TMI Blog2014 (1) TMI 1583X X X X Extracts X X X X X X X X Extracts X X X X ..... gricultural land - The AO didnot considered the facts correctly - The assessee is not a fractional owner of the property at Gadaipur, and hence eligible for deduction u/s 54 of the Act - Decided against Revenue. - ITA No. 5077/Del/2011 - - - Dated:- 29-1-2014 - Shri J. Sudhakar Reddy, AM And Shri A. T. Varkey, JM,JJ. For the Appellant : Sh. D. K. Mishra, D.R.(CIT) For the Respondent : Sh. R. S. Ahuja, C.A. ORDER Per J. Sudhakar Reddy, AM This is an appeal filed by the Revenue directed against the order of the Ld.Commissioner of Income Tax (Appeals)-XVI, New Delhi dated 21.7.2011 pertaining to the A.Y.2007-08. 2. Facts in brief:- The assessee is an individual and derives income from house property, short term capital gains, long term capital gains and interest income He filed his return of income declaring income of Rs.2,78,53,090/- on 31.7.2007. During scrutiny proceedings the AO noticed that the assessee has claimed a deduction u/s 54 F amounting to Rs.2,21,69,090/- against a long term capital gain of Rs.3,74,47,787/-, earned by him on the sale of shares of a private limited company M/s Valley View Pro Build P.Ltd. The assessee replied to the various queries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y at Village Gadaipur, Delhi by holding that no super structure exists on the portion of land in Khasra no.75 and 90 partly owned by the assessee but the super structure exists only on the portion of land in Khasra no.76 owned by his father. 3. On the facts and circumstances of the case and in law the Ld.Commissioner of Income Tax (Appeals) has erred in allowing the claim of the assessee for exemption u/s 54 of the Income Tax Act. 4. On the facts and circumstances of the case and in law the Ld.Commissioner of Income Tax (Appeals) has failed to appreciate the facts discussed in detail in the assessment order and remand report. 5. The appellant craves to be allowed to add, delete or amend any other grounds of appeal." 5. The Ld.Counsel for the assessee filed an application for admission of additional evidence which it claims is in the nature of contemporaneous documents such as: i) The letter of MCD bearing No 94/A/HQ/89/419/AE(B)HQ1 dt 02/08/1989 addressed to Shanti Developers sanctioning the construction of Farm House at Khasra No. 75,76 90 at Village Gadaipur, Delhi. ii) Sanctioned Architectural drawings for above plot dated 25/07/1989. iii) House tax Bill dt 16/07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order, the Ld.D.R. read the order of the Ld.CIT(A). The submissions of the Ld.D.R. are: (a) The CIT(A) has not dealt with the findings of the A.O. that the entire transaction of purchase and sale of shares, resulting in capital gains, is not a genuine transaction of sale of shares; (b) That the company M/s Valley View Probuild Pvt. Ltd. was incorporated on 21.10.2005 and 5000 shares were allotted to Mr. Shyam Kumar Bagga and that on 25.10.2005 all the 5000 shares of value of Rs.50,000/- were transferred to the assessee, at the face value which shows the suspicious nature of the transaction. (c) That the assessee has not conclusively proved with evidence that the transfer of the asset in question resulted in long term capital gain and not short term capital gain. (d) That there is no dispute that the assessee has a house at Fatehpur Beri and that the only dispute is regarding the fractional ownership of the house at Gadaipur. (e) That the agreement in question giving fractional ownership to the assessee was between father and son and that if the case of the assessee is that, his share of rent which is 15% is not for the residential building but only for the plo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not free from doubt. He relied on some case laws and pointed out deficiency in the order of the Ld.Commissioner of Income Tax (Appeals). We shall be dealing with these, if necessary, in due course. 8. The Ld.Counsel for the assessee on the other hand relied on the order of the Ld.Commissioner of Income Tax (Appeals) and submitted that the arguments of the Ld.D.R. are based merely on conjectures and surmises. On the genuineness of the transfer of shares he submitted that the sale was made to unrelated parties who ultimately took over the management and the company itself in a phased manner. He pointed out that the annual report of the assessee company, which is filed under the Companies Act before the ROC, and which was filed on 24.11.2006 and submitted that in this document, the transfer of shares were duly recorded and reported. This being a contemporaneous record, the A.O. cannot doubt the genuineness of the transfer. He relied on the order of the Ld.Commissioner of Income Tax (Appeals) and submitted that transfer of shares is effective on delivery. On the doubt expressed of having received initially 60% of the consideration of sale of shares, the Ld.Counsel submitted that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue has not disputed the admission of additional evidence in its grounds of appeal and hence it is not for the D.R. to dispute the same at this stage. He drew the attention of the Bench the agreement executed with Modi Xerox and submitted that a perusal of this agreement makes it clear as to why, 15% of the rent was paid to the assessee. On the doubts expressed by the Ld.D.R. that the house tax paid got reduce year after year, he submitted that during that period there was change in the government policy and house tax was being levied on unit basis and hence this results in reduction of overall tax liability. He submitted that these are unwarranted doubts raised without any basis. 