Income Tax Appellate Tribunal - Jaipur
Hardyal Singh, Jaipur vs Assessee on 29 January, 2016
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IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR
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BEFORE: SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM
vk;dj vihy la-@ITA No.340/JP/2013
fu/kZkj.k o"kZ@Assessment Years : 2008-09.
Shri Hardayal Singh, cuke The DCIT, Circle,
Development Officer, Vs. Jaipur.
LIC of India, Sikar.
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vihykFkhZ@Appellant izR;FkhZ@Respondent
fu/kZkfjrh dh vksj ls@ Assessee bys by : Shri Mahendra Gargiey (Advocate)
jktLo dh vksj ls@ Revenue by: Shri Kailash Mangal (JCIT)
lquokbZ dh rkjh[k@ Date of Hearing : 08.01.2016.
?kks"k.kk dh rkjh[k@ Date of Pronouncement : 29/01/2016.
vkns'k@ ORDER
PER SHRI LALIET KUMAR, J.M.
This is an appeal filed by the assessee against the order or ld. CIT (A)-III, Jaipur dated 9th January, 2013 for the A.Y. 2008-09. The assessee has raised the following grounds :-
1. The impugned additions and disallowances made in the order u/s 143(3) of the Act dated 16.12.2010 are bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be deleted.
2.1 `10,30,497/- : The ld. CIT(A) erred in law as well as on the facts of the case in confirming the assessment of Long Term Capital Gain 2 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
("LTCG" for short) of `10,30,497/- by adopting the full value of sales consideration u/s 50C of the Act at `11,40,453/- as against the claim of the appellant that no transfer at all took place and therefore, the provisions relating to the capital gain u/s 45 r/w Sec.50C of the Act are not at all applicable. The assessment of the Long Term Capital Gain and confirmation by the ld. CIT(A) was therefore, being contrary to the provisions of law and facts be deleted in full.
Alternatively and without prejudice to above, 2.2 `9,25,497/-: The ld. CIT(A) further erred in law as well as on the facts of the case in confirming the adoption of the full value of sales consideration u/s 50C of the Act at `11,40,453/- which was contrary to the provisions of law and facts on record. The ld. CIT(A) also erred in rejecting the objections made before him u/s 50C(2) of the Act and having coterminous powers with the AO, the ld. CIT(A) could and should have acted thereupon. Hence, value as declared by the appellant at `1,05,000/- be considered even assuming it is held that Sec.45 of the Act is applicable in the present case. The addition of the balance `9,25,497/- [`10,30,497/- less `1,05,000/- ] be deleted.
Alternatively and without prejudice to above, 2.3.1 `10,30,497/-: The ld. CIT(A) further erred in law as well as on the facts of the case in not admitting the legal ground relating to the claim of deduction u/s 54F of the Act. Even assuming, it was not a legal ground, the ld. CIT(A) having coterminous powers could and should have got the enquires conducted in the interest of justice instead of shutting the door of justice. Hence, such a ground kindly be admitted now and deduction as claimed kindly be allowed.
2.3.2 The ld. CIT(A) further erred in law as well as on the facts of the case in otherwise denying the claim made u/s 54F of the Act, even on merits taking contradictory stand and ignoring the fact that the appellant had already proceeded to construct a new house and therefore, also admittedly purchased a residential plot, within the stipulated time limit and hence, was entitled to the deduction u/s 54F of the Act of the entire amount. The appellant therefore, please be allowed deduction u/s 3 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
54F of the Act and the entire addition of the LTCG `10,30,497/- be deleted in full.
3. The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, 234B & 234C of the Act. The appellant totally denies its liability of charging of any such interest. The interest so charged, being contrary to the provisions of law and facts, kindly be deleted in full.
Ground No. 1 :
2. At the time of hearing, ground no. 1 is not pressed by the ld. A/R of the assessee, therefore, the same is dismissed as not pressed.
