Income Tax Appellate Tribunal - Delhi
Mrs Mrs. Asha Kanodia, New Delhi vs Ito, New Delhi on 14 September, 2017
1
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
IN THE INCOME TAX APPELLATE TRIBUNAL
[ DELHI BENCHES : "C" NEW DELHI ]
BEFORE SHRI I. C. SUDHIR, JUDICIAL MEMBER
AND SHRI O. P. KANT, ACCOUNTANT MEMBER
I.T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
Mrs. Asha Kanodia, Income Tax Officer,
212 - Kailash Hills, Vs. Ward : 14 (1),
East of Kailash, New Delhi.
N e w D e l h i - 110 065.
PAN : AAEPK 1295 P
(Appellant) (Respondent)
Assessee by : Shri K. Sampath, Adv.;
Department by : Shri R. C. Danday, Sr. D. R.
Date of Hearing : 20.06.2017
Date of Pronouncement : 14.09.2017
O R D E R.
PER I. C. SUDHIR, J. M. :
The assessee has impugned first appellate order on the
following grounds :-
" That on the facts and in the circumstances of the case and
in law the Ld. CIT (Appeals) erred in confirming the order
of Assessing Officer by holding :
2
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
i) the transfer of 50% share in property situated at E-102,
East of Kailash, New Delhi by the Appellant for a consideration
of Rs.3 crores was not assessable as long term capital gain
under the head 'capital gain';
ii) the claim by the Appellant of investment of the long
term capital gain arising out of the sale of above property in
the purchase of 1 /3rd share of property situated at 212,
Kailash Hills, New Delhi for Rs.2,90,00,000/- u/s. 54 of the
Act was not allowable.
iii) rejecting the Appellant's claim of assessment under the
head 'capital gain' in respect of transfer of immovable property
within the meaning of Sec. 2(47) of the Act of the long term
capital assets on the basis of superfluous enquiry carried out
behind the back of the Appellant, relying on irrelevant
considerations and ignoring crucial pieces of evidence on record
in support of income;
iv) the amount of Rs.3 crores received as consideration
on transfer of property situated at E-102, East of Kailash,
New Delhi by the Appellant was assessable u/s. 56 of the
Act. "
2. Heard and considered the arguments advanced by the parties
in view of orders of the authorities below, material available on record
and the decisions relied upon.
3
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
3. The relevant facts are that the assessee, an Individual, had
declared income of Rs.8,24,640/-. The said return was processed under
section 143(1) of the Act. During the course of assessment proceedings
under section 143(3) the assessee submitted that she had sold 50%
share of one property i.e. residential house No. E-102, East of Kailash,
New Delhi, for consideration of Rs.3 crores and had also purchased
1/3rd share of another property at 212, Kailash Hills, New Delhi,
for Rs.2,90,00,000/-. The assessee claimed exemption under section
54 thereupon. The Assessing Officer held the transactions as sham and
the money received from the sale of the property was treated by him
as unexplained money under section 68 of the Act. The deduction
claimed under section 24 was that disallowed and income was
recomputed as Rs.3,08,24,640/-. The same has been upheld by the
ld. CIT (Appeals). This action of the ld. CIT (Appeals) has been
questioned by the assessee.
3.1 At the outset of hearing the ld. AR pointed out that the
issue raised is fully covered in favour of the assessee in the case of
the co-owner, Rajendra Kanodia & Sons (HUF) assessment year
4
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
2012-13, who had sold 50% of their share in the same property i.e.
E-102, East of Kailash, New Delhi, wherein the Assessing Officer in
the assessment framed under section 143(3) of the Act has accepted
the claimed exemption under section 54 of the Act under similar facts.
He drew our attention to page No. 55 of the paper book where a copy of
the said assessment order has been made available. He submitted
that the assessee had entered into an agreement to sell dated 25.03.2011
with Pushpanjali Investrade Pvt. Ltd. to sell her 50% share in the
property situated at E-102, East of Kailash, New Delhi, for a
consideration of Rs.3 crores, subject to execution of sale deed on
receiving full and final payment from them. Out of the above sale
consideration of Rs.3 crores, Rs.2,50,00,000/- was received on
8.03.2011 through RTGS from ICICI Bank, having UTR No. ICICH
11067047050. The remaining payment of Rs.50,00,000/- was received
on 22.02.2012 as full and final payment for the above property. On
the same date physical possession of the property was delivered to
Pushpanjali Investrade Pvt. Ltd. by the assessee. On 10.03.2011,
1/3rd share of the property 212, Kailash Hills, New Delhi, was
purchased by the assessee through sale deed for a consideration of
Rs.2,90,00,000/-. The assessee claimed exemption under section 54.
5
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
The calculation of long term capital gain and exemption under section
54 is being reproduced hereunder :-
" Calculation of Long Term Capital Gain and Exemption U/s. 54 :
Sale Consideration of one floor of property E-102,
East of Kailash, New Delhi. 3,00,00,000/-
Less: Cost of Acquisition in 1994-1995 Rs.4,12,190.50
Indexed cost of Acquisition
Rs. 4,12,190* 785/259 12,49,302/-
Long Term Capital gain. 2,87,50,6989/-
Less: Exemption U/s. 54 for
Purchase of Residential house
Property at 212, Kailash Hills, New Delhi.
