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2015 (11) TMI 745 - ITAT LUCKNOW

2015 (11) TMI 745 - ITAT LUCKNOW - [2015] 42 ITR (Trib) 23 (ITAT [Luck]) - Computation of capital gain - whether transfer was complete during the financial year 2004-05 and not in the impugned assessment year, therefore, no capital gain was accrued in the impugned assessment year? - CIT(A) deleted the addition - Held that:- Assessee has placed ample evidence on record to establish that the sale agreement was executed on January 27, 2005 and the sale consideration was paid on two occasions - one .....

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and comments were also obtained from the assessee. Having taken into account all these facts, the learned Commissioner of Income-tax (Appeals) has taken a view that the capital gain does not arise in the impugned assessment year, as it arise in the financial year 2004-05 relevant to the assessment year 2005-06 and the Assessing Officer may consider computation of capital gains in that assessment year. Since it has been established that the transfer took place as per the provisions of section 2(4 .....

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Bench was delivered by 1. Sunil Kumar Yadav (Judicial Member).-This appeal is preferred by the Revenue against the order of the learned Commissioner of Income-tax (Appeals), inter alia, on the following grounds : 1. That the learned Commissioner of Income-tax (Appeals)-II, Kanpur has erred in law and on facts in holding that no liability for capital gains tax had arisen in the financial year 2007-08 and in directing the Assessing Officer to consider the computation of capital gains in the assess .....

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ver the possession of the property to the purchaser in the financial year 2007-08. 3. That the learned Commissioner of Income-tax (Appeals)-II, Kanpur has erred in law and on facts in accepting the additional evidence from the assessee in the form of the said letter dated March 31, 2005 without offering any opportunity to the Assessing Officer for confronting the same thus the learned Commissioner of Income-tax (Appeals)-II has violated the provision of rule 46A of the Income-tax Rules, 1962. 4. .....

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d by the District Judge, Kanpur vide order dated March 10, 2004 without whose permission the property could not be sold/transferred. 2. Because the Commissioner of Income-tax (Appeals) has not accepted any additional evidence within the meaning of the provisions of rule 46A inasmuch as whatever paper/confirmation/letters as alleged to have been filed are all pursuant to the directions given by the Commis sioner of Income-tax (Appeals) in terms of section 251(2) read with rule 46A(4) of the Act, .....

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elay has been moved on behalf of the assessee. In the absence of proper application for condonation of delay in filing of the cross-objection, we are of the view that the assessee has no reasonable cause for the delay in filing of the cross-objection. We accordingly hold that the cross-objection filed by the assessee is time barred and dismiss the same being not admitted. 4. Now we are left with the Revenue's appeal, in which the issue of capital gain in the impugned assessment year has been .....

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the Sub-Registrar, Kanpur at ₹ 2,28,11,625 on which stamp duty was paid. The assessee was required to show cause as to why proceedings under section 50C of the Income-tax Act, 1961 (hereinafter called in short "the Act") should not be applied. The Assessing Officer accordingly computed the capital gain at ₹ 1,69,01,323, against which an appeal was filed before the learned Commissioner of Income-tax (Appeals) with the submission that the property was not transferred in the .....

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remand report was accordingly submitted by the Assessing Officer. As per the agreement to sell, the total consideration was fixed at ₹ 51 lakhs out of which ₹ 21 lakhs was received by the assessee on January 10, 2005 and the balance amount of ₹ 30 lakhs was received on March 31, 2005. On payment of the entire consideration, the possession was handed over to the buyer. Therefore, nothing was left out for further payment. In the light of the provisions of section 2(45)(vi) of th .....

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-06. The relevant observations of the learned Commissioner of Income-tax (Appeals) are extracted hereunder for the sake of reference : "I have considered the facts and circumstances of the case, gone through the assessment order as well as the paper book filed by the assessee and the written submissions placed by the learned author ised representative. The assessee Pt. Ranglal Trust, is a private trust, established by Late Pt. Ranglal by trust deed dated January 27, 1930. The trust was crea .....