Ground No. 2 :
3. Regarding ground no 2, the relevant facts are that the assessee while filing the return of income on 09.03.2009 has not declared the income under the head capital gains. On receipt of information from CIB Wing of the Income Tax Department that assessee has sold a plot for Rs. 1,05,000/- which was valued at Rs. 11,40,453/- for the purpose of stamp duty, the assessee was asked vide notice u/s 142(1) dated 06.10.2010 to explain why the sale consideration of the asset may not be treated as Rs.
11,40,453/- as per the provisions of section 50C of the Act and to file computation of capital gain. In compliance, the assessee vide letter dated 18.11.2010 had furnished copy of registered sale deed dated 16.04.2007 whereby plot of land was sold for a consideration of Rs. 1,05,000/-. However, for the purpose of stamp duty the valuation was taken at Rs. 11,40,453/-. Subsequently, vide letter dated 06.12.2010 Shri Pradeep 4 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Pilania, the A/R of the assessee submitted that the sold property was situated at Prithviraj Nagar Scheme, a disputed area, and later on a settlement was reached between the seller and purchaser to cancel the subjected transactions and restore the ownership of the plot to the seller as held before 16.04.2007. As per assessee, another document rebutting back the ownership over the said plot from purchaser to the assessee was executed and got registered on 23.02.2008, and thereby the assessee pleaded that there was no transfer of property on 16.04.2007 and hence section 45 could not be applied and assessee was not required to disclose any gain. 3.1. The above contention of the assessee was not accepted by the AO for the reason that on execution of sale deed dated 16.04.2007 the title of the property was legally vested on the purchaser, and there is no provision for any cancellation of such registered sale deed. The later acquisition of the same property by the assessee on a later date is another transaction for different consideration and under different terms. Therefore, the AO held that it cannot be said there was no transfer of the said property on 16.04.2007 and that provisions of section 45 or section 50C of the Act are not attracted. The AO after considering the explanations of the assessee held that the assessee had transferred the land on 16.04.2007 for which the value was adopted by the Sub Registrar for stamp duty purpose. Therefore, as per provisions of section 50C full value of sale consideration was adopted by the AO at Rs. 11,40,453/- and accordingly computed the capital as under and added to the total income of the assessee :
5ITA No. 340/JP/2013 a.y. 2008-09
Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Full value of sale consideration u/s 50C of the Act Rs. 11,40,453/-
Less : Cost of acquisition, as stated and evidence filed By assess Rs. 60,865/-
(one half of Rs. 1,21,730/-) Indexed cost of acquisition (60865 x 551/305) Rs. 1,09,956/-
Long Term Capital Gain : Rs.10,30,497/-
4. Being aggrieved, the assessee carried the matter before ld. CIT (A), who after discussing the matter at length in his order from pages 3 to 5 held that the sale of plot on 16.04.2007 and 23.02.2008 were two different transactions. The appellant had transferred and sold the plot on 16.04.2007 making him liable to pay tax on long term capital gains according to the provisions of Sec. 45 read with section 50C of the Act.
Hence, the ld. CIT (A) dismissed the ground of the assessee.
