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Naresh Kukreja Versus The Income Tax Officer Ward 25 (3) (1) , Mumbai

2017 (9) TMI 842 - ITAT MUMBAI

Addition on account of capital gain - STCG OR LTCG - transfer u/s 2(47) - Held that:- We are of the view from the intend and purpose of the agreement to sell deed 19-07-2004 and subsequent cancellation dated 03-12-2008 that the parties never acted on the agreement and sale was never completed. Accordingly, we are of the view that the subsequent transfer effected by the assessee vide agreement dated 03-12-2008 for a sum of ₹ 75 lacs is to be considered as long term capital gain. In view of .....

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g out of the order of CIT(A)-35 Mumbai, in appeal No. CIT(A)-35/ITO.25(3)(1)/ITA.225/11-12, dated 13-08-2013. The Assessment was framed ITO Ward-25(3)(1), Mumbai for the A.Y. 2009-10 vide order dated 22-12-2011 under section 143(3) of the Income Tax Act, 1961(hereinafter the Act ). 2. The only short issue before us is whether in the facts of the case i.e. assessee entered into agreement dated 19-07-2004 with Mrs. Minu Chawla and Mrs. Meenakshi Chawla, for sale of half share of undivided shop No. .....

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the facts and circumstances of the case. The Appellant, therefore, prays that the addition on account of Short Term Capital Gain is without any basis and the same may be deleted. ii. The Id. CIT(A) failed to appreciate that the Appellant has not transferred any part of the impugned property to Mrs. Minu Chawla and the shop was always in the exclusive possession of the Appellant. Thus, the addition on account of Short Term Capital Gain is without any basis and the same may be deleted. iii. The Id .....

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oor, Khan Market, New Delhi admeasuring 530 Sq. Ft. Shri Puran Chand sold this property to Shri Mulkh Raj Kukreja, the father of the assessee, vide sale deed registered on 22-12-1961. Shri Mulkh Raj Kukreja died leaving behind his last will and Testament dated 15-01-1983, whereby he bequeathed the said property in favour of his wife Smt. Sheela Devi. Smt. Sheela Devi died on 21-03-1991 leaving behind her last will and Testament, whereby she bequeathed the above said property in favour of her son .....

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heirs in the dispute pertaining to the probate. Ultimately, the probate was not granted by the court in favour of late Shri Suresh Kukreja and therefore agreement to sale between late Shri Suresh Kukreja and Shri Balwant Rai Pruthi dated 11-10-2000 could not be acted upon. Thereafter pending the above legal proceedings for granting of probate before the District Judge Delhi, assessee decided to sell his half share of the shop to meet the cost of litigations due to financial problems. On 19-07-20 .....

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y the assessee and further, assessee could not hand over the possession of the said property as it was already occupied by the tenant Shri Balwant Rai Pruthi. Finally, on 03-09-2005 the probate was granted by District Judge Delhi in Probate case No. 203/2005 in favour of assessee. Finally, on 03-12-2008, agreement to sell was entered into to cancel the agreement dated 19-07-2004, wherein both the parties have agreed to cancel the earlier agreement to sell as the total property was occupied by th .....

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dated 03-12-2008 clearly direct that the agreement to sale dated 18-07-2004 is nullified and cancelled. The assessee finally decided to sell this shop to some other party and for that finally on 03-12-2008, assessee entered into an agreement to sell with Manoj Kumar Pruthi, son of late Balwant Rai Pruthi to sell this shop No.6A Khan market, New Delhi for a total consideration of ₹ 75 lakhs. 4. In term of the above facts, the assessee filed return of income for AY 2009-10 and disclosed lon .....

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d by the assessee on 19-07-2004 and the same were repurchased on 03-12-2008 and according to him, for this one half share of the undivided shop is to be taxed as short term capital gain. The AO referred the clause of sale agreement dated 28-12-2008 and for the sake of clarity the same is being reproduced from the assessment order as under: - And whereas the vendor has entered into an agreement sale dated 19-07-2004, duly registered as Document No. 18628, in Addl. Book No. 1, Volume No. 1392, on .....

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ee to Mrs. Meenakshi Chawla on 19-07-2004 and the same was repurchased by the assessee on 03-12-2008 and thereafter the same was held by the assessee for less than 36 months before the final sale on 03-12-2008 and therefore, the capital gain for this half share of the property is to be assessed as short term capital gain. Accordingly, the AO adopted the sale consideration at 37.50 i.e. for the half share of the property out of the total consideration of ₹ 75 lakhs. The AO adopted the cost .....

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on 53A requirement is met with by the transferee. In terms of the transferor (in this ease the appellant) not encashing the cheques, it is in no way a reflection on the part of the transferee not performing or willing to perform her part of the contract, and, therefore, again this requirement of Section 53A to deem this transaction as transfer in relation to Capital Asset is also met with. In fact in page 5 para I of agreement dated 28.12.2008, it is again mentioned that AND WHEREAS the parties .....

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ted or challenged the fact that lie is repurchasing the said property, albeit by returning the said amount as was received on 19.07.2004. This fact of not returning the said amount alone cannot construe invalid the part performance of contract in terms of Section 53A of the Transfer Property Act, 1882 by virtue of the agreement to sale dated 19.07.2004. For the reasons given above, I am in agreement with the AO that for half the share in the property which was first sold/transferred to Ms. Meenu .....

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ur from the Hon ble District Judge, Delhi was sold on 03-12-2008. Prior to this action, probate proceedings were pending before the District Court Judge, Delhi, and the assessee decided to sell his half share of his shop to meet the cost of litigation and due to financial problems. Accordingly, assessee entered into an agreement to sell with Mrs. Minu Chawla and Meenakshi Chawla for selling this half share of undivided share in shop No. 6A, Khan Market, New Delhi for consideration of ₹ 5,0 .....

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ies have agreed to cancel the earlier agreement to sell as the title of the property was not clear and due to which the assessee could not hand over the vacant position of the property despite a clause in the agreement. With the entering of cancellation agreement dated 03-12-2008, both the parties acted on agreements and accordingly assessee returned to the purchasers all the cheques received, which were supposed for the purchase of half share of this shop. Vide this present agreement dated 03-1 .....

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e on page No. 4 to 5 of the agreement dated 03-12-2008 i.e. the cancellation of agreement clearly states as under: - ….and whereas the said Shri Naresh Kukreja (the vendee herein ), entered into an agreement to sell dated 17-07-2004, duly registered as document n. 18628, in Addl. Book No. I, Volume No. 1392, on page 7 to 2 on 19,07,2004/ 25.02.2005, in the office of the Sub Registrar VII, New Delhi, for the sale of 1/s (one half) undivided share of shop bearing No. 6A, Measuring 534 Sq. f .....

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the said cheques were not got encashed by the vendee. And Whereas the parties have mutually agreed that the vendee shall repurchase the said share of said property from the vendors, by refund of the said amount of ₹ 4,90,000/- to the vendors so as to nullify / cancel the said Agreement to sell dated 19.07,2004, resulting whereby the vendors shall become the full and complete owner/ lessee of the said property or any part thereof. Further, the assessee claim is fortified by the fact that th .....

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