TMI Blog2016 (7) TMI 184X X X X Extracts X X X X X X X X Extracts X X X X ..... filed by different assessees against different orders of ld. CIT(Appeals) Panchkula dated 30.12.2015 for assessment year 2007-08. 2. The issues are identical in all the appeals. Ld. Representatives of the parties mainly argued in the case of assessee Shri Rajiv Kumar and submitted that order in this case may be followed in other appeals. 3. We have heard ld. Representatives of both the parties, perused the findings of authorities below and considered the material available on record. Ld. DR produced the assessment records, has also been perused. The appeal in the case of Shri Rajiv Kumar is disposed off as under. ITA 17/2016 ( Shri Rajiv Kumar) 4. In this appeal, on ground No. 1 the assessee challenged the upholding of long term capital gain amounting to ₹ 5,23,23,470/- in the year under consideration i.e. 2007-08. On ground Nos. 2 to 7, the assessee challenged the order of the ld. CIT(Appeals) in denying exemption under section 54B and 54F of the Income Tax Act on different amounts. On ground No. 8, assessee challenged the order of ld. CIT(Appeals) in not allowing commission of ₹ 5,50,000/- paid by the assessee to the brokers from the sale proceeds of agri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n consonance with existing law. The assessee himself offered for tax an amount of ₹ 50 lacs during the year and for balance amount of ₹ 5 Crores, the assessee claimed that it will be offered for tax in assessment year 2009-10, which was not in accordance with law. The assessee executed Sale Deed on 20.03.2007 and the sale consideration was partly received and partly promised. The buyer issued cheque for ₹ 5 Crores undated bearing No. 009643 to the assessee and also contracted that the Sale Deed in question shall automatically be stand cancelled in the event of dishonour of post-dated cheque. The Assessing Officer framed the following questions to arrive at the decision : i) If the amount of cheque of ₹ 5 Crore was realized, what will be the effective date of transfer ? ii) If the amount of cheque of ₹ 5 Crores was not realized, what will be the fate of ₹ 50 lacs already paid by the buyer to the seller ? 6(ii) The Assessing Officer further observed that as per provisions of Section 54 of Transfer of Property Act, it is clear that when price is partly paid and partly promised, the immovable property is deemed to have been transferred on ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(Appeals) that assessee executed Sale Deed dated 20.03.2007 in favour of M/s Link Infrastructure and Developer Pvt. Ltd., Delhi. The total contracted consideration was ₹ 5.50 Crore. The sale consideration was received as advance of ₹ 41,50,000/- vide cheque on 15.03.2007, cash of ₹ 8,50,000/- at the time of registration of the Deed on 20.03.2007 and balance ₹ 5 Crores through undated cheque which was later on encashed on 16.06.2008. As per terms of the Sale Deed, it was stipulated that in case the cheque of balance amount gets dishonoured, the Sale Deed shall stand automatically cancelled. The assessee referred to the terms of Sale Deed for cancellation of the Sale Deed on dishonour of undated cheque. Regarding possession, assessee has relied upon affidavit given by the buyer at the time of registration. The assessee submitted that assessee received sum of ₹ 50 lacs only as proceeds of the land and due tax/treatment was meted out to the aforesaid receipt. 8(i) The assessee further submitted that though the definition of transfer of capital asset under section 2(47) is extended w.e.f. assessment year 1988-89 to include any transaction involving th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case and written submission filed by the appellant. The AO had information available with him that the assessee had sold his share in land in Village Jaroda, Yamuna Nagar which was situated within 8 km. of municipal limits and the taxable capital gain was involved. The AO after obtaining due approval u/s 151(2), issued notice u/s 148 dated 21.08.2012 which was duly served on the appellant. The appellant was required to file return within 30 days of receipt of the notice. However, no compliance was made. Subsequently, notices u/s 142(1) dated 18.10.2013 and 03.12.2013 were issued but no compliance was made. Again a notice u/s 142(1) dated 08.01.2014 was issued and served upon the appellant. Subsequently, the appellant vide its reply dated 14.02.2014 submitted that return filed in original may be treated as filed in response to notice u/s 148 of the Act. 6.1 It is further noted that the appellant has sold agricultural land for a consideration of ₹ 5,50,00,000/- through a sale deed registered on 20.03.2007. As per the deed, the sale consideration comprised of ₹ 8,50,000/- in cash, ₹ 41,50,000/- through cheque dated 15.03.2007 and ₹ 5,00,00,000/- t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant has committed that nothing is due. The mutation would be entered or the officials of the company itself can mutate in their name, the seller will have no objection. Thus, as per provisions of Transfer of Property Act, the transfer was affected on 20.03.2007. In the instant case, there is intention of the seller to sell and buyer to purchase a property for a sum which is paid and promised to be paid, so sale has taken place on 20.03.2007 i.e. during year under consideration. Here, the reliance is placed on the decision of Hon'ble Tribunal Hyderabad 'A' Bench in the case of Dr. Maya Shenoy 23 DTR 140, wherein it was held that so long as transfer is made for a consideration it is immaterial that consideration will be received in future. Thus,the sale is complete even if price is intended to be paid. So sale has taken place during the year. 6.4 Further, there is a certainty in performance of contract and no right