2021 (6) TMI 69 - AT - Income Tax

Income from other sources u/s 56(2)(vii) - ancestral property transaction - property was already acquired on power of attorney from the original/legal owners - assessee purchased the property by virtue of conveyance deed and the market value of the said property was different as compared to the transaction value and stamp duty was paid accordingly - CIT-A deleted the addition - HELD THAT - As property was purchased by Jagdish Narian Agarwal in the year 1974 after paying the full consideration. The original owners/vendors confirmed the transaction and the parties had given requisite confirmation before the district collector. They transferred the possession of the said land to Late Shri Jagdishnarian Agarwal. Original owners and confirmation parties also executed the Power of Attorney in favour of Late Shri Jagdishnarian Agarwal in which all rights were given to him. The property was exclusively under the ownership and possession of the Shri Jagdishnarian Agarwal, which was acquired by the appellant or other legal heir on demise of his father Shri Jagdish Narian Agarwal. The property was under litigation for a long time and the compensation was given for the settlement. The property was registered with the name of Shri Jagdishnarian Agarwal till the pending of the litigation, however, the same was came with the name of the appellant and other legal heirs by virtue of conveyance deed in the FY 2014-15. The registrar had charged stamp duty and prevailing market value for the said property. Accordingly, it is opined by the CIT(A) that the land was not a fresh purchase. Hence, deleted the additions raised in view of the provisions u/s 56(2)(vii)(b) The facts are not distinguishable at this stage. The factual interpretation of the transaction was clearly described by the CIT(A). Accordingly, we are of the view that the Ld.CIT(A) has passed the order judiciously incorrectly, which is not liable to the interfere with the appeal at this stage. Accordingly, all the issues are deciding in favour of the assessee.

Summary

Issues:
1. Allowance of claim of &8377; 2,85,42,477/- u/s 56(2)(vii) of I.T.Act.
2. Challenge to the CIT(A) decision on the above claim.

Analysis:

Issue 1 and 2:
The revenue contested the CIT(A)'s decision to allow the assessee's claim of &8377; 2,85,42,477/- under section 56(2)(vii) of the Income Tax Act. The CIT(A) based the decision on the property being purchased by the assessee's father in 1974, with full payment made to the vendors and original owners. Possession was transferred to the father, supported by confirmations and a Power of Attorney. The property was inherited by the appellant and other legal heirs. Payments made by the appellant were for settlement, not purchase consideration, as the property already belonged to the family. The registration in the appellant's name in 2014-15 was due to a settlement, not a new purchase. Stamp duty was paid based on the ready reckoner value. The CIT(A) concluded that the property was not a fresh purchase, hence deleting the addition under section 56(2)(vii)(b) of the Act. The appellate tribunal upheld the CIT(A)'s decision, finding it well-founded and not subject to interference.

Issue 3:
Issue 3 was deemed formal and did not require adjudication. The appeal of the revenue was consequently dismissed. The judgment was pronounced openly on 31/05/2021.