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TMI Blog2021 (10) TMI 601X X X X Extracts X X X X X X X X Extracts X X X X ..... deed and therefore, the same could not be substituted by deemed consideration u/s 50C. (iv) by not referring the determination of FMV of the property u/s 50C(2) of the Act." 2. Briefly stated facts of the case are that the Assessing officer based on information that the assessee has sold his share of land situated at village Hirapura issued notice u/s 148 of the Act and thereafter, a show-cause was issued as to why long term capital gains may not be taken at Rs. 81,58,722/- u/s 50C, being the value determined by the Stamp duty authority. In response, the assessee submitted that the transfer was carried out under fraudulent circumstances and no capital gains liability arises on such sham transaction and substance should prevail over form and infact, there was no transfer u/s 2(47) of the Act. It was submitted that the assessee and other aggrieved parties have also filed an FIR and a civil suit before the Hon'ble Court. The AO however didn't accept the assessee's contentions for the reason that a sham transaction has no relevance in Income tax Act and referring to provisions of section 2(47) of the Act, it was held that as per sale deed, the property has been transferred and pos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as given that after conversion, 784 sq. yard developed land would be given to them. 5. It was submitted that the Sub registrar for stamp duty purposes took the value of land for which the sale deed was executed by the assessee at actual consideration of Rs. 5,00,000/- considering it to be an agriculture land. However, Collector Stamps vide order dt. 23.03.2006 for the purpose of levy of stamp duty determined the value of land at Rs. 81,58,722/- by considering the same to be commercial land though in the revenue record, it is still a agriculture land. On the basis of this information, the AO initiated proceedings u/s 148. In course of assessment proceedings, the assessee explained that Smt. Krishna Devi got transferred the land under fraudulent circumstances. She misguided the assessee and put a condition that unless he and other family members execute a registered sale deed, the legal process at JDA cannot be completed. Accordingly, the assessee executed the sale deed for cash consideration of Rs. 5 lacs. However, Smt. Krishna Devi did not fulfill her commitment and no conversion was done of the said agricultural land into residential colony. Thus, assessee and his brothers filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted by the ld AR that the buyers of the land fraudulently got the sale deed executed from the assessee in her favour without complying with the promises they made at the time of the transaction taking place. As per the promise, they will get the scheme approved from JDA and will get pattas of the residential land in favour of the assessee as agreed by them. As per the agreement, assessee got hold of the plot of lands, constructed boundary wall and the remaining land was used by him as per his convenience. But Smt. Krishna Devi with the intention of cheating want to sale the entire land breaching the terms of actual agreement, in view of the sale deed executed in her favour. Therefore, the assessee has filed a civil writ petition before the High Court of Rajasthan. The Hon'ble High Court vide order dt. 31.01.2014 directed to maintain the status quo. The matter is still pending before Hon'ble High Court. 9. It was submitted that from the above, it can be noted that though the assessee has executed the sale deed, he has not parted with the possession and the matter is pending before the Hon'ble High Court. Thus, when the entire transaction is under dispute, simply on the basis of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when it is proved that actual consideration is only what is recorded in the sale deed, the same cannot be substituted by deemed consideration u/s 50C and that too without referring the determination of FMV of the property to DVO u/s 50C(2) of the Act, more particularly when assessee has not filed any appeal or revision or reference to any authority or court against the value assessed by the stamp valuation authorities. Further, the AO has not allowed any deduction of indexed cost of acquisition in computing the long term capital gain which is against the provisions of the Act. In view of above, it was submitted that the income on account of long term capital gain assessed by the AO be directed to be deleted. 12. Per contra, the ld. DR relied on the order of the lower authorities and our reference was drawn to the findings of the ld. CIT(A) which read as under:- "3.1.2 Determination: (i) The brief facts of the case are that during the year under consideration, the appellant along with his brothers namely S/Shri Madan Lal, Lallu Ram Yadav and Munna Lal had sold land at Tagore Nagar, Heerapura to Smt. Krishna Devi wife of Shri Mussadi Lal Yadav vide four separate sale deeds. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom the material placed on record that some dispute has arisen between the appellant, his brothers on the one hand and Smt. Krishna Devi on the other hand which is pending before the court of law. It is noted from the material placed on record that a suit for issue of temporary injunction was filed by appellant along with his brothers in relation to their dispute with Smt. Krishna Devi in the Court of Civil Judge (A & B) and Metropolitan Magistrate (East), Jaipur and vide order dated 03.07.2013 in case No. Misc.