Act"), pertaining to the assessment year 2007-08.
2. In this appeal, the only dispute relates to the taxability on capital gains arising on sale of property at 310, Narayan Peth, Pune. In brief, the facts are that assessee jointly owned the aforesaid property with other co-owners and assessee's share was 1/4th. As per the sale-deed executed on 16.09.2006, the property was sold to a purchaser whereby consideration payable was Rs.2.30 crores in cash and Rs.2.40 crores in the form of constructed area of 3000 sq.ft. thereby reflecting a total consideration of Rs.4.70 crores. Out of the cash consideration of Rs. 2.30 crores, assessee received his share of 2 ITA No. 648/PN/2012 A.Y. 2007-08 Rs.60 lacs. In the return of income filed, assessee disclosed capital gains on sale of property. The Assessing Officer noted that the value assessed by the Stamp Valuation Authority for the purposes of transfer of property was higher than the total consideration of Rs. 4.70 crores declared by the assessee. Since assessee disputed the valuation made by the Stamp Valuation Authority, in terms of section 50C(2) of the Act, the Assessing Officer referred the matter to the Valuation Officer (VO), Solapur for ascertaining the Fair Market Value (i.e. FMV) of the property. The VO valued the property at Rs.5,91,52,000/- and assessee's share was determined at Rs.1,47,88,000/-. The Assessing Officer adopted the figure of Rs.1,47,88,000/- as the full value of consideration received by the assessee as mandated by section 50C of the Act and computed capital gains of Rs.88,15,400/- after allowing exemption u/s 54EC & 54F of the Act. The aforesaid determination of capital gain has been affirmed by the CIT(A) in-principle except to the extent of amount of sale consideration adopted by the Assessing Officer in order to compute the capital gains. Instead of Rs.5.91 crores adopted by the Assessing Officer, the CIT(A) directed the Assessing Officer to adopt the full value of sale consideration at Rs.4,70,00,000/-, as the FMV determined by the VO was higher than the value of property determined by the Stamp Valuation Authority. Not being satisfied with the order of the CIT(A), assessee is in further appeal before us.
3. Before us, the only point raised by the assessee is that one of the obligations of the transferee was to give a constructed area of 3000 sq.ft. to the assessee co-owners, which has not been adhered to by the transferee. The learned counsel pointed out that assessee alongwith other co-owners had also sent a notice to the purchaser in this regard and legal proceedings have been initiated for enforcing performance of the contract. It was contended that the event of non-handing-over of the constructed area, as agreed in the agreement by the purchaser, would lead to an inference that no 'transfer' within the meaning of section 2(47) of the Act has taken place and thus no capital gain was exigible to tax in terms of the sale-deed dated 14.08.2006. 3 ITA No. 648/PN/2012
A.Y. 2007-08
4. In our considered opinion, the plea of the assessee is quite misplaced inasmuch as the transfer of the property in favour of the purchaser has taken place during the previous year relevant to the assessment year under consideration on execution of the sale-deed. Non-receipt of complete consideration cannot be construed as a ground for avoidance of liability to capital gains tax because section 45(1) of the Act specifically provides that profits or gains arising from the transfer of a capital asset effected in the previous year shall be chargeable to tax under the head 'capital gains' and shall be deemed to be the income of the previous year in which the transfer took place. Ostensibly, in the present case, it is undeniable that the transfer of property has taken place in the previous year relevant to the assessment year under consideration and thus capital gain arising thereon is liable to be charged in the instant assessment year. The Hon'ble Delhi High Court in the case of CIT vs. Rohtak Textile Mills Ltd. (1982) 138 ITR 195 (Del) supports the aforesaid understanding of the implication of section 45 of the Act and we find no justification in the plea of the assessee which has been rightly negated by the CIT(A). The CIT(A) has lucidly brought out the justification for holding that a 'transfer' within the meaning of section 2(47) of the Act has taken place during the year under consideration and therefore, there is no escapement from the liability of capital gains tax. Accordingly, we affirm the order of the CIT(A) and assessee fails on this aspect.
5. In the result, appeal of the assessee is dismissed.
Order pronounced in the open Court on 30 th December, 2013.
Sd/- Sd/-
(R.S. PADVEKAR) (G.S. PANNU)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Pune, Dated : 30 th December, 2013
Sujeet
4 ITA No. 648/PN/2012
A.Y. 2007-08
Copy of the order is forwarded to: -
1) The Assessee;
2) The Department;
3) The CIT(A)-II, Pune;
4) The CIT-II, Pune;
5) The DR, "B" Bench, I.T.A.T., Pune;
6) Guard File.
By Order
//True Copy//
Sr. Private Secretary
I.T.A.T., Pune