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Income-tax Officer, Ward-8 (2) , Surat Versus Shri Harijibhai P. Vastrapara

2016 (4) TMI 556 - ITAT AHMEDABAD

Addition on account of long term capital gain - taxability - Held that:- Entire capital gain i.e. short term and long term capital gain has been taxed in the hands of two co-owners namely Harjibhai Parsottambhai Vastarpara and Becharbhai Jivrajbhai Vastarpara and by the four confirming parties by way of showing total sale consideration of ₹ 1,11,25,000/- bifurcated amongst their returns of income and after reducing the cost of acquisition which has been duly accepted by the revenue authori .....

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with a third party.

We find that four confirming parties further entered into an agreement for sale of land for ₹ 1,11,25,000/- of M/s Dhara Construction and Dhirajlal PopatlaiTejani and therefore, sale deed was registered by the signatures of two co-owners who received ₹ 11,51,000/- and the sale deed was further counter-signed by the confirming parties who received the balance amount of ₹ 99,74,000/-. In other words there was no loss to the revenue and also the cap .....

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.CAS/V/180/2010-11 for Asst. Year 2008-09. Assessment was framed on 24.12.2010 by ITO, Ward-8(2), Surat. Revenue has raised the following grounds of appeal :- 1. On the facts and circumstances of the case and in law the ld. CIT(A) has considered the invalid satakhat (copy enclosed) and deleting the addition of ₹ 52,26,735/- made on account of long term capital gain. 2. On the facts and circumstances of the case and in law, the ld. CIT(A) ought to have upheld the order of the Assessing Offi .....

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2) was issued on 31.08.2009, on the basis of AIR information available in the case of assessee in respect of sale of immovable property. The notice was issued on 30/11/2010 and served upon the assessee. 3. The Assessing Officer observed that assessee and his coowner Becharbhai Jivrajbhai Vastarpara purchased agricultural land at plot no.218/A (2300 sq.m.) and 218/B (4646 sq.m.) situated at T.P. Scheme No.49 at Katargam, Surat for a sum of ₹ 5,25,000/- and the assessee and co-owner spent &# .....

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sing Officer calculated the long term capital gain at ₹ 1,04,53,469/- after reducing index cost of acquisition at ₹ 6,71,531/- from total sale consideration at ₹ 1,11,25,000/- and arrived at long term capital gain at ₹ 1,04,53,469/- and assessee being co-owner, the Assessing Officer, therefore, added 50% of the total long term capital gain of ₹ 1,04,53,469/- and accordingly made addition of ₹ 52,26,735/- in the total income of assessee. Aggrieved, assessee wen .....

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during the course of appellate proceedings before ld. CIT(A) ld. AR of assessee submitted that assessee executed the registered sale deed of land bearing Survey No. 199/5 and 6, T.P. 49, F.P. 218A and 218B of Katargam vide Registered sale deed dtd. 01 03 2008 and 28.03.2008 for ₹ 36,25,000/- and ₹ 75,00,000/- respectively. The sale deed was executed by assessee and other coowner Becharbhai Jivarajbhai Vastarpara. The appellant claimed that appellant and co-owner Becharbhai Jivarajbh .....

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abhai Harjibhai Desai Babubhai Nagjibhai Gajera Sureshkumar Babubhai Gajera 6.2 Details of receipts by owners and confirming party are as under Receipts of owners Receipts of confirming party Name Amount Name Amount Harjibhai Parsottambhai 575500 Gopalbai Pragjibhai 4424000 Vastarpara Vastarpara (HUF) Becharbhai Jivrajbhai 575500 Jitendrabhai Harjibhai 3050000 Vastarpara Desai Babubhai Nagjibhai gajera 1250000 Sureshkumar Babubhai 1250000 Gajera 6.3 The assessee and other owners had entered into .....

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ers and omitted the names of 4 confirming parties to avoid payment of double stamp duty. 6.4 The Surat Municipal Corporation had put water works reservation on these lands as the land is for agriculture. The confirming parties had agreed to make representation before the Revenue Department of the State Government to release the Reservation on land, to carry out. the procedure of N.A. before the Collector Surat and to get the plan of building approved on land from Surat Municipal Corporation. All .....