to revocation is stipulated in the sale deed or registration deed. The saving clause in the registration deed that in case of non realization of undated cheque, the agreement to sell shall stand cancelled is only a protection given to the seller for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rly states that the possession has been handed over to the buyer on the date of registry itself. It is to be noted that the document evidencing the transfer of property has been duly registered by the competent authority i.e. Registering Authority and the necessary mutation entry has also been done and accepted by 31.03.2007. Truly speaking such an affidavit is not valid in the eyes of law as it states something which is not borne out of legally valid documents and record. If such affidavit has to take precedents over the provisions of law it will only lead to anarchy. Naturally, in such circumstances one has to go by the entries in the land revenue records and sale deed. Therefore, the appellant's reliance on the buyer's affidavit for second date of sale is not well placed as these do not nullify the effect of what is stated in the revenue records and sale deed registered on 20.03.2007. 6.7 Regarding the claim of assessee that possession of property remained with the assessee' till the encashment of post dated cheque, there is contrary finding by the AO that the Tehsildar, Jagadhri informed that Intkal has been accepted before the year end on 31.03.2007 in the nam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cheques encashed on different dates falling in two financial years. Therefore, the appellant's reliance on these cases is not relevant to the facts of the instant case. 6.10 The appellant has further relied on the decision in the case of ACIT Vs. Hotel Harbour View [2009] 184 Taxman 42, wherein the Hon'ble ITAT, Cochin Bench on interpretation of section 2(47) r.w.s. 53A of the Act held that the transfer of possession of property takes place only when sale deed is executed and title of property is transferred from vendor to vendee. The appellant has also relied on the judgment of Hon'ble Madras High Court in the case of Smt. D. Kasturi Vs. CIT [2010] 323 ITR- 40 wherein Hon'ble High Court held that where assessee had executed agreement for transfer in respect of property and given possession to party and received consideration, doctrine of part performance as per section 53 A of Transfer of Property Act was rightly invoked; subsequently act of assessee in executing power of attorney and sale deeds executed by PA holder on basis of such power of attorney would not in any way alter status of the parties to agreement. On perusal of these judgments, it is noticed t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an that in all situations the possession of property is pre-requisite before or during the registration of sale deed for effective transfer of capital assets. In the instant case, the transfer is by way of registered sale deed wherein it has been mentioned -'possession of land in question had been handed over to the purchaser company on the spot. Now the purchaser company has become owner in possession of the above land in my place'. This fact shows that there is a registered sale deed and according to sale deed the possession of land has already been transferred. The provisions of section 2(47)(i) recognizes the sale of the capital assets as a mode of transfer in relation to the capital asset. So, the 'transfer' of capital asset is covered by section 2(47)(i) of the Act and not by 2(47)(v) as contemplated by the appellant. In the judgment given by Hon'ble High Court of Bombay in the case of Chaturbhuj Dawarkadas Kapadia Vs. CIT 260 ITR 491, the Hon'ble Court observed that however/the mode of 'transfer' as per section 2(47)(v) read with section 53A of TP Act is in the cases of such agreements which are in the nature of development agreements where th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar question was before the Hon'ble Andhra Pradesh High Court in the case of Addl. CIT v. G.M. Omar Khan (116 ITR 950) which is reproduced as under : 3. Whether the profits or gains arising from the transfer of a 'capital asset' can be chargeable to income-tax if the transfer is effected in the previous year and if no amount is received? The Hon'ble High Court answered the question in favour of the Revenue. While answering the question in favour of the Revenue, the Hon'ble High Court observed as under :- The Madras High Court in T. V. Sundaram lyengar and Sons Ltd. v. CIT [1959137ITR 26 opined (per headnote): In order to attract liability to tax on capital gains under section 12B of the Indian Income-tax Act, 1922, it is sufficient if in the relevant accounting year profits have arisen out of the sale of capital assets, that is to say, if the assesses has a right to receive the profits. It is not necessary that the asses see should have received them. When once profits have arisen in the accounting year out of the sale of capital assets, what the parties did /subsequent to that year will not have any bearing on their liability to tax in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive Magistrate, Jagadhri in which the buyer has specifically affirmed that sale deed of the land has been registered but the spot possession will be given at the time when company would be paying the total land amount of PDC cheque to the assessee. Until the amount of PDC cheque has not been paid, the buyer company cannot make discharge of any kind to the remaining persons etc. If the PDC cheque could not be paid at the mentioned time, then owner will made holder of the possession and sale deed will be cancelled and buyer company will be responsible for the loss of the trees and crops, building etc. and the property will remain with the assessee. 