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Shri Nalin P. Shah, Shri Jagat P. Shah And Shri Dilip S. Zaveri Versus DCIT, Circle- 14 (1) , And Income tax Officer-14 (2) (3, Mumbai

2017 (8) TMI 407 - ITAT MUMBAI

Determining the income of the assessee - Capital gain - Transfer u/s 2(47) - joint ownership - registration of agreement to sell - section 50C applicability - Held that:- There is no doubt that agreement to sell the plot of land was not registered with the stamp duty authorities. Even the buyer of the plot admitted that registration had not taken place. Secondly,the buyer had not adhered to the payment schedule. It is also a fact that as per the revenue records the assessee and the other co-owne .....

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ce with the provisions of the law. As far as applicability of section 50C is concerned it is sufficient to say that provision of the said section were not applicable to the facts of the case under consideration - Decided in favour of assessee. - I.T.A. /2608/Mum/2009, ./I.T.A. /2999/Mum/2009, I.T.A. /3000/Mum/2009, I.T.A. /4811/Mum/2009, I.T.A. /484/Mum/2009 - Dated:- 21-6-2017 - Sh. Rajendra,Accountant Member and C. N. Prasad,Judicial Member For The Revenue : Smt. Arzo Garodia-Sr. AR For The As .....

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main issue is taxability of sale proceeds of a plot of land.There are certain other issues in the appeal/cross appeals.We have decided to dispose all the appeals together for sake of convenience. ITA/2999/Mumbai/2009 -Brief Facts: 2.The assessee-an individual, is an investor in shares and securities. It filed its return of income on 07/10/2003 declaring total income of ₹ 65,35,760/-. The case was selected for scrutiny and the AO completed the assessment vide order dated 31/03/2006 determi .....

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greement to sell the plot of land to Pratima Enterprises (PE) for a total consideration of ₹ 18.75 lakhs, that the AOP received ₹ 8 lakhs, that the assessee was entitled to get 20% (Rs. 1.60 lakhs) of the sale proceeds, that it had not offered the amount in question for taxation. The AO directed the assessee to file an explanation in that regard.Vide his letter dated 20/12/2005 the assessee stated that transaction to sell the property was incomplete, that he has not offered the sale .....

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ty was transferred during the year under consideration, that the amount received by the assessee was liable to be tax under the head capital gains, that the AOP was not in existence, that the share of consideration of the assessee had to be taxed in his hands.The AO formed an opinion that the total consideration of ₹ 18.75 lakhs, considering the location of the property, was very low. Therefore,a reference u/s.55A of the act was made to the Valuation Officer (VO) to determine fair market v .....

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7; 1.37 crores and was taxed under the head capital gains. 4.Aggrieved by the order of the AO, the assessee preferred an appeal before the First Appellate Authority (FAA).He made elaborate submissions and referred to certain case laws in his support. He filed certain additional documents before the FAA and requested him to admit the same as per the provisions of Rule 46A of the Income Tax Rules, 1962. The FAA called for remand report from the AO in the light of the submissions of the assessee. H .....

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ecord was still in the name of the assessee, that there was no transfer of the plot as per the provisions of section 53A of the Transfer of Property Act. He held that there was an agreement for sale entered into between the five co-owners as vendors including the assessee with PE, that agreement was not registered, that as per the agreement total consideration payable by the purchaser was ₹ 18.75 lakhs, that the purchaser did not make the payment as per the schedule payment fixed in the ag .....

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aving received the remaining payment was established, that before the AO the purchaser had admitted that the payments were not made in accordance with the terms of agreement, that the purchaser had further admitted that he had not paid property tax, stamp duty and that the deed was not registered with the Stamp Duty authorities, that the purchaser was in possession of the property, that after making the payment of 1instalment the purchaser had defaulted the terms of the agreement for sale by not .....

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t is a share on the basis of agreement for sale, that same had to be treated as forfeited amount in the hands of the assessee for non-performing of its part by the arches, that the amount in question had to be taxed in the hands of the assessee. He directed the AO to advocate the forfeited amount to the income of the assessee. He further observed that the AO, while determining capital gains in the hands of the assessee, had adopted the sale considera - tion on the basis of fair market value as p .....

