Income Tax Appellate Tribunal - Lucknow
Deputy Commissioner Of Income Tax, ... vs M/S. R.D. Cement Industries Private ... on 17 September, 2024
I.T.A. Nos.338, 339 & 340/Lkw/2019
1
Assessment Years:2012-13 to 2014-15
IN THE INCOME TAX APPELLATE TRIBUNAL
LUCKNOW BENCH 'A', LUCKNOW
BEFORE SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER
AND SHRI SUBHASH MALGURIA, JUDICIAL MEMBER
I.T.A. Nos.338, 339 & 340/Lkw/2019
Assessment Years:2012-13 to 2014-15
Dy.C.I.T., Vs. M/s R. D. Cement Industries Pvt. Ltd.
Range-5, Lucknow. 363/288, Hasan Ganj Bawli,
Sahadatganj, Lucknow.
PAN:AABCR1474P
(Appellant) (Respondent)
Appellant by Shri H. P. Singh, Advocate
Respondent by Shri Neil Jain, CIT (D.R.)
ORDER
PER ANADEE NATH MISSHRA, A.M.
(A) These three appeals have been filed by Revenue against the impugned appellate order dated 26/03/2019 for assessment year 2012-13, dated 29/03/2019 for assessment year 2013-14 and dated 29/03/2019 for assessment year 2014-15 passed by learned Commissioner of Income Tax (Appeals) ["CIT(A)" for short]. For the sake of convenience and brevity, these three appeals are hereby disposed off through this consolidated order.
(B) The original grounds of appeal and the revised grounds of appeal filed by the Revenue in I.T.A. No.338/Lkw/2019 are as under:
Original Grounds of Appeal "1. The Ld. CIT [A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 and deleting the addition Rs.9,21,55,000/- made on protective basis by ignoring the legal and factual observations mentioned in the I.T.A. Nos.338, 339 & 340/Lkw/2019 2 Assessment Years:2012-13 to 2014-15 assessment order as well as registered sale deeds dated 31.03.2013 and 12.07.2013.
2. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating that the date of transfer of land shall be determined by the provisions of Transfer of Property Act and not by the entries made in books of accounts of the transferor and transferee entity.
3. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating that the land has not been transferred during the F.Y. 2011-12 relevant to A.Y. 2012-13 for the reason that neither the possession of land was handed over to the transferee nor any sale deed was registered during the F.Y. 2011-12.
4. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating that section 53A of the Transfer of Property Act does not rescue the assessee for the reason that the possession of any part of the property was not handed over to the transferee in the F.Y. 2011-12 relevant to A.Y. 2012-13 as mentioned in ground no. 6 to 9 below.
5. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating that contents of the registered sale deeds dated 31.03.2013 & 12.07.2013 shall prevail upon entries made in books of account.
6. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating the following facts mentioned in the sale deed dated 31.03.2013:-
(i) The transferor doth hereby transfers, conveys and assigns the land measuring 2974 sq. mtr. to transferee in pursuance of resolution dated 21.03.2013 of Board of Directors (para-1 at page-4 of sale deed dated 31.03.2013].
I.T.A. Nos.338, 339 & 340/Lkw/2019 3 Assessment Years:2012-13 to 2014-15
(ii) The seller has handed over the actual physical possession of the property mentioned above to the Purchaser with all its rights and privileges so far held and enjoyed by the seller (para-3 at page-4 of sale deed dated 31.03.2013)
7. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to tax in A.Y. 2012-13 without appreciating that the facts mentioned in ground no. 6 above clearly prove that the decision to transfer/sell the land measuring 2974 sq mtr was taken by Board of Directors on 21.03.2013 (F.Y. 2012-13) and the possession of the land was also handed over to the transferee company on the date of registry of sale deed, i.e. 31.03.2013 F.Y. 2012-13) and these facts demolish the claim of the assessee regarding transfer and handing over of possession of land to the transferee in the F.Y. 2011-12.
8. The learned CIT(A) has erred in law and on facts in holding that the capital gains is chargeable to tax in assessment year 2012- 13 without appreciating the following facts mentioned in the sale deed dated 12/07/2013:
(i) Whereas the meeting of Board of Directors of the Transferor Company was held and necessary resolution was passed in its board meeting dated 08.07.2013 for transferring the entire project of Lucknow in favour of its Subsidiary company, (last para at page-2 of sale deed dated 12.07.2013)
(ii) In pursuance of the said resolution of Board of Directors the transferor doth hereby transfers conveys and assigns the land measuring 24,907.04 sq mtrs. to the transferee (para-1 at page-3 of the sale deed dated 12.07.2013).
