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Late Shri Gangadhar Ramchandra Harer and Others Versus Tax Recovery Officer (IT) , Ahmednagar

Transfer of capital asset - determination of capital gain - whether capital asset transferred by the assesses is not agricultural land but “assignment of right to obtain the conveyance” of the agricultural land - Held that:- We find the Ld.CIT(A) has rightly observed that the assessee in the instant case have transferred their right to obtain the conveyance of immovable property to the purchaser C&M Farming Ltd. Further, para 10 of the agreement between the assessees and C&M Farming Ltd. dated 1 .....

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ng the land transferred in the name of the purchaser for which he has paid full consideration of ₹ 2.75 crores to the respective parties. Under the aforementioned circumstances, we do not find any infirmity in the order of the CIT(A) holding that the capital asset transferred by the assesses is not agricultural land but “assignment of right to obtain the conveyance” of the agricultural land. The various decisions relied upon by Ld.CIT(A) also supports the case of the Revenue. Under these c .....

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IT/TP, Pune relating to A.Y. 2005-06. For the sake of convenience, all these appeals were heard together and are being disposed of by this common order. 2. All these appeals were fixed for hearing for the first time on 02-12-2014. Since nobody appeared on that date the cases were adjourned to 19-03-2015. Since nobody appeared on that date also the cases were adjourned to 08-06-2015. Since nobody appeared on 08-06-2015 fresh notices were issued through RPAD. The notices were duly served on the as .....

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n brief are that the assessee Shri Gangadhar Ramchandra Harer and his family members received sale consideration of ₹ 2.75 crores on account of sale of agricultural land situated in Ahmednagar city. However, since no return of income was filed disclosing the capital gain from this transaction notice u/s.148 was issued which was duly served on the assessee. In response to notice u/s.148 the assessee filed the return of income declaring NIL income. A note was appended below the computation o .....

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00 5. On being confronted by the assessee it was stated that they are tenants under Bombay Tenancy and Agricultural Land Act, 1948. According to the provisions of this Act, permission of the Collector is required u/s 43 and u/s 64 of the BTAL Act for transferring the property. In view of the above, capital gain taxability of land will arise only in a year in which the Collector gives permission to transfer the land. Further, as a 'deemed purchaser', the price payable by a tenant to the l .....

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sequent transfer to C & M Farming Ltd according to the provisions of Section 2(47) and, therefore, capital gain does not arise in the facts of the case. 6. However, the AO did not accept the contention of the assessee. He observed that as per the agreement dated 13.07.2004 with C & M farming Ltd, Mumbai, assessees received total ₹ 2.75 cr. At the time of signing of an agreement, advance of total ₹ 13 lakhs was given to the assessees. Subsequently, before 31.03.2005, the asses .....

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on is paid only after finalization of the transaction. 7. The AO further noted that as agreed upon, the total sale consideration of ₹ 2,75 cr has been received by the assesses. Therefore, no amount of balance is pending with the purchaser company. Apart from above, the original land owners - Mr. Sayyed Usuf Gaffur and Mr Sayyed Chand Gaffur- have already declared the capital gain from the sale of the above land and paid the taxes accordingly. The AO accordingly determined the capital gain .....

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solidated order upheld the action of the AO by observing as under: 2.8 I have considered the facts, provisions of the Income Tax Act, relevant provisions of Bombay Tenancy Agricultural Lands Act as well as the arguments of the Appellants. I am of the view that capital gain tax should be levied on the Appellants. The reasons for my decision are as under: 2.9 The Appellants have argued that there is no transfer within the meaning of section 2(47). It needs to be appreciated that for levying of cap .....

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;deemed purchaser' under the BTAL Act because they hold the 'capital asset', they are legally capable of transferring land and rights associated with the land. 2.10 The Appellants have stated there is no transfer in terms of provisions of Section 2(47) of the Income tax Act because they are only 'deemed purchaser' under the Bombay Tenancy and Agricultural Land Act. It is stated that the dispute regarding the purchase with the landlord is pending in the Court. Further, the Dis .....

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ming Limited. The perusal of the para 10 of the Agreement between the Appellants and C&M Farming Limited dated 13.07.2004 show that the Appellant has undertaken to transfer land to the purchaser or to anyone named by the purchaser. It is stated that this Agreement has been made in the favour of the purchaser and the land can be transferred by the purchaser to anyone else, which would not be objected to by the sellers. Further, the right of receiving compensation from MHADA in case of acquisi .....

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tated that there is a certainty of Appellants purchasing land from the owners. Because of the certainty, the purchaser has paid full amount to the Appellants and Appellants have applied these amounts towards purchase of other agricultural land and other assets. 2.13 The above discussion makes it clear that the 'capital asset' transferred by the Appellants is not agricultural land but 'assignment of right to obtain conveyance' of the agricultural land. 'Right to obtain conveya .....

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s of the jurisdictional High Court I hold that the learned AO has correctly levied capital gains tax on the Appellants. I confirm the addition made by the learned AO. 9. Aggrieved with such order of the CIT(A) the assessee is in appeal before us with the following grounds : 1. On the facts and circumstances of the case CIT(A) has erred in law by treating Transfer as per Section 2(47) of the Income Tax Act. 2. On the facts and circumstances of the case CIT(A) has erred in law by treating Transfer .....

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the agreement, none of mode is complete during the said assessment year. 5. On the facts and circumstances of the case agreement is made by appellant as Deemed Purchaser hence many legal formalities as per Bombay Tenancy and Agriculture Land 1948 have to be done, which was pending during the said assessment year. This fact not considered by CIT(A). 6. On the facts and circumstances of the case CIT(A) has erred by treating transfer eventhough possession of land is still with the appellant. 7. The .....

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