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2015 (5) TMI 574 - ITAT PUNE

2015 (5) TMI 574 - ITAT PUNE - TMI - Computation of log term capital gains - transfer of share of the assessee [co-owner of the property having 1/24th share] in property situated at Survey No.1611, Shivaji Nagar, Pune. Held that:- As submitted by assessee he did enter into an agreement with Shri Sanjay Kakade for sale of his share in the property and the consideration was fixed between the parties at ₹ 93,75,000/-. In furtherance to the said contract, assessee received ₹ 60,00,000/-, .....

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to be taxed. It is also submitted at the time of hearing that the proceedings in the civil court are yet continuing.

Documents, as submitted now, which bring out in detail the dispute is pending in the civil court, has been furnished before the Tribunal and it was not available before the lower authorities. Thus the points raised by the assessee is quite significant because if assessee is able to demonstrate that the sale agreement could not be fructified in view of the pendency of c .....

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ellant : S/Shri Ajay R. Singh & Ramesh N. Rao For the Respondent : Shri B. C. Malakar ORDER Per Sushma Chowla, JM: This appeal filed by the assessee is against the order of CIT(A)-I, Pune, dated 15.01.2013 relating to assessment year 2007-08 against order passed under section 147 r.w.s. 143(3) of the Income Tax Act, 1961. 2. The assessee has raised the following amended grounds of appeal:- I. Asst. Order bad in law : 1. The Id. CIT(A) erred in upholding the asst. order passed u/s, 143(3). Wh .....

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,270/- in the relevant year without appreciating that the possession of the property was not handed over due to litigation amongst the co-owner and ultimately the transaction was not materialised, therefore transfer had not taken place in the relevant year n/s. 2(47) of the Act. 4. The Id. ClT(A) failed to appreciate that due to right of pre-emption purchase available with co-owners the assessee could not have sold/transferred the property to third party, more so when the application in the fina .....

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valuation a property beyond ₹ 10 lacs is bad in law, the matter ought to have been referred to DVO, therefore the reference was bad in law. 7. The Appellant craves leave to add, amend, alter, or delete any or all the above grounds of appeal. 3. At the time of hearing, the ground of appeal Nos.1 and 2 raised by the assessee are not pressed and the same are being dismissed as Not Pressed . 4. The issue arising vide ground of appeal Nos.3 and 4 is in relation to the computation of log term ca .....

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n 148 of the Act was issued. In consequent thereto, assessee clarified that he was a salaried person earning a monthly salary of ₹ 7,000/- from one M/s Rahul Enterprises and since his income for the year under consideration was below the taxable limit, no return of income was filed. Further, claim of the assessee was that he has not transferred any property during the year under consideration. However, he had entered into a sale agreement which could not be completed due to litigation in C .....

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eration was not received. The assessee was asked to submit the relevant documents i.e. a copy of the sale deed dated 17.01.2007 along with the index No.II and copy of valuation report and also the copy of the court order for stay of the said sale and the copies of the FDs made against the part consideration of ₹ 60,00,000/-. The assessee before the Assessing Officer furnished the relevant documents. The Assessing Officer show-caused the assessee to explain as to why the sale consideration .....

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assessee that the possession of the property could not be handed over to the transferee. Reference was made to para 4 of the show-cause notice issued by the Assessing Officer, under which the court order dated 18.02.2008 is referred to. It has been ordered that Shri Sanjay Dattatray Kakade who was purchaser of the said property was restrained from taking the possession of the suit property without adopting due process of law, till disposal of the suit. The Assessing Officer rejected the explanat .....

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e consideration against the sale transaction of the property under consideration. Further, reliance was placed on the Memorandum of Understanding (MOU) executed between Shri Pradeep Shankarrao Walvekar along with his family and the purchaser Shri Sanjay Dattaraya Kakade executed on 06th September, 2006 with respect to the permanent conveyance of their share in the said property under consideration for an amount of ₹ 3 crores plus. The MOU also mentioned that the individual share of each of .....

