TMI Blog2021 (12) TMI 764X X X X Extracts X X X X X X X X Extracts X X X X ..... to this effect was put up in the registered sale deed, the revenue cannot displace the legal effect of such express terms duly registered. In the factual matrix, the gains arising by virtue of such arrangement is either chargeable under the head capital gains or not chargeable at all. There is no scope for bringing such income to tax under the head income from other sources . Scope of powers under revisionary jurisdiction are not unfettered. Whereas the A.O. had rightly endorsed the corroborated claim of the assessee in this regard, the PCIT, in our view, has attempted to substitute his wisdom by views of the A.O. without any definite basis. If the view of the PCIT towards the banakhat allegedly hollow or unenforceable is accepted, no income can be recognised at all. The view taken by the A.O. is clearly plausible in law and could not have been displaced in a revisionary proceedings by a very untenable or a debatable view. Having come to a conclusion that the income should be taxed under the had income from other sources it was not open to the PCIT to direct the A.O. to make enquiries and verifications without keeping the issue open for him to be determined afresh. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed of by this common order. 3. We shall first take up ITA No.390/Ahd/2020 concerning Assessment Year 2015-16 in the case of Anil Rambhai Mevada for the purpose of adjudication. ITA No.390/Ahd/2020 Anil Rambhai Mevada AY 2015-16 4. The captioned appeal has been filed against the revisional order of PCIT-3, Ahmedabad dated 16.03.2020 passed under section 263 of the Act whereby the assessment order passed by the Assessing Officer (A.O.) dated 30.10.2017 concerning Assessment Year (A.Y.) 2015-16 was sought to be set aside for reframing assessment in terms of supervisory directions. 5. As per its grounds of appeal, the assessee has essentially challenged the justification of revisional action of the PCIT as a consequence of which the A.O. was directed to pass the assessment order denovo after making enquiries and verifications on points set out in the revisional order. 6. A small delay of 45 days in filing captioned appeals before the tribunal is condoned at the request on behalf of respective Assessee having regard to ongoing pandemic situation prevailing in the country at the relevant time. No prejudice is shown to have caused to revenue. The appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee and other erstwhile co-purchasers to the banakhat agreement were made confirming parties to the sale transactions between the land owners and ultimate purchaser. The assessee and other original co-purchasers received ₹ 2.85 cr. each out of the sale consideration by virtue of being confirming parties to the sale agreement. The capital gains arising on such receipts for release of rights claimed to be vested by banakhat agreement was worked out to Rs. ₹ 2,66,01,375/- by the assessee. The assessee offered such surplus under the capital gains and availed indexation benefits and concessional tax treatment associated to such long term capital gains. As noted earlier, deduction against such capital gains were claimed under S. 54B of the Act which was withdrawn in the course of assessment and additional taxes were paid thereon. The AO after making enquiries in this regard as mandated under limited scrutiny and after taking relevant documents in the form of banakhat and sale agreement etc. endorsed the claim of capital gains and consequently assessed the income at ₹ 2,12,73,200/ based on the revised computation of income. 9. After the completion o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn in ITR. 7. Please furnish copies of assessment orders for the last three years. 8. Details of bank accounts operated during the year under consideration along with Reconciliation Statements of each accounts. Bank accounts Reconciliation Statement: In respect of bank accounts held by you either severally or jointly, please furnish the details of the same along with the copy of bank statement/pass-book and bank book as under: Name of the Bank/Branch A/c. No. Type of A/c Current/CC/ OD/Loan/ Savings Balance as per Bank (Rs.) Balance as per Books (Rs.) Difference, if any interest received during the year(Rs.) In case of difference in the balance, please furnish the bank reconciliation statement along with supporting documentary evidence. 9. It is also requested that the above information may please be furnished para wise, with complete details called for. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther deduction from capital gain has been claimed correctly as required upon him in performance of quasi judicial functions. The A.O. has raised appropriate questions on both these points and after taking note of the documents filed before him in support of such claim, has found merit in stance of the assessee. The assessee, on his part, has fully substantiated the claim of capital gains arising on sale of property/rights therein with clinching evidence. Therefore, there was no perceptible reason for the A.O. to interfere with the income offered by the assessee dehors the tangible facts. ii) The PCIT has proceeded to set aside the assessment based on totally irrelevant extraneous considerations. As contended, it was never the case of the assessee that he was the owner of plot (Survey No.847) giving rise to capital gains of ₹ 2,66,01,375/-. The assessee has all along claimed that while the assessee was not vested with ownership right nor was having the possession of the property, certain rights were accrued to the assessee on account of banakhat dated 25.08.2008 entered into between seller (Shri Kiran D. Patel) and the then proposed purchasers (Shri Dipak R. Bharwad, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the assessee at all. The question of characterisation of non-est income would thus not arise at all. In a situation, where the