TMI Blog2019 (11) TMI 1113X X X X Extracts X X X X X X X X Extracts X X X X ..... her transaction have not shown under the head Capital Gain.Claim of the assessee made before the A.O that it is carrying out the business of purchase and sale of land has no merit and the alleged gain from transaction of sale of land needs to be taxed as capital gain. Thus this issue is decided against the assessee. Capital gain to be taxed in Assessment Year 2010- 11 or Assessment year 2011-12 - HELD THAT:- Alleged sale deed was executed on 31.03.2010. This fact is not disputed by both the parties. Though the document has been registered subsequently during the financial year 2010-11 but the sale deed has been signed by both the parties on 31.03.2010. In the course of hearing when assessee was confronted with this aspect, he was fair enough to accept that 31.03.2010 may be taken as the date of sale of the plots of land. In these given facts and circumstances, we are of the view that the sale transaction was completed on 31.03.2010 and thus the incidence of tax falls in Assessment Year 2010-11. Whether the gain from the transaction from sale of land is to be taxed as Short Term Capital Gain or Long Term Capital Gain during Assessment Year 2010-11 - Relevant dates of purch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on before the lower authorities, we being fair to both the parties and in the interest of justice set aside this issue to the file of Ld. A.O with the direction that necessary reference may be made to the Departmental Valuation Officer for valuation of the impugned capital asset and if the same is less than alleged fair market value then apply the same for computation of Long Term Capital Gain. Whether the assessee is eligible to get the claim of expenses for stamp duty, registration and brokerage by computing income of AY 2010-11 even though the amount have been incurred during AY 2011-12? - These expenses were claimed as business expenditure during Assessment Year 2011-12 which were appearing in the audited financial statements. Since we have already decided the issue that the incidence of tax will fall in Assessment Year 2010-11 the alleged expenses of registration and stamp duty and brokerage which very much relates to the transaction taken place during Assessment Year 2010-11 and the quantum was ascertainable as on 31.03.2010, the assessee needs to be given the benefit of deduction of the Stamp duty and Registration expenses of ₹ 1,72,67,070/- and brokerage expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,82,420/- in the return of income filed on 31.07.2010 for Assessment Year 2010-11. The case was reopened u/s 147 of the Act on the ground of non disclosure of short term capital gain of ₹ 13,21,51,725/-. Notice u/s 148 of the Act was issued and served upon the assessee. During the course of reassessment proceedings Ld. A.O observed that there is a transaction of sale of land situated at Khajrana, District, Indore. As per the sale deed dated 31.3.2010 sale consideration of ₹ 14 crores is received by the assessee and the market value of the plot as per the Stamp Valuation Authority was ₹ 16,17,50,000/-. This plot of land was purchased at the cost of ₹ 2,95,98,275/- vide registered deed dated 12.7.2007. As per the Ld. A.O the alleged transaction needs to be taxed under the head Short Term Capital Gain in Assessment Year 2010-11 since the property was owned for less than three years. When the assessee was confronted it was submitted that the alleged transaction is a part of its business activity and it has been duly shown in the return of income for Assessment Year 2011-12 and the net profit from the sale of land at ₹ 8,75,86,752/- have been shown. It was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. With sale consideration of ₹ 14,00,00,000/-. The. Market value of the plot as per section 50C. Was ₹ 16,17,50,000/-. Moreover, the assessee had finalized an agreement with the purchaser company for sale of the plot and even taken advance of ₹ 1,50,00,000/- by cheques in the month of January, 2010. As evidence placed on record that the said land was purchased on 12/07/2007 and sold on 31.03.2010 and the possession was also given on that date.. Hence, holding period of the property is. Not more than 36 month further, the registration of sale took place in F.Y. 2009~10. Therefore, it should be taxed as STCG in A.Y. 2010-1l. 5.1.2 The sale deed or agreement has been produced to support the claim mentions that, the registration of plot pas taken place on 31/03/20 O. Further, it is seen that during the course of assessment and appellate proceedings agreement has been produced to establish the terms .and conditions of the sale or rather the arrangement between the appellant and M/s Media Savy India Ltd. The sale of land or the appellant is specified and the appellant has been-paid the. Money on the basis of agreement Further as p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subsequent assessment year i.e. A. Y. 2011-12 by an Order of Assessment passed under s.143(3) of the Act. 3. That, the appellant further craves leave to add, alter or amend the foregoing ground of appeal as and when considered necessary. Assessee has also raised following additional grounds of appeal; 1.That, on the facts and in the circumstances of the case, both the authorities below grossly erred in not considering the material fact that the appellant having already been assessed to tax in respect of the transfer of the subject plot in a subsequent assessment year i.e. A.Y. 2011-12, under s.143(3) of the Act, there was no escapement of any income chargeable to tax giving rise to invocation of the provisions