Income Tax Appellate Tribunal - Chennai
Sarala Kankaria, Chennai vs Ito, Chennai on 18 September, 2017
आयकर अपील य अ धकरण, 'बी' यायपीठ, चे नई IN THE INCOME TAX APPELLATE TRIBUNAL ' B' (SMC) BENCH : CHENNAI ी अ ाहम पी. जॉज , लेखा सद य के सम ।
[BEFORE SHRI ABRAHAM P. GEORGE, ACCOUNTANT MEMBER] आयकर अपील सं./I.T.A. No. 404/Mds/2017 नधा रण वष /Assessment year : 2007-2008.
Smt. Sarala Kankaria, Vs. The Income Tax Officer, No.19/8, 4th floor, Non Corporate Ward 2(1) Jain Kriti Apartments, Chennai 600 034.
North Boag Road, T.Nagar, Chennai 600 017.
[PAN AAEPK 9395A] (अपीलाथ"/Appellant) (#$यथ"/Respondent) अपीलाथ क ओर से/ Appellant by : Shri. D. Anand, Advocate यथ क ओर से /Respondent by : Shri. B. Sagadevan, IRS, JCIT. सन ु वाई क तार ख/Date of Hearing : 13-09-2017 घोषणा क तार ख /Date of Pronouncement : 18-09-2017 आदे श / O R D E R Assessee in this appeal filed against an order dated 27.12.2016 of ld. Commissioner of Income Tax (Appeals)-2, Chennai has raised the following grounds:-
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1.The order of learned Commissioner of Income Tax (Appeals) - 2 confirming the order of Income Tax Officer, on Corporate Ward- 2(1), Chennai is against the facts of the case and principles of natural justice.
2.The learned Commissioner of Income Tax (Appeals), failed to appreciate the fact that the alleged transfer had already been effected in Assessment Year 2006-07.
3.The learned Commissioner of Income Tax (Appeals) failed to appreciate that the transaction of sale was covered U/s 2(47)( v) of the Income Tax Act r.w.s. 53(a) of the Transfer of property act.
4.Without prejudice to the above grounds, the learned Commissioner of Income Tax (Appeals) failed to appreciate the fact that section 50c was not applicable to the agricultural land''.
2. Ld. Counsel for the assessee submitted that the land on which capital gains was computed for the impugned assessment year was transferred to the buyer in the preceding year pursuant to an agreement for sale dated 22nd November, 2005. As per the ld. Authorised Representative, out of the total agreed consideration of Rs.23 lakhs, sum of Rs.10 lakhs was received by the assessee on 26th August, 2005 and another sum of Rs.5 lakhs received on 4th November, 2005. Contention of the ld. Authorised Representative was that all these happened in previous year ending 31.03.2006. Ld. Counsel urged that recitals in the agreement for sale clearly indicated handing over of possession on 26th August, 2005. Ld. Counsel pointed out that assessee was having only 1/4th right over the property and :- 3 -: ITA No.404/Mds/2017 receipt of Rs.5,75,000/- on sale of the property was duly shown by her, in her return for assessment year 2006-07. Further according to him, the land sold was agricultural in nature. As per the ld. Authorised Representative the lower authorities had placed undue reliance on the conveyance deed executed on 10th November, 2006, in favour of the buyer and computed capital gains applying Section 50C of the Income Tax Act, 1961 (in short ''the Act'') ignoring the handing over possession in the earlier year. According to him, transfer by virtue of Section 2(47)(v) of the Act was complete in previous year ended 31.03.2006 and the same transaction could not be again considered for taxation in a subsequent assessment year. In any case according to him, the land sold being agricultural was not exigible to capital gains tax.
3. Per contra, ld. Departmental Representative submitted that recitals in the registered sale deed dated 10th November, 2006 clearly mentioned handing over of possession on that date. According to him, Section 53A of Transfer of Property Act, 1882 could be applied only where substantial consideration was paid. As per the ld. Departmental Representative consideration which was paid on the date of entering into the agreement for sale was only Rs.10 lakhs, out of the total agreed price of Rs.23 lakhs. According to the ld.
