TMI Blog2019 (9) TMI 458X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is entitled to reckon the period of holding from the date of the registration of the agreement i.e. 15th February 2006. Execution of the sale deed in pursuance to the order of the court would relate back to the original agreement to sale as discussed above. Hence the assessee is entitled for the claim of index cost of acquisition being the holding period more than 36 months. Therefore the ground of appeal of the assessee is allowed. Denial of deduction of cost of improvement - admission of additional ground - HELD THAT:- Admittedly, the issue raised by the assessee in the additional ground of appeal relates to the factual dispute which was discussed in the assessment order. But the impugned issue was agitated by the assessee before the authorities below. As such the authorities below did not entertain the claim of the assessee on the reasoning that the assessee failed to furnish the supporting documents. This fact can be verified from the order of the authorities below. Therefore we are of the view that the assessee being aggrieved is entitled to raise the additional ground in the instant case. Accordingly, we are inclined to admit the additional ground of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ital gain as short term capital gain. 3. Briefly stated facts are that the assessee is an Individual and engaged in the business of trading in grey, fabrics, and hosiery. The assessee in the year under consideration declared long term capital gain amounting to ₹ 2,86,64,441/- on sale of Land situated at Makarba vide survey no. 415/2, Ahmedabad. The property was sold vide sale deed dated 31-08-2012 at ₹ 3,11,00,000/- only. 3.1 The AO on verification of the purchase deed of Land dated 16-03-2012 found that the property was held by the assessee for a period less than 3 years. Accordingly the AO proposed to treat the capital gains arising on such property as short term capital gain. 3.2 In response to questions put forward by AO, the assessee made following representations: 1) He has entered into an agreement for purchase of impugned land situated at Makarba with Khoadaji Mansingh bhai thakor and baldeji thakor on 15-02-2006 and paid an amount of ₹ 1,00,000/- to the seller out of the total amount agreed at ₹ 5,36,200.00 only. 2) Thereafter, the land owner refuse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 441/- which was claimed by the assessee. 4. Aggrieved assessee preferred an appeal before the Ld.CIT (A). The assessee before the Ld. CIT (A), besides the submissions made before the AO, tendered that he failed to get the land registered in his name due to non-performance on account of the seller. Therefore, he should not be penalized for the default of the seller. 4.1 However, the Ld.CIT (A) rejected the contention of the assessee and confirmed the order of the AO by observing that the transfer did not take place within the meaning of section 2(47) of the Act, read with section 53A of the transfer of property Act. Being Aggrieved by the order of the Ld.CIT (A) the assessee is in appeal before us. 5. The Ld. AR before us submitted that the impugned purchase of the property should relate back with the agreement to sell dated 15th February 2006. As such there was no fault of the assessee in the purchase of the property within the time specified under the agreement. Therefore, the assessee should not be penalized for the fault committed by the other party. 6. On the other hand, the Ld. DR submitted th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all the conditions specified in the agreement but the seller failed to do so for the reasons best known to him. Accordingly, we conclude that the delay in non-registration of the sale deed and possession of the property has occurred for the reasons beyond the control of the assessee i.e. due to default of the seller of the property. The law of impossibility of performance does not necessarily require absolute impossibility, but also encompass the concept of severe impracticability. In our humble opinion, the doctrine of impossibility of performance applies in this case. Due to uncontrollable circumstances, the performance of the obligation as specified under the agreement became impossible to perform within the time for the assessee. The impossibility of performance releases the assessee from its obligation for the delay of the registration of the property within the time. A default occurs only when an obligation is not performed. When the assessee is released from the obligation, it cannot be said that it is in default. Thus, when the assessee was prevented from getting the property registered in his name within the time, the question of its not performing the ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sale. The petitioner was. thus, entitled to claim the benefit of cost indexation from the said date. The entire basis of the department in the reasons recorded in order to dispute the petitioner's computation of the capital gain, therefore, is rendered invalid. In the result, the impugned notice is set aside. In peculiar facts of this case, therefore, we have adopted the logic as was done by the Supreme Court in case of Sanjeev Lal (supra). The petition allowed and disposed of. 7.6 In view of the above we hold that the execution of the sale deed in pursuance to the order of the court would relate back to the original agreement to sale as discussed above. Hence the assessee is entitled for the claim of index cost of acquisition being the holding period more than 36 months. Therefore the ground of appeal of the assessee is allowed. The second issue raised by the assessee in additional ground of appeal is that the Ld.CIT (A) erred in confirming the action of the AO by denying the deduction of cost of improvement of ₹ 18,40,850/-. 8. The assessee while computing the capital gain claimed cost of improvement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e raised by the assessee in the additional ground of appeal relates to the factual dispute which was discussed in the assessment order. But the impugned issue was agitated by the assessee before the authorities below. As such the authorities below did not entertain the claim of the assessee on the reasoning that the assessee failed to furnish the supporting documents. This fact can be verified from the order of the authorities below. Therefore we are of the view that the assessee being aggrieved is entitled to raise the additional ground in the instant case. Accordingly, we are inclined to admit the additional ground of appeal raised by the assessee. 13.1 However, we note that the claim of the assessee was rejected by the authorities below in view of the fact that the supporting documents were not furnished. Therefore, in the interest of justice and fair play, we are inclined to refer the matter to the file of the AO for fresh adjudication as per the provisions of law. 13.2 It is also pertinent to note that the assessee shall be at the liberty to file the supporting documents to justify his claim. Hence the additional ground of app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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