ofs.148 of the Act. 2. That, without prejudice to the above, both the authorities below have grossly erred in holding that the property transferred by the appellant was held by him as a short-term capital asset whereas having purchased the property on 31-03- 2007 and sold the same on 31-03-2010, even if re-characterization of income from business income to capital gain was warranted, it ought to have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ground and additional grounds of appeal, Ld. Counsel for the assessee argued at length referring to the following written submissions:- (i) Additional Ground No.2: That, without prejudice to the above, both the authorities below have grossly erred in holding that the property transferred by the appellant was held by him as a short-term capital asset whereas having purchased the property on 31-03-2007 and sold the same on 31-03-2010, even if re-characterization of income from business income to capital gain was warranted, it ought to have been regarded as transfer of a long-term capital asset held by the appellant for a period of more than 36 months in accordance with the provisions of s.2(29A) read with s.2( 42A) of the Income Tax Act, 1961. In this regard, it is submitted as under: 1.01 That, during the previous year relevant to A.Y. 2007-08, the appellant had purchased certain pieces of plots of diverted land admeasuring 69643.08 sq. ft. situated at Survey Nos. 211, 2/2, 2/3, 2/4, 2/5, 2/6, 217 2/8, village Khajrana, Tehsil District Indore, for a total purchase consideration of ₹ 2,95,98,275/- from M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofit from sale of the subject plots, as business income, for A.Y. 2011-12, the Id. AO changed his mind and formed a belief that having handed over the possession of the plots, in the previous year relevant to A.Y. 2010-11, i.e. the assessment year under consideration, the gain on transfer of plots had taken place during such assessment year 2010-11 only and accordingly, issued the notice under s.148 of the Act to the appellant for the assessment year under consideration. 2. 1 That, the learned AO, in the impugned assessment order, besides shifting the year of taxability of the profit on sale of plots from A.Y. 2011-12 to A.Y. 2010-11, has further recharacterized the nature of the income claimed by the appellant as business income to capital gain. According to the AO, the appellant had not carried out any business activity and therefore, the subject plots were held by him only as investment and not as stock-in- trade. 2.02 That, the learned AO, for the purpose of taxability of the capital gain, was of the view that the subject plots were held by the appellant for a period of less than 36 months and therefore, the same would be treated as a short-term c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30.04.2010 31 31.03.2010 3.02 On a perusal of the aforesaid table, it shall be observed that on one hand, in respect of date of purchase, the AO has adopted the date of registration i.e. 12-07-2007 and on the other hand, for date of sale, the AO has adopted the date of execution of the deed i.e. 31-03-2010. Thus, it shall be appreciated by Your Honours that the approach of the AO in computing the holding period of the assets is arbitrary and misplaced. 3.03 The ownership of an asset is assumed either when the possession of the asset has been handed over or when the sale deed is executed between the parties. Thus, it shall be appreciated by Your Honours that the date of transfer of a capital asset would be considered from the date when the two parties, after payment of purchase consideration, have signed the deed in presence of two witnesses. It shall further be appreciated by Your Honours that under section 47 of the Registration Act, 1908, a registered document shall relate back to the date on which it is executed and not from the date on which it has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Hon'ble High Court of Delhi in the case of Bharti Gupta Ramola vs. CIT (2012) 72 DTR 387 (De!), placing reliance upon section 3(35) of the General Clauses Act, 1897, held that the period of holding would begin on which the assessee became the holder of the asset and one day before in the relevant calendar year. The Hon'ble Court explained the position by an example holding that if an assessee acquires an asset on 2nd January in a preceding year, the period of 12 months would be complete on 1 st January next year and not on 2nd January. Following the same analogy, in the case of the appellant, if computed from the date of execution of the deeds, the period of 36 months would get completed on 30-03-2010. 4.00 It shall be appreciated that even if the approach of the learned AO is adopted, then the resultant capital gain to the appellant would be a long-term capital gain for the reason that the holding period of the plots by the appellant is more than 36 months. Thus, the appellant shall be liable to pay long-term capital gain instead of the short-term capital gain as computed by the learned AO. (ii) ADDITIONAL GROUND NO. 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 841. 