:- 4 -: ITA No.404/Mds/2017 Departmental Representative recitals in the registered conveyance
deed was primary evidence that could not be ignored. Contention of the ld. Departmental Representative was that the land was within Municipal limits, and described as vacant even in the agreement relied on by the assessee. It was urged by the ld. Departmental Representative that lower authorities were justified in considering the land as non- agricultural. According to him, assessee had not offered any capital gains from the transactions even in the preceding year. Thus, as per the ld. Departmental Representative the order of the lower authorities was unimpeachable.
4. I have heard the contentions and perused the orders of the authorities below. English translation of the agreement to sell, entered by the assessee and the other co-owners with the buyer, has been reproduced by the ld. Commissioner of Income Tax (Appeals) and this reads as under:-
On 2nd Nov. 2005, to Thangapushpam, aged 50, D/oThangaiyan, residing at Vellore District, Sisters of the Sacred Heart of Jesus, Idaya Nagar, Ranganathapuram, We, (1) Ani/ Kankaria, aged 50,5/0 Madan/a/ Kankaria, (2) Sara/a Kankaria, aged 43, Husband's name Ani/ Kankaria (3) Amith Kankaria, aged 26, Father's name Ani/ Kankaria, (4) Ankus Kankaria, aged 22, Father's name Ani/ Kankaria, residing at Chennai-17, Thiagaraya Nagar, Rajaman&r Street, No. 41/19, agreed to sell and made this agreement to sell as under:
:- 5 -: ITA No.404/Mds/2017 The property as per the details of property below IS at our own enjoyment from 1965 and for your family commitment and to settle other debts, we have decided to sell this to you and fixed the sale amount for a total sum of Rs.23,OO,OOO/-
(Rupees Twenty Three lakhs only) and today the 26th August; we have received Rs. 10,00,000/- in the presence of the witnesses and we have today handed over the enjoyment rights to the Yesuvin Thiru Irudaya Sabai, a trust, and the following items are handed over today:
1. Pump Set key 2.Building key 3. Main Gate key On settling the balance amount, we agree to sell at your convenient date to the same Trust.
Sd/- Sd/-
As against the above, what is stated in the registered sale deed dated 10th November, 2006 is reproduced hereunder:-
''On 10th Nov. 2006, to Sister T. Thangapushpam, aged 50,D/o Thangaiyan, residing at Vellore District, PIN Code 632 009, Rangapuram, Idaya Nagar, Yesuvin Thiruirudhaya Sagotharigal Sabai, We, Shri Anil Kankaria-1, aged about 50 (PAN No. AAEPK9394B), residing at Chennai-17, Thiagaraya Nagar, Rajamannar Street, No. 41/19, Smt. Sarala Kankaria-2, aged about 43, (PAN AAEPK 9395A) residing at the above address, Shri Amith Kankaria-3, aged about 26 (PAN No. AAFPK0397M) & Shri Ankus Kankaria, aged about 22 (PAN AAEPK9392H), whole-heartedly agreed and made the Sale Deed, as The property at Kancheepuram District, Tambaram Circte, Anakaputhw Village, Kamarajapuram, Thiruneermalai Road, :- 6 -: ITA No.404/Mds/2017 Gramanatham Survey No. 307, including 28340 sq.ft. plot, with two old buildings, well, electricity connection, compound wall, fifteen teak trees and twenty four coconut trees, is belonging to us and is in enjoyment by us.
The above property was belonging to Shri Madanlal Kankaria, Father of (1) of us and Father-in-law of (2) of us, who paid all the taxes in respect of the property and was enjoying it. On his expiry on 11.3.1996, the property devolved on (1) of us and other blood relations. Till date, the property was not subjected to any litigation and we have paid all Government taxes, Property Tax and Electricity Bills and have been enjoying the property with all rights.
We have decided to sell our above property to you, due to our family commitment and to settle other debts, and fixed the consideration at Rs. 23,00,000/- (Rupees Twenty Three Lakhs only) and received the sums in cash, in the presence of the witnesses, as under:
1. 26.8.2005 as Advance Rs.10,00,000/-(Rupees Ten Lakhs Only)
2. 4.11.2005 Rs. 5,00,OOO/-(Rupees Five Lakhs Only)
3. Today (balance amount) Rs. 8,OO,OOO/-(Rupees Eight Lakhs Only) Since the entire amount has been received by us without any dues, we are executing the Sale Deed today, in the name of the Charitable Trust and handed over the enjoyment of the property through this Deed.