11(i) The ld. counsel for the assessee further submitted that sale deed was executed with advance because the buyer company will have to get land use changed from the Revenue authorities with permission to develop by raising construction. In case no land use change permission has been granted or construction is not allowed by the authorities, the buyer use to cancel the sale deed and advance many is refunded. He has, therefore, submitted that intention of the parties from the above facts shall have to be considered in the light of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ient funds. Hon'ble High Court had taken the cognizance of the same and directed the investigation through senior officer of the Crime Branch to look into the allegations and even the Collector, Yamuna Nagar was directed to take remedial action. Special Investigation Team was formed under the head of Additional Director General of Poilice. The ld. counsel for the assessee, therefore, submitted that these facts will clearly reveal that there was no intention of the buyer to pay the sale consideration to the assessee in assessment year in appeal. The buyers duped the assessee and others and got the sale deed registered without giving any sale consideration and only after intervention of the High Court and various civil and police authorities, assessee got the amount of undated cheque. Therefore, no capital gain arises in the years under consideration. 13. The ld. counsel for the assessee relied upon following decisions : i) Decision of Hon'ble Punjab Haryana High Court in the case of Hira Lal Ram Dayal V CIT 122 ITR 461. ii) Order of ITAT Chandigarh Bench in the case of CIT V Mrs. K.Atma Ram 6 CCH 202. iii) Order of ITAT Hyderabad Bench in the case of M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al may not feel convinced that the sale transaction was a sham transaction and refuse to rely on the material produced by the assessee for good reasons, but the said material had to be taken into considered and could not be ignored. The enquiry before the Tribunal was to be directed to find out whether there had been a sale and if the Tribunal comes to the conclusion that the sale had taken place, in that case, that capital gains tax would become payable. The matter can be viewed from another angle. It is a matter of daily happening that people, who want to avoid payment of tax, would sell the property by getting the sale deeds registered at under- estimated value. If it is held that the sale deed is final, in that case, the IT authorities will be debarred from looking into as to how much sale consideration passed under the transaction, which is not the law. The factum of sale and the proceeds are the real questions to be determined by the IT authorities. From what has been stated above, it is clear that the Tribunal fell into an error in refusing to examine the material put forth by the assessee to prove that the sale was a sham transaction. 15(i) ITAT Chandigarh Bench in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and having decided to execute the sale deed in a future date the transaction of sale of properly was not completed in terms of section 2(47) of the Act., specifically, read with the Sec 53A of Transfer of Property Act, 1882. We place reliance on the judgement of Patna High Court in the case of Smt. Raj Rani Devi Ramna vs. CIT ( 201 ITR 1032) wherein it was held that sale deed, though registered, stipulating a condition precedent that the property shall pass only on receipt of sale consideration, transaction did not take place on the date of registration of sale deed. We also place reliance on the order of the Delhi Tribunal in the case of ITO vs. Srnt. Satwavati Devi Verma (124 ITD 467) wherein held that the assessee having executed the agreement, which only contemplated the sale property to the purchaser on a future date on certain terms without transferring any right of ownership, and no possession of property is given or right to use the property or right received income arising in the property also not given to the purchaser, in such circumstances, it is not a transfer in terms of section 2(47) of the IT Act, 1961. We also place reliance on the decision of CIT vs. Rasiklal Mane ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... session of land on receipt of final amount and which in this present case had taken place on 4/2/2009. From the above facts it can be concluded that though the Assessee entered into agreement for sale on 19.3.2008, the actual rights and benefits in the land were transferred by the Assessee on receipt of the final installment i.e. in AY 2009.10. The Assessee has disclosed the capital gains in the return in AY 2009-10. The Revenue has not been in a position to controvert the aforesaid facts by bringing any contrary material on record. 8.1. In the case of Smt. Raj Rani Devi Ramna Vs CIT (1993) 201 ITR 1032 (Pat) the Hon'ble HC has held that the properties do not necessarily pass as soon as the instrument is registered, for the true test is the intention of the parties. Registration is prima facie proof of an intention to transfer, but it is no proof of an operative transfer if there is a condition precedent as to the payment of consideration or delivery of the deed. Thus the seller may retain the deed pending payment of price and in that case there is no transfer until the price is paid and the deed is delivered. 8.2. In the case of ITO vs Smt Satyawati Devi Verma (2010 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration making the assessee liable for capital gains tax under s. 45--Nitai Chandra Naskar vs. Smt. Champaklata Debi (1919) 29 CJL 250, Panchoo Sahu vs. Janku Mandar AIR 1952 pat 263 and Shiva Narayan Sah vs. Baidya Nath Prasad Tiwary AIR 1973 pat 386 relied on. 15(vi) ITAT Kolkata Bench in the case of Chanchal Kumar Sirkar V ITO (supra) held as under : Where the consideration for the transfer was received several months after the date of the transfer of property, the period of six months for making deposit under s 54EC should be reckoned from the date actual receipt of the consideration . 