2.01 The Hon'ble High Court of Madras in the case of N Meenakshi vs. ACIT (2010) 326ITR 229 (Mad) held that without receiving the report of the DVO, the AO was not justified in completing the assessment and making the addition by invoking the provisions of s.50C of the Act. 2.02 Without prejudice to the above, it is submitted that mere difference in the value adopted by the Stamp Valuation Authority for the purpose of fixing the stamp duty and that shown by an assessee as the actual sales consideration cannot be a sole basis for making an addition even under s.50C of the Act. For such proposition, reliance is placed on the decision of Hon'ble High Court of Punjab Haryana in the case of CIT vs. Chandni Bhuchar (2010) 323 ITR 510 (P H). In such case, the Hon'ble High Court was pleased to hold that valuation done by any State agency for the purpose of stamp duty would not ipso facto substitute the actual sale consideration as being passed on to the seller by the purchaser in the absence of any admissible evidence. An AO is obliged to bring on record positive evidence supporting the price assessed by the State Government for the purpose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01 It shall be pertinent to note that under clause (12) of the registered sale deed [kindly refer PB Page No. 40], the expenses relating to payment of stamp duty and registration fees have been borne by the seller of the property i.e. the appellant. 2.02 In pursuance of the contractual agreement, the appellant had to incur a sum of Rs.l,72,67,070/- towards payment of stamp duty and registration fees. It is submitted that the entire payments of stamp duty and registration expenses have been made by the appellant through banking channels only. It is further submitted that the appellant, in his Profit Loss Account for the previous year relevant to A.Y. 2011-12 [kindly refer PB Page No. 48], has duly claimed the aforesaid payment of ₹ 1,72,67,070/- as an expenditure and accordingly, computed the profit on sale of subject plots at ₹ 8,75,86,752/- for the previous year relevant to A.Y. 2011-12. The same was duly examined by the AO framing the assessment for subsequent assessment year i.e. A.Y. 2011-12 under s.143(3) of the Act and it was duly allowed. 2.03 It shall be worthwhile to note that since the appellant had offered the profit of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the learned AO, in the impugned Assessment Order, has not made any adverse comment in respect of the brokerage expenses of ₹ 28,00,000/- and therefore, the claim of the brokerage expenses, being genuine and reasonable expenses incurred in connection with the transfer of property, deserved to be allowed to the appellant under s.48(i) of the Act as deduction from the sales consideration of the subject plots while computing the capital gain for the relevant assessment year. 4.00 It is submitted that the mode of computation of capital gain is given under the provisions of s.48 of the Act. It is submitted that according to the provisions of s.48 of the Act, the income chargeable under the head 'capital gains' shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset, the amounts namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer; (ii) the cost of acquisition of the asset and the cost of any improvement thereto. 4.01 In the instant case, the learned AO has only granted deduction in respect of the cost of acq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per Book. (v) ADDITIONAL GROUND NO. 6 That, without prejudice to the above, both the authorities below grossly erred in not issuing an appropriate direction to the effect that having preponed the incidence of tax from subsequent assessment year i.e. A.Y. 2011-12 to the assessment year under consideration, the appropriate credit for any tax already paid by the appellant in respect of the subject capital gain, in the subsequent assessment year, is required to be given for the assessment year under consideration from the date of making of such payment. In this regard, it is submitted as under: 1.00 That, as submitted earlier, the appellant had already offered the profit on sale of the subject plots for taxation at ₹ 8,75,86,752/- which is included in the total income of ₹ 9,62,64,226/- shown by the appellant in his return of income for the A.Y. 2011-12. It is further submitted that on the aforesaid income, the appellant was liable for total income tax of ₹ 3,04,36,556/- [kindly refer PB Page No. 43] against which the appellant had paid a sum of ₹ 3,13,38,893/- [Advance Tax Self Assessment Tax of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessed. It would be appreciated that having already paid the tax on the same income for A.Y. 2011-12, if the year of chargeability of income is preponed to A.Y. 2010-11, then, the appellant would be eligible for claim of credit in respect of the taxes on such income for A.Y. 2011-12. 2.04 It is a settled law that an assessee cannot be taxed twice for the same income in two different assessment years. For such proposition, reliance is placed on the decision of the Hon'ble Supreme Court in the case of Mahaveer Kumar Jain vs. CIT (2018) 404 ITR 738 (SC). The relevant para (13) of the decision of the Hon'ble Apex Court is being reproduced as under: 13. The above referred cases make it clear that there is no prohibition as such on double taxation provided that the legislature contains a special provision in this regard. Now, the only question remains to be decided is whether in fact there is a specific provision for including the income earned from the Sikkim lottery ticket prior to 01.04.1990 and after 1975, in the income-tax return or not. We have gone through the relevant provisions but there seems to be no such provision in the IT Act wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee is consistently changing his stand. During the reassessment proceedings he claimed the alleged gain as business income to be taxed in Assessment Year 2011-12 and now contending that it may be taxed as gain under the head Long Term Capital Gain. In these facts the order of Ld. CIT(A) may be confirmed. 