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2019 (6) TMI 1445 - AT - Income TaxAddition u/s 56(2)(vii)(b) - Income from other sources - Government value for stamp duty purpose of the immovable property was more than the actual value as per the deed - HELD THAT - Sale agreement is different from sale-deed. Sale agreement contains agreed upon terms and conditions between seller and buyer for the sale of property. It also specifies the date by which the transaction will be completed. Sale agreement is a road-map how property transaction will be completed. On the other hand, sale deed is executed at the time of actual transfer of property i.e. transfer of ownership from the seller to the buyer. In the written submission filed before the Ld. CIT(A), the Authorised Representative(AR) of the assessee, referring to the decision in Gurbax Singh v. Kartar Singh Ors 2002 (2) TMI 102 - SUPREME COURT ; Govt. of Karnataka v. Ragini Narayan 2016 (9) TMI 1275 - SUPREME COURT ; Ved Nath v. Indra Vikram Alias Chhote Sing 2002 (9) TMI 885 - ALLAHABAD HIGH COURT , has explained that in view of the provisions of section 47 of the Registration Act, 1908, it is well settled that a document on subsequent registration will take effect from the date when it was executed and not from the time of its registration. We refer here to page 5 of the P/B. In fact, we follow the above ratio in subsequent paras. In the instant case, there is no dispute that the Agreement for Sale is dated 10.09.2014. The Letter of Allotment dated 27.04.2012 can not be considered as the date of execution of agreement by any stretch of imagination. Immovable property is not conveyed by delivery of possession, but by a duly registered deed. Further, it is the date of execution of registered document, not the date of delivery of possession or the date of registration of document which is relevant. In the case of Alapati Venkataramiah v. CIT 1965 (3) TMI 21 - SUPREME COURT , CIT v. Podar Cements Pvt. Ltd. 1997 (5) TMI 2 - SUPREME COURT it is held that once the executed documents are registered, the transfer will take place on the date of execution of documents and not on the date of registration of documents. Section 56(2)(viii)(b)(ii) clearly stipulates that where any immoveable property is received for a consideration which is less than the stamp duty value of the property by an amount exceeding ₹ 50000/-, the stamp duty value of such property as exceeds such consideration , shall be chargeable to tax in the hands of the individual or HUF as income from other sources. It is applicable from A.Y. 2014-15. In National Cement Mines Industries Ltd. v. CIT 1961 (1) TMI 11 - SUPREME COURT speaking for the Hon ble Supreme Court emphasized the principles of interpretation to be adopted by the Court in construing a commercial transaction - the true nature and character of the transaction have to be ascertained from the covenants of the contract in the light of the surrounding circumstances. In view of the above factual matrix and position of law, we uphold the order of the Ld. CIT(A). - Decided against assessee
Issues Involved:
1. Validity of the order dated 09.08.2018 by the CIT(A)-3, Thane. 2. Legality of the addition of ?1,00,14,951/- under section 56(2)(vii)(b) of the Income Tax Act, 1961. Detailed Analysis: 1. Validity of the Order Dated 09.08.2018 by the CIT(A)-3, Thane: The assessee argued that the order by CIT(A)-3, Thane was arbitrary, against natural justice, unlawful, and invalid. The Tribunal, however, upheld the order of the CIT(A), dismissing the appeal filed by the assessee. The Tribunal found that the CIT(A) had correctly analyzed the facts and applied the relevant legal provisions, including section 56(2)(vii)(b) of the Income Tax Act, 1961. 2. Legality of the Addition of ?1,00,14,951/- Under Section 56(2)(vii)(b): The core issue was whether the addition of ?1,00,14,951/- made by the Assessing Officer (AO) under section 56(2)(vii)(b) was justified. The AO noted that the government value for stamp duty purposes of the immovable property was higher than the actual purchase price, leading to the addition under the head "Income from Other Sources." - Assessee’s Argument: The assessee contended that the property was booked on 27.04.2012, with an advance payment of ?3,00,000/-, and the relevant date for the transaction should be considered as 27.04.2012. The assessee argued that section 56(2)(vii)(b) was introduced by the Finance Act, 2013, effective from 01.04.2014, and thus not applicable to the assessment year 2015-16. - CIT(A)’s Findings: The CIT(A) rejected the assessee's argument, stating that the payment on 27.04.2012 was merely an earnest money deposit. The actual execution of the purchase was on 10.09.2014, as per the registered deed. The CIT(A) emphasized that the transaction must be registered to be enforceable under section 53A of the Transfer of Property Act. - Tribunal’s Analysis: The Tribunal examined various case laws and the facts presented. It concluded that the “Letter of Allotment” dated 27.04.2012 could not be considered the date of execution of the agreement. The “Agreement for Sale” dated 10.09.2014 was deemed to be the relevant date for the transaction. The Tribunal cited the Supreme Court's decisions in Alapati Venkataramiah v. CIT and CIT v. Podar Cements Pvt. Ltd., which held that the transfer occurs on the date of execution of the registered document, not the date of registration or possession. The Tribunal also referred to section 56(2)(viii)(b)(ii), which stipulates that if immovable property is received for a consideration less than the stamp duty value by an amount exceeding ?50,000/-, the excess amount is chargeable to tax as income from other sources. This provision was applicable from the assessment year 2014-15. - Conclusion: The Tribunal upheld the addition made by the AO, agreeing with the CIT(A)’s reasoning and findings. The appeal by the assessee was dismissed, and the order of the CIT(A) was confirmed. Final Judgment: The appeal was dismissed, and the order pronounced in the open Court on 10/06/2019. The Tribunal upheld the addition of ?1,00,14,951/- under section 56(2)(vii)(b) of the Income Tax Act, 1961, confirming the validity and legality of the order dated 09.08.2018 by CIT(A)-3, Thane.
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