TMI Blog2023 (2) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... AO to re-compute the capital gain taking the assessee s share in the property as 1/12th. This contention raised by the ld.counsel for the assessee is accordingly allowed. Stamp duty value/jantri value of the land sold on the date of entering into agreement to sell should have been adopted as per the provision of section 50C - The agreement to sell has been found to have stamped on 6.10.2009 while the agreement was entered into much later on 5.2.2010. There is also over-writing on the date mentioned in the agreement to sell. Most importantly, the original agreement to sell was never produced before the Revenue authorities. The fact that as per prevailing law of the State of Gujarat, a partnership firm could not have purchased an agriculture land, this agreement to sell between a partnership firm(M/s Vishwas Builders)as the buyer and the assessee as seller was in any case invalid. Further, the agreement to sell finds no mention in the final sale deed entered into between the parties. The fact that the agreement to sell is in relation to land admeasuring 15580 sq.meters, and the land actually sold as per the registered sale is only 8741sq.meters also remained un-reconciled. W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... against order passed by the ld. Commissioner of Income Tax (Appeals)-10, Ahmedabad[hereinafter referred to as Ld.CIT(A) under section 250(6) of the Income Tax Act, 1961 ( the Act for short) dated 7.3.2017 pertaining to the Asst.Year 2013-14. 2. The grounds raised by the assessee are as under: 1.1 The order passed u/s.250 on 7-3-2017 for A.Y.2013-14 by CIT(A)-10 , Abad upholding the addition of Rs.65,39,434/-as long term capital gains made by AO is wholly illegal, unlawful and against the principles of natural justice. 1.2 The Ld. CIT(A) has grievously erred in law and or on facts in confirming the impugned addition on the reasons not raised by AO as well as without considering fully and properly the submissions made and evidence produced by the appellant with regard to the impugned additions. The CIT(A) has grievously erred in law and on facts in confirming the impugned addition for the reasons not raised by AO so that it was exceeding his jurisdiction and illegal. 2.1 The Ld. CIT(A) has grievously erred in law and on facts in confirming addition of Rs.65,39,434/- as long term capital gains made by AO. The findings given by CIT(A) for upholding the impugned add ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee, as is revealed from order of the authorities below. The assessee had sold a plot of land situated at Survey No.196 at Moje Gota, Taluka-Daskroi, Dist-Ahmedabad along with eight other co-owners on 28.5.2012 for a sum of Rs.5.00 crores. In the return of income filed, the assessee had computed his capital gain earned thereon taking the impugned sale consideration relating to his share of property and after claiming exemption under section 54F of Rs.21.00 lakhs on account of investment of the consideration in purchase of residential property to the said extent. The AO computed the capital gain earned by the assessee by making the following adjustments to the calculation of the assessee: i) He substituted the actual sale consideration with the stamp duty value of the property as on the date of sale of Rs.10,05,21,500/- as per section 50C of the Act; the assessee s share in the property was taken at 1/9th; ii) Indexed cost of acquisition of the property pertaining to assesses share was taken by the AO at Rs.7,44,733/- as against Rs.13,47,416/- claimed by the assessee. The AO had restricted indexed cost of acquisition to the extent of the property noted to be sold of 8,741 sq. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and premium paid directly to the Govt. of Gujarat on behalf of the land owners, as per provision to section 50C of the Act the jantri/stamp duty value of the land as on the date of agreement to sell was to be substituted as opposed to stamp duty value taken on the date of registration of sale; that jantri rate on the date of entering into agreement to sell was Rs.4,37,05,000/-, which needed to be substituted to the sale consideration received by the assessee, as opposed to stamp duty value of Rs.10,05,21,500/- as on the date of registration of sale deed taken by the AO. iii) Besides, the assessee had also challenged the denial of exemption on account of investment made in purchase of new residential property of Rs.21 lakhs in terms of section 54F of the Act. All the contentions of the assessee were rejected by the ld.CIT(A), as pointed out by us above. 6. Before us, the ld.ounsel for the assessee has reiterated the contentions made before the ld.CIT(A). With regard to his contentions that the assessee s share in the property sold was 1/12th and not 1/9th as taken by the AO, he pointed out that this fact had been pointed out to the AO during the remand proceedings by the ld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o-partners to the land including the assessee, and therefore, his contention of 1/12th share in the land is accordingly rejected. He drew further attention to the finding of the ld.CIT(A) at para-5 of his order on this issue pointing out that while the ld.CIT(A) admitted additional evidence filed by the assessee, but in the same breath he held the evidences filed with regard to demonstrating the shares of the assessee s property as non-admissible, and therefore, rejecting the contention of the assessee. Our attention was drawn to para-5 of the order of the ld.CIT(A) as under: Decision 5. The first arguments of the appellant is regarding the share in the property whether it is 1/9th or 1/12th. It is seen that during the course of assessment proceedings the assessment has been made by the A.O by considering the share of the appellant at l/9th. The same has not been disputed by the appellant at all. In fact the appellant himself has given computation of income in which the sale consideration has been shown at Rs. 11169055/- which clearly indicates that not only the appellant has accepted I/9th share in the sale of the said property, the appellant has also accepted the valuat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eport