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Income-tax. The income and expenditure account of the trust has also been seen. The only source of income is income from interest from bank. There is no income from property. This further substantiate that the trust ceased to enjoy income from property after giving possession of the same. The authorised representative has placed the arguments that due to meager rent the trust was not in a position to achieve its objects and fulfil the purpose for which it was created. The tenants were nei ther .....

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greement on January 27, 2005 with Mayur Infrastructure Ltd. to sell the said property for ₹ 51 lakhs. The entire sale consideration of ₹ 51 lakhs was received as under : ₹ 21,00,000 vide cheque No. 536834 on State Bank of Indore, Birhana Road, Kanpur dated January 10, 2005 ₹ 10,00,000 vide cheque No. 536840 on State Bank of Indore, Birhana Road, Kanpur dated March 31, 2005 ₹ 20,00,000 vide cheque No. 536839 on State Bank of Indore, Birhana Road, Kanpur dated March 3 .....

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sell was executed on January 27, 2005 registered with Sub-Registrar, Kanpur, between the assessee and Mayur Infrastruc ture Ltd., the purchaser, for a total consideration of ₹ 51 lakhs. The sale consideration was to be paid partly at the time of registration of the agreement to sell and partly to be paid by March 31, 2005. The purchaser paid ₹ 21,00,000 vide cheque No. 536834 drawn on State Bank of Indore, Birhana Road, Kanpur dated January 10, 2005 at the time of agreement to sell .....

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e same vide let ter dated March 31, 2005 itself. The learned authorised representative has submitted that since the entire consideration was paid and the possession of the property was handed over to the purchaser, the assessee ceased to have any right, title or interest or any lien of any nature whatsoever over the said property. The obligation cast on the assessee stood discharged. In terms of section 2(47)(v) of the Income- tax Act, 1961, wherein any transaction involving the allowing of the .....

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entire consideration and has parted with the property, the transfer stood completed and as such, the liability to pay capital gains would not arise in the year under appeal, when the sale deed was executed and registered. These facts are not in dispute. The facts are documented, in the agreement to sell as well as the sale deed, both are registered and are not doubted upon. The consideration has been paid in full and the possession of the property has been delivered. For the purpose of the Inco .....

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s brought in the statute by the Finance Act, 1987 with effect from April 1, 1988. Sub-clause (v) was inserted in section 2(47) along with other clause (vi) with the intention to neutralise certain devices and transactions pursuant to which capital asset or interest therein were transferred in such a manner so as to fall beyond the parameters of the definition of the term transfer in section (2) sub-section (47). Taxable event in the case of possession in pursuance of agreement to sell occurs in .....

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al control of property to make it use is enough. The above proposition is clear by the wordings of section 53A and also by the Board's Circular No. 495 dated September 22, 1987 ([1987] 168 ITR (St.) 87 ) which explains the intention behind the insertion of these sub-sections to section 2(47) of the Act, 1961. '53A. Part performance.-Where any person contracts to transfer for consideration any immovable property by writing, signed by him or on his behalf from which the terms necessary to .....

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ered, has not been registered, or, where there is an instru ment of transfer, that the transfer has not been completed in the manner prescribed therefor by the law for the time being in force, the transferor or any person claiming under him shall be debarred from enforcing against the transferee and persons claiming under him any right in respect of the property of which the transferee has taken or continued in possession, other than a right expressly provided by the terms of the contract : Prov .....

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reme Court decisions in CIT v. Bhurangya Coal Co. [1958] 34 ITR 802 (SC) and in Alapati Venkataramiah v. CIT [1965] 57 ITR 185 (SC). 'Definition of "transfer" widened to include certain transac tions-11.1. The existing definition of the word "transfer" in section 2(47) does not include transfer of certain rights accruing to a purchase, by way of becoming a member of, or acquiring shares in a co-operative society, company, or association of persons or by way of any agreeme .....