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he Transfer of Property Act, that the question of capital gains would not arise. He allowed the ground of appeal, about applicability of section 50C, in favour of the assessee for statistical purposes. 5.During the course of hearing before us, the departmental representative (DR) supported the order of the AO and stated that there was transfer of plot of land. Referring to the case of Dwarakadas Chaturbhuj, he argued that matter should be restored back to the file of the AO for determining the c .....

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eived on money, that no stamp duty was paid for the transaction, that registration of the plot of land had not taken place, that reference was made by the AO to the valuation officer u/s.142 (A) of the act and not u/s.55A as claimed by the AO, that the assessee had cooperated with the valuation officer,that if indexation was allowed the assessee would have no objection to offer the disputed amount under the head capital gains.He referred to the pages 25-28, 34, 38,123 and 125 of the paper book. .....

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greed sale consideration said to be accepted as full value consideration, that the amendment to section 50C with effect from 01/70/2009, by inserting the words or assessable had only prospective application. 6.We have heard the rival submissions and perused the material before us. We find that the AOP,consisting of 5 co-owners, had entered into an agreement with PE to sell a plot of land for ₹ 18.75 lakhs, that the agreement for sale was executed on a stamp paper of ₹ 20/-, that the .....

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f land at ₹ 6.85 crores, that he determined the share of the assessee at ₹ 1.37 crores, that the FAA called for two remand report s from the AO, that he held that provisions of section 50C were not applicable, that he held that amount received by the assessee should be taxed in his hands under the head forfeiture of advance received. There is no doubt that agreement to sell the plot of land was not registered with the stamp duty authorities. Even the buyer of the plot admitted that r .....

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fter going through the paper book we find that the AO had made the reference to the valuation officer u/s.142 and not u/s.55A of the Act. Clearly, the reference was not in accordance with the provisions of the law. As far as applicability of section 50C is concerned it is sufficient to say that provision of the said section were not applicable to the facts of the case under consideration. The Hon ble Madras High Court in the case of R. Sugantha Ravindran(supra)has deliberated upon the facts of t .....

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agreement of sale, the assessee had transferred the property and received the sale consideration. In such circumstances, whether section 50C of the Act would be made applicable even in respect of cases w is here the registration had not taken place, is the only issue to be decided in this case. 7.Learned counsel for the assessee placed a circular in Circular No. 5 of 2010/(F. No. 142/13/2010-SO(TPL)), dated June 3, 2010 (see [2010] 324 ITR (St.) 293 ), issued by the Board and submitted that as p .....

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from October 1, 2009, and,therefore, they will apply only in relation to transaction undertaken on or after such date. The relevant portion of the circular is extracted hereunder (page 319 of 324 ITR) : "23.4. Applicability.-These amendments have been made appli cable with effect from 1st October, 2009, and will accordingly, apply in relation to transactions undertaken on or after such date." 9. Learned counsel for the Revenue is not disputing about the existence of such circular issu .....

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r 1, 2009, is neither a clarification nor an explanation to the existing provision and it is only an inclusion of new class of transactions, namely, the transfer of properties without or before registration. Before the amendment, only transfer of properties where the value was adopted or assessed by the stamp valuation authority were subjected to section 50C application. However, after introduction of the words or assessable such transfers where the value is assessable by the valuation authority .....

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valuation authority and executed through agreement to sell or power of attorney. Consequently, the amendments have been made applicable with effect from October 1, 2009 and will apply only in relation to transactions undertaken on or after such date. Considering the above, we decide GOA 2,3,5 and 6 against the AO. 7.Ground number 4,raised by the AO and second ground of the assessee are identical.So, while deciding the appeal filed by the assessee,we would deal with it. ITA/2608/Mum/2009,(Nalin .....

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ed for nonperformance by the purchaser . In the earlier part of our order,we have mentioned the assessee had agreed to pay tax under the head capital gains for the amount received by it, provided benefit of indexation is given to him. Accordingly,we direct the AO to compute the capital gains, after affording a reasonable opportunity of hearing to the assessee. Ground number two is allowed in favour of the assessee, in part. ITA/3000/Mum/2009,( Jagat P Shah): 10.The AO has raised eight grounds of .....

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