TMI Blog2017 (11) TMI 189X X X X Extracts X X X X X X X X Extracts X X X X ..... evidence available on record not the assumptions or presumptions of the AO. Further, the assessee’s husband took loan from Repco Bank and the same was paid directly to the vendors account and whatever remaining balance was also settled to them. AO has not brought on record anything contrary that the assessee has indirectly benefitted in this transaction or the sale consideration was redirected to the assessee or husband of the assessee. Merely relying on the assumptions and just because the property was purchased by assessee’s husband, it does not mean that there exists some kind of foul transaction and without bringing on record any cogent material to support the AO’s contention, AO cannot presume facts. - Decided against revenue - ITA No. 1339/Hyd/2015 - - - Dated:- 31-10-2017 - Shri D. Manmohan, Vice President And Shri S. Rifaur Rahman, Accountant Member Revenue by : Smt. N. Swapna Assessee by : Shri T. Chaitanya Kumar ORDER Per S. Rifaur Rahman, A. M. This appeal filed by the revenue is directed against the order of the learned Commissioner of Income-tax (A) - 4, Hyderabad, dated 11/09/2015 for AY 2010-11. 2. Briefly the facts of the case are that as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the head long term capital gain in the light of document dated 25-01-2010 though the assessee was not a party (transferor) for the said transaction and she ceased to be owner of the property in the light of registered document of sale cum GPA dated 28-09-2007. 2. Alternatively, without prejudice to the above claim made the assessing officer erred in treating the long term capital gain in the hands of the assessee as the property was gifted by her husband on 02-03-1981 and the same is transferred to her husband by way of sale deed and there is no gain accrued to the assessee in this transaction. Hence, the same is liable to be deleted. Submissions From the above ground it can be seen that the point raised in additional ground would go to the root of the issue i.e. whether the assessing officer was correct in holding that the assessee was liable for tax on capital gain in the light of document dated 25-01-2010 though the assessee was not transferor of said property. As the additional ground raised by the assessee is of legal in nature, the Hon'ble CIT(A) may consider the request of the assessee for admission of additional ground. The request of the appellant for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Sri Marri Badrinarayana Reddy, Bowenpally, Secunderabad. b) Registered Agreement of sale cum GPA dated 27-08-2007 executed by Smt. Marri Swaroopa W/o Sri M.Badrinarayana Reddy in favour of Sri Veera Malla Kistaian and 4 others. c) Registered Sale deed dated 25-01-2010 executed by Sri Veera Malla Kistaiah and 4 others in favour of Sri M. Badri Narayana Reddy, Secunderabad. Brief facts relating to above mentioned documents are submitted hereunder: a. Gift deed dated 22-03-1981: From the gift deed it can be seen that the donor was Marri Badrinarayana Reddy, Secunderabad and the donee was Smt. Marri Swaroopa W/o Sri M. Badri Narayana Reddy, Secunderabad. The donor gifted house bearing No.1-9-64 to 66 situated at Pedda Tokatta, Bowenpally, Secunderabad admeasuring an area of 426 sq. yards with existing tiled house valued at ₹ 35,000/-. The gift deed was registered by the registration authorities on 22-03- 1981 as document No.677/81. Thus, Smt Marri Swaroopa W/o Sri M.Badri Narayana Reddy the assessee became absolute owner of the property because of the document No.677/81 dated 22-03-1981. b. Registered Agreement of Sale cum GPA dated 28-07-2007: Sm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be identified as seller of the property. b. At para 2 of the Assessment order, the AO observed that Smt. Marri Swaroopa received the money as Sri B.N.Reddy has taken the loan from Repco Homes and transferred directly to Sri Veera Malla Kistaiah and others. Further, 'the AO observed that Smt. Marri Swaroopa has taken advance from Sri Veera Malla Kistaiah and others and consideration was directly paid to them. Therefore, the AO concluded that the assessee received sale consideration which was directly paid to Sri Veera Malla Kistaiah and others who were otherwise her loan creditors. Thus, the AO concluded that long term capital gains are to be assessed in the hands of the assessee. The undisputed facts are that: i. The assessee received a property mentioned above as a gift vide registered document dated 02-03-1981. ii. She executed a registered Sale cum GPA dated 28-09-2007 in favour of Sri Veera Malla Kistaiah and 4 others accepting consideration of ₹ 46 lakhs. The above two documents are registered documents. Thus, the fact is that the assessee sold away the property through Sale cum GPA dated 28-09-2007 for ₹ 46 lakhs. Thus, the assessee c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e I.T. Act and as per definition transfer includes sale. Further, the transfer of property should be between transferor and transferee. As already mentioned the said sale deed dated 25-01-2010 did not contain the signature of Smt. M. Swaroopa as she was not having any ownership rights over the property and she was not a party for that transaction. Thus, she was not a transferor of the said property sold through document dated 25-01-2010. Therefore, as far as the assessee is concerned there is no scope to invoke provisions of section 45 of the I.T. Act with reference