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2015 (9) TMI 73 - KERALA HIGH COURT

2015 (9) TMI 73 - KERALA HIGH COURT - [2016] 383 ITR 585 - Purchase value for the purpose of computation of capital gains - whether has to be reckoned as per Annexure C Agreement and on the basis of Statement recorded under Sec.132 (4) of the Act? - Held that:- Appellate Tribunal has discussed the entire issues put forth by the appellants and has arrived at a reasonable conclusion that the basis for adoption of sales price of ₹ 25,000/- per cent was the sale agreement seized during search .....

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borated by any proof or materials and therefore the Assessing Authority was left with no other alternative than to decline the claims so raised by the appellants. Further the Tribunal has found that the responsibility to substantiate the purchase consideration was on the appellants and appellants have not adduced any evidence or put forth any material to substantiate the case advanced by them and therefore, the claim of the appellants that they were entitled to seek reckoning of the amount alleg .....

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while the property was conveyed by executing sale deed, the same was an agricultural land. But on the other hand, the assessing officer has clearly found that the property in question was barren land and further it was revealed that after purchase of the property, no agricultural operations were carried on by the appellants and further that the property was sold within a short period which discloses nothing but an adventure in the nature of trade liable to be taxed under the Act. These are all c .....

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S Sulekha Beevi And Smt Rosie Athulya Joseph For the Respondent : Sri P K R Menon, Sr. Counsel, GOI (TAXES) JUDGMENT Shaji P. Chaly, J. These appeals are preferred by the assessees against the order passed by the Income Tax Appellate Tribunal, Cochin Bench in I.T.A. No.265/2012 dated 27.12.2013 for the assessment year 2008-2009 and ITA No.266/2012 dated 27.12.2013 for the assessment year 2009-2010. Even though the learned Appellate Tribunal has disposed of the appeals vide separate orders, since .....

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s of rubber plantation in Amballur Village, Thrissur District on 9.5.2007 and 7.7.2007 along with the appellant in ITA No.127 of 2014. The said property was later sold to E.P. Antony and A.A. Davis and others. A person named Sri.P.T. Pavunni was the middle man or broker in the deal. A search was conducted at the residence of Sri.P.T.Pavunni and during the search a sale agreement relating to the above said transaction of sale was seized. From the said seized agreement, it was noticed by the Asses .....

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tions raised by the appellants that the property sold was an agricultural land and hence the profit arising on its sale is exempted from payment of tax. The Assessing Authority found that the appellants did not carry out any agricultural operations and further that the land was sold within a short period of its purchase. Apart from the same, the appellant in ITA No.125 of 2014 had confirmed that he did not carry on any agricultural activity on the said land. Added to this, the Assessing Authorit .....

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arch operations. 6. Even though the appellants have taken up the matter in appeal, the First Appellate Authority confirmed the order of the Assessing Authority and it is aggrieved by the said order, the appellants preferred 2nd appeal before the Income Tax Appellate Tribunal, which affirmed the order of the Commissioner of Income Tax Appeals. It is thus aggrieved, these appeals are filed. Questions of law raised in ITA No.125 of 2014: (i) In the facts and circumstances of the case, ought not the .....

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Annexure C Agreement and on the basis of Statement recorded under Sec.132(4) of the Act. (iv) In the facts and circumstances of the case, ought not the Tribunal have held that the transactions does not partake the characteristic of adventure in the nature of trade." 8. Question of law raised in ITA No.127 of 2014: (i) In the facts and circumstances of the case, ought not the Tribunal have held that the purchase value for the purpose of computation of capital gains has to be reckoned as per .....

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of computation of tax while computing the tax against them in accordance with the agreement unearthed during the search operation. So also the learned counsel contended that the property sold by the appellants was agricultural property having rubber plantation and on executing the agreements for sale of the said property, the prospective purchasers were put in possession and they were permitted to cut and remove the rubber trees and to remove soil from the said property. Therefore, in the facts .....

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move soil from the property, there is substantial proof to show that the property transferred by the appellant was an agricultural property and that therefore he is not liable to pay any tax under the Act. 12. As stated earlier, appeals are relating to the assessment years 2008-2009 and 2009-2010. To answer the above contention of the appellants, we think it only appropriate to refer to sub-section 1A of Section 17 of the Registration Act, which is extracted hereunder: "(1A) The documents c .....

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dment Act 2001 and therefore, any agreement for transfer of property after introduction of sub-section 1A require mandatory registration in order to have effect for the purpose of Section 53A of the Transfer of Property Act. Admittedly the appellants have not registered the agreements for sale and therefore, as provided under sub-section 1A of Section 17 of the Registration Act, the same can only be deemed as an ineffective document for considering the question of part performance of the contrac .....

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s of the Assessing Authority and contended that the Assessing Authority has categorically found that when the property in question was sold, the same was barren land and there was no evidence to establish that the appellants have sold agricultural property to the buyers at the time of execution of sale deeds. It was the further contention of the learned Senior Counsel that at the time of execution of the sale deed, in accordance with the investigation and verification conducted by the Assessing .....

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ore, the profit derived from such sale is liable to be assessed under the Act. 15. The learned Senior Counsel for the Revenue also contended that the Assessing Authority could unearth the actual sale price from the agreement seized on search from aforesaid Pavunni and thereby the assessing authority could ascertain the tax evaded by the appellants truly and correctly. Learned Senior Counsel also argued that there is no proof to establish that the appellants have paid the purchase price of ₹ .....

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hat the basis for adoption of sales price of ₹ 25,000/- per cent was the sale agreement seized during search and also confirmation of the same by the appellant in ITA No.125 of 2014 and the purchaser of property, Sri.A.A. Davis in their sworn statements. It is therefore clear that the sale price of ₹ 25,000/- per cent was arrived at basically relying on the sale agreement and not the sworn statement alone. Further the Tribunal has found that the claim that the appellants have purchas .....

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