of the AO that the basis for taking the assessee s share at 1/9this that the sale deed mentioned nine co-owners in the property. It is not the Revenues case that the sale deed mentioned any share of co-owners ,but they merely presumed the share of all 9 co-owners to be equal, this despite the fact that the assessee had pointed out respective shares of each nine co-owner in his letter filed to the AO during the assessment proceedings, and had also explained the reason for the same by way of family-tree pointing out that the share of eight co-owners came to 1/12th on account of application of Hindu Succession Law. The ld.CIT(A) also, we find dismissed this contention of the assessee for frivolous reasons stating that he refuses to admit additional evidence filed by the assessee. We find that while the ld.CIT(A) states that all additional evidences filed by the assessee were admitted by him, but in the subsequently states that vis- -vis the shares of the assessee in the property sold, he refuses to admit additional evidence. There appears to be no clarity in the order of ld.CIT(A) on this aspect of the matter. Even otherwise, we find that the share of the assessee being a crucia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or land premium on conversion of land, the said premium was paid by the purchaser on behalf of the seller. Further since the land being an old tenure agricultural land it could not be bought by the purchaser being a firm and hence immediately an application for change in use of land from agricultural to non agricultural purpose was made to the land revenue department. After the said permission was received even application for passing of construction plans had been made and the said permission had also been received in July, 2011, and thereafter the balance payment was made by the purchaser and accordingly the sale deed was executed in May, 2012. The above events clearly show that all the permissions for construction were applied for much before the sale deed was executed and even the payments for the said permission had been made by the purchaser much before the sale deed had been executed which clearly substantiates the fact of the existence of the agreement for sale. For your verification all the above mentioned permissions as well as the copy of the bank statement of the purchaser substantiating the above mentioned payments has already been submitted to your honour. 11. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hip firm is not entitled to buy such land. Even on this ground, this agreement to sale is not proper. (4) There is no mention of this Agreement to sale whatsoever in the sale deed entered into between the parties which was entered into in 2012. If the contention of the appellant is even accepted for argument sake, the agreement to sale which is claimed to have been entered into by the appellant would have been mentioned in the final sale deed, however, there is no mention of such sale deed at all. (5) The agreement to sale shows the land admeasuring 15580 sq.mtrs, whereas as per the final sale agreement, the land sold is only 8741 sq.mtrs. The land in both the agreements cannot vary so much as has been claimed by the appellant. In fact as per the prevailing law in Gujarat State, a partnership firm is not allowed to buy agricultural land. Therefore, thje partnership firm cannot enter into an agreement to sale for 15580 sq.mtrs of land which is clearly agricultural land. Therefore, an agreement to sale for 15580 sq.mtrs is not possible. (6) In the final agreement to sale it has clearly been provided that the -Collectors order for conversion of the land has been da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld.Counsel for the assessee of substitution of the sale consideration with the jantri value on the date of entering into agreement to sell is accordingly rejected. 13. The last contention before us was with regard to the claim of exemption under section 54F on account of investment of capital gain/ sale consideration in purchase of residential property to the extent of Rs.21 lakhs. The denial of the same, as per theld.CIT(A) is for the reason that the investment in the new property was not made within the period stipulated as per law. His finding in this regard at page no.6 of the order is as under: 6. Ground No.2 is regarding claim of the appellant us.54F. The appellant has filed the following submissions by letter dated 28/4/2016. The appellant has made investment of Rs.21,00,000/- in flat in Saga Scheme. The appellant entered into agreement for purchase on 31.07.2013 and made majority of the payment within a period of 2 years from the date of sale. The last payment for purchase of flat was made on 28.03.2015. It is only that the sale deed was executed on 05.08.2015 which is outside the period of 2 years from the date of sale. The process of getting the sale deed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in that banakhat it has clearly been mentioned that the time period of this banakhat is 14 months from the date of execution of the banakhat. Therefore, the flat would only be delivered to the appellant by 13/9/2014 which is beyond two years as stipulated. Therefore, in this case the appellant has entered into an agreement for purchase of a flat which in itself is beyond two years. Therefore, there is a clear violation of the provisions of sec.54F of the Act and accordingly, the benefit of section cannot be extended. The grounds of appeal is accordingly dismissed. 14. A perusal of order of the ld.CIT(A) reveals that as per the provision of law, the assessee is required to investment in new property by 28.5.2014 i.e. within two years from the date of sale of original property on 28.5.2012. The sale deed for purchase of the new property was executed on 5.8.2015 i.e. much beyond the specified date for purchase of new property. The ld.CIT(A) has noted that the assessee s contention that he had paid for the entire consideration for the purchase of new property well within the period specified as per law and sale deed was not executed within the time only on account of the failure o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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