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TMI Blog2025 (3) TMI 1049X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,330/-. Subsequently, based on the information received that the assessee sold an immovable property bearing Survey.No.156/2B, Mouje, Nashik, District Nashik admeasuring 3H 2R for a consideration of Rs. 15.30 crore and that the assessee has not shown the income from sale of immovable property in its income- tax return, notice u/s. 148 of the act was issued and reassessment proceedings u/s. 147 were carried out. During the course of assessment proceedings, ld. Assessing Officer (AO) observed that the land in question was purchased by him on 14.05.1992 and was sold to Mr. Vasanti Shankar who further sold to Rathi Estates who further sold to Yogeshwar Packaging Industries and it was further sold to Paresh N Bhagat and finally Paresh N Bhagat sold to Bhavin Enterprises. Now the transaction of capital gain/ profits earned by each of the person referred above have been disclosed in their regular income-tax returns for the year during which the transactions took place and duly offered to tax. However, since the final sale deed was not registered by any of the buyers, finally it was the assessee who was asked to complete the registration of sale deed in favour of Bhavin Enterprises and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g relief to the assessee and taking the unassessed income of Rs. 15,13,95,000/- out of the tax net citing double taxation in the hands of the assessee when there is no clear evidence as to the fact that the intermediary parties have offered any income to tax in their respective books of accounts. 3. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) has erred in deleting the addition of Rs. 15,13,95,000/- ignoring the fact that the entire chain of title of immovable property involved two Survey Nos. at 156/2 and 156/2B Nashik admeasuring 24000 Sq. mts. and and 11600 Sq mts respectively and that the Survey No. at 156/2 admeasuring 24000 Sq. mts was sold by the assessee to Smt. Vasanti Shankar and Survey No. 156/2B Nashik admeasuring 11600 Sq mts. was sold by Viraj Estates Pvt. Ltd wherein the assessee is a director. 4. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) has erred in deleting the addition of Rs. 15,13,95,000/- not appreciating the fact that as per the final Sale Deed no.3412 of 2013 dated 30.03.2013 the assessee was recorded as the Seller and M/s. Bhavin Enterprises as purchaser for the Survey No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en sold by buyers at different point of time but no registered sale agreement has been entered into and it was the assessee who has finally entered into the sale agreement and registered it. Therefore, the transaction has culminated only during the year under consideration and the addition made by the AO deserves to be affirmed. 6. On the other hand, ld. Counsel for the assessee took us through the details of the various buyers and sellers of the land during F.Y.1996-97 to the F.Y.2012-13. Index of the paper book can briefly describe the documents placed by the assessee to prove that the alleged sum has already suffered tax in various hands during preceding years and the same is as follows : "(1) Facts of the case are that your assessee has purchased land for total cost of Rs. 21,98,235/- which is supported by purchase deed dated 14/05/1992 as chief promotor of proposed co-operative housing society. (2nd submission-Anne-4). The copy of purchase deed is attached herewith as Annexure-4. (2) The notarized agreement to sale the impugned land was entered into with Vasanti Shankar on 30/04/1996 for consideration of Rs. 45,00,000/- [Annexure-A(i)]. The copy of notarized agreement bet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osed Co-Op. Housing Society as the land was purchased by registered deed in his name on 14/05/1992. The impugned payments by cheques are evident from ledger account of Bhavin Enterprises in the books of Paresh Bhagat is attached herewith as Annexure-14, and also HDFC bank statement of Paresh Bhagat attached herewith as Annexure-15. The above facts can be noted from notarized MOU dated-30/03/2013 which is between the assessee and 5 others who were involved in the transactions pointed out above is attached herewith as Annexure-16. The above facts can be summarized in tabular chart on next page and real income earned by assessee is to be assessed to tax. The amount of Rs. 18,00,000/- was payable by Viraj Estates to Smt. Mustari Begam Pirjade as per agreement with her dated 