8.3. On the transfer of shares he submitted that the A.O. never disputed the factum of transfer of shares and S.2(47) of the Income Tax Act comes into play. He vehemently contended that in the remand report the A.O. travelled beyond his jurisdiction and raised all and sundry issues on the other aspects of stamp duty etc. He relied on the findings of the Ld.Commissioner of Income Tax (Appeals). He submitted that in the year 2006, the assessee has no other house whatsoever in Kailash Colony etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006. It was on this day that the assessee handed over original share certificates along with transfer deed form duly filled and signed by Ms.Falguni Nayar. Pages 15 and 16 of the assessee's paper book (referred to as APB) contains copy of the agreement to sell and page 17 of APB contains copy of the receipt as well as the copy of the sale confirmation. Pages 28 to 35 of APB is the copy of the annual return filed with the ROC wherein the name of Ms.Falguni Nayar appears at page 6 of the said return. The details of the transfer are also mentioned in page 8 of the annual return. On the face of these evidences, we are of the considered opinion that the Assessing Officer was wrong in doubting the very transaction, that too without any evidence to the contrary, much less any investigation. The Assessing Officer could have summoned the purchasers or taken confirmations from them, in case he disbelieved the transfers. The Ld.D.R. is of the opinion that Ms.Falguni Nayar paid Rs.2.25 crores by 25.9.2006 under an agreement and that this creates a doubt in the mind as to the genuineness of the transaction. The transaction is between unrelated parties. The assessee demonstrates that on that da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the balance sheet of the assessee dt. 31.3.2006. The subsequent balance sheets also demonstrate that there was no improvements made to this piece of agricultural land. A perusal of the copies of the Khasra Gidwari proves the fact that the land bearing khasra number 75 and 90 are used only for agricultural operations. This khasra gidwari also proves that the house in question is situated in the land bearing khasra no.76 which is fully owned by the father of the assessee and not the assessee. 14. The agreement dt. 24.2.1999 between the assessee and his father, states that both the parties agreed to let out the entire property to third parties and 15% of the rent would be given to the assessee for allowing the use of the land belonging to him by the assessee. The lease deed dt. 21.11.2000 entered into by the father of the assessee and the assessee, with M/s Xerox Modi Corporation Ltd. goes to support the case of the assessee. It is clearly mentioned in Clause (3) of the lease agreement that the 15% of the monthly rent is paid as rent for use of land belonging to the assessee by M/s Xerox Modi Corporation. The father was paid 85% of the rent for the building. Just because similar wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 419/AEI dt. 2.8.89 and thereafter constructed the farm house on the said land. This proves that constructed portion was purchased only by the father of the appellant. The Assessing Officer has not brought any evidence to disprove this fact. This fact has been ignored by the A.O. Had this fact been considered by him, he could not have come to the conclusion that appellant was also the owner of house at Village Gadaipur. It appears that even the counsel of appellant missed this important factual aspect and relied on the assumption that the appellant was the co-owner of the property. Be that as it may, the mistake has to be corrected. 4. Khasra girdawri placed on record as an additional evidence, to prove the use of land, clinches the issue. It clearly shows that the piece of land falling in Khasra nos. 75 and 90 was used only for growing vegetables There is no evidence on record to disprove this fact. 5. On the other hand, khasra girdawri shows that a kothi (residential house) exists on the portion of land bearing khasra no.76 which was exclusively owned by his father Sh.Premnath Nagpal. This evidence, in fact, clinches the entire issue. There is no evidence to prove that any str ..... X X X X Extracts X X X X X X X X Extracts X X X X
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