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Ashwani Kumar and Sons (HUF) Versus ITO, Ward-1 (1) , Meerut

2016 (5) TMI 424 - ITAT DELHI

Chargeability of capital gain on sale of property through unregistered documents - Held that:- According to the provisions of section 2(47) (v) of the act transfer includes any transaction involving the allowing of the possession of any immovable property 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.Therefore, in the transaction entered into by the assessee. All the ingredients of transfer are satisfied, .....

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he assessee when subsequently the same agreement was honoured. Furthermore for taking back the possession of the property assessee produced an undated notarised understanding on stamp paper of ₹ 10/-. For repossession of the property assessee produced an undated notarised understanding on stamp paper of ₹ 10/- between the buyer and seller However subsequently the transaction of sale has happened at the agreed price between the parties. Further it is difficult to appreciate that when .....

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essee - ITA No.5521/Del/2015 - Dated:- 15-3-2016 - SHRI I. C. SUDHIR, JUDICIAL MEMBER AND SHRI PRASHANT MAHARISHI, ACCOUNTANT MEMBER For The Assessee : Sh. Ashwani Kumar, Self For The Revenue : Sh. Bharat Bhushan Garg, Sr. DR ORDER PER PRASHANT MAHARISHI, A. M. 1. This is an appeal preferred by the assessee against the order dated 31.08.2015 of ld CIT (A), Meerut for the Assessment Year 2012-13. 2. The assessee has raised the following grounds of appeal:- 1. That the A.O. has not justified to in .....

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ll as CIT(A) has not considered that the A.O. has assessed capital gain on the basis of documents of agreement on stamp paper of ₹ 100/-, which was unregistered document. As per amended provision of section 53A of T.P. Act no such transfer is valid, therefore, without sale of agriculture land assessment of capital gain is bad in law. 4. That the A.O. is in error to assess balance amount of ₹ 26,81,600/-, which is yet not received and neither the assessee has received full considerati .....

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compliance of agreement possession was taken back. Hence, rejection of case law is unjustified. 6. That the initiation of penalty proceeding is bad in law, as the assessee has not concealed any income. 7. That the interest charged U/s 234A, 234B and 234C is not according to law as income of the assessee is relates to capital gain. 3. Ground No. 1 and 2 are against denial of deduction to the assessee under section 54B of the income tax act and Ground No 3 & 4 area against the chargeability of .....

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the property was given accordingly. According to the agreement the purchaser was to give balance consideration which was not given and therefore the possession was taken back on 15.03.2012. Therefore, there is no transfer according to the income tax act. However it was also noted by lower authorities that the possession of the property was handed over to the buyer. Against the total sale consideration of ₹ 1,96,81,600/- assessee has already received ₹ 1,70,00,000/- and balance of &# .....

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idual assessee and not to HUFs. Assessee preferred an appeal before CIT appeal who in turn confirmed the action of the assessing officer on taxation of capital gains on sale of land and secondly on denial of deduction under section 54B of the income tax act in the hands of HUF assessee. Therefore assessee is in appeal before us. 4. Firstly we take up ground no 3, 4 and 5 of the appeal which are against chargeability of capital gain on property where the document evidencing sale/ agreement of sal .....

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view of provisions of section 2(47) of the Income tax act, 1961. For this he relied on the decision of Honourable Punjab and Haryana high court in case of C S Atwal V CIT 59 taxmann.com 359. His contention was that that the assessee is an HUF and therefore according to the provisions of section 54B of the income tax act Assessee should be entitled to deduction. For this proposition he relied on the decision of CIT V T Narayanswamy 156 ITR 194 (mad), K S Jain & sons (HUF) V ITO 173 taxman 11 .....

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rther temporary taking back of possession is also not supported with credible evidence. Therefore, he submitted that the capital gain has rightly been charged to tax. Regarding deduction under section 54B of the income tax act, it was submitted that assessee being an HUF is not entitled to the deduction as per clear cut language of the section. 7. We have carefully considered the rival contentions and also perused the details filed by the assessee. It is undisputed fact that assessee has entered .....

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1882.Therefore, in the transaction entered into by the assessee. All the ingredients of transfer are satisfied, and therefore we are of the view that though assessee might not have received the full consideration but transfer of property has occurred in view of handing over the possession of the property to the buyer. For repossession of property assessee produced a an undated notarised understanding on stamp paper of ₹ 10/-.Merely because the possession of the property has been taken bac .....

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on of sale has happened at the agreed price between the parties. Further it is difficult to appreciate that when assessee has received substantial consideration and only meagre consideration is outstanding how assessee has taken possession of the property back from the buyer without returning any payment to the buyer. Reliance by the assessee on decision of Honourable Punjab and Haryana high court in case of C S Atwal V CIT (supra) is also misplaced as in that case the fact of handing over posse .....

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of the income tax act to the assessee for the sole reason that assessee is not an individual, but an HUF. Provisions of section 54 B of the act as it stood at relevant times are as under :- CAPITAL GAIN ON TRANSFER OF LAND USED FOR AGRICULTURAL PURPOSES NOT TO BE CHARGED IN CERTAIN CASES (1) Subject to the provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took .....

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f the amount of the capital gain is greater than the cost of the land so purchased (hereinafter referred to as the new asset), the difference between the amount of the capital gain and the cost of the new asset shall be charged under section 45 as the income of the previous year; and for the purpose of computing in respect of the new asset any capital gain arising from its transfer within a period of three years of its purchase, the cost shall be nil; or (ii) if the amount of the capital gain is .....

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e provisions of sub-section (2), where the capital gain arises from the transfer of a capital asset being land which, in the two years immediately preceding the date on which the transfer took place, was being used by the assessee being an individual or his parent, or a Hindu undivided family for agricultural purposes (hereinafter referred to as the original asset), and the assessee has, within a period of two years after that date, purchased any other land for being used for agricultural purpos .....

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ed family, by substitution of the words in sub-section (1), the assessee or a parent of his , by the words the assessee being an individual or his parent, or a Hindu undivided family with effect from April 1, 2013, i. e., for the assessment year 2013-14 and subsequent assessment years. Hence according to the plain language of law the Deduction to assessee HUF was not available for Ay 2012-13. However appellant has relied on the decision of K S Jain & sons HUF V ITO 173 taxman 114 (Delhi) whe .....

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ction 54B. Those cases are:- 1. CIT v. G.K. Devarajulu [1991] 191 ITR 211 (Mad.); 2. CIT v. R. Vijay Kumar [1995] 214 ITR 483 (Mad.); 3.Pravin Chand Mohin Kumar v. CIT [1994] 208 ITR 11 (Raj.). The Assessing Officer held that in all these cases it was held that the assessee being an HUF cannot be granted deduction under section 54(1) of the Act. Applying the analogy the deduction under section 54B cannot be allowed. 11. However we have perused these decisions and found that following decision ar .....

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ased agricultural lands within two years from the date of sale, the Income-tax Officer allowed exemption from capital gains under section 54B(ii) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). On the basis of an audit objection that exemption under section 54B(ii) of the Act is available only to individual assessees and not to a Hindu undivided family, the Income-tax Officer reopened the assessment under section 147(b) of the Act and the exemption granted under sec .....

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