2022 (1) TMI 1264 - AT - Income Tax

Long Term Capital Gain or Short term capital gain - joint property sold - assessee and his brother has entered into an agreement of sale - AO invoked provisions of section 50C of the Act and adopted the SRO value for calculating the capital gains at Rs.34,16,000 as against the sale consideration adopted by the assessee in the sale deed of Rs.23,50,000 - HELD THAT - The assessee and his brother sold the property on 13.10.2008 only. Therefore the documentary evidence fairly establishes that the assessee had purchased the property on 10.07.2006 and sold the same on 13.10.2008. Therefore AO has correctly computed the STCG. In this case, the assessee did not place any evidence before the authorities below as well as before us. Moreover, the assessee did not appear before the AO to establish the said fact inspite of repeated notices. Before us also, the assessee had not placed any satisfactory evidence that the sale transaction has been completed in Feb., 2001 except the cancellation of telephone connection in the property purchased by the assessee, it is difficult to come to a conclusion based on the cancellation of telephone connection that they are in possession of the property. Apart from this, the GPA was registered as document No.2691/2006 on 30.06.2006 at SRO, Chikkadpally, Hyderabad. Therefore, we are of the view that the sale has taken place only on 10.07.2006. Hence the Assessing Officer as well as the learned CIT(A) has rightly came to the conclusion that the assessee is entitled only for STCG. Hence, we do not find any infirmity in the order of Assessing Officer as well as the learned CIT(A). Hence this ground raised by the assessee is dismissed. Denial of deduction u/s.54 - deduction u/s. 54 of the Act on purchase of residential property vide Agreement of Sale cum General Power of Attorney in the name of Smt. Shamim Begum, wife of the assessee and Mohammed Saleem - As per revenue assessee did not file ownership rights of the property and he is only a GPA holder, hence he has no ownership right over the property, the assessee is not entitled for deduction u/s. 54 - HELD THAT - In this case, the assessee entered into an Agreement of sale cum GPA which was registered, vide Document No.3374/08 dt.15.10.2008. Apart from this, he has not placed any evidence before the lower authorities as well as before us establishing that he purchased or constructed a residential house as per provisions of section 54 of the Act. Therefore in the absence of any such evidence, the A.O. as well as CIT(A)dismissed the instant ground raised by the assessee. The assessee failed to establish ownership right over the residential property but being only a GPA holder and Agreement holder. After considering the findings of the lower authorities, we do not find any infirmity in the orders of authorities below. Hence ground raised u/s. 54 of the Act by the assessee is dismissed.

Summary

Issues Involved:
1. Denial of Long Term Capital Gain
2. Denial of deduction u/s.54 of the Act

Issue 1: Denial of Long Term Capital Gain:
The appeals filed by different assessees for Asst. Year 2009-10 were consolidated due to identical facts. The assessees raised two main issues: denial of Long Term Capital Gain and denial of deduction u/s.54 of the Act. The Assessing Officer invoked section 50C of the Act to calculate capital gains based on SRO value, differing from the sale consideration by the assessee. The assessee claimed possession of the property since 2001, but the sale deed was executed in 2006. The appellate tribunal held that the sale occurred in 2006, dismissing the assessee's claim for Long Term Capital Gain due to lack of evidence supporting possession since 2001.

Issue 2: Denial of Deduction u/s.54 of the Act:
Regarding the claim of deduction u/s.54 of the Act, the assessee purchased a residential property but failed to provide evidence of ownership rights, being only a GPA holder. The tribunal referred to Section 54 of the Act, emphasizing the requirement for the assessee to purchase or construct a property to claim the deduction. As the assessee did not establish ownership rights over the property, the claim for deduction u/s.54 was dismissed by the authorities. The tribunal upheld the decision, stating that without evidence of property ownership as per Section 54, the assessee's claim for deduction could not be accepted.

In conclusion, both appeals by the assessees were dismissed based on the denial of Long Term Capital Gain and deduction u/s.54 of the Act. The tribunal's decision was consistent across the appeals due to similar facts. The orders were pronounced on 20th Jan., 2022, and a copy of the common order was directed to be placed in the case file.