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2016 (2) TMI 881 - ITAT JAIPUR

2016 (2) TMI 881 - ITAT JAIPUR - TMI - Liability to pay tax on long term capital gains - cancellation document - Transfer - Held that:- If there was any cancellation document which has taken place, the original document would have been with the assessee, as the assessee would have been the sole beneficiary of said document . In our view, the alleged cancellation agreement between the assessee and the purchaser, if accepted, is a title document qua the assessee that will nullify the effect of the .....

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nst the assessee. Therefore, we have no hesitation to hold that the complete transfer in accordance with law has taken place on account of registered sale deed dated 16.04.2007 and, therefore, the assessee is liable to pay the long term capital gain on sale of the capital asset on DLC rate of the property at ₹ 11,40,453/-. Accordingly, this issue is decided against the assessee.

Applicability of provisions of section 53A of the Transfer of Property Act - Held that:- Provisions o .....

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ich was earlier sold by the assessee to the purchaser, namely Praveen Kumar Jain was later on transferred by Shri Praveen Kumar Jain to the assessee by registered sale document. Both the transactions i.e. one between the assessee and Praveen Kumar Jain dated 16.04.2007 and another between Praveen Kumar Jain and assessee dated 23.02.2008 have taken place within the A.Y. 2008-09 and in both the sale transactions the DLC rate is applied was ₹ 11,40,453/-, though in the later transaction the s .....

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se of the said property was ₹ 3,00,000/-. The full value consideration in the case of selling the property to Shri Praveen Kumar Jain was required to be considered as ₹ 11,40,453/- in accordance with sec. 50C. However, the same yardstick is required to be applied when it comes to sale consideration paid by the assessee. In our view, for the purpose of the cost of the new asset, the same principle, in the peculiar facts and circumstances is required to be applied. The assessee cannot .....

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led to the benefit of the amount spent by him for purchase of plot for the sale consideration of ₹ 3,00,000/- and any other addition caused which may have been incurred by him on the said purchase of the land. The same parameters should be applied for giving the benefits under 54F as had been applied under section 50C.

Though section 50C(2) provides that it is for the assessee to claim before the AO that the value adopted by the stamp valuation authority exceeds the fair market .....

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he property to Shri Praveen Kumar Jain or at the time of purchasing the property from Shri Praveen Kumar Jain. In our view the ground of the assessee is required to be dismissed and accordingly we dismiss the ground of the assessee. - ITA No.340/JP/2013 - Dated:- 29-1-2016 - SHRI T.R.MEENA, AM & SHRI LALIET KUMAR, JM For The Assessee : Shri Mahendra Gargiey (Advocate) For The Revenue : Shri Kailash Mangal (JCIT) ORDER PER SHRI LALIET KUMAR, J.M. This is an appeal filed by the assessee agains .....

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ital Gain ( LTCG for short) of ₹ 10,30,497/- by adopting the full value of sales consideration u/s 50C of the Act at ₹ 11,40,453/- as against the claim of the appellant that no transfer at all took place and therefore, the provisions relating to the capital gain u/s 45 r/w Sec.50C of the Act are not at all applicable. The assessment of the Long Term Capital Gain and confirmation by the ld. CIT(A) was therefore, being contrary to the provisions of law and facts be deleted in full. Alt .....

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n. Hence, value as declared by the appellant at ₹ 1,05,000/- be considered even assuming it is held that Sec.45 of the Act is applicable in the present case. The addition of the balance ₹ 9,25,497/- [Rs.10,30,497/- less ₹ 1,05,000/- ] be deleted. Alternatively and without prejudice to above, 2.3.1 ₹ 10,30,497/-: The ld. CIT(A) further erred in law as well as on the facts of the case in not admitting the legal ground relating to the claim of deduction u/s 54F of the Act. E .....

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ant had already proceeded to construct a new house and therefore, also admittedly purchased a residential plot, within the stipulated time limit and hence, was entitled to the deduction u/s 54F of the Act of the entire amount. The appellant therefore, please be allowed deduction u/s 54F of the Act and the entire addition of the LTCG ₹ 10,30,497/- be deleted in full. 3. The ld. AO further erred in law as well as on the facts of the case in charging interest u/s 234A, 234B & 234C of the .....