8. We have heard rival contentions and perused the records placed on records and carefully gone through the judgments referred by the Ld. Counsel for the assessee. All the issues raised in this appeal relates to the transaction of sale of plots of land at Village Khajrana, District Indore. Assessee purchased 69643.08 sq. Ft plot from City Square Builders Developers Pvt. Ltd for consideration of ₹ 2,95,98,275/- vide purchased deed executed on 31.03.2007 but registered with Sub Registrar on 12.7.2007 and possession taken on 26.3.2007 as the assessee had paid total purchase consideration up to 26.3.2007. 9. These plots of land were sold to Media Savy India Ltd for a consideration of ₹ 14 crores vide sale deed dated 31.3.2010 which got registered with Sub Registrar on 30.04.2010. As per the sale deed possession was ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11. Now we will first take up the issue Whether the alleged transaction is to be taxed as business income or capital gain . 12. From perusal of the record we observe that the assessee has shown the transaction of sale of land to have been carried out in the course of business and profit derived there from is offered to tax in Assessment Year 2011-12. This was the sole transaction which was entered during the year. No documentary evidence placed before us which could show that the assessee has been carrying out the business of purchase and sale of land in the past. It is also not proved that the alleged land was held as stock-in-trade in books by the assessee in the preceding year. No tax audit report has been filed demonstrating the system of accounting and valuation of stock. Audited Profit Loss Account and Balance sheet also do not indicate about the preceding year details and only the single transaction of sale of land has been claimed to have been completed in the course of business. In our considered view it is not figuring out that the assessee is into the business of purchase and sale of land. Computation of income for Assessment Year 2011-12 fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he possession will be crucial. As far as the date of sale is concerned the date of sale is 31.03.2010 and in the sale deed itself the handing over of the possession is on 31.03.2010 has been accepted by the seller and buyer. So the date of handing over of the possession and the date executing the sale deed is 31.03.2010 and part of the sale consideration was received by the assessee on and before these dates. So we can safely conclude that the date of sale is 31.03.2010 for the purpose of computing the capital gain. 17. Now the other limb is the date of purchase. The purchase deed is executed on 31.03.2007. The possession of the land was taken by the assessee on 26.03.2007 since the total purchase consideration was paid on and before 26.03.2007. Taking the same analogy which we have adopted for accepting the date of sale i.e. the date of execution of the deed, the date of purchase in this case is 31.03.2007. Though the revenue authorities have adopted the date of registration of the purchase date of 12.07.2007 as the date of purchase, we do not find any merit in the finding of Ld. CIT(A). Taking a step forward, we find that the date of taking possessio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... land or building or both, is less than the value adopted or assessed [or assessable] by any authority of a State Government (hereafter in this section referred to as the stamp valuation authority ) for the purpose of payment of stamp duty in respect of such transfer, the value so adopted or assessed 86[or assessable] shall, for the purposes of section 48, be deemed to be the full value of the consideration received or accruing as a result of such transfer. (2) Without prejudice to the provisions of sub-section (1), where- (a) the assessee claims before any Assessing Officer that the value adopted or assessed 86[or assessable] by the stamp valuation authority under sub-section (1) exceeds the fair market value of the property as on the date of transfer; (b) the value so adopted or assessed 86[or assessable] by the stamp valuation authority under sub-section (1) has not been disputed in any appeal or revision or no reference has been made before any other authority, court or the High Court, the Assessing Officer may refer the valuation of the capital asset to a Valuation Officer and where any such reference is made, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Ground No.3 is allowed for statistical purpose. 23. Now we take up the fourth issue. Whether the assessee is eligible to get the claim of expenses for stamp duty, registration and brokerage by computing income of Assessment Year 2010-11 even though the amount have been incurred during Assessment Year 2011-12. 24. We observe that the assessee has claimed to have incurred registration and stamp duty charges of ₹ 1,72,67,070/- and brokerage expenses of ₹ 28 lakhs. Genuineness of both these expenses have not been disputed before us. These expenses were claimed as business expenditure during Assessment Year 2011-12 which were appearing in the audited financial statements. Since we have already decided the issue that the incidence of tax will fall in Assessment Year 2010-11 the alleged expenses of registration and stamp duty and brokerage which very much relates to the transaction taken place during Assessment Year 2010-11 and the quantum was ascertainable as on 31.03.2010, the assessee needs to be given the benefit of deduction of the Stamp duty and Registration expenses of ₹ 1,72,67,070/- and brokerage expenses of ₹ 28 lakhs in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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