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2017 (1) TMI 1093 - ITAT HYDERABAD

2017 (1) TMI 1093 - ITAT HYDERABAD - TMI - Capital gains - Nature of receipt - assessee was not the owner of the property but had the control over property - legal owners - allowing the cost indexation towards the value of acquisition cost - as per DR assessee is not a owner of the piece of land which he sold to M/s NCCl - assessee has stated that he has safeguarded the property from unlawful encroachment and he is in the absolute control over the property since 1986 and that he is aware of lega .....

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o a part of owner and also assessee had played the role of a owner in the agreement of sale between the disputed parties and M/s NCCL. Even though assessee’s name in the sale agreements is not shown as an owner, but, it is shown as one of the consenting parties. Moreover, assessee has received a portion of the sale consideration from this transaction i.e. ₹ 85.05 lakhs out of ₹ 166.8 lakhs (about 51%) of the total consideration. It shows that assessee is one among the parties, who so .....

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of ₹ 15.3 lakhs as allowed by the CIT(A) - Held that:- As per the agreement of sale submitted by the assessee, assessee has confirmed the payment of ₹ 15 lakhs to Shri Ali Asghar Ceizure, which was also confirmed by Shri Ali Asghar Ceizure in the same agreement, but, the assessee is supposed to pay ₹ 15 lakhs at the time of registration of sale deed. There is no proof or evidence placed on record to show that the agreement of sale is, in fact, completed. In the absence of any e .....

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VI DEVI, JUDICIAL MEMBER AND SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER For The Revenue : Smt. U. Mini Chandran For The Assessee : Shri P.C. Yadav ORDER PER S. RIFAUR RAHMAN, A.M.: This appeal filed by the Revenue is directed against the order of CIT(A), Vijayawada, dated 10/01/2013 for AY 1997-98. The assessee also filed CO against the very same order of the CIT(A). 2. Briefly the facts of the case are that the assessee, an individual, filed his return of income on 06/03/1998 declaring total inco .....

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determined at ₹ 51,05,000/- and brought to tax in that year. On appeal, the CIT(A)- VI, Hyderabad directed the AO to assess the said income in respective years in which these amounts were actually received. He further directed to reopen the assessments for A Y. 1996-97 and 1997-98 to bring to tax the respective amounts received in those years. 2.1 As a result, the assessment for AY.1997-98 was reopened. As against the revised income admitted at ₹ 56,380/-, the assessment u/s.143(3) .....

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d the addition made on protective basis. On the issue of nature of this receipt, the CIT (A) confirmed the stand taken by the AO and denied the assessee's claim that this receipt is long term capital gains and not income from other sources. On further appeal, the Hon'ble ITAT Hyderabad A' Bench, Hyderabad vide Order in ITA No. 301/Hyd/2006 dated 26/9/2008, held that the entire receipt of ₹ 85,05,000/- has to be assessed on substantive basis in the hands of the assessee only ins .....

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dingly, the assessment for AY 1997-98 was done afresh treating the receipts of ₹ 82,55,000/- as income from other sources after allowing an amount of ₹ 2,50,000/- towards litigation expenses. The AO has concluded that the assessee has not furnished any material evidence to show that the receipt of ₹ 85.05 lakhs from M/s NCCL is on account of relinquishing his right over the property. The assessee was shown as a mere consenting party and therefore cannot be considered as arising .....

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iew that the remand report was not of much help in adjudicating the issue. 4. The CIT(A) observed that it is seen from the records that right from the year 1986, till the impugned assessment year, the assessee is shown as main person in the impugned transactions. As per Xerox copy of the agreement for sale dated 09.04.1986, a copy of which was produced before the undersigned has been perused and placed on record, according to which the assessee has paid ₹ 15,00,000 and the remaining amount .....