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e possession is allowed to be taken or retained in part performance of a contract, of the nature referred to in section 53A of the Transfer of Property Act, 1882. Now sub-clauses (v) and (vi) have been inserted in section 2(47) to prevent avoidance of capital gains liability by recourse to transfer of rights in the manner referred to above. 11.2 The newly inserted sub-clause (vi) of section 2(47) has brought into the ambit of 'transfer', the practice of enjoyment of property rights throu .....

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er of Income-tax-I, Kanpur for his comments and also if he had anything in contrary. The Assistant Commissioner of Income-tax-I vide his report dated February 19, 2013, has submitted, that the possession of the said property was given to the purchaser at the time of execution of the sale deed on May 15, 2007 and not when the entire sale consideration was paid on March 31, 2005. For this purpose, the Assistant Commissioner of Income-tax-I enclosed a copy of the letter dated April 14, 2009 address .....

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detailed submissions dated February 21, 2013 as under : 'With reference to the above, we beg to submit that we are in receipt of the remand report dated February 19, 2013 and beg to submit as under : That the letter dated April 14, 2009, referred to by the Assessing Officer in the remand report is a reply filed by the assessee, addressed to the Deputy Commissioner of Income-tax-I, Kanpur and is in pursuance to notice issued under section 144/142(1) of the Income- tax Act, 1961. It may be no .....

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would be evident from the copy of the letter dated March 31, 2005 already submitted. The said letter contains the details of the balance sale consideration paid and its acknowledgment. It also contains the factum of giving and taking of possession of the property. For the sake of convenience, the letter is reproduced as under : Thus, the submission of the Assessing Officer that the possession of the property was not given in the financial year 2004-05 itself, but was given on May 15, 2007 if rea .....

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only entitled to a symbolic possession. It is hereby once again submitted that the possession of the prop erty came to be given and acknowledged by the buyer on March 31, 2005 itself when the entire consideration stood paid, the reason being that soon after receiving the entire sale consideration, the assessee ceased to have any right, title, interest or lieu of any nature whatso ever over the said property. The property in question still continues to be occupied by different tenants and there i .....

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date of possession, the authorised representative is asked to file a confirmation from M/s. Mayur Infra structure Ltd., the buyer of the property. Accordingly, the authorised representative on February 26, 2013 filed a confirmation letter dated February 25, 2013 regarding receipt of payments and taking over possession of the property on March 31, 2005. In view of the confirmatory letter of M/s. Mayur Infrastructure Ltd., dated February 25, 2013 it is clear, that the possession of the property w .....

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, 2006, March 31, 2007 and March 31, 2008 in support of the fact that no rent had been received nor has been declared in the income and expenditure account. Even in the return for the year under consideration, i.e., assessment year 2008-09, no rental income for one and a half months has been declared. This further shows clearly, that the property has not been in possession of the assessee after March 31, 2005. In view of the above factual and legal position, I am of the considered view that sinc .....

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L-IT, wherein the relinquishment of vested rights in an immoveable property is treated as 'transfer' under section 2(47), even if sale deed is not executed. The other grounds of appeal, i.e., the adoption of sale considera tion, as per the consideration determined by the District Judge, Kanpur, deducting for encumbrances such as property being covered by the Rent Control Act, and the property should ought to have been referred to the Valuation Cell in terms of section 50C(2) of the Act a .....

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for sale of property and sale agreement dated January 27, 2005 appearing at pages 108 to 129 of compilation of the assessee wherein the total consideration was determined and the same was paid during the financial year relevant to the assessment year 2005-06. The payment of ₹ 51 lakhs was made in two instalments-the first instalment of ₹ 21 lakhs was paid on January 10, 2005 and the second instalment of ₹ 30 lakhs was paid on March 31, 2005. The possession was also given to the .....

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