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2019 (8) TMI 180

..... SUPREME COURT] that as per the requirement of section 54, the assessee buyer is not required to become absolute owner of the property in question. On this aspect of the matter, this subsequent judgment of Hon’ble Apex Court does not make difference because as per this subsequent judgment of Hon’ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra), the assessee has not become the owner of the property in question because there is no registered sale deed executed by the vendor but as per the judgment of Hon’ble Delhi High Court, becoming the owner of the property in question is not required for the purpose of section 54 of the IT Act. Section 54F of the IT Act is parametria with section 54. Hence, we respectfully follow this judgment of Hon’ble Delhi High Court and decide the issue in favour of the assessee. - ITA No. 575/Bang/2019 - 31-7-2019 - Shri Arun Kumar Garodia, Accountant Member And Shri Pavan Kumar Gadale, Judicial Member For the Assessee : Shri B.S. Balachandran, Advocate For the Revenue : Dr. P.V. Pradeep Kumar, Addl. CIT (DR) ORDER PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER This appeal is filed by the assessee and the same is di .....

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..... he has followed the judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini as reported in [2017] 86 taxmann.com 94 (SC) and he has also considered another judgment of Hon ble Apex Court (Constitution Bench) rendered in the case of Commissioner of Customs (Import), Mumbai Vs. M/s. Dilip Kumar and Company in Civil Appeal No. 3327 of 2007 and disallowed the claim of the assessee for deduction u/s. 54F of the IT Act. He placed reliance on the judgment of Hon ble Delhi High Court rendered in the case of Balraj Vs. CIT as reported in 254 ITR 22. He also filed written submissions of two pages. He submitted that the issue may be decided after considering written submissions and also after considering the judgment of Hon ble Delhi High Court cited by him. The ld. DR of revenue supported the orders of authorities below. He also placed reliance on the same judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra) and in particular our attention was drawn to para nos. 19 and 20 of this judgment. 4. We have considered the rival submissions. First of all, we reproduce the provisions of section 54F of the IT Act. The same are as under. C .....

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..... he date of the transfer of the original asset, or constructs, within the period of three years after such date, any residential house, the income from which is chargeable under the head "Income from house property", other than the new asset, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a), or, as the case may be, clause (b), of sub-section (1), shall be deemed to be income chargeable under the head "Capital gains" relating to longterm capital assets of the previous year in which such residential house is purchased or constructed. (3) Where the new asset is transferred within a period of three years from the date of its purchase or, as the case may be, its construction, the amount of capital gain arising from the transfer of the original asset not charged under section 45 on the basis of the cost of such new asset as provided in clause (a) or, as the case may be, clause (b), of sub-section (1) shall be deemed to be income chargeable under the head "Capital gains" relating to long-term capital assets of the previous year in which s .....

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..... of fact in the present case that assessee has paid an amount of Rs. One crore to the vendor B Z Zameer Ahmed Khan but he has not registered the sale document. The only document available is in the form of sale agreement which is a registered sale agreement. Now under these facts, we have to decide as to whether it can be said that assessee has purchased a residential house within the prescribed time period. As per the judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra), it was held that after the commencement of the Amendment Act of 2001, if an agreement, like the JDA in that case is not registered, then it shall have no effect in law for the purposes of section 53A of the Transfer of Property Act, 1882. In that case, the issue in dispute was this as to whether as per the unregistered JDA, any transfer has taken place and any income has accrued to the assessee. Whereas in the present case, the dispute is this as to whether the assessee has purchased a house property or not for claiming deduction u/s. 54F of the IT Act. 6. At this juncture, we now examine the applicability of judgment of Hon ble Delhi High Court rendered in the case of Balraj Vs .....

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..... s. 54F, it is not essential that the assessee should become the owner of the property. Hence in our considered opinion, this subsequent judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra) does not change the situation regarding applicability of this judgment of Hon ble Delhi High Court cited by ld. AR of assessee. Now we reproduce para nos. 19 and 20 of this judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra). The same are as under. 19. It is also well-settled by this Court that the protection provided under Section 53A is only a shield, and can only be resorted to as a right of defence. See Rambhau Namdeo Gajre v. Narayan Bapuji Dhgotra (Dead) through LRs. (2004) 8 SCC 614 at 619, para 10. An agreement of sale which fulfilled the ingredients of Section 53A was not required to be executed through a registered instrument. This position was changed by the Registration and Other Related Laws (Amendment) Act, 2001. Amendments were made simultaneously in Section 53A of the Transfer of Property Act and Sections 17 and 49 of the Indian Registration Act. By the aforesaid amendment, the words the contract, though re .....

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..... lify as a transfer of a capital asset under Section 2(47)(v) of the Act, there must be a contract which can be enforced in law under Section 53A of the Transfer of Property Act. A reading of Section 17(1A) and Section 49 of the Registration Act shows that in the eyes of law, there is no contract which can be taken cognizance of, for the purpose specified in Section 53A. The ITAT was not correct in referring to the expression of the nature referred to in Section 53A in Section 2(47)(v) in order to arrive at the opposite conclusion. This expression was used by the legislature ever since sub-section (v) was inserted by the Act of 1987 w.e.f. 01.04.1988. All that is meant by this expression is to refer to the ingredients of applicability of Section 53A to the contracts mentioned therein. It is only where the contract contains all the six features mentioned in Shrimant Shamrao Suryavanshi (supra), that the Section applies, and this is what is meant by the expression of the nature referred to in Section 53A . This expression cannot be stretched to refer to an amendment that was made years later in 2001, so as to then say that though registration of a contract is required by the Amendment .....

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..... e property to safe guard his interests and since then he has been using it as a rest house. It is also stated in the affidavit that in terms of the agreement, both the parties are entitled to specific performance of the obligations under the agreement dated 28.03.2013. It is also stated in the same affidavit that he is peacefully holding the possession even though the time for the balance payment of ₹ 1.5 Crores has been extended by mutual consent as provided in the agreement. The ld. CIT(A) has also reproduced the confirmation from B.Z. Zameer Ahmed Khan dated 26.12.2018 as per which it is stated by the vendor that he had entered into an agreement for sale of a property for ₹ 2.5 Crores by an indenture dated 28.03.2013. He has also stated that he has delivered possession of the property on the date of agreement as an assurance that the interest of the said purchaser B. Noorulla Khan are safe guarded in view of clause 13 of the agreement which entitles both the parties to a specific performance of the respective obligations. He has also stated in his confirmation that B. Noorulla Khan is entitled to the property in question and he is entitled for the consideration as me .....

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