TMI Blog2024 (2) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... dge withdrawing the suit unconditionally and N.A. permission in respect of the land was obtained from the Collector. The above details are very much reflecting in the registered Sale Deed executed on 05.01.2013 registered as Document No. 174 of 2013 with the Office of the Sub Registrar, Ahmedabad-2, Wadaj. It is in the above registered Sale Deed, the respondents/assessees herein are shown as the Confirming Parties and received the consideration through various payment from the buyer/developer. Thus the allegations and averments made by the AO does not stand good in the eye of law namely Banakhat is unregistered and the Banakhat after 12 months period is invalid in law are not properly understood by the Ld. A.O. in legal prospective. Therefore the grounds are liable to the dismissed. No infirmity in the order passed by the Ld. CIT(A) who held that rights held by the assessee as a Confirming Party in the Sale Deed as a capital asset within the meaning of Section 2(14) of the Act and liable for LTCG and the assessee is also eligible to claim deduction u/s. 54B of the Act. Decided against revenue. - Smt. Annapurna Gupta, Accountant Member And Shri T.R. Senthil Kumar, Judic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clear Title Clearance Certificate is provided by the vendor, till that date the period of this Banakhat will be extended automatically . Further it is a fact that no buyer will pay crores of rupees to any third person through amount payee cheques, if someone has no right in the property. As per clause 4 of the Banakhat, the assessee herein has the right over the property, the title dispute were cleared with the previous vendor in Spl. Civil Suit No. 95/2006 wherein the assessee is also a party in the suit. Thus Ld. CIT(A) confirmed that the transfer of the property is a capital asset within the meaning of section 2(14) of the Act and thereby allowed the assessee to compute capital gain and also claim deduction under section 54B of the Act by observing as follows: 5.3 The facts of the case, submissions of the appellant and findings of the AO have been considered thoroughly. The appellant with other partner, Shri Bharatbhai Patel entered into Banakhat with Vendor, Shri Kiran V. Patel for the land under consideration on 29.04.2005 for a consideration of Rs. 15.50 lakh, out of which Rs 2 lakh were paid Remaining Rs. 13.50 was to be paid within one year of the Banakhar The A.O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this Banakhat will be extended automatically, could not be noticed by the A.O. The appellant's contention that the A.Os finding considering the Banakhat as null void for this reason is not justified, is found acceptable, hence it in accepted. 5.5 Another reason for making additions by the AO is that Banakhal dated 29.04.2005 is an afterthought to avoid/lower tax liability but did not give any reason for this finding. The appellant his partner, Shri Kiran V. Patel, vendor and Prasthan Infrastructure Pvt. Ltd. ie buyer are not related parties in any manner directly or indirectly Generally, the A.Os, have apprehension about the genuineness of the confirming parties and some time it is found correct by making further enquiries. Bogus confirming parties are created by the vendor/buyer of the property to avoid/reduce tax liability in some cases To find out genuineness of the confirming party, one parameter is that weather the confirming parties are related directly or indirectly to the vendor or vendee Because bogus confirming parties are created by paying small commission and if parties are not related, the confirming party may not return the amount paid. Such risk will not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible Containers (185 ITR 693 (Bombay). The above palgments have been re affirmed by the following judgments of the Hon'ble High Courts:- i) CIT Vis Tate Services Lid (122 ITR 594. Bombay) ii) CIT Vis. Surat Laxmi Devi Ratnani 296 ITR (393 MP) iii) J.K. Kashyap VN. ACIT (302 ITR 255 Delhi) As mentioned above, in all these cases, it has been held that a tight created by agreement to sale is an enforceable right, therefore, it is capital asset u/s 2(14) of the I.T. Act. Therefore, the findings of the A.O. that the appellant did not have any right in property as per section 2(14) of the Act is not found legally sustainable, hence rejected 5.7 The A.O cited case law of Suraj Lamp Industries Pvt. Ltd. Vis. State of Haryana decided by the Hon'ble Supreme Court to strengthen his arguments to make additions But the same is not found applicable in view of extended meaning given to the term transfer u/s 2(47) of the Income Tax Act. The said decision rendered prior to the amendment in the definition of transfer u/s 2(47) of the Act and the aforesaid judgment is not related to special provisions of Income Tax Act. Therefore, with due respect, this came la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the properties and construction had commenced, which showed that the assessee had no rights over the lands by virtue of the Banakhat. 5. The Ld.CIT(A) has erred in not appreciating that the Banakhat was a scheme, as an agriculturist vendor could not be expected to obtain the certificate of conversion of land from Agricultural Land to Non Agricultural Land and the automatic extension of time for payment by vendor on noncompletion of formalities within 12 months from the date of Banakhaz without any penalty or consideration was unusual. 6. The Ld CIT(A) erred in placing reliance upon the decision of the Hon'ble Supreme Court in the case of Sanjeev Lal Vs. CIT even though the said case was decided on the peculiar facts of the case and related to the issue of relief w/s.54 of the Act within the factual matrix of the said case, which are quite different from the present case. 6. We have heard rival submissions extensively and also gone through the Paper Book and Case laws filed by both the parties. The primary contention of the Revenue is that the Banakhat (Agreement of Sale) dated 29.04.2005 was unregistered and the Banakhat was meant only for 12 months period, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averments made by the Assessing Officer does not stand good in the eye of law namely Banakhat is unregistered and the Banakhat after 12 months period is invalid in law are not properly understood by the Ld. A.O. in legal prospective. Thus the Grounds of Appeal (namely violation of section 17(1)(aa) of Registration Act) and Case law Suraj Lamp and Industries Pvt. Ltd. relied upon there are clearly distinguishable to the facts of the present case. Therefore the grounds are liable to the dismissed. Thus we do not find any infirmity in the order passed by the Ld. CIT(A) who held that rights held by the assessee as a Confirming Party in the Sale Deed as a capital asset within the meaning of Section 2(14) of the Act and liable for LTCG and the assessee is also eligible to claim deduction u/s. 54B of the Act. 7. Therefore the appeal field by the Revenue is hereby dismissed. 8. ITA No. 1963/Ahd/2017 is the other Confirming Party in the very same Sale Deed and the facts herein is also identical. 9. The Grounds of Appeal raised by the Revenue in this appeal reads as follows: 1. The Ld. CIT(A) has erred in law and on facts in deleting the addition of Rs. 2,67,25,000/- made by th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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