31/12/2012(Anne-G) and hence in last transaction the amount was paid to Viraj Estate Pvt. Ltd. The copy of agreement between Viraj Estate & Smt. Mustari Begam Pirjade is attached herewith as Annexure- 17. Thereafter, due to encroachment and area dispute the payment was delayed and ultimately paid through banking channel. Copies of relevant ledger accounts were filed to the AO. CHART Name of the seller Sale Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis of a suit for specific performance and be led into evidence as proof of agreement or part performance of a contract. Further, ld. Counsel for the assessee filed the written submissions providing all necessary details of the alleged transaction as well as its contention to support the finding of the CIT(A). 8. We have heard the rival contentions and perused the record placed before us. Revenue is aggrieved with the finding of the ld. CIT(A) deleting the addition of Rs. 15,13,95,000/- made by the AO towards profit from sale of immovable property. We observe that the assessee who is an individual purchased a piece of land on 14.05.1992 in capacity of Chief Promoter of Niyojit Lord & Lord Cooperative Housing Society. During the year under consideration, a sale deed was registered which was signed by the assessee and it was executed in favour of Bhavin Enterprises. When this information was received by the AO, he carried out the reassessment proceedings which culminated into the impugned addition. Now the facts narrated by the ld. Counsel for the appeal indicate that the assessee purchased land during F.Y. 1992-93 and sold it in F.Y. 1996-97 for a consideration of Rs. 45.00 lakhs a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide Registered Deed dated 29.12.2012. 5] It is submitted that the impugned land adm. around 9 acres fell under the Urban Land (Ceiling and Regulation) Act, 1976 and therefore, the registered agreement in respect of the same could be entered only after obtaining the requisite permission u/s 26(1) of the said Act. This Act had been repealed centrally by way of Urban Land (Ceiling and Regulation) Repeal Act, 1999 and it was anticipated that even the Maharashtra State Govt. would repeal the applicability of the impugned Act very soon. Vide the unregistered agreements to sale entered by the respective parties, it was agreed that the final registered sale deed shall be entered only after the impugned permission u/s 26(1) of the ULCR Act, 1976 was obtained. However, subsequently, the Maharashtra State Legislature adopted the ULCR Repeal Act vide Resolution dated 29.11.2007 and thus, the said provisions were done away with even in the State of Maharashtra. Therefore, upon insistence of Advocate of Buyer M/s. Bhavin Enterprises who purchased the impugned land for consideration of Rs. 15.30 Crs. vide Sale Deed dated 29.12.2012, a registered deed was entered for first time in respect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Rs. 15.12 Crs. was ever received by the assessee or that the amount of Rs. 18 lakhs was ever retained by the assessee without paying the same to Mrs. Peerzade. Further, the persons who in fact had the right to receive the sale consideration, have offered the same to tax in their ITRs and hence, mechanically taxing the same again in hands of the assessee merely because the assessee was a signatory to the regt. sale deed will amount to double taxation and will be unjustified on facts and in law. 8] It is well settled law that under the provisions of Income Tax Act, 1961, only the real income is taxable and not any hypothetical income. In this respect, the appellant places reliance on the ratio laid down in the following decisions - 1. Dinesh Vazirani v. PCIT & Others [(2022) 445 ITR 110 (Bom HC)] 2. Smt. Shivani Madan v. PCIT [ITA No. 573/2023 (Delhi HC) dated 08.01.2025 3. Sapnaben Dipakbhai Patel v. ITO [ITA No. 2414/Ahd/2013] dated 13.01.2016 [Hon'ble AM is party to this Decision relied upon by CIT(A)] 9] In view of the above facts and judicial decisions cited, it is submitted that the relief provided by the Id. CIT(A) by way of detailed and reasoned order is j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rathi Estates and Yogeshwar Packaging P. Ltd., Yogeshwar Packaging P. Ltd. and Paresh Navnitlal Bhagat, Paresh Navnillal Bhagat and Bhavin Enterprises during FY 1996-97 to FY 2015-16. The AO has not accepted the impugned transactions entered into between parties through unregistered agreements to sale staling that, the immovable property can be legally transferred only by entering into registered deed of conveyance and hence, the unregistered agreements to sale entered into have no value. In support of this contention, the AO has relied on the decision of Honorable Supreme Court, in the case of Suraj Lamp Industries Ltd. Vs State of Haryana (2011) 202 Taxman 607(SC). 