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2019 (8) TMI 180

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..... 575/Bang/2019 - Dated:- 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 directed against the order of ld. CIT(A)-9, Bangalore dated 18.01.2019 for Assessment Year 2013-14. 2. The grounds raised by the assessee are as under. 1) The order of the lower authority is erroneous in law and on facts in so far as claim for deduction under section 54/54F has been denied. 2)The learned CIT(A) erred in confirming the disallowance of section 54/54F. on the ground that there is no registered conveyance by purported following the decisions of the Hon S.C. cited in the appellate order. to the effect that there is no transfer . 3)The learned CIT(A) failed to appreciate that those decisions are not directly on the point and on the contrary the decision cited by the appellant is directly on the issue under consideration and hence the learned CIT(A) ought to have followed the same. 4)The learned CIT(A) has erred in holding that law laid down in .....

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..... 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. Capital gain on transfer of certain capital assets not to be charged in case of investment in residential house. 54F. (1) Subject to the provisions of sub-section (4), where, in the case of an assessee being an individual or a Hindu undivided family, the capital gain arises from the transfer of any long-term capital asset, not being a residential house (hereafter in this section referred to as the original asset), and the assessee has, within a period of one year before or two years after the date on which the transfer took place purchased, or has within a period of three years after that date constructed, one residential house in India (hereafter in this section referred to as the new asset), the capital gain shall be dealt with in accordance with the following provisions of this section, that is to say,- (a) if the cost of the new asset is not less tha .....

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..... e 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 such new asset is transferred. (4) The amount of the net consideration which is not appropriated by the assessee towards the purchase of the new asset made within one year before the date on which the transfer of the original asset took place, or which is not utilised by him for the purchase or construction of the new asset before the date of furnishing the return of income under section 139, shall be deposited by him before furnishing such return [such deposit being made in any case not later than the due date applicable in the case of the assessee for furnishing the return of income under sub-section (1) of section] in an account in any such bank or institution as may be specified in, and utilised in accordance with, any scheme which the Central Government may, by notification in the Official Gazette, frame in this behalf and such return shall be accom .....

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..... ce 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. CIT (supra) on which reliance has been placed by ld. AR of assessee. As per the facts noted in this case in para no. 2 of the judgment, it is noted that the assessee sold property belonging to him on December 3, 1974 and by reason of the agreement of sale coupled with possession, the assessee reported to have purchased a property for ₹ 2.03 Lakhs on February 6, 1975. In the same para, this is also noted that if the aforementioned transaction amounts to purchase of property, the same would be within a period of one year. The Hon ble Delhi High Court noted that the only question for consideration in that case was this as to whether this transaction by way of agreement of sale coupled with possession can be accepted as a purchase within the meaning of section 54 of the IT Act. This is also noted in the same para that out of the agreed consideration .....

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..... e 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 required to be registered, has not been registered, or in Section 53A of the 1882 Act have been omitted. Simultaneously, Sections 17 and 49 of the 1908 Act have been amended, clarifying that unless the document containing the contract to transfer for consideration any immovable property (for the purpose of Section 53A of 1882 Act) is registered, it shall not have any effect in law, other than being received as evidence of a contract in a suit for specific performance or as evidence of any collateral transaction not required to be effected by a registered instrument. Section 17(1A) and Section 49 of the Registration Act, 1908 Act, as amended, read thus: 17(1A). The documents containing contracts to transfer for consideration, any immovable property for the purpose of Section 53A of the Transfer of Property Act, 1882 (4 of 1882) shall be registered if they .....

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..... 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 Act of 2001, yet the aforesaid expression of the nature referred to in Section 53A would somehow refer only to the nature of contract mentioned in Section 53A, which would then in turn not require registration. As has been stated above, there is no contract in the eye of law in force under Section 53A after 2001 unless the said contract is registered. This being the case, and it being clear that the said JDA was never registered, since the JDA has no efficacy in the eye of law, obviously no transfer can be said to have taken place under the aforesaid document. Since we are deciding this case on this legal ground, it is unnecessary for us to go into the other questions decided by the High Court, namely, whether under the JDA possession was or was not taken; whether only a licence was granted to develop the property; and whether the developers were or we .....

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..... rest 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 mentioned in the agreement. Under these facts, in our considered opinion, this judgment of Hon ble Delhi High Court cited by ld. AR of assessee is squarely applicable and we have come to this conclusion that judgment of Hon ble Apex Court rendered in the case of CIT Vs. Balbir Singh Maini (supra) has not changed the legal position. In our considered opinion, as per the 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 because there is no registered sale deed as executed by the vendor. But the judgment of Hon ble Delhi High Court is not on this basis that the assessee buyer has become owner of the property in question even without a registered sale deed. Had this been the judgment of Hon ble Delhi High Court, this judgment would be said to be bad in law after thi .....

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