Cost of Purchase Rs.2,90,00,000/- 2,87,50,6989/-
Taxable capital gain 'N I L'. "
3.2 The ld. AR submitted that the Assessing Officer was not
justified in treating the sale of the property to Pushpanjali
Investrade Pvt. Ltd. on the basis that possession of the property was
not handed over since the assessee failed to provide original possession
letter and receipt of advance. The ld. CIT (Appeals) has held the same
6
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
that possession letter was not signed by the buyer i.e. Pushpanjali
Investrade Pvt. Ltd. or on its behalf by any other person. The ld. AR
submitted that on receipt of total consideration the assessee had
handed over possession of the property to the buyer, Pushpanjali
Investrade Pvt. Ltd. and thus, "transfer" was complete under section
2(47) of the I. T. Act. In support he referred page Nos. 5, 8 and 46 of the
paper book i.e. copies of possession letter, terms of agreement and
financial statements of Pushpanjali Investrade Pvt. Ltd. The ld. AR
also submitted that the decision in the cased of Suraj Land &
Industries Pvt. Ltd. Vs. State of Haryana, 340 ITR 1 (SC) relied upon
by the Assessing Officer having distinguishable facts are not
applicable in the case of the assessee as it is based on general
provisions of law.
3.3 The ld. Sr. DR, on the other hand, placed reliance on the
orders of the authorities below. He submitted that the possession letter
has not been signed by the purchaser Pushpanjali Investrade Pvt. Ltd.,
hence the same cannot be relied upon to establish that possession of
the property was handed over by the assessee to them well before
execution of sale deed. He submitted that the assessee had deputed
7
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
Inspector to enquire about the property status of E-102, East of
Kailash, New Delhi, from House Tax Department and Electricity
Department. Both the Departments reported that the property
was vested with the assessee and Mr. Rajendra Kanodia.
3.4 The ld. AR rejoined with the submission that the company's
balance sheet made available at page No. 46 as well as terms of the
agreement to sell made available at page No. 8 as well as possession
letter issued by the assessee and witnessed by two persons are best
proof of possession handed over by the assessee to the purchaser.
He submitted that the ownership is transferred on the record of the
House Tax authorities and Electricity Department only on execution
of sale deed of the property. He submitted that copy of the report of
the Inspector was, however, not supplied to the assessee, hence that
report cannot be relied upon.
3.5 Considering the above submission even if we ignore the
possession letter under the signature of the assessee stating that the
possession was handed over to the buyer Pushpanjali Investrade
Pvt. Ltd., there are other evidences to support the handing over of
8
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
the possession of the property (50% thereof) to the buyer i.e. as per
the clause 2 of the Agreement to Sell dated 25.03.2011, whereby it
was agreed upon that "the vacant physical possession of the property
shall be delivered to the second party by the first party immediately
after receiving the balance consideration amount at the time of Registry
and / or final possession," as well as the financial statement of the
buyer, Pushpanjali Investrade Pvt. Ltd., wherein it has been made
clear by the noting as "Pending completion of registration and
formalities, advance of Rs.600 lacs (previous year Rs.700 lacs) against
purchase of properties has been shown as capital advances after
full payment as per sale agreement. The property will be capitalized
in the year of completion of registration and formalities." There is no
dispute that payment of Rs.2,50,00,000/- out of the sale consideration of
Rs.3 crores was made by the buyer to the assessee on 8.03.2011 and the
balance amount of Rs.50,00,000/- was paid to the assessee by them on
22.02.2012 both through banking channel through RTGS. In such
transaction, it is in general practice to make entire payment of amount
in consideration pending the execution of Sale deed, only when
possession of the property is handed over to the buyer. Hence, there
was no reason to doubt about the handing over of the possession of
9
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
the property as per the Terms of the Agreement and as per the financial
statements of the buyer company on full payment of the amount in
consideration. It is undisputed position of law that for the purpose of
section 2(47) of the Income Tax Act, "transfer" of immovable property
is complete on handing over of the possession of the property on
payment of sale consideration in performance of a contract of the
nature referred to in section 53-Aof the Transfer of the Property Act.
It is also undisputed fact that name of the owner on the record of
House Tax and Electricity Departments is transferred on the basis
of Registered Sale Deed only. Thus the report of the Income Tax
Officer has no relevance. And above all, in the case of co-owner i.e.
Rajendra Kanodia & Sons (HUF) who was owner of the 50% of the
same property, the Assessing Officer in the assessment under section
143(3) for the same assessment year has allowed the claimed
exemption under section 54 of the I. T. Act on the sale of their 50% of
the property. Under these facts and circumstances, we hold that the
Assessing Officer was not justified in denying the claimed exemption
under section 54 of the Act to the assessee on the basis that
possession of the property was not handed over to the buyer and thus,
sale was not complete in absence of execution of Sale Deed. We
10
I. T. Appeal No. 34/Del/2016
Assessment Year : 2012-2013
thus, while setting aside orders of the authorities below in this regard,
direct the Assessing Officer to allow the claimed exemption. The
grounds are accordingly allowed.
4. In result, appeal is allowed.
5. The order is pronounced in the Open Court on : 14th September,
2017.
Sd/- Sd/-
( O. P. KANT ) ( I. C. SUDHIR )
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated : the 14th September, 2017.
*MEHTA*
Copy of the Order forwarded to :-
1. Appellant;
2. Respondent;
3. CIT;
4. CIT (Appeals);
5. DR, ITAT, ND.
BY ORDER
11 I. T. Appeal No. 34/Del/2016 Assessment Year : 2012-2013 ASSISTANT REGISTRAR Date Draft dictated on 14.09.2017 Draft placed before author 14.09.2017 Draft proposed & placed before the second member Draft discussed/approved by Second Member.
Approved Draft comes to the Sr.PS/PS Kept for pronouncement on File sent to the Bench Clerk Date on which file goes to the AR Date on which file goes to the Head Clerk.
Date of dispatch of Order.
12I. T. Appeal No. 34/Del/2016 Assessment Year : 2012-2013