(iii) The transferor has on this day of execution of the present deed delivered the actual peaceful vacant possession of the demised plot of land alongwith all the constructions thereon hereby transferred/assigned and enjoyed by the Transferor to hold the same unto the Transferee and Transferee has acknowledged the I.T.A. Nos.338, 339 & 340/Lkw/2019 4 Assessment Years:2012-13 to 2014-15 same, (para-7 at page-4 of the sale deed dated 12.07.2013).
9. The Ld. CIT (A) has erred in law and on facts in holding that the capital gains is chargeable to in A.Y. 2012-13 without appreciating the facts mentioned in ground no. 8 above clearly prove that the decision to transfer/sell the land measuring 24907.04 sq mtr was taken by Board of Directors on 08.07.2013 (F.Y. 2013 14] and the possession of the land was also handed over to the transferee on the date of registry of sale deed, i.e. 12.07.2013 (F.Y. 2013 14) and these facts once again demolish the claim of the assessee regarding transfer and handing over of possession of land to the transferee in the F.Y. 2011-12.
10. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the capital gains shall be computed on the basis of circle rate adopted by the stamp valuation authority in the sale deed/transfer deed regardless of the fact that no stamp duty was payable on the transfer of the land.
11. The Ld. CIT (A) has erred in law and on facts indeleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the assessee's claim of land purchase and its transfer to subsidiary company to be in the nature of trading activity instead of transfer of capital assets is completely false, fabricated and misleading for the reason that assessee's Trading and P&L account for the F.Y. 2011-12 do not show any sale or purchase of land. As a matter of fact, both the sales and purchases of the assessee are zero as per accounts as well as ITR and therefore land cannot be treated as stock in trade and it is a capital asset only.
12. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the provisions of section 50C are clearly attracted on sale/transfer of land for the reason that the transferred land is a capital asset and not a trading item as mentioned in ground no.7 above.
I.T.A. Nos.338, 339 & 340/Lkw/2019 5 Assessment Years:2012-13 to 2014-15
13. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the rate of Rs.5000/- per sq. mtr is the rate adopted by the stamp valuation authority as per registered sale deed dated 31.03.2013 itself and the AO has to apply the rate adopted by the stamp valuation authority as per section 50C of the IT Act.
14. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the value of land calculated by the assessee at Rs.2,92,20,000/- is not in accordance with the rate of Rs.5,000/- applied by the stamp valuation authority in the registered sale deed dated 31.03.2013.
15. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that in both the registered sale/transfer deeds dated 31.03.2013 and 12.07.2013, the land has not been mentioned to be industrial land and therefore the circle rate of industrial land is not applicable.
16. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that the rate applied by D.V.O. Kanpur as on 31/03/2018 is not relevant for assessment year 2012-13.
17. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- made on protective basis without appreciating that assessee's submission regarding circle rate @Rs.5,000/- per sq. mtr as mentioned in the registered sale/transfer deeds being a typographical mistake is incorrect and is leading for the reason that any objection on or application for correction has never been filed by the assessee before the stamp valuation authority."
Revised Grounds of Appeal "1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- without appreciating the fact that the land has not been transferred during the F.Y. 2011-12 relevant to A.Y. 2012-13 for the reason that neither the I.T.A. Nos.338, 339 & 340/Lkw/2019 6 Assessment Years:2012-13 to 2014-15 possession of land was handed over to the transferee nor any sale deed was registered during the F.Y.2011-12 and the date of transfer of land shall be governed by the Transfer of Property Act and not by the entries made in books of account of transferee & transferor.
2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.9,21,55,000/- without appreciating the facts mentioned in the sale deed dated 12.07.2013 wherein it is clearly stated that in the meeting of Board of Directors of the assessee Company necessary resolution was passed dated 08.07.2013 for transferring the entire project of Lucknow in favour of its Subsidiary Company and whereby in pursuance to this meeting the assessee company on 12.07.2013 delivered the actual peaceful vacant possession of the plot of land alongwith all the constructions thereon to the transferee.
3. The Ld. CIT(A) has erred in law and on facts in considering the amended provisions of section 17(1A) and section 49 of the Registration Act, 1908 which say that until and unless an agreement is registered with the authorities concerned, it cannot materialize into a valid transfer and accordingly no cognizance can be taken of the provisions embedded in Section 53A of the Transfer of Property Act, 1882.