So, we do not have any rights on the property from today. You can enjoy the above property, which you have registered in the name of the Charitable Trust.
We assure you that there is no litigation like pledge, court attachment, collateral security, will thava, legal heir thava, affidavit, counter, rejoinder, land grabbing over the property. In case of any litigation, we agree to take any action to settle the same in favour of yourself.
We have made payments of all the taxes, Property tax, :- 7 -: ITA No.404/Mds/2017 Electricity Bill till date. The property can be changed in the name of the Trust and necessary payments may be made hereinafter. We have, today, handed over all the records pertaining to the property which has been sold out to the Trust. This is the Sale Deed executed whole-heartedly by us, in the presence 0f the witnesses.
Property Details The details of the property at South Chennai Register District, Pamrnal sub-Register Circle, Kancheepurarn District, Tarnbararn Circle, Anakaputhur Village, Kamarajapuram, Thiruneermalai Road, Gramanatham Survey No. 307 with 28340 sq. ft. plot, in that two old buildings, well, electricity connection, compound wall, fifteen teak trees and twenty four coconut trees, is as under:
To North Prakasi Ammal property To South Arputhakani property To East Properties of G. Santhanamariyan, S. Johnbosco
and S. Indrani, Thiruneermalai Road, Property of Anthoniyar Koil and Sivanthi Adithyanar Welfare Club building.
To West Properties of M. Anthonikurus, S. Murugan and S. Sesurathinam and Road In the middle, the property under this sale, with 28340 sq.ft. plot, in that two old buildings, well, electricity connection, compound wall, fifteen teak trees and twenty four coconut trees, is situated. Property Tax No. 3655 Electricity connection No. 258-10-570 The above property is coming under Anakaputhur Municipality. The present market value Rs. 80,00,000/-.
Witnesses:- Sellers
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Purchaser:-
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This document was prepared by: Sd/-"
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It is not disputed by the Revenue that assessee had received Rs.10 lakh on 26.08.2005 and another Rs.5 lakh on 4.11.2005, which fell within previous year ending 31.03.2006. Since the agreed consideration was Rs.23 lakhs, we cannot say Rs.15 lakhs was an insignificant portion. Now the question is when the possession was handover. As per the agreement for sale, possession stood handed over on 26th August, 2005. As against this, the relevant sentence in the registered conveyance deed dated 10th November, 2006 reads as under:-
''Since the entire amount has been received by us without any dues, we are executing the sale deed today in the name of the Charitable Trust and handed over the enjoyment of the property through this deed''.
Though the above sentence is not happily worded, if the possession was handed over only on 10th November, 2006, the words that should have been used are ''handing over'' and not ''handed over'', since these are in conjunction with the words ''executing the sale deed''.
The use of the words ''handed over'' in preference to the words '' handing over'', in my opinion indicated that possession was handed over on an earlier day. The purchaser had separately affirmed that possession was handed over to them in previous year ended 31.03.2006. It clearly corroborates the recital in the agreement for :- 9 -: ITA No.404/Mds/2017 sale that possession was handed over on 26th August, 2005. Thus substantial consideration was paid in the year ended 31.03.2006 and the possession was also handed over in that year. Transfer by virtue of Section 2(47)(v) of the Act happened in the year ended 31.03.2006. It is true that the land was not agricultural and assessee was not able to adduce any evidence for the agricultural nature of the land. However, the transfer having been effected in year ended 31.03.2006, the capital gains could have been considered only for assessment year 2006-07 and not for assessment year 2007-08.
Accordingly, we delete the addition under the head capital gains made in the impugned assessment year.
5. In the result, appeal of the assessee is partly allowed. Order pronounced on Monday, the 18th day of September, 2017, at Chennai.
Sd/-
(अ ाहम पी. जॉज ) (ABRAHAM P. GEORGE) लेखा सद य/ACCOUNTANT MEMBER चे$नई/Chennai %दनांक/Dated: 18th September, 2017 KV आदे श क त(ल)प अ*े)षत/Copy to:
1. अपीलाथ /Appellant 3. आयकर आयु+त (अपील)/CIT(A) 5. )वभागीय त न0ध/DR
2. यथ /Respondent 4. आयकर आयु+त/CIT 6. गाड फाईल/GF