6.5 On perusal of the above decision, it is noticed that, this decision is in respect of legal transfer of immovable property and not in respect of provisions of income tax act laying down any proposition about capital asset defined u/s 2(14) or transfer of capital asset u/s 2(47) of the Income tax Act. The appellant has submitted that by entering into agreement to purchase, the proposed purchaser acquires right of specific performance to purchase the property which is a valuable right and clearly fall within the def ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der: 15. In the assessment order, the Ld. AO has placed reliance upon the judgment of Hon'ble Supreme Court in the case of Suraj Lamps & Industries Pvt Ltd (supra) for the proposition that transfer of a property shall be effective only on registration of conveyance deed in view of section 54 of Transfer of Property Act. In our view, it is a settled proposition of law and there is no dispute on that. The absolute legal ownership of an immovable property shall take place in terms of various provisions of Transfer of Property Act which needs to be read with provisions of section 2(47) of Income-lax Act, 1961 for the purpose of computing tax liability arising on account of sale /purchase of immovable properties under Income-tax Act. But the issue here before us is different. As discussed earlier, the holding period is to be delermined in terms of section 2(424) of the Act which has been reproduced and discussed above. The issue of transfer of ownership is not the issue to be decided here for computing the holding period. Therefore, we find that application of the ratio of aforesaid judgment would not be appropriate here." 6.7 It is pertinent to note here that, the Honorable Sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , if unregistered, can be admitted in evidence as evidence of a contract in a suit for specific performance." 6.9 In the case of Sanjeev Lal Etc Vs Commissioner of Income Tax, Chandigarh, Civil appeal No. 5899 & 5900 of 2014, dated 01.07.2014. it has been observed by Honorable Supreme Court, while deciding the issue of date of transfer to be considered for allowing deduction u/s 54, as under. "The question to be considered by this Court is whether the agreement to sell which had been executed on 27th December, 2002 can be considered as a date on which the property ie. the residential house had been transferred. In normal circumstances by executing an agreement to sell in respect of an immoveable property, a right in personam is created in favour of the transferee/vondee. When such a right is created in favour of the vendee, the vendor is restrained from selling the said property to someone else because the vendee, in whose favour the right in personam is created, has a legitimate right to enforce specific performance of the agreement, if the vendor, for some reason is not executing the sale deed Thus, by virtue of the agreement to sell some right is given by the vendor to the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e addition in the hands of the appellant needs to be deleted. 6.12 In view of the above facts of the case, it is clear that the profit in respect of the impugned land under consideration has been offered to tax by various parties as under : Name of the seller Profit in Rs. (1) Rajendra R. Shah on behalf of Viraj Estates Pvt. Ltd. previously Mahavir Land Developer- Director [PAN : AAACM4414F[ 23,01,765/- (2) Vasant Shankar 90,00,000/- (3) Rathi Estates [PAN : AACFR9412P] 1,45,80,000/- (4) Yogeshwar Packaging Pvt. Ltd. [PAN : AASFS5130K] 43,20,000/- (5) Paresh Navnitlal Bhagat PAN : AABPB1037B] 11,88,00,000/- Total 14,90,01,765/- From the facts of the case, it is evident that, each of the above parties including the appellant have received sale consideration separately and have earned profit of Rs. 14,90,01,765/- and also offered the same in their computation of income. Therefore, taxing the said profit again in the hands of the appellant shall result into double taxation of the same income. 6.13 In view of the above facts and discussion and considering the ratio laid down in the various decisions of Courts and Tribunals, I am of the considered view that, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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