5. Now the assessee is in appeal before us.
5.1. The ld. A/R for the assessee has submitted that though the AO has pointed out that the assessee has sold a residential plot on 16.04.2007 situated at Prithvi Raj Nagar Scheme, Jaipur for a consideration of Rs. 1,05,000/- which was valued by the Stamp Valuing Authority at Rs. 11,40,453/-, the assessee has not declared the long term capital gain under the head Income from Capital Gains in his return of income. Therefore, the AO called upon the assessee as to why section 50C be not applied as per DLC rate. The assessee has filed the reply on 18.11.2010, 30.11.2010 and 06.12.2010. In the reply dated 18.11.2010, the assessee has submitted that " the assessee sold an immovable property on 16.04.2007 at the cost of Rs. 1,05,000/- to Shri Gyan Chand 6 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Jain. This asset was acquired by assessee 03/06/1996. Photo copies of both these assets are being enclosed with this letter for your kind consideration. The assessee acquired the immovable asset i.e. one plot on 03/06/1996 from Meenawala Society, Jaipur. The assessee transferred this plot on 16.04.2007. The copies of Purchase deed and Sale deed of this asset are being submitted for your kind perusal." In the reply dated 30.11.2010, the assessee has further submitted in continuation of the reply dated 18.11.2010 as under :-
" The assessee acquired this immovable asset (plot) during the year 1996-97 on 03.06.1996 at the cost of Rs 1,21,730/-. Half portion of this immovable asset was sold at the cost of Rs. 1,05,000/- on dated 16.04.2007. The assessee incurred only capital loss in this case. The assessee has no any capital gains in this case, therefore, there arises no question of any computation. Moreover this transaction of sale, in fact, was cancelled by the parties and there being no transfer, there is no question of capital gain."
In reply dated 06.12.2010, the assessee has submitted as under :-
" In continuation of our earlier letter dated 30.11.2010 as regards the matter relating to capital gain, it is further submitted that the transaction of sale dated 16.04.2007, in fact and in law was cancelled by the parties vide a separate cancellation deed executed on dated 13.11.2007. It is submitted that the buyer, after entering into the transaction, came to know that the subjected plot of land was situated in Prithviraj Nagar Scheme. The repeated news in the paper it turned out that the said area was highly disputed, was under acquisition and exposed to continuous litigation before the 7 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Hon'ble Rajasthan High Court. Consequent to this, most of the transaction of purchase/sale in all the colonies/societies falling in Prithviraj Nagar were suspended by the property dealers and parties (Other than some exceptional cases). He found that no valid construction was practically possible and also was not legally permissible. In these circumstances, the banks were not providing any loan for construction and there was no question of approval of land by the JDA. This coupled with some other reasons, created a serious tension in the mind of the buyer and he started feeling cheated in as much as these facts were made known to him by the seller. After having suffered mental agony he pressurized the seller to treat the subjected transaction as cancelled since inception. After some rounds of discussion the parties ultimately reached to a settlement that the subjected transaction of sale be treated as cancelled and the same legal and factual position of the parties be restored as was prior to 16.04.2007. The parties also agreed to observed necessary legal formalities in this regard. The assessee agreed to compensate Shri Praveen Kumar Jain towards the use of the sale consideration received by it and also agreed to bear the necessary expenses. Accordingly, the assessee agreed to pay liquidated damage of Rs. 1,95,000/-. Consequently to the cancellation deed, again a document rebutting back the ownership over the said plot from Shri Praveen Kumar Jain to the assessee was executed and got registered on 23.02.2008. Thus, it will be observed that because of this cancellation the subjected transaction of transfer back and the legal position, the rights and obligations of the parties restored back to the same position and condition as it existed prior to 16.04.2007."8 ITA No. 340/JP/2013 a.y. 2008-09
Shri Hardayal Singh vs DCIT, Circle, Jaipur.
On the basis of above said submissions, the assessee has submitted that there is no transfer of capital asset taken place in the A.Y. 2008-09 and even if it is alleged that there is some transfer of capital asset, the said capital asset was restored back to the assessee vide a fresh deed dated 23.02.2008 registered in favour of the assessee. The ld. A/R further relied upon the definition of 'Transfer' under section 2(47) of the IT Act and has further submitted that the assessee was entitled to the benefit under sec. 54F of the IT Act.