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confirming parties had executed a cancellation / transfer deed on 21.03.2008 by which the assessee .and other co-owners were required to execute Registered Sale Deeds in favour of Dhara Construction and Dhirajla! Popatlal Tejani to whom land was sold by four confirming parties. The copy of transfer deed dtd. 21.03.2008 is enclosed. 6.5 The assesses had sold the land as per Satakhat dtd. 04.03.2005 to 4 confirming parties and had shown the Capital Gain in A.Y. 2007/08 on sales of land to confirm .....

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cknowledgement of I.T. Return of Income of A.Y. 2008/09 and A.Y. 2009/10 of 4 confirming parties are enclosed, 6.7 Thus, the entire sales consideration of ₹ 1,11,25,000/- has been shown in the case of assesses, Harjibhai and 4 confirming parties according to the terms of Satakhat dtd. 04.03.2005, 7. We have heard the contentions made by ld. DR and perused the material on record. We find that this is a case in which assessee along with his co-owner purchased plots of agricultural land discu .....

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were required to be cleared before any payment is made by confirming parties to two coowners. The issues in land were cleared in A.Y. 2007/08 and the payment was made by confirming parties to two co-owners in AY 2007-08 and both the co-owners had shown Short Term Capital Gain in their Return of Income which were accepted by the Assessing Officer. The above referred four parties further have sold the plots of land in the issue under appeal before entering registered sale deed in favour of M/s Dha .....

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r Babubhai Gajera. All the four confirming parties have shown the respective receipts totaling to ₹ 99,74,000/- in their return of income as capital gains. 8. We further find that ld. CIT(A) has observed following while allowing the appeal of assessee - Decision: 6. I have gone through the assessment, order and the submission of the appellant. So far as the first ground of appeal related to the addition of ₹ 52,26,735/- on account of Capital Gain is concerned, it is found from the de .....

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0 Sureshkumar Babubhai Gajera 1250000 Total 1151000 Total 9974000 When the Satakhat was executed there were certain reservations and issues in land which were required to be cleared before any payment is made by confirming parties to two co-owners. The issues in land were cleared in A.Y. 2007/08 and the payment was made by confirming parties to two co-owners in AY 2007-08 and both the co-owners had shown Short Term Capital Gain in their Return of Income which were accepted by the Assessing Offic .....

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ion involving the allowing of the possession of any immovable property to be taken or retained in part performance of contract of the nature referred to in Section 53A of the Transfer of Property Act, 1882 of and capital assets falls within the meaning of 'transfer for the purpose of Sec. 45 of the Act. Since, the possession was given in A.Y. 2007/08 by the two co-owners to four confirming parties in A.Y. 2007/08, the Short Term Capital Gain in case of assesses and other co-owner is attracte .....

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nd accordingly, had shown the long term capital gain in their Return of Income. Thus, the entire Capital Gain whether short term or long term has been taxed in this case of two co-owners and four confirming parties. The only doubt on the part of Assessing Officer is the execution of Registered Sale Deed in favour of Dhara Construction and Dhirajlal Popatlal Tejani by two co-owners when they had transferred their rights by Satakhat dtd. 04.0:5.2005. As per the terms of Satakhat the final sale dee .....

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s for non-agriculture permission and approval of building plan, all to be completed by the four confirming parties who had completed the same on 26.03.2007, made payment on that date to two co -owners and sold the land on 28.03.2008. The assessee and other co-owner has executed a transfer/cancellation deed on 21.03.2008 with four co-owners by which the four confirming parties instructed and agreed with the assessee and other co-owner to execute Registered Sale Deed in favour of purchaser of and .....

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d on 24.05.2010. Since, the assessee, other co-owner and the four confirming parties have already accounted the sales receipts of ₹ 1,11,25,000/- in their respective accounts and have also shown the Capital Gain in their all cases as per their share in land, the Assessing Officer was not justified in making the addition of entire consideration in the case of appellant. Accordingly, the addition of ₹ 52,26,735/- is hereby deleted and the ground of appeal is allowed. 9. We find that ld .....

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