TMI Blog2017 (11) TMI 504X X X X Extracts X X X X X X X X Extracts X X X X ..... m/2013 - - - Dated:- 25-9-2017 - SHRI G.S. PANNU, AM AND SHRI RAVISH SOOD, JM For The Revenue : Shri V. Justin, D.R. For The Assessee : Shri M. Subramanian, A.R. ORDER PER RAVISH SOOD, JUDICIAL MEMBER The present appeal filed by the revenue is directed against the order passed by the Commissioner of Income Tax (Appeals)-22, Mumbai (for short CIT(A)-22, Mumbai, dated 03.06.2013, which in itself arises from the assessment order passed by the A.O u/s 143(3) of the Income Tax Act, 1961 (in short the Act ), dated 23.12.2011 in the case of the assessee for A.Y. 2009-10. The revenue being aggrieved with the order of the CIT(A) had carried the matter in appeal before us, raising the following grounds of appeal: 1. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in deleting addition of ₹ 93,96,127/- treated as Short Term Capital Gain u/s. 50 of the Act. 2. On the facts and in the circumstances of the case and in law the Ld. CIT(A) erred in directing to consider the value of properties amounting to ₹ 24,91,588/- in the block of assets and to allow depreciation claim by the assessee. 3. The appellant c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 12,699/- claimed on the said block of assets be disallowed. 4. The assessee in compliance to the directions of the A.O, submitted as under:- (A). Residential property at Nagpur : i). That the residential property marked as 15, Mehar Colony, Nagpur, was purchased vide agreement dated 26.08.2006 for an amount of ₹ 25,00,101/-. ii). That the physical possession of the property was received by the assessee on 21st October, 2008. The assessee in order to fortify its claim that the possession of the property was delivered on 21.10.2008, furnished with the A.O a copy of the possession receipt evidencing the said fact. iii). The aforesaid property was put to use for its business purposes w.e.f. 27.11.2008. iv). That it had had capitalized in its books of accounts, the purchase consideration of ₹ 25,00,101/- that was paid in terms of the agreement dated. 26.08.2006. v). That the substantial amount of purchase consideration was paid to the seller on or before F. Y. 2008-09. vi). That though the aforesaid purchase transaction stood concluded during the year under consideration, however, in order to secure the title, the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Stamp Duty Act. ii). The A.O observed that as per Clause 4 of the Agreement of sale , it was clearly mentioned that physical vacant possession will be handed over by the seller to the purchaser at the time of sale deed. The A.O in the backdrop of the aforesaid recital in the agreement, thus concluded that as the sale deed was registered only on 24.08.2009, i.e in the period relevant to A.Y.2010-11, therefore, the physical possession of the property would have been delivered to the assessee only in A.Y. 2010-11. (B). Property marked as 94, Sector 2, Koparkhairane, Navi Mumbai : i). The A.O observed that the aforesaid property, which was a row house belonged to the director of the assessee company, viz. Mr. L.D. Fernandes who had 85.99% share holding in the assessee company. ii). The AO observed that the assessee company had claimed to have purchased the row house property for a consideration of ₹ 70,00,000/-, vide an unregistered deed of assignment and transfer, dated.18.03.2009, executed on a Non Judicial stamp paper of ₹ 100/-. That it was further observed by the A.O that the stamp duty on the value of the transaction of ₹ 70,00,000/- evidenced ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... epreciation of ₹ 12,699/-. The CIT(A) while concluding as hereinabove, had observed as under: 9.1 I have gone through the assessment order and also the contention of the appellant before me. The major issue to be decided is whether conveyance of the property is made or not and whether transfer is complete in absence of full payment. From the documents submitted before me it is seen that the appellant company has taken the possession of the property during the A.Y. 2009-10 and even the AO is not disputing this fact. As per Section 2(47) 'transfer', in relation to a capital asset, includes, - (i) the sale, exchange or relinquishment of the asset; or (ii) the extinguishment of any rights therein; or (iii) the compulsory acquisition thereof under any law; or (iv) in a case where the asset is converted by the owner thereof into, or is treated by him as, stock-in-trade of a business carried on by him, such conversion or treatment; or (iva) the maturity or redemption of a zero coupon bond; or (v) any transaction involving the allowing of the possession of any immovable property to be taken or retained in part performance of a contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l representative (for short D.R ) relied on the order of the A.O. The ld. D.R submitted that as the purchase transactions of the aforesaid both of the properties had not concluded during the year under consideration, therefore, the A.O had rightly concluded that as the block of asset had ceased to exist, the profit on the sale of the remaining properties forming part of the said block of assets , during the year under consideration, was liable to be assessed as Short Term Capital Gain under Sec. 50 of the Act . It was further averred by the ld. D.R that now when the block of assets had ceased to exist on the sale of the aforesaid properties, therefore, the claim of depreciation raised by