5.2. On the other hand, the ld. D/R for the revenue relied upon the orders of the authorities below and has contended that once the transfer has taken place within the meaning of the Act by handing over the possession and after receiving the consideration, Capital gain is required to be calculated based on the statutory provisions provided under sec. 50C of the Act. It was further contended that the authorities below has rightly calculated the capital gain by invoking section 50C after applying DLC rate. 5.3. We have considered the rival submissions made by the parties before us and also perused the written submissions and paper book filed by the assessee. Firstly, we shall be deciding the issue whether the transfer in the eyes of law has taken place by the execution of registered sale deed dated 16.04.2007 by the assessee or not. The undisputed fact is that the assessee vide registered sale deed dated 16.04.2007 has transferred the title as well as the possession of the property bearing no. 27 to Shri Praveen Kumar Jain son of Shri G.C. Jain resident of village Dhod, Tehsil and District Sikar for a consideration of Rs. 1,05,000/-. It is also not disputed that the DLC rate, as 9 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
applicable to the transfer was for an amount of Rs. 11,40,453/-, though in the sale deed the consideration mentioned was Rs 1,05,000/- which was paid in totality on 29.04.2006. Undisputedly, the possession of the property was handed over by the assessee to the purchaser at a time prior to the execution of sale deed dated 16.04.2007. Interestingly no specific date has been as to when possession was given to the buyer by the seller in the sale deed . It is also not disputed that the said land was allotted by Meenawala Grah Nirman Sahakari Samiti to the assessee vide letter dated 03.06.1996. Thus the land which was allotted by Meenawala Grah Nirman Sahakari Samiti was a capital asset within the meaning of section 2(14) and by virtue of sale deed dated 16.04.2007 there is a transfer of capital asset by way of sale by the assessee to Shri Praveen Kumar Jain. Therefore, we have no hesitation but to hold that the capital asset was transferred by the by the sale deed dated 16.04.2007 and we hold accordingly.
5.4. The contention of the assessee that the subjected land was the subject matter of litigation in SB CWP No. 6709/2002 and the Hon'ble Jurisdictional High Court vide order dated 09.04.2003 has passed Stay Order thereby restraining building activity in the plot in question. In our view, the said order instead of helping the contention of the assessee goes against the assessee. Firstly, the order was passed on 09.04.2003 by the Hon'ble Jurisdictional High court and thereafter much water has flown. The transaction in hand is on 2007 and prior thereto as alleged by the assessee an agreement to sale was entered between the assessee and the purchaser ,on 10 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
29.04.2006, when the entire sale consideration was given. Thus before executing the sale deed dated 16.04.2007 the purchaser was having sufficient time i.e. from 30th April, 2006 to 16.04.2007 to verify the genuineness, title, possession and other aspects in respect of the property. After passing of approximately one year, the purchaser Shri Praveen Kumar Jain has gone ahead for purchasing the property. Not only this, as per the sale deed dated 16.04.2007, the purchaser has borne all the expenses for registration of the sale deed. In our view, as the purchaser has taken more than a year for getting the sale deed registered and has further spent sufficient amount for registration of the sale deed to the tune of Rs. 74,130/- for purchase of stamp paper, the contention of the assessee that he does not want to purchase the property on account of prolonged litigation, is preposterous and without any merit. Therefore, we have no other option but to reject the contention of the assessee on this account. As per the reply dated 18.11.2010, 30.11.2010 and 06.12.2010, the assessee has failed to produce the original of the cancellation deed and has only produced copy of the cancellation document on 13.12.2010. In our view, if there was any cancellation document which has taken place, the original document would have been with the assessee, as the assessee would have been the sole beneficiary of said document . In our view, the alleged cancellation agreement between the assessee and the purchaser, if accepted, is a title document qua the assessee that will nullify the effect of the original sale deed as per the assessee (though this contention of nullifying the effect of registered document is highly disputable and debatable in view of provisions of Transfer 11 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
of Property Act). But since the cancellation document as is alleged is the title document in favour of the assessee, therefore, the original document should have been in possession of the assessee, but the assessee has failed to produce the original document during the assessment proceedings, in our view, it goes against the assessee. Therefore, we have no hesitation to hold that the complete transfer in accordance with law has taken place on account of registered sale deed dated 16.04.2007 and, therefore, the assessee is liable to pay the long term capital gain on sale of the capital asset on DLC rate of the property at Rs. 11,40,453/-. Accordingly, this issue is decided against the assessee.