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the head capital gains. On receipt of information from CIB Wing of the Income Tax Department that assessee has sold a plot for ₹ 1,05,000/- which was valued at ₹ 11,40,453/- for the purpose of stamp duty, the assessee was asked vide notice u/s 142(1) dated 06.10.2010 to explain why the sale consideration of the asset may not be treated as ₹ 11,40,453/- as per the provisions of section 50C of the Act and to file computation of capital gain. In compliance, the assessee vide lette .....

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the subjected transactions and restore the ownership of the plot to the seller as held before 16.04.2007. As per assessee, another document rebutting back the ownership over the said plot from purchaser to the assessee was executed and got registered on 23.02.2008, and thereby the assessee pleaded that there was no transfer of property on 16.04.2007 and hence section 45 could not be applied and assessee was not required to disclose any gain. 3.1. The above contention of the assessee was not acce .....

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tion 45 or section 50C of the Act are not attracted. The AO after considering the explanations of the assessee held that the assessee had transferred the land on 16.04.2007 for which the value was adopted by the Sub Registrar for stamp duty purpose. Therefore, as per provisions of section 50C full value of sale consideration was adopted by the AO at ₹ 11,40,453/- and accordingly computed the capital as under and added to the total income of the assessee : 4. Being aggrieved, the assessee c .....

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The ld. A/R for the assessee has submitted that though the AO has pointed out that the assessee has sold a residential plot on 16.04.2007 situated at Prithvi Raj Nagar Scheme, Jaipur for a consideration of ₹ 1,05,000/- which was valued by the Stamp Valuing Authority at ₹ 11,40,453/-, the assessee has not declared the long term capital gain under the head Income from Capital Gains in his return of income. Therefore, the AO called upon the assessee as to why section 50C be not applied .....

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Society, Jaipur. The assessee transferred this plot on 16.04.2007. The copies of Purchase deed and Sale deed of this asset are being submitted for your kind perusal. In the reply dated 30.11.2010, the assessee has further submitted in continuation of the reply dated 18.11.2010 as under :- The assessee acquired this immovable asset (plot) during the year 1996-97 on 03.06.1996 at the cost of ₹ 1,21,730/-. Half portion of this immovable asset was sold at the cost of ₹ 1,05,000/- on dat .....

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submitted that the transaction of sale dated 16.04.2007, in fact and in law was cancelled by the parties vide a separate cancellation deed executed on dated 13.11.2007. It is submitted that the buyer, after entering into the transaction, came to know that the subjected plot of land was situated in Prithviraj Nagar Scheme. The repeated news in the paper it turned out that the said area was highly disputed, was under acquisition and exposed to continuous litigation before the Hon ble Rajasthan Hig .....

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serious tension in the mind of the buyer and he started feeling cheated in as much as these facts were made known to him by the seller. After having suffered mental agony he pressurized the seller to treat the subjected transaction as cancelled since inception. After some rounds of discussion the parties ultimately reached to a settlement that the subjected transaction of sale be treated as cancelled and the same legal and factual position of the parties be restored as was prior to 16.04.2007. T .....

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red on 23.02.2008. Thus, it will be observed that because of this cancellation the subjected transaction of transfer back and the legal position, the rights and obligations of the parties restored back to the same position and condition as it existed prior to 16.04.2007. On the basis of above said submissions, the assessee has submitted that there is no transfer of capital asset taken place in the A.Y. 2008-09 and even if it is alleged that there is some transfer of capital asset, the said capit .....

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handing over the possession and after receiving the consideration, Capital gain is required to be calculated based on the statutory provisions provided under sec. 50C of the Act. It was further contended that the authorities below has rightly calculated the capital gain by invoking section 50C after applying DLC rate. 5.3. We have considered the rival submissions made by the parties before us and also perused the written submissions and paper book filed by the assessee. Firstly, we shall be dec .....

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C rate, as applicable to the transfer was for an amount of ₹ 11,40,453/-, though in the sale deed the consideration mentioned was ₹ 1,05,000/- which was paid in totality on 29.04.2006. Undisputedly, the possession of the property was handed over by the assessee to the purchaser at a time prior to the execution of sale deed dated 16.04.2007. Interestingly no specific date has been as to when possession was given to the buyer by the seller in the sale deed . It is also not disputed tha .....