to document dated 25-01-2010 . The AO without taking those facts into consideration, mainly, the fact that she was not a transferor of the property in the document dated 25-01-2010 made her liable for capital gain tax in respect of the transfer made through that document which is legally untenable. c. At para 3 of the assessment order the AO observed that the Sale cum GPA holders i.e., Sri Veera Malla Kistaiah and others backed out from the transaction and they have taken their money back and finally concluded that Smt. M.Swaroopa has sold the property to Sri B.N.Reddy and therefore long term capital gain was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document as a seller. d. The AO observed that in future if Sri B.N.Reddy sells the property the cost of acquisition will be ₹ 52,54,700/-. It is submitted that the comments of the AO are not relevant to the issue now under consideration and therefore no detailed submissions are made. In the light of the above details submissions the following facts would emerge: i. The assessee got the property bearing No.1-9-64 Pedda Tokatta, Bowenpally, Secunderabad as a gift from her husband Sri Badri Narayana Reddy through document No.677/81 dated 2-03-1981. ii. She sold the property through registered sale cum GPA dated 28-09-2007 for a consideration of ₹ 46 lakhs. The property was sold to Sri Veera MalIa Kistaiah and 4 others. iii. Sri Veera MalIa Kistaiah and 4 others sold the property through registered Sale deed dated 25-01-2010 for a consideration of ₹ 52,54,700/-. The assessee was not a party to the said sale deed. iv. The assessee ceased to have ownership rights over the property in the light of Sale cum GPA dated 28-09-2007 and on receipt of sale consideration. She was also not a signatory in the sale deed dated 25-01-2010. v. Sr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... usbands income when there was a long gap of five years between gift and sale . From the above it is clear that there was long gap between the gifted property and sale executed the sale consideration cannot be clubbed. In the present case the assessee received the property through gift from her husband on 22-03-1981. Later on the assessee entered into an agreement of sale dated 28- 072007, subsequently, the property was executed sale deed in favour of her husband on 25-01-2010. As there is a long gap of five years between the gift and sale. Hence, there is no gain accrued to the assessee in the light of above judicial decision. In the light of the above facts and circumstances of the case there is no levying of tax on 'long term capital gain in the hands of the assessee. Hence, the addition made by the AO may be deleted. 4.1 The above additional grounds and submissions were remanded to the AO and AO vide his letter dated 11/08/2015 submitted that the decision to compute capital gains in the hands of assessee is in accordance with law and the additional ground putforth by the assessee deserves no consideration. The same was forwarded to assessee s comments and ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 2010-11 is not correct. Therefore, the addition made by the Assessing Officer is deleted and the appeal on these grounds are allowed. 5. Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following grounds of appeal: 1. The order of the ld. CIT(A) is erroneous on facts and in law. 2. The Ld.CIT(A) ought not to have admitted the additional grounds as the same were produced before the Assessing Officer and were duly considered during the course of assessment proceedings and no new evidence was brought on record which qualify under rule 46A(1) of I.T. Rules, 1961. 3. The Ld. CIT(A) even after allowing the additional grounds, ought to have confirmed the addition, as the assessee is the transferor of property and no transfer in favour of GPA holders has taken place either in terms of Sec. 2(47)(v) of the I.T. Act or in terms of Sec.53A of Transfer of Property Act upto 25.01.2010. 4. Any other ground that may be urged at the time of hearing. 6. Ld. DR besides relying on the order of AO, relied on the decision of Hon ble Supreme Court in the case of Suraj Lamp Industries Pvt. Ltd., SLP (C) No. 13917 of 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive, not revoked. It clearly indicates that the claimants are GPA holders and not the assessee nor they represented the assessee. W hat is relevant is the physical evidence available on record not the assumptions or presumptions of the AO. Further, the assessee s husband took loan from Repco Bank and the same was paid directly to the vendors account and whatever remaining balance was also settled to them. AO has not brought on record anything contrary that the assessee has indirectly benefitted in this transaction or the sale consideration was redirected to the assessee or husband of the assessee. Merely relying on the assumptions and just because the property was purchased by assessee s husband, it does not mean that there exists some kind of foul transaction and without bringing on record any cogent material to support the AO s contention, AO cannot presume facts. Moreover, Ld. DR relied on Swaraj Lamps Industries (supra) case, as per the ratio laid down therein, GPA sales cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. By considering the above ratio, in the given case, the assessee has received the major portion of the sale co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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