15(vi) Hon'ble Bombay High Court in the case of CIT V Mrs. Hemal Raj Shete in IT Appeal No. 2348 of 2013 vide judgement dated 29.03.2016 held in para 7 to 12 as under: 7. Mr.Pinto, learned counsel for the Revenue urged that in terms of section 45(1) of the Act that transfer of capital asset would attract the capital gains tax. It is further submitted that the amount to be taxed under section 45(1) is not dependent upon the receipt of the consideration. In support of the above he invites our attention to Section 45(1)(A) and section 45(5) of the Act which in contrast b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that income may accrue to an assesee without the actual receipt of the same. If the assessee acquires a right to receive the income, the income can be said to have accrued to him though it may be received later on its being ascertained. The basic conception is that he must have acquired a right to receive the income. There must be a debt owed to him by somebody. There must be as is otherwise expressed debitum in presenti, solvendum in futuro .... .... .... . In this case all the co-owners of the shares of M/s.Unisol have no right in the subject assessment year to receive ₹ 20 crores but that is the maximum which could be received by them. This amount which could be received as deferred consideration is dependent/contingent upon certain uncertain events, therefore, it cannot be said to have accrued to the respondent-assessee. The Tribunal in the impugned order has correctly held that what has to be taxed is the amount received or accrued and not any notional or hypothetical income. As observed by the Apex Court in Commissioner of Income-Tax vs. M/s. Shoorji Vallabdas and Co. (1962) 46 ITR 144 Income-Tax is a levy on income. No doubt, the Income-Tax Act takes into account two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a right to receive ₹ 20 crores in the subject assessment year. 12. In the above view, in the present facts the question of law as framed does not give rise to any substantial question of law. Accordingly, appeal is dismissed. No order as to costs . 16. In the instant case, the sale deed dated 20.03.2007 in question mentioned the sale consideration of ₹ 5.50 Crores out of which advance of ₹ 50 lacs have been given on the date of execution of the sale deed. The substantial balance consideration of ₹ 5 Crores was to be paid through undated cheque No. 009643. Further, it is mentioned that due to bouncing of the aforesaid cheque, sale deed will be cancelled. Therefore, essential condition of the sale deed is transfer of the property on full payment made by the purchaser. On the same day, the buyer M/s Link Infrastructure Developer P. Ltd. through Shri Parveen Kumar executed an affidavit dated 20,.03.2007 duly attested by the Executive Magistrate, Jagadhari. In this affidavit, the buyer has mentioned/affirmed that though sale deed of the land has been registered but the spot possession will be given at the time when total sale consideration of the PDC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taking legal actions against the Real Estate Developers Builders who have duped/cheated hundreds of farmers in the area of Yamuna Nagar by alluring them to execute the sale deeds with a promise to pay sale consideration through cheques which later on bounced for want of sufficient funds. All the substantial amount remained unpaid. 16 (ii) Hon'ble High Court, considering the serious allegations against the builders/buyers for cheating hundreds of farmers in District Yamuna Nagar directed the senior officers of the Crime Branch to look into the allegations of conniving with the builders alongwith Collector Yamuna Nagar to take immediate remedial action. Addl. DGP, Crime Branch was also directed to constitute Special Investigation Team to conduct fair investigations. These facts would also support the claim of the assessee that the buyer companies have no intention to pay any amount to the agriculturists who have executed sale deed in favour of the developers and the developers have not paid the substantial sale consideration to the agriculturists including the assessee. It is only when the investigation carried out by the State Police and Civil Authorities, as per directions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, cannot be ignored. The contents of sale deed, affidavit and undated cheque of ₹ 5 Crores and orders of Hon'ble Punjab Haryana High Court clearly proved that the buyer company manipulated the sale deed to dupe the assessee and other agriculturists. Undated cheque of ₹ 5 crores shows no intention of the buyer to pay any sale consideration in future to complete the transaction. The undated cheque itself shows that buyer company was not definite of the payment within the time-bound period. The intention of the parties shall have to be considered on the facts and circumstances of the case. The registration is prima-facie proof of an intention to transfer but it is no proof of an operative transfer if there is a condition precedent as to the payment of consideration or delivery of the deed or possession. The properties do not necessarily pass as soon as the instrument is registered, the true test is the intention of the parties. In the instant case, the sale of property depends upon full payment and the buyer company obtaining land use change permission and development permission etc. The authorities below only considered the sale deed was final but ignored the other ..... X X X X Extracts X X X X X X X X Extracts X X X X
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