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16.04.2007 and we hold accordingly. 5.4. The contention of the assessee that the subjected land was the subject matter of litigation in SB CWP No. 6709/2002 and the Hon ble Jurisdictional High Court vide order dated 09.04.2003 has passed Stay Order thereby restraining building activity in the plot in question. In our view, the said order instead of helping the contention of the assessee goes against the assessee. Firstly, the order was passed on 09.04.2003 by the Hon ble Jurisdictional High cour .....

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oximately one year, the purchaser Shri Praveen Kumar Jain has gone ahead for purchasing the property. Not only this, as per the sale deed dated 16.04.2007, the purchaser has borne all the expenses for registration of the sale deed. In our view, as the purchaser has taken more than a year for getting the sale deed registered and has further spent sufficient amount for registration of the sale deed to the tune of ₹ 74,130/- for purchase of stamp paper, the contention of the assessee that he .....

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inal document would have been with the assessee, as the assessee would have been the sole beneficiary of said document . In our view, the alleged cancellation agreement between the assessee and the purchaser, if accepted, is a title document qua the assessee that will nullify the effect of the original sale deed as per the assessee (though this contention of nullifying the effect of registered document is highly disputable and debatable in view of provisions of Transfer of Property Act). But sin .....

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is liable to pay the long term capital gain on sale of the capital asset on DLC rate of the property at ₹ 11,40,453/-. Accordingly, this issue is decided against the assessee. 6. The assessee has taken alternative ground in the written submission stating that the long term capital gain was not correctly taxable in the A.Y. 2008-09 on account of the fact that the entire sale consideration was paid by the assessee on 29.04.2006 i.e. A.Y. 2007-08. 6.1 At the outset, the said ground of the ass .....

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egally speaking, no transfer took place in this year. The assessee having received the entire sale consideration and parted with the full control and possession of the plot on dated 29.04.2006 (falling in AY 2007-08) it cannot be said that a transfer took place in this year giving rise to a liability of LTCG. The addition, therefore, so made is completely without jurisdiction, bad in law and hence kindly be deleted in full. The ld. A/R has drawn our attention to section 2(47) read with sec. 53A .....

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he appellant on 29.04.2006. The sale was registered after a year on 16.04.2007 …… . Further, he has also drawn our attention to the sale deed dated 16.04.2007 wherein it is mentioned that the entire sale consideration of ₹ 1,05,000/- was paid on 29th April, 2006 at the time of entering into agreement and further mentioned that the possession was also given. It was mentioned in the sale deed in respect of possession as under :- On the basis of the above said position, after re .....

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e heard rival contentions and perused the material on record. In our view, it is undisputed fact that the entire sale consideration was paid on 29th April, 2006 i.e. in the A.Y. 2007-08 in cash. However, we are not in agreement with the submissions made by the ld. A/R that the possession was also handed over on 29th April, 2006. The averment mentioned in the sale deed clearly stipulates that the possession was given prior to the registration of the sale deed. The exact date of handing over of th .....

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on, continues in possession in part performance of the contract and has done some act in furtherance of the contract, and the transferee has performed or is willing to perform his part of the contract, then, notwithstanding that the contract, though required to be registered, has not been registered, or, where there is an instrument 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 .....

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of section 53A of the Transfer of Property Act is not attracted as the assessee has failed to produce the written contract between the assessee and Shri Praveen Kumar Jain, pursuant thereof in part performance of the contract, the possession of the property was handed over to Shri Praveen Kumar Jain. Therefore, the issue is decided against the assessee. Ground No. 2.3.1 & 2.3.2 : 7. We shall be deciding these grounds together. These grounds were raised before ld. CIT (A). The ld. CIT (A) has .....

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on of residential house and not on the mere purchase of plot of land. Appellant has not furnished any evidence of construction made on the said plot. Neither any construction plan approved by the municipal authorities nor any bills/vouchers of construction material and wages were produced. In fact, the appellant himself claimed that construction activity was banned in the area by the Hon ble Rajasthan High Court. Therefore, on merits also, appellant is not eligible for deduction u/s 54F of the A .....