the assessee in respect of the same, had rightly been declined by the A.O. The ld D.R further submitted that it remained as a matter of fact that the assessee had failed to establish the user of the properties which were claimed by him to have been purchased during the year under consideration, as a result whereof the conviction of the A.O that the purchase transactions of the aforesaid properties had not concluded during the year under consideration, was established beyond any scope of doub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Sale deed , which we find was executed only as on 24.08.2009, i.e in the period relevant to A.Y. 2010-11. However, the claim of the assessee that it had received the possession of the property on 21.10.2008, i.e during the year under consideration itself, had been substantiated by the assessee on the basis of the possession receipt, remains a fact that cannot be lost sight of. We are of the considered view that now when the genuineness and veracity of the possession receipt had not been disproved by the A.O, therefore, the aforesaid claim of the assessee which is backed by a documentary evidence, cannot be dislodged. We further find that as stands gathered from the order of the CIT(A), the assessee had upto 20.03.2009, i.e during the year under consideration paid an amount of ₹ 20,34,901/- (out of total purchase consideration of ₹ 25,00,101/-) to the seller, while for only an amount of ₹ 4,78,979/- remained payable. We thus in the backdrop of the aforesaid facts, viz. (i). possession of the property was received by the assessee during the year; and (ii). substantial part of the purchase consideration of ₹ 20,34,901/-(supra) was paid by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... operty on 18.03.2009, i.e during the year under consideration itself, had been substantiated by the assessee on the basis of the possession receipt, remains a fact that cannot be lost sight of. We are of the considered view that now when the genuineness and veracity of the possession receipt had not been disproved by the A.O, therefore, the aforesaid claim of the assessee which is backed by a documentary evidence, viz. possession receipt, cannot be dislodged. That still further we find that the other facts, viz. (i). Affidavit of the Managing Director of the assessee company viz. Mr. L.D Fernandes therein deposing that the property was purchased by the assessee on 18.03.2009 for office purpose and staff was employed at the said location; (ii). copy of the board resolution authorizing the assessee company to sell the other office premises and purchase the properties under consideration, i.e at Koparkhairane and Nagpur; and (iii). copy of the return of income of the seller of the property, viz. Mr. L.D Fernandes for A.Y. 2009-10, reflecting the Capital gain on sale of the property, substantially evidences the fact that the purchase transaction of the aforesaid property concluded pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz. (i). possession of the respective properties were received by the assessee during the year; and (ii). substantial part of the purchase consideration in respect of both the properties was paid by the assessee to the respective sellers during the year under consideration, viz. A.Y. 2009-10, shall have a material bearing on the adjudication of the issue as to whether a transfer of the property under consideration could be said to have taken place in favor of the assessee, therein vesting with him the rights as that of the Owner of the property during the said year, or not. 10. We are of the considered view that if the answer to the aforesaid issue is found to be in affirmative, then the respective additions of the aforesaid properties in the block of asset by the assessee can safely be held to be in order. We find that the legislature in all its wisdom had vide the Finance Act, 2012 made available an Explanation 2 to Sec. 2(47)(v), w.e.f 01.04.1962, which clarifies the scope and gamut of the term transfer , as stands contemplated under Sec. 2(47) of the Act , and reads as under:- Explanation-2 says that transfer' includes and shall be deemed to have always in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his own right, and the requirement of registration of sale-deed in the context of s. 22 is not warranted. That still further we find that the Hon ble Supreme Court in the case of Mysore Minerals Ltd. vs. CIT (1999) 239 ITR 0775 (SC), had held as under: It is well-settled that there cannot be two owners of the property simultaneously and in the same sense of the term. The intention of the legislature in enacting s. 32 of the Act would be best fulfilled by allowing deduction in respect of depreciation to the person in whom for the time being vests the dominion over the building and who is entitled to use it in his own right and is using the same for the purposes of his business or profession. Assigning any different meaning would not subserve the legislative intent. To take the case at hand it is the appellant-assessee who having paid part of the price, has been placed in possession of the houses as an owner and is using the buildings for the purpose of its business in its own right. Still the assessee has been denied the benefit of s. 32. On the other hand, the Housing Board would be denied the benefit of s. 32 because in spite of its being the legal owner it was not using ..... X X X X Extracts X X X X X X X X Extracts X X X X
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