TMI Blog2015 (12) TMI 1421X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal (ITAT) relating to the assessment year 2006-07. 2. The brief facts are that by an agreement dated 1.4.1995 the appellant/assessee had agreed to purchase 3 acres 39 guntas of land from one H R Gurappa @ ₹ 310/- Sq. Ft. (according to which the total price of land came to approximately ₹ 4.80 crores) for which an advance of ₹ 40.00 lakhs was paid by the assessee to the seller in terms of the agreement. However, because of certain disputes between the seller and one Vikas Housing, with whom also the seller and his brother had agreed to sell a large chunk of their land, including the land regarding which the agreement had been entered into with the assessee/appellant, and as an Original Suit No.3950/95-96 had been filed relating to the said land, the sale deed could not be executed. The litigation between the parties relating to the land in question went up to the High Court and ultimately, a compromise was entered into between the parties, and in terms of the said compromise, instead of 3 acres 39 guntas of land which was to be sold in favour of the appellant for approximately ₹ 4.80 crores, only 27 guntas of land was agreed to be sold to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of agreement. It is contended that the sale deed could not be executed because of the pending litigation, which had been initiated immediately after the agreement was entered into on 01.04.1995, and it was only after the parties had entered into a compromise that 27 guntas of land was transferred in favour of the assessee on 5.12.2002 on payment of a further sum of ₹ 1.00 lakh only, after adjusting ₹ 40.00 lakhs already been paid in terms of the agreement dated 01.04.1995. 6. It is further contended that the benefit of Section 2(42A) of the Act would be available to the assessee, as the land was held by the assessee ever since after the agreement dated 01.04.1995 and in terms of the aforesaid Section, it is not necessary that the land was to be owned by the assessee, as long as it was held by the assessee. In support of his submission, learned counsel has relied on a decision of the Apex Court rendered in the case of SANJEEV LAL vs COMMISSIONER OF INCOME-TAX AND ANOTHER ((2014) 365 ITR 389) , which shall be dealt with at the time of considering the arguments of the parties. 7. Per contra, Sri Jeevan J Neeralgi, learned counsel for the respondent-revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se/original asset . 10. The benefit of Section 54 of the Act is to be given only when the assessee purchases a property one year prior to the sale of his property or two years after such sale. In the case before the Apex Court, even though the purchase of the property by the assessee was on 30.04.2003, which was not within one year prior to the execution of the sale deed dated 24.09.2004, yet the benefit was given by the Apex Court to the assessee on the ground that it was within two years of the agreement to sell executed on 27.12.2002. While coming to such a conclusion, the Apex Court had, in paragraphs 20, 21 and 23 of the Judgment observed as under: 20. The question to be considered by this court is whether the agreement to sell which had been executed on December 27,2002, can be considered as a date on which the property, i.e., the residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immovable property, a right in personam is created in favour of the transferee/vendee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the ven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the suit filed by Shri Ranjeet Lal, challenging the validity of the will, had been dismissed. In the transfer , one can come to a conclusion that some right in respect of the capital asset in question had been transferred in favour of the vendee and, therefore, some right which the appellants had, in respect of the capital asset in question, had been extinguished because after execution of the agreement to sell it was not open to the appellants to sell the property to someone else in accordance with law. A right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed and who had also paid ₹ 15 lakhs by way of earnest money. No doubt, such contractual right can be surrendered or neutralized by the parties through subsequent contract or conduct leading to no transfer of the property to the proposed vendee but that is not the case at hand. 22 . 23. Consequences of execution of the agreement to sell are also very clear and they are to the effect that the appellants could not have sold the property to someone else. In practical life, there are events when a person, even after executing an agreement to sell an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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