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, where, in the case of an assessee being an individual or a Hindu undivided family], the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or [two years] after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, a residential house (hereafter in this section re .....

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e proportion as the cost of the new asset bears to the net consideration, shall not be charged under section 45: -. Explanation : For the purposes of this section, - "Net consideration", in relation to the transfer of a capital asset, means the full value of the consideration received or accruing as a result of the transfer of the capital asset as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The appellant shall be entitled to the exemptio .....

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urse with a view to construct a new residential house thereon). Thereafter, the appellant has also done some construction in as much as a residential unit consisting of two rooms, toilet, kitchen etc. was also constructed (partly) wherein he further invested ₹ 2.50 Lacs (Approx.) till the expiry of 3 years i.e. upto 16.04.2010 unfortunately however, because of the fear of damage/destruction by the JDA authorities, the construction had to be suspended for sometime. The appellant has again r .....

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Rajneet Sandhu vs DCIT (2010) 133 TTJ (Chd)(UO) 64 Smt. Usha Vaid vs ITO in ITA No. 98/(Asr)/2011 Gyan Chand Batra vs ITO (2010) 133 TTJ 482 (JP) 7.1. We have heard rival contentions and perused the material on record. The AO while deciding the issue has recorded that Consequently another document rebutting back the ownership over the said plot from purchaser to the assessee was executed and got registered on 23.02.2008 . The perusal of the document dated 23.02.2008 clearly shows that the docum .....

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ctions i.e. one between the assessee and Praveen Kumar Jain dated 16.04.2007 and another between Praveen Kumar Jain and assessee dated 23.02.2008 have taken place within the A.Y. 2008-09 and in both the sale transactions the DLC rate is applied was ₹ 11,40,453/-, though in the later transaction the sale consideration was mentioned as ₹ 3,00,000/- whereas in the earlier sale consideration received by the assessee was ₹ 1,05,000/-. Thus the assessee had paid ₹ 1,95,000/- mo .....

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in accordance with sec. 50C. However, the same yardstick is required to be applied when it comes to sale consideration paid by the assessee. In our view, for the purpose of the cost of the new asset, the same principle, in the peculiar facts and circumstances is required to be applied. The assessee cannot be axed twice. In fact, if we see the fate of transactions, the genuineness of the transaction is loud and clear and is apparent though we have held that the transfer has taken place between th .....

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purchase of the land. The same parameters should be applied for giving the benefits under 54F as had been applied under section 50C. 7.2. With respect to the claim of the assessee for incurring ₹ 2,50,000/- for construction of the property, we do not agree with the contention of the assessee as there is a clear cut prohibition by the Hon ble Rajasthan High Court prohibiting any kind of building activities/construction activities. If we allow the incurring of expenditures on construction, .....

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gain and further apply the same parameters for the purposes of section 54F as had been applied under for section 50C. Ground no 2.2 : 8. Regarding this ground, the assessee has submitted as under :- The AO considered the deemed sale consideration at ₹ 11,40,453/- u/s 50C, ignoring the actual sale consideration of ₹ 1,05,000/- although detailed objections u/s 50C(2) were raised before him vide letter dated 30.11.2010. Before the CIT(A) also specific ground no. 2.2 was raised and detai .....

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o continuous litigation before the Hon ble Rajasthan High Court. Consequent to this, various transactions of purchase/sale in all the colonies/societies falling in Prithviraj Nagar were suspended by the property dealers and parties other than some exceptional cases. No valid construction was legal and practically possible and also was not legally permissible. In these circumstances, there was no question of approval of land by the JDA. 1.2 There apart, the plot was not in accordance with Vasthu, .....

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he back, there was no open road therefore, such remaining land could be used for a Godown only that too with no independent approach or at the best could be used for a kitchen garden. 1.4 The plot was facing West which is not considered as good as north facing or east facing. 1.5 There apart, the four sides of the plot are uneven and not rectangular. Whereas the width i.e. front was of 30 feet the width of the backside was around 33 feet which shows that it was a Naharmukhi plot not preferred be .....

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