6. The assessee has taken alternative ground in the written submission stating that the long term capital gain was not correctly taxable in the A.Y. 2008-09 on account of the fact that the entire sale consideration was paid by the assessee on 29.04.2006 i.e. A.Y. 2007-08.
6.1 At the outset, the said ground of the assessee, in our view and as per the record was not raised either before the AO or before ld. CIT (A) or before us. However subsequently an additional ground was added in the existing ground to this effect in the following manner :
" Rs. 10,30,497/-: The ld. CIT (A) erred in law as well as on the facts of the case in confirming the assessment of Long Term Capital Gain (LTCG for short) of Rs. 10,30,497/- in this year whereas as per u/s 2(47)(v) r/w Sec. 53A of the Transfer of Property Act, 1882, legally speaking, no transfer took place in this year. The assessee having received the entire sale consideration 12 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
and parted with the full control and possession of the plot on dated 29.04.2006 (falling in AY 2007-08) it cannot be said that a transfer took place in this year giving rise to a liability of LTCG. The addition, therefore, so made is completely without jurisdiction, bad in law and hence kindly be deleted in full."
The ld. A/R has drawn our attention to section 2(47) read with sec. 53A of the Transfer of Property Act to canvas his argument that no capital gain accrued in A.Y. 2008-09. For that purpose he has drawn our attention to para 2.3 of the order of ld. CIT (A) to the following effect :-
"02.3. I have duly considered the submissions of the appellant and the material available on records. It is noticed from the sale deed dated 16.04.2007 that the said land was agreed to be sold vide sale agreement dated 29.04.2006 and the entire sale consideration in cash was received by the appellant on 29.04.2006. The sale was registered after a year on 16.04.2007 ......".
Further, he has also drawn our attention to the sale deed dated 16.04.2007 wherein it is mentioned that the entire sale consideration of Rs. 1,05,000/- was paid on 29th April, 2006 at the time of entering into agreement and further mentioned that the possession was also given. It was mentioned in the sale deed in respect of possession as under :-
^^foØ; fd;s x;s fuEufyf[kr mRrjh Hkkx IykV dk okLrfod dCtk izFke i{k us f}rh; i{k dks iwoZ esa gh ekSd a sa ij djk fn;k gSA^^ On the basis of the above said position, after relying on the judgments in the case of CIT vs. Mormasji Mancharji Vaid (2001) 168 CTR 565 (Guj.)(FB) and Chaturbhuj 13 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Dwarkadas Kapadia vs. CIT (2003) 180 CTR 107 (Bom), and Jasbir Singh Sarkaria, in re (2007) 212 CTR 107 (AAR), it was submitted that no capital gain liability arose in A.Y. 2008-09.
The ld. D/R for the Revenue has submitted that the judgments referred herein above as well as the provisions of law are not attracted and has submitted that the liability arose in the AY. 2008-09.
We have heard rival contentions and perused the material on record. In our view, it is undisputed fact that the entire sale consideration was paid on 29th April, 2006 i.e. in the A.Y. 2007-08 in cash. However, we are not in agreement with the submissions made by the ld. A/R that the possession was also handed over on 29th April, 2006. The averment mentioned in the sale deed clearly stipulates that the possession was given prior to the registration of the sale deed. The exact date of handing over of the possession has not been mentioned in sale deed. Section 53A of the Transfer of Property Act provides as under :-
"Where any person contracts to transfer for consideration any immovable property by writing signed by him or on his behalf from which the terms necessary to constitute the transfer can be ascertained with reasonable certainty, and the transferee has, in part performance of the contract, taken possession of the property or any part thereof, or the transferee, being already in possession, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor 14 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract:
PROVIDED that nothing in this section shall affect the rights of a transferee for consideration who has no notice of the contract or of the part performance thereof. "
From the bare reading of the provisions, it is clear that provisions of section 53A of the Transfer of Property Act is not attracted as the assessee has failed to produce the written contract between the assessee and Shri Praveen Kumar Jain, pursuant thereof in part performance of the contract, the possession of the property was handed over to Shri Praveen Kumar Jain. Therefore, the issue is decided against the assessee. Ground No. 2.3.1 & 2.3.2 :
7. We shall be deciding these grounds together. These grounds were raised before ld. CIT (A). The ld. CIT (A) has passed the following orders :-
" 03.1. I do not agree with the alternative claim of the appellant. Firstly, no such claim was made before the AO and hence the ground does not arise out of the assessment order. The facts related to this alternative plea were not available on records of assessment. Hence, the ground is not admitted.