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377; 15,00,000 was paid after completion of sale, the sale proceeds to the extent of ₹ 81,75,000 was given to others, on which also no comments were made by the ITAT. Thus, the CIT(A) observed that since the sale receipts realized by the assessee is only 51 % (Rs. 85,05,000/- out of total receipts of ₹ 1,66,80,000), the purchase price of the assessee needs to be restricted to 51% of the amount of ₹ 30,00,000/- as per the agreement for sale for sale dated 09.04.1986, mentioned h .....

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ly the deemed purchase price to the assessee is worked at ₹ 15,30,000) on which no indexation is possible. Now the main question whether the receipt of sale proceeds in the hands of the assessee constitute capital gains or business income. The CIT(A) observed that as rightly argued by the AR and as it transpires from the records, the assessee paid advance and took possession of the impugned land and spent amounts to safeguard it from encroachers/ other ruffians, and finally in association .....

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s regards the ground of appeal pertaining to levy of interest under sections 234A, 2348, and 234C, the CIT(A) held that Levy of interest under these sections is mandatory and not appealable, however, the assessee is entitled for consequential relief, if any, after giving effect to this order. 5. Aggrieved by the order of the CIT(A), Revenue is in appeal before us raising the following grounds of appeal: 1) The CIT (Appeals) order is erroneous both in law and facts of the case 2) The CIT(A) erred .....

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e has raised the following cross objections: 1. The learned Commissioner of Income-tax (Appeals) erred in restricting the purchase price to 51 % of the amount of ₹ 30,00,000/-paid. He ought to have allowed the entire amount of ₹ 30,00,000/- paid. He failed to appreciate that the entire agreed cost had accrued as liability payable to the owner and was paid as such in the course of the transaction. It is therefore prayed that the authorities below may be directed to take purchase price .....

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he paper book. She submitted that the assessee is not a owner of this piece of land, which was sold to M/s NCCL. She brought to our notice some of the agreements entered between vendor and vendee in which in first two agreements assessee s name is nowhere seen in the agreements. In other agreements, it was mentioned as consenting party. She submitted that as per the findings of the AO, assessee is not the owner of the property nor an agent. It is submitted that the assessee has produced a copy o .....

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R relied on the judgment of the Hon ble Supreme Court in the case of Rambhau Namdeo Gajre vs Narayan Bapuji Dhotra (Dead) (dated 25 August, 2004), [2004] (8) SCC 614. 8. Ld. AR relying on the order of CIT(A), submitted that assessee has purchased the property from Shri Ali Asghar Ceizure on 10th April, 1986, who has bought this property on 18th May, 1965, a copy of the agreement is placed at page 10 of paper book. It is submitted that Shri Ali Asghar Ceizure has sold this property to the assesse .....

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30 lakhs. He submitted that assessee has paid ₹ 30 lakhs to Shri Ali Asghar Ceizure as purchase consideration, he should be allowed to claim the whole amount as cost of purchase and indexation should be allowed accordingly. 9. Considered the rival submissions and perused the material facts on record. We find that Late Shri V. Malla Reddy bought the disputed land from one Shahin Asghar Ahmed for a valid consideration and the said purchase was acknowledge and confirmed by the Govt. of AP. Sr .....

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on record as claimed by the assessee. However, assessee has stated that he has safeguarded the property from unlawful encroachment and he is in the absolute control over the property since 1986 and that he is aware of legal disputes on the property and he has spent lot of money on representing legal disputes on the property. It is submitted by the ld. AR that the assessee is the main person in safeguarding the property as well as bringing the disputed parties on the table successfully to comple .....

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of a owner in the agreement of sale between the disputed parties and M/s NCCL. Even though assessee s name in the sale agreements is not shown as an owner, but, it is shown as one of the consenting parties. Moreover, assessee has received a portion of the sale consideration from this transaction i.e. ₹ 85.05 lakhs out of ₹ 166.8 lakhs (about 51%) of the total consideration. It shows that assessee is one among the parties, who sold the property to M/s NCCL. In case, the assessee is no .....

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