4. The Ld CIT(A) has erred in law and on facts to consider the rationale of the decision of Hon'ble Supreme Court in the case Seshasayee Steel Put Ltd. vs ACIT (2020) 187 DTR (SC) 241 that in order to attract the provisions of section 53A of Transfer of Property Act, the transferee must, in part performance of the contract have taken possession of the property or any part thereof and the transferee must also have performed his part of the agreement in order to constitute a value element of sale/transfer and unless these two conditions, among others, are satisfied, provisions of section 53 of Transfer of Property Act cannot be enforced.
5. The Ld. CIT(A) had erred in law and on facts in deleting the addition of Rs.9,21,55,000/- without appreciating that the circle rate as on 31.03.2013 and 12.07.2013 were the same and, therefore, the circle rate of Rs.5,000/- per sq. mtr. as mentioned in sale deed dated 31.03.2013 is also applicable for the sale deed dated 12.07.2013 and the AO has to apply the I.T.A. Nos.338, 339 & 340/Lkw/2019 7 Assessment Years:2012-13 to 2014-15 rate adopted by the stamp valuation authority as per section 50C of the IT Act, 1961.
6. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 9,21,55,000/- without appreciating the fact that in the registered sale/transfer deed dated 12.07.2013, the land has not been mentioned as industrial land and, therefore, there is no basis for circle rate of industrial land to be applicable in this case.
(B.1) The original grounds of appeal and the revised grounds of appeal filed by the Revenue in I.T.A. No.338/Lkw/2019 are as under:
Original Grounds of Appeal "1. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/- by ignoring the legal and factual observations mentioned in the assessment order as well as registered sale deed dated 31.03.2013.
2. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-without appreciating that the date of transfer of land shall be determined by the provisions of Transfer of Property Act and not by the entries made in books of accounts of the transferor and transferee entity.
3. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/- without appreciating that the land has not been transferred during the F.Y. 2011-12 relevant to A.Y. 2012-13 for the reason that neither the possession of land was handed over to the transferee nor any sale deed was registered during the F.Y. 2011-12.
4. 4. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-| without appreciating that section 53A of the Transfer of Property Act does not rescue the assessee for the reason that the possession of any part of the property was not handed over to the transferee in the F.Y. 2011-12 relevant to A.Y. 2012-13 as mentioned in ground no. 7 & 8 below.
5. The Ld. CIT (A) has erred in law and on facts in Covered in 1.
Above. deleting the addition of Rs. 4,02,39,545/-without I.T.A. Nos.338, 339 & 340/Lkw/2019 8 Assessment Years:2012-13 to 2014-15 appreciating that contents of the registered sale deed dated 31.03.2013 shall prevail upon entries made in books of account.
6. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/-without appreciating that the capital gains shall be computed on the basis of circle rate adopted by the stamp valuation authority in the sale deed/transfer deed regardless of the fact that no stamp duty was payable on the transfer of land.
7. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-without appreciating the following facts mentioned in the sale deed dated 31.03.2013:-
(i) The transferor doth hereby transfers, conveys and assigns the land measuring 2974 sq. mtr. to transferee in pursuance of resolution dated 21.03.2013 of Board of Directors (para-'1' at page-4 of sale deed dated 31.03.2013).
(ii) The seller has handed over the actual physical possession of the property mentioned above to the Purchaser with all its rights and privileges so far held and enjoyed by the seller. (para-3 at page-4 of sale deed dated 31.03.2013)
8. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/-without appreciating that the facts mentioned in ground no. 7 above clearly prove that the decision to transfer/sell the land measuring 2974 sq mtr was taken by Board of Directors on 21.03.2013 (F.Y. 2012-13) and the possession of the land was also handed over to the transferee company on the date of registry of sale deed, i.e. 31.03.2013 (F.Y. 2012-13) and these facts demolish the claim of the assessee regarding transfer and handing over of possession of land to the transferee in the F.Y. 2011-12.
9. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/-without appreciating that the provisions of section 50C are clearly attracted on sale/transfer of land for the reason that the transferred land is a capital asset.
I.T.A. Nos.338, 339 & 340/Lkw/2019 9 Assessment Years:2012-13 to 2014-15
10. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-without appreciating that the rate of Rs. 5000/-per sq. mtr is the rate adopted by the stamp valuation authority as per registered sale deed dated 31.03.2013 itself and the AO has to apply the rate adopted by the stamp valuation authority as per section 50C of the IT Act.
11. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-without appreciating that the value of land calculated by the assessee at Rs. 3,57,84,000/-is not in accordance with the rate of Rs. 5,000/-applied by the stamp valuation authority in the registered sale deed dated 31.03.2013.
12. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/- without appreciating that the rate applied by DVO Kanpur as on 31.03.2008 is not relevant for A.Y. 2013-14.
13. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/ without appreciating that in the registered sale/transfer deed dated 31.03.2013, the land has not been mentioned to be industrial land and therefore the circle rate of industrial land is not applicable.
14. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs. 4,02,39,545/-without appreciating that assessee's submission regarding circle rate @ Rs. 5,000/-per sq. mtr as mentioned in the registered sale/transfer deeds being a typographical mistake is incorrect and misleading for the reason that any objection or application for correction has never been filed by the assessee before the stamp valuation authority."
Revised Grounds of Appeal "1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/- without appreciating the fact that the land has not been transferred during the F.Y. 2011-12 relevant to A.Y. 2012-13 for the reason that neither the possession of land was handed over to the transferee nor any sale deed was registered during the F.Y.2011-12 and the date of transfer of land shall be governed by the Transfer of Property I.T.A. Nos.338, 339 & 340/Lkw/2019 10 Assessment Years:2012-13 to 2014-15 Act and not by the entries made in books of account of transferee & transferor.
2. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/- without appreciating the facts mentioned in the sale deed dated 12.07.2013 wherein it is clearly stated that in the meeting of Board of Directors of the assessee Company necessary resolution was passed dated 08.07.2013 for transferring the entire project of Lucknow in favour of its Subsidiary Company and whereby in pursuance to this meeting the assessee company on 12.07.2013 delivered the actual peaceful vacant possession of the plot of land alongwith all the constructions thereon to the transferee.
3. The Ld. CIT(A) has erred in law and on facts in considering the amended provisions of section 17(1A) and section 49 of the Registration Act, 1908 which say that until and unless an agreement is registered with the authorities concerned, it cannot materialize into a valid transfer and accordingly no cognizance can be taken of the provisions embedded in Section 53A of the Transfer of Property Act, 1882.
4. The Ld CIT(A) has erred in law and on facts to consider the rationale of the decision of Hon'ble Supreme Court in the case Seshasayee Steel Put Ltd. vs ACIT (2020) 187 DTR (SC) 241 that in order to attract the provisions of section 53A of Transfer of Property Act, the transferee must, in part performance of the contract have taken possession of the property or any part thereof and the transferee must also have performed his part of the agreement in order to constitute a value element of sale/transfer and unless these two conditions, among others, are satisfied, provisions of section 53 of Transfer of Property Act cannot be enforced.
5. The Ld. CIT(A) had erred in law and on facts in deleting the addition of Rs.4,02,39,545/- without appreciating that the circle rate as on 31.03.2013 and 12.07.2013 were the same and, therefore, the circle rate of Rs.5,000/- per sq. mtr. as mentioned in sale deed dated 31.03.2013 is also applicable for the sale deed dated 12.07.2013 and the AO has to apply the rate adopted by the stamp valuation authority as per section 50C of the IT Act, 1961.
I.T.A. Nos.338, 339 & 340/Lkw/2019 11 Assessment Years:2012-13 to 2014-15
6. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs.4,02,39,545/- without appreciating the fact that in the registered sale/transfer deed dated 12.07.2013, the land has not been mentioned as industrial land and, therefore, there is no basis for circle rate of industrial land to be applicable in this case."
(B.2) The original grounds of appeal and the revised grounds of appeal filed by the Revenue in I.T.A. No.340/Lkw/2019 are as under:
Original Grounds of Appeal "1. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- by ignoring the legal and factual observations mentioned in the assessment order as well as registered sale deed dated 31.03.2013.
2. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the date of transfer of land shall be determined by the provisions of Transfer of Property Act and not by the entries made in books of accounts of the transferor and transferee entity.
3. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the land has not been transferred during the F.Y. 2011-12 relevant to A.Y. 2012-13 for the reason that neither the possession of land was handed over to the transferee nor any sale deed was registered during the F.Y. 2011-12.
4. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that section 53A of the Transfer of Property Act does not rescue the assessee for the reason that the possession of any part of the property was not handed over to the transferee in the F.Y. 2011-12 relevant to A.Y. 2012-13 as mentioned in ground no. 7 & 8 below.
5. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that contents of the registered sale deed dated 31.03.2013 shall prevail upon entries made in books of account.
I.T.A. Nos.338, 339 & 340/Lkw/2019 12 Assessment Years:2012-13 to 2014-15
6. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the capital gains shall be computed on the basis of circle rate adopted by the stamp valuation authority in the sale deed/transfer deed regardless of the fact that no stamp duty was payable on the transfer of land.
7. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating the following facts mentioned in the sale deed dated 31.03.2013:-
(i) Whereas the meeting of Board of Directors of the Transferor Company was held and necessary resolution was passed in its board meeting dated 08.07.2013 for transferring the entire project of Lucknow in favour of its Subsidiary company, (last para at page-2 of sale deed dated 12.07.2013)
(ii) In pursuance of the said resolution of Board of Directors the transferor doth hereby transfers conveys and assigns the land measuring 24,907.04 sq mtrs. to the transferee (para-1 at page-3 of the sale deed dated 12.07.2013).
(iii) The transferor has on this day of execution of the present deed delivered the actual peaceful vacant possession of the demised plot of land alongwith all the constructions thereon hereby transferred/assigned and enjoyed by the Transferor to hold the same unto the Transferee and Transferee has acknowledged the same, (para-7 at page-4 of the sale deed dated 12.07.2013).
8. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the facts mentioned in ground no. 7 above clearly prove that the decision to transfer/sell the land measuring 24907.04 sq mtr was taken by Board of Directors on 08.07.2013 (F.Y. 2013-14) and the possession of the land was also handed over to the transferee company on the date of registry of sale deed, i.e. 12.07.2013 (F.Y. 2013-14) and these facts demolish the claim I.T.A. Nos.338, 339 & 340/Lkw/2019 13 Assessment Years:2012-13 to 2014-15 of the assessee regarding transfer and handing over of possession of land to the transferee in the F.Y. 2011-12.
9. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the provisions of section 50C are clearly attracted on sale/transfer of land for the reason that the transferred land is a capital asset.
10. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the circle as on 31/03/2013 and 12/07/2013 were the same and therefore the circle rate of Rs. 5000/- per sq. as mentioned in sale deed dated 31.03.2013 is also applicable for the sale deed dated 12/07/2013.
11. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the rate of Rs.5,000/- per sq. mtr is the rate adopted by the stamp valuation authority as per registered sale deed dated 31/03/2013 itself and the Assessing Officer has to apply the rate adopted by the stamp valuation authority as per section 50C of the IT Act.
12. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the value of land calculated by the assessee at Rs. 3,57,84,000/- is not in accordance with the rate of Rs. 5,000/- applied by the stamp valuation authority in the registered sale deed dated 31.03.2013.
13. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that the rate applied by DVO Kanpur as on 31.03.2008 is not relevant for A.Y. 2014-15.
14. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that in the registered sale/transfer deed dated 12.07.2013, the land has not been mentioned to be industrial land and therefore the circle rate of industrial land is not applicable.
I.T.A. Nos.338, 339 & 340/Lkw/2019 14 Assessment Years:2012-13 to 2014-15
15. The Ld. CIT (A) has erred in law and on facts in deleting the addition of Rs.8,49,63,522/- without appreciating that assessee's submission regarding circle rate @ Rs. 5,000/-per sq. mtr as mentioned in the registered sale/transfer deeds being a typographical mistake is incorrect and misleading for the reason that any objection or application for correction has never been filed by the assessee before the stamp valuation authority."
(C) The assessee purchased a piece of land measuring 7.349 acres in auction from state authority for Rs.4,50,00,000/- vide sale certificate dated 13/04/2011. The assessee and its subsidiary company namely M/s Bankeybihari Infraplanners Pvt. Ltd. ("BBIPL" for short) entered into a written agreement dated 10/02/2012 whereby the aforesaid land was to be transferred by the assessee to BBIPL for the same sale consideration, i.e. Rs.4,50,00,000/-. The assessee and BBIPL made book entries for transfer in their respective books of account. However, sale consideration in monetary terms was not received by the assessee from BBIPL during previous year relevant to assessment year 2012-13. Possession was also not handed over by the assessee to BBIPL in previous year relevant to assessment year 2012-13. The actual sale was effected by the assessee and BBIPL in two parts through two separate sale deeds dated 31/03/2013 and 12/07/2013. Possession of the land was also handed over, correspondingly, on aforesaid dates i.e. 31/03/2013 and 12/07/2013 by the assessee to BBIPL. The dispute in these three appeals relates to chargeability of income under the head 'capital gains', in the hands of the assessee, on transfer of the aforesaid land. The dispute is on two points. Firstly, according to the assessee, the transfer of the land took place in previous year relevant to assessment year 2012-13. This claim of the assessee is based on the fact that the assessee and BBIPL entered into written agreement for transfer of the land on 10/02/2012; and further that the corresponding book entries were made by the assessee and BBIPL in their respective books of account in previous year relevant to assessment year 2012-13. According to the I.T.A. Nos.338, 339 & 340/Lkw/2019 15 Assessment Years:2012-13 to 2014-15 Assessing Officer, the actual sale deeds were executed by the assessee and BBIPL on 31/03/2013 and 12/07/2013. Further, possession of the land was also given by the assessee to BBIPL on the aforesaid dates of 31/03/2013 and 12/07/2013 respectively. Moreover, actual sale consideration in monetary terms was not received by the assessee from BBIPL during previous year relevant to assessment year 2012-13 and only book entries were made by the assessee and BBIPL in previous year relevant to assessment year 2012-13. Based on these facts, the Assessing Officer took the view that the transfer of the land did not take place in previous year relevant to assessment year 2012-13, and instead the transfer took place, vide the aforesaid sale deeds dated 31/03/2013 and 12/07/2013 in previous year relevant to assessment year 2013-14 and 2014-15.