(Temporary Injunction)/ 332/2012, the temporary injunction as prayed by the petitioners was denied by the Civil Judge, a part of the relevant extract of the above referred order of Civil Judge is reproduced as under: (v) Against the above referred order of Civil Judge, the appellant along with his brothers (the petitioners) filed a civil appeal before the Addl. District Judge No. 16, Jaipur and vide order dated 21.05.2013, in Civil Misc. Appeal No. 08/2013, the Addl. District Judge confirmed the above referred order dated 07.03.2013 of Civil Judge and thus, no temporary injunction was granted, even by Addl. District Judge, Jaipur. A part of the relevant extract of the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iven the non-fulfillment of such promises and agreement, the assessee has taken series of steps permissible under law against the buyer from time to time by way of filing an FIR, thereafter, suit for injunction in court of civil judge, thereafter civil appeal before the Add. Judge and lastly, by way of filing a civil writ before the Hon'ble Rajasthan High Court where the Hon'ble Court has directed to maintain a status quo pending disposal of the writ petition. It was submitted that where the whole transaction is under dispute, it cannot be presumed that merely by entering into a sale deed, the transfer has taken place so as to attract capital gains tax. Per contra, the case of the Revenue is that the assessee has executed a sale deed for sale of the land which has been duly registered and has not been cancelled till date and as per sale deed, the property has been transferred and possession has been handed over to the buyer and therefore, it is clear that a transfer has taken place which is liable for capital gains. 14. In this regard, we refer to the decision of the Hon'ble Punjab & Haryana High Court in case of Hira Lal Ram Dayal vs CIT (supra) wherein the question for considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factum of sale and the sale proceeds are the real questions to be determined by the Income-tax authorities. From what has been stated above, it is clear that the Tribunal fell into an error in refusing to examine the material put forth by the assessee to prove that the sale was a sham transaction." 15. We refer to the decision of the Hon'ble Patna High Court in case of Smt. Raj Rani Devi Ramna vs CIT (1992) 201 ITR 1032 (Pat.) where the questions framed for consideration before the Hon'ble High Court read as under: "(1) Whether, on the facts and in the circumstances of the case, the learned Income-tax Officer was justified in including the sum of Rs. 42,000 pertaining to three deeds of sale in the gross receipts for the purposes of computation of capital gains? (2) Whether, on the facts and in the circumstances of the case, the learned Income-tax Officer was legally correct in coming to a finding that once the sale deed was registered, the transfer was complete and any stipulation in the deed of sale to the contrary was irrelevant ? (3) Whether by mere execution of a deed of sale and registration thereof, there could be transfer of an immovable property without effective ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubject to certain exceptions, be chargeable to income-tax under the head "Capital gains" and shall be deemed to be the income of the previous year in which the transfer took place. The word "transfer" has been defined under section 2(47) of the Act which provides that, in relation to a capital asset, transfer includes the sale, exchange or relinquishment of the asset or the extinguishment of any rights therein or the compulsory acquisition thereof under any law. In the present case, we are concerned with the transfer of an immovable property by way of sale. In the absence of any provision to the contrary, the concept of sale of an immovable property which is included in the expression "capital asset" as defined under section 2(14) of the Act, has to be gathered from section 54 of the Transfer of Property Act, 1882. In the present case, from the statement of case itself as drawn up and sent to this court by the Tribunal, it is apparent that the parties had clearly intended that despite the execution and registration of sale deeds, transfer by way of sale will become effective only on payment of the entire consideration amount and in this background of facts, it has to be held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which have not been fulfilled by the buyer and the Hon'ble Rajasthan High Court vide its order dated 31.01.2014 in S.B. Civil Misc. Stay Application No. 18755/2013 in S.B. Civil Writ Petition No. 21812/2013 has directed as under: "Heard the learned counsel Mr. Vishwajeet Mantri for the petitioners and the learned counsel Mr. A.K. Dubey appearing for the respondent No. 3 on caveat. Having regard to the submissions made by the learned counsels for the parties, and to the impugned orders passed by the courts below, the parties are directed to maintain status-quo as regards the possession, alienation, construction and creation of third party interest in the suit lands, pending the writ petition. The Stay application stands disposed of." 17. We therefore, find that the outcome of these proceedings before the Hon'ble