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thus, in view of the provisions of Income Tax Act and section 53A of the Transfer of Property Act, 1882 held that the sale consideration received by the assessee comes under the ambit of definition of transfer and therefore the sale consideration is to be considered for computing the capital gains tax. Vide para 10 of the assessment order, the Assessing Officer referred to decree and pointed out that though the court has restrained the purchaser from the taking possession temporarily upto the f .....

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08,270/-. 6. The CIT(A) referred to the significance of events vis-à-vis the inheritance of the property and thereafter the devolvement of the property on various shareholders including the assessee who had 1/24th share in the property. The property was decreed on 07.06.1994 following an out of court settlement in which distinctive share in the property of each of the family members was determined. Compromise decree is reproduced by the CIT(A) under para 7.1 at pages 29 to 32 of the appel .....

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hat the Civil Judge held that the members of joint family were entitled to sell their undivided share to third person subject to right of presumption i.e. the first offer having been given to the family members to purchase the same. It was further decreed that the third party had no right to step into the shoes of the members who sold his undivided share and enjoy the joint shares with other members. The only course available to the purchaser was to file suit for general partition and to obtain .....

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of section 2(47)(v) of the Act and section 53A of the Transfer of Property Act, 1882 pointed out that there must be an agreement for sale and part performance of contract covered by section 53A of the Transfer of Property Act, 1882 by giving the possession of the property. It was noted by the CIT(A) that In the present case, there is admittedly a registered sale deed but there is no possession given to the purchaser/transferee. As such, clause (v) of section 2(47) which has been invoked by the A .....

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sess or question the title of the vendee. Though the case relates to transfer of lease rights, the ratio of this decision with reference to effective date of transfer would apply with equal force equally to the facts of the present case. Here the transferor-appellant has put transferee (Shri Sanjay Kakade) in effective possession but in view of the court direction, it is said that the transferee is not the owner of the property though for all practical purposes transferee acts as the owner, in v .....

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session of the property without adopting due process of law. It is to be noted that the court has not cancelled the agreement which is the issue of the present appeal. The court has merely directed that the purchaser Shri Sanjay Kakade should await the final decree application pending in respect of CS 543 of 1989 for partition by metes and bounds and to thereafter obtain possession of the undivided share sold to him. Thus a reading of the Civil Judge's order in CS No. 613/2007 dated 18.2.200 .....

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t the final decree in Special Civil Suit 503/89 has been ordered. A perusal of the application for interim injunction in Special Civil Suit No.613/2007 by the other family members shows that they are interested in the Court directing the vendor to join in execution of such sale deeds in favour of the other family members also, since he has purchased the shares of the other family members (including the appellant) with full knowledge of the right of preemption. The sale is final in the eyes of th .....

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m the transfer of the capital assets. Grounds No.7 to 11 are thus, dismissed. 9. The assessee is in appeal against the order of CIT(A). 10. The Ld. Authorized Representative as well as the Ld. Departmental Representative made their arguments in support of their stands. 11. We have heard the rival contentions and perused the record. The issue arising before us is in relation to the alleged transfer of share of the assessee in property situated at Survey No.1611, Shivaji Nagar, Pune. Admittedly, t .....

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ty without offering them the right to purchase. The learned Authorized Representative for the assessee has emphasized that the civil court vide its order dated 18.02.2008 restrained the assessee from going ahead with the sale. On this basis, the case set up is that the sale has not indeed fructified and therefore, no capital gain required to be taxed. It is also submitted at the time of hearing that the proceedings in the civil court are yet continuing. To support the proceedings in the civil co .....

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ranslation; 5. Copy of Decree in Special Civil Suit No.503/1989 dated 16.05.1994 along with English translation; 6. Copy of letter issued by some of the Plaintiffs and Defendant to the Plaintiff No.1, dated 06.05.2005 along with English translation; 7. Copy of Notice published by Plaintiff in daily Sakal dated 29.09.2005 along with English translation; 8. Copies of correspondence i.e. Notices issued by Advocate for Defendant Nos.1, 4, 7 and another to Plaintiff Nos.1 and 2 dated 28.10.2005 and i .....

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