(C.1) The second point of dispute is on whether the assessee is hit by section 50C of the IT Act. The assessee claimed that the sale of land by the assessee to BBIPL was also for the sale price of Rs.4,50,00,000/- which is same as the amount paid by the assessee to state authority for purchase of land. Thus, the assessee claimed that the purchase price of the land and sale price of the land being same, there was no income under the head 'Capital Gains'. The assessee also claimed, that stamp duty was not required to be paid by the BBIPL for purchase of the aforesaid land as the transfer was between the assessee and BBIPL, a subsidiary of the assessee. Further, the assessee claimed that stamp duty valuation of the land should be taken at Rs.2,92,20,000/- as per DM circle rate. According to the assessee, the DM circle rate at the relevant time was Rs.80 lacs/Rs.60 lacs per hectare for agricultural land, to be doubled in the case of industrial land. Based on this, the assessee computed the circle rate of the land at Rs.2,92,20,000/- treating the land as industrial land. However, according to the Assessing Officer, in the aforesaid sale deed dated 31/03/2013, the I.T.A. Nos.338, 339 & 340/Lkw/2019 16 Assessment Years:2012-13 to 2014-15 circle rate is mentioned to be Rs.5,000/- per sq. mtr. Based on this, the Assessing Officer adopted the circle rate of Rs.5,000/- per sq. mtr. and computed capital gain of Rs.8,49,63,522/- for the assessment year 2014-15 (corresponding to the aforesaid sale deed dated 12/07/2013). He also computed capital gain of Rs.4,02,39,550/- for assessment year 2013-14 (corresponding to aforesaid sale deed dated 31/03/2013). The Assessing Officer charged these amount of Rs. Rs.8,49,63,522/- and Rs.4,02,39,550/- to tax for assessment years 2014-15 and 2013-14 respectively, on substantive basis. However, he also made the addition of the aforesaid amounts on protective basis in assessment year 2012-13 as the assessee had claimed that the transfer had taken place in previous year relevant to assessment year 2012-13.
(C.2) The assessee filed appeals in the office of the learned CIT(A). Vide impugned separate orders dated 29/03/2019 for assessment years 2013-14 and 2014-15 respectively and order dated 26/03/2019 for assessment year 2012-13, the learned CIT(A) accepted the assessee's claim that the transfer of land took place in previous year relevant to assessment year 2012-13. He also accepted the assessee's claim that the circle rate of property was Rs.2,92,20,000/- and held that the assessee was not hit by section 50C of the IT Act as transfer of the land had taken place for a sale consideration of Rs.4,50,00,000/-, which was higher than the circle rate stated to be Rs.2,92,20,000/-.
(C.3) The present three appeals before us have been filed by the Revenue against the aforesaid impugned separate appellate orders dated 29/03/2019 for assessment years 2013-14 and 2014-15 respectively and order dated 26/03/2019 for assessment year 2012-13.
I.T.A. Nos.338, 339 & 340/Lkw/2019 17 Assessment Years:2012-13 to 2014-15 (C.4) In the course of appellate proceedings in the ITAT, a paper book containing the following particulars was filed from the assessee's side:
S.No. Particulars
1. Written submissions
2. Copy of letter dated 28/12/2018 addressed to Assessing Officer along with copy of list of circle rates
3. Copy of valuation report of the District Valuation Officer
4. Copy of sale deed dated 31/03/2012
5. Copy of sale deed dated 12/07/2013
6. Copy of agreement dated 10/02/2012 between the respondent and its subsidiary company
7. Copy of return of income tax for assessment year 2012-13 along with copy of balance sheet etc.
8. Copy of final accounts of the subsidiary company duty audited on 01/09/2012 (D) At the time of hearing before us, the learned CIT (D.R.) for Revenue placed heavy reliance on the orders passed by the Assessing Officer for assessment years 2012-13, 2013-14 and 2014-15. He draw our attention to relevant parts of the assessment orders passed by the Assessing Officer.