High Court would have a direct bearing on the subject transaction in terms of intention of the parties, fulfillment or nonfulfillment of various promises and agreement and in short, the substance and real purport of the whole transaction and resultant taxability thereof as it evident from the grounds so taken in the aforesaid writ petition filed by the assessee alo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w has stated that the agreements produced on record are not registered documents whereas there is compulsion under section 17 and 49 of the Registration Act for registration of such documents. It is most humbly submitted that in the instant case the documents which are agreements are not at all for conveyance of the immovable property by the defendant respondent No. 3. The courts below have clearly erred in not at all appreciating the true nature of the transaction between the parties. (G) Because the case of the petitioners before the learned court below is for specific performance of the terms of agreements in question which are mere memorandum of agreements conveying no property. The agreement is to the effect that the respondent No. 3 will get a residential scheme sanction and will thereafter get lease deeds of residential plots executed by JDA in favour of the petitioners. The conveyance will take place at the time of execution of lease deeds and the stamp duty as well as registration of documents for conveyance will be attracted at that stage. Thus the learned court below seriously erred in misconstruing the terms of the contract, the nature of the document and the nature ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the injunction prayed would clearly result in irreparable injury which cannot be compensated in terms of money. The courts below have considered this aspect of the matter in a very cursory manner. (M) Because in the facts and circumstances of the case the balance of convenience is also in favour of the petitioners. However the learned court below has considered this aspect of the matter also in a very cursory manner. (N) Because it is settled law of construction of documents that the true intent of parties can be gathered from the surrounding circumstances and if the evidence available suggests that what is expressed in the document is not the only thing which has taken place between the parties, the meaning to the document has to be given by considering the entire set of circumstances. The courts below have not taken into account the true principle in this regard and decided the matters without considering the law and principles applicable in this regard. (O) Because the learned Courts below erred in not considering the fact that it is well settled principle that when one document is executed after the another both the documents should be read in toto and not as a separat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Application without applying the judicious mind. (S) Because the learned Courts below have only to see primafacie there is a case of plaintiffs or not. But the Courts below without appreciating the evidence came before the Court arrived out over a finding that the subsequent agreements between the plaintiffs and defendant are forged and that the plaintiffs had sold the entire land to the defendant which is a question of evidence and without going through the evidence with regard to the documents concerned arriving out to such conclusion cause gross injustice to the plaintiffs. (T) Because the learned Courts below erred in not considering the facts with regard to the irreparable loss to the plaintiffs and no finding was given with regard to the fact whether the plaintiffs having continue possession over the land and if they were remove from their respective portion of land it will cause gross irreparable loss to the plaintiffs and which cannot be compensated with any other relief. (U) Because the learned Courts below erred in not considering the fact that if the defendant sold the land to any third party it will cause multiplicity of the party and irreparable loss to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d sale consideration of Rs. 5,00,000/- and in such circumstances, the AO should have taken steps by referring the matter to the DVO u/s 50C(2) of the Act and should have taken into consideration the report of the DVO before substituting the sale consideration as per Collector (Stamps) order as against the declared sale consideration. And we believe that in light of differential approach and valuation adopted by the stamp duty authorities in case of assessee and in case of brother of the assessee in respect of similar situated property as so claimed, the reference to DVO becomes imperative to take the same into consideration and determine the fair market value of the property. Given that the AO had go ahead in the matter without referring the matter to DVO, it gives rise to another reason why we are of the considered view that the matter deserve to be set-aside to the file of the Assessing officer who is hereby directed to refer the matter to DVO and decide as per law. 20. Since we are setting aside the matter, the Assessing officer is also directed to consider other contentions raised by the ld AR regarding non-allowance of indexed cost of acquisition while determining capital gai ..... X X X X Extracts X X X X X X X X Extracts X X X X
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