banakhat is deemed to be void and not enforceable as viewed by PCIT, why will the seller part with huge amount to the assessee and other parties. The answer lies in the risk assessment of contracting parties; howsoever absurd such assessment might be. It is the sole wisdom of the transacting parties which will govern the quantum and character of receipt. vi) Such compensation on release of rights to sue in land parcel is clearly a capital receipt. Such compensatory receipts, not being property under S. 2(14) are not chargeable to tax at all and at best can be taxed under the head capital gains . By bringing such non taxable income to capital gain tax, the revenue has not suffered at all. The PCIT completely lost sight of the fact that the compensation received cannot be seen dehors the banakhat rights and hence by no means could be brought to charge under the head income from other sources erroneously concluded by the PCIT. The issue on nature of income is thus not even debatable. What is debatable is the correctness of taxes levied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceeding under S. 263 or other under other provisions are probably pending against him. Notwithstanding, it was simultaneously stated that in the light of self-evident fact, no adverse conclusion would be possible against any confirming party in law. The assessee has duly declared income and limited ground is assessment under correct head. The action of the assessee to declare the income under the head capital gain is fully supportable without any room for debate. The only debate possible is on the inherent chargeability of such income. Looking from any perspective, the order of the AO is, in no way, either erroneous or prejudicial to the interest of revenue. 14. As regards revision proposed in respect of other land transactions, it was fairly submitted that the assessee has no impending grievance towards the directions given in the revisional order in respect of capital gain arising on sale of land parcels bearing plot no.594/2 and 868/1/2 having regard to the fact that a positive consequential order has already been passed by the A.O. on appreciation of facts and evidences. The issue relating to other land parcels (other than survey no. 847) is thus academic and does not ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee herein by virtue of banakhat agreement. The transfer of the impugned land parcel was ultimately effected in favour of one Shri Navin K. Patel by the land owners and sellers (Shri Kiran D. Patel) vide sale agreement dated 19.02.2015. The registered sale agreement however, has admittedly recognised the assessee and other two erstwhile co-purchasers as confirming parties to facilitate a peaceful transfer of land parcel in favour of ultimate purchasers. In the process, the assessee and other two co-purchasers have received ₹ 2.85 crores each as compensation for relinquishment of their right to sue demand to arise by virtue of erstwhile banakhat . The assessee has offered the compensation so received in the capacity of a confirming party on sale of land parcel under the head capital gain . The document namely banakhat agreement, sale agreement etc. were produced before the A.O. in the original assessment under limited scrutiny. The A.O. ascertained the quantum of the capital gains declared by the assessee and assessed the income offered by the assessee without any adjustments or realignment. The PCIT, however, in exercise of the revisional powers under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inition of capital asset , the relinquishment of which is taxable as capital gains under S. 45 of the Act. The assessee was paid compensation along with other co-purchasers when the final sale deed was executed in consideration of release of rights arising to him by Banakhat . Hence, the seller and the ultimate purchaser have, rightly or wrongly, perceived strength of such banakhat under general laws and in order to bring quietus to any potential dispute, have taken these co-purchasers onboard as confirming parties, as advised to them. The compensation awarded to the assessee and co-purchasers naturally have direct connect with such subsisting rights perceived by the sellers and purchasers. Compensation so received on release of such right, at best, falls within the ambit of expression of capital asset defined in section 2(14) of the Act. Pertinent to note, the expression capital asset as defined in section 2(14) of the Act of very wide import and connotation. Needless to say, the income emanating on relinquishment of a capital asset would give rise to capital gain as claimed by the assessee. Hence, we do not see potency in the claim of PCIT that such income is chargeable u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onal order does not pass the test of prerequisites of jurisdiction embedded in section 263 of the Act. In our view, the PCIT has failed to demonstrate any perceived error in the assessment order. Noticeably, the assessee claims a converse situation where the prejudice, if any, has caused to assessee for offering such gains as chargeable to tax, where judicial view is also available for its non chargeability at the threshold. 18.2 We are thus inclined to agree with various pleas raised on behalf of the assessee for setting aside the revisional order and restore the assessment order in so far as taxability of receipts attributable to impugned land parcel bearing survey no. 847 is concerned. The revisional order is accordingly set aside on the point of taxability of capital gains on sale of land parcel bearing survey no.847 in question. 18.3 In the light of concession given on behalf of the assessee, the grievance of the Assessee in respect of other land parcels (other than survey no. 847) are, however, answered in negative and against the assessee. 19. In the result, appeal of the assessee is partly allowed. ITA No.391/Ahd/2020 Assessment Year 2015-16 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