The learned Counsel for the assessee relied on the impugned appellate orders passed by the learned CIT(A), and on the paper book. He also placed reliance on order dated 04/01/2017 passed by Hyderabad Bench of the Income Tax Appellate Tribunal in I.T.A. No.1130/Hyd/2015 for assessment year 2011-12 in the case of ACIT vs. Lalitha Karan and on order dated 10/10/2018 of Agra Bench of the Income Tax Appellate Tribunal in I.T.A. No.228/Agr/2018 for assessment year 2013-14 in the case of Income Tax Officer vs. Shri Ramesh Chandra Kulshresth & Brother HUF. Curiously, both sides placed reliance on order dated 04/12/2019 of Hon'ble Supreme Court in the case of Seshasayee Steels P. Ltd. vs. ACIT in Civil Appeal No.9209 of 2019, arising out of SLP(C) No.34815 of 2012. According to the learned Counsel for the assessee, de facto transfer of the property had taken place in previous year relevant to assessment year 2012-13 and therefore, according to the learned Counsel for the assessee, the aforesaid I.T.A. Nos.338, 339 & 340/Lkw/2019 18 Assessment Years:2012-13 to 2014-15 order dated 04/12/2019 of Hon'ble Supreme Court was in favour of the assessee. On the other hand the learned CIT (D.R.) for Revenue stated that neither possession was transferred by the assessee to BBIPL in previous year relevant to assessment year 2012-13, nor the sale consideration in monetary terms was received by the assessee from BBIPL in previous year relevant to assessment year 2012-13. The learned CIT (D.R.) submitted that BBIPL, without possession of the property, was not enabled for enjoyment of the property even as a purported owner in previous year relevant to assessment year 2012-13. He submitted that transfer of the property took place in two parts vide aforesaid sale deeds dated 31/03/2013 and 12/07/2013 relevant to assessment years 2013-14 and 2014-14 and also possession of the property was handed over by the assessee to BBIPL on the aforesaid dates; and therefore, transfer of the aforesaid land should be held to have taken place in two parts in previous year relevant to assessment year 2013-14 and 2014-15.
(E) We have heard both sides. We have perused the materials on record. Relevant facts are not in dispute. It is not in dispute that the possession of the land was given by the assessee to BBIPL at the time of executing the aforesaid sale deeds dated 31/03/2013 and 12/07/2013. The possession was not given by the assessee to BBIPL in previous year relevant to assessment year 2012-13 but, in previous years relevant to assessment years 2013-14 and 2014-15 respectively at the time of executing the aforesaid sale deeds. Further, although the assessee and BBIPL made book entries reflecting the transfer of land in their books of account for the assessment year 2012-13, sale consideration in monetary terms was not given by BBIPL to the assessee during previous year relevant to assessment year 2012-13. Although the sale deeds were executed on 31/03/2013 and 12/07/2013 corresponding to assessment years 2013-14 and 2014-15, the I.T.A. Nos.338, 339 & 340/Lkw/2019 19 Assessment Years:2012-13 to 2014-15 assessee would have been justified in claiming that the transfer of land took place in previous year relevant to assessment year 2012-13 if the assessee met the requirements under 'Doctrine of Part Performance' in accordance with section 47(v) of the IT Act read with section 53A of the Transfer of Property Act, 1882. Under Doctrine of Part Performance, handing over of possession by the seller to the buyer is essential requirement to claim transfer of the land, as per section 47(v) read with section 53A of Transfer of Property Act. Since this requirement was not met in previous year relevant to assessment year 2012-13, the assessee's claim that the transfer took place in previous year relevant to assessment year 2012-13 is wrong. As neither sale deed was executed nor possession was handed over by the assessee to BBIPL in previous year relevant to assessment year 2012-13, the stand taken by the Assessing Officer that the transfer took place in two parts in previous year relevant to assessment year 2013-14 and 2014-15 having regard to sale deeds dated 31/03/2013 and 12/07/2013 is correct. The reliance placed by Revenue on the decision of Hon'ble Supreme Court in the case of Seshasayee Steels P. Ltd. (supra) is also upheld because the assessee's rights both as to ownership and as to possession, were intact in the hands of the assessee during previous year relevant to assessment year 2012-13. Merely because book entries were made in the books of the assessee and BBIPL reflecting the transfer of land on the basis of aforesaid agreement to sell, dated 10/02/2012, it cannot be said either in law or de facto, that the transfer took place in previous year relevant to assessment year 2012-13; and without possession, it was not possible for BBIPL to have 'enjoyment' of the property.