Without prejudice to the above, the appellant is not eligible for deduction u/s 54F on merits also. Deduction u/s 545F is allowable on the 15 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
investment made in construction of residential house and not on the mere purchase of plot of land. Appellant has not furnished any evidence of construction made on the said plot. Neither any construction plan approved by the municipal authorities nor any bills/vouchers of construction material and wages were produced. In fact, the appellant himself claimed that construction activity was banned in the area by the Hon'ble Rajasthan High Court. Therefore, on merits also, appellant is not eligible for deduction u/s 54F of the Act."
The ld. A/R has drawn our attention to the written submissions filed by him before ld. CIT (A) to the following effect :-
"2.2.1 Alternatively and without prejudice to above, it is further submitted that the appellant was also eligible to the exemption granted u/s 54F of the Act in as much as the appellant not only purchased the plot but also constructed a residential unit (partly) within the stipulated period. Sec.54F of the Act provides that "(1) [Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,--
(a) if the cost of the new asset is not less than the net consideration in respect of the original asset, the whole of such capital gain shall not be charged under section 45 ;
(b) if the cost of the new asset is less than the net consideration in respect of the original asset, so much of the capital gain as bears to the whole of the capital gain the same proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: -----------.16 ITA No. 340/JP/2013 a.y. 2008-09
Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Explanation : For the purposes of this section, - "Net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer." The appellant shall be entitled to the exemption u/s 54F of the Act, depending upon the amount of investment. In this case, by the admission of the ld. AO himself, the appellant after selling the subjected plot, purchased a new plot on 13.02.2008 and invested Rs.3 Lacs, the appellant has fulfilled the condition here itself in as much as against the total sale consideration of Rs.1,05,000/- he had already purchased a residential plot of land for Rs.3 Lacs i.e. more than the sale consideration within the period of 3 years (of course with a view to construct a new residential house thereon). Thereafter, the appellant has also done some construction in as much as a residential unit consisting of two rooms, toilet, kitchen etc. was also constructed (partly) wherein he further invested Rs. 2.50 Lacs (Approx.) till the expiry of 3 years i.e. upto 16.04.2010 unfortunately however, because of the fear of damage/destruction by the JDA authorities, the construction had to be suspended for sometime. The appellant has again resumed the remaining work. Thus, total investment of Rs.5.50 Lacs (approx.) was made within permissible period under law. In that view of the matter, the appellant was fully entitled to the exemption u/s 54F of the Act and hence, there was no liability of capital gain tax. "
The ld. A/R has also relied upon the following judgments :
Smt. Shashi Varma vs. CIT (1999) 152 CTR (MP) 227 CIT vs. Sardarmal Kothari (2008) 217 CTR (Mad) 414 Mrs. Seetha Subramanian vs. ACIT (1996) 56 TTJ (Mad) 417 Smt. Rajneet Sandhu vs DCIT (2010) 133 TTJ (Chd)(UO) 64 Smt. Usha Vaid vs ITO in ITA No. 98/(Asr)/2011 Gyan Chand Batra vs ITO (2010) 133 TTJ 482 (JP) 17 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