(E.1) As regards the valuation of the land as per circle rate, we find from perusal of the records, that as per aforesaid sale deed dated 31/03/2013, executed by the assessee and BBIPL, the circle rate of the land was I.T.A. Nos.338, 339 & 340/Lkw/2019 20 Assessment Years:2012-13 to 2014-15 Rs.5,000/- per sq. mtr. Since the assessee as well as BBIPL are signatory of this sale deed, the act of Assessing Officer jumps in adopting the circle rate of Rs.5,000/- per sq. mtr. cannot be, prima facie, faulted. The Assessing Officer, in the assessment order, has observed as under:
"(iii) The facts of the case and assessee's reply have been considered. First of all it is clear that the capital gains are definitely chargeable as both the conditions mentioned in section 47A have been violated by the assessee. As mentioned above the land measuring area of 24907 sq. mtrs. has actually been transferred on 12.07.2013. In the sale deed, there is no mention of agreement dated 10.02.2012 regarding transfer of land. Rather it is mentioned in the sale deeds that the seller on the day of execution of the sale deed has handed over the actual physical possession of the property to the purchaser with all rights and privileges so far held and enjoyed by the seller, which is contrary to the claim of the assessee. This means that possession of the land has been transferred on the date of execution of the sale deed and not on any earlier date. Further the sale deeds which are registered documents will prevail upon the agreement dated 10.02.2012."
(E.2) In view of the foregoing, we are of the view that the Assessing Officer, due to delay attributable on part of the assessee, did not have time to make further inquiries/verification regarding the circle rate of the said land. Therefore, in the fitness of things, it will be just and proper to restore this issue to the file of the Assessing Officer for fresh order in accordance with law, with due regard to section 50C of the IT Act, after conducting further inquiries/verification, and after providing reasonable opportunity to the assessee.
(E.2.1) Accordingly, we set aside the impugned appellate orders dated 29/03/2019 for assessment years 2013-14 and 2014-15 respectively and impugned order dated 26/03/2019 for assessment year 2012-13 and we restore the issue as to whether the assessee is hit by provisions of section 50C of the Act, to the file of the Assessing Officer with the direction to pass I.T.A. Nos.338, 339 & 340/Lkw/2019 21 Assessment Years:2012-13 to 2014-15 de novo assessment orders after conducting further enquirier/verifications and after providing reasonable opportunity to the assessee. Further, we uphold the stand taken by the Assessing Officer that the transfer of the land took place in two parts in previous years relevant to assessment year, 2013- 14 and 2014-15 corresponding to aforesaid sale deeds dated 31/03/2013 and 12/07/2013; and we reject the contention of the assessee that the transfer of the land took place in previous year relevant to assessment year 2012-13. The appeals of the Revenue for assessment years 2013-14 and 2014-15 are thus allowed. Since substantial additions have been made in assessment years 2013-14 and 2014-15, and as the addition made in assessment year 2012-13 is only on protective basis, the appeal of the Revenue for assessment year 2012-13 becomes infructuous because of our finding, as aforesaid that the transfer of the land did not take place in previous year relevant to assessment year 2012-13 and that aforesaid transfer took place in two parts in previous years relevant to assessment years 2013-14 and 2014-15. The appeal of the Revenue for assessment year 2012-13 being infructuous, is dismissed.
(F) In the result, the appeals for assessment years 2013-14 and 2014-15 are allowed and the appeal for assessment year 2012-13 being infructuous, is dismissed for statistical purposes.
(Order pronounced in the open court on 17/09/2024) Sd/. Sd/.
(SUBHASH MALGURIA) (ANADEE NATH MISSHRA)
Judicial Member Accountant Member
Dated:17/09/2024
*Singh
I.T.A. Nos.338, 339 & 340/Lkw/2019
22
Assessment Years:2012-13 to 2014-15
Copy of the order forwarded to :
1. The Appellant
2. The Respondent.
3. Concerned CIT
4. The CIT(A)
5. D.R., I.T.A.T., Lucknow
Asstt. Registrar