7.1. We have heard rival contentions and perused the material on record. The AO while deciding the issue has recorded that " Consequently another document rebutting back the ownership over the said plot from purchaser to the assessee was executed and got registered on 23.02.2008". The perusal of the document dated 23.02.2008 clearly shows that the document is Vikray Patra (sale deed) executed by Shri Praveen Kumar Jain in favour of Shri Hardayal Singh in respect of the plot no. 27 allotted by Meenawala Grah Nirman Sahakari Samiti to the assessee on 3rd June, 1996. Thus the comparison of the two registered sale documents clearly shows that the property which was earlier sold by the assessee to the purchaser, namely Praveen Kumar Jain was later on transferred by Shri Praveen Kumar Jain to the assessee by registered sale document. Both the transactions i.e. one between the assessee and Praveen Kumar Jain dated 16.04.2007 and another between Praveen Kumar Jain and assessee dated 23.02.2008 have taken place within the A.Y. 2008-09 and in both the sale transactions the DLC rate is applied was Rs 11,40,453/-, though in the later transaction the sale consideration was mentioned as Rs. 3,00,000/- whereas in the earlier sale consideration received by the assessee was Rs. 1,05,000/-. Thus the assessee had paid Rs.
1,95,000/- more for getting back the title in respect of the same property on 23.02.2008. If we examine the issue, the in the light of above facts, in our view, there is no income which can be subjected to tax as the income which was received by selling the property was Rs 1,05,000/- and the amount paid for purchase of the said property was Rs. 3,00,000/-. The full value consideration in the case of selling the property to 18 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Shri Praveen Kumar Jain was required to be considered as Rs. 11,40,453/- in accordance with sec. 50C. However, the same yardstick is required to be applied when it comes to sale consideration paid by the assessee. In our view, for the purpose of the cost of the new asset, the same principle, in the peculiar facts and circumstances is required to be applied. The assessee cannot be axed twice. In fact, if we see the fate of transactions, the genuineness of the transaction is loud and clear and is apparent though we have held that the transfer has taken place between the assessee and Shri Praveen Kumar Jain, but nonetheless the re-transfer/fresh sale deed was also executed by Shri Praveen Kumar Jain in favour of the assessee on 23.02.2008. Therefore, in our view, the assessee is entitled to the relief claimed under this provision. Thus, we hold that the assessee is entitled to the benefit of the amount spent by him for purchase of plot for the sale consideration of Rs. 3,00,000/- and any other addition caused which may have been incurred by him on the said purchase of the land. The same parameters should be applied for giving the benefits under 54F as had been applied under section 50C.
7.2. With respect to the claim of the assessee for incurring Rs. 2,50,000/- for construction of the property, we do not agree with the contention of the assessee as there is a clear cut prohibition by the Hon'ble Rajasthan High Court prohibiting any kind of building activities/construction activities. If we allow the incurring of expenditures on construction, it will be violating the orders passed by the Hon'ble High Court. In any case, no document in support of the construction raised by the assessee has been 19 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
produced before the authorities below and before us to show that the amount of Rs. 2,50,000/- has been spent by him on the construction. As a result, the ground of the assessee is partly allowed and the AO is directed to give benefit of Rs. 3,00,000/- under the provisions of sec. 54F for the purpose of calculating the long term capital gain and further apply the same parameters for the purposes of section 54F as had been applied under for section 50C.
Ground no 2.2 :
8. Regarding this ground, the assessee has submitted as under :-
" The AO considered the deemed sale consideration at Rs. 11,40,453/- u/s 50C, ignoring the actual sale consideration of Rs 1,05,000/- although detailed objections u/s 50C(2) were raised before him vide letter dated 30.11.2010. Before the CIT(A) also specific ground no. 2.2 was raised and detailed submissions were made before him at pg 6 (PB 42) the same are being reproduced hereunder:
"Alternatively and without prejudice to other submissions, even otherwise Rs.11,40,453/- was not the true and correct fair market value of the subjected property for the following reason:
1.1 The Plot is allotted by a society and situated in Prithviraj Nagar which was a residential colony. It is a matter of common knowledge that the said area is highly disputed as was under acquisition and exposed to continuous litigation before the Hon'ble Rajasthan High Court. Consequent to this, various transactions of purchase/sale in all the colonies/societies falling in Prithviraj Nagar were suspended by the property dealers and parties other than some exceptional cases. No valid construction was legal and practically possible and also was not legally permissible. In these circumstances, there was no question of approval of land by the JDA.20
ITA No. 340/JP/2013 a.y. 2008-09
Shri Hardayal Singh vs DCIT, Circle, Jaipur.
1.2 There apart, the plot was not in accordance with Vasthu, which is an important consideration now a days.
1.3 The size of the plot i.e. the part sold under consideration was 30 feet on one side with the length of 140 feet of 6 inches i.e. a long plot with a narrow frontage which is not considered to be good size for the construction of a residential house. For an ideal construction, the owner normally uses upto 60-70 feet or at the best 90 feet in the length and therefore, the remaining almost half of the plot i.e. 50 feet would be a waste. Since at the back, there was no open road therefore, such remaining land could be used for a Godown only that too with no independent approach or at the best could be used for a kitchen garden.
1.4 The plot was facing West which is not considered as good as north facing or east facing.
1.5 There apart, the four sides of the plot are uneven and not rectangular. Whereas the width i.e. front was of 30 feet the width of the backside was around 33 feet which shows that it was a Naharmukhi plot not preferred being against Vasthu."
The ld. CIT (A) in para 4.2 of his order has rejected the contention of the assessee in the following terms :-
" 04.2. I do not agree with the aforesaid alternative claim of the appellant. AO is bound to adopt the value assessed by the registration authority for stamp duty purpose, as laid down in Sec. 50C of the Act. The only exception is that where assessee claims before the AO that value assessed by stamp valuation authority exceeds the fair market value, AO may refer the valuation of the asset to a Valuation Officer. No such claim was made by the appellant before the AO. Hence, provisions of sec. 50C(2) are not applicable in this case. Appellant also did not dispute the valuation of property by the stamp duty authority before any higher authority 21 ITA No. 340/JP/2013 a.y. 2008-09 Shri Hardayal Singh vs DCIT, Circle, Jaipur.
or court as envisaged in Sec. 50C(2)(b) of the Act. It shows that appellant agreed with the valuation of property by the stamp duty authority and the same was the market price of property. It is also pertinent to mention here that the market value of the plot was assessed at higher figure of Rs. 13,46,928/- by the stamp valuation authority in the subsequent sale deed dated 23.02.2008. Hence, market value of the said plot can not be taken at Rs. 1,05,000/-. The ground raised by the appellant is accordingly dismissed."
8.1. We have heard rival contentions and perused the material on record. In our view, the order passed by the ld. CIT (A) is well founded and on merit, as mentioned herein above. Though section 50C(2) provides that it is for the assessee to claim before the AO that the value adopted by the stamp valuation authority exceeds the fair market value, in that eventuality the AO may refer to the Valuation Officer for the valuation of the capital asset in accordance with law. In the present case no request has been made before the AO. The perusal of the paper book and record shows that even before the AO or before us, the assessee has not filed any fair market value of the property to the estimation of the assessee. Further, the assessee has not challenged the value adopted by the stamp valuation authority either at the time of selling the property to Shri Praveen Kumar Jain or at the time of purchasing the property from Shri Praveen Kumar Jain. In our view the ground of the assessee is required to be dismissed and accordingly we dismiss the ground of the assessee.
9. In the result, appeal of the assessee is partly allowed.
22ITA No. 340/JP/2013 a.y. 2008-09
Shri Hardayal Singh vs DCIT, Circle, Jaipur.
Order